Primecredit Ltd v. Yeung Chun Pang Barry and Another

HCMP 2103/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2103 OF 2015

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BETWEEN

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J U D G M E N T

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1.The plaintiff (Primecredit) is a judgment creditor of the 1^st defendant (Yeung). The judgment debt (Debt) stood at just over HK$3 million as at 29 September 2015, and is attracting interest at 8% p.a. By a charging order absolute dated 1 December 2003 (Order), Yeung’s interest in a landed property (Property), which he jointly owned with his father (SL) as joint tenants, stands charged with the payment of the Debt. SL passed away in February 2012 and Yeung has become the sole owner of the Property by operation of law.

2.This is Primecredit’s application to have the Property sold to pay for the Debt.  The 2^nd defendant (Wong) is Yeung’s mother.  She claims to be a beneficial owner of the Property.

3.The sole issue in this case is whether Wong is a beneficial owner of the Property.  If she is, this application cannot succeed because the Order only affects Yeung’s interest in the Property.   

4.Wong says that there are 2 alternative ways in which she became a beneficial owner of the Property – common intention constructive trust and resulting trust.  Hence, the sole issue will have to be examined under these 2 legal concepts. 

5.The burden of proof in this application rests on Yeung and his mother.  They both gave evidence.  Primecredit relies on the documents it has placed before the court, which are uncontroversial.  Indeed, there is no material dispute to Primecredit’s case, save for the beneficial ownership of the Property. 

Yeung’s evidence

6.He was 21 years old at the time when the Property was acquired in June 1985.  He was still studying and had a part-time job at a convenient store earning a small income.  He was not financially independent.  He knew little about the acquisition.  He said that his father told him that his name would be borrowed for that purchase.  He did not contribute to the purchase in any way.  He regards the Property as belonging to his parents, but it will be passed to him as the only male descendent of the family when his parents pass away. 

7.Yeung also said that there was an oral agreement between himself and Primecredit in that the latter had agreed not to take further action against him, including enforcing the Order, if he agreed to make monthly payment of HK$3,000 to repay the Debt.  He had kept up with that payment until Primecredit took step to enforce the Order.   

Wong’s evidence

8.Wong is 82 years old.  She said that the Property was acquired with, partly, her money.  It is her case that the Property belonged to her and her husband.  There was a suggestion by her counsel, Mr Cheung, that the Property belongs entirely to her after SL passed away.  However, that point was not pressed in the course of this trial.

9.The Property belongs to the Home Ownership Scheme (HOS).  At the time of acquisition, Wong was the owner of a flat in which her family resided (Che Wah Property) and was therefore not eligible to buy a HOS property.  For 2 reasons the Property was acquired in Yeung’s name as well as that of her husband: (a) it was intended that the Property would pass to Yeung as the only male descendent after she and her husband passed away; and (b) to increase the chances of success of the purchase. 

10.The purchase price was HK$320,200.  It was paid with a down payment of HK$270,000 and the balance was funded by a mortgage.  It was intended that the Che Wah Property be sold and the proceeds used as down payment.  However, that property could not be sold in time and a HK$200,000 loan was obtained from a friend of SL’s brother-in-law to make up the down payment.  The rest of such payment was financed by the savings of Wong and her husband.  They also discharged the mortgage payments.  The Property was used as the family home.  Wong continues to reside there, although her children had all moved out. 

11.The Che Wah Property was sold in November 1985 at HK$240,000.  The loan was repaid with the proceeds.  At the material times, Wong was a casual worker at a canteen earning a very modest income.  She said that she only knew about the Order at the end of 2015. 

Analysis

12.There is no disagreement over the applicable legal principles.  In a dispute over the beneficial ownership of land, the starting point is that the beneficial ownership is the same as the legal title.  The onus is on the person seeking to show that the beneficial ownership is different from the legal ownership: Re Liu Yi Fang [2015] 3 HKLRD 668, §§ 13 and 14, referring to Stack v Dowden [2007] 2 AC 432.

13.I have been urged by Mr Tsang, appearing for Primecredit, to consider the evidence of Yeung and Wong with circumspection given their interest in these matters: Re Leung Wai Fai, HCB 15328/2003, §§15 and 16; Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605, §56.

14.There is little relevant evidence from Yeung in respect of the issue to be resolved in this case.  However, I should say, with respect, that he is clearly a witness not to be relied upon.  He said that he was unaware of the amount of the Debt, in particular about the interest elements, and he would have accepted what Primecredit told him without making any enquiry himself.  He agreed that at HK$3,000 per month, it would have taken 47 years just to repay the principal element of the Debt, and that no reasonable bank would have accepted such repayment. 

15.Apart from the absurdity of Yeung’s evidence, he is a sophisticated person having received part of his education in the UK and have been working as a quantity survey technician for many years.  His wife is a solicitor. 

