Favor Easy Management Ltd & Anor v Wu (aka Lisa Wu) & Ors [2011] EWHC 2017 (Ch)

Case No HC09C00826

[2011] EWHC 2017 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 29/07/2011

Before

MR JUSTICE NORRIS

Between

Favor Easy Management LimitedClaimants

(2) Samuel Tak LeeClaimant

Fuk Fei WuDefendants

Favor Easy Management LimitedDefendant

Mr Trace QC and Mr Keller (instructed by Stephenson Harwood) for Claimants

Mr Crampin QC and Mr Staunton (instructed by Kamberley Solicitors) for Defendants

Hearing Hearing dates: 15-19 November, 22, 24-26 November, 21 December 2010 (Defendants’ submissions) 27 January 2011 (Claimants’ submissions), 8-9 March 2011

Judgment

Mr Justice Norris :

[1]The task in this case is to analyse the partial accounts of two less than straightforward people in order to see what, on the balance of probabilities, were the arrangements made at the time of the purchase in January 2008 of a hotel at 66 Avonmore Road London W14 (“66 Avonmore Road”) and the purchase in July 2008 of the adjoining premises (“64 Avonmore Road”).

[2]Samuel Tak Lee (“Mr Lee”) is one of the world’s truly “super rich”; he is a Hong Kong Chinese property magnate in his 70’s. 66 Avonmore Road was bought with his money in the name of Favor Easy Management Ltd (a company incorporated in the Seychelles) (“FEM Seychelles”). The actual instructions for the purchase were given by Fuk Fei Wu (“Ms Wu”), a 42-year-old Chinese woman, to the sole proprietor of David Tang & Co solicitors of Shaftesbury Avenue London W1 (“Mr Tang”). Shortly thereafter Ms Wu bought the adjoining property 64 Avonmore Road in the name of Favor Easy Management Ltd (a company incorporated in the British Virgin Islands) (“FEM Virgin”) using mortgage finance which she raised. The mortgage was secured not on 64 Avonmore Road but on 66 Avonmore Road: to achieve this FEM Seychelles transferred 66 Avonmore Road to FEM Virgin. In opening his case Mr Trace QC (Counsel for Mr Lee) simply described this transfer as “a cunning and callous fraud”.

[3]In his Particulars of Claim Mr Lee claims beneficial ownership of both 66 and 64 Avonmore Road. As to 66 Avonmore Road the Particulars allege that by reason of his sole contribution to its purchase price in January 2008 and regardless of the ownership and control of FEM Seychelles Mr Lee was solely and beneficially entitled to the property under a resulting or constructive trust arising from his provision of the purchase money, and FEM Seychelles held 66 Avonmore Road on trust for Mr Lee. But he says that in any event at all material times he held the sole bearer share of FEM Seychelles and so he was the owner of the company. When in July 2008 the property was transferred by FEM Seychelles to FEM Virgin Mr Lee alleges that, because the transfer was a breach of the fiduciary duties which Ms Wu owed to FEM Seychelles as its director (of which breach of duty FEM Virgin knew), FEM Virgin received 66 Avonmore Road as constructive trustee for FEM Seychelles, or alternatively for Mr Lee. When 66 Avonmore Road was mortgaged to HSBC Mr Lee alleges that it was so mortgaged in breach of trust and that FEM Virgin and Ms Wu must pay sufficient to discharge the mortgage and leave 66 Avonmore Road unencumbered. Mr Lee alleges that in fact he had agreed to provide the purchase price of 64 Avonmore Road for it to be purchased by FEM Seychelles in exactly the same manner as 66 Avonmore Road and Ms Wu was obliged to arrange things in that way. Mr Lee says that when he did provide the monies in question he did so on the understanding and agreement that FEM Seychelles (or he himself) would thereby acquire an interest in 64 Avonmore Road. So Mr Lee says that Ms Wu's purchase of 64 Avonmore Road in the name of FEM Virgin was a breach of obligation and trust, and FEM Virgin now holds 64 Avonmore Road on trust for FEM Seychelles (or on a resulting or constructive trust for Mr Lee because he provided the purchase money, albeit after the event).

[4]In her Amended Defence Ms Wu alleges that she was and is the beneficial owner of FEM Seychelles as the “owner” of the one bearer share (which puts in issue whether she could be in breach of fiduciary duty); and she says that 66 Avonmore Road was a gift to her by Mr Lee (who gave the money required for its purchase), FEM Seychelles simply being a nominee for her. Alternatively she says that if FEM Seychelles was not a nominee for her but the company was the true beneficial owner of 66 Avonmore Road, then she was entitled to deal with the property (in particular by transferring it to FEM Virgin) because she was the beneficial owner of FEM Seychelles. Ms Wu says that she bought 64 Avonmore Road in July 2008 using borrowed money secured against 66 Avonmore Road, and that Mr Lee subsequently gave her money in September and October 2008 which she used to redeem the mortgage. She says that if Mr Lee now has the bearer share in FEM Seychelles it is because some time between the 2 and 26 January 2009 he wrongfully took it.

[5]The context in which this debate over conveyancing must be conducted is a fundamental clash between Mr Lee and Ms Wu as to the nature of the relationship between them. Mr Lee says that Ms Wu was an employee to whom he intended to commit the conduct of the business at 66 Avonmore Road (and then 64 Avonmore Road as well) as part of his property empire under a business model known as “Zhou Wen Xuan”. Mr Lee says that this had been developed by a Chinese businessman of that name who happened to come from Ms Wu's hometown. Under it the business assets are held in a name which conceals the true owner’s identity, and are solely administered by an entirely entrusted steward, apparently on his own account: but in truth the whole is simply the investment of the concealed owner. Ms Wu says that she was the mistress of a fabulously wealthy man who encouraged her to emulate him and another Chinese businessman, Zhou Wen Xuan (who was from her home village and had started with nothing and built up a commercial empire): and that Mr Lee gave her money and advice and assisted members of her family to immigrate so that she could attain that goal.

[6]As that account illustrates, one of the challenges in this case is to give English legal content to Chinese cultural arrangements: another has been to remember the potency of the concept of “face” (which featured in what was said by both Mr Lee and Ms Wu).

[7]As I approached my task I decided, first, to remind myself of what had been said by Lord Pearce in Onassis v Vergottis

[1968] 2 Lloyds Rep 403

at 431. I will set it out in full so that what underpins my findings of fact is clearly explained:- “ “Credibility” involves wider problems than mere “demeanour” which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person telling something less than the truth on this issue, or though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think they are morally in the right, tend very easily and unconsciously to conjure up legal rights that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of the witness. And motive is one aspect of probability. All these problems compendiously are entailed when a judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part”.

[8]The competing accounts are such that there is a real possibility that one or the other side is lying in key respects: and in the telephone transcripts to which I will refer Ms Wu admits lying about ancillary matters. Some of the possible lies would arise out of a direct conflict of evidence relating to the central issues that I must determine: but the course of the hearing was such that lies about ancillary matters seemed to be treated not simply as going to credit generally, but also as bearing upon the actual issues for decision. So, secondly, I reminded myself of the significance of lies as explained in R. v Lucas (1981) 73 Crim.App.Rep 159. In the first place to be satisfied that they were deliberate lies and not misrecollections: and in the second place to remember that lies are told for many reasons (amongst them to bolster a truth, to conceal disreputable conduct unrelated to the wrong with which the action is concerned, to cover confusion, and for other innocent reasons).

[9]As well as the evidence I heard, I have also had to consider what is the correct approach to evidence I might have heard of but did not. I have therefore reminded myself, thirdly, at the invitation of Mr Trace QC, of the observations of the Court of Appeal in Wisniewski v Central Manchester HA [1998] PIQR 324. The plaintiff, who suffered from cerebral palsy, complained that the staff attending the birth failed to pick up signs calling for investigative intervention at an early stage: the resident senior house officer failed to attend the trial to give evidence. Counsel for the plaintiff submitted that the judge should infer from his failure to attend the trial that he had no answer to the criticism made of him: and the judge did so. The Court of Appeal set out the following principles:- “(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2) If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4) If the reason for the witness’s absence or silence satisfies the court, then no adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified”.

[10]Further on that theme, I have, fourthly, had to consider the effect of questions that were not put in cross-examination. The advocacy styles of Mr Trace QC (for Mr Lee) and Mr Crampin QC (for Ms Wu) were very different. This led Mr Trace QC to submit that, in effect, I was compelled to accept his client's evidence on many points because the particular points had not been put in cross examination. I have reminded myself that I am not adjudicating some technical advocacy competition where questions of style arise, but conducting a trial with the ultimate aim of doing justice between the parties. But procedural fairness, not only to the parties but also to the witnesses, requires that if their evidence is to be disbelieved they must be given a fair opportunity to deal with the allegation: see Markem Technologies v Zipher

[2005] EWCA Civ 267

at [56]. I have considered the passage in that judgment which continues to [61]: but it is not necessary to include a lengthy citation from it. It is sufficient to cite from the case relied on by Mr Trace QC: Browne v Dunn [1894] The Reports 67. He relied on a passage in the headnote:

“ If in the course of the case it is intended to suggest that a witness is not speaking the truth upon a particular point, his attention must be directed to the fact by cross-examination showing that that imputation is intended to be made, so that he may have an opportunity of making any explanation which is open to him, unless it is otherwise perfectly clear that he has had full notice beforehand that there is an intention to impeach the credibility of the story or ... the story is of an incredible and romancing character”

. I would draw attention to one further passage in the speech of Lord Herschell (at P. 70-71):- “… I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of the case, but is essential to fair play and fair dealing with witnesses. Sometimes reflections have been made upon excessive cross-examination of witnesses, and it has been complained of as undue; but it seems to me that a cross-examination of a witness which errs in the direction of excess may be far more fair to him than to leave him without cross-examination, and afterwards to suggest that he is not a witness of truth, I mean upon a point on which it is not otherwise perfectly clear that he has had full notice beforehand that there is an intention to impeach the credibility of the story which he is telling. Of course I do not deny for a moment that there are cases in which that notice has been so distinctly and unmistakably given, and the point upon which he is impeached ….is so manifest, that it is not necessary to waste time in putting questions to him upon it. All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted”. This guidance, of course, falls to be applied in the particular circumstances of the individual case and in the context of litigation now conducted in a very different way from what it was in 1894 (with, under the CPR, advance notice of and, in theory, judicial control over the evidence to be adduced). But the touchstone of fair play and fair dealing remains as applicable now as then: as was made clear (in the context of allegations of deceit, fraud and dishonesty) by Rimer LJ in LB Haringey v Hines

[2010] EWCA Civ 1111

at paragraphs [39] to [42].

[11]In addition to these principles of evidence Mr Trace QC also referred to the burden of proof. He submitted that it was well established that where A paid money to B for no consideration B is immediately presumed to hold the money on resulting trust; and when B then purchases the property that trust transposes itself to the property acquired with the money unless “the presumption of advancement” applies or B proves that A had an actual intention to make the transferee the beneficial owner of the property. Although not everyone might agree with that formulation so far as it relates to the bare payment of money (compare Seldon v Davidson

[1968] 2 All ER 755

) it undoubtedly applies to the payment of purchase monies (with which the case about 66 Avonmore Road is concerned). For present purposes I accept as correct the statements of the law to be found in Snell's Equity (32nd ed.) at paragraphs 25-001, 25-001 and 25-013 in these terms:- “ It may happen ... that a transferor of property causes the legal interest to vest in another person in circumstances where it is unclear whom the transferor intends to have the beneficial interest in it. Here, by operation of law, a resulting trust may arise for the benefit of the transferor. It gives effect to a default presumption about the intention of a person in making a gratuitous transfer of property: although he has transferred the legal interest, he would generally not intend to transferee to take the property beneficially ... The clearest evidence of rebuttal is an express declaration of trust ... Even where this is absent, the court aims to arrive at the parties’ real intentions by considering direct evidence of all the transaction. This requires an objective inference drawn from the parties’ words and conduct. As a result, the presumptions of a resulting trust or of advancement are only relied upon as default rules where there is no sufficient evidence to displace them ... The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration. It has been held that subsequent acts and declarations may only be admissible as evidence against the party who made them, and not in his favour……”

[12]I have endeavoured to bear all of these matters in mind in my approach to the evidence which I heard. This is going to be a long judgment: and if at particular points I do not articulate reasons which appear to address each and every of the foregoing considerations it should not be assumed that I have overlooked them.

[13]A brief overview of the issues for decision would be this. 66 Avonmore Road was undoubtedly bought by FEM Seychelles with money emanating from Mr Lee. The question is whether FEM Seychelles was a nominee for somebody else (Mr Lee or Ms Wu). If it was not a nominee (but was itself the beneficial owner of 66 Avonmore Road) the question then is: who was the owner of FEM Seychelles? This involves considering who had possession of the bearer share, and on what terms (as between the parties) was that bearer share held? Mr Lee undoubtedly has the bearer share now. Has he always had it, or did he take it? And if he took it, did he do so by legal right or wrongfully? Was Mr Lee party to some agreement or understanding with Ms Wu about the acquisition of 64 Avonmore Road? If so, was the acquisition by FEM Virgin a breach of that agreement or understanding? Did Mr Lee pay for 64 Avonmore Road? If so, how and when?

[14]It is as well to begin with the documents central to the transactions in issue in the action and to see what, in their unvarnished form, they tell of the dealings between the parties. They provide a solid narrative.

[15]FEM Virgin was incorporated on 5 July 2007 by a BVI registered agent. Paragraph 10 of its Memorandum of Association permitted it to issue registered shares only, and did not authorise it to issue bearer shares or to convert registered shares to bearer shares. It is not possible from the documents to discern whether it was incorporated under that name upon specific instructions from somebody or whether it was simply an “off-the-shelf” company.

[16]On 12 October 2007 Ms Wu attended on Mr Tang of David Tang & Co (solicitors). His note of the 20 minute conversation is brief but records:

“Her boss is thinking of buying a hotel for £1.6 million. The boss would then grant a lease to her two nephews for £500k premium”

. The attendance note does not record any details of the property to be acquired. Shortly thereafter (on 16 October 2007) the agents handling the sale of 66 Avonmore Road sought confirmation that the purchaser had the means to pay for the property without a mortgage. Mr Tang spoke with Ms Wu and his note says:

“ She would not be the buyer but her boss. I need to know the details of her boss. She wants to form a company but I do not know what company the boss requires. Requested the boss to talk to me tomorrow to clarify”

. But Ms Wu then rang back and a note of that conversation reads: “ Her boss would not contact me. The boss would at least need to form a company so we can contact the formation company. Whoever acts for the boss must need to be able to obtain instructions”.

[17]The following day (17 October 2007) a change in the instructions was signalled. Ms Wu telephoned Mr Tang and the summary of the call that is recorded says: “Boss may lend her the money so that she can be the purchaser. Boss requires security. She can grant a mortgage to her boss on completion”.

