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Favor Easy Management Ltd, Samuel Tak Lee v Fuk Fei Wu, Favor Easy Management Ltd (2012)


A judge had adopted the correct approach when considering the evidence as a whole in determining the intentions of the parties in relation to the disputed beneficial ownership of two commercial properties.


The second appellant businessman (L) appealed against a decision ([2011] EWHC 2017 (Ch)) that the first respondent (W) was entitled to the bearer share in the first appellant company (FS) and was beneficial owner of two commercial properties.

W had purchased one of the properties, a hotel, in FS's name, using funds provided by L. W subsequently bought the second property in the name of the second respondent company (FV) using a mortgage secured on the hotel. She later redeemed the mortgage with monies received from L, and transferred the hotel to FV for a nominal amount. L claimed beneficial ownership of both properties based on a resulting or constructive trust arising from his provision of the purchase price for the hotel. He further claimed that at all material times he held the bearer share in FS and was therefore the owner of FS and the hotel. He contended that W's acquisition of the second property was a breach of trust. The nature of L and W's relationship was disputed. L claimed that W was his employee; W claimed that she was his mistress and that the hotel and monies had been gifts. The judge found that W's claims regarding the parties' relationship and their intentions in respect of the properties were correct. He considered documents from the conveyancing of the properties to be reliable material, but only one element of the evidence. He also found that the contents of transcripts of telephone conversations between L and W following the breakdown of their relationship favoured W. It was accepted that the parties' intention in respect of the second property depended and followed from the conclusion in respect of the hotel.

L contended that (1) given that the judge had found both parties to be "less than straightforward", he should have found the contemporary documentary evidence, which was principally from the files of the conveyancing solicitors (T) and suggested that the true purchaser and owner was L, to be decisive; (2) the judge had failed to give proper weight to the content of the telephone conversations.


(1) The judge had adopted the correct approach to the conveyancing documents. The documents were snapshots of the instructions received by T and revealed a changing picture as to the precise mechanics of the transaction. They did not reveal a full or constant picture regarding L and W's true intentions. As the judge found, the true intentions of the parties could only be derived from the evidence as a whole. The documents did not reflect the transaction that had occurred. The judge was not bound simply to construe the documents in isolation from the realities of the case. He had correctly had regard to the whole of the evidence, with the documents as one element of the factual scenario. All that he derived from the totality of the evidence was that the instructions about the possible mechanics of the transaction changed in various respects throughout the process as options were ventilated and considered. A judge was not confined in his consideration of the evidence at trial to the tramlines of documents expressly referred to by the parties, nor were they prohibited from having recourse to other documents in the trial bundles to see the whole picture. W's case was not based on what she had told T. It was founded on what she said was her understanding of what she and L intended, namely a gift to her of the hotel. That fact that her instructions to T might have been clouded by her own embarrassment about speaking expressly about her relationship with L, and that different mechanisms for the acquisition were described from time to time in her instructions, did not undermine or contradict her case as to what the parties' true intentions were. The judge had determined those intentions in accordance with all the evidence, as he was entitled, and indeed bound, to do (see paras 16-38 of judgment). (2) The passages in the telephone conversations were also far from being all one way. Even if W had spoken during their arguments at the time of their separation of L "giving" her the hotel, that did not mean that she was accepting that the hotel was strictly his property or was not intended to be a gift to her. The mechanics of the transaction did not make for clarity. There was a great danger of looking at what was said by the parties in those conversations through the eyes of those versed in the ways of English property transactions and to construe individual remarks without proper regard to the overall context. The judge was fully entitled to weigh up what he had taken from the telephone conversations with the other evidence in the case. That evidence was compelling in favour of W. The finding in her favour regarding the nature of their relationship was a crucial one. L's case was characterised by an attempt to downplay W's role in his life, and the nature of the entire case was coloured by L's dishonest account of their relationship. Its true nature provided the explanation for the acquisition of the properties (paras 39-56).

Appeal dismissed

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21 Nov 2012

Court of Appeal
Ward LJ, Lloyd LJ, McCombe LJ

LTL 21/11/2012 : [2012] EWCA Civ 1464

Jonathan Allcock

Practice areas
Company, Partnerships & LLPs
Real Estate