16.I do not believe that Yeung’s evidence about the agreement with Primecredit (para 7 above) is true.  More likely than not, it was made up to explain the fact that the application for the Order was not resisted.  That application was made in 2003 when SL was still alive.  I should also mention that it is quite possible that Yeung is residing at the Property, because it is the address used by him in these proceedings.  His explanation that it is merely his correspondence address is unconvincing given that he had moved out of it 20 years ago. 

17.Wong’s evidence about the payment for the Property is consistent with the available record.  However, her evidence of a rather substantial interest free and unsecured loan from someone who knew neither her husband nor her is difficult to believe.  On the other hand, her evidence that she was in the course of selling the Che Wah Property is consistent with the record.  Hence, a bridging loan was required.  It is not critical where that bridging loan came from. 

18.Although the Che Wah Property was in Wong’s sole name, given her modest income, more likely than not it was acquired with the joint effort of her and her husband.  However, on any view, Wong had contributed to the acquisition of the Property.  This is the strongest point in her case. 

19.To constitute a common intention constructive trust, it is essential for there to be a common intention on the part of the owner(s) and the claimant regarding their shared beneficial interest in the property: see Luo Xing Juang v Estate of Hui Shui See (2009) 12 HKCFAR 1, §§ 38 and 39.

20.In this case, there is no evidence of the intention of SL or Yeung at the time of the acquisition of the Property.  The allegation of “common intention” only surfaced in Wong’s 3^rd and last affirmation.  It appears from her earlier affirmations that she was advancing a case on resulting trust based on her financial contribution to the purchase of the Property.  Even in that 3^rd affirmation, the allegation is nebulous.  It was alleged that there was a common intention “among the family” that the parents were the beneficial owners of the Property, and that Yeung had no beneficial interest in the same before they passed away.

21.On balance, I am not satisfied that there was any common intention at all.  I should add that when Yeung gave evidence he referred to the Property as his property.  Evidently, he changed that to his parents’ property when he realised that he should not have said so.  However, he reverted back to calling it his property unwittingly from time to time. Such evidence tends to suggest that Yeung believes that he is the owner of the Property. 

22.Further, the fact that the application for the Order was not defended speaks volumes.  There can be little doubt that if the application was unfounded because the Property did not belong to Yeung, he would have told his parents to oppose it.  His father was available to give evidence then.     

23.In my view, this case depends on whether Wong can make out her claim based on resulting trust.  It is a well-established principle that where a person purchases property with his money but in the name of another, in the absence of contrary evidence, there is a presumption that the property is held by the owner under a resulting trust in favour of the person who paid for the property: Lee Tso Fong v Kwok Wai Sun [2008] 4 HKLRD 270, §5.

24.There is, however, a counter-presumption of advancement (or gift) where a parent purchases a property in the name of his child.  In Suen Shu Tai v Tam Fung Fung Tai [2014] 4 HKLRD 436, the Court of Appeal left open the question whether such presumption applies to a mother and her independent adult child.  The Court noted the view of the Supreme Court of Canada that the presumption of advancement does not apply to an independent adult child.

25.In this case, Yeung was not independent at the time when the Property was acquired, and Mr Tsang argues that the presumption of advancement applies.  However, it is common ground that the modern approach is to rely upon the evidence to ascertain the intention of the person who paid for the property. 

26.There is not a great deal of evidence from which the court can infer the intention of Wong at the time of acquisition.  I am not inclined to accept her bare assertion when she faces the prospects of losing her home.  I believe that it is very important that she intended to give the Property to her only son.  This is underlined by: (a) the fact that the name of 1 of her 2 unmarried daughters (there are 4 daughters in the family) could have been used to answer the need to have an extra person named as purchaser; and (b) Wong made no attempt to have herself named as an owner of the Property after the Che Wah Property was sold. 

27.From Wong’s point of view, there was no risk in giving the Property to her son during her lifetime because it would be held jointly with her husband.  There is also the objective indicia that the application for the Order was not defended. 

28.The evidence of both Yeung and Wong is that SL had told his son to allow his mother to continue to reside at the Property after he passed away.  This militates against the proposition that Wong is a beneficial owner of the Property. 

29.Apart from Wong’s bare assertion, there is nothing to counterbalance the above evidence.  In the premises, I cannot be satisfied that Wong has discharged her burden of proof that her intention was that her son would hold the Property (or any part thereof) for her benefit. More likely than not, the purchase was a gift from her to her son. 

30.I therefore allow this application.  There is a draft order before the court prepared by Primecredit.  The only disagreement between Mr Tsang and Mr Cheung in respect of its terms concerns the period of time allowed for the payment of the Debt.  I would err on the side of generosity given the time of the year and Wong’s age.  I allow 90 days as suggested by Mr Cheung.  Paragraphs 3 and 10 of the draft order should be amended accordingly. There are other minor amendments which have been ventilated with the parties. Subject to those amendments, I make an order in terms of the said draft.

31.Last but not least, I am grateful to counsel for their assistance.

Mr Alvin Tsang, instructed by J Chan & Lai, for the plaintiff

The 1^st defendant appeared in person

Mr Anthony P W Cheung and Mr Marco Tse, instructed by T K Tsui & Co, for the 2^nd defendant