Hsu Kim Ming, The Executor of the Estate of Lo Sook Hing, Deceased v. Chui Yuk Fei

DCMP 230/2015

[2018] HKDC 815

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 230 OF 2015

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Before: Deputy District Judge Benny Lo in Court

Dates of Hearing: 17-18 and 20 January 2017

Dates of Further Written Submissions: 27 January and 4 February 2017

Date of Judgment: 17 July 2018

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JUDGMENT

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INTRODUCTION

1.This action arose out of a dispute over the beneficial ownership of a residential property known as Flat 1407, 14/F, Block F, Allway Gardens, No 22 On Yat Street, Tsuen Wan, New Territories (“Property”).

2.The Property was at all material times held in the names of the late Madam Lo Sook Hing (“Mother”) and one of her sons, the defendant, as joint tenants.  Shortly before she died on 24 January 2014, Mother served on the defendant a notice of severance dated 14 January 2014 (“Notice of Severance”) purporting to sever the joint tenancy into a tenancy in common in equal shares.

3.By an originating summons issued herein on 21 January 2015[1], the plaintiff as the personal representative of Mother’s estate[2] applies for an order for sale of the Property pursuant to section 6 of the Partition Ordinance (Cap 352)[3].

4.The defendant’s case is that he is and was at all material times the sole beneficial owner of the Property based on common intention constructive trust, resulting trust, and/or proprietary or promissory estoppel.  He contends that he was the sole contributor to the purchase price of the Property, and that he had acted in detrimental reliance of Mother’s representation that the Property would be his in the end.

5.As there is no dispute that the party arguing that beneficial ownership differs from legal ownership bears the burden of proving it, the trial focused on whether the defendant has made out his defence and counterclaim based on trust and estoppel.

UNDISPUTED BACKGROUND

6.The plaintiff and the defendant are among the eight children of the late Mr Hsu Fong Pu (“Father”) and Mother.  They are, in the order of seniority:-

(1) Chui Yin Yuk, deceased (eldest daughter, born in 1953) (“Yin Yuk”);

(2) Chui Siu Yuk (second daughter, born in 1955) (“Siu Yuk”);

(3) Chui Yuk Ching (third daughter, born in 1957) (“Yuk Ching”);

(4) Chui Yuk Fei (the defendant and eldest son, born in 1958);

(5) Tsui Kim Fai (second son, born in 1961) (“Kim Fai”);

(6) Chui Mei Yuk (fourth daughter, born in 1962);

(7) Hsu Kim Ming (the plaintiff and youngest son, born in 1963); and

(8) Chui Siu Fung (youngest daughter, born in 1965) (“Siu Fung”).

7.In the 1960s, Father started working as a lorry driver running his own transportation business.  Mother was a housewife.  The family was allocated a public housing unit in Tai Wo Hau Estate, Tsuen Wan (“Tai Wo Hau Unit”) where family members lived under the same roof.  Father worked in the transportation business until he retired in 1980.

8.Since the 1970s, some of the family members have acquired their own private properties.

9.The first property was a unit known as Flat B, 4/F, Fu Hang Mansion, 30 & 38 Yan Ching Street, Tuen Mun (“Tuen Mun Unit”).  It was acquired on 20 September 1974 by Father and Mother as joint tenants at the consideration of HK$55,000. A mortgage loan of HK$27,000 was taken out in connection with it, which had been fully repaid by 30 March 1977.  The Tuen Mun Unit served as the residence of Father and Mother and some of the siblings, while the others either remained at the Tai Wo Hau Unit or gradually moved out.

10.On 7 May 1979, Mother signed a sale and purchase agreement to buy a second property (ie the Property) for HK$162,190.  Shortly before completion, the Tuen Mun Unit was disposed of for HK$200,000.  On 10 December 1980, the Property was assigned into the names of Mother and (upon her nomination) the defendant as joint tenants.  A mortgage loan of HK$100,000 was taken out in respect of the Property, which had been repaid by 21 October 1985.  The Property served as the residence of Father and Mother and some siblings including the defendant, who stayed in the Property until the early 1990s when he moved out.

11.The third property was a unit known as Flat F, 10/F, Block 19 (Shenyang House), Tsuen Wan Centre, 102 Tsuen King Circuit, Tsuen Wan (“Tsuen Wan Centre Unit”). It was acquired on 29 April 1982 by Father and Mother, as joint tenants, at the consideration of HK$212,000.  A mortgage loan of HK$100,000 in respect thereto was taken out.  On 12 January 1989, the Tsuen Wan Centre Unit was disposed of for HK$398,000.

12.On 27 January 1992, the defendant in his sole name acquired another property at Flat D, 21/F, Tower 6, Tsuen King Garden, 75 Tsuen King Circuit, Tsuen Wan (“Tsuen King Garden Unit”) for HK$1,220,000.  A mortgage loan was also taken out by him in respect of the purchase.

13.In 1998, Father died.  Since then, Mother had been living in the Property alone until around 2012 when her health began to deteriorate.  She then moved to live in an elderly home in Tsuen Wan.

14.In December 2013 and January 2014, family members held various discussions about the care and welfare for Mother.  Among those was a face-to-face meeting held on or about 11 January 2014 between Siu Yuk, Yuk Ching, Kim Fai and the defendant at a restaurant in Festival Walk, Kowloon Tong (“Meeting”).  At the Meeting, the defendant was asked to agree to sell the Property but, like on previous occasions, the defendant did not agree.

15.Shortly after the Meeting, Mother served the Notice of Severance on the defendant on 14 January 2014.  On the same day, Mother alone signed a tenancy agreement purporting to let the Property to the plaintiff for 5 years from 15 January 2014 at HK$7,000 per month inclusive of government rates, government rent and management fee (“Tenancy Agreement”).

16.Three days after the Notice of Severance was served, Mother executed a will on 17 January 2014 (“Will”) under which she named Yuk Ching, Kim Fai and the plaintiff as executors, and bequeathed to them her net residuary estate in three equal shares.  She then died from aspiration pneumonia on 24 January 2014.  Probate of the Will was granted to the plaintiff^[4] on 19 March 2014.

PARTIES’ RESPECTIVE CASES

17.The plaintiff’s case is that legal ownership of the Property reflects its beneficial ownership, and that he is entitled to an order for sale of the Property to facilitate the due execution of the Will[5].

18.On the other hand, the defendant contends that he has all along been the only one intended to be the beneficial owner of the Property and the only one who paid its purchase price.  His factual case is that[6]:-

(1) Since 1976, he began to work in the surveying industry after graduating from secondary school.  His earnings had always been managed by Mother.  Part of the money was used for family expenses, and part of it was kept by Mother on his behalf as his savings.  Mother told him that she would help him save the money so that he would not spend it randomly (“幫你儲住錢先等你唔好亂咁洗”);

(2) By around 1979, when such savings had reached a few tens of thousands of dollars which was sufficient to enable him to study abroad, the defendant requested to obtain the money from Mother;

(3) In response, Mother expressed her wish to have the defendant stay in Hong Kong instead of studying abroad.  She asked the defendant to use the savings to purchase the Property instead.  Mother further said to the defendant that she would hold the Property as a trustee on his behalf until she passes away, and expressly told him that the Property would be his in the end (“層樓最後都係你架啦”);

(4) The reason why the defendant did not sign the sale and purchase agreement for the Property was because he was at work on the Monday when the agreement was signed by Mother alone.  He and Mother, as joint tenants of the Property, signed the relevant mortgage deed in respect of the HK$100,000 mortgage loan.  Apart from the mortgage loan, the balance consideration for the purchase of the Property was paid for out of the defendant’s savings then kept by Mother;

(5) Since the purchase of the Property, the defendant continued to work in the surveying field with different employers with a gradual increase in his income.  He continued to give all his salary, gratuity etc. to Mother in the same manner as he did before the purchase of the Property.  The money was used for making mortgage loan repayments and the balance was used for family expenses.  The defendant relied solely on overtime pay and other subsidies for his own daily expenses; and

(6) By around October 1985, Mother told him that his savings kept by her since 1980 were sufficient to repay the remaining 60 mortgage instalments so as to discharge the mortgage.  Shortly thereafter, on 28 January 1986, Mother, as the trustee for the defendant’s interest in the Property, completed the formalities to discharge the mortgage.

19.On this basis, the defendant contends that he is and was at all material times the sole beneficial owner of the Property under a common intention constructive trust, resulting trust and/or proprietary or promissory estoppel.

20.In his counterclaim, the defendant seeks a declaration that the plaintiff holds the Property as a trustee for him and an order for vacant possession of the Property.  He also seeks a declaration that the Notice of Severance and the Tenancy Agreement were invalid, and that the registrations of the same be vacated from the land register in respect of the Property.

21.In reply to the defendant’s case, the plaintiff contends that[7]:-

(1) There was no express agreement or common intention between Mother and the defendant in respect of the ownership of the Property as the defendant alleges;

(2) The defendant did not make any contribution towards the purchase price of the Property.  On the contrary, the Property was paid for by Mother using the sale proceeds from the Tuen Mun Unit and the HK$100,000 mortgage loan, the repayment of which was also met by the own savings of Father and Mother;

(3) Although Father and Mother had sufficient money to purchase the Property without taking out a mortgage loan, they chose to do so to maintain cash liquidity.  Shortly after the Property was purchased, Mother and Father bought the Tsuen Wan Centre Unit for investment purposes in April 1982 using their savings and a mortgage loan;

(4) The reason why the defendant’s name was added as a legal owner of the Property was because Father and Mother could not produce income proof for the purpose of obtaining the HK$100,000 mortgage loan;

(5) The defendant did not have a stable job, was always employed on a project basis and would remain unemployed between projects.  He only gave part of his earnings to Mother as family expenses but not as savings.  After the purchase of the Property, in around 1981, most of the other siblings were also working and made contributions towards family expenses by paying Mother in various amounts; and

(6) Title deeds of the Property had always been kept by Mother after the mortgage was discharged.  Since 2005, the same was kept in a safe deposit box at the Tsuen Wan Branch of Shanghai Commercial Bank, until January 2014 when Mother discovered that the original deeds had been removed from the safe deposit box without her knowledge and consent.  Only a set of plain copies was left behind.

22.Notwithstanding the plaintiff’s case that the defendant did not contribute to the purchase price of the Property, he does not dispute that the defendant had beneficial entitlement in the Property with Mother as joint tenants before the service of the Notice of Severance, and as tenants in common in equal shares after the service of the Notice of Severance[8].

23.On the pleadings, the plaintiff disputes the defendant’s challenges over the validity of the Notice of Severance and the Tenancy Agreement.  But during closing submissions, Mr Ko did not specifically seek to uphold the validity of the Tenancy Agreement.

ISSUES

24.In view of the parties’ respective contentions, the principal issues for determination are as follows:-

(1) Did Mother hold her interest or share in the Property on a common intention constructive trust for the sole benefit of the defendant?

(2) Did Mother hold her interest or share in the Property on a resulting trust for the sole benefit of the defendant?

(3) Has the defendant established a sole beneficial interest in the Property based on proprietary or promissory estoppel?

(4) Finally, what if any relief should be granted on the plaintiff’s claim for an order for sale and the defendant’s counterclaim?

WITNESS EVIDENCE

25.The parties called a total of 4 witnesses at trial.  The plaintiff himself, Kim Fai and Mr Man Chi Fai George (“George”) testified for the plaintiff, and the defendant himself testified for the defence[9].  They all adopted the contents of their affirmation and/or witness statement as evidence in chief.  I shall first set out below a broad summary of their evidence on the pertinent issues.

(a) The plaintiff

26.A major theme of the plaintiff’s evidence was that Father and Mother did not solely rely on the defendant’s earnings to survive.  He explained that the defendant was unemployed from time to time, including a 6-month period in 1981 when he had no earnings except sickness allowance.  He suggested that the defendant only gave part of his earnings to Mother as family expenses but not as his savings, and other siblings particularly Kim Fai, Yuk Ching, Siu Yuk and himself also did the same in around 1980 and 1981.

27.On the purchase of the Property, the plaintiff said that the defendant did not pay any part of its purchase price and that the Property was purchased using the sale proceeds from the Tuen Mun Unit together with the HK$100,000 mortgage loan.  He explained that Father and Mother had enough money to purchase the Property but still chose to obtain a mortgage loan to maintain cash liquidity.  The defendant’s name was added only because Father and Mother could not produce income proof for the mortgage loan.

28.On cross-examination, it was however revealed that the plaintiff did not have a clear first-hand knowledge of these matters.  He accepted that he only found out about the amount of financial contributions from other siblings after this case started.  He also accepted that Father and Mother would not mention to him how they would use the money received from the siblings. 

29.The plaintiff was unable to explain why, on one hand, the defendant’s name was needed to help obtain a mortgage loan in 1980 in respect of the Property but, on the other hand, Father and Mother could obtain a mortgage loan without any income proof in 1982 in respect of the Tsuen Wan Centre Unit.  When pressed further by Mr Wong, the plaintiff even conceded that he was unclear as to why and how Father and Mother obtained the said mortgage loans in 1980 and 1982, why the defendant’s name was added to the Property as legal owner, and why the defendant’s name did not come off the Property after the mortgage loan had been paid off in 1985.

30.On the Tenancy Agreement, the plaintiff explained that it was signed to give a peace of mind to Mother who was then worried about her own financial security.  The plaintiff however accepted that the Tenancy Agreement may be defective and invalid as the defendant did not consent to it. 

31.As regards the Notice of Severance, the plaintiff’s evidence was that it was Mother’s own decision to have it signed, upon legal advice, after feeling that the defendant was greedy, as he kept avoid selling the Property even though she only wanted half of the sale proceeds to support her living.

32.Finally, the plaintiff explained that it was Mother herself who wished to execute the Will quickly despite the cold weather in January 2016.  Insofar as the Meeting is concerned, although he was absent from it, the plaintiff subsequently learned from Yuk Ching and Kim Fai that the defendant had only claimed that half of the Property belonged to him.

(b) Kim Fai

33.Kim Fai is one of the executors and beneficiaries under the Will.  In his witness statement, he provided an account of the family’s living conditions.  According to him, although Mother had not received formal education, Mother was well able to manage the family’s affairs and finances, and she would undertake outsourced work to earn extra money.

34.Kim Fai explained that, apart from Siu Fung (who went on to complete her tertiary education), all other siblings already started working in their mid to late teens and would thereafter make contribution towards family expenses.  These expenses would be used to support the family’s daily expenditure and to support family members who were still undergoing education.  In his statement, he gave evidence on the respective amounts paid by siblings to Mother as family expenses when the Property was acquired in 1980.  However, upon cross-examination, it became clear that, like the plaintiff, Kim Fai also did not have a clear idea as to the amount of the siblings’ contributions and how such money was used.

35.On the purchase of the Property, Kim Fai said that it was purchased to replace the Tuen Mun Unit, and he was the one who accompanied Mother to view the site of the Property in April 1979.  It was Mother herself who picked Flat 1407 and she paid the initial deposit in cash straight away.  In May 1979, Mother signed the relevant sale and purchase agreement in her sole name.  Kim Fai never heard from Father and Mother that the defendant had paid any part of the deposits or that the Property was purchased for him.

36.Like the plaintiff’s account, Kim Fai suggested that the defendant’s name was only added to the Property because neither Mother or Father had income proof to obtain the mortgage loan.  He understood that the Property was paid for from Father’s and Mother’s own savings, and that the defendant had not contributed towards the purchase price nor any of the mortgage loan repayments, which came out of Mother’s own Citibank account.

37.As to the use of the Property, Kim Fai’s evidence was that both Father and Mother together with the unmarried siblings lived there until they moved out to form their own families.  The defendant himself moved out in around 1992 and purchased the Tsuen King Garden Unit with financial assistance from Father on the down payment.  After Father died in 1998, Mother had been living at the Property alone until she moved to an elderly home in mid-2013.

38.Kim Fai went on to say that, by around late 2013, the Deceased had used up most of her savings and there was no agreement among the siblings on the sharing of Mother’s expenses.  Mother therefore wanted to realize the Property to fund her own living expenses.  According to Kim Fai, during the siblings’ discussions, the defendant repeatedly stressed that he was entitled to and had to get a half share of the sale proceeds, but otherwise he did not object to the sale.  But as the defendant gave various excuses not to carry out the sale, the Property had remained unsold before Mother’s death.

(c) George

39.The plaintiff’s last witness was George, who is Yin Yuk’s son.  His testimony related only to events that happened in early to mid-2013, when Mother’s children discussed about the sale of the Property.

40.According to George, he learned from conversations between his uncles and aunts that Mother wanted to sell the Property, and understood that the plaintiff, the defendant and Kim Fai had discussed and agreed that the Property would be sold for HK$3,000,000.  As George wanted to purchase the Property, he called the defendant to discuss the matter.

41.In around June or July 2013, Mother was admitted to hospital.  George’s evidence was that during one of his visits he indicated to Mother that he wanted to buy the Property and Mother agreed.  He also heard the defendant saying to the others present that he only wanted to take back one half of the sale proceeds and would not be concerned with other matters (“我淨係要攞番一半錢，其他我乜都唔理”).  The defendant further asked for two separate cheques for the sale proceeds be issued, one to Mother and one to himself.

42.According to George, the defendant changed his mind several days later and was reluctant to effect the sale.  He contended that during the whole process of the discussion on the Property, the defendant had not mentioned that he owned the whole interest of the Property, nor had he requested for the whole of the sale proceeds be paid to him alone.  He never heard from anyone that Mother was only a trustee and that the Property was owned by the defendant solely instead of jointly with Mother.

(d) The defendant

43.The defendant devoted a considerable part of his affirmation and witness statement to his occupation and earnings.  As he explained, after graduating from secondary school in 1976, he started working as a surveying trainee in Ching Hing Construction Company earning HK$500 per month.  He then moved to work in different companies with gradual increases in his earnings. 

44.The defendant said that he pursued part time studies at the Hong Kong Polytechnic, and his personal expenses were limited.  He did not have much entertainment, holidays or any smoking or drinking habit.  Since he began working, he had given his income to Mother for her management and essentially lived on overtime pay and other subsidies for his daily expenses.  In the defendant’s own words:-

“[Mother] usually used part of the money for family expenses, and kept the remaining part as savings on my behalf.  As she told me, she saved the money for me in this way so that I would not spend it (“幫你儲住錢先等你唔好亂咁洗”)”[10].

45.The defendant described the family members’ living situation in the Tai Wo Hau Unit and the Tuen Mun Unit in some detail.  Though the Tuen Mun Unit was purchased by Father with a view to improve the family’s living environment, only some siblings went to live there.  The defendant described both these family residences as unsatisfactory, the Tuen Mun Unit being inconveniently located, and the Tai Wo Hau Unit being crowded.

46.On the purchase of the Property, the defendant explained that by about 1979, his savings kept by Mother had reached a few tens of thousands of dollars and was sufficient for him to study abroad.  When the defendant asked to obtain such savings, Mother suggested that he could use the money to acquire a property instead as she did not want him to leave Hong Kong.  In cross-examination, the defendant added that Mother kept separate bank passbooks in respect of each child’s financial contributions paid to her.

47.Thus, after discussions, the defendant said that he agreed with Mother that these savings would be used to purchase the Property.  In §19 of his witness statement, the defendant described that crucial agreement in these terms:-

“At the material times, [Mother] expressly told me, and which was agreed by me, that the Property would be mine at the end (“層樓最後都係你架啦”), i.e. after she passed away, the Property would be completely mine. [Mother] and I expressly agreed their common intention (“the Constructive Trust by Common Intention”) that [Mother] would be one of the registered owners of the [Property] holding the beneficial interest of the [Property] as a trustee for and on behalf of me and I would be the beneficial owner of the [Property]. It was further agreed that upon acquisition of the Property, [Father] and [Mother] should move to live with me in the Property.”

48.Despite the aforesaid, upon cross-examination, the defendant conceded that he did not mention any “trust” arrangement with Mother, and all he said was that:- (a) Mother would be acting as a registered owner (“登記業主”) of the Property, (b) the Property would be held in the form of a joint tenancy (“長命契”), and (c) while she could live there until her passing, the defendant’s prior consent was needed for any other siblings to move into the Property.  Significantly, the defendant clarified that he did not expressly mention that Mother would not hold any beneficial interest in the Property.

49.As regards purchase logistics, the defendant explained that it was Mother who executed the sale and purchase agreement alone as he was busy on that Monday. But all the deposits towards the purchase, as well as the subsequent monthly mortgage repayments of HK$1,723 were said to have been paid from the defendant’s savings kept by Mother.  According to the defendant, a joint named account was opened between Mother and him to facilitate the making of the monthly mortgage loan repayments.

50.Under cross-examination, the defendant confirmed that he had not informed the conveyancing solicitors about the existence of his above agreement with Mother.  Although the defendant did not explain in his witness statement why it was necessary for Mother’s name to be added if he were the sole beneficial owner, he suggested in cross-examination that he did so because he had promised Father to look after Mother until she passed away.

51.As far as the use of the Property post-completion is concerned, in §38 of his witness statement, the defendant explained that:-

“Since completing the purchase of the Property in 1980, [Father], [Mother] and my family members, except those married or moved out, moved into the Property and it had then become the major family premises since then.”

52.Under cross-examination, the defendant suggested that 4 other family members also moved into the Property, namely Father, Mother and two younger sisters pursuant to his consent.  When asked why this account differed somewhat from §38 of his witness statement, he explained that the phrase “my family members” referred to his own family.  When the defendant was reminded that he only got married in 1995 and when it became clear that his girlfriend did not live in the Property, he was unable to provide any further meaningful explanation.

53.The defendant lived in the Property until 1990, when he had a dispute with Father and Mother over family contributions.  He then moved out and allegedly having to sleep at night in his car for 3 months before renting a unit in North Point with his colleagues.  With his earnings and profits made from investment in stocks, he purchased the Tsuen King Garden Unit in 1992.  The defendant said that his relationship with Father and Mother improved from then on.

54.At the Meeting held in January 2014, the defendant was against selling the Property when Yuk Ching and Kim Fai demanded and pressurized him to sell.  Under cross-examination, the defendant denied having said that he only wanted half of the proceeds, but accepted that he did not say to other siblings that the Property solely belonged to him.  According to the defendant, he had said this even before Mother fell ill and did not wish to say it again when the issue of sale came up.  He also did not dispute that this case was not mentioned in any of the pre-action letters from his solicitors.

55.Finally, the defendant contended that Notice of Severance was made without his consent or approval, and was contrary to his agreement with Mother concerning trust holding in the Property.  As to the Tenancy Agreement, the defendant reiterated that it was signed without his consent or approval, and that he had not received any rent from anyone who occupied the Property.

ANALYSIS AND FINDINGS

56.In assessing and resolving disputed evidence of fact, I have borne in mind the well-established considerations of inherent probability and consistency with contemporaneous documents[11]. In determining the weight to be given to a particular piece of factual evidence, I have also borne in mind the cogency of such evidence and the relevant witness’ source of knowledge. 

(a) Common Intention Constructive Trust

57.To establish a common intention constructive trust, the defendant must prove that:- (i) there was a common intention between him and Mother that he would be the sole beneficial owner despite their legal joint tenancy therein; (ii) he altered his position in detrimental reliance upon such common intention; and (iii) it is unconscionable for the plaintiff to rely on the strict rights of Mother as a legal joint tenant in the Property.  See Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 per G Lam J at §46; Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 per Cheung JA at §5.16.

58.There is also no dispute that, in a domestic context, a party seeking to establish a common intention that the beneficial ownership differs from the legal ownership has a heavy burden to discharge.  See Stack v Dowden [2007] 2 AC 432 per Lord Walker at §33 and Baroness Hale at §68; Lo Kau Kun v Cheung Yuk Yun (unreported) HCA 152/2013; 24 February 2015 per DHCJ Sakhrani at §9; Lung Ka Kuen v Chu Chun Yuk & Anr (unreported) HCA 2832/2015; 24 October 2016 per DHCJ Marlene Ng at §21.

59.The starting point for finding such a common intention is from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the relevant property based on evidence of express discussions.  In ascertaining whether there was a common intention, it is the objective intention of each party which was reasonably understood by the other party to be manifested by that party’s words and conduct that one must examine.  It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention.  See Liu Wai Keung (supra) per G Lam J at §§47-50.

60.In the present case, the common intention relied on by the defendant was said to be expressly agreed at the time of acquisition.  The alleged contents of the agreement are stated in §47 above.  As Mr Wong confirmed during closing submissions, the defendant does not rely on any change of intention that occurred after the purchase of the Property.

61.Mr Wong started his submissions by comparing the parties’ versions of events as to why the defendant became one of the legal joint tenants[12].  He attacked the plaintiff’s case that the defendant was needed for his income proof to support the mortgage application as being untrue, incredible and illogical. While I agree with Mr Wong that the plaintiff’s case on this is not made out on his own evidence (see §§28-29 above), the burden to prove the alleged express common intention rests ultimately on the defendant himself.

62.In this regard, Mr Wong submitted that the defendant’s case is supported by “positive and direct evidence” that Mother would hold the Property as a trustee on his behalf until she passed away, and Mother expressly stated that the Property would be the defendant’s in the end (“層樓最後都係你架啦”)[13]. 

63.Though I agree that the defendant’s evidence is “positive and direct”, in the sense of it having been testified to by him personally, his testimony remains a bare assertion.  No documentary evidence has been produced that records or suggests the existence of the alleged express common intention.  The defendant’s evidence is uncorroborated by any other witness.  Even though the defendant filed a witness statement of Lam Kan Chung, Mr Lam was not called to testify at trial.  No explanation has been given for this.

64.As submitted by Mr Ko, I find that the defendant’s evidence under cross-examination on his all-important conversation with Mother (see §§47-48 above) was inconsistent with his pleaded case and witness statement evidence on the alleged express common intention.  As the defendant conceded, there was in fact no express discussion with Mother regarding trust or that Mother would hold no beneficial interest at all.

65.Significantly, the defendant’s own evidence as to what was discussed between Mother and him in the said conversation (see §48 above) was equivocal as to whether the parties did reach the express common intention as alleged.  None of the matters allegedly discussed, whether individually or collectively, literally or in context, cogently supports the existence of an express common intention that Mother would only be a registered owner and would have no beneficial interest in the Property in her lifetime.

66.In cross-examination, the defendant accepted that he had never thought about requesting for a declaration of trust be made or for the Property be assigned into his sole name in line with the alleged common intention.  This is despite his appreciation that it would be possible to do so after the purchase of the Tsuen King Garden Unit in 1992, and the serious dispute with Father and Mother that allegedly led to him have to sleep in his car and bathe in a sports center for 3 months.  That the defendant never even thought about taking such steps until commencement of this action is, in my view, rather surprising if the alleged express common intention did exist.

67.I am also not impressed by the credibility of the defendant’s evidence concerning the use of the Property (see §§51-52 above), which on his own evidence was connected to the alleged express common intention.  It is obvious that the defendant was trying hard to downplay the status of the Property as the major family premises to bolster his case of sole beneficial ownership.  I do not find this aspect of the defendant’s evidence credible at all.

68.While the parties’ evidence differed as to whether the defendant only requested to get back half share of the sale proceeds when family members were discussing a possible sale of the Property in 2013 and 2014 (see §§41-42 and 54 above), he accepted under cross-examination that he never mentioned to other siblings that the Property wholly belonged to him (see §54 above).  That the defendant did not raise such a contention even during those heated discussions is again, in my view, very surprising if the alleged express common intention did exist. 

69.George gave evidence that, when he visited Mother in 2013, he heard the defendant saying to his other siblings that he only wanted to take back one half of the sale proceeds and would not be concerned with other matters (“我淨係要攞番一半錢，其他我乜都唔理”).  Mr Ko submitted that George was an independent witness and his evidence should be accepted.  There is no evidence to suggest that George is materially interested in the outcome of this case or that his evidence was biased in any way.  George’s testimony on what the defendant said accords with the legal ownership of the Property.  In these circumstances, I have no hesitation in accepting his evidence and find that, apart from not saying to the other siblings that the Property solely belonged to him, the defendant only demanded to receive half of the sale proceeds in 2013 as George described.

70.Finally, I agree with Mr Ko that the defendant’s case is inconsistent with the pre-action letters between the parties’ solicitors.  In particular, the defendant’s case on common intention constructive trust was not even hinted in his letter from Messrs Li, Kwok & Law dated 9 May 2014 or the one from Messrs Leung Tam & Wong dated 2 December 2014.  In the former, Messrs Li, Kwok & Law, acting on the defendant’s instructions, even asked the plaintiff’s solicitors what “your client proposes to deal with the interest of [Mother] in the [Property] besides sale so that we can take instructions.”

71.The defendant purported to explain these by saying that he had not yet made up his mind to retain Messrs Li, Kwok & Law at the time, and that in the letter from Messrs Leung Tam & Wong his rights have been “explicitly reserved”. But this does not detract from the defendant’s curious failure to instruct his own solicitors to put forth his core case on common intention constructive trust (or resulting trust and/or estoppel), which would have been the most natural thing to do.  The defendant offered no explanation on why he had to withhold his case at that point when litigation was about to erupt.

72.As mentioned above, a party seeking to show that beneficial ownership differs from legal ownership has a heavy burden to discharge.  In Lo Kau Kun v Cheung Yuk Yun (supra), DHCJ Sakhrani said in §§9-10:-

“9. In Stack v Dowden [2007] 2AC 432 it was held (Lord Neuberger dissenting) that where a domestic property was conveyed into the joint names of cohabitants without any declaration of trust there was a prima facie case that both the legal and beneficial interest in the property were joint and equal. The onus of proof lay upon any party seeking to establish that equity should not follow the law. Such a party had to prove that the parties had held a common intention that their beneficial interests be different from their legal interests, and in what way. In order to discern the parties’ common intention the court should look at the parties’ whole course of conduct in relation to the property. It was also held that the law had moved on from the presumption of resulting trust and many more factors other than the parties’ respective financial contributions might be relevant to divining their true intentions. When all relevant factors had been taken into account, cases in which the joint legal owners were to be taken to have intended that their beneficial interests should be different from their legal interests would be very unusual.

10. I would also refer to what Lord Walker said at paragraph 33 in Stack v Dowden (supra):

“In the ordinary domestic case where there are joint legal owners there will be a heavy burden in establishing to the court’s satisfaction that an intention to keep a sort of balance‑sheet of contributions actually existed, or should be inferred, or imputed to the parties. The presumption will be that equity follows the law. …”

and also to what Baroness Hale said at paragraph 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. …””

73.Having considered the entirety of the evidence, particularly the matters in §§63-71 above, I am far from satisfied that the defendant has discharged his heavy burden of proving the existence of the alleged express common intention on the balance of probabilities.  Accordingly, I find that the express common intention as alleged by the defendant did not exist.

74.Although the evidence was unclear as to why Mother’s name had been added as a joint tenant of the Property, the defendant’s failure to prove his case means that equity should follow the law.  In these circumstances, the defendant’s case based on common intention constructive trust must be dismissed.

75.For completeness, I should also mention that even if I have erred in finding against the existence of the alleged common intention, I would still have rejected the defendant’s case of common intention constructive trust as he has failed to prove the necessary detrimental reliance.

76.The defendant’s pleaded case on detrimental reliance is based on his alleged sole contribution to the purchase price of the Property, which included all the down payments and all monthly mortgage loan repayments[14].

77.In this connection, the defendant has adduced particularized evidence on his employment and earning history throughout the period August 1976 to October 1985.  In his written closing submissions, Mr Wong tried to demonstrate, inter alia, that the defendant’s cumulative basic salary of HK$66,258 from August 1976 to December 1980 was sufficient to cover the total down payments towards the purchase of the Property of HK$62,170[15].

78.While the plaintiff made no serious challenge on the defendant’s earning capacity, the defendant’s own case is that the down payments were made by Mother allegedly out of his “savings” kept by her, and that the mortgage repayments were paid out of a joint named bank account into which Mother deposited HK$1,723 every month out of such “savings”.  In other words, none of the said payments were directly made by the defendant himself.

79.Thus, in order for the defendant to succeed, he must show that:- (i) Mother kept money on the defendant’s behalf as his “savings”; (ii) such “savings” alone were sufficient to pay for the down payments for the purchase of the Property and all mortgage loan repayments; and (iii) all down payments and mortgage loan repayments in fact came out of such “savings”.

80.Apart from the defendant’s own bare assertion, there was no other evidence, whether documentary or testimonial, to corroborate his account that Mother kept money for him as his “savings”.  While he alleged for the first time under cross-examination that Mother kept one bank passbook for each sibling’s financial contributions, I do not think this belated allegation alone is sufficient to prove that Mother did keep “savings” for the defendant.

81.Even assuming that the defendant gave all his basic salary to Mother for use first as family expenses and to keep the remainder as his “savings”, there is no evidence on apportionment between the two.  There is also no evidence on the level of monthly family expenses.  In these circumstances, there is no objective basis for the court to infer and find that, in the period August 1976 to December 1980, Mother only kept HK$4,088 out of the defendant’s cumulative basic salary of HK$62,170 allegedly given to her as family expenses, while applying the entire remainder towards the down payments for the purchase of the Property.

82.The defendant did explain the reason for the lack of documentary evidence[16].  But I am not persuaded that his difficulty aforesaid can be overcome by such an explanation.  As Mr Ko submitted[17], there were several potential sources for Mother’s money at the material time, including the defendant, Father, other siblings and the proceeds from the sale of the Tuen Mun Unit (HK$200,000).  On this state of the evidence, I am not satisfied that what Mother had paid as down payments and the mortgage loan repayments can be traced back to the money of the defendant alone.

83.The lack of objective documentary evidence is not necessarily fatal to the defendant’s case.  But apart from the inherent deficiencies in his own testimony, I find it surprising that the defendant, through his solicitors Messrs Li Kwok & Law and Messrs Leung Tam & Wong, did not even raise his allegation of sole financial contribution in the pre-action correspondence (see §§70-71 above).  If the defendant’s case were true, it would have been most natural for him to raise it to refute a request for sale of the Property. The defendant’s case is also at odds with his demand to receive only half of the proceeds from a sale of the Property, as I have found in §69 above.

84.Having assessed the parties’ evidence and submissions in the round, I am not satisfied that the defendant has proved that he was the only one who contributed to the purchase price of the Property. 

85.Accordingly, even if (contrary to my above finding) the alleged express common intention did exist, I would still have rejected the defendant’s case based on common intention constructive trust for want of detrimental reliance.

(b) Resulting Trust

86.The defendant’s alternative case based on resulting trust is also founded on his alleged contribution to the purchase price of the Property. 

87.In §81 of his written closing submissions, Mr Wong submitted that:-

“… in the event that this Honourable Court found that the Constructive Trust by Common Intention was not entered into by [Mother] and [the defendant] and [the defendant] made full or part contributions to the purchase price of the Property, this Honourable Court may still find that [the defendant] is entitled to the interest of the Property in proportion to the contribution to the purchase price of the Property.”

88.I pause to note that Mr Wong’s reliance on a putative finding of “part contributions” to the purchase price does not find any support in the defendant’s pleadings.  The defendant’s counterclaim is made on the basis that the defendant was the 100% beneficial owner of the Property, with no alternative counterclaim based on a lower percentage.  But be that as it may, I shall proceed to consider Mr Wong’s said submissions.

89.It is worth repeating that the plaintiff does not dispute that the defendant is entitled to a 50% beneficial interest in the Property.  Thus, for the defendant to succeed meaningfully under this head, he must show that he had contributed over 50% towards the purchase price of the Property.

90.As stated above, I have rejected the defendant’s case that he was the sole contributor to the purchase price of the Property.  I rejected it because, inter alia, there was insufficient evidence to show how much of the purchase price could be traced to the defendant’s contribution (if any), and on the finding that he had only demanded to receive half of the sale proceeds in 2013.

91.In view of the aforesaid, there is simply no basis for this court to find that the defendant has contributed to over 50% of the purchase price of the Property, or even if so, how much between 50% and 100% the defendant contributed.

92.It follows that the defendant’s case on resulting trust must also be rejected.

(c) Proprietary or Promissory Estoppel

93.The principles of promissory and proprietary estoppel were succinctly explained by Recorder Coleman SC in Hong Chi Yung v Chung Ngai Ki (the executor of the Estate of Chung Hung Chong, Deceased) (unreported) HCA 54/2014; 19 October 2016 at §§39-42:-

“39. Though there is discussion as to the extent to which promissory estoppel and proprietary estoppel overlap, there is a body of opinion inclining towards the view that there is no real difference between them.

40. A proprietary estoppel is established when there is shown (a) a representation or assurance has been made to a claimant, (b) reliance has been placed on the representation by the claimant, and (c) there is detriment to the claimant by reason of his (reasonable) reliance: see Snell’s Equity 33^rd Ed at §12‒033.

41. The three requirements are inter‑related, and underpinned by the notion of unconscionability. However, even if the three requirements appear to have been satisfied, yet it would not “shock the conscience of the court” to refuse the claim, then the proprietary estoppel claim may still fail. As stated by Robert Walker LJ in Gillett v Holt [2001] 1 Ch 210 at 225:

“... the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments. ... Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.”

42. As regards the concept of detriment, although that element is an essential ingredient of proprietary estoppel, the requirement is to be approached as part of a broader inquiry as to whether repudiation of an assurance is unconscionable in all the circumstances.”

94.In the present case, the only reference to estoppel in the defendant’s pleaded case appears in §24 of the Amended Counterclaim, which reads:-

“24. In such circumstances, the Defendant, by means of contributing to the savings kept by [Mother] since 1976, solely contributed to the purchasing value of the Property, as the whole down payment, monthly instalments of the mortgage, as well as the remaining instalment sums for discharging the mortgage in 1985. By virtue of such financial contributions and in reliance of the Constructive Trust by Common Intention, the Defendant is solely entitled to the full beneficial interest vested in the Property. Further or alternatively, the Defendant is the beneficiary of the Property under a resulting trust and/or constructive trust and/or propriety [sic] estoppel of which the Plaintiff holds the Property on trust on behalf of the Defendant.” (emphasis added)

95.It appears from this passage that the defendant has not pleaded the precise representation or assurance being relied upon.  It is also clear that the estoppel, as pleaded, is founded upon the defendant’s sole contribution to the purchase price but not on any other detriment. 

96.But in his opening and closing submissions, Mr Wong clarified that:-

(1) The representation or assurance being relied upon by the defendant is Mother’s oral statement that the Property would be the defendant’s in the end (“層樓最後都係你架啦”)[18] (“Representation”); and

(2) The major detriment being relied upon is his alleged sole or partial contribution to the purchase price of the Property.  In addition, the defendant has also incurred detriment by giving up the opportunity to study abroad in reliance upon the Representation.[19]

97.Mr Wong laid particular emphasis on the fact that the defendant’s evidence on the Representation was not challenged by the plaintiff.  He submitted that the defendant’s evidence was unshaken, and that it amounted to a sufficient promise or assurance by Mother as to his beneficial entitlement.

98.Mr Ko, while accepting that he did not challenge this part of the defendant’s evidence during cross-examination, submitted that the court should still assess the credibility of the defendant’s evidence.  In any event, he contended that the Representation should be understood in the context it was said to be made.  He further submitted that all the Representation meant was that the Property would be held under a joint tenancy with the defendant.

99.I do not think Mr Wong was going so far to suggest that the court is bound to accept any aspect of the defendant’s evidence simply because it was not challenged by the plaintiff.  The court would no doubt need to be satisfied that, on the entirety of the evidence, the defendant’s evidence on the Representation is credibly made out on the balance of probabilities.

100.It is pertinent to note that, on the defendant’s own evidence, the Representation was made as part of the same agreement said to constitute the alleged express common intention (see §47 above).  Indeed, when I asked Mr Wong about the meaning and effect of the Representation, he confirmed that the Chinese words in the Representation “supported” the agreement that Mother would hold the Property as a trustee until she passed away.

101.At §§62-73 above, I rejected the defendant’s case based on the alleged express common intention.  Given the close connection between the alleged express common intention and the Representation, I take the view that some of the grounds for rejecting the former also apply to the latter.  In particular, if Mother really made the Representation, there is no credible reason why the defendant, as I found in §69 above, only asked for half of the sales proceeds in 2013.  It is also unthinkable that he did not inform his solicitors about it at the time of the pre-action correspondence.

102.For these reasons, I am not satisfied that the defendant has adduced sufficient evidence to show that the Representation was in fact made.  I accordingly find that the Representation was not made and reject the defendant’s case based on proprietary and promissory estoppel.

103.For completeness, I should mention that I would have rejected the defendant’s case on estoppel in any event even if the defendant had proved the existence of the Representation.  This is essentially for the reason that, in my judgment, the defendant has failed to prove the requisite detriment.

104.Insofar the defendant relies on his contribution to purchase price for the Property as detriment, as I explained in §§89-91 above, there is no basis to find that the defendant has contributed to over 50% of the purchase price on the evidence. In these circumstances, I do not think that the defendant should be given over 50% of the beneficial interest in the Property as equitable relief, even if the Representation were made.

105.As to the defendant’s alleged detriment from giving up an opportunity to study abroad, I do not think this is made out on the facts.  The defendant admitted in cross-examination that his decision to stay in Hong Kong had nothing to do with the purchase the Property, but because Mother feared that he would not return like his elder sister.  As Mr Ko submitted^[20], I agree that giving up studying abroad did not constitute a sufficiently substantial detriment (see Snell’s Equity (33^rd ed) §12-043).  This is because:-

(1) The defendant could have pursued his studies in Hong Kong, and there was no evidence at all to show what detriment, if any, he has suffered by not being able to study abroad in 1980; and

(2) In any event, the defendant admitted that he could have gone to study abroad after saving up for another year after the purchase of the Property.

106.Mr Wong referred to Gillett v Holt [2001] Ch 210 and argued that a decision to give up schooling could constitute a sufficient detriment.  As Mr Ko submitted, the facts of that case are materially different, and involved a far more substantial sacrifice of giving up schooling and working on a farm for over 25 years.  The present facts on detriment, which are clearly distinguishable, do not in my judgment “shock the conscience of the court” even if the Representation had been made.

(d) Relief

107.For all these reasons, the defendant’s defence and counterclaim based on constructive trust, resulting trust and proprietary or promissory estoppel are rejected.

108.In Ng Ming Joe Joseph, Executor of late Ng, Kar Yuen Peter (deceased) v The Personal Representatives of Late Lau Yue Heng (deceased) (unreported) DCMP 2839/2015; 7 February 2017 (at §§23-26 and 29), I summarized the applicable principles in an application for an order for sale under section 6 of the Partition Ordinance (Cap 352).

109.Applying those principles, I am satisfied that it is impracticable to make an order for partition of the Property.  Mr Wong has not advanced any submissions as to why an order for sale would not be beneficial to all the co-owners or that it would result in hardship to the defendant.  To give effect to the plaintiff’s right to rid himself of the shackles of co-ownership, I would make an order for sale of the Property.

110.By an Order of Master S P Yip made by consent dated 11 January 2016, the parties agreed to adduce the Valuation Report of Dudley Surveyors dated 19 March 2015 as expert evidence on the value of the Property.  Dudley Surveyors issued an updated expert report on 3 June 2016 which has also been placed into evidence.  The market value of the Property as of 3 June 2016 on a vacant possession basis was assessed at HK$3,400,000.  Absent contrary evidence, I accept this figure as its market value aforesaid.

111.In the originating summons, the plaintiff seeks a series of proposed directions for the sale of the Property.  Mr Wong has made no adverse comments in relation thereto. Subject to minor changes (see under §116 below), I am prepared to order the sale be conducted in such manner, with liberty for the parties to apply for further directions.

112.In view of the rejection of the defendant’s case on constructive trust, resulting trust and estoppel, I only need to consider the defendant’s counterclaim in connection with the Tenancy Agreement. 

113.There is no dispute that the Tenancy Agreement was only signed by one of the two legal joint tenants of the Property.  By the unity of title, it is trite that one joint tenant cannot grant a lease of land without the authority of other joint tenant(s) (see U-Needa Laundry Ltd v Hill [2000] 2 NZLR 308 per Paterson J at §24; Jong Lan Kiauw v Jong Yang Hwa & Anr (unreported) DCMP 2540/2008; 17 November 2008; per HHJ Mimmie Chan (as she then was) at §13).  I therefore agree with the defendant that the Tenancy Agreement and the registration of the same at the Land Registry were invalid and of no legal effect.  I am also prepared to make a declaration this effect to avoid issues with conveyancing. 

114.Save as the aforesaid, the defendant’s counterclaim is dismissed.

115.Despite the defendant’s limited success, the plaintiff is the overall winner of the case.  The time spent on dealing with the Tenancy Agreement was negligible.  In such circumstances, I consider it fair to make an order nisi that the defendant do pay the plaintiff’s costs of the main action and the counterclaim, with a certificate for counsel.

DISPOSITION

116.I therefore order that final judgment be entered as follows:-

(1) ALL THOSE 7 equal undivided 30,167^th parts or shares of an in ALL THAT pieces or parcels of ground registered in the Land Registry as TSUEN WAN TOWN LOT NO. 236 AND THE EXTENSION THERETO And of and in the messuages erections and buildings thereon now known as “ALLWAY GARDENS (荃威花園)”, No. 22 On Yat Street, Tsuen Wan, New Territories, Hong Kong (“the Building”) TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT FLAT 1407 on the FOURTEENTH FLOOR of BLOCK F of the Building (“the Property”) be sold, pursuant to section 6 of the Partition Ordinance (Cap 352), in the manner set out hereinbelow;

(2) The plaintiff’s solicitors herein, Messrs Danny Ma & Co, shall have the conduct of sale of the Property;

(3) The Property shall be sold with vacant possession at first attempt by private treaty sale at a price of not less than HK$3,250,000.  The formal Sale and Purchase Agreement for such sale shall be executed within 2 months from the date hereof and the date of completion of such transaction shall be within 2 months from the date of execution of the said formal Sale and Purchase Agreement, unless both of the parties herein should consent in writing to any variation of the said time limits;

(4) If the Property cannot be sold and/or the formal Sale and Purchase Agreement cannot be executed within the time-frame in the manner as stated in the preceding paragraph, the Property shall be sold by public auction with a reserve price of HK$3,150,000;

(5) If the Property shall be sold by public auction as aforesaid, the first public auction shall be held within 1 month from the expiry of the time limit for the execution of the Sale and Purchase Agreement for private treaty sale;

(6) The plaintiff and the defendant do put up in equal shares any reasonable deposit required to defray the fees and disbursements incidental to the sale of the Property whether by private treaty or public auction;

(7) The proceeds of sale of the Property be applied in the following order of priority:-

(a) first, in the discharge of government rent, taxes, rates and/or other outgoings due and outstanding and affecting the Property;

(b) second, in the discharge of any prior encumbrances affecting the Property; and if such prior encumbrance is due and owing by the plaintiff solely, it shall be deducted from the shares of the net proceeds of sale to which the plaintiff shall be entitled;

(c) third, in payment of the estate agent’s commission, conveyancing costs, legal costs and disbursements, auctioneer’s remuneration and all other reasonable expenses payable or incurred for the purposes of or in connection with the sale provided that such estate agent commission and/or auctioneer’s remuneration shall not exceed 1.5% of the sale price of the Property and the legal costs in respect of the conveyance of the Property shall not exceed the sum of HK$15,000;

(d) fourth, in payment of the residue to the plaintiff and the defendant in equal shares; and

(8) There be liberty to apply for further directions, if necessary, as to the manner of sale of the Property and generally;

(9) It is declared that the tenancy agreement entered into by Lo Sook Hing and the plaintiff in respect of the Property dated 14 January 2014 and registered with the Land Registry by memorial no. 14012201450011, together with the registration thereof at the Land Registry, were invalid and of no legal effect;

(10) Save as ordered under the preceding paragraph, the defendant’s counterclaim be dismissed; and

(11) There be a costs order nisi that the defendant shall pay the plaintiff’s costs of the main action and counterclaim, including all costs reserved if any, to be taxed if not agreed with a certificate for counsel.  The order nisi shall become absolute in the absence of any application to vary the same within 14 days of handing down.

117.It only remains for me to thank counsel for their assistance.

Mr Tony Ko, instructed by Danny Ma & Co, for the plaintiff

Mr Tim Wong, instructed by Leung, Tam & Wong, for the defendant