Liu Tim Man v. Liu Tsun Ka
Read the full judgment text of DCCJ 936/2014 on BabelCite. This District Court judgment was delivered on 1 December 2015.
1. This is the trial of an action of a dispute between two brothers over a sum of $133,333.33 (“the Sum”).
|
DCCJ 936/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 936 OF 2014 --------------------
--------------------
-------------------- JUDGMENT -------------------- Introduction 1.This is the trial of an action of a dispute between two brothers over a sum of $133,333.33 (“the Sum”). Dramatis personae 2.The plaintiff and the defendant are indigenous villagers in Sheung Shui, New Territories. 3.The plaintiff is the second son and the defendant the third and youngest son of their family. The plaintiff is now aged 73. The defendant is about 12 years younger and now in his early 60’s. Their eldest brother, Liu Yat Choi（廖日財）, passed away in December 2012 (“the Eldest Brother”). I shall refer to the brothers as “the Three Brothers” in this judgment. 4.The Three Brothers were and are members of the Liu Chung Yi Tong（廖種義堂）(“the LCY Tong”) and the Liu Kwong Tak Tong（廖廣德堂）(“the LKT Tong”). They will be collectively referred to as “the Tongs” below. The family of the Three Brothers is recognised as one “family”（家）in the Tongs for the purpose of the Tongs’ affairs, including, most notably, the distribution of the Tongs’ income. 5.Apart from the family of the Three Brothers, there are other “families” in the Tongs. As I understand from the evidence, the membership of the two Tongs is the same. Liu Wai Man（廖惠民）is the manager of the Tongs. He is the uncle of the Three Brothers. I shall refer to him as “the Manager” in this judgment. 6.The LCY Tong owned a piece of land, known as Lot No 503 in Demarcation District 52 (“the Land”). The Manager held the Land on trust for members of the LCY Tong. The Land was resumed by the government for public use as of 23 March 1999 pursuant to the Lands Resumption Ordinance (Cap 124). It is the resumption of the Land and the subsequent compensation paid by the government to the LCY Tong which has given rise to the present dispute. 7.At the material time, the LKT Tong owned a number of properties which generated regular streams of rental income. Same as the LCY Tong, the Manager held these properties and the rental income on trust for members of the LKT Tong. At the beginning of each year, a meeting cum banquet would be held in which the Manager would distribute the rents collected during the previous year to the “families” in accordance with a pre-set ratio. This meeting would usually take place on the first Sunday of January. That would be a joyful event for all concerned, since it not only served as a social occasion for members of the LKT Tong to gather together, it was also the formal meeting in which the “families” would receive their shares of the LKT Tong’s rental income for the previous year. The share payable to each “family” was called “房頭錢” or “家頭錢” in the evidence and I shall refer to each such share as “an LKT Family Income”. 8.While the distribution of the LKT Family Income does not form the subject-matter of the present dispute, it will shortly become clear that this forms an important part of the factual backdrop against which the parties’ cases in respect of the Sum are to be looked at and evaluated. 9.At trial, apart from the plaintiff himself, Liu Alan David（廖達榮）, the son of the Eldest Brother, gave evidence for the plaintiff. The Manager testified for the defendant, in addition to the defendant himself. Factual background giving rise to the Sum 10.The events which give rise to the present dispute took place during the period from late 1998 to January 2000. 11.It is common ground that during this period, the plaintiff resided in the UK (having emigrated there at the age of 19) and only came back to Hong Kong for short visits. He eventually returned to Hong Kong for good in 2004. 12.The following facts regarding the resumption of the Land are not controversial as they can mostly be gathered from publicly available records or notices. 13.The resumption process of the Land commenced with the posting of a Notice of Resumption dated 14 December 1998 at the Land. It gave notice that the Land would be resumed by the government for public use at the expiry of the three-month period counting from the date of the posting of the notice. 14.The Land reverted to the government on 23 March 1999. 15.On 15 April 1999, the government offered a sum of $2,741,011.20 to the Manager as compensation for the resumption (“the Compensation Amount”). The offer was accepted by the Manager. A Notice of Offer of Compensation dated 30 August 1999 which made reference to the Compensation Amount and informed members of the LCY Tong of their right to object within one month was then posted on the notice boards on the same day in a number of places in Sheung Shui. No objection was received. 