Favor Easy Management Ltd & Anor v Wu (aka Lisa Wu) & Ors

In assessing disputed evidence, the court must evaluate credibility holistically. Demeanour is only one consideration. Contemporary documents, admitted or incontrovertible facts, probabilities, memory, motive and the possibility of mistake all matter. Deliberate lies require careful identification and may have several explanations, so they do not automatically determine the disputed issue. Adverse inferences from an absent witness require a case to answer, some supporting evidence and no satisfactory explanation for the absence. Fairness also requires a witness to have a proper opportunity to answer an allegation that their evidence is to be rejected. In resulting-trust cases, presumptions are default rules. The court must seek the parties’ actual intention from the evidence, particularly the circumstances of the purchase, before relying on a presumption.

The claim concerned the beneficial ownership of two adjoining London hotel properties and the companies through which they were held. The second claimant alleged that he had funded both acquisitions, that the first defendant held the properties or companies for him, and that the transfer of one property between the companies was a breach of duty. The first defendant contended that the first property had been given to her and that she had acquired the second using mortgage finance, with later payments from the claimant being gifts.

The central issues were the parties’ intentions when the first property and its holding company were established, the ownership and subsequent removal of the bearer share, the lawfulness of the transfer between the companies, and the source and character of the payments associated with the second property.

1. Outcome. The claim was dismissed. Relief sought in the Part 20 claim was granted. The judge found that the first property was intended as a gift for the first defendant, that the Seychelles company was not a nominee for either party, and that the transfer to the BVI company was lawful.
2. Assessment of evidence. Credibility involved more than demeanour. The court had to assess whether a witness was truthful, whether an honest witness was mistaken, whether memory had altered, and whether the account was probable. Contemporary documents, admitted or incontrovertible facts, motive and probabilities had to be given proper weight. Lies had to be shown to be deliberate rather than mistaken, and could have innocent or collateral explanations.
3. Absent witnesses. An adverse inference could be drawn only where the absent witness might reasonably be expected to give material evidence, there was some evidence supporting the issue, and there was no satisfactory or credible explanation for the absence. The inference could strengthen the other party’s evidence or weaken the evidence of the party who might have called the witness. On the facts, no adverse inference was drawn against the defendant concerning the non-attendance of the company formation agent.
4. Cross-examination and fairness. A party intending to allege that a witness was untruthful on a material point should ordinarily put the allegation in cross-examination, giving the witness a fair opportunity to explain it. The touchstone was fair play and fair dealing, applied in the circumstances of modern litigation.
5. Resulting trust. The court accepted that payment of purchase money may give rise to a resulting-trust presumption, subject to advancement and rebuttal by evidence of actual intention. Such presumptions are default rules. The court must consider the parties’ words and conduct, including acts and declarations before or at the purchase or sufficiently close to it, and draw an objective inference as to their real intention.
6. Application. The first defendant was the intended owner of the Seychelles company and its property. Her possession of the bearer share was in her own right, although the share was later removed without legal right. The second property was her personal venture, funded initially by borrowing secured on the first property. Later payments into her personal account were gifts and did not make the claimant the purchaser or beneficial owner. The claimant therefore had no proprietary claim to either property.