Lam Wai Sun Alias Lam Kwok Leung and Another v. Chan Yan Yee, Administratrix of the Estate of Lam Wai Hung, Deceased

HCMP 3303/2015

[2018] HKCFI 1056

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3303 OF 2015

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Before: Hon Chow J in Chambers (Open to Public)

Dates of Hearing: 9 January 2018 and 3 May 2018

Date of Judgment: 17 May 2018

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JUDGMENT

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INTRODUCTION

1.In this action, the Plaintiffs, who are the parents of Lam Wai Hung, deceased (“the Deceased”), claim against the Defendant, being the widow and the administratrix of the estate of the Deceased, for (inter alia) an order that the Defendant do distribute to the Plaintiffs their entitlements to the Deceased’s estate.

2.The principal issue which arises for determination is whether a property known as Unit B, 2/F, Block 15, Richland Gardens, 80 Wang Kwong Road, Kowloon (the “Property”) held in the name of the Deceased (i) belonged to the Deceased solely, or (ii) was held by the Deceased on trust for the benefit of both the Deceased and the Defendant in equal shares.

3.In the course of the trial, the parties have raised many collateral disputes of fact.  I do not propose to resolve all the disputes save those which are strictly necessary for a proper determination of the issues in this action.

BACKGROUND FACTS

4.The Plaintiffs were married on 30 May 1958. They have two children, namely, (i) the Deceased, a son born on 18 October 1961, and (ii) Lam Mei Sze (“Mei Sze”), a daughter.

5.The Deceased had been working at Standard Chartered Bank, Hong Kong, since he finished secondary education in or about 1979.  The Deceased was introduced to work at the bank by Raymond Lam (“Raymond”), the Deceased’s cousin, who had worked at Standard Chartered Bank for about 35 years and retired as a Senior Account Manager in March 2016.

6.In about August 1995, the Deceased purchased the Property at the price of HK$1,308,000 with the assistance of a mortgage loan granted by his employer at a favourable interest rate applicable to the staff of the bank.  According to the 1^st Plaintiff, he also gave the Deceased the sum of HK$300,000 to assist him in the purchase of the Property. In his second affirmation, the 1^st Plaintiff said he gave the money to the Deceased “out of parental love”.  However, in his oral evidence, he said that he expressly told the Deceased at the time that it was a “loan”.  I pause to observe that if the payment was indeed a loan, recovery of the loan would, prima facie, have been time-barred a long time ago.  In any event, the 1^st Plaintiff has not raised any claim against the estate of the Deceased for repayment of the alleged “loan”.

7.The Deceased and the Defendant were married on 1 March 1997.  The Defendant also used to work at Standard Chartered Bank as an office assistant until early 1997.  After the marriage, the Deceased and the Defendant started to live together in the Property as their matrimonial home.

8.According to the Defendant, shortly after their marriage, they had a discussion about transferring the Property from the sole name of the Deceased into their joint names.  However, after the Deceased had make enquiries with the Deceased’s employer (the mortgagee), the Deceased and the Defendant decided to defer changing the name of the owner of the Property for essentially two reasons:-

(1) the substantial costs and expenses of transferring the Property into their joint names (including stamp duty of a few tens of thousands of dollars); and

(2) the bank was, at that time, starting to lay off staff after the Asian Financial Crisis and the Deceased considered that, in view of his lowly position at the bank, he had very little bargaining power and did not want to make a fuss of the matter in the eyes of his supervisors.

9.Nevertheless, the Deceased told the Defendant that since they had married, all properties and assets of the family, including the matrimonial home, regardless of whether they were held in his name or her name, would belong to both of them equally, and after he had paid off the mortgage loan or after he had left the employment of the bank, he would transfer the Property into their joint names.  The Defendant trusted or believed in what the Deceased said, and thus the matter of transferring the Property into their joint names was deferred.  In her words:-

“再加上死者曾說，既然大家都已結了婚，家中一切所有財產，包括婚姻居所，不論是他或我的名下，都是共同擁有，無分彼此，待日後供樓完成或他離開渣打後，再轉為雙方共同名下也不遲，而我亦深信死者所說，大家便把此事擱下來”. [emphasis added]

10.The Defendant says, further, that the Deceased’s income was not sufficient to pay their family expenses.  She says that prior to their marriage when they were both working at Standard Chartered Bank, the Deceased’s salary was about HK$10,000 and her salary was about HK$5,000 to $6,000 per month.  As earlier mentioned, the Defendant stopped working at Standard Chartered Bank in early 1997.  According to the Defendant, she took up different jobs afterwards and earned more or less the same as, and sometimes even more than, what she used to earn at Standard Chartered Bank.  The Defendant says that a substantial portion of the Deceased’s income was used to discharge the monthly mortgage payment, and the balance of the family expenses were paid by both the Deceased and her.  She has not, however, given any particulars of the family expenses or the financial contributions allegedly made by her.