[18]A day or so later Mr Tang received a document dated 18 October 2007 and headed “Re: 9 Room Hotel”, the second page referring to “Avonmore Hotel”. It is in Chinese characters and in the hand of Mr Lee (save for the last line). Some caution must be exercised over the translation of its contents. It appears to be written advice (or instructions) to Ms Wu on the practical steps to take and about how to structure the transaction: Company A will buy the property and will lease it to Company B. Amongst the suggestions made are these:

“…. Buying company A: ask for/want “bearer share” company Liberia, BVI etc… Prepare leasehold between company A and B: refer to the documents of yesterday…. Establish/buy British company B: change its name to “Mistress Lodge Ltd”… Company A (anonymous) bought at £1.6 million… Company A 20 years leasehold selling/sold for £500,000…. Selling/sold to company B; plus annual rental…. first five years - £50,000/year; second five years - £80,000/year; last 10 years - £95,000/year…..” (The rental payments would total £1.6 million over the life of the lease: so the operator would pay the freeholder the purchase price of the property plus £500,000). At the foot of this note and in Ms Wu’s hand is written: “The name of company A will be given to you later”

Establish/buy British company B: change its name to “Mistress Lodge Ltd”…

[19]The reference in that note to “the document of yesterday” was said by Counsel for Mr Lee to be a reference to a document in the handwriting of Mr Lee and in English referring to the purchase of “Richmond Property” for the sum of £850,000 to operate a Chinese restaurant business, using Company A to hold the property and company B to take a lease for £500,000 and operate the business (the capital of company B being subscribed 50% by immigrant X and 50% by immigrant Y). This was accepted by Counsel for Ms Wu. I am not wholly confident that that is right since the “Richmond Property” document appears to have been faxed to somebody on 2 October 2007 and to have been received by Mr Tang on 12 October 2007 (possibly when taking his original instructions), so calling it on 18 October 2007 “the document of yesterday” is slightly odd. But I will proceed on the agreed basis.

[20]On 19 October 2007 Mr Tang made a note of instructions from Ms Wu asking him to form a BVI company for her. He appears to have told her that he would treat her as his client “as her boss would not be giving me any instructions”. The instruction was countermanded two days later when Ms Wu informed Mr Tang and he noted:

“Her B may hv a BVI company formed in HK already”

. But that instruction was itself altered at a 40 minute meeting on 22 October 2007 of which there is a six line note. This note reads in part:

“ She will probably instruct a formation company in HK to form a BVI company. For the purpose of this transaction, she is my client although she may receive financial assistance from her boss. Since the boss does not want to meet me, I would not be able to act for the boss”

. This document was not in the Core Bundle and was not referred to at the trial. Ms Wu gave Mr Tang a cheque for £5000 drawn on her own account.

[21]On 22nd of October 2007 solicitors for the vendors wrote to David Tang & Co to confirm that their clients had agreed to sell 66 Avonmore Road to “your client Mrs Wu” at a price of £1.58 million. This was a Victorian terraced 9 bedroom guesthouse/hotel with three employees that made a profit of about £50,000 a year. The surveyor described its condition as “tired, aged and soiled” with the exterior in need of extensive remedial works.

[22]Mr Tang then records that on 23 October 2007 Ms Wu told him that she would let him know the name of the company shortly but that “she [did] not know whether she would use a nominee to hold the position for her or not”. Once again, this document was not in the Core Bundle and not referred to at trial.

[23]On 25 October 2007 Faith Secretarial Services Ltd of Hong Kong sent to David Tang & Co the Certificate of Incorporation of “Favor Easy Management Ltd”. This must have related to FEM Virgin. Now provided with the name of the company and with Ms Wu's cheque Mr Tang put the requisites searches in train.

[24]At the first meeting of FEM Virgin on the 3 November 2007 one share was registered as issued to Ms Wu, and she became the company's sole director.

[25]On the 7 November 2007 Ms Wu telephoned Mr Tang and according to his note “she would use a different company to acquire”. This attendance note was not in the core bundle and not referred to at trial.

[26]On 8 November 2007 Yan Yan & Co Ltd (taxation and accountancy advisers) gave some advice about bearer share companies. It is not possible from the document itself to identify to whom the advice was tendered. But from other documents it can be established that later Ms Wu asked Mr Tang to contact Mr Lo of Yan Yan & Co to provide information, and Mr Lo did so in a fax headed “Re: Ms Wu”, subsequently communicating with Mr Tang on the footing that Ms Wu was a mutual client. It may therefore be inferred that Yan Yan & Co were advising Ms Wu. (This is the sense of the oral evidence as well). The tenor of the advice suggests that they had been asked to advise about Seychelles International Business Companies. They explained that care had to be taken when deciding to incorporate this kind of bearer share company, but that it had been relatively cheaper to incorporate such companies in the Seychelles where regulations were fewer: however, it could not be guaranteed that the Seychelles would not follow other countries in the world and tighten regulation over bearer-share companies. They quoted an incorporation charge of HK$9500. (There was no suggestion that Mr Lee paid this).

[27]Through the services of a Hong Kong formation agent, FEM Seychelles was incorporated on 12 November 2007 with one bearer share. The subscriber to the Memorandum and the sole director was Ms Wu. Although the registered office was in the Seychelles the address to be used for all correspondence (and the location specified for all books, documents and records of the company) was 2 Ebury Mews, London SW1. This was Ms Wu's address. The share application signed by Ms Wu was in these terms:

“I, being the agent of the bearer, hereby apply for and request you to allot one bearer share…. to the bearer at par. I confirm that the bearer agree (sic) to take the said share subject to the Memorandum and Articles……”

[28]Mr Tang was not immediately provided with a copy of the Certificate of Incorporation of FEM Seychelles. He eventually received it from Ms Wu on 21 November 2007. The conveyancing processes then took their ordinary course.

[29]On 14 December 2007 Ms Wu telephoned Mr Tang to report a change in the price. His note of the conversation records: “ The purchase price has been reduced by a further £10k. Her backer will send the money to me from Switzerland. The backer would like to have a look at the contract first”.

[30]This was followed on 17 December by a fax in the handwriting of Mr Lee in these terms:

“ Re: Acquisition of 66 Avonmore Road…(Price of £1.57 million) Please be informed that we have today caused HSBC Private Bank Geneva ... to wire to your firm's Barclays bank account ... CHF 365,400 for the 10% deposit for the captioned acquisition. Such sum is around £157,000. The purchaser is our firm. Sincerely yours Favor Easy Management Ltd Victoria, Seychelles”

Since Ms Wu did not write English it would have been apparent to Mr Tang that this communication came from somebody else: but he would not from the face of the document know who. Such sums were indeed sent from an account in Mr Lee's name. Before the money arrived Ms Wu signed FEM Seychelles’ part of the contract; and when it arrived contracts were exchanged (on 20 December 2007) on the authority of Ms Wu. Sincerely yours Favor Easy Management Ltd Victoria, Seychelles”

Favor Easy Management Ltd

[31]Completion was due on 8 January 2008 and was effected using a payment of CHF 3,355,588 (£1,513,503) received from Mr Lee's account. This was some £30,000 more than was required and the excess was paid to Ms Wu. The documents do not show what became of that excess. Mr Tang's attendance notes record that the hotel business was to be run by a company called Wong's House Ltd: but I know nothing from the documents of the circumstances of its incorporation, ownership or operation, save that Ms Wu signed documents on its behalf.

[32]On 23 February 2008 Ms Wu informed Mr Tang that she wanted to buy the adjoining property so that she could expand the hotel, and he made a note to that effect. (Other documents suggest the expansion would be from 9 bedrooms to 28 bedrooms if there could be a comprehensive development of both sites). This led to Mr Tang meeting with Ms Wu and her architect on 16 April 2008 for one hour. Part of his 14-line attendance note reads:- “ She wants the BVI company to own the present property. She also wants the BVI company to acquire the next-door building. She will offer £1.6 million in due course ... I advised her to approach HSBC to obtain rate. Mr Simons will also arrange a mortgage through NatWest for her. Whoever can offer the best will get the deal. She wants to borrow £2 million…….”

[33]Ms Wu’s offer of £1.6 million for 64 Avonmore Road was accepted at the beginning of May 2008: and she also received an offer of finance. According to an attendance note of Mr Tang dated 16 May 2008 the bank told him that they would not require 64 Avonmore Road as security: they only required 66 Avonmore Road and £1 million of funds. The bank does not appear to have explained to Mr Tang why this should be so: and even as late as 9 July 2008 he was writing to the insurance broker to note that Ms Wu would “be granting a mortgage to HSBC but for some reason the bank requires No.66 only and not 64”.

[34]Mortgage finance had not been arranged when, on 23rd of May 2008, Ms Wu exchanged contracts, paying a 5% deposit of £80,000 from her own account at HSBC. An HSBC Term Sheet indicates that the finance was to be provided in two separate tranches. First there was to be an advance of £700,000 repayable by monthly instalments over 15 years and secured by an “all monies” charge on 66 Avonmore Road (the arrangement fee being £7000). Secondly there was to be an £800,000 interest-only loan for a period of 4 years supported by the personal guarantee of Ms Wu in the sum of £1.5 million, the guarantee being supported by charges over an investment portfolio and cash deposits valued at £1 million (the arrangement fee being £8000).

[35]The completion date was set at 18 July 2008. As Mr Tang noted at a meeting with Ms Wu on 10 July this would entail FEM Seychelles transferring 66 Avonmore Road to FEM Virgin on or before then. The relevant Transfer was actually effected on 18 July 2008 when for nominal consideration FEM Seychelles transferred 66 Avonmore Road to FEM Virgin, Ms Wu signing the Transfer on behalf of FEM Seychelles. That same day FEM Virgin charged 66 Avonmore Road to HSBC, HSBC transferred £1.5 million to Mr Tang (being the £800,000 interest-only term loan, and the £700,000 repayment mortgage) with Ms Wu providing the balance payable to the vendors and the costs and expenses (including stamp duty of £64,000) out of a £90,000 transfer she had earlier made from her personal account. £1.52 million was paid to the vendors of 64 Avonmore Road (they having already received the £80,000 deposit) and that property was transferred to FEM Virgin. So Ms Wu paid £170,000 of her personal money plus £15,000 bank fees, and personally borrowed £1.5 million to buy 64 Avonmore Road.

[36]At the same time as the completion of the purchase of 64 Avonmore Road a tenancy agreement was entered into between FEM Virgin and Wong's House Ltd. Such an arrangement had been specified by HSBC as a condition of its provision of funding: the duration of the tenancy and the rent payable under it had been determined by HSBC and bore no relationship whatever to the arrangements outlined in the “Richmond Property” document or the “9 Room Hotel” document.

[37]The £700,000 home loan was repaid by a single monthly instalment followed by one bullet payment of £695,940 on 19 September 2008, the narrative on FEM Virgin’s bank statement indicating that the payment was by Ms Wu. (On 17 September 2008 Mr Lee had transferred CHF2.03 million to Ms Wu's London bank account: the sterling equivalent was £1.018 million). The £800,000 loan was repaid as to £500,000 with a bullet repayment on 27 October 2008. (On 21 October 2008 Mr Lee had transferred CHF1.015 million to Ms Wu’s bank account: the sterling equivalent was £514,518). The balance of £300,000 was repaid on 27 July 2009 and the “all monies” charge then released.

[38]With one qualification, these documents provide a reliable record of the dealings between the parties concerning 66 Avonmore Road and 64 Avonmore Road. The one qualification is that Mr Tang's attendance notes must be approached with a degree of caution. First, they are very brief records of sometimes lengthy meetings and will record his summary in his words. Second, the meetings themselves will have been conducted in Cantonese of which the attendance notes provide an English record: it is possible that something was lost or gained in translation. Thus where Mr Tang has used the word “boss” that is his translation of the expression “lopan”.

[39]Counsel for Mr Lee submits that the case should be decided on that material alone: he argues that Mr Lee's case is clearly made out on the balance of probabilities from those documents, and that Ms Wu is seeking to deflect attention from the question whether, in the face of those documents, she can prove that she was intended to be the beneficial owner of 66 Avonmore Road, by focusing on issues of no, or at most only tangential, relevance (in particular whether she had a sexual relationship with Mr Lee).

[40]I do not agree. One has to look at the entirety of the evidence. But these documents are a source of essentially reliable material provided they are approached in a considered way.

[41]Around Christmas 2008 there was a change in the relationship between Mr Lee and Ms Wu. The oral evidence is to the effect that Ms Wu said she was pregnant by Mr Lee. It appears Ms Wu wanted Mr Lee to pay for a new flat for her in Kowloon or alternatively to pay her £3 million. When he hesitated Ms Wu said that she never wished to see Mr Lee again. Mr Lee recorded Ms Wu's attitude in a note in his own handwriting dated 31 December 2008. Mr Lee felt he was being blackmailed: he engaged private investigators to monitor Ms Wu's every move and in addition decided to record their telephone calls. Counsel for Mr Lee submits that if the case cannot be decided on the conveyancing file then these transcripts put beyond doubt Mr Lee’s intended beneficial ownership of 66 Avonmore Road and 64 Avonmore Road, and that the transcripts themselves provide a compelling and broadly contemporaneous record of the party's positions.

[42]In my judgment the transcriptions of these telephone calls must also be approached with some caution. First, Mr Lee says that he was conducting the conversations under advice and to try and test “Ms Wu's criminal mind”: his side of the conversation may therefore be somewhat contrived (though on my reading of the transcripts there seem to be many unguarded moments where Mr Lee participated as a human being and not as a detached legal investigator). Second, the conversations were conducted in Cantonese: the proper translation of some passages was a matter of contention, and in general one must beware that something might be gained or lost in translation. Third, these telephone conversations record the respective positions adopted by the parties in the context of an impending breakup of whatever relationship they had: they are not part of the transaction itself (be that transaction the purchase of 66 Avonmore Road or the purchase of 64 Avonmore Road). But (with one further caveat) I would regard a statement against interest made in the course of these conversations to be a generally reliable indicator of where the truth probably lay, and the content of the conversations to provide a fair guide as to immediately contemporary events (provided that in that regard I am alert to the possibility that a false trail is being laid).

[43]The one caveat is that not all of the passages in these recorded telephone conversations that might be taken to refer to the arrangements about 64 and 66 Avonmore Road and to the files containing the relevant documents were put to Mr Lee or Ms Wu respectively, and I must therefore be careful in assessing the truth such passages tell (for although the statements were obviously made, I do not have the benefit of any gloss or commentary by the maker).