16.On 20 or 21 December 1999 (the evidence is not clear on the exact date but this does not appear to be material for present purposes), the Manager received a cheque for the Compensation Amount from the government. 17.What happened next, according to the defendant, is that in late December 1999, the “families” of the LCY Tong resolved at a meeting that, out of the Compensation Amount, a sum of $2,400,000 (“the LCY Compensation Proceeds”) should be distributed amongst the “families” of the LCY Tong, with the balance of about $340,000 to be retained for investment and general expenses. This resolution was recorded in a handwritten Chinese document dated 2 January 2000 prepared by the Manager (“the Resolution”). 18.The Resolution also set out the exact amount which was to be distributed to each “family” (each “an LCY Family Share”). Some “families” would receive $200,000 and others $400,000. Relevant to the present dispute is the distribution of the sum of $400,000 to the family of the Three Brothers. I set out below the relevant part of the Resolution in Chinese:-
19.The Manager then transferred the LCY Compensation Proceeds to the defendant’s personal bank account by bank transfer. The intention was for the defendant to write out cheques to the “families” of the LCY Tong for their respective shares. In their oral evidence, both the Manager and the defendant explained the background to such an arrangement:-
20.What happened next forms the crux of the dispute between the plaintiff and the defendant. It is more convenient to set out the defendant’s case first, followed by the plaintiff’s. The defendant’s case 21.It is common ground that during the period from late December 1999 to January 2000, the plaintiff was not in Hong Kong; and, more specifically, he did not attend the Annual Meeting. 22.According to the defendant, on 23 December 1999, the plaintiff’s son who was in Hong Kong and lived nearby, came to see the defendant and told him that the plaintiff was in urgent need of money and asked the defendant to give him his share of the LCY Compensation Proceeds. Each of the Three Brothers was entitled to the Sum, which is one-third of the Three Brothers’ LCY Family Share of $400,000. 23.The defendant acceded to the request and wrote out and handed to the plaintiff’s son a cheque in the sum of $135,000 payable to the plaintiff, with the payee being recorded in the cheque stub as “Tim” (“the First Cheque”). The cheque amount was more than the Sum and the excess amount represented an advance payment to the plaintiff of his share of the Three Brothers’ LKT Family Income for that year. At that time, the LKT Family Income had not yet been determined. The defendant intended that once the amount was finalised, he would make adjustment with the plaintiff (“多除少補”). During cross-examination, the defendant explained that at that time his relationship with the plaintiff was normal and he did not have any hesitation in making payment to the plaintiff in advance of the Annual Meeting, since they were brothers. (This is to be contrasted with the deterioration of their relationship since about 2002 when the brothers were embroiled in other litigation.) 24.At the Annual Meeting, the defendant wrote out two cheques drawn on his personal bank account to the representative of each “family” – one cheque for the annual distribution of that family’s LKT Family Income and the other for the one-off distribution of that family’s LCY Family Share. For identification purposes, the defendant dated the cheques of the former group 3 January 2000 and those of the latter group 4 January 2000, notwithstanding that all these cheques were in fact handed out to the representatives of the “families” on 2 January 2000. 25.Since the distribution of the LCY Compensation Proceeds was a one-off event and a large sum of money was involved, the Manager had prepared a Chinese document dated 2 January 2000 (“the Receipt”) and asked each representative to sign on it to acknowledge receipt of his family’s LCY Family Share. 26.For records purposes, the cheque numbers were also marked on the Receipt against the respective names of the “families”. The only exception was that no cheque number was marked against the entry of the family of the Three Brothers. It was because, explained the defendant, the Three Brothers’ LCY Family Share was already in the defendant’s own bank account and there was no need to draw any cheque for that amount – see §19 above. The defendant did, however, sign on the Receipt on behalf of the Three Brothers. After the Annual Meeting, the Manager kept the original of the Receipt and gave a copy to the defendant for records. 27.It is pertinent to record at this juncture that there was no equivalent document recording the distribution and receipt of the LKT Family Income which also took place during the Annual Meeting. The defendant said that at that time it had not been the practice of the LKT Tong to request the representatives to acknowledge receipt of their shares of the LKT Family Income in writing. The distribution and receipt of the LCY Compensation Proceeds were documented because the resumption was a special one-off event and the amount involved was large. 