Lo Man Yau v. Chiu Sung Fai and Another

DCCJ 2516/2013

[2019] HKDC 1075

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2516 OF 2013

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Before: Deputy District Judge Lawrence K F Ng in Open Court

Date of Hearing: 16 May 2019

Date of Judgment: 14 August 2019

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JUDGMENT

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A. INTRODUCTION

1.This is my judgment on the determination of the issue directed by the Court of Appeal in paragraph 25 of its judgment dated 9 July 2018 (“the CA Judgment”).  The issue is: whether the claim of trust as pleaded by the 1^st defendant arose, bearing in mind that, as found by this Court, the 1^st defendant did make contributions of HK$588,534 towards the purchase of the Property. 

2.This judgment should be read together with the judgment of this Court handed down on 14 February 2017 (“the Judgment”).  Unless otherwise stated, in this judgment, I will adopt the abbreviations used in the Judgment.

3.In the original trial, the plaintiff was represented by Mr Shum (with him Mr Cheung), and the defendant was represented by Ms Tsui.

4.As the Court of Appeal observed in paragraph 10 of the CA Judgment, this Court found that:-

(1)   The 1^st defendant and his witnesses, Sung Leung and Madam Lam, were truthful witnesses whose evidence this Court accepted.  On the other hand, this Court was not impressed by the plaintiff, whose evidence this Court found to be unsatisfactory and implausible.

(2)   The 1^st defendant had contributed HK$558,534 to the purchase of the Property, giving rise to a resulting trust in the Property held by South Sea in proportion to the 1^st defendant’s contributions to the purchase of the Property, which this Court found to be 30.77%.

(3)   The plaintiff ought to have but failed to make inquiry of the 1^st defendant and Madam Lam.  Because of such failure, this Court found that the plaintiff took the Property subject to the 1^st defendant’s beneficial interest in the Property.

5.With respect to (2) above, in paragraph 22 of the CA Judgment, the Court of Appeal stated that under the legal principles on resulting trust for a corporate context (which are set out in paragraph 12 of the CA Judgment), as a starting point, the rebuttable inference is that both the legal and beneficial interest in the Property is vested in South Sea and the burden is on the 1^st defendant to rebut the inference.  The Court of Appeal further stated that all the circumstances of the case ought to be assessed to determine whether the 1^st defendant had rebutted the inference by showing that the parties intended at the time of purchase to vest the beneficial interest of the Property in the 1^st defendant personally (or the beneficial interest in the Property corresponding to the 1^st defendant’s contributions, see paragraph 24 of the CA Judgment).  In particular, in respect of the 1^st defendant’s contributions, the Court should approach them against his pleaded case in paragraphs 3 and 5 of the defence and counterclaim and any evidence relevant to the parties’ intention at the time of purchase of the Property.

6.In this connection, it ought to be mentioned that, as accepted by Mr Shum, the legal principles on resulting trust for a corporate context were never raised by him in the original trial.  The only cases on resulting trust cited in Mr Shum’s written opening were Wong Chim Ying v Cheng Kam Wing [1991] 2 HKLR 253 and Mo Ming v Brillex Development Ltd & Anr [2015] 3 HKC 104, which were dealt with by this Court in paragraphs 33 to 36 of the Judgment.  Likewise, the legal principles on resulting trust for a corporate context were also never raised in Mr Shum’s written closing submissions.  Rather, with respect to resulting trust, the plaintiff’s closing submissions relied on two main contentions: first, the payments by the 1^st defendant were not contributions to the purchase of the Property but were loans to South Sea, which was rejected by this Court in paragraph 49 of the Judgment; and second, the Court was not able to ascertain the exact percentage of the 1^st defendant’s beneficial interest because he has failed to prove the terms of the mortgage, which was rejected by this Court in paragraphs 58 to 59 of the Judgment.  Nor were the legal principles on resulting trust for a corporate context raised by Mr Shum in the plaintiff’s application to this Court or to the Court of Appeal for leave to appeal.  They were apparently only raised by Mr Shum for the first time at the hearing of the appeal proper in the Court of Appeal.  Although I do not need to make any finding on this, the fact that the legal principles on resulting trust for a corporate context were raised at such an extremely late stage perhaps explains why not only it was never put to the 1^st defendant in cross-examination that he did not intend to acquire a beneficial interest in the Property corresponding to his contributions, but the 1^st defendant was in fact asked in cross-examination whether he knew or intended at the time of purchase of the Property that he would acquire a beneficial interest in the Property corresponding to his contributions, to which he answered in the affirmative (see below).

