Cheung Ngar Ping Everine v. Cheung Yik Ming Emil

HCA 1894/2014

[2019] HKCFI 1467

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1894 OF 2014

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Before: Madam Recorder Yvonne Cheng SC in Court

Dates of Hearing: 20 – 22 and 24 May 2019

Date of Judgment: 14 June 2019

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JUDGMENT

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A. INTRODUCTION

1.The Plaintiff claims that the property at No 13, 1st Street Section M, Fairview Park, Yuen Long, New Territories (“the Property”), is beneficially owned by her, and asks that the Defendant (her brother and the registered owner of the Property) transfer it to her.

2.The Plaintiff says that there was a common understanding between her and the Defendant that the Plaintiff would buy a property in Hong Kong and allow Defendant and his family to live in it, paying below-market rent to her.

3.The Plaintiff says that based on this understanding, she made a number of payments for the purchase of the Property, and in fact paid the Defendant more than the purchase price of the Property because of the Defendant’s misrepresentations that he needed further funds to complete the purchase.

4.At the trial, counsel for the Plaintiff Mr Tony Ko (appearing with Ms Sharon Ho), advanced the Plaintiff’s case on three bases:

(1) that the Plaintiff owns the entire beneficial interest in the Property by reason of a common intention constructive trust;

(2) alternatively, that the Plaintiff owns the entire beneficial interest in the Property by reason of a resulting trust;

(3) that the Plaintiff is additionally entitled to restitution of the 4^th and 5^th Payments (as defined below), being money paid pursuant to a mistake of fact induced by the Defendant’s misrepresentation that further funds were required for the purchase of a property.

B. THE PARTIES AND THE PURCHASE OF THE PROPERTY

5.The following facts are not in dispute.

B1. The parties

6.The Plaintiff is the elder sister of the Defendant.  They have an elder brother named Cheung Ka Wa (“the Brother”).

7.The Plaintiff emigrated to Canada in 1996.

8.The siblings’ mother (“Mother”) passed away in 2005.

B2. The purchase of the Property

9.On 16 November 2002, the Defendant entered into a Provisional Sale and Purchase Agreement for the Property at the price of HK$1,920,000 (“the PSPA”).  He paid the initial deposit of HK$50,000 using a cheque drawn on the Brother’s account (although he says that the cheque had been given to him by Mother some time ago, undated and without any payee’s name written thereon) (“the Initial Deposit Cheque”).

10.The PSPA provided that a further deposit of HK$142,000 was to be paid on 29 November 2002, and that the balance of the purchase price of HK$1,728,000 was to be paid on completion, which was to be on or before 3 January 2003.

11.The Defendant paid the further deposit of HK$142,000 by way of a cheque drawn on his current account, in favour of Messrs Paul Chan & Co (apparently the Defendant’s solicitors) which was cashed on 26 November 2012.  The relevant bank statement for the Defendant’s current account shows that on the same day, an amount of HK$152,000 had been transferred from a “savings/time deposit” account.

12.The Defendant then paid the balance of the purchase price of the Property of HK$1,728,000 by way of a cheque drawn on his current account, in favour of Messrs Paul Chan & Co, which was cashed on 30 December 2012.  The relevant bank statement for the Defendant’s current account shows that on the same day, an amount of HK$1,800,000 had been transferred from a “savings/time deposit” account.

13.The Defendant completed the purchase of the Property on 3 January 2003.

14.The Defendant and his family moved into the Property in 2003.  The Defendant has never paid rent to the Plaintiff.

C. THE PLAINTIFF’S CASE

C1. Common intention constructive trust

15.The Plaintiff’s primary case is that her interest in the Property arises by reason of a common intention constructive trust.

16.The Plaintiff says that since 1984, the Defendant had had financial difficulties and had asked her and Mother for loans.  Eventually, in 2002, the Plaintiff suggested that she would buy a property in Hong Kong in her name, and allow the Defendant (and his family) to live there as her tenants, paying rent at a level below market rates.  At the time, the Defendant was paying HK$9,000 per month, and the Plaintiff suggested that the Defendant could pay her HK$5,000 a month.  Subsequently, Mother suggested to her that the Defendant’s name should also be added as a property owner for convenience in managing the property.

17.The Plaintiff says that Mother told her that she (Mother) had told the Defendant on the phone the purpose of adding his name to the Property, and that he had expressed his understanding and agreement to the entire arrangement.

18.Mr Ko indicated that he relied on three elements to the common understanding between the Plaintiff and the Defendant (“the Common Understanding”):

(1) that the Plaintiff told Mother that she would buy a property in Fairview Park so that the Defendant and his family could live there;

(2) that the Plaintiff would charge the Defendant a below-market rent of HK$5,000 per month;

(3) that the property would be beneficially owned by the Plaintiff and was not a gift.

19.The Plaintiff says that based on the Common Understanding, the 1^st to 5^th Payments were made.

C1.1 The 1^st Payment

20.The Plaintiff says that in 2002 she re-mortgaged her property in Canada.

21.It is not disputed that on 24 September 2002, the Plaintiff initiated a transfer of C$100,000 (said to be the equivalent of HK$498,000) from her account in Canada to a joint account of Mother and the Brother in Hong Kong.  After deduction of charges, C$99,989 was credited to Mother and the Brother’s joint account on 25 September 2002.

22.It is not disputed that on 3 December 2002, a transfer of C$99,900 was made from Mother and the Brother’s joint account to an account of the Defendant.

23.The Plaintiff says that she did not transfer the funds directly to the Defendant since she did not have his bank account details, and she had not been in contact with him for the six years since her emigration to Canada.