11.On the basis of the matters mentioned in paragraphs 8 to 10 above, the Defendant contends that she is entitled to half of the beneficial interest in the Property by way of a common intention constructive trust or proprietary estoppel, and therefore only half of the beneficial interest in the Property should be regarded as forming part of the estate of the Deceased.

12.The Plaintiffs dispute the Defendant’s claim in respect of the Property based on a common intention constructive trust or proprietary estoppel.  They also dispute the Defendant’s allegation that there was an express agreement between the Deceased and the Defendant that the Property would belong to them equally.

(1) According to the 1^st Plaintiff, the Deceased told him about 2 years after his marriage that he did not have a happy marriage relationship with the Defendant.  The Deceased also told the 1^st Plaintiff about 5 to 6 years after his marriage that the Defendant had once asked him to add her name as an owner of the Property, but the Deceased had refused her request.

(2) According to Mei Sze, the Deceased complained to her that he did not have a happy marriage with the Defendant, that she had quitted her job from the bank soon after their marriage and was idling at home most of the time, and that he was responsible for all the family expenses.  Mei Sze also says that the Deceased told her, about 4 to 5 years after his marriage, that the Defendant had asked that her name be added as an owner of the Property but the Deceased had refused her request.

13.Mei Sze says that in January 2014, after the death of the Deceased, she went with the Defendant to the Standard Chartered Bank to discuss about the arrangement for payment and settlement of the Deceased’s Provident Fund and outstanding mortgage loan respectively.  At that time, the Defendant asked why the Property registered under the Deceased’s sole name could not have been transferred into the joint names of the Deceased and herself.  Miss Grace Chan of the Personnel Department of the bank explained that was because the Deceased, as a staff member of the bank, enjoyed preferential interest rate on the mortgage loan and thus joint ownership of the Property (with a non-staff member of the bank) was not allowed.  This episode, according to Mei Sze, shows that the reason for not assigning the Property into the joint ownership of the Deceased and the Defendant “had nothing to do with legal fee, stamp duty and consent from the Deceased’s supervisor” as alleged by the Defendant.  The Defendant argues, however, that the Deceased would not have made enquiries with the bank concerning a possible transfer of ownership of the Property into their joint names if he had not agreed to give her a half share of the Property.  I do not consider that one can get much out of this matter.  On the other hand, the bank’s policy could possibly be the reason why the Deceased did not assign the Property to the joint names of himself and the Defendant even though he was willing to give half of the beneficial interest in the Property to her.  On the other hand, the fact that the Deceased made relevant enquiries with the bank may show that he had considered the possibility of giving a half share of the Property to the Defendant, but does not mean that he had finally decided, or agreed, to do so.

14.The Plaintiffs also say, or believe, that the Deceased was able to pay the family expenses out of his earnings:-

(1) According to the 1^st Plaintiff, the Deceased told him that his basic salary as a senior clerk at Standard Chartered Bank was HK$14,000 per month, and he could make a further sum of about HK$6,500 per month from working overtime.  He believed that the Deceased’s income was sufficient to maintain his family.  In fact, the Deceased used to give him and the 2^nd Plaintiff HK$1,500 each month to subsidize their living expenses.

(2) According to Raymond, the Deceased’s salary would be over HK$10,000 per month at the time of his marriage in 1997, and his salary would be about HK$14,000 per month by 2002 when he was promoted to the position of “Clerk I”.  In addition, since the Deceased was working in the Securities Department of the bank which was a relatively busy department of the bank, he had to work overtime and was paid overtime allowance of about HK$6,500 per month.  Raymond also said that the Deceased told him that he worked as a part-time “fung shui” master and could earn about $3,000 to $4,000 per job.

15.The Deceased died intestate on 15 December 2013, at the age of 52.  The Deceased and the Defendant had no children.  There is no dispute that the Defendant (as the surviving spouse) and the Plaintiffs (as the surviving parents) are the only beneficiaries of his estate under the Intestates’ Estate Ordinance, Cap 73.

16.On 10 June 2014, Letters of Administration of the estate of the Deceased was granted to the Defendant.  Apart from cash in a number of bank accounts (totalling around HK$1,061,480.43), the principal asset of the estate of the Deceased consisted of the Property.  Regardless of whether it belonged to the Deceased solely or was held by him on trust for the Deceased and the Defendant in equal shares, the Defendant, as administratrix, was duty bound to administer the estate of the Deceased and distribute to the Plaintiffs their entitlements to the estate of the Deceased.  Admittedly, the Defendant failed to do so.  Her reasons, or excuses, for failing to administer the estate of the Deceased included ill health and an unwillingness to move out of the Property.