7.The parties agreed that the re-trial is limited to oral submissions with no new or further evidence to be adduced and that all evidence received at the original trial do stand as evidence in the re-trial. 

B.   THE 1^ST DEFENDANT MADE CONTRIBUTION OF HK$588,534 TO THE PURCHASE OF THE PROPERTY

8.In paragraph 19 of the CA Judgment, the Court of Appeal referred to paragraphs 45 to 49 of the Judgment in which this Court gave detailed reasons to support the finding at paragraph 50 of the Judgment that the 1^st defendant had paid HK$558,534 towards the purchase of the Property and further observed that those were sound reasons which could not be faulted and that there is simply no basis for it to disturb those findings.

9.For completeness, I set out below paragraphs 45 to 50 of the Judgment:-

“45. [The 1^st defendant’s] case is that he contributed a total of $558,534 towards the purchase of the Property. In my judgment, [the 1^st defendant’s] case is supported by the 10 cheques drawn on the Joint Account at around the time the Property was purchased. His evidence as to the purpose for which the cheques were issued was largely unchallenged. The table below is a summary of his evidence. I see no reason to disbelieve his evidence.

Date of cheque	Amount ($)	Payee	Purpose
16.5.2004	$50,000	Chun Tung Group Limited	Repayment of initial deposit
19.5.2004	$100,000	Yip & Partners	Payment of deposit
23.5.2004	$11,560	C C Lee & Co	Payment of stamp duty
16.6.2004	$300,000	C C Lee & Co	Payment of balance of purchase price
16.6.2004	$6,703	C C Lee & Co	Payment of legal costs
22.6.2004	$3,500	The Hong Kong Electric Co Ltd	Payment of electricity deposit
22.6.2004	$65,000	Yeung Chit Fat	Payment of decoration fees
9.7.2004	$900	The Incorporated Owners of Tung Lee Building	Payment of management fees
20.7.2004	$871	The Government of the HKSAR	Payment of rates
20.7.2004	$20,000	Lee Sau Hing	Payment of decoration fees
Total:	$558,534

46.   [The 1^st defendant’s] evidence that he contributed $558,534 to the purchase of the Property is also supported by other contemporaneous documents, namely the Police Statements, which came into existence long before this action was commenced on 10 July 2013.  As noted above, in the Police Statements, [the 1^st defendant] stated that the sum of $558,534 was paid from the Joint Account towards the purchase of the Property.  In cross-examination, it was not suggested to him that what he said in the Police Statements was untrue.

47.   [The 1^st defendant’s] evidence is also supported by the one-page 12.05.2004 PSPA on which Daniel Ng wrote down [the 1^st defendant’s] payments towards the purchase of the Property in the total sum of $418,263.  As shown by the transcript of the meeting held on 25 September 2009, Daniel Ng also said in that meeting that this sum was [the 1^st defendant’s] investment in the Property. Although the amount stated in the one-page 12.05.2004 PSPA differed from the amount which [the 1^st defendant] claimed he had contributed, the one-page 12.05.2004 PSPA clearly supports [the 1^st defendant’s] case that he had contributed monies towards the purchase of the Property.

48.   Mr Shum (Mr Cheung with him), counsel for [the plaintiff], submitted that [the 1^st defendant’s] case is inconsistent with the 1^st Compromise Agreement which made no mention of any contribution to the purchase price of the Property by him or any resulting trust.  With respect, this submission overlooked the fact that apart from the 1^st Compromise Agreement, the one-page 12.05.2004 PSPA with Daniel Ng’s calculation of [the 1^st defendant’s] payments towards the purchase of the Property also came into existence at the same time as the 1^st Compromise Agreement and must be read together with the 1^st Compromise Agreement.