C1.2 The 2^nd Payment

24.The Plaintiff says that one day, Mother telephoned her and said that the Defendant had told her that the deposit for the property purchase would be needed at any moment and that he needed HK$1,200,000.  Since the Plaintiff had only transferred C$100,000 (around HK$498,000), she considered that she needed to make up HK$700,000.

25.The Plaintiff says that therefore, in around September or October 2002, she borrowed HK$700,000 from the Brother, asking him to transfer the amount to the Defendant.  She says the Brother telephoned her to say that this had been done.  The Defendant denies having received any such transfer.

26.The Plaintiff says that she repaid the amount to the Brother in instalments, together with 2% interest, over the subsequent nine or ten months.

C1.3 The 3^rd Payment

27.The Plaintiff says that around a month later, the Brother telephoned her and said that the Defendant still needed another HK$1,000,000.

28.She says that accordingly, she transferred her fixed deposit of HK$1,000,000 to her joint account with Mother, and then the Brother transferred this to another Standard Chartered Bank account, purchasing a cashier’s order, and giving this to the Defendant.

29.It is not disputed that on 8 November 2002, there was a transfer of HK$1,000,000 from the Plaintiff and Mother’s joint account in Hong Kong to the Brother’s account.  The amount was then deposited, on the same day, into an account of the Standard Chartered Bank and used for the purchase of a cashier’s order.

30.The Plaintiff’s case is that the cashier’s order was given to the Defendant; the Defendant denies this.

C1.4 The 4^th Payment

31.The Plaintiff says that in around February 2003, she telephoned the Defendant, not knowing at the time that he had already purchased the Property.  She asked him what property prices were like in the area where he was living, and the Defendant said they were around HK$2,600,000 to HK$2,800,000, whereupon the Plaintiff said that she would transfer more money to him, and asked for his account number.

32.It is not disputed that subsequently, on 27 June 2003, the Plaintiff initiated a transfer of C$60,000 from her account in Canada to an account of the Defendant in Hong Kong.  On 28 June 2003, this amount (less charges) was credited as HK$345,898 to the account of the Defendant.

33.The Defendant acknowledges the transfer but says that the Plaintiff asked him to issue a cheque to an unknown person thereafter for HK$330,000, which was cashed on 7 July 2003.

C1.5 The 5^th Payment

34.The Plaintiff says that subsequently, she thought that maybe the Defendant had not been able to select a suitable property as he did not have enough money.  Therefore, she planned to transfer further funds to the Defendant.

35.It is not disputed that on 11 September 2003, the Plaintiff initiated a transfer of C$40,000 from her account in Canada to an account of the Defendant in Hong Kong.  On the same day, this amount (less charges) was credited as HK$227,392 to the account of the Defendant.

36.As with the 4^th Payment, the Defendant acknowledges the transfer but says that the Plaintiff asked him to issue a cheque to an unknownperson thereafter for HK$220,000, which was cashed on 15 September 2003.

C2. Resulting trust

37.The Plaintiff says that even if there was no common intention, she is entitled to the Property because she contributed the full purchase price of the Property.

C3. Restitution of money paid under mistake of fact

38.The Plaintiff’s alternative case in relation to the 4^th and 5^th Payments is that they were made because the Defendant misrepresented to her in a conversation in February or June 2003 that the 1^st to 3^rd Payments were not sufficient for the purchase of a property, and that the amount needed was close to HK$2,700,000 (“the Misrepresentation”).  Since the Plaintiff made the payments under a mistake of fact induced by the Misrepresentation, she is entitled to recover them.

D. THE DEFENDANT’S CASE

39.The Defendant acknowledges that in 2002, his finances were not very good, although this had only been the case since the closing down of his business after the financial turmoil of 1997.

40.He said that at the end of September 2002, he and Mother had a conversation at Mother’s home.  Mother expressed the view that the Defendant ought to have his own property rather than to pay rent.  The Defendant told Mother that she could not afford to buy a property, whereupon Mother said that she would buy a property for him.  She asked him how much a property would cost, and he said about HK$2,000,000.  Mother then went into her bedroom and gave him a cheque, drawn for an amount of HK$50,000 but with no payee or date written thereon.  This was in fact the Initial Deposit Cheque.  Mother told the Defendant to find a property and promised to give him the balance of the purchase price.

41.The Defendant acknowledges that the Property was not purchased with his funds.  However, he says that the funds all came from Mother, who wanted to provide a stable residence for her grandchildren and therefore offered to purchase and gift a property to him.  He denies that there was any common understanding with the Plaintiff.  He says that nobody told him about the alleged Common Understanding.  He only had a discussion with Mother and what she had said was that she wanted him to own his own property.  She never told him about the source of the money used to purchase the Property.

42.The Defendant denies that he made any misrepresentation to the Plaintiff in February 2003 that he needed further funds for the purchase of a property.

E. THE ISSUES

43.The parties identified the issues to be determined as follows:

(1) whether the Plaintiff contributed to the purchase price of the Property;

(2) whether there was an express or implied common intention between the Plaintiff and the Defendant that the Property would be beneficially owned by the Plaintiff;

(3) whether the Plaintiff transferred the 1^st to 5^th Payments based on the Common Understanding;

(4) whether the Defendant misrepresented to the Plaintiff that the purchase of the Property had still not been completed and the consideration needed for the purchase was close to HK$2,700,000;

(5) whether the Plaintiff transferred the 4^th and 5^th Payments to the Defendant relying on the misrepresentation with the belief that the Defendant needed further funds to complete the purchase of the Property based on the Common Understanding.

F. COMMON INTENTION CONSTRUCTIVE TRUST

F1. The legal principles

44.There is little dispute as to the applicable principles.

45.In order to establish a common intention constructive trust, a plaintiff must prove that:

(1) there was a common intention between him and the defendant that the plaintiff was to be the beneficial owner of the property despite it being acquired in the defendant’s name;

(2) the plaintiff altered his position in detrimental reliance upon such common intention; and

(3) it is unconscionable for the defendant to assert ownership in reliance on his legal title to the property.

See Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at [45] per G Lam J.

46.The parties’ intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned, based on evidence of express discussions.  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 at [49].  Direct contributions to the payment of the purchase price of the property will readily justify such an inference: Mo Ying v Brillex Development Ltd & another [2014] 3 HKLRD 224 at [39(5)].

47.Even where reliance is placed on an express agreement, arrangement or understanding between the parties, their other conduct remains relevant as a matter by reference to which their assertions about the agreement or understanding must be gauged and tested.  See Liu Wai Keung at [50].

48.A party seeking to show that the beneficial title does not follow its legal title bears the burden of proof in asserting otherwise.  This is an onerous burden.  See LLC v LMWA FCMC 4683/2014, unreported, 22 June 2017, at [53].

49.In assessing the evidence, whether in relation to a claim of common intention constructive trust or a claim of resulting trust, Lam VP observed in Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 that:

“ 1.4 … the court should have regard to inherent probabilities in light of the surrounding circumstances at the time when the Property was acquired. …

…

1.6 Since Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776, as far as Hong Kong is concerned, the modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context ….”

F2. Whether Common Understanding between Plaintiff and Defendant

50.It is logical to first deal with the question of whether the Plaintiff has established the existence of the Common Understanding (which includes the question under the second agreed issue of whether there was an express or implied common intention between the Plaintiff and Defendant that the Property would be beneficially owned by the Plaintiff).

51.It is common ground that there was no direct discussion between the Plaintiff and the Defendant regarding the Common Understanding.  The Plaintiff says that she had a discussion with Mother as to the basis on which she was going to buy a property and let it to the Defendant at a below-market rent, and that Mother then discussed this with the Defendant, who agreed to the arrangement.

52.Mother is therefore the only person who was party to both the discussion with the Plaintiff and the Defendant.  However, as she passed away in 2005, no evidence is available from her as to what transpired in those discussions.  Nor was any statement obtained from her before she passed away.  There are no contemporaneous written records of what was discussed between the Plaintiff and Mother or between the Defendant and Mother.

53.In these circumstances, I need to assess the veracity of the Plaintiff’s and Defendant’s accounts of events by reference to other matters.  In doing so, I have borne in mind a number of general principles regarding fact finding and the assessment of credibility.  See Mo Ying, supra, at [77], citing Hui Cheung Fai v Daiwa Development Ltd HCA 1734/2009 (unreported, 8 April 2014) at [77] to [80]:

“ 77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce). …

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: eg Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36 – 37 (Bokhary PJ)), or from the assessment of the witnesses’ character(Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

54.Having considered the evidence, as set out below, I find that the conduct of the Plaintiff both before and after the purchase of the Property is inconsistent with the Plaintiff having entered into the Common Understanding with the Defendant as alleged.  The circumstances are such that it is inherently unlikely that there was such a Common Understanding.  Furthermore, the Plaintiff’s explanations of a number of important matters are not convincing.  Accordingly, I do not find the Plaintiff’s evidence to be reliable.

55.I will not address every single factual allegation and counter-allegation raised by the parties, as this would not be constructive. Instead, I will focus on the key matters which have led me to my conclusion.

F2.1 No requirements or parameters for choosing the Property

56.In her witness statement, the Plaintiff had said that in around 2002:

“ I promised Emil [the Defendant] that he could select the property on my behalf as I was not in Hong Kong at the time. I also considered the fact that it would be Emil and his family who would reside in the property, and not me. I was merely investing my monies to purchase the property and receive rent from the same.”

57.When asked about this, the Plaintiff said that she did not in fact have a direct discussion with the Defendant, and that it was Mother who spoke to the Defendant about this.

58.More significantly, the Plaintiff said that she did not specify any requirements or parameters as to the choice of property, such as location, size, or price.  When asked how the Defendant was to choose a property in such circumstances, the Plaintiff said that the Defendant had lived in his area for a long time, so he was would have been familiar with the price of property in that area, and property values were dropping at the time, so that the budget would be HK$1 to 2 million-odd. However, when asked whether she had had any discussion about the budget, the Plaintiff said that she had not had any discussion with anyone as to the budget for the property, not even Mother.

59.The Plaintiff also gave evidence that:

(1) the purchase of the Property was to be an investment for the Plaintiff;

(2) she invested all, not just a large amount, of her savings on the Property;

(3) she took out a mortgage on her property in Canada for the purpose of making the 1^st Payment;

(4) she did not have funds to make the 2^nd Payment and therefore had to borrow them from the Brother;

(5) she was not able to make the 4^th Payment of C$60,000 until June 2003, despite the Defendant telling her in February 2003 that he needed further funds, until after she had sold her property in Canada;

(6) after making the 1^st to 5^th Payments, she was not able to return to Hong Kong until October 2003 when she had a few months’ savings;

(7) by 2002, she had not been in contact with the Defendant for six years.  Their relationship was such that she did not even want to telephone him to ask for his bank account details because “if I said something he did not like, he would immediately throw a tantrum, he would slam the table and scream at me”.

60.I do not find it credible that against this background, the Plaintiff simply gave a free hand to the Defendant to choose whatever property he fancied (even if it was to be within Fairview Park), and committed to paying for it in full.  The Plaintiff might not have been able to afford whatever the Defendant chose; she might not have liked whatever the Defendant chose; and yet she would have committed her entire savings to it.