17.On 26 August 2014, the Plaintiffs, through Francis Kong & Co, wrote to the Defendant enquiring whether she had proceeded with the administration of the estate of the Deceased and asked for the progress of the administration.  A follow up letter was sent by Francis Kong & Co to the Defendant on 23 September 2014 in view of the absence of any response by the Defendant to the earlier letter.  In the follow up letter, Francis Kong & Co requested the Defendant to give a timetable for the distribution of the Deceased’s estate.

18.On 6 October 2014, the Defendant, through W K To & Co, replied to Francis Kong & Co stating that she had never received the letter of 26 August 2014.

19.On 9 October 2014, Francis Kong & Co sent to W K To & Co a copy of their earlier letter dated 26 August 2014 and reiterated the request for distribution of the Deceased’s estate to the Plaintiffs.  A follow up letter was sent by Francis Kong & Co to W K To & Co on 3 November 2014.

20.By a letter dated 10 November 2014, W K To & Co informed Francis Kong & Co that they had no further instructions to act for the Defendant.

21.On 12 December 2015, the Plaintiffs commenced the present action against the Defendant.

22.On 12 September 2016, a meeting took place at the office of the Plaintiffs’ solicitors to discuss the distribution of the estate of the Deceased.  In attendance were the Plaintiffs, Mei Sze, Barry Tam (a clerk of Francis Kong & Co), the Defendant, and the Defendant’s sister and brother-in-law.  At the meeting, Mei Sze demanded the Defendant to make a partial distribution of HK$800,000 to the Plaintiffs within 1 week, and pay the Plaintiffs their full entitlements to the estate after the sale of the Property.  The Defendant acceded to the demands, but subsequently failed to make any partial distribution to the Plaintiffs as agreed at the meeting.  She proposed, instead, to distribute to the Plaintiffs their full entitlements to the estate of the Deceased in one go.  This was not acceptable to the Plaintiffs.  By a letter dated 16 December 2016 from Francis Kong & Co to the Defendant, the Plaintiffs demanded the Defendant to make the partial distribution of HK$800,000 on or before 31 December 2016 and put the Property up in the market for sale on or before 15 January 2017.

23.The Defendant does not dispute that, at the meeting on 12 September 2016, she agreed to make a partial distribution of HK$800,000 to the Plaintiffs within 1 week, and that the Property would be sold afterwards so that the Plaintiffs would be paid their full entitlements to the estate of the Deceased.  She says that she acceded to the demands of the Plaintiffs and Madam Lam because she felt confused and helpless, and she acted impulsively at that time.  To be fair to the Defendant, I should add that there is some evidence that she was, might have been, suffering from depression at the time of the meeting.  This having been said, the Defendant is adamant that she was not (and is not) suffering from any mental illness, and was (and is) able to discharge her duties as administratrix of the estate of the Deceased.

NO COMMON INTENTION CONSTRUCTIVE TRUST OR PROPRIETARY ESTOPPEL

24.It is common ground, in view of the fact that the Property was held and registered in the sole name of the Deceased, that the burden is on the Defendant to prove that she is beneficially entitled to a half interest in the Property based on a common intention constructive trust (see Stack v Dowden [2007] 2 AC 432, at paragraph 56 per Baroness Hale of Richmond).  For this purpose, the critical question is whether she can prove the alleged express agreement or understanding between the Deceased and herself that the Property would belong to them in equal shares.  In my view, she has failed to do so, for the following reasons.

25.First, if the alleged express agreement or understanding did exist, the Defendant would know, at the time when she applied for the Letters of Administration of the estate of the Deceased, that the Deceased was entitled to only half of the beneficial interest in the Property with the remaining half interest being held on her behalf.  However, in the schedule of assets dated 19 May 2014 attached to the Letters of Administration (the contents of which were confirmed by the Defendant on oath), the Defendant stated that the entire Property belonged to the Deceased (paragraph 8).

26.Second, in the Defendant’s second affirmation filed herein on 10 August 2016 which purported to be a just and true account of her administration of the Deceased’s estate, she likewise stated that the entire Property belonged to the Deceased or his estate, without mentioning that she was beneficially entitled to a half interest in the Property.