28.At the Annual Meeting, the Eldest Brother asked the defendant to settle the former’s share of the Three Brothers’ LKT Family Income as well as that of the LCY Family Share by issuing a cheque payable to the plaintiff since the Eldest Brother did not have a bank account in Hong Kong. The two of them would then sort out the amounts between themselves. In accordance with that instruction, the defendant gave to the Eldest Brother a cheque in the sum of $130,000 payable to the plaintiff and dated 4 January 2000, the payee being recorded in the cheque stub as “T.M. Liu” (“the Second Cheque”). During cross-examination, the defendant said that later on at the Annual Meeting he also handed $35,000 in cash to the Eldest Brother (“the Cash Payment”) to settle the balance of the shares of the Eldest Brother and the plaintiff. That the balance was settled by cash instead of by cheque seemed to be due to the defendant’s concern as to whether he had sufficient funds in his bank account to honour all the cheques drawn on that day. 29.The defendant explained, during cross-examination, that the Three Brothers’ LKT Family Income for 1999 amounted to $50,000. Adding it to the Three Brothers’ LCY Family Share of $400,000, the three of them together should receive a total sum of $450,000 from the Tongs. And the share of each brother should therefore be $150,000. The First Cheque, the Second Cheque and the Cash Payment together added up to $300,000, which was exactly the sum of the aggregate entitlement of the Eldest Brother and the plaintiff. 30.To substantiate this, the plaintiff has produced the original cheque stubs of the personal cheque book which he used during that period. The dates, numbers and amounts as recorded in the cheque stubs all match with the defendant’s oral testimony and the cheque numbers as shown in the Receipt – see §§24 and 25 above. 31.As noted in §26 above, according to the defendant’s case, there was no marking of any cheque number against the entry of the family of the Three Brothers on the Receipt. However, in the documents disclosed in these proceedings, there is another version of the Receipt, which I shall refer to as “the other version of the Receipt” below. This document is identical to the Receipt save that underneath the row in which the defendant acknowledged receipt of the Three Brothers’ LCY Family Share, there were written by hand the cheque numbers of the First Cheque and the Second Cheque (“the Extra Markings”). The Extra Markings in the other version of the Receipt was the subject-matter of some discussion between the parties’ solicitors shortly after the commencement of this action. I shall return to this issue below. 32.In summary, therefore, the defendant’s case is that he had duly paid to the plaintiff the Sum and the plaintiff’s share of the Three Brothers’ LKT Family Income for 1999 – first, by giving the First Cheque to the plaintiff’s son on 23 December 1999 and secondly, by making the Cash Payment to the Eldest Brother. 33.At trial, the Manager gave evidence which generally supports the defendant’s case as set out in §§24, 25 and 26 above (save for the minor matters discussed in §59 below). However, the Manager made it clear in his oral testimony that his responsibility as manager of the Tongs was to make distribution to the representative of each “family”. Once that was done, he had no further say in, and did not know, how the money should then be distributed amongst the members of that “family”. 34.It is also necessary for me to set out how the defendant’s evidence has emerged over the course of these proceedings as this is a matter which has attracted some criticism from the plaintiff:-
The plaintiff’s case 35.The plaintiff’s case is that he has never received the Sum. He denies that he had asked his son to approach the defendant for money in December 1999, as alleged by the defendant or at all. 36.Prior to March 2004, he had been living in the UK, only returning to Hong Kong for short visits. Therefore he had known nothing about the resumption of the Land, the payment of the Compensation Amount and the distribution of the LCY Compensation Proceeds at the Annual Meeting. 37.The plaintiff went to some length to explain, both in his written statements and in his oral evidence at trial, that since he had emigrated to the UK at a young age, he did not maintain any close contact with the Eldest Brother, the defendant or other members of the Tongs. And even after he returned to Hong Kong for good, his relationship with the others in the Tongs had not been close. 38.Further, the plaintiff pointed out that his father passed away in October 1997. Prior to that, his father had been receiving the family’s income from the Tongs. It was only after his father passed away that the Three Brothers started to share the family’s income. And, because of this, the plaintiff said that he knew very little about the Tongs’ affairs. 