[44]An examination of what parts of the conversation might relate to 66 Avonmore Road or 64 Avonmore Road or the documents relating to them reveals the following:-(a) At the end of a call made by Mr Lee (from Paris) to Ms Wu (on a Hong Kong number) on 9 January 2009 about an attempt by her to send her bank details Mr Lee enquired “Are they still with those files in No.2? I am too busy to deal with your case”: to which Ms Wu responded “The files are of course in No.2. What did you think was not there?”. The reference to “No.2” is clearly a reference to 2 Ebury Mews, where Ms Wu lived. The reference to “files” may be a reference to the books documents and records of FEM Seychelles (which its constitution said were to be kept at 2 Ebury Mews): or to other files (such as a file containing the property purchase documents, licences etc).

(b) In the course of a call on 11 January 2009 the following exchange occurred:- “Lee: Hey the house that you bought. Have you finished the decoration of it? Don't know what the number of the next one is. Wu: It will take eight weeks ... yes 8 to 12 weeks before getting the approval. As it is a conservation district here it will take a very long time. Lee: Why don't you ask Ah Ming to keep an eye on it for you?” Lee: Why don't you ask Ah Ming to keep an eye on it for you?”

(c) A conversation on 12 January 2009 had begun with a reference to Ms Wu attending a provincial gathering with (she said) a “big belly”, with everybody knowing that she was with a rich man but not married: it ended with this exchange:- “Wu: Now all people know. But I haven’t got you, I haven't got the money. People don't see how much money you give me in the UK. In any case, if you give me a property, I can explain to people. Lee: Why don’t you buy a street in the UK? Wu: I don’t want a street. I just want a house to live in. Lee: I am going to get angry….” Lee: Why don’t you buy a street in the UK? Lee: I am going to get angry….”

(d) In the course of a conversation on 13 January 2009 the following passage occurs:- “ Lee: Hey, about you buying the hotel next door, has the deal about the building next to the hotel in London been done yet? Wu: It was sold a long time ago. Lee: Is being renovated now? Wu: Now they're waiting for the council to approve so they can start renovation. Lee: Right.” Lee: Is being renovated now? Lee: Right.”

(e) Later in that same call the conversation took this form:- “Wu: I have no money…. Lee: What you mean by having no money? Wu: I have no money except some living allowance, living allowance only. Now I only want to have a property. That's all I'm asking. I don't want anything else. Lee: Hey, I'm sorry…. You are a boss yourself. As your relatives in Ningbo say you are running hotels, owning properties and earning rent in London. Wu: True hotels…. and earning rent… To be honest you know quite well that Zhou Wen Xuan of yours stuff, I'm not allowed those now. They are just placed there. You don't belong to (unintelligible).. Belongs to me, big boss…… Look what you're talking about. Right, things about hotels and stuff are true. But I'm now living in Hong Kong at a place about the size of a bathroom. Is that right for me? Lee: It's you who wanted to go back to Hong Kong. Why didn't you stay in London and be a big owner of a whole street?.......” Lee: What you mean by having no money?

(f) On 14 January 2009 Ms Wu made the following complaint:- “ Being a good father, you ... do you think it's easy to be a good father? There's a price to pay. For me, you're paying money. Right? That's the same, paying price. What do I do? I'm with a rich man. I don't have money or even a property to live in. Why am I with you? You got it all wrong. You don't give people money and property to live in, and you want women? ... Shouldn't I get my things back ?”

(g) Later in that same conversation occurs the following exchange:

“Wu: .. I'll make everything clear. I am only asking for a bit more than 10 million. It’s ridiculous if I ask you for many million, but I am only asking for a bit more than 10 million to buy a property. Why do you bother so much? You said you don't trust me. I gave you what you wanted. What do you want? Lee: Now you ask me for 14 million and you won't…. Wu: I won't do anything. I’ll have a property and the hotel to do business. I won't care how much money you have. This is me. I only want a property and the hotel because I have to raise my son. You understand? That would be all…. Lee: Hey after you get the 14 million and a property at Kowloon.. you'll ask me again……”

After a short interlude Ms Wu says:- “ I only want my own things back. I want the hotel back. I want a property in Hong Kong. With the hotel I can do some business and raise my own son. And I won't bother you…….. I won’t take a dime from your family in the future. I only want my hotel back. That's it …” The debate continues and Mr Lee interjects:- “When will you get enough? Around your hotel you can buy a whole street….” Then after a further interval there is the following exchange:- “Wu: Let me tell you. I won't go to you until I'm really out of money. You can refuse to pay me. Fine. Suit yourself. Don't give me then. I want my hotel back and the hotel file back. Let's finish. Lee: Have you taken it? Have you taken it? Wu: What? What did I take? I didn't. I told you to go to the UK and see if the file is there before you pay me…” There is then further debate in the course of which Mr Lee suggests that Ms Wu may be committing a crime in asking for money and that he wanted to talk to his lawyer: the parties then approach a settlement and the following then occurs:- “Lee: Let me talk to my lawyer first. Wu: I’d most get back that thing from Zou Wen Xuan for myself. If I have enough money to live, I won't go and ask for it…………… Lee: £3 million and you get back all of Zhou Wen Xuan's title deeds and all that stuff. And you will go to the lawyer to sign?............ Wu: I don't even want your money. Do whatever you like. I only need to get back Zhou Wen Xuan’s things. I told you. You can refuse to give me money. I'm not blackmailing you. Just to be clear. You can refuse to give me money. I only need to get back Zhou Wen Xuan’s things. I won't see you again. I said it. I deserve all that….. I'm not blackmailing you. You can think this over. You can do what you want……………. Wu: I get the hotel stuff and leave. I only get back what I deserve and that's it. I'll ask you for money to live when I run out of it one day…………………… Lee: If I'm going to do it, I’ll go to No.2 and get the files first, and use the old option to do it. Are you done? Wu: You go to No.2, find the files and pay. This is human talking. We have a deal. I won't take your Zhou Wen Xuan because you're afraid that one day I'll take Zhou Wen Xuan and leave. My heart will always be with you. I'm not afraid of waiting. You can even give it to me in 20 years time. That's all. We're talking as humans right? You can look at it before giving it to me. Will I use the a bit more than 10 million against your many millions?” “ I only want my own things back. I want the hotel back. I want a property in Hong Kong. With the hotel I can do some business and raise my own son. And I won't bother you…….. I won’t take a dime from your family in the future. I only want my hotel back. That's it …” “When will you get enough? Around your hotel you can buy a whole street….” Lee: Have you taken it? Have you taken it? (h) A further call on 14 January 2009 takes up the settlement discussions on the footing that the parties were breaking up. A number of options were canvassed and their numbering became confused. But what emerged was this. The first option was that Mr Lee would pay £3 million into Miss Wu's account and the parties would go their separate ways. The second option was that Mr Lee would buy Ms Wu the Kowloon flat for HK $14 million, and when Mr Lee enquired whether he would still have to pay living expenses Ms Wu responded that he would not and that her living expenses would come from “the hotel business”. That would also be a clean break. The third option was that Mr Lee would not give her any money but Ms Wu said:

“ I will take the hotel business and run it myself. As long as I can live on it, I won't bother you or ask you for money at all. If I have no success, I will ask you for money to cover my living expenses”

. So that would not be a clean break. After further discussion Miss Wu says:- “ I don't want to do this. I just want a property and the hotel instead of fighting against your family when you are around. ... As long as you buy me a property and give me the hotel I am happy to sign anything. Isn't that good enough?.... I am in need of a property now…. And the hotel…… I need to buy the property. I have been telling people I will buy that property. I will lose face if I don't get it. Do you understand?” (i) Negotiations continued on 16 January 2009 and in the course of a telephone conversation on that day Ms Wu asked Mr Lee for HK$15 million repayable if a DNA test verified that the baby which she said she was then carrying did not belong to Mr Lee. There then followed this exchange:- “Lee: No, you left out something. Are you removing things relating to Zhou Wen Xuan? Wu: I will take Zhou Wen Xuan with me… Lee: I've told you, if you take them that we would be turning against each other.. Wu: OK. OK. I won't take it….” Wu: I will take Zhou Wen Xuan with me… Wu: OK. OK. I won't take it….” (j) In a telephone conversation on 20 January 2009 Mr Lee and Ms Wu review the money he has already given her in these terms:- “Lee: Reflecting while eating breakfast, I wanted to ask you how much of my money was spent on you since the very beginning? I've forgotten about that….. How much did you spend on [immigration]? Wu: That amounted to 1 million [ pounds]…….. Lee: It's not the money used to purchase the hotel “Admore London” is it? Wu: That's a different amount of money. Lee: How much did it cost purchasing that hotel? I've forgotten that one too? Wu: One million and six hundred thousand. Lee: So the two add up to 2.6 million…… on top of that, things involving Ah Ming cost me another 500,000. Wu: You are right. Lee: So you have spent nearly 3,000,000 of my money. Wu: You're right. Lee: So ... I haven't treated you badly ... Around 3 million right? It cost 500,000 to process the immigration of Ah Ming and your nephew. Correct? ... So add another £500,000 onto the tally. Then how much for purchasing the adjoining building? Wu: That cost 1.4 plus million…….. Lee: Actually I've treated you fairly well then. Wu: Yeah, but I did not actually get much. The stuff relating to the hotel. … Actually you have yet to give it to me. You have given me [indistinct] so far”. Lee: It's not the money used to purchase the hotel “Admore London” is it? Lee: How much did it cost purchasing that hotel? I've forgotten that one too? (k) There is a note in Mr Lee's handwriting of 27 January 2009 which summarises his conversation with Mr Wu in these terms:- “ Just found out in No.2 Ebury Street STL took out the bearer shares of Avon Hotel… She blew her top and would return to Hong Kong tomorrow and march up to STL's family… to showdown with ST Lee family. Why STL corner her like this? Very angry” The translated transcription of the telephone call reads (so far as material):- “Wu: What do you want? ... I sent people to collect things. You said the property has been [inaudible] and you have taken the file. Can you tell me? Now you ... you don't give me the [inaudible]. Fine. But you also take the hotel. This is an agreement between you and me. I could have taken it long ago if I wanted to. Do you have to play dirty? ... Aren't you forcing me into a corner ? That means you have left me with no choice . Now that you've taken away the one thing I live on, is it fair to me?... You have taken that box from me! Have you ever considered what I wanted to do? ... That box of hotel stuff ... The box contains the hotel’s ... it has been written down that those things belong to the hotel. Now you have taken it away…. Now that you have taken the stuff relating to Zhou Wen Xuan you knew I would turn my back on you. Why didn't I take it? Why did I keep my promise?.. If I wanted the stuff relating to Zhou Wen Chuang, I could have beaten you to it. Why didn't I do it? Why are you so mean? How can you take it? I don't understand … What do you mean someone entered No.2? You entered No.2 and took the file…. Don't tell me that the stuff related to Zhou Wen Xuan flew away by itself. Could you be so mean?”

Lee: How much did it cost purchasing that hotel? I've forgotten that one too?

[45]Having dealt with two inherently reliable sources of evidence (albeit that each must be approached with a degree of caution) I turn to consider the oral evidence. I will deal with general credibility before approaching the principal conflicts. I will address the principal conflicts chronologically; but there is an obvious interplay between the issues and it should not be thought that I have necessarily reached my conclusions in the order of the events themselves. Conclusions on later events have inevitably informed conclusions about earlier events.

[46]Mr Lee came to trial a fabulously rich man with a thoroughly investigated and meticulously prepared case on which no expense appeared to have been spared. As a successful and apparently reputable businessman of international standing he is entitled to be approached in the first instance as a truthful man, although one who makes concealment part of his life. On his own case his business method is to operate through vehicles that cannot be traced to him. He told me that he operated his property business in this country through at least 19 bearer share companies (and provided a list of 18 such companies incorporated in Liberia, the BVI and Samoa): and that in relation to at least one English business (The Astor Court Hotel) he employed the Zhou Wen Xuan model. He described his business method as employing “stealth”: booking into one hotel but in fact staying at another, booking rooms on different floors of the same hotel so that members of the same family should not know he was dealing with the different branches. Wherever he does business he avoids leaving an expenditure footprint. Now concealment and untruthfulness are different things: but I am wary of taking what comes from Mr Lee's side at face value and alert to the possibility that the available documentary record may not disclose what is really happening on his side (save in relation to travel dates, where record keeping was meticulous).

[47]Ms Wu came to trial a by no means impoverished litigant (having regard, not least, to Mr Lee’s admitted generosity towards her): but the resources she deployed on the case could not match those of Mr Lee. She came as an admitted liar. In the transcribed telephone conversations she had no answer to Mr Lee's accusation that she pretended to be in Hong Kong but was in truth in London; and in those conversations she admitted deceiving Mr Lee into believing that she was pregnant in January 2009 at a time when she had already had an abortion. In her original Defence dated 23 April 2009 Ms Wu alleged and verified that the mortgage on 66 Avonmore Road had been fully redeemed: but before trial it was established that that was not so and that at the date of the Defence £300,000 remained outstanding. Ms Wu is therefore to be approached in the first instance as one who is more than capable of being untruthful if it serves the immediate purposes.

[48]The need for that approach was underlined in one particular respect during the trial itself. Mr Trace QC satisfied me that applying the civil test of the balance of probability Ms Wu had during January 2009 provided to Mr Lee in the course of her negotiations with him a medical certificate that was not authentic (though he did not satisfy me that it was Miss Wu who had created it). I express myself in these restricted terms because Mr Lee brought a private prosecution against Ms Wu in this country in relation to certain demands which she made upon him. The criminal trial was conducted during an adjournment of the trial before me: my understanding is that the prosecution failed (because the jury could not agree) and that Mr Lee intends to bring a second private prosecution. I therefore wish to exercise caution in making findings that may influence the second round of criminal proceedings. But I must record my findings because it was necessary for me to take them into account in assessing Ms Wu's credibility.

[49]Mr Lee gave his evidence in English, the language in which he was educated - although his mother tongue is Cantonese. Ms Wu does not read or speak English (although she can clearly understand some English) and gave her written evidence in Chinese and her oral evidence through an interpreter. (This is the place publicly to commend the interpreters who assisted the court in this case: each was a model of the profession - resisting the temptation to enter into conversation with the witness, translating only what was spoken by counsel or by me or by the witness, and informing me of everything that passed between witness and interpreter). But the difficulties of language and the process of interpretation meant that the demeanour of the witness in general had little part to play, though there were particular instances (which I noted at the time).

[50]There is a dispute in the first place about the time at which and circumstances in which Mr Lee and Ms Wu first met. Mr Lee says that he first came to know Ms Wu in April 2006 when it was suggested by one of his then support staff, Ms Gao, that he interview Ms Wu for a personal assistant role within his organisation. (Ms Gao says that she thinks Ms Wu advertised for a job in the “Chinese Business Gazette” or one of 5 other papers saying that she had secretarial/PA experience). Mr Lee did so at an interview at Garfunkel's restaurant in Victoria train station. He learned that she had been somebody's mistress for 8 years, the relationship terminating immediately before her arrival in the UK on a tourist and then student visa. He was impressed by her experience in running a small business, her tough nature and her ability to handle people: and offered her a job as a PA. In oral evidence he explained that his deal-making livelihood was “very human oriented - eyeballing, body language, and the chemistry of the seller ”. He wanted an assistant “to make my personal effort easier with counterparties and with people around them” and “to make me less stressed ... when I do deals and I will come across a spectrum of people on the seller sides”. He said he was looking for “talent” - which he was well able to assess in 15 or 20 minutes. But there was no talk of any remuneration.

