Lee Siu Biu and Another v. Li Siu Shuen By Tan Huiqi, His Guardian Ad Litem
Read the full judgment text of DCCJ 4399/2014 on BabelCite. This District Court judgment was delivered on 5 May 2017.
1. The dispute concerns the ownership of a property of Flat E2 on 5 th floor, Mirador Mansion, No. 58 Nathan Road, Kowloon, Hong Kong (“the Property”).
Cited by 1 case · Cites 2 cases
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DCCJ 4399/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4399 OF 2014 -------------------------
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---------------------- JUDGMENT ---------------------- Introduction 1.The dispute concerns the ownership of a property of Flat E2 on 5th floor, Mirador Mansion, No. 58 Nathan Road, Kowloon, Hong Kong (“the Property”). Undisputed facts 2.The 1st plaintiff and the defendant are brothers. Their father, the late Mr Lee Duk Sun (“the late Mr Lee”) died intestate on 4 January 2011. His wife, Ms Cheung Ngan Yin survived him and is now in her eighties. The late Mr Lee and his wife had 6 children. The 1st plaintiff is their 2nd son; the 2nd plaintiff is the wife of the 1st plaintiff. The defendant is their 3rd son. The other siblings are Lee Siu Chung, the eldest son; Lee Kam Chu, the 4th daughter; Lee Siu Kwan their 5th son; Lee Siu Bong is the 6th son. Law Shui Lin is the wife of Lee Siu Chung. 3.The late Mr Lee carried on business in a rented premise in Tsim Sha Tsui prior to his demise in the garment industry, manufacturing shirts for tourists. The defendant had worked with him and had taken over the business after the late Mr Lee’s retirement in 1989. The defendant relocated the business to the Property. 4.The defendant was the registered owner of the Property. He entered into a sale and purchase agreement of the Property on 28 August 1991 at a price of HK$815,000. The mortgage was obtained under the sole name of the defendant on 27 September1991. The mortgage was fully repaid. 5.Prior to the purchase of the Property, the plaintiff deposited HK$100,000 to the defendant’s bank account on 7 August 1991. The plaintiff’s claim 6.The 1st plaintiff claims he is one of the beneficial owner of the Property. In June 1991, the late Mr Lee represented to the plaintiff that he has insufficient funds to purchase the Property because he was only able to raise a mortgage at HK$200,000. He was required to pay HK$600,000 purchase price. Whilst the defendant was able to contribute HK$180,000, the late Mr Lee invited the plaintiff to contribute HK$100,000 to the purchase price of the Property and he made good the rest of the down payment. 7.The plaintiff claims HK$100,000 was made in contribution to the purchase price of the Property and on reliance on a common understanding by the parties that they would own the Property in shares proportionate to their contribution to the purchase price. 8.The plaintiff has no idea about the purchase of the Property. He had only realized the Property was purchased in the defendant’s sole name few months after the completion. The plaintiff demanded the defendant to add himself as one of the title owner of the Property, in shares proportionate to his contribution of the purchase price. The dispute arose when the defendant had continuously refused to accede to the plaintiff’s repeated requests. The plaintiff seeks (i) a declaration that the defendant holds the Property and the rental income derived from the Property on trust for the 1st and 2nd plaintiffs since the purchase of the Property in shares proportionate to their respective contributions to the purchase price; (ii) an order that the defendant to transfer the proportion of beneficial interest of the Property which was held on trust for the 1st and 2nd plaintiffs. The defence 9.The defendant says he is the only legal and beneficial owner of the Property. Both he and the late Mr Lee funded the purchase price of the Property. The mortgage loan was obtained in his sole name. The mortgage payments were paid solely by him in full. The plaintiff’s fund in sum of HK$100,000 paid to him in 1991 was not meant to be purchase price of the Property but a personal loan made by the plaintiff and of which he has fully repaid. There was no agreement or common understanding that the plaintiff shall have beneficial interest of the Property. The Issues 10.The dispute can be resolved by deciding whether there was a common intention that the Property was to be acquired in joint names of the parties in shares proportionate to their respective contribution to the purchase price; and whether the HK100,000 advanced by the plaintiff to the defendant on 7 August 1991 was contribution of the purchase price of the Property. If the court found in the affirmative, notwithstanding the declaration sought, the defendant shall also account for the rental payment of the Property to throughout since purchase. The court should also determine the amount of rental payment the 1st plaintiff is entitled to. 11.Should the sum HK$100,000 transferred by the 1st plaintiff to the defendant on 7 August 1991 was found to a personal loan advanced to the defendant for his business, notwithstanding the plaintiff’s claim be dismissed, the court should also decide whether the defendant has repaid the loan to the 1st and 2nd plaintiffs. 12.In summary, the issues to be determined at trial are:-
Legal principles 13.The legal principle is best summarized by Godfrey Lam J in Liu Wai Keung v Liu Wan Man [2013] 5 HKLRD 9:-
The 1st and 2nd plaintiff’s evidence 14.The 1st and 2nd plaintiffs testified. 15.The 1st plaintiff testified, in or about June 1991, the late Mr Lee indicated he intended to purchase a property to carry out his garment business. The late Mr Lee viewed the Property which was located in the vicinity of his rented premise. Nevertheless, he has concern of the funding of the purchase. At that time, the late Mr Lee was in his sixties and he was not confident that he could secure a mortgage of the Property if it was bought in his sole name. The late Mr Lee said he could contribute HK$350,000 as the purchase price of the Property. He then told the 1st plaintiff that the defendant can contribute HK$180,000. In the same discussion, the 1st plaintiff said the late Mr Lee had suggested part of the Property can be leased. The rental income can be made as part of the mortgage repayment. Without further ado, the plaintiff transferred HK$100,000 to the defendant on 7 August 1991. 16.Few months later, in a casual family gathering, the 1st plaintiff realized the purchase of the Property has been completed and it was bought in the sole name of the defendant. The 1st plaintiff was unsettled and complained for not being made one of the registered owner. The defendant explained to the 1st plaintiff of this arrangement because the late Mr Lee could not appear to be the registered owner of the Property as he was a tenant of public housing, having a privately owned property might risk contravention of relevant legislation. Thereafter, the defendant had promised he will add the 1st plaintiff as one of the registered owner of the Property. 17.During the period from 1991 to 1993, both the 1st and 2nd plaintiffs testified they had requested the defendant to add the 1st plaintiff as one of the registered owner of the Property. The defendant repeatedly promised he will do so. 18.In or about 2011, after the demise of the late Mr Lee. The 1st plaintiff specifically demanded the defendant to add him as one of the registered owner of the Property. He claimed the defendant had deliberately delayed in doing so. 19.In or about January 2013, all siblings attended a family meeting in Lee Siu Chung’s (the eldest brother) home in Tai Po (“the Tai Po meeting”). The 1st plaintiff claimed the defendant had sought the views from other siblings whether the 1st plaintiff’s name should be added as one of the registered owner of the Property. In this meeting, the defendant defended the Property was meant to be a gift made to him by the late Mr Lee. 20.In November 2013, a 2nd family meeting was held to discuss the same issue (“the 2nd meeting”). The 1st plaintiff raised he should be entitled to part of the rental income of the Property since purchase. The 1st plaintiff roughly estimated the gross rental income in sum of HK$2 million. The 1st plaintiff particularized the rental payments on a piece of paper. He asked the defendant for share of rental income. The defendant raged and had torn the piece of paper into pieces. The 1st plaintiff said he reproduced the same and had shown it to other siblings. 21.The 2nd plaintiff testified and had adopted the witness statement of the 1st plaintiff. The defendant’s evidence 22.The defendant testified and had called Lee Siu Chung (his eldest brother), Law Shui Lin (wife of Lee Siu Chung), Lee Kam Chu (younger sister) and Lee Shiu Kwan (the younger brother) as the defence witnesses. 23.The defendant testified the history of the family business. Since 1982, the late Mr Lee started business in the garment industry in a rented premise in Tsim Sha Tsui, mainly manufacturing gentlemen shirts for tourists. The defendant joined his business. The late Mr Lee began to retire from the business since 1989, a time when the business has plunged, the defendant has taken over the business until today. 24.In or about July 1991, the defendant came to know the Property was listed for sale, he suggested to the late Mr Lee that it would be good for the business if he could acquire a self-owned property. The late Mr Lee agreed. The defendant entered into a sale and purchase agreement in August 1991 in consideration of HK$815,000. The purchase was completed in September 1991. The defendant paid HK$180,000, he borrowed HK$355,000 from the late Mr Lee and the rest of the purchase price was made good by a mortgage of HK$280,000. The defendant repaid the mortgage in full within 6 years. The defendant agreed the mortgage payments were satisfied partly from the rental income derived from leasing the Property. 25.Since December 1991, the defendant repaid his loan to the late Mr Lee in sum of HK$8,000 per month. The HK$355,000 loan was fully repaid in about 3 ½ years. He had continued to pay the living expenses of the late Mr Lee after the loan has been fully paid up. 26.Due to unstable income of the business, the defendant borrowed HK100,000 from the 1st plaintiff at the time when he was purchasing the Property. As an elder brother, the 1st plaintiff was willing to help, they did not bother to reduce the loan agreement in writing. Neither did they agree on the date of repayment. The 1st plaintiff offered the defendant to repay the loan after his business has recovered. The defendant said the HK$100,000 loan was unrelated to the purchase of the Property. 27.During the period from 2002 – 2003, the 2nd plaintiff demanded the defendant to repay the loan. The defendant agreed it was fully repaid in or about 2004 – 2005. The defendant repaid the loan by transferring HK100,000 to the 1st plaintiff’s bank account. For the lapse of time, he could not retrieve the bank records. In the Tai Po meeting, the defendant had made himself clear that the HK$100,000 loan was fully repaid to the 1st plaintiff. 28.All the defence witness testified they were present in the Tai Po meeting. All of them said the issue of the purported loan of HK$100,000 has been settled by the defendant to the 1st plaintiff. Analysis Common intention of the purchase of the Property 29.The burden rests with the 1st and 2nd plaintiffs to prove on balance, there was common intention between themselves and the defendant to purchase the Property together and the defendant has held the 1st plaintiff’s share of ownership on trust for the 1st plaintiff. On evidence of the 1st plaintiff solely, he could not have established such intention. The 1st plaintiff testified during cross examination that he had only discussed the purchase of the Property with the late Mr Lee. He promised the late Mr Lee that he will contribute HK$100,000. There has never been one occasion that the 1st plaintiff, the defendant and the late Mr Lee had discussed the arrangement of the purchase. The 1st plaintiff did not speak to the defendant about the purchase. The 1st plaintiff agreed to the saying that he did not know what the late Mr Lee had suggested or promised to the defendant. He has no idea what has been agreed between them. It is clear that the 1st plaintiff was uncertain what the late Mr Lee has told the defendant prior to the purchase of the Property, it might be very different from what the 1st plaintiff and the late Mr Lee have discussed. 30.The evidence of the 2nd plaintiff could not assist the 1st plaintiff’s case. The 2nd plaintiff was only present at the discussion in or about June 1991, when the 1st plaintiff and the late Mr Lee discussed the purchase of the Property themselves without the presence of the defendant. 31.Neither did the conduct of the 1st plaintiff in demanding the defendant to add him as one of the title owner of the Property assist his claim. The 1st plaintiff has done nothing positively during the late Mr Lee’s lifetime to procure the defendant to add him as one of the title owner. The 1st plaintiff recalled the late Mr Lee did not specifically ask the defendant to add the 1st plaintiff’s name. More than once, the 1st plaintiff said he had mentioned or more accurately complained to defendant in the presence of the late Mr Lee about the ownership of the Property. The defendant had only replied that he will to do it in due course. The 1st plaintiff explained, due to affection to the late Mr Lee, the 1st plaintiff did not insist the defendant to add him as a title owner immediately. It is not believable, should such a common intention existed, the late Mr Lee will not give pressure to the defendant to add the 1st plaintiff as one of the title owner of the Property. On this point, no common intention can be inferred by the conduct of the 1st plaintiff and the defendant. 32.The 1st plaintiff pleaded he is entitled to a proportion of the Property. When being cross examined, he said he was uncertain of such proportion. He admitted this issue has never come across the minds of himself and the late Mr Lee. The 2nd plaintiff agreed the proportion of ownership has never been discussed. The 1st plaintiff said he had trusted the late Mr Lee of the arrangement and was happy to provide financial assistance to the late Mr Lee in purchasing the Property. When being cross examined about the mortgage arrangement of the Property. The 1st plaintiff conceded he has no idea of how it was obtained. 33.The 1st plaintiff agreed the rental income derived from the Property will be used to satisfy mortgage payments. The 2nd plaintiff anticipated if there was such a need to contribute to the mortgage repayment, the defendant would ask her to do so. She said the rental income, part of it if not all, would be contributed to the living expenses of the late Mr Lee and her mother in law. That was why she did not bother to insist on the sharing the rental income since purchase. 34.The defendant denies the 1st plaintiff was a beneficial owner of the Property. He paid up HK$180,000 and had obtained a personal loan in sum of HK$355,000 from the late Mr Lee. The rest of the purchase price was made good by a mortgage obtained in his sole name. The monthly repayment was around HK$4,000. The mortgage was fully satisfied within 6 years. The defendant encountered financial pressure during plunge of business in 1989, the HK100,000 transfer was a personal loan by the 1st plaintiff. He has repaid the loan to the 1st plaintiff by transferring the sum to him in or about 2005 – 2006. 35.The matter has been held in abeyance for more than 20 years, the 1st plaintiff had only commenced this proceeding only 3 years after the demise of the late Mr Lee. The 1st plaintiff did not formally complain the defendant’s inaction to add him as one of the title owner of the Property. The inaction of both the defendant and the late Mr Lee is a clear pointer that the 1st plaintiff was not involved in the purchase of the Property. Both the sale and purchase agreement and the assignment was signed by the defendant without notifying the 1st or 2nd plaintiffs. The mortgage of the Property was obtained by the defendant solely. The defendant sought assistance from his friend as a guarantor in securing the mortgage instead of asking either the 1st and 2nd plaintiffs for help. Should the 1st plaintiff be one of the title owner of the Property, it is expected he would have provided assistance to the defendant in the purchase, or at least, the defendant would have sought assistance from them. The manner in which the Property was purchased was sufficiently clear that there had been no common intention as alleged by the 1st plaintiff. The finding is further reinforced by the fact that the 1st plaintiff has not been notified of the completion of the purchase. He only came to know after few months of completion. 36.With the foregoing reasons, I do not find there has been common intention as alleged by the 1st plaintiff, nor could I infer from the conduct of the 1st plaintiff and the defendant that there had been so. 37.On balance, I find the evidence of the defendant under this head is more believable and probable. The alleged common intention put forward by the 1st and 2nd plaintiffs was bound to fail. Even if the evidence of the 1st and 2nd plaintiffs on this point is put to the highest, I find the common intention as alleged was not reasonably understood by the defendant to be manifested by the 1st plaintiff’s words and conduct. I fail to see the 1st and 2nd plaintiffs can substantiate there was such a common intention or at all on a balance of probabilities. 38.Albeit I have decided no common intention existed, I would deal with the other issues as follows. The financial ability of the defendant 39.The 1st and 2nd plaintiffs challenged the financial ability of the defendant. They submitted the defendant could not have sufficient funds to purchase the Property or means to purchase or to pay the mortgage repayments of the Property. The 1st and 2nd plaintiffs relied on the defendant’s tax return for the period 2000 to 2001, where the defendant had only made an annual income at HK$60,850. 40.The 1st and 2nd plaintiffs further submitted, since the purchase of the Property until 1995, the defendant has to repay almost more than HK$10,000 per month, namely, (i) HK$4,000 mortgage payment; (ii) HK$8,000 repayment of loan to the late Mr Lee; and (iii) HK$1,000 – HK$2,000 monthly maintenance to his parents. It is not believable that his income derived from the business could have sustained his monthly liability. 41.The defendant explained his financial ability in light of the garment business. The late Mr Lee and himself specialized in manufacturing shirts for tourist mainly in Tsim Sha Tsui area for a long time. The business plunged since 1989 and the late Mr Lee had retired. The defendant then took over the business in 1990. It was then, the idea of acquiring the Property came into the minds of the both the late Mr Lee and the defendant. 42.Apart from paying HK$8,000 monthly mortgage repayment, the defendant had maintained the living expenses to his mother whenever he has the means to do so. He further clarified part of the Property can be leased where the rental income can be applied to repayment of mortgage installments. 43.I accept the defendant’s evidence. The only piece of tax return could not have reflected the entire financial position of the defendant. He could have savings throughout the years. As the defendant has engaged in the family business with the late Mr Lee, without evidence from the late Mr Lee, no conclusion could be deduced that the defendant did not have the means to purchase the Property. Whether the defendant has repaid the loan fully to the late Mr Lee is not a relevant issue here to be decided. As I recall the evidence other siblings testified for the defendant, being beneficiaries of the late Mr Lee, they have no intention to acquire a share of the Property. The defendant might have tight financial means after purchasing the Property and yet there is no concrete evidence pointing to his lack of ability to purchase the Property. The argument of the 1st and 2nd plaintiffs are untenable. HK$100,000 transferred by the 1st plaintiff to the defendant 44.Further to the analysis of the above. I find it more probable that the transfer of HK$100,000 on 7 August 1991 being a personal loan rather than contribution of purchase price of the Property. The defendant was in a very different financial position after the purchase of the Property, especially he had shouldered the family business at time of a difficult business environment. 45.At that time, the 1st plaintiff and the defendant were in good terms. The 1st and 2nd plaintiffs were a family more well off than the defendant. As brothers, it is not surprising that the 1st plaintiff would assist the defendant by way of a personal loan, it is equally not surprising that the loan agreement had not been reduced in writing and without specifying the repayment date. Taking into account all circumstance, I accept the defendant’s evidence that it is more probable the transfer was a personal loan advanced by the 1st and 2nd plaintiffs to the defendant. 46.On the part of the 1st and 2nd plaintiffs, I do not accept their evidence. As I have mentioned earlier, in the absence of the evidence of the late Mr Lee, no evidence could corroborate with them to substantiate such sum was part of the purchase price of the Property. All other siblings did not know there was an arrangement of the ownership of the Property. In particular, I find Lee Siu Chung’s evidence most believable and was the truth when he testified he had observed the 1st plaintiff became unsettled after the defendant’s marriage. He explained the 1st plaintiff was concerned the defendant’s wife would acquire a share in the Property. The 1st plaintiff believed the Property should be “in the hands of the Lee’s family”, not the the defendant’s spouse. Lee Siu Chung denounced the 1st plaintiff. 47.The issue of laches came into scene. The 1st and 2nd plaintiffs submitted they shall be permitted to assert their claim. The relevant approach in cases of lache, as submitted by Ms Lee, counsel for the 1st and 2nd plaintiffs, is only when the 1st and 2nd plaintiff’s action to bring this proceeding against the defendant is unconscionable, the 1st and 2nd plaintiffs should not be permitted to do so (See Lewin on Trusts, paragraphs 44-017). I accept Ms Lee’s argument. The legal doctrine of lache would not bar the 1st and 2nd plaintiffs to claim the defendant. 48.Not only once did the 1st plaintiff mentioned he had not asserted his right on the ownership of the Property. The 1st plaintiff had no idea of how the Property was purchased, including the time to sign the sale and purchase agreement, the assignment. They did not know the sum of the outstanding expenses. As one of the owner of the Property, the 1st plaintiff did not assist in obtaining mortgage. The 1st plaintiff testified, he had only come to knowledge of the successful completion of the purchase after the assignment has been signed. What followed was the 1st plaintiff’s inaction to assert his right to demand the defendant to add his name as one of the title owner of the Property. He explained his inaction because he did not want to disappoint the late Mr Lee. I have difficult to accept this evidence. If the rights of the 1st plaintiff is clear and unequivocal that he was one of the owner of the Property, and when the late Mr Lee was known to the arrangement of the transfer of HK$100,000 as part of the purchase price of the Property, nowhere could I speculate the intention of the late Mr Lee, I would have seen it, as a father of both the 1st plaintiff and the defendant, to take action to settle the dispute. The matter has been dragged on for more than 20 years for the 1st plaintiff to commence proceedings against the defendant. 49.With the foregoing reasons, I accept the defendant’s evidence that the transfer of HK$100,000 on 7 August 1991 was a personal loan advanced by the 1st plaintiff. I reject the 1st and 2nd plaintiffs’ evidence that the same was contribution to the purchase price of the Property. Whether the HK$100,000 loan was repaid by the defendant 50.The 1st and 2nd plaintiffs challenged the defendant has never repaid HK$100,000 to them. Ms Lee submitted the defendant was uncertain as of when the defendant has transfer the said sum to the 1st plaintiff. The defendant testified he had made the transfer around 2003; and then clarified between 2004 – 2005 and 2005 – 2006 subsequently. Apart from that, the defendant stated in his first two witness statements that he had repaid HK$100,000 to the 1st and 2nd plaintiff by depositing the sum in the 2nd plaintiff’s Hang Seng Bank account. It was proved to be wrong when the 2nd plaintiff produced the bank passbook showing no such entry. The defendant then attempted to make a supplemental witness statement to rectify his mistake that the said sum has been deposited into the 1st and 2nd plaintiff’s joint bank account between 2004 – 2006. It was subsequently proved to be wrong again by way of a letter issued by Hang Seng Bank dated 21 January 2016 clarifying the 1st and 2nd plaintiffs have never maintained any joint account with them. Solely considering the defendant’s evidence, it is far from probable that the sum has been repaid. 51.The defence witnesses’ evidence that the repayment of the loan was confirmed and clarified in a family meeting in or about 2013. Lee Siu Chung, the eldest brother, Lee Siu Kwan and both their wives clarified sum of HK$100,000 has been repaid by the defendant. 52.Ms Lee submitted, for reason that their witness statements are identical with same words and punctuation, the court should place no weight on the defence witnesses. I accept Ms Lee’s argument. In Ho Sing Yin v Chan Yiu Ling, HCA 90/2010 (unreported, 13 July 2012). Deputy Judge Saunders (as he then was) stated in paragraphs 58 - 61:-
53.I cannot criticize Ms Lee’s submission. Each of the witness statements of the defence witnesses are succinct, consisted of few paragraphs, telling the same incident. The impact would not be so strong if not the whole witness statement were identical to each other. During cross examination, Lee Siu Chung, Law Shui Lin (wife of the Lee Siu Chung), Lee Kam Chu (younger sister) said that they have respectively given instructions to the defendant’s solicitors to prepare the witness statements. Only Lee Shiu Kwan (the younger brother) admitted, he did not give instructions to the defendant’s solicitors. He was given a draft witness statement to sign. The manner that of the defendant’s solicitors in preparing the witness statements rendered the evidence of the defence witnesses unreliable and their evidence ought to be rejected. 54.In the premises, I find the 2nd plaintiff had demanded the defendant for repayment sometime around 2002 – 2003. I am not satisfied the defendant is able to prove the sum of HK$100,000 has been repaid to the 1st and 2nd plaintiffs and of which it is still due and owing to them. Whether the outstanding loan is time barred 55.The answer is yes. Section 4 of the Limitation Ordinance, Cap 347 stipulates a 6-year time limit in contracts, including personal loans. Ms Lee has right conceded should the transfer of HK$100,000 be adjudged as a personal loan advanced by the 1st and 2nd plaintiffs to the defendant, such claim will be time barred. Order 15 rule 4, Rules of the District Court, Cap 336H 56.As I have made a finding that (i) there was no common intention and/or understanding between the parties in purchasing the Property as alleged by the 1st plaintiff; and (ii) the transfer of HK$100,000 on 7 August 1991 was a personal loan advanced by the 1st and 2nd plaintiffs to the defendant. The issue of whether the estate of the late Mr Lee should be joined as a party to this action became academic. Conclusion 57.In light of the abovementioned findings, I dismiss the 1st and 2nd plaintiffs’ claim. I make a costs order nisi that the 1st and 2nd plaintiffs do pay the defendant the costs of this action, with certificate for counsel, to be taxed if not agreed. In absence of application by inter parte summons to vary the costs order nisi, the same should be made absolute 14 days from the date of this judgment.
Ms Joyce Lee, instructed by Wong & Co, for the 1st and 2nd plaintiffs Mr Jackson Poon, instructed by Tang & Lee, for the defendant | ||||||||||||||||||||||
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