39.It was not until around December 2012 that he finally learnt of these events. The Eldest Brother passed away in late December 2012. When Liu Alan David was tidying up his personal belongings, he discovered a handwritten Chinese document, which was a copy of the Resolution. Having been born and brought up in the UK, Liu Alan David could not read Chinese. He therefore handed the document to the plaintiff. Liu Alan David testified that the plaintiff was “very much astonished” upon reading the Resolution. 40.The plaintiff stressed that this was the first time he learnt about the LCY Compensation Proceeds and about his entitlement to the Sum. He said that he had not been aware of the posting of the various public notices regarding the resumption of the Land and the Compensation Amount since he was not in Hong Kong when those notices were put up and no one had ever discussed these matters with him. 41.In a meeting in late December 2012, the plaintiff asked the Manager about the LCY Compensation Proceeds by showing him a copy of the Resolution. The Manager did not reply on the spot. In the annual meeting which took place in January 2013, the plaintiff asked the defendant about the Sum. The defendant’s reply was that he should already have paid the Sum to the plaintiff. The plaintiff immediately denied ever receiving it. The defendant then made no further reply. 42.Liu Alan David confirmed that he himself also was not aware of the LCY Compensation Proceeds but he could not ascertain whether his father had actually received his share or not. 43.There was some exchange of correspondence between the plaintiff’s solicitors and the Manager’s solicitors in September and November 2013. Through his solicitors, the Manager produced a copy of the Receipt (ie, the one without the Extra Markings) and asserted that the Three Brothers’ LCY Family Share had already been paid to the defendant. Issues in dispute 44.The primary issue in dispute is whether the Sum had in fact been paid by the defendant to the plaintiff. If so, that would conclusively determine the outcome of the action and the plaintiff’s claim must fail. I shall refer to this issue as “the Payment Issue”. 45.On the other hand, if I find that the Sum had never been paid, the defendant’s position is that the plaintiff’s claim is time barred, since the payment was due back in late 1999 or early 2000 and the action was not commenced till 2014. In reply to this, the plaintiff contends that the defendant had been holding the Sum on trust for the plaintiff, and accordingly there is no time limit to the plaintiff’s recovery of the Sum, which is a trust property, by virtue of section 20(1)(b) of the Limitation Ordinance (Cap 347). The questions as to whether the defendant held the Sum as trustee for the benefit of the plaintiff and whether section 20(1)(b) of the Limitation Ordinance applies are mixed questions of fact and law. I shall refer to this issue as “the Trust Issue”. 46.If I determine the Trust Issue in favour of the plaintiff, that would be the end of the matter and the plaintiff’s claim must be upheld. However, if I determine the issue in favour of the defendant, the plaintiff then argues that section 26(1)(b) of the Limitation Ordinance will apply which has the effect of postponing the commencement of the running of time to December 2012 when he first found out about the Sum. In this regard, the plaintiff will have to prove deliberate concealment on the part of the defendant. I shall refer to this issue as the “the Concealment Issue”. 47.I shall first address the Payment Issue. Analysis – the Payment Issue 48.The Payment Issue is a factual issue, each party giving a directly opposite account of whether the Sum had been paid over. The resolution of the issue requires an assessment of the credibility of each party’s case against the backdrop of undisputed and indisputable facts. Contemporaneous documents, including the Resolution, the Receipt, the other version of the Receipt and the cheque stubs, are important documentary evidence against which the parties’ cases and evidence are to be assessed. In the process, the court should consider whether a party’s case is inherently plausible or implausible. The demeanour of the witnesses would also be relevant. 49.At trial, the witnesses (save Liu Alan David) gave evidence on events which took place more than 15 years ago and I should bear in mind that their memories of these events will not be perfect due to the long lapse of time, coupled with the fact that all the witnesses (except, again, Liu Alan David) are now of advanced age. Where there are apparent discrepancies or inconsistencies in a witness’s evidence, I need to ask myself whether they arise due to his fading memory or imperfect recollection of the events or, rather, they arise because the witness was not giving a truthful account or whether they exist due to some other reason. 50.As regards the defendant’s factual case on the Payment Issue, the following matters are, in my view, pertinent to the assessment of its credibility:-
51.At trial, the plaintiff sought to cast doubt on the defendant’s case by raising the following points. 52.First, the cheque stubs were disclosed very late in these proceedings, only very shortly prior to the trial and so was the defendant’s evidence on the First Cheque, the Second Cheque and the Cash Payment – see §34 above. The plaintiff asks (in my view, quite legitimately) – why hadn’t the defendant produced such important evidence earlier? And why waited till so late to do so? 53.The defendant explained that since the commencement of the action, ie, March 2014, he had been going through his own records to look for the bank statements, cheque stubs or other bank records for the period but the search had been in vain since the records date back to more than 15 years ago. And he just could not locate them. He made some last efforts just a few weeks prior to the trial and finally managed to find the cheque stubs amongst his belongings but not the other bank records, eg, bank statements. 54.It appears to me to be a reasonably plausible explanation, when one takes into account the long lapse of time since those events took place. Furthermore, I note that the defendant wrote to the bank very shortly after the commencement of the present action asking for copies of the cheques and records of those transactions. The bank replied that it no longer had any records or copies because their customer transaction records were only kept for a period of seven years. In my view, the readiness of the defendant to go promptly to the bank for evidence demonstrates that the defendant’s efforts to search for the relevant bank records was genuine. 55.Secondly, the plaintiff complains that the defendant’s account of the First Cheque in the supplemental witness statement does not refer to the conversation between the defendant and the plaintiff’s son at all. In that account, the defendant simply said that the plaintiff requested an early payment of the Sum. It was only when the defendant was asked to clarify this part of the witness statement in his evidence-in-chief that he disclosed for the first time the involvement of the plaintiff’s son. 56.The plaintiff argues that this shows that the defendant’s case is not believable and the allegation concerning the plaintiff’s son is in any event a bare assertion. I do not agree. I consider that the late revelation of the evidence should be looked at and assessed not on its own but also in the context of the observations I made in §49 above. 57.Thirdly, the plaintiff seeks to question why the defendant had not asked the plaintiff to sign and acknowledge receipt of the Sum. The same query applies to the payment to the Eldest Brother. I have set out the defendant’s explanation in §50(f) above. I find it to be an entirely plausible explanation and accept it as truthful. It is noteworthy that when the LKT Family Income was distributed at the same time, there was no receipt signed at all. This does go to show that the absence of any formal receipt signed by the plaintiff and the Eldest Brother is not a decisive pointer in the present analysis. 58.Fourthly, the plaintiff points out that there are a number of material discrepancies in the defendant’s evidence. For instance, the defendant said, with some hesitation, during cross-examination that he made the Extra Markings on the other version of the Receipt after he found the cheque stubs, ie, in around October 2015. This is clearly wrong because the Extra Markings were shown in the document sent out by the defendant’s solicitors back in July 2014. Clearly, the defendant made a mistake in his oral testimony. But it is, in my view, sufficiently clear that this mistake arose out of his fading memory as to exactly when he put down the Extra Markings. I am satisfied that he was confused when he gave oral evidence on this point and hence made the mistake. Furthermore, based on the evidence before the court, I fail to see any advantage that the defendant could hope to gain by lying about the timing. 59.The plaintiff also relies on other discrepancies in the evidence adduced by the defendant apparently with a view to discrediting him. For instance, the defendant said it was him who handed out the cheques to the representatives of the “families” at the Annual Meeting whereas the Manager said it was not the defendant, but the Manager himself, who did so. 60.These discrepancies, in my view, do not cast any serious doubt on the credibility of the defendant or the Manager as they do not relate to the material points in issue. Given the overall plausibility of the defendant’s case (when viewed against the undisputed background and presently available contemporaneous documents), I consider that these discrepancies arise because of the inability of either the defendant or the Manager to recall fully and accurately the minute details of the events which took place more than 15 years ago. 61.On the other hand, insofar as the plaintiff’s evidence is concerned, there is one stark inconsistency which in my view stems not from his fading memories but arises in such a way as to cast serious doubt on his credibility. 62.The plaintiff’s case, as disclosed by his pleadings and his witness statements, is in fact a simple one – he has never received the Sum from the defendant. 63.The plaintiff unequivocally confirmed at an early stage of his cross-examination that he had in fact received his share of the Three Brothers’ LKT Family Income at the beginning of each of the years from 1998 to 2004, except 2000. (Those were the years when the Three Brothers started to receive the LKT Family Income after their father’s death and when the plaintiff was still living in the UK.) 64.However, towards the end of his cross-examination, when he was asked specifically why he did not chase for the 2000 share, he hesitated and said he could not remember. Then, he went on to say that he seemed to remember to have spoken to the Eldest Brother about this and the Eldest Brother should have given his 2000 share to the plaintiff’s son. This change in the evidence concerning the 2000 share was without any apparent reason. In my view, the change in the evidence is remarkable and must be treated with grave scepticism for three reasons. 65.First, the year of 2000 is of course the material year in this dispute since at the Annual Meeting held at the beginning of 2000, both the LCY Compensation Proceeds and the LKT Family Income were distributed. The alleged failure of the defendant to pay the plaintiff his share of the LKT Family Income (which was the defendant’s earlier version) would have been more consistent with the plaintiff’s major assertion in this action that the defendant did not pay him the Sum either. Secondly, the “correction” of the evidence is remarkable because the defendant was very firm when first testifying that he had not received his share of the Three Brothers’ LKT Family Income at the beginning of 2000. Thirdly, the alleged subsequent conversation between the plaintiff and the Eldest Brother does not sit comfortably with the plaintiff’s repeated allegation that he had not maintained close contact with his brothers throughout the material period – see §37 above. 66.In my view, this casts grave doubt on the credibility of the plaintiff. When his account of events is looked at against the conflicting account put forward by the defendant, I would readily accept the latter and reject the former. In other words, I accept the defendant’s case as set out in §§22 to 30 above. 67.In conclusion, I find that the defendant had paid the Sum to the plaintiff in late December 1999 and he did so in the manner as alleged by him. I therefore dismiss the plaintiff’s claim. Analysis – the Trust Issue 68.In light of the above factual findings, the Trust Issue does not arise for determination. But, for completeness, I would add the following point. 69.When the Manager received the Compensation Amount from the government, I do not think it is in dispute that he held that sum subject to the trust of the LCY Tong. When the Manager handed over the LCY Compensation Proceeds to the defendant, I agree with the plaintiff’s submission and hold that the defendant took upon himself a fiduciary obligation in respect of that sum vis-à-vis the beneficiaries of the trust. He became a fiduciary agent and as such he held the LCY Compensation Proceeds on trust for the “families” of the LCY Tong: see Soar v Ashwell [1893] 2 QB 390 at 394. 70.There was some discussion at trial as to whether the defendant then held the Sum on trust for the plaintiff after he signed on the Receipt. This question arises because arguably once he signed, which by itself signifies an acknowledgment of the distribution from the trust of the LCY Tong, he then held the money as agent for himself, the plaintiff and the Eldest Brother. The question is then whether the Sum was held subject to a trust or whether the relationship between the defendant and the plaintiff was simply one of debtor and creditor and no trust arose in respect of the Sum. 71.However, since I have made the factual finding that the defendant issued the First Cheque to the plaintiff on 23 December 1999 and thereby paid the Sum to him, it would not be appropriate or possible for me to make a ruling on this point since to do so would require an analysis of the issue based on the contrary hypothetical factual premise that the Sum had not been paid. Analysis – the Concealment Issue 72.Similarly, as I have found that the plaintiff had in fact known about and received the Sum, it would not be logically possible for me to deal with, even on a hypothetical basis, the Concealment Issue. 73.For the reasons set out above, I dismiss the plaintiff’s claim. 74.I also make an order nisi that the plaintiff do pay the defendant’s costs of the action, to be taxed if not agreed, with certificate for counsel.
Mr Ngan Siu Lun, of Lau & Ngan, for the plaintiff Mr Leon Tang, instructed by KM Tang & Co, for the defendant | |||||||||||||||||