F2.2 Not following up progress of the purchase

61.The Plaintiff says that the Defendant did not notify her before he purchased the Property. He signed the PSPA on 16 November 2002 and completion of the purchase was on 3 January 2003.  Yet, she says, it was only when the Plaintiff returned to Hong Kong in October 2003, and was taken to the Property by the Defendant, that she learnt that he had purchased the Property and had moved in.  Even then, although she stayed at the Property for nine days, she “seldom discussed” the Property with the Defendant.  She asked how much of her funds were left and the Defendant said around HK$40,000.

62.When asked why she had not asked earlier about the progress in looking for a property, the Plaintiff said that she did telephone the Defendant to ask in February 2003.  But according to her witness statement, that conversation was as follows:

Plaintiff:  “ What is the property price like in the area where you live now?”

Defendant:  “ Around HK$2,600,000 to HK$2,800,000.”

Plaintiff:  “ Then I will transfer more money to you, what is your bank account number?”

63.This was not an enquiry by the Plaintiff as to how the Defendant was progressing with property selection.

64.When asked why she did not make further enquiries between this conversation in February 2003 and her visit to Hong Kong in October 2003, the Plaintiff gave an answer about why she did not make the 4^th and 5^th Payments earlier.

65.I do not find it credible that having transferred all of her savings to the Defendant to invest in a property on her behalf, the Plaintiff did not make enquiries as to how the search of a property was progressing.  When she did discover, apparently to her surprise in October 2003, that a property had been bought, using her funds and behind her back, she did not ask how much it cost, when it had been bought, or indeed in whose name it had been bought (not hers presumably, since she had not even known about it). I do not find this to be credible.

F2.3 Transferring funds without reference to purchase price of Property or completion date of Purchase

66.The purchase price of the Property was $1,920,000.  The 1^st to 3^rd Payments amounted to some HK$2,198,000.  Yet the Plaintiff continued to make the 4^th and 5^th Payments (C$60,000 and C$40,000, equivalent to HK$345,898 and HK$227,392).

67.In the Amended Statement of Claim, it was pleaded that the reason for this was that in around June 2003, the Defendant telephoned the Plaintiff and said that the purchase of the Property had not been completed and that the consideration needed was close to HK$2,700,000.  The Plaintiff, fearing that the Defendant would not have sufficient funds to complete the purchase, and based on the Common Understanding, transferred the 4^th Payment to the Defendant.

68.The Plaintiff confirmed in evidence that the telephone conversation in question was in fact the one referred to in her witness statement as having taken place in February 2003 (quoted above).  The discrepancy in the date is perhaps understandable, given the lapse of time since the telephone conversation occurred.  More surprising is the difference in the account of the conversation.  If the Plaintiff had not spoken to the Defendant for six years she ought to have remembered whether it was the Defendant who called her up out of the blue, asking for funds (version pleaded in the Statement of Claim), or whether it was she who called the Defendant to ask about progress of property selection, and volunteering further funds (version in the witness statement).

69.More significant, though, is the Plaintiff’s claim that the reason for her transferring further funds to the Defendant was his misrepresentation that more money was needed for completion of the purchase of the Property.  On the Plaintiff’s own description of the conversation (as set out above), there simply was not any such misrepresentation.  All that the Plaintiff did was to ask what the property price was in the area where the Defendant was living (which had all along been Fairview Park) and all that the Defendant did was to respond that it was HK$2,600,000 to HK$2,800,000.  This does not amount to a representation that no property had yet been purchased, or that any intended purchase would require further funds.

70.Furthermore, I do not find it credible that if the Plaintiff was expecting the Defendant to purchase a property on her behalf, the Plaintiff did not seek more concrete information as to whether the Defendant had identified a target property, how much that target property would cost, or when funds were needed, before transferring funds to him.

71.Similarly, the Plaintiff’s explanation for needing to borrow HK$700,000 at a 2% interest rate from the Brother (to make the 2^nd Payment) is also not credible.  In her witness statement, she says that Mother telephoned her, saying that the Defendant needed to pay a deposit for purchasing a property “at any moment” and that he wanted HK$1,200,000 for this purpose.  When asked whether she had any query as to why such a large amount was needed for merely the deposit, the Plaintiff said that she did not think about it, claimed not to be aware what percentage of the purchase price of a property might be needed for a deposit, and said that anyway it was not feasible to differentiate between funds needed for a deposit or an actual acquisition.  It is not credible that the Plaintiff did not ask for more information as to the investment being made on her behalf, and which required her financial commitment, and instead simply went ahead to borrow money to provide the requested funds.  As a matter of common sense, a property requiring a HK$1,200,000 deposit might be very different from a property requiring a HK$1,200,000 purchase price.  After all, it is not as if the Plaintiff had no experience in the property market at all.  She had previously bought a property in 1991 for which she had paid HK$50,000 by way of deposit (as she said that the purchase was not carried out through an agent and the amount was simply that asked for by the vendor), and had also bought an uncompleted property pursuant to a pre-sale scheme in the 1980s.  Moreover, the Plaintiff is an educated lady, being able to read and write in Chinese, English and Japanese, and having worked in various fields, including as a computer programmer for a number of years.

F2.4 Not transferring funds to the Defendant directly for the 1^st and 3^rd Payments

72.The 1^st Payment was not made by the Plaintiff directly to the Defendant.  The Plaintiff transferred C$100,000 to Mother’s joint account with the Brother in September 2002.  Later on, in December 2002, there was a transfer of a similar amount to the Defendant’s account.  The Plaintiff said that the payment was not transferred directly to the Defendant as she did not have his account details, and she did not want to contact the Defendant directly to ask, because (as mentioned above) if she said something he did not like, he would throw a tantrum.

73.The 3^rd Payment was also not made by the Plaintiff directly to the Defendant.  There was a transfer from the joint account of the Plaintiff and Mother to the Brother’s account, and then the Brother arranged for the purchase of a cashier’s order, which the Plaintiff says was then given to the Defendant.  The Plaintiff said that again, she did not transfer the money directly to the Defendant because she did not know the Defendant’s account number.

74.It would of course have been simple for the Plaintiff to have picked up the phone to ask the Defendant for his bank account details, and indeed that is what she says she did in the conversation of February 2003, for the purpose of making the 4^th and 5^th Payments.  The claim that the Defendant might have had a tantrum, had the Plaintiff tried to call him, appears to me to have been contrived in an effort to explain why, if the 1^st and 3^rd Payments had truly been for a property purchase on the Plaintiff’s behalf, they were not made to the Defendant directly.

75.The Plaintiff could also have asked Mother or the Brother for the Defendant’s account number, even if she did not want to speak directly to the Defendant.

76.I find that it is not credible that on the one hand, the Plaintiff was entrusting her entire savings and the task of finding a suitable investment property to the Defendant, but that on the other hand, the Plaintiff did not even want to phone the Defendant to ask him for his account number (or find it out by some other means) so that funds could be transferred to him for this very purpose.

F2.5 Lack of complaint; delay in making claim

77.The Plaintiff’s evidence is that it was on her visit to Hong Kong in October 2003 that she realised she had been deceived, in that (a) the Defendant had already bought the Property in his name and had moved into it, (b) the Defendant had lied about having had insufficient funds to buy the Property (whereupon the Plaintiff had made the 4^th and 5^th Payments), and (c) the Defendant had not paid any rent to the Plaintiff.  The Plaintiff says that she stayed with the Defendant and his family in the Property for nine days, but they “seldom discussed” the Property.  Subsequently, in a discussion with Mother, Mother also expressed the view that the Defendant was dishonest.

78.According to the Plaintiff, during her stay with the Defendant, she had a quarrel with him over his failing to visit Mother during Chinese New Year, and then also asked him why he did not pay rent, but she did not ask him to transfer the Property back to her.

79.The Plaintiff says that she visited Hong Kong again in 2005, when Mother passed away, and did not want to mention the Property as she had to attend to Mother’s funeral matters.  She also visited in 2006 but this was to deal with Mother’s estate.

80.The next time the Plaintiff visited was in May 2012.  She says that initially, the Defendant refused to let her stay with him.  However, as Mother’s flat (in which the Brother lived) was filled with clutter, the Plaintiff insisted on staying with the Defendant, and did so for 27 days.  During that period, the Defendant did not mention transferring the Property to her, or paying rent to her.  The Plaintiff did not make any demand either.

81.The Plaintiff visited Hong Kong again in November 2012.  This time, she says that she called the Defendant and demanded that he transfer the Property into her name.  He refused, whereupon the Plaintiff said that she would take him to court.  Three days later, the Plaintiff asked the Brother to call the Defendant to ask him whether he had considered transferring the Property to the Plaintiff.  The Defendant refused.

82.The Defendant has never paid rent to the Plaintiff.  Prior to the present action (and/or pre-action correspondence in 2013 which was not before the court), the Plaintiff has never asked for it, save for once in October 2003 when she says that she discovered the Defendant’s deception.  When asked why she had not asked for rent, the Plaintiff said (in the witness box) that Mother found out about the deception during Chinese New Year of 2003, and had already asked the Defendant to pay rent.  Since the Defendant ignored Mother, the Plaintiff thought it was “pointless” to ask again.  The Plaintiff had not previously mentioned in her witness statements that Mother had ever asked the Defendant to pay rent.

83.If the Plaintiff transferred the entirety of her savings so that she could acquire an investment property and receive rent from it, it is simply not credible that despite never having received a cent’s worth of rent since the Property was acquired in 2003, and having thought herself to be the victim of deception since October 2003, she made only one complaint to the Defendant about his failure to pay rent, and did not take any action until 2012 or 2013 when she sought legal advice.

84.The Plaintiff’s explanation as to why she did not ask for a transfer of the Property until November 2012 is also not credible.  She did not ask for a transfer of the Property in October 2003, even though this was apparently the time when she discovered that she had been deceived of the entirety of her savings.  When asked why she did not do so, the Plaintiff said that she thought that she had already lost the Property to the Defendant by reason of his deception, so she would not be able to recover the Property.  She also said that it was difficult, or impossible, to talk to the Defendant about the matter, because Mother would think that it was very mean on her part.  These explanations are difficult to believe:

(1) If, in 2003, the Plaintiff thought that she had already lost the Property to the Defendant, so that she would not be able to recover the Property, why did she nevertheless ask the Defendant to transfer it to him in November 2012?  She said that she called him and asked him for the transfer because “at that time what was in my mind was to see what was in his mind”.  It was not because she had already received legal advice that she had a good claim.  According to the Plaintiff, it was only after the Defendant refused the transfer that she started looking for lawyers to see whether she could take action to recover the Property.

(2) The Plaintiff also said that when she called the Defendant in 2012 asking for a transfer of the Property, she had not thought that he would refuse—which is inconsistent with a belief that she could not recover the Property.

(3) If the Plaintiff did not want to upset Mother over the matter, this nevertheless does not explain why she did not make any demand for a transfer of the Property between 2005 (when Mother died) and November 2012.  The Plaintiff said that she was busy with various matters arising out of Mother’s death, including her funeral and matters relating to her estate.  However, it must have been possible for the Plaintiff to make a complaint during these years.

85.It is not credible that if the Common Understanding was that the Property was beneficially owned by the Plaintiff, but the Defendant then deceived the Plaintiff and bought it in his own name, using the Plaintiff’s funds (which were the entirety of her savings), the Plaintiff did not complain about this, let alone take action to recover the Property, until November 2012.  Even then, all that she apparently did was to ask once, and then three days later ask the Brother to ask once.  I do not find it credible that the Plaintiff stayed with the Defendant for 27 days in the Property in May 2012, yet did not once raise her grievance with the Defendant, even though she says that she was “very angry and disappointed” at the Defendant’s treatment of her.

F2.6 The Defendant’s version of events

86.The Defendant was cross-examined for over a day.  He was consistent in his evidence throughout, and his version of events is also consistent with the inherent probabilities of the case.  In general, I accept the evidence that he gave to be truthful.

87.The Defendant frankly admitted that he did not contribute anything towards the purchase price of the Property, but said that the funds came from Mother, who wanted to help the Defendant to own his own property.  He said that Mother never told him that the funds provided by Mother had originally come from the Plaintiff, or said that the Property was held on trust for either her or the Plaintiff.  He said that after Mother gave him the Initial Deposit Cheque in September 2002 and promised to give him the balance of the purchase price, she telephoned him in late October 2002 to say that the money was ready for the purchase of a property, and urged him to look for one.  Subsequently, Mother transferred money to the Defendant’s bank account and the Defendant purchased the Property with these funds.

88.There is evidence that Mother had given the Defendant gifts of money in the past.  The Defendant gave evidence that as his income as a private tutor was not always enough to support him and his family, he relied occasionally on financial gifts from Mother.  He produced a passbook of his joint account with Mother showing that in September 1999, Mother had deposited HK$415,000 into it, which he says was for his use. This was not challenged.

89.The undisputed evidence is that Mother was worried about the Defendant, who had financial difficulties.  It is plausible that Mother wished to help the Defendant and his family, including her only grandchildren, by buying a property for them to live in.  No reason has been suggested as to why Mother would not have done this.

90.It was suggested by the Plaintiff that Mother’s money must have come from the Plaintiff,[1]as Mother never worked.  However, it is unknown whether Mother inherited any wealth from her husband.  Also, Mother did own a property at Mei Foo Sun Chuen, and she sold this in 1979 for HK$320,000 before buying the property at Chi Fu in 1980 for HK$184,000 at which she lived before her death.  According to the Defendant, Mother also earned money from speculating on the property and gold markets.

91.It was a theme of Mr Ko’s submissions that the Defendant had been ambivalent all along as to whether or not he had received the 1^st to 5^th Payments, and that he did not put forward any positive case, but simply sat back and waited to see whether the Plaintiff came up with evidence to substantiate her claim.

92.It was however pleaded by the Defendant from the start that Mother had suggested to him that he should own a property instead of renting, that she had promised to provide him with financial assistance, and that funds for purchasing the Property had come from Mother directly.  I do not consider that the Defendant can be criticised for putting forward non-admissions in respect of the 1^st to 3^rd Payments which mostly related to the Plaintiff’s own dealings with her own accounts or the Brother, to which he was not privy.  He admitted the receipt of the 4^th and 5^th Payments in his account but denied that he had called the Plaintiff to ask for them by misrepresenting that further funds were needed to complete the purchase of the Property.

93.Nor do I draw adverse inferences from the fact that the Defendant did not make denials in his witness statements about various matters.  It was said, for example, that the Defendant did not deny receipt of the 2^nd and 3^rd Payments in his witness statement, and only did this when he came to give evidence.  However, the Defendant’s positive case was simply that all the funds for the purchase of the Property came from Mother.  It would have been reasonably apparent from that position that he did not accept that the 2^nd and 3^rd Payments were made to him.

94.The Defendant was also criticised for having selectively disclosed his bank account records.  The Defendant had provided copies of cheques and bank statements showing that he drew cheques for payment of the further deposit and balance of purchase price for the Property.  On the day when each of these cheques were drawn (26 November 2002 for the further deposit of HK$142,000 and 30 December 2002 for the balance of purchase price of HK$1,728,000), a transfer was made into the account from a “savings/time deposit” account (HK$152,000 on 26 November and HK$1,800,000 on 30 December).  The criticism was that the Defendant had failed to provide bank records showing the provenance of the amounts of HK$152,000 on 26 November and HK$1,800,000 on 30 December 2002.  However, I do not think that I can draw any adverse inference against the Defendant from the absence of such records.  It has to be remembered that on her own evidence, the Plaintiff did not ask the Defendant to transfer the Property until November 2012, more than nine years after completion of the purchase of the Property, and that the action was not commenced until 2014.  It cannot be said that the Defendant was alerted to the claim sufficiently early such that an absence of bank records dating from 2002 and 2003 inexorably gives rise to suspicion.

F2.7 Evidence of others

95.The Plaintiff relied on the evidence of the Brother as well.  The Brother gave a short witness statement in which he said (inter alia) that the Plaintiff had suggested to Mother that a property could be purchased and rented to the Defendant at HK$5,000 per month; and that Mother had suggested adding the Defendant’s name, to which the Plaintiff had agreed.  He also mentioned that the Defendant never spoke about the situation.  He considered that the Plaintiff had been generous but the Defendant had been dishonest.  The Brother also made a supplemental witness statement in which he addressed the mechanics of the 1^st to 3^rd Payments in greater detail.

96.In considering whether there was the Common Understanding as alleged by the Plaintiff, I have not put much weight on the Brother’s evidence, as it is rather general in nature.  For example, whilst the Brother says that the Plaintiff made a suggestion to Mother about buying a property, he does not explain how he came to know of this—whether it was something which the Plaintiff told him about at the time, or only subsequently; or whether it was something which Mother told him about.  In particular, he does not say that he was witness to any discussion either between the Plaintiff and Mother, or between Mother and the Defendant, as regards the Common Understanding.

97.Mr Ko also pointed to two conversations which the Plaintiff said she had with the Defendant’s wife and son respectively:

(1) The conversation with the Defendant’s wife is said to have taken place during the Plaintiff’s October 2003 visit.  The Plaintiff said that the Defendant’s wife had thanked her for allowing the Defendant’s family to live at the Property, to which the Plaintiff had responded that there was no need to thank her as the Property was not a gift and the Defendant’s family had to pay rent each month.

(2) The conversation with the Defendant’s son took place is said to have taken place during the Plaintiff’s November 2012 visit.  The Plaintiff said that after she called the Defendant and told him that she would sue him, the Defendant’s son called her back, saying that the Defendant had suggested selling the Property and paying money back to her.

98.I have already explained in earlier sections above why I have found the Plaintiff’s evidence to be unreliable.  I therefore do not accept the Plaintiff’s account of the two conversations, there being no independent corroboration of the same.  In addition:

(1) in relation to the conversation with the Defendant’s wife in October 2003, it was the Plaintiff’s evidence that she discovered during this very visit that she had been deceived of the entirety of her savings by the Defendant, yet she stayed at the Property for nine days with the Defendant’s family, having little discussion about the Property with the Defendant.  I simply do not find her account of the visit, including the alleged conversation, to be credible. Furthermore, if the Plaintiff had raised the issue of rent in October 2003, it is difficult to see why the Plaintiff never asked for it again afterwards (until the current dispute arose).  I have already set out above my views regarding the Plaintiff’s explanation of why she did not ask for rent;

(2) in relation to the conversation with the Defendant’s son in November 2012, even if the conversation had taken place as described, this would have taken place more than nine years after the purchase of the Property, and after the Plaintiff had already told the Defendant that she would be taking him to court.  The alleged conversation is merely a self-serving assertion which carries little weight.

99.Mr Ko submitted that the court should draw a negative inference from the fact that the Defendant did not call his wife or son to give evidence to refute these conversations, citing (inter alia) Wisniewski v Central Manchester Health Authority [1998] PIQR P324 at 340 and DBS Bank (Hong Kong) Ltd v Sit Pan Jit HCA 382/2009, unreported, 2 April 2015. In the latter, Deputy High Court Judge Marlene Ng (as she then was) reviewed a number of authorities relating to the drawing of adverse inferences, and said at [34]:

“ … In Kao Lee & Yip v Koo Hoi Yan & ors, where none of the defendants gave evidence, Ma J (as he then was) said that ‘… adverse inferences may be more easily drawn against them and correspondingly, any inferences favourable to KLY can more confidently be drawn as well … providing that the rest of the evidence allows such inferences to be drawn and that such evidence is credible in the first place’ (my emphasis). Likewise, To J in Gleneagle Holdings Ltd v Tse Yue Fong & Ors, observed that:

‘ … If the opponent’s assertion is credible, the inference would add weight to that assertion.  It would be reasonable to draw the adverse inference.  If the assertion is just moonshine or incredible, the inference could not even be raised at all.  It would be unreasonable to draw an adverse inference against a party to give support to an assertion which cannot even stand on its own.  The maxim does not require a party to call each and everyone mentioned in the assertion to rebut that assertion.  Whether the adverse inference is to be drawn is a matter of common sense …’ (my emphasis)”

100.I do not find the Plaintiff’s case regarding the Common Understanding to be credible, and therefore do not draw any adverse inference against the Defendant based on the fact that his wife and son did not give evidence at trial.

F2.8 No Common Understanding

101.I therefore reject the Plaintiff’s evidence and find that there was no Common Understanding as alleged. There was therefore no express or implied common intention between the Plaintiff and Defendant that the Property would be beneficially owned by the Plaintiff.

F3. Whether the Plaintiff transferred the 1^st to 5^th Payments based on the Common Understanding

102.Given my finding that there was no Common Understanding, I do not accept that the Plaintiff transferred the 1^st to 5^th Payments based on such a Common Understanding.

F4. Whether the Plaintiff contributed to the purchase price of the Property

103.A person’s contributions to the purchase price of a property can, in certain circumstances, give rise to an inference that there was a common intention for that person to have a beneficial interest in the property.  However, in the present case there is no room for such an inference, given that the Plaintiff’s primary case is that there was an express common intention, which I have rejected.

104.In case I am wrong about the above, I now set out my findings on the issue of whether the Plaintiff contributed to the purchase price of the Property, simply in the sense of whether the 1^st to 5^th Payments can be attributed to the purchase price of the Property.  I also set out these findings given that the Plaintiff’s case on resulting trust is that she is entitled to the Property because she contributed the full purchase price of the Property.

F4.1 The 1^st Payment

105.It is not disputed that the Plaintiff caused a deposit of C$99,989 to be credited to the Mother and the Brother’s joint account on 25 September 2002, and that on 3 December 2002, a transfer of C$99,900 was made from the Mother and the Brother’s joint account to an account of the Defendant at HSBC, numbered 556-1-035568.

106.By 3 December 2002, the Defendant had already paid the deposit and further deposit for the Property.  As to whether the C$99,000 (roughly equivalent to HK$498,000) could be said to have formed part of the HK$1,800,000 which was deposited into the Defendant’s account 553-549960-001 on which he drew a cheque for HK$1,728,000 on about 30 December 2002 to pay the balance of the purchase price of the Property, there is no evidence.  The Defendant closed his account 556-1-035568 in January 2004 and had asked HSBC for, but was unable to obtain, any records of the account.

107.In the circumstances, the Plaintiff fails to establish that the 1^st Payment formed part of the payment of the purchase price of the Property.

F4.2 The 2^nd Payment

108.The Plaintiff says that in September or October 2002, she borrowed HK$700,000 from the Brother, and asked him to transfer this to the Defendant.  She says that she repaid the amount to the Brother by instalments with 2% interest over the subsequent nine or ten months.  In the Plaintiff’s witness statement, she said that she asked brother to transfer the money to the Defendant’s account, and that the Brother telephoned her to confirm that the transfer had been made.  In the Brother’s witness statement, he also said that the money was given to the Defendant by way of bank transfer.  In the Brother’s supplemental witness statement, he said that he transferred the HK$700,000 to the Defendant in around September 2002.

109.However, at trial, the Brother said for the first time that the Initial Deposit Cheque (which Mother gave to the Defendant) formed part of the HK$700,000 loan, which is at odds with what he and the Plaintiff had previously said.  It is unlikely that had the amount on the Initial Deposit Cheque been deducted from the HK$700,000 transfer, no mention of this would have been made in the Brother’s first witness statement in 2014 or his supplemental witness statement of 2017 (particularly when the latter was expressed to have been made for the purpose of clarifying the details of the 1^st to 3^rd Payments).

110.Furthermore, the Brother’s evidence-in-chief was that Mother asked him to issue the Initial Deposit Cheque, without writing the payee’s name or filling in an amount.  He did not explain how he was able to determine the (remaining) amount to be transferred to the Plaintiff in such circumstances.

111.I have taken into account the fact that the Brother, unlike the Plaintiff, is not claiming any beneficial interest in the Property, so that he should be giving impartial evidence.  On the other hand, I consider that the inconsistencies in his evidence are such that I should not accept the evidence without contemporaneous corroboration of the same.

112.There is no contemporaneous documentation to corroborate either the HK$700,000 (or HK$650,000) transfer to the Defendant, or any of the Plaintiff’s instalments of repayment to the Brother with interest over the subsequent months.

113.The Defendant denies having received a HK$700,000 transfer.  He was cross-examined as to why he did not make such a denial in his witness statement.  He answered that he considered that the purpose of his statement was to set out an account of the facts which had happened, rather than to set out denials of every single allegation that had been raised against him, and that his account of events was simply that the money for the purchase of the Property had come from Mother.  Having observed the Defendant closely during this part of the cross-examination, I accept the explanation given.

114.In the circumstances, I am not satisfied that the 2^nd Payment was made as alleged.

F4.3 The 3^rd Payment

115.In the Brother’s first witness statement, he said that the payment of HK$1,000,000 was transferred to the Defendant’s account, from Mother and himself, by way of bank transfer.  In the Brother’s supplemental witness statement, he said that in fact the amount was transferred to his account, from Mother and the Plaintiff’s account, and then the Defendant asked him to purchase a bank draft and give it to him.

116.This is not an insignificant discrepancy.

117.The documents show that a cashier’s order of HK$1,000,000 was purchased.  However, there is no contemporaneous documentation to show that it was deposited or used by the Defendant.

118.The Defendant denies that he received the cashier’s order.

119.Again, given the absence of contemporaneous corroboration asto what became of the cashier’s order, I am not satisfied that the 3^rd Payment was made as alleged.

F4.4 The 4^th and 5^th Payments

120.These were made after completion of the purchase of the Property.  They could not have been contributions to the Purchase Price.

G. RESULTING TRUST

121.The Plaintiff advanced an alternative case that by reason of her financial contribution to the full purchase price of the Property, I should find that the Defendant holds the Property on resulting trust for the Plaintiff.

122.However, as submitted by Ms Katrina Lee, counsel for the Defendant, given that the Plaintiff’s case is that there was an expressly agreed common intention on the part of the Plaintiff and Defendant that the beneficial interest in the Property belonged to the Plaintiff, there is little scope for the presumption of resulting trust to operate: Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364 at [46].

123.Given that I have rejected the Plaintiff’s case on the alleged Common Understanding, it cannot be said that any funds provided by the Plaintiff were in the character of a purchaser (cf Lewin on Trusts, 19^th ed., para 9-021).

124.In any event, for the reasons set out above, I am not satisfied that the Plaintiff did in fact contribute to the purchase price of the Property.

H. RESTITUTION OF MONEY PAID UNDER MISTAKE OF FACT

H1. Whether the Defendant misrepresented to the Plaintiff that the purchase of the Property had still not been completed and that the consideration needed was close to HK$2,700,000

125.The Plaintiff’s case is that the Misrepresentation was made in the conversation with the Defendant of February 2003.  The Plaintiff’s account of the conversation as set out in her witness statement has been set out at paragraph 62 above.

126.I do not consider that this conversation, as described, contained any representation that the purchase of a property had not been completed (and hence that any particular sum was required as consideration therefor).  The Plaintiff simply asked the Defendant about the price of property in the area in which he was living.

H2. Whether the Plaintiff transferred the 4^th and 5^th Payments to the Defendant relying on the misrepresentation with the belief that the defendant needed further funds to complete the purchase of the Property based on the Common Understanding

127.Given my rejection of the alleged Misrepresentation, it follows that the 4^th and 5^th Payments were not made pursuant to such a misrepresentation.

H3. Limitation

128.In any event, as Ms Lee submitted, the Plaintiff’s claim for recovery of the 4^th and 5^th Payments is time-barred.  The causes of action arose when the payments were made in 2003, more than six years prior to the commencement of these proceedings.  Actions founded on simple contract are barred after the expiry of six years from the accrual of the cause of action (section 4(1) Limitation Ordinance, Cap 347); this covers actions for money had and received: Goff & Jones, The Law of Unjust Enrichment, 9^th ed, paras 33-07, 33-08.

I. CONCLUSION

129.I therefore dismiss the Plaintiff’s action, and order costs be paid by the Plaintiff to the Defendant, to be taxed if not agreed.

Mr Tony Ko and Ms Sharon S Y Ho, instructed by Ho, Tse, Wai & Partners, for the plaintiff

Ms Katrina K W Lee, instructed by K Y Lo & Co, for the defendant