[51]Ms Wu also originally placed her initial meeting with Mr Lee at the end of April or possibly a little later. She said they met as the result of an advertisement in the “Singtao Daily” placed by her. A copy of the advertisement appearing in the period 9 to 15 June was traced. Ms Wu then placed her initial meeting with Mr Lee somewhat later. Mr Trace QC submitted that this demonstrated she was not a credible witness because she was prepared to trim her evidence to suit the documents. I reject that submission. To me it simply demonstrates that unassisted recollection may be less accurate than recollection assisted by documents.

[52]The advertisement was headed “Hong Kong lady seeking spouse”. If taken literally (rather than as code for “lover” or “sugar daddy”) this would be a deceit by Ms Wu: she was at that time married (although the marriage was in difficulties) and had a small child back in Hong Kong. I am satisfied that Ms Wu did later deceive Mr Lee into thinking that her husband (Ming) was her brother. This deception further undermines Ms Wu's general credibility. The advertisement continued:- “ Aged 35 ... tall, slim and elegant and graceful, mild tempered and sincere [seeking] a male aged 40-50, honest and economically sound as a spouse”.

[53]Ms Wu agrees that she met Mr Lee at Garfunkel's restaurant in Victoria. Her account of the meeting is that Mr Lee asked as to her background and financial circumstances. Ms Wu says that she told him she was a beautician and a trained masseuse (and it is accepted that she is) and that she had owned a ceramic tile business in Hong Kong (which failed). Her evidence is that Mr Lee told her he had a big company called “Langham” and indicated that if she agreed to have a relationship with him then all her problems would be solved and that he wished her to accompany him during his travels. There was disputed evidence about whether they then went for a Chinese dinner in Tooting, whether Mr Lee flew away that day or the next following day, and whether he said he was going to Japan or Geneva. Those disputes are not material to the issues I have to decide and have not assisted me in assessing credibility.

[54]Of the competing versions I would find that Ms Wu's is more likely to be true. What brought Mr Lee and Ms Wu into contact was her advertisement for a “spouse”, and nothing to do with a job. First, the advertisement is undoubtedly hers (it carries her mobile telephone number). I regard it as highly improbable that she would have placed such an advertisement shortly before 9 June 2006 if in late April 2006 she had accepted a post as a PA to a rich businessman. Second, there is no documentary support for the suggestion that Ms Wu placed a job advert or that Ms Gao had embarked on a recruitment campaign for Mr Lee. Third, placing an advertisement looking for a job as a secretary/PA simply would not play to Ms Wu's strengths or reflect her experience (as any prospective employer could immediately discover): and I do not think that it would have satisfied Ms Wu's ambition. One witness (Mr Fan) whom I regarded as reliable said that he did not consider that Ms Wu had even the basic skills to live in this country. Fourth, on Mr Lee’s account of events, at the time he appointed Ms Wu as his PA he already had the services of Corolla Lam (an experienced and long serving London based PA) and Ms Gao (who said she was a freelance PA on a contract worth £40,000 per year) in addition to domestic and support staff and drivers: the need for yet another PA (particularly one who was unable to work since she had only a student visa expiring in September 2006) was not adequately explained. Fifth, an interest in a companion rather than in an employee would coincide with Mr Lee's sexual awakening. Mr Lee told me that he had had some serious operations in 2005 which had left him impotent, and that he recovered his potency at a time when he began to be intimate with Ms Gao: on his evidence and that of Ms Gao (if true) this would be June 2006. Sixth, there is no documentary support for the existence of any relationship (personal or professional) in April or May 2006.

[55]My finding does involve rejecting Ms Gao’s account of selecting Ms Wu from among six other individuals (assembled by some unstated means) to fulfil the role of PA. Although (as I shall indicate) I feel unable to reject Ms Gao’s entire evidence as a fabrication (prompted by her receipt of £5 million from Mr Lee including £900,000 shortly before the trial), I found this account itself unconvincing. It was unsupported by any documents to which my attention was drawn. There was inconsistency between her account and that of Mr Lee as to who determined the alleged terms of engagement of the PA (each said they left key terms to the other, and there was a straight conflict as to whether Ms Wu was subject to a probationary period). I was struck by the fact that when offered the chance to look through the “Chinese Business Gazette” for various weeks from March to June Ms Gao did not even think it worth doing so: it was as if she knew she would not find the advertisement. Given the PA and driving services then available to Mr Lee a further recruitment campaign for yet another PA/driver needed some explanation: but Ms Gao's evidence dealt only in generalities.

[56]Further, I acknowledge that my conclusion does not fit easily with those occasions on which Ms Wu referred to her “lopan” or “boss” in conversations with Mr Tang. Ms Wu’s explanation (which related to the ease with which Ms Wu felt able to refer to her “lover” when instructing her solicitor) was not always consistently expressed and, whilst plausible, is a little thin. I simply have to accept that evidence cannot always be reconciled so as to point in a single direction, and sometimes one simply has to choose what seem to be the more powerful indicators.

[57]There was then a dispute as to what Ms Wu was expected to do. I am satisfied that she does not speak or write English (though she has a degree of understanding, demonstrated by her ability on occasion to answer a question in Chinese before it had been translated from the English, and could probably speak a smattering of broken English). She does not speak any continental languages. She is not computer literate. (Mr Trace QC challenged such a proposition by pointing to evidence from Ms Wu's witness Mr Fan that she had a computer at home which ran “skype” 24 hours a day and which she frequently used: using a computer as a video phone does not demonstrate computer literacy). When she met Mr Lee she was not particularly experienced in foreign travel. In that context, what could she contribute as a personal assistant?

[58]According to Mr Lee, Ms Wu's role was to drive him in the UK and Europe; to organise European travel requirements; to support his domestic staff and to ensure that his post-business trip laundry was properly dealt with; to provide him with massages; and to escort, meet, greet and entertain business contacts and their families. Apart from driving and massage (and possibly supporting domestic staff and overseeing laundry) Ms Wu was in fact singularly ill-qualified for this role: so much so that in his oral evidence Mr Lee suggested that she should perform it using local interpreters. Nonetheless Mr Lee says that Ms Wu was hired as one of his ordinary PA's, and that he soon became so impressed by her performance in that role that she became the PA team's “top dog”. Mr Lee says that two or four times a year he would make transfers to Ms Wu's bank account to reflect the nature and calibre of her recent work: and that he would reimburse her for certain areas of expenditure for which she was responsible once a significant sum had been incurred and was requested.

[59]Mr Lee had a number of PAs serving him worldwide. From his account it was not at all easy to follow who was employed at any one time, but he mentioned Ms Lam, Ms Law, Ms Matsumoto, Ms Chow, Ms Chung, and Ms Mok: and he said that Ms Gao was also his PA. Save perhaps for Ms Gao and for part of Ms Mok's term of service, all of these PAs were employed by one of Mr Lee's companies (though Mr Lee declined to give disclosure of their contracts of employment on the ground that they were not relevant to anything in the action). He acknowledged in cross-examination that none of these PAs received large gifts (though for him a seasonal gift of several thousand pounds would not be large). Apart from Ms Gao, none of these ladies gave evidence: and no one explained how or in what sense Ms Wu became the PA team's “top dog”. Apart from hotel bills in Ms Wu's name there was no documentary support for Ms Wu’s having organised European business travel. There was no specific instance given of Ms Wu meeting, greeting or entertaining business contacts: and there was but one instance given of assisting the families of business contacts (driving children to a Swiss school).

[60]Ms Wu's evidence was that she was not employed as a PA but was Mr Lee's companion on whom he lavished gifts. It is common ground that (assuming one payment of £820,000 was duplicated and ignoring the money paid for 66 Avonmore Road) Mr Lee paid Ms Wu £4.26 million between September 2006 and December 2008 by 23 separate payments of irregular amounts: and in addition paid £200,000 in cash in September 2006. One such payment was of CHF160,000 made on 24th of October 2006 to her Hong Kong bank account: Ms Wu said that this was to repay the mortgage on her Hong Kong flat. Her evidence on this was not specifically challenged (though there was a general challenge as to the nature of payments generally).

[61]It is now common ground that on 14 February 2007 Mr Lee made a Deed of Gift in which he declared that he had “agreed to grant my friend [Ms Wu] an irrevocable gift consisting of the sum of £1 million” and he declared that “this cash gift is gifted to my friend entirely by my own volition and I divest myself of this sum to her absolutely”. In an affidavit of 23 June 2009 Mr Lee said that she was by that time “valuable to his business”. But it is clear that this Deed did not amount to a fresh gift of a further £1 million: it covered payments that had been made by Mr Lee in September 2006 (principally a bank transfer of £820,000 and the payment of £200,000 cash which are referred to in a letter in Mr Lee's hand dated 5 March 2007). The purpose of the Deed of Gift was to establish (in connection with a then current application for entry clearance to the United Kingdom) that Ms Wu had “investor status”.

[62]Ms Wu's case is that these payments were neither more nor less than gifts by a rich man to his companion. Mr Lee denies this. At the commencement of these proceedings in February 2009 his solicitors would acknowledge only “a purported Deed of Gift” (and for that perhaps they and Mr Lee may be forgiven, since he would not have been able to trace a single payment of £1 million): but they went on to state that they were “instructed that ... further substantial monies were loaned to [Ms Wu] and that these monies have yet to be repaid”. Their instructions must have altered because no claim for repayment of a loan is pursued: and in cross examination Mr Lee said this claim was a “misunderstood instruction with hindsight”. In his written evidence Mr Lee said the payments were commensurate remuneration and the reimbursement of expenses for Ms Wu acting as PA. In his oral evidence Mr Lee stressed that the initial payments (which were subsequently utilised in connection with Ms Wu's application for UK residence) were what he called “soft costs” in connection with the 66 Avonmore Road investment project which were to be recoverable under the Company A/Company B structure. He explained:- “ In real estate you buy the type of property where you need rather relatively intensive people operating it, like hotel. And the operating costs of those staffs is the soft costs part…. I did not give a £1 million. I signed it when… for that is my soft cost [for my hotel], my small hotel operation, to expand my hotels in this country, small hotels. It’s the soft costs in advance ”.

[63]I find that at the time these payments were made they were (and were intended to be) gifts, however much Mr Lee may now seek to re-characterise them as loans, or reimbursement of expenses or “soft costs”. First, it is how Mr Lee himself described a significant part of them in a formal document. Second, the timing of the payments is less consistent with the reimbursement of expenses and the incurring of “soft costs” associated with project acquisition than with gifts to a new companion. Direct payments totalling at least £1,180,000 had already been made by the end of October 2006. There is nothing to suggest that Ms Wu had done anything to warrant commensurate remuneration or the reimbursement of expenses at this level, and there was no project then in view. Third, the payments to which my attention was directed appear to derive from Mr Lee's private bank account, not from any company account: I would infer that they represent private rather than business expenditure. Fourth, there is something special about these financial dealings in that they appear to differ markedly (in level and mode) from Mr Lee's financial dealings with all his other established PAs. Fifth, in the January 2009 telephone calls Mr Lee undoubtedly treats money paid for Ms Wu's immigration as part of the gifts he has made to her. The documents, the probabilities and Mr Lee’s own view in January 2009 all support Ms Wu.

[64]Next, Ms Wu says that Mr Lee bought her two cars (a Ford Focus in July 2006 and a Mercedes-Benz in August 2007). Mr Lee himself has 26 cars. Mr Lee says that the Ford and the Mercedes are actually company cars bought for his business needs and for use by his staff, and although at the time of the trial he had not sought to recover them from Ms Wu he was taking advice as to whether he should do so. The order form for the Ford shows the purchaser is Ms Wu (giving an address in Tooting): the only named driver is Ms Wu and the insurance does not cover use for business purposes. The insurance document for the Mercedes says that Ms Wu is the owner of the vehicle, she is the only named driver, and use for business purposes is excluded. The documents support Ms Wu's account.

[65]Then, Ms Wu says that Mr Lee bought her furs, expensive watches and diamonds: she produced receipts that (save in one respect) were not the subject of challenge or examination at trial. Mr Lee says he authorised Ms Wu to purchase expensive watches and jewellery as presents for business contacts for which he reimbursed her. There was a dispute about one particular incident. Ms Wu says that she and Mr Lee were shopping together on 30th of June 2006 in Zurich. Ms Wu knew that Swiss watches were very famous. She knew from a magazine that one luxury brand began with a “P”. She chose a Patek Phillipe watch from a store called Gubelin for CHF 118,000: she has the receipt which shows that it is a diamond-encrusted ladies’ watch. She says that Mr Lee bought it for her. She says that later in the day she saw a Piaget, which was the brand in the magazine: she says Mr Lee bought that for her as well, from Bucherer at a cost of CHF33,100. She has the receipt. She still has both watches.

[66]Mr Lee denies buying expensive watches for Ms Wu. But he says he does recall that on one occasion Ms Wu brought the wrong brand of watch from that which a business associate had desired, that this mistake caused Mr Lee embarrassment (“the business associate particularly minced his word in broken English and tell me my assistant brought the wrong watch”), and he scolded Ms Wu and ordered her to buy the right brand for his contact. He described it as “the biggest PA blunder”. (It would have been amongst the first tasks Ms Wu undertook as PA if she were such). He suggests that she kept the wrong watch for herself without telling him. Mr Lee did not seek to identify the business contact: he had earlier explained that “for the money involved” he would not do so. “ My contact or my business world, confidentiality, respectability and able to control your own people within the realm of management is my honour and reputation. You don't breach it by naming other people's name all over the place… it could involve those persons’ private life. It would involve relations where I should not trespass into other people's business or private life….”

[67]I can understand Mr Lee's reluctance to bring into the light of day any £50,000 personal gift to “a business associate”. But I consider Ms Wu's account to be inherently the more probable. She has both watches and both receipts. The business associate who angrily rejected the watch of the wrong brand must have ended up with nothing: that cannot have improved his temper or eased his dealings with Mr Lee. Yet Mr Lee appears to have known nothing of this and not to have pursued it. Nor is it easy to understand the disparity in the value of the gift and its “replacement”.

[68]I take the same view of the purchases of diamonds, Rolex watches, other jewellery and furs. Ms Wu has these (or in some cases her family does) and the receipts for them: if these were really gifts for business contacts which Ms Wu has stolen it really is extraordinary that none of the disappointed intended donees alerted Mr Lee to the thefts, and that he was unaware that Ms Wu had the furs and diamonds, jewellery and watches that he had intended for others.