49.   Mr Shum further submitted that the payments by [the 1^st defendant] were not contributions to the purchase price of the Property but were loans to South Sea which had been repaid to [the 1^st defendant] by the cheques issued on 25 September 2009.  In my judgment, there is no evidential basis for such a submission.  It is not [the plaintiff’s] pleaded case that the sum of $558,534 was a loan from [the 1^st defendant] to South Sea.  As fairly accepted by Mr Shum, it was not suggested to [the 1^st defendant] in cross-examination that the sum was a loan.  There is also no basis to suggest that the sum had been repaid.  As noted in Section B above, none of the cheques issued on 25 September 2009 has been cashed.

50.   In conclusion, I am satisfied and find as a fact that [the 1^st defendant] had paid $558,534 towards the purchase of the Property …” 

10.Mr Shum now submits[1] that it was wrong for the 1^st defendant to suggest that the plaintiff had never put to the 1^st defendant that the sum of HK$558,534 was a loan from the 1^st defendant to South Sea, notwithstanding that he accepted in the original trial that that was the case: see paragraph 49 of the Judgment set out above.  It is unclear from the relevant transcript of the original trial now identified by Mr Shum as to whether he did specifically put to the 1^st defendant that the sum of HK$558,534 was a loan from the 1^st defendant to South Sea, because at the original trial the plaintiff did not accept that the 1^st defendant had contributed anything to the purchase of the Property and put the 1^st defendant to straight proof thereof, and because the question put was either not specific enough[2] or was hypothetical[3].  More importantly, there is in any event no basis for this suggestion, which is contradicted by the contemporaneous documents set out in paragraphs 45 to 49 of the Judgment.  Furthermore, even if it can be said that the question had been specifically put, the 1^st defendant, whose evidence I accept, disagreed with Mr Shum’s suggestion.

C.   THE 1^ST DEFEDANT HAS REBUTTED THE INFERENCE 

11.As the Court of Appeal explained in paragraph 17 of the CA Judgment, reading paragraph 5(a) together with paragraphs 3 and 4 of the defence and counterclaim[4], it is clear that the 1^st defendant was in substance pleading that because (1) the Property was to be acquired by him; and (2) South Sea was used solely to hold the Property so acquired by him, he made the contributions to the purchase of the Property.

12.Having assessed all the circumstances of the case, and, in particular, in respect of the 1^st defendant’s contributions to the purchase of the Property, having approached them against his pleaded case as set out in paragraphs 3 to 5 of the defence and counterclaim and any evidence relevant to the parties’ intention at the time of purchase of the Property, I find that the 1^st defendant has rebutted the inference that the beneficial interest of the Property acquired in the name of South Sea with some of the funds provided by him was intended to pass to South Sea and has proved on a balance of probabilities that at the time of purchase of the Property the parties intended that the 1^st defendant would acquire a beneficial interest in the Property corresponding to his contributions.

13.First, I refer to this Court’s findings in paragraphs 45 to 50 of the Judgment as set out in paragraph 9 above.

(1)   In my judgment, the fact that the sum of HK$558,534 was 1^st defendant’s contributions to the purchase of the Property and was not a loan from the 1^st defendant to South Sea is strong or convincing evidence that the 1^st defendant intended to acquire a beneficial interest in the Property corresponding to his contributions, because otherwise there would be no reason why he would have done so.  This is particularly so because in the present case, the only explanation for payment of the sum of HK$558,534 the plaintiff could offer was that it was a loan from the 1^st defendant to South Sea, which explanation this Court has rejected.

(2)   If the sum of HK$558,534 were a loan from the 1^st defendant to South Sea, then, “by advancing a shareholder’s loan to the company to purchase a property, the shareholder was expressing an intention to seek repayment of the loan from the company, rather than acquiring a beneficial interest in the property.  Such intention is inconsistent with any presumed intention on the part of the shareholder to acquire a beneficial interest in the property”: Re Fortune King Trading Limited, HCCW 432/2012, unreported, 19 May 2017, at paragraph 25 per Madam Recorder Linda Chan, SC (approved by the Court of Appeal in the CA Judgment, at paragraph 12 per Poon JA). 

(3)   By parity of reasoning, if, as this Court found in the Judgment (which finding was approved by the Court of Appeal), the sum of HK$558,534 was not a loan from the 1^st defendant to South Sea but was his contributions to the purchase of the Property, then it is consistent with an intention on the part of 1^st defendant to acquire a beneficial interest in the Property corresponding to his contributions.

(4)   On a proper analysis, Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, upon which Mr Shum relied[5], does not assist the plaintