Re Kwok Suk Ling

HCB 3569/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO 3569 OF 2007

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Re : KWOK SUK LING, the Bankrupt

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J U D G M E N T

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Introduction

1.There is before this court an application by the Trustees of the property of Madam Kwok Suk Ling (“Madam Kwok”) for an order for sale under s 60 of the Bankruptcy Ordinance, Cap 6 (“BO”) and s 6 of the Partition Ordinance, Cap 352 (“PO”), in respect of the property known as Flat 4 on 21/F of Block A, Siu Hin Court, No.1 Leung Wan Street, Tuen Mun, New Territories (“Property”), together with consequential orders.

2.The Property is in a Home Ownership Scheme Development. Its saleable floor area is about 598 sq ft.  On 14 June 1991, the Property was assigned into the joint names of Madam Kwok and Mr Kwok Yiu Sang (“Respondent”) at the consideration of HK$455,400.  Madam Kwok is the younger sister of the Respondent.

3.According to the updated verbal valuation from Allied Surveyors Limited, as at 15 December 2016, the value of the Property was as follows:

(1)	Open Market Value[1]	HK$4,200,000
(2)	Secondary Market Value[2]	HK$3,300,000

4.The application is opposed by the Respondent.  In gist, the Respondent’s case is that the Property is solely owned by him.  He said in his two affirmations that, apart from the 10% deposit (as well as renovation costs) which was borne by his father, all the mortgage repayments, as well as household expenses, in respect of the Property were paid for by him.  Madam Kwok had paid nothing towards the purchase of the Property.  The idea of the Respondent and Madam Kwok jointly applying for and eventually purchasing the Property came from their father Mr Kwok Ping Nam.  The intention was that the Property should belong to the Respondent solely and hence he alone should be responsible for the entirety of the mortgage repayments.  The Respondent’s case is corroborated by Madam Kwok herself and their father.

Background

5.On 24 April 2007, Madam Kwok filed a petition for her own bankruptcy.  On 15 June 2007, she was adjudicated bankrupt.  In her Statement of Affairs dated 24 April 2007, Madam Kwok said she owed unsecured creditors approximately HK$434,638.  The Trustees, on the other hand, said the total proofs of debt received were around HK$1.366 million as at 24 May 2016.  Thus far, Madam Kwok has contributed HK$12,020 to her bankruptcy estate account.

6.Madam Kwok was born in 1969 and is around 48 years old.  She is married with three children and is currently living with her husband and children in public rental housing at Room 138, 1/F, Hing Cheung House, Tai Hing Estate, Tuen Mun, Hong Kong.  In her two affirmations as well as in court, Madam Kwok said she had moved out of the Property as early as 1996 to live with her husband upon their getting married.  As detailed in an annexure to her 2^nd affirmation dated 28 June 2016, Madam Kwok had resided in various places after moving out of the Property in 1996.  Between 1996 and 2005, she lived in two private residential properties in Tuen Mun, the first one was rented by her husband, while the second one was purchased by her and her husband (unfortunately) at the height of the property market in 1997. In 2005, she moved to the address given in her Statement of Affairs ie No. 96, Sik Kong Tsuen Ha Tsuen, Yuen Long, Hong Kong, a rented property.  From 2011 up till now, her residential address is as stated above.

7.Both Madam Kwok’s husband and Madam Kwok herself were successively made bankrupt in 2005 and 2007.  Their jointly owned property in Tuen Mun had also been foreclosed by the mortgagee bank. Presently, Madam Kwok works as a salesperson in an employment agency earning around HK$7,900 to HK$9,000 a month.

8.The Respondent is 50 years old.  He is currently residing in the Property with his wife and three children.  In fact, according to the Respondent, he and his family have always been living in the Property.  The address stated in his marriage certificate (dated 23 March 2001), his three children’s birth certificates (dated 12 October 2001, 24 August 2002 and 19 January 2009) and the demand note from the Water Supplies Department (dated 20 November 2012) all support the Respondent’s case.

Deliberation

9.The principal issue in this case is whether Madam Kwok had any beneficial interest in the Property and if so how much.

10.The Respondent had filed two affirmations in these proceedings and testified in court.  His case has been summarised at paragraph 4 above.

11.Madam Kwok had also filed two affirmations in these proceedings and testified in court.  Essentially, she confirmed the Respondent’s case summarised above.  She categorically disclaimed any beneficial interest in the Property.  In the annexures to her 2^nd affirmation, Madam Kwok had set out in detail her various residential addresses from 1991 to the present, as well as her income between 1989 and the present.

12.When a property is conveyed to two persons as joint tenants without any declaration of trust, the prima facie case is that their legal and beneficial interests in the property are joint and equal, unless and until the contrary is proved — the onus of proof lies upon the party seeking to establish that equity should not follow the law and that both of them had a common intention that their beneficial interests be different from their legal interests and in what way: Stack v Dowden [2007] 2 AC 432. Baroness Hale of Richmond said at [68]–[69]:

“68. The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon….

69.   In law, ‘context’ is everything and the domestic context is very different from the commercial world.  Each case will turn on its own facts.  Many more factors than financial contributions may be relevant to divining the parties’ true intentions…”

13.In ascertaining the parties’ true intentions, the task of the court is to ascertain their shared intention, actual, inferred or imputed, with respect to the property, in light of their whole course of conduct in relation to it.  As this court reads Stack v Dowden, in apportioning the beneficial interests of a jointly‑owned property used as a matrimonial home, it should shift away from the use of the presumption of resulting trust, which essentially mandates an arithmetic calculation of how much, in money or money’s worth, each joint owner has contributed to the purchase price, as a tool.  See also Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985.

14.Each case will turn on its own facts and, of course, context is everything: Re Tsang Yin Hong, Bankrupt, unrep, HCB 4387/2007, 27 June 2016 at [14].

15.The factual context of Stack v Dowden and the cases which followed, including Jones v Kernott [2012] 1 AC 776, is that of a “fight” between husband and wife or cohabitees living in a property purchased in their joint names as a matrimonial home, each party having contributed some, but unequal, shares to the purchase price and one party claiming a larger share of the beneficial interests in the property than the other.  In a joint judgment by Lord Walker of Gestingthorpe and Baroness Hale of Richmond in Jones v Kernott at [25], the Supreme Court Justices made it abundantly clear that the Stack v Dowden approach was only apt to apply in that factual context:

“25. The time has come to make it clear, in line with Stack v Dowden [2007] 2 AC 432 (see also Abbott v Abbott [2008] 1 FLR 1451), that in the case of the purchase of a house or flat in joint names for joint occupation by a married or unmarried couple, where both are responsible for any mortgage, there is no presumption of a resulting trust arising from their having contributed to the deposit (or indeed the rest of the purchase) in unequal shares. The presumption is that the parties intended a joint tenancy both in law and in equity. But that presumption can of course be rebutted by the evidence of a contrary intention, which may more readily be shown where the parties did not share their financial resources.”

16.The present case is substantially different from Stack v Dowden and Jones v Kernott.  The relevant parties in the present case are brother and sister and they did not purchase the Property as their matrimonial home as such.  On Madam Kwok's evidence, the intention of her father was that the Property should be used as a long term residence of her mother and the Respondent, and that the three Kwok sisters would move out of it once they got married.  Such an intention was shared by Madam Kwok and the Respondent as evidenced by their conduct — Madam Kwok did move out of the Property when she got married in 1996, while the Respondent stayed put, before and after he got married in 2001.

17.Further, on the available evidence, instead of contributing to a smaller share of the purchase price of the Property, Madam Kwok did not contribute to the purchase price at all.  On her evidence, she received education up to Form 5 and earned roughly HK$2700 to HK$3700 as a clerk in a godown between 1989 and 1992.  She said in 1991, when the Property was purchased, her meagre income was just enough to cover her own expenses and there was nothing left for mortgage repayments.  In 1991, Madam Kwok was only 22 years of age and her job at the godown was her first one.  It seems highly unlikely that she would have enough savings for the purpose of purchasing a property.  The Respondent, on the other hand, was earning about HK$10,000 in early 1990s.

18.Lastly and importantly, Madam Kwok and the Respondent were and are ad idem as to their intention at the time of the purchase: the Property belonged to the Respondent solely and would serve as his long term residence and he alone would be responsible for all the outgoings, including mortgage repayments.

19.In these circumstances, this court seriously doubts whether the Stack v Dowden approach is appropriate in the present case at all.  But even assuming there is an initial presumption of a joint tenancy in law and in equity, the totality of the evidence in the present case is, in this court’s view, sufficient to rebut that presumption.  In particular, the “whole course of conduct” of Madam Kwok suggested that she treated the Property as her temporary residence, she had no means to and did not make any financial contribution towards the purchase of the Property and she moved out of it once she got married and established a matrimonial home with her husband by renting and then purchasing a property in Tuen Mun in 1997.

20.This court has reminded itself that the documentary evidence in support of the Respondent’s case that he alone paid for the mortgage instalments was far from satisfactory or complete, and that the testimony of the Respondent is in a sense self‑serving.  But this court has also reminded itself that the testimony of Madam Kwok is not.  In fact, her disclaimer of any beneficial interest in the Property is against her interest.  According to the 5^th affidavit of Mr Shek, for the Trustees, if Madam Kwok indeed had 50% beneficial interest in the Property, then once the Property is sold, the bulk of the debt owed to her unsecured creditors ie HK$1.218 million out of HK$1.366 million (subject to adjudication by the Trustees) will be repaid.  Further, as Madam Kwok does not reside in the Property, she has no incentive to lie in order to oppose the sale of the Property.  Lastly, this court has reminded itself that there was no serious challenge to the evidence of the Respondent and Madam Kwok by cross‑examination.

21.All in all, having carefully considered their testimony against the available documentary evidence, and having carefully considered the Trustees’ written submissions, particularly those at paragraphs 22 to 25 therein, this court finds both the Respondent and Madam Kwok truthful witnesses and accepts their testimony.  This court concludes that Madam Kwok and the Respondent did not intend a joint beneficial tenancy of the Property — instead, their common intention was and has always been that the Property solely belonged to the Respondent beneficially.  In other words, this court is satisfied that the Respondent has discharged the burden of showing his sister Madam Kwok had and has no beneficial interest in the Property.  That is sufficient to dispose of the Trustees’ application.

Disposition and costs order nisi

22.The Trustees’ application is hereby dismissed.

23.There shall be an order nisi that each party shall bear its own costs.

Mr J Shek of Gallant, for the Joint and Several Trustees of the property of the Bankrupt

The Bankrupt: Kwok Suk Ling, appeared in person

The Respondent: Kwok Yiu Sang, appeared in person

Attendance of the Official Receiver was excused