27.Third, when the Defendant was allegedly pressed by the Plaintiffs and Mei Sze at the meeting on 12 September 2016 to make an interim distribution of the estate of the Deceased to the Plaintiffs and to pay the balance of their entitlements to the estate of the Deceased after the sale of the Property, any reasonable person in her position would, I believe, have told the Plaintiffs, either at the meeting or shortly afterwards (in the course of the WhatsApp exchanges that she had with Mei Sze), that she was entitled to half of the beneficial interest in the Property even if the issue of how the proceeds of sale of the Property was to be distributed was not expressly raised at the meeting, because that was an unavoidable issue which had to be resolved after the sale of the Property.  Not only did she not raise her claim that she was entitled to half of the beneficial interest in the Property at that time, she failed to do so even when the Plaintiffs’ solicitors demanded, by their letter dated 16 December 2016, that the Property be put on the market for sale on or before 15 January 2017.

28.Fourth, on the basis of the express agreement or understanding between the Deceased and the Defendant as alleged by her, the Defendant’s own assets (or assets held in the name of the Defendant) as at the date of death of the Deceased should also be regarded as belonging to both the Deceased and the Defendant in equal shares, and hence 50% of those assets should be treated as belonging to the estate of the Deceased.  However, the Defendant plainly did not consider that to be the position, and was unwilling to share half of her assets with the Plaintiffs under the intestacy of the Deceased.  When this matter was pointed out to her by Mr Cheung to her in the course of his cross examination of the Defendant, she said or suggested that her agreement or understanding with the Deceased would only apply to her assets upon her death.  This answer or suggestion is difficult to follow.

29.Lastly, the Defendant only raised the alleged express agreement or understanding for the first time in her 2^nd affirmation filed herein on 1 August 2017, some 20 months after the commencement of this action by the Plaintiffs.

30.In all, I do not accept the Defendant’s evidence that there was any express agreement or understanding between the Deceased and herself that the Property would belong to them in equal shares.  Also, on the facts of this present case, I do not see that there is any scope for any agreement or understanding of a shared ownership of the Property that could be implied or inferred from the conduct of the parties, or the whole course of the dealings of the parties.  I therefore reject the Defendant’s claim of a half share in the Property based on a common intention constructive trust.  The Defendant’s alternative claim based on proprietary estoppel does not require separate consideration, because it is grounded on the same facts and matters relied upon in support of the common intention constructive trust claim.

31.In passing, I should mention that I do not consider that it matters much whether the Deceased’s income was sufficient to pay the family expenses and whether the Defendant did make contributions to the family expenses.  The fact that she made contributions to the family expenses, assuming that she did, is readily explicable on the basis that she was a member of the family.  I do not accept that she made contributions to the family expenses because of any agreement or representation by the Deceased that she would have a half share in the Property, or any common understanding or arrangement to that effect.

RELIEF

32.In the Amended Originating Summons, the Plaintiffs seek the following relief:-

(1) Paragraph 2 (distribution of the estate of the Deceased) – this relief is not opposed by the Defendant.

(2) Paragraph 3 (sale of the Property) – at the hearing, I was informed by counsel that (i) the parties had agreed that the Defendant did not have to vacate from, or sell, the Property, (ii) the parties had agreed to appoint a joint valuer to assess the current market value of the Property, and (iii) the parties had agreed that the Defendant shall pay to the Plaintiffs their appropriate entitlements to the estate of the Deceased based on the court’s findings in this judgment.

(3) Paragraph 4 (interim distribution) – Mr Cheung accepts, I understand, that it would not be necessary for the court to order the Defendant to make any interim distribution to the Plaintiffs if the appointment of the joint valuer and the valuation of the Property referred to in (2) above can be carried out and completed within a reasonable time.

(4) Paragraph 5 (funeral expenses) – the parties are agreed that the 1^st Plaintiff shall be paid the sum of HK$33,500 out of the estate of the Deceased.

(5) Paragraph 6 (removal of the Defendant as administratrix) – at the hearing, Mr Cheung informed the court that the Plaintiffs would not insist on this relief.

33.I shall leave it to the parties to agree on the precise form of the order to give effect to this judgment, with liberty to the parties to apply for further directions if no agreement can be reached within 2 weeks of the handing down of this judgment.

34.On the question of costs, since the Plaintiffs have been largely successful in this action, I make an order that the Defendant shall pay to the Plaintiffs their costs of this action, to be taxed if not agreed.  I do not consider that the Defendant should be entitled to be indemnified by the estate of the Deceased against her liability to pay the Plaintiffs’ costs, or that her own costs should be paid out of the estate of the Deceased.

35.Lastly, it remains for me to thank counsel for their assistance rendered to the court in this action.

Mr Lawrence Cheung, instructed by Francis Kong & Co, for the 1^st and 2^nd Plaintiffs

Ms Jacqueline Law, instructed by T C Foo & Co, for the Defendant