[69]Then there is the flat. It is common ground that on 7 August 2006 Ms Wu took a tenancy of a two bedroomed flat at 2 Ebury Mews, just round the corner from Mr Lee's residence in Chester Square, at an annual rent of over £30,000; and that Mr Lee paid the whole of the six months rent in advance. It is not in dispute that the tenancy was periodically renewed, that Mr Lee continued to pay the rent, and that members of Ms Wu's family stayed there: in particular the man whom Mr Lee thought was Ms Wu's brother (and who was employed by Mr Lee for a time as a cook/driver) but was in fact Ms Wu’s husband, and an elderly woman (who was in fact Ms Wu's mother-in-law).

[70]The difference between the parties is simple. Ms Wu says that she was provided with a flat in order that she could be near Mr Lee but at a discreet distance. Mr Lee says that the flat was acquired by Ms Wu without his prior agreement or assistance as a result of an instruction he gave to her to find a flat to be used as accommodation for his staff when they visited London, being occupied by Ms Wu “because mainly one of the main seller of properties to me is living around there”. He says he visited the flat once or twice or maybe a handful of occasions when he had very, very painful cramping on his right foot for the purpose of obtaining a massage. He acknowledges that he kept clothes and toiletries there (as well as at his residence in Chester Square), but explains that this was in connection with his travel arrangements (so that they would be instantaneously available to his driver) whilst his principal stock of clothing was maintained by his housekeeper in Chester Square.

[71]Ms Wu called Si Hang Li to give evidence that one morning in April or May 2008 he had seen a 5’10” oriental gentlemen come out of number 2 Ebury Mews and get into a classic Jaguar. Mr Lee owns a classic Jaguar. I place no reliance on that evidence.

[72]Ms Jia gave evidence (under the compulsion of a witness summons). She had been retained to provide services for Mr Lee (she said, conversation and advice on diet), and had spent some time at 2 Ebury Mews. She had provided witness statements to both Mr Lee and Ms Wu, but was called by Ms Wu. There was a draft of a witness statement prepared by Ms Wu's solicitors expressed in terms to which Ms Jia felt she could not commit herself. But she signed a witness statement dated 22 April 2009 (which had been the subject of consideration and revision by her) as an intended witness for Ms Wu. (She said she felt intimidated by Ms Wu: but on examination there was nothing in fact to connect Ms Wu or those acting for her with the sense of intimidation which Ms Jia felt). In her signed witness statement she had stated that “Ms Wu's partner [Mr Lee] often came round to the apartment to spend time with Ms Wu. They appeared intimate together around the apartment”. After she had made her statement on behalf of Ms Wu she was seen by Mr Lee’s legal team. At the start of her oral evidence she said that in fact she did not know Mr Lee was Ms Wu's “partner”, that if the word “intimate” implied a sexual relationship then it was not appropriate “but they appeared to be close”, that she could not in fact say that the men's clothes in the flat belonged to Mr Lee, and that when she said Mr Lee “often” came round to the apartment she meant that he had come round once for maybe about half an hour and on that occasion she had seen “them embracing each other and kiss a little bit” but not in a sexual way. In so heavily qualifying the considered revised statement she had given to Ms Wu she confirmed the contents of a witness statement which she had given to Mr Lee two months later. On the issues relating to the use of the flat I did not think I could rely on her evidence as supporting either Ms Wu or Mr Lee. (Her evidence was helpful in one other respect).

[73]Ms Gao gave evidence that on unspecified occasions between September 2006 and December 2008 she stayed overnight at 2 Ebury Mews because she needed to get up at 2:30 am or 3 am to prepare Mr Lee's things for his business trips; she said she spent a lot of time at 2 Ebury Mews. She was not specifically challenged on this evidence: but it was clearly Ms Wu's case that Ms Gao did not come on to the scene at all until about August 2008. Ms Gao’s evidence was plainly not accepted by Ms Wu: but nor was it tested in detail.

[74]On the other hand, Ms Gao’s evidence that she spent a lot of time at 2 Ebury Mews from September 2006 was not specifically put to Ms Wu either. Ms Gao's evidence about staying at 2 Ebury Mews does not therefore provide a sound basis for drawing any conclusions about the role of 2 Ebury Mews.

[75]I am therefore simply left with the evidence of Mr Lee and Ms Wu. Ms Wu's account of the circumstances of the acquisition of 2 Ebury Mews and the purpose of its acquisition seems to me inherently more probable than Mr Lee's explanation. Mr Lee said that his other companies had flats in London for staff use: why an additional flat for business use should be taken in the personal name of Ms Wu and paid for by Mr Lee personally (and not by a company) needs some explanation. The justification for the location of the flat near Chester Square (because that was where an unnamed property vendor lived, whom there was no evidence Ms Wu had ever met or dealt with) is unconvincing: a location for his companion near to where Mr Lee lived has the ring of truth.

[76]Then there was a dispute about the level of intimacy in the relationship. Ms Wu said she had a sexual relationship with Mr Lee conducted at 2 Ebury Mews and in hotels. Mr Lee strenuously and frequently denied this. With a man for whom stealth is the natural mode of operation it is no surprise to find that there are (with one exception) no witnesses to public displays of affection, no witnesses to whom the true nature of the relationship was recounted, no recorded account (photographic or written) of Mr Lee and Ms Wu as a couple. It is Mr Lee's word against Ms Wu's.

[77]The one exception is Ms Jia. Even though her oral evidence was a substantial retraction of her written evidence she gained the impression (from the one occasion she saw them together) that Mr Lee and Ms Wu were “close” and “embraced” (and kissed). Led by Mr Trace QC she confirmed that this embrace was “not sexual”. But there is something odd here which suggests an unusual level of intimacy. Mr Lee said that if he attended an official European style function then “ once or twice reluctantly” there may have been “ very embarrassing embracing in official business function” but “no one kissing nobody” because for Orientals this sort of gesture was very embarrassing. So there was something which enabled him to overcome his embarrassment in engaging with Ms Wu in Ms Jia's presence, even if only on one occasion.

[78]That inclines me to think that Ms Wu may well be right and Mr Lee may be falsely denying the true character of their relationship. That impression is confirmed by the following.

[79]First Ms Wu has produced a number of hotel bills which demonstrate that she shared a room with somebody on foreign trips. One (over the European New Year 2006/2007) is for the accommodation of “Mr and Mrs Wu” at the Marriott hotel, Champs Elysee, Paris for €2768. Mr Lee says that he is not “Mr Wu” and the reference must be to the man he thought of as Ms Wu's brother (and was in fact her husband) Ming. But the level of expenditure seems uncharacteristic for a PA and a cook. Another, for the Imperial Hotel in Tokyo, is addressed to “Mr Lee Samuel Tak and Ms Wu Fuk Fei” paid for with Mr Lee's American Express card. Mr Lee says that this was probably the hire of a room to be used as an office (which makes the charges for television, laundry and private bar in need of some explanation). His evidence was that he never paid his business hotel bills (simply walking out and leaving a PA to deal with it). So that would suggest these are personal bills. There are two other Imperial hotel bills in Mr Lee's sole name but for two persons sharing a room. There are other bills in the name of Mr (sic) Fuk Fei Wu of Ebury Mews for two persons sharing, which Mr Lee says were for Ms Wu sharing with another PA (such as Ms Gao), and that he occupied a separate room (for which he cannot produce an invoice). There is absolutely no documentary evidence to support the suggestion that Ms Gao was travelling as a PA in the period covered by these bills: and most unfortunately Ms Gao had in August 2010 (shortly before trial) cut up the passport showing her foreign travel over this period into small pieces and thrown it “in the bin”, not realising its significance (notwithstanding that she had used it as the source for a detailed summary of her travel contained in a statement to be used in a private prosecution brought by Mr Lee against Ms Wu, repeated in her written evidence for this trial). This evidence from hotel bills is not particularly strong but (coupled with the absence of documentary support for Mr Lee’s explanations) it undoubtedly weighs in the scale in Ms Wu’s favour.

[80]Second, on Mr Lee's own case there is no doubt that he was sexually active and willing to have a sexual relationship outside marriage. Ms Gao’s evidence is that she and Mr Lee were in a sporadic sexual relationship from June 2006. If he was in a sexual relationship with one of his freelance PAs the suggestion that he should have the same sort of relationship with Ms Wu is not so incredible.

[81]Third, much of the telephone transcriptions (to part of which I have referred above) are concerned with Ms Wu's assertion that she is pregnant with a child by Mr Lee. She says that if the child turns out (as the result of a DNA test) not to belong to Mr Lee then she will return whatever he pays her in settlement of her claims upon him. We now know that that offer was a bluff (because Ms Wu now acknowledges that her pregnancy had by then terminated). But Mr Lee did not know that at the time of the conversation. Even allowing for the fact that Mr Lee says he was acting under advice and was testing Ms Wu's criminal mind, what is odd about these conversations is(a) that Mr Lee never says “You cannot be pregnant by me because we have never had sex”

(b) that he does not immediately jump at the proposal that there should be a DNA test (because the child could not possibly be his) and implement it there and then

(c) that both sides can keep up the conversations about Ms Wu’s possible pregnancy by Mr Lee from 6 to 27 January 2009 if each knew the truth to be that they had never ever had sex together.

[82]Fourth, Ms Wu was prepared to give some fairly intimate detail of Mr Lee’s anatomy. Of course, it went unverified. But that fact that she was prepared to run the risk speaks of a degree of confidence in the truth of the answer which would probably not be found in even a brazen liar.

[83]Fifth, in deciding the truth about this issue I am bound to put this in the context of Mr Lee’s general treatment of Ms Wu. That general context supports the truth of her evidence on this issue.

[84]In short, by whatever margin Mr Lee's general credibility exceeds that of Ms Wu, on the issues of the origin, nature and depth of the relationship between them I am satisfied that Ms Wu is telling the truth and Mr Lee is not. She was not a business functionary but a sexual companion. In this regard Mr Lee has not incorrectly recollected matters. He has been deliberately untruthful. He has lied.

[85]Mr Trace QC submits that this is all irrelevant to the central issue in the action: who was intended to own 66 Avonmore Road? He is undoubtedly right to say that the findings I have made in the preceding section (on issues that were so hotly contested in the written and oral evidence) cannot determine the outcome of the key issues I have identified. But he is wrong to say they are irrelevant. They go beyond credibility. They establish the context in which the purchase of 66 Avonmore Road took place: and they may assist (I stress “may”) in determining the true intention of the parties. That is exactly why Mr Lee was so anxious that I should find his relationship with Ms Wu to be a purely professional one: and Ms Wu equally anxious that I should find the other way.

[86]I can now deal with the oral evidence so far as it relates to the purchase of 66 Avonmore Road. There is no need to restate the competing cases. I will report my findings as “provisional”, because in reaching my conclusion I have gone through the process of reaching provisional views on each issue, and then standing back and looking at the whole of the evidence to see whether those provisional views require adjustment before reaching a final conclusion.

[87]There is first a dispute about the nature of the initial project. Mr Lee's case is that although engaged as an organiser of his foreign travel and laundry, masseuse and greeter of business contacts, Ms Wu had in fact (by mid 2007) become a trusted and valued member of his UK-based business middle management and had begun to identify potential investments for him. One such investment was a Chinese restaurant in Richmond for about £850,000. From the “Richmond Property” document it is clear that this must have been in or before September 2007. He said that he visited the property a few times but decided it was not a suitable investment due to its capital value being low in comparison with his usual investments. Nonetheless he had provided Ms Wu with an outline of the financial structure he required for the purchase and ownership of the Richmond Property. This is a reference to the “Richmond Property” document.

[88]Ms Wu's case is that Mr Lee's account of her role in mid-2007 is “totally nonsense”. She said that Mr Lee so enjoyed her companionship that he was willing to assist two members of her family to immigrate, but for that purpose they each needed to demonstrate to the UK Border Agency that they had funds of £200,000-£250,000 and were involved in business. So the proposal was that Mr Lee would buy a business for Ms Wu in which her relatives could work to establish their immigration status. She says the Richmond Property was that business.

[89]My provisional view is that Ms Wu's account is more likely to be true than that of Mr Lee. First, the purchase of a Chinese restaurant in Richmond for £850,000 in my judgment fell well below Mr Lee's investment radar at that time. In June 2007 and the weeks following Mr Lee was involved (through his company Wyatt Estates II Limited) in the acquisition of the European property portfolio of Jelmoli Holding AG (held in 89 separate companies) for CHF3.6 billion. It was the biggest deal of his life (although it ultimately failed) and he spent $6.8 million on bid costs alone and secured facilities from his house bank of £2.8 billion. The idea that he was simultaneously personally involved in the purchase of a restaurant in Richmond as an addition to his English portfolio is not really credible. A degree of personal involvement in the purchase of a gift for his mistress is, on the other hand, more understandable. Second, as an indication of the terms in which he generally thought Mr Lee told me that he regarded half a million pounds as a “negligible” sum, £1.6 million “a very small deal” and that if he went to his bank to ask for so small a sum as £1.5 million “where do I hide if I see the Chief Executive or Chairman [of HSBC]”. Mr Lee did not strike me as a man who would devote personal effort into the investment of a little more than negligible sum even if he did build his portfolio property by property. Third, the Richmond Property document plainly contemplates that a business is to be operated by “immigrant X” and “immigrant Y” who are going to have to find £500,000 as a premium for a 25 year lease at an annual rent of £50,000. This is essentially the arrangement to which Ms Wu speaks: but I was given no ground to think it is an ordinary feature of the claimed Zhou Wen Xuan business model. Fourth, there is no doubt that Mr Lee did eventually provide about £500,000 for the nephew and niece of Ms Wu in support of their intended entry into the UK (recorded in two Deeds of Gift dated 8 March 2008 each relating to CHF 568,000, which sums had been openly sent by Mr Lee to Mr Tang days earlier). Mr Lee again described these in oral evidence as “soft costs in advance” i.e. as a business-driven transaction. But the formal documents expressly state that Mr Lee did not expect or require that the sum should be repaid him; and in the January 2009 telephone conversations he also refers to this payment of £500,000 to progress the immigration of relatives when reviewing the money he has spent on Ms Wu.

[90]Then one comes to 66 Avonmore Road itself. Mr Lee says that the object of the acquisition was to allow him or one of his companies to invest in the freehold of a hotel and expand his investments in small London hotel properties. He says he was utilising the Zhou Wen Xuan business model using an offshore company with bearer shares as the owning company, and an English operating company to be called “Mistress Lodge Ltd”. This name was deliberately chosen because of the association of the word “mistress” (“er nai” in Cantonese) with luxury brands in China, representing “a certain lifestyle that is aspirational for both male and female consumers”. He intended that it should become the brand for the hotel and for other hotels which he might purchase in the future targeted at Chinese visitors. (Rather confusingly, in a later witness statement he said that his object in purchasing the hotel was because he foresaw a demand for small, friendly less flashy hotels). He says the “9 Room Hotel” document is his instructions to Ms Wu. His evidence is that he knew nothing of FEM Virgin until Land Registry searches were done in 2009. He says that Ms Wu knew full well right from the start that he would only accept a company incorporated in Liberia or the Seychelles because (based on his 40 years in business) they are the only jurisdictions which offer true bearer share status: accordingly he “specifically ordered Ms Wu to buy, or if not available then, to incorporate, a true bearer share company ... That excluded BVI”. His case (as put in oral evidence) is that when in November 2007 Ms Wu became the registered holder of the one share in FEM Virgin and its sole director she had already decided to defraud him by creating a parallel company to the one for which he had given specific instruction, namely FEM Seychelles.

[91]Ms Wu says that Mr Lee suggested she find a business in order to occupy herself usefully and to assist in the immigration of members of her family; and that she found 66 Avonmore Road (Mr Lee helping her to negotiate the purchase price and to understand the business accounts). She says that the “9 Room Hotel” document is Mr Lee's advice to her as to the way the business should be structured. On that document the name of the operating company “Mistress Lodge Ltd” is written in English. Ms Wu does not read English. Above the English are Chinese characters. Ms Wu says that she put them there, and that they read “Yee lai” which means “the second woman”, and that the company name reflects the fact that she was his mistress. In written evidence she says that in July 2007 Mr Lee asked her to arrange for the incorporation of FEM Virgin, but that he wanted the owning company to be a bearer share company and so FEM Seychelles was incorporated later. In oral evidence she gave a slightly different account of the formation of the two companies.

[92]She explained that she did not know about offshore companies purchasing property in England, but that Mr Lee taught her step-by-step (although she still did not have a clear idea about how an offshore company can hold UK property). FEM Virgin was formed first, with the intention that it would hold the property in which her relations would conduct a business. But then Mr Lee said that if her relations immigrated and took a lease Ms Wu would be receiving rent every year on which she would have to pay tax, and that if she failed to pay tax this would not be good for her own immigration status. Ms Wu continued:

“ So Mr Lee suggested that I found a company with no name, which is better than a company with a name. ... BVI does not have a company without a name, and so Seychelles, that country was used….”

[93]As between the competing accounts of Mr Lee and Ms Wu my provisional view is that Ms Wu is more likely to be telling the truth.

[94]In expressing this provisional view I must immediately address Mr Trace QC’s submission that the documents tell wholly in favour of Mr Lee and there is really no need to look at anything else. In opening he submitted that the attendance note of the 12 October 2007 (“her boss is thinking of buying a hotel ... the boss would then grant to lease her two nephews”) and that of 16 October 2007 (“she would not be the buyer but her boss”) each constitutes “a smoking gun”. The point is undoubtedly weighty. Ms Wu's explanation for instructions in these terms (that she was embarrassed at the outset to say Mr Lee was her lover having only just completed immigration procedures with his money) whilst not entirely implausible, is a little thin. But to reach a fair conclusion one cannot simply cherry pick the best bits of the documentary record. Account has to be taken of the development in the instructions which the documents as a whole record. On 17 October 2007 Ms Wu indicates that her “boss” may lend the money so she can be the purchaser. By 18 October 2007 it is clear that the purchaser is not to be an individual but a company. By 22nd of October 2007 it is clear that it is Ms Wu who will be forming the relevant company, although she may be receiving “financial assistance” from her boss. By 23 October 2007 it is clear that the role of the company (nominee or not?) is to be determined by Ms Wu. By 14 December 2007 she is telling Mr Tang that “her backer” will be sending the money from Switzerland and Mr Tang is told that the purchaser is “our firm”. The documents are far more nuanced than Mr Trace QC would allow: and they certainly do not make it unnecessary to refer to any other evidence. So far as they go they demonstrate ultimate instructions from Ms Wu that FEM Seychelles (the company incorporated by her) is to be the purchaser, but that she (as its human agent) has a financial backer. They do not compel the conclusion that FEM Seychelles belongs to Mr Lee or that FEM Seychelles is a bare trustee for Mr Lee.

[95]Mr Trace QC made much of the fact that any application for the bearer share in FEM Seychelles was made “as agent for the bearer”: and that Ms Wu had acknowledged in cross-examination that “FEM Seychelles was set up….and Mr Lo…..explained to [her] in conversations that [she] had in Cantonese”.

[96]The point might be of some significance if I could be satisfied of the probability that the share application was specifically crafted for this particular allotment (and is not simply a standard form document designed to conceal the identity of the bearer), or that the import of applying as “agent” for the bearer was considered by Mr Lo and explained to Ms Wu. But Mr Lee did not seek to call Mr Lo to prove these things as part of his positive case. He only relies on such inferences as might be drawn from the state of Mr Lo’s evidence.

[97]I think rather more significance might be attached to the “9 Room Hotel” document prepared by Mr Lee. First, in his own hand Mr Lee instructs/advises Ms Wu to ask for a “bearer share company… Liberia, BVI etc registration”. I consider it unlikely that he specifically instructed her to utilise a Seychelles company and to exclude the BVI. Second, although “Mistress Lodge Limited” was to be capitalised at £500,000, the entirety of that capital was to be employed in paying the premium on the lease for this one hotel. The launch of a brand (for which there was absolutely no other documentary support) seems to me unlikely.

[98]In much the same way I find myself unable to accept Mr Trace QC’s submission that the position is “put beyond doubt” by the transcripts. As I have indicated, I consider that, because they do not form part of the transaction itself, these should be examined for statements against interest. I have set out the key passages above. I should make clear that in closing submissions on behalf of Mr Lee there were 54 citations of passages from the transcript, 15 of which were requests by Ms Wu for “a property” or assertions that she did not have “a property”: I have not set these (and their contexts) out in this judgment. Mr Trace QC treated these as admissions that Ms Wu did not own 66 Avonmore Road. I am satisfied that when properly placed in the conversation these references to “a property” were references to a place to live and were part of a plea that Mr Lee should pay for the flat in Kowloon: they tell me nothing about whether she disavowed ownership of the hotel.

[99]I say the outset that neither party adopted an entirely consistent position in these conversations. The parties were frequently bickering and point-scoring, and in heated argument were sometimes confused and contradictory. Moreover, they used their own private dictionary and made allusive references to events which they plainly understood as between themselves (but which it is difficult for a Court receiving limited evidence about a two-year relationship to understand).

[100]In particular I am not at all sure that the parties would have agreed at the time what was meant by the condensed expression “Zhou Wen Xuan” or that they would have recognised the explanation of it given at trial. Nor am I sure I fully understand it (for the purpose of interpreting the conversations). Although Mr Lee gave the impression that it was the business model he used in this country, and that its essence was that he retained ownership but exercised no management control whatsoever, I was in fact provided with no accounts to demonstrate or information to elucidate exactly how this model worked. For example, I gained no insight into any of the 18 bearer share companies which Mr Lee owned and which held his UK portfolio: I was provided with no documents relating to the Astor Court Hotel (upon which the acquisition of 66 Avonmore Road was said to be modelled). I was vouchsafed no insight into how (e.g. as regards the professionals engaged in the formation of the holding company and the acquisition of the property, the flow of instructions to those professionals, the means of payment for the acquisition, and the exact mode of management after acquisition) the transaction involving 66 Avonmore Road, conformed to or departed from the standard model. Does Mr Lee normally use the solicitor selected by his intended steward in order to make additional acquisitions to his intended portfolio? All I know from the documents is that in this particular case the original proposal was that those who operated the business (“immigrant X” and “immigrant Y” in the case of the Richmond Property, and Mistress Lodge Limited in the case of 66 Avonmore Road) were to pay the purchase price plus £500,000 and yet the property was apparently still to belong to the original acquirer (which Mr Lee says was himself). This suggests (albeit not strongly) that this is some sort of family arrangement rather than any sort of commercial arm's length deal. But more importantly it means I cannot be truly confident what references to “Zhou Wen Xuan” in the telephone conversations really mean.

[101]In the telephone conversations it seems to me that on a number of occasions Mr Lee plainly treats 66 Avonmore Road as belonging to Ms Wu:

“ the house that you bought”, “ you are running hotels, owning properties and earning rent in London”, “ so I haven't treated you badly…..around £3 million right”

. It is difficult to see upon what advice Mr Lee should make such admissions if they were not true: and it is difficult to envisage what insight into Ms Wu's criminal mind would be gained by such admissions.

[102]On the other hand in the telephone conversations it seems to me that on a number of occasions Ms Wu does not treat 66 Avonmore Road as then belonging to her:

“you know quite well that Zhoun Wen Xuan of yours stuff, I'm not allowed to those now. They are just placed there ... Belongs to me, big boss”, “I only want my own things back. I want the hotel back”, “ I'd most get back that thing from Zhou Wen Xuan for myself”, “ I only need to get back Zhou Wen Xuan’s things”, “ I get the hotel stuff and leave. I only get back what I deserve”, “I will take the hotel business” “ as long as you buy me a property and give me the hotel I am happy”

. There are other more ambiguous references which also might amount to admissions that Ms Wu did not then own 66 Avonmore Road:

“I only want a property and the hotel”, and “I’ll have a property and the hotel to do business”

. These appear to be spontaneous acknowledgements by Ms Wu that as that January 2009 66 Avonmore Road was not hers.

[103]I consider that these observations must be considered with care. Properly read they seem to me to indicate that at some time 66 Avonmore Road had been Ms Wu's but it had somehow ceased to be because Mr Lee now reclaimed it. Hence the complaint that she was “not allowed those now” and the demand that she wanted the hotel “back”. It is difficult from the documents to see how this might be: but a clue was given in oral evidence. “Wu: When my relationship with Mr Lee was good, we had an agreement, we have promise to one another. This was the promise made when Mr Lee bought the hotel as a gift to me. He said if I caused any harm to his family relationship, and then I will return the property, the hotel to him. So I put the files in No.2, when Mr Lee can always look at it. I put it there so that he can feel comfortable.” As it was delivered this evidence struck me (and I noted it) as entirely authentic, in the sense that it set out an entirely genuine belief on the part of Ms Wu. Any such arrangement might also be seen as consistent with Mr Lee's evidence to me that being “able to control his own people within the realm of management” is “[his] honour and [his] reputation”. Further, in the light of it one can see how such an arrangement was possibly being alluded to in the January 2009 telephone conversations:

“This is an agreement between you and me. I could have taken it long ago if I wanted to” and “If I wanted the stuff relating to Zhou Wen Xuan I could have beaten you to it”

. So it seems to me that the statements to which I have referred in the preceding paragraph cannot fairly be taken as admissions by Ms Wu that 66 Avonmore Road never belonged to her.

[104]I should emphasise that I am not finding that such an agreement actually existed. As Mr Trace QC pointed out, that was not the case he had come to meet. The case presented by each party was that upon its acquisition 66 Avonmore Road belonged to one or other of them (not that it was subject to some proprietary or contractual obligation under which ownership could shift). That is the case I must decide.

[105]In the result, just as the documents do not contain “the smoking gun”, so the transcribed telephone conversations do not “put the position beyond doubt”. (though on balance I consider the conversations favour Ms Wu). So it is necessary to look at other material and at the probabilities.

[106]Amongst the other material is the evidence of Mr Lo, contained in a witness statement submitted under the Civil Evidence Act. It was explained in the CEA notice that Mr Lo resided in Hong Kong: and before the Chief Master on 22 October 2010 it was further explained that he was not being called at trial to minimise expense. On 3 November 2010 solicitors for Mr Lee objected to the CEA notice because they wished to cross-examine Mr Lo (identifying no particular evidence and giving no reason why cross-examination was proportionate). Mr Lo is a consultant with Faith Secretarial Services Ltd. He says that both FEM Virgin and FEM Seychelles were incorporated upon the instructions of Ms Wu alone. This supports the inference that I would otherwise have drawn from the documents alone.

[107]Mr Trace QC submits that I must draw adverse inferences from the failure of Mr Lo to attend trial (by an application of the Wiesniewski principle). He said he would have cross-examined on the significance of Ms Wu’s application for the bearer share as “agent”, whether Mr Lo had ever advised that the Seychelles was not a safe jurisdiction and about the incorporation of the FEM companies generally. He submits that Mr Lo could have given evidence by video link. If these things were part of his positive case Mr Lee could, of course, have called Mr Lo himself in the same way he tendered Ms Jia (for there is no property in a witness). But he did not. I decline to draw any adverse inference from Ms Wu’s failure to call Mr Lo to give evidence at trial. He is not a key or even major witness. There are undoubtedly fewer resources available on Ms Wu’s side than on Mr Lee’s. Mr Lee very probably made it difficult for Ms Wu to obtain the assistance of Mr Lo in this litigation. In May 2010 Mr Lee commenced proceedings against Mr Lo’s firm in Hong Kong requiring him to disclose certain matters. When those proceedings failed Mr Lee commenced a second set of Hong Kong proceedings in about July 2010 against Mr Lo’s firm (the judge described them as “a fishing exercise”) which were dismissed on 4 October 2010. It is perhaps unsurprising that in the midst of this on 2 August 2010 Mr Lo declined to continue his assistance to Ms Wu saying that on Counsel’s advice he would not be signing an additional statement. I think these circumstances provide a satisfactory and credible reason for Ms Wu’s failure to secure the attendance of Mr Lo at trial and I decline to draw any adverse inferences. But of course I must not let the debate about the adverse inferences to be drawn or not drawn distract me from remembering that Mr Lo’s evidence is limited in scope and hearsay in nature.

[108]So far as the probabilities go, if it is right that Ms Wu was a companion and sexual partner (and not a PA or middle manager in a UK property empire organised so as not to require management) it is not improbable that a wealthy man like Mr Lee, who had already given well over £1 million to Ms Wu and conferred upon her investor status for the purpose of UK residence, should buy her a modest, rundown hotel for herself and her family to operate under his distant guidance. On the other hand it is improbable that a woman as well placed as Ms Wu should have put at risk her recently acquired status (which on any footing was such a huge improvement over her former condition) by embarking upon a fraud concerning 66 Avonmore Road (for at that stage the availability of 64 Avonmore Road was unknown). Moreover, embarking upon that fraud by deliberately incorporating FEM Virgin in defiance of specific instructions not to do so, then commencing to conduct the transaction utilising FEM Virgin (from whom her solicitor was going to need instructions and payment), only to complete the transaction utilising FEM Seychelles (the intended purchaser) and (on Mr Lee’s case) then handing the bearer share and the company seal of FEM Seychelles to Mr Lee.

[109]So looking at the acquisition of 66 Avonmore Road itself, my provisional view is that Ms Wu's account is more likely to be correct that Mr Lee’s. Then one has to look what happened afterwards.

[110]Mr Lee never visited the hotel. Ms Wu took it over and organised a licensee. Wong House Ltd began to trade there. Mr Lee never called for any account. He never received any revenue (or any premium). As the January 2009 telephone conversations demonstrate, he did not know what was going on. Mr Lee says that that is the Zhou Wen Xuan business model in action. Ms Wu says that it is because the hotel was given to her precisely so that she and her family could run it when her services were not required by Mr Lee. It is in this context that the dispute over the possession of the bearer share occurs.

[111]Mr Lee says that after completion Ms Wu gave him the bearer share and the associated file (including the company seal) and that he kept it at 74 Chester Square (his London residence). He says that he does not regard bearer shares as important documents and so he left the FEM Seychelles share and associated file in his study. Mr Lee says that there was a further file containing documents relating to the acquisition and management of the hotel” which was left at 2 Ebury Mews. He does not explain why the property acquisition documents were treated in this way. He points out (as is the case) that Ms Wu only reported the alleged theft of the FEM Seychelles file from 2 Ebury Mews on 24 April 2009 (after the action had commenced) and that the “theft” is therefore to be viewed as a fabrication designed to support Ms Wu’s defence of his claim. He also points out that in her original pleaded case Ms Wu had said that Mr Lee had disposed of the FEM Seychelles bearer share “by giving physical possession” in March 2008.

[112]He is supported by Ms Gao. She says that in early 2008 Mr Lee showed her the file in the study at Chester Square and said that it showed his ownership of 66 Avonmore Road. Her evidence is entirely devoid of any context. Mr Trace QC says it was unchallenged and that I must accept it. It is true that whilst Ms Wu’s witnesses were constantly accused of lying, Mr Lee’s witnesses were not. But Ms Gao’s cross examination explored the oddity of being shown this one file (out of all the other 18 bearer share files which Mr Lee says were in his study) and the oddity of Mr Lee explaining (alone amongst his investments) how this is one was funded. In my judgment a fair opportunity was given to Ms Gao to place her evidence in context: but she did not avail herself of it.

[113]Ms Wu says that she received and kept the FEM Seychelles file at 2 Ebury Mews, together with a file relating to FEM Virgin, and a file relating to the purchase of 66 Avonmore Road. The documents were under her desk. One day (probably in March 2008) Mr Lee asked her to show them to him and said “This is yours. See what I have done for you”. She said that she always had them until she came back from Hong Kong at the beginning of 2009 and discovered that they were missing. In a further statement she then corrected this to say that in fact she had discovered that the file appeared to have been taken whilst she was still in Hong Kong and before her return. It is her evidence that the FEM Seychelles file was taken by Mr Lee in January 2009. She says she did not report the theft to the police because she understood they would not be interested because of her relationship with Mr Lee, and because Mr Tang had told her that it did not matter since “the file contained her name” .

[114]She tendered in support of her case the evidence of Victor Fan. Mr Lee attacked Mr Fan’s credibility on the grounds that the two private investigators whom he had engaged to keep Ms Wu under surveillance had established that Ms Wu and Mr Fan shared a flat and were lovers (which Ms Gao had also confirmed). I am satisfied that Mr Fan is married to Ms Wu’s niece and that the attack is baseless. Mr Fan became a part-time manager/receptionist at 66 Avonmore Road on 1st January 2009. He was asked by Ms Wu to move her effects out of 2 Ebury Mews before the expiration of the tenancy on 7 February 2009. (There is no doubt that the tenancy was due to expire then). For that purpose Ms Wu’s personal belongings were pointed out on a visit to 2 Ebury Mews on 13 January 2009 (a date Mr Fan could fix by reference to the hotel rota). He was shown two files (a blue one and a black one) and told that he must not leave them behind. He saw that in the blue file was a cream coloured certificate of incorporation for a Seychellois company. He also saw another document of which he has a lesser recollection (except that it was a certificate with several lines on the paper, proving ownership of something, with a £1 share). So far as he knew the file contained only documents. He remembers the incident because he had never before heard of the Seychelles; and the date on the incorporation certificate was his birthday. When he went back to 2 Ebury Mews to perform the task of removing personal belongings neither of the files he had seen was there: so he telephoned Ms Wu. I considered Mr Fan the most impressive witness I saw.

[115]Ms Wu also relied on the evidence of Mr Tang. In cross-examination he said that Ms Wu had telephoned him to say that the file containing the company papers had been removed, and that he thought he said something to the effect that it was “not stolen as such because you guys were together” and also because Mr Lee had access to the flat, so that he did not think there was a crime worth reporting.

[116]Both sides relied on the evidence of Ms Jia. But I derived no assistance from her evidence in its final form.

[117]My provisional view is that Ms Wu is probably telling the truth. First, the incorporation documents themselves contemplate that the FEM Seychelles company papers will be kept at 2 Ebury Mews (and not at Mr Lee’s home or office): and I cannot trace any complaint that this was not meant to be. Second, telephone records show two lengthy conversations with Mr Fan on Ms Wu’s husband’s telephone on 26 January 2009, and a lengthy conversation with Mr Tang on 27 January 2009. Of course, the content of the calls cannot be known. But their existence and timing support Ms Wu’s account. Third, it is clear from the transcriptions of the January 2009 telephone calls that both parties knew that there were some important files at 2 Ebury Mews: although some of the references might refer to operational files rather than files relating to ownership, there are other references which clearly relate to ownership of the hotel:

“go to the UK and see if the file is there before you pay me” “I’ll go to No 2 and get the files first and use the old option to do it” “find the files and pay”, “are you removing the things relating to Zhou Wen Xuan”

. Fourth, it is plain from the telephone transcriptions that Ms Wu is accusing Mr Lee of having removed the bearer shares and from Mr Lee’s own note that he well understood that accusation to be made:

“I sent people to collect things and you have taken the file” “you have taken that box from me that box of hotel stuff”: Mr Lee does not deny it, nor does he respond “But I have always had it”

. Fifth, the evidence of Mr Fan was far more convincing than that of Ms Gao having regard both to its manner of delivery and its content. Mr Fan was able to give an account of what he saw that required him to have seen the original documents (although he misrecollected that the share was denominated in $ not £). Ms Gao’s evidence did not descend to that detail. He was able to explain why he saw the document: Ms Gao did not attempt to do so. He could explain why he remembered (and the coincidence of the date of incorporation and his birth date cannot be contrived): Ms Gao could not. I do not regard it as significant that in his account of the document he saw he failed to mention the company seal or that his account of where he saw the file differed from Ms Wu’s evidence of where she had last placed it. This is a level of detail that would make me suspicious if there were complete identity of recollection. Sixth, if (as I think to be the case) Ms Wu was Mr Lee’s mistress and the recipient of a gift of the hotel it is likely that she would retain possession of the share. Seventh, Ms Wu was later to give instructions that 66 Avonmore Road should be transferred from FEM Seychelles to FEM Virgin: it seems to me unlikely that she knew what was involved in that process, and therefore unlikely that she would have given the instruction if she did not have the FEM Seychelles papers available to give Mr Tang if he needed them to effect the transfer.

[118]Mr Trace QC argues that this conclusion is not open because Ms Wu made an admission in cross-examination. Ms Wu was (through the interpreter) referred to a sentence in the telephone transcript where she had said “I want the hotel back.” She was then asked (through the interpreter, translating phrase by phrase) this question:

“Q: That can only be a reference, Ms Wu, to you saying: look, Mr Lee has the bearer share, and in some way you want to try to get the hotel back from him. Isn't that right?”

To this Ms Wu answered “Yes”. I fail to see how much can be made of this exchange, even when divorced from its context. But the context of the question is a denial that Ms Wu had handed the bearer share in FEM Seychelles to Mr Lee, the assertion that the file for FEM Seychelles had always been kept “in my place”, a claim that the file had always been in Ms Wu's possession until it was stolen by Mr Lee, and (immediately following the exchange I have quoted) the assertion that all three files (including that for FEM Seychelles) were always kept at 2 Ebury Mews. Ms Wu did not admit that Mr Lee had the bearer share.

[119]What of the alternative case pleaded in the Amended Defence that there was a gift or purported gift in March 2008? If my provisional view is right it does not matter to Ms Wu. But it does matter to Mr Lee if he can rely on the fact that it was advanced at all as undermining Ms Wu’s principal case significantly. I have borne in mind that Ms Wu has not always put her case the same way. But I consider too much was made of this point by Counsel for Mr Lee. From the very outset Ms Wu’s case has clearly been that “the bearer share certificate was at all times physically held by [her] with the knowledge and acquiescence of [Mr Lee]”: see paragraph 7 of the Defence. The claim pleaded out in paragraph 13 of the Amended Defence is plainly an alternative case (addressing the possibility that the Court might conclude that she held as agent or bailee for Mr Lee, in which case she says her possession as agent became possession as owner in March 2008). I do not consider that this amounts to a “revealing late amendment” which means that the conclusion that Mr Lee beneficially owned either FEM Seychelles or 66 Avonmore Road “is made yet more irresistible”. (The same point is made about a plea of proprietary estoppel: this was, I think, a late and a desperate amendment on which no specific evidence was led at trial and which was not addressed in closing. It owes more to those undertaking the legal analysis than to Ms Wu's unadorned factual narrative).

[120]So what happened afterwards, particularly in relation to the bearer share, supports the provisional view that 66 Avonmore Road was a gift by Mr Lee to Ms Wu. Both sides fought the main battle over 66 Avonmore Road, and rather accepted that the outcome of that battle would determine the fate of the other issues. But I should give it separate consideration.

[121]So I turn to the second significant transaction, the purchase of 64 Avonmore Road. Mr Lee's pleaded case was very sparse. It was that in the spring of 2008 Ms Wu told him that 64 Avonmore Road might be available, that he agreed to provide the purchase price of £1.6 million, that it was agreed or understood that the transaction would exactly mirror the earlier transaction, and that consistently with that agreement Mr Lee provided the purchase monies to Ms Wu for her to arrange the purchase of 64 Avonmore Road through FEM Seychelles.

[122]His evidence added little more. He said that the issue had been raised on a number of occasions, that he believed the vendor of 64 Avonmore Road had agreed to prepare plans to merge the two properties in order to help with planning approval, that as a general principle he considered it wise to “purchase the property next to one you already own”, but he did not provide the funds promptly because he was on his long summer holiday and was reluctant to deal with business issues which were not significant to him or core to his commercial interests. In this way the delay between the proposal (in spring 2008) and the payment (in September 2008) is explained: but there is no explanation for the first payment being of £1.018 million on 17 September 2008 and the second of £514,518 on 21 October 2008, or why the two payments together total less than the purchase price of 64 Avonmore Road (even ignoring all associated costs).

[123]Mr Lee relied on the evidence of Ms Gao. Her evidence is simply that Mr Lee told her that he owned 64 Avonmore Road and that he had wanted to buy the property in case he wished to expand the hotel being conducted from 66 Avonmore Road in the future. But she is unable to provide any details as to when or in what context she learned this information.

[124]Ms Wu’s pleaded case is that it was her suggestion to seek to acquire 64 Avonmore Road, that Mr Lee told her that he had given her a large enough gift already and that if she wished to acquire it she would have to raise the money herself by mortgaging 66 Avonmore Road, and that accordingly she did so. She says that the lender wanted the provider of the security and the recipient of the advance to be the same person: and that this coincided with advice from Mr Lo that it was not safe to have a company incorporated in the Seychelles. For that reason 66 Avonmore Road was transferred to and 64 Avonmore Road was bought by FEM Virgin. Ms Wu says that she struggled to meet the mortgage repayments, and that when she approached Mr Lee he told her that if she could find a younger companion of whom he approved then he would reward her (not just by repaying the mortgage on 64 Avonmore Road but with a whole street). Ms Wu alleges that she introduced Ms Gao in August 2008 and that this accounts for the payment she received on 17 September 2008; and that Mr Lee then made a further gift in October.

[125]Her evidence was to the same effect, but rendered in more detail. Out of it four disputes arise: these go principally to credibility.

[126]First, Mr Trace QC submits that Ms Wu’s own evidence does not support her plea that she received advice from Mr Lo that the Seychelles was not a safe jurisdiction, that Mr Lo himself has not given evidence, and that I should draw an adverse inference from the failure to call him. It is true that Ms Wu's evidence does not identify Mr Lo as the source of the advice: the evidence is that “the Hong Kong company establishment agency ... said many times that it was not safe to have a company in the Seychelles”. Since this is plainly a reference to Faith Secretarial Services Ltd (for whom Mr Lo works) the point does not seem to me to be significant. In the circumstances in which Ms Wu sought to secure the co-operation of Mr Lo to give evidence at trial (explained on instructions supported by documents once Mr Lee's legal team had raised the point) I do not consider that I should presume that Mr Lo would have contradicted Ms Wu had he been called and that is the reason why he was not called. I regard it as probable that she did receive advice to similar effect (though she may have misrecollected its precise terms) having regard to the general advice which she received from Yan Yan & Co in November 2007.

[127]Second, Mr Trace QC submits that on the state of the evidence I should not find that what drove the transfer of 66 Avonmore Road to FEM Virgin was a requirement of the lender that the advance must be to the provider of the security. The relevant bank official is identified (Mr Chiu): but he was not called to give evidence and Mr Trace QC submits that I must draw an adverse inference (presumably that the bank was not the source of the requirement that the mortgage must be of 66 Avonmore Road even though the advance was for the purchase of 64 Avonmore Road). I accept this submission. It seems to me plain on the documents (without the need to draw inferences from the failure to call witnesses) that the proposal to transfer 66 Avonmore Road from FEM Seychelles to FEM Virgin pre-dated the stipulation of terms by the lender. What did lie behind the transfer from FEM Seychelles to FEM Virgin is a key issue for decision. But the documents do support the proposition that the bank required (for reasons which are not apparent) that the security should be over 66 Avonmore Road even though the funding was for the acquisition of 64 Avonmore Road.

[128]Third, there was a major dispute about whether Ms Wu had procured Ms Gao to provide sexual services for Mr Lee (and so earned the substantial procuration fee) or whether the undoubted sexual relationship between Mr Lee and Ms Gao (which by November 2008 had led to the conception of twins, subsequently aborted) had arisen earlier and out of a working relationship. There was in fact not a single document which linked Ms Gao to Mr Lee dated earlier than August 2008. (I have already commented on the unfortunate destruction of Ms Gao's passport which would have provided the requisite corroboration and detail of the extensive travelling which she said she had undertaken with Mr Lee since 2006). In particular there was no documentary evidence whatsoever that Mr Lee had ever paid her a cent before his relatively recent and prolific generosity.

[129]But Ms Gao gave evidence that between 2006 and 2009 by way of salary for the PA’s services she was providing Mr Lee made two cash payments, the first being approximately 400,000 Chinese RMB (which she said was the equivalent of £40,000): these payments she asked to be made to her mother in Shenzen, China. When it was suggested that £40,000 converted to approximately 600,000 Chinese RMB Ms Gao said that she received the balance in cash in Hong Kong.

[130]Ms Gao's mother Madam He gave evidence by video link. She said that she recalled receiving a telephone conversation in September 2005 from Ms Gao informing her that Ms Gao was now employed by Mr Lee: and that over the past few years she had received cash payments in Chinese currency delivered in black plastic envelopes by a middleman who claimed to be instructed by Mr Lee. She said that apart from the first payment which was of 150,000 RMB the payments were of 400,000 RMB. She said that she used the cash in her cement factory but put part in her bank account. One pass book was produced. Save for one deposit of 100,000 RMB in December 2006 it was not possible to correlate deposits with the receipt of plastic bags of cash. Since February 2009 (the commencement of proceedings) the deposits have been of the order of 400,000 RMB. Madam He therefore contradicts Ms Gao as to the number of payments made and as to the size of the first payment.

[131]I do not feel able to hold that Ms Gao and Madam He have dishonestly fabricated this evidence in return for payments from Mr Lee, because I do not think that that challenge was fairly put to either of them. But that does not mean that I am bound to accept the evidence. I must still form a view about its general reliability (based as it is entirely on unassisted recollection, given by people who cannot be said to be disinterested, and with significant inconsistency): and Mr Crampin QC is at liberty to comment upon its plausibility by reference to the inherent probability of the events described.

[132]In weighing those matters I must take account of such other material as exists. Amongst that material is Ms Wu's evidence that because she had recruited Ms Gao to perform sexual services for Mr Lee she required Ms Gao to undergo a health check to assess her sexual hygiene: and that she duly received the reports and showed them to Mr Lee. There is no doubt that Ms Gao attended at the Wellington health centre on about 11 August 2008, that tests were undertaken and pathology reports prepared. The reports are in the trial bundle. But Ms Gao says that this is because she and Mr Lee were about to try for a baby, that when she received the pathology reports she took them to 2 Ebury Mews, and that Ms Wu stole them.

[133]It is not possible to reconcile the evidence of Ms Gao and Madam He on the one hand and Ms Wu on the other. On the other hand the means of choosing between the two less than convincing accounts is limited. Ms Wu tells lies: Ms Gao, a current recipient of Mr Lee’s generous bounty and with a son by Mr Lee to support, gives evidence which cannot be tested, which is not corroborated by any document, and which is implausible. I ought not to shirk a decision because the issue was said to undermine Ms Wu’s credibility. I am driven to such documents as exist and to the inherent probability. The documents evidence tests in mid-August 2008 on Ms Gao for chlamydia, gonorrhoea, hepatitis and liver function and the analysis of a high vaginal swab. They do not strike me as being prompted by the possibility of pregnancy within a current active sexual relationship. They seem to me to relate to the commencement (or conceivably revival) of a sexual relationship. The attack on Ms Wu’s credibility is not successful.

[134]Fourth, there was a dispute about whether Ms Wu also procured Ms Jia. Ms Wu's original evidence was that the second payment of £518,000 in October 2008 was a reward for procuring Ms Jia. This is plainly wrong as regards the timing (as the internal inconsistency between paragraphs 71 and 72 of the statement themselves make clear). Ms Wu corrected the mistake in her second statement: I accept her explanation. It is clear that Mr Lee first met Mr Jia in November 2008. Whether Ms Jia was an attractive 23 year-old student who provided sexual services to Mr Lee (as Ms Wu claims) or whether she was the daughter of doctors and as such provided nutritional advice to Mr Lee in connection with cracked skin on his thumb, it is unnecessary to decide. But fairness to Mr Jia requires that it be publicly recorded that she said she felt humiliated and shocked by Ms Wu's suggestion. What is, however, clear is(a) that Ms Jia came into contact with Ms Wu and Mr Lee as the result of an advertisement placed by Ms Wu in the Chinese business Gazette on 14 November 2008 seeking a “female escort” (which it is accepted has sexual connotations in Chinese culture) and

(b) that she was asked to provide a certificate of health “in the feminine department” (and submitted to such tests on 18 December 2008). (November 2008 was when Ms Gao became pregnant with twins by Mr Lee). The advertisement and the requirement of a sexual hygiene test provide a measure of support for Mr Wu’s evidence as to what she was doing and as to how she thought she could please Mr Lee at that time and means that her account of the nature of the relationship with Mr Lee in the autumn of 2008 cannot be dismissed as fantastical: and it does not damage her credibility. But equally it does not prove that Mr Lee's generosity in September and October 2008 was motivated by gratitude for the provision of fresh sexual partners.

[135]Having summarised the oral evidence and the principal disputes about it I must return to the real question: was the acquisition of 64 Avonmore Road the personal venture of Ms Wu for which Mr Lee, in a subsequent act of generosity, paid? Or was it an additional investment by Mr Lee of which he has been deprived by a cunning and callous fraud carried into effect by a company switch?

[136]My provisional view is that Ms Wu’s evidence that it was a personal venture subsequently funded by Mr Lee is probably correct.

[137]First, the documents directly concerning 64 Avonmore Road are notable for the complete absence of any reference in them to Mr Lee and of any document emanating from or connected with him, in marked contrast to the documents concerning 66 Avonmore Road. I am alive to the point that, of course, if Ms Wu was intending to defraud Mr Lee, she would naturally seek to keep things from him. But Mr Lee's evidence was that although he avoided leaving an “expenditure footprint”, it was his practice to ensure that there was a paper trail connecting him to investment transactions (and he characterised the fax of 17 December 2007 in his handwriting but in the name of FEM Seychelles in this way). There is no trail in connection with 64 Avonmore Road. If one looks at the file there is no hint at all of the involvement of anyone other than Ms Wu: and the file is entirely consistent with the account of the transaction which she gives.

[138]Second, it is plain from the documents that the purchase monies for 64 Avonmore Road did not derive solely from the mortgage of 66 Avonmore Road. FEM Virgin borrowed £800,000 on the security of a personal guarantee by Ms Wu supported by charges over the investment portfolio and bank deposit which she was required to maintain to validate her “investor status” for immigration purposes. If Ms Wu was committing a cunning and callous fraud she was, therefore, to a significant extent doing so by risking her own money: because as at 18 July 2008 she could not be sure that Mr Lee would, two or three months later, provide money sufficient to pay off the funding.

[139]Third, the documents show that Mr Lee never did pay a sum equal to the full purchase monies and acquisition costs of 64 Avonmore Road. Ms Wu herself paid the difference between the available funding and the price together with all of the acquisition costs. If Ms Wu was committing a cunning and callous fraud she was doing so in part at her own expense.

[140]Fourth, the documents show that the payments (themselves of apparently arbitrary amounts) which Ms Wu actually used largely to pay off the mortgage were made by Mr Lee into her personal bank account (not to Mr Tang or the lender). Ms Wu was in fact free to use them as she chose. There is no indication that she was obliged to apply them towards 64 Avonmore Road.

[141]Fifth, so far as the telephone transcriptions go they provide clear support for the proposition that 64 Avonmore Road was nothing to do with Mr Lee but was Ms Wu's acquisition towards which Mr Lee gave her some money. “Hey the house that you bought. Have you finished the decoration of it? Don't know what the number of the next one is”. “Hey about you buying the hotel next door, has the deal about the building next to the hotel in London been done yet?” “I wanted to ask you how much of my money was spent on you since the very beginning…. then how much the purchasing the adjoining building?... Actually I have treated you fairly well then”. Fairly read these seem to me to be admissions that 64 Avonmore Road belonged to Ms Wu. I cannot think upon what basis Mr Lee could have been advised to take this position or how taking this position provided some insight into Ms Wu's “criminal mind”: they seem to me to be spontaneous statements which go to the heart of the truth.

[142]Sixth, if I am right in my assessment that the purchase of 66 Avonmore Road in January 2008 was a gift to Ms Wu, then it seems to me highly probable that if sometime between February 2008 and May 2008 she asked Mr Lee for another £1.6 million for another property acquisition he would tell her to use what he had already given. That is especially so if he was at that very time funding the immigration of Ms Wu's relatives. But, given the general level of his generosity, it is not improbable that by September and October 2008 he should be prepared to make further payments totalling £1.5 million (even if these were not rewards for procuring the services of additional sexual partners). Certainly in the telephone transcriptions Mr Lee does not regard gifts at this level as at all extraordinary: indeed he cannot himself remember their amount. But undoubtedly he treats them as gifts.

[143]Seventh, it seems to me improbable that, placed as she was, Ms Wu should seek to execute the cunning and callous fraud suggested. Sensibly, in closing Counsel did not support Mr Lee's suggestion that the fraud had begun in July 2007 with the secret incorporation of FEM Virgin. The suggestion in closing was that, however it had come into being, FEM Virgin was available as a vehicle to acquire 64 Avonmore Road and as a vehicle to receive 66 Avonmore Road and that sometime around April 2008 Ms Wu decided to utilise it. Her decision to do so is, of course, recorded in the April 2008 attendance note. The question is what lay behind the choice. Mr Trace QC submitted that if 66 Avonmore Road belonged (one way or another) to Mr Lee and if Mr Lee had possession of the bearer share in FEM Seychelles (even though he was not a director of that company and could not act for it) and if (in one way or another) Mr Lee had bound himself to pay for 64 Avonmore Road, then the probability is that the transfer of 66 Avonmore Road from FEM Seychelles to FEM Virgin was dishonest, and was designed to remove ownership and control from Mr Lee and vest it in Ms Wu.

[144]I do not accept the premises from which this argument proceeds. But I do not in any event accept that, looking at the evidence, fraud is the most likely explanation. Nothing in the evidence suggests to me that Ms Wu really understood the difference between a “bearer share” company and one with registered shareholders. As I noted alongside one passage of Ms Wu's evidence as it was being given; “She has not a clue. She does not have the sophistication to engineer a fraud”. She incorporated these different entities because other people told her to do so, not because she herself understood the different modes of transmitting ownership. She does not really understand how an offshore company can own English land (though of course she accepts advice that it can). Notwithstanding what counsel for Mr Lee call “the company switch” Ms Wu herself still thought that the file for FEM Seychelles was important to her as demonstrating ownership of 66 Avonmore Road. Her anxiety as to its whereabouts and her concern over its removal (evident in the telephone transcriptions) was not some devious double bluff (because she actually knew its contents to be valueless and had herself deliberately brought that about): she genuinely did not understand. Nor did she understand what Mr Tang probably meant when (as she recalls) he told her not to worry about the theft of the FEM Seychelles file because the file contained her name. (He probably meant that she was the registered holder of the share in FEM Virgin). To her way of thinking one could simply choose the safer option. “ Mr Lee want me to start a nameless company. Mr Lo told me that BVI is a very stable country. Politically, it's superior to Seychelles. In my memory, Mr Lee mentioned that as well. I have this in my mind and then later on my niece’s and nephew’s immigration plan is not successful and there's no question regarding taxation. So when the purchase of number 64 is due, so I want to use BVI to buy 64….. They said it would be better to use one company to hold two properties, so I chose BVI to hold because BVI is superior to Seychelles. This is a normal way of doing things. If I have a choice, I'd choose one that is better….. I did not make it up. Even now I do not have a very clear concept about the two companies. I only know that BVI is a better country than Seychelles and I only know that it's more stable”. That evidence seemed to me entirely genuine and I would accept it.

[145]So I would find that 64 Avonmore Road was bought as a personal venture by Ms Wu: but subsequently paid for using (as a matter of choice) bounty provided by Mr Lee.

[146]I have in the course of this judgement expressed my views as “provisional”. This is to emphasise that in its preparation, after having considered each issue according to the evidence particularly directed at that issue, I have then endeavoured to stand back and look at the whole picture and the whole of the evidence in the light of my self-directions at the beginning of this judgment, and to see whether overall I am satisfied that I have reached the answer that seems to me to be right. I am so satisfied. The views characterised as “provisional” are in the end my firm findings and holdings.

[147]Although frequently an untruthful person Ms Wu has told me the truth about these transactions, and not infrequently her lies have been told to support a case which is at bottom true. Mr Lee was a generally truthful person: but he has lied to me because, I think, he sees it necessary for his honour and his reputation to demonstrate that he can control people within his realm of management, and Ms Wu resists his control. He certainly does not care about the money (which is to him next to nothing). His case could not have been harder fought.

[148]In summary my conclusions are these:-(a) FEM Seychelles was not a nominee for anybody. It was intended by Ms Wu (and in fact by Mr Lee) to be the beneficial owner of 66 Avonmore Road. That is why trouble was taken over the selection of the right entity.

(b) Ms Wu was the intended owner of FEM Seychelles. She arranged its incorporation, and Mr Lee paid to the solicitor acting for FEM Seychelles the monies necessary to purchase 66 Avonmore Road because (when one looks at all the evidence) he intended that property to be a gift for the benefit of Ms Wu.

(c) Upon incorporation of FEM Seychelles and for a substantial period thereafter Ms Wu had possession of the file which contained the bearer share. She held it not because she was the agent or nominee of Mr Lee, but in her own right as the owner of FEM Seychelles (and of its asset, 66 Avonmore Road).

(d) Mr Lee now has the bearer share for FEM Seychelles. That is because somebody (without any legal right so to do) took it from 2 Ebury Mews in January 2009.

(e) Possession of the bearer share for FEM Seychelles does not in fact matter any more because 66 Avonmore Road was lawfully transferred from FEM Seychelles to FEM Virgin by Ms Wu who was the sole director of (and beneficial owner of the sole share in) FEM Seychelles and (at that time) sole director of and shareholder in FEM Virgin.

(f) The purchase of 64 Avonmore Road was a personal venture of Ms Wu utilising borrowing secured on property to which she was (through her ownership of FEM Seychelles and then FEM Virgin) beneficially entitled. Mr Lee was not involved in its purchase and there was no agreement or understanding that he should be.

(g) Mr Lee did not pay for 64 Avonmore Road. 64 Avonmore Road was bought with borrowed money. Mr Lee subsequently paid money into Ms Wu's personal bank account which she then chose to use to pay off part of the borrowing she had raised. When one looks at all the evidence it is clear that when he paid the money Mr Lee intended it as a gift.

[149]For these reason I dismiss the claim. I will grant the relief sought in the Part 20 Claim.

[150]I do not require the attendance of Counsel or legal representatives when I hand down judgment on 29 July 2011.

[151]On the material at present before me the decision on costs seems straightforward. My provisional order would be that Mr Lee (the Second Claimant) should pay the Defendants’ costs, those costs to be the subject of a detailed assessment on the standard basis. If either party would wish me to make some other order then I will reconsider the matter entirely afresh on an application at the beginning of next term to be fixed through the usual channels (unless the parties agree to invite me to determine the matter on written submissions). Mr Justice Norris………………………………………………………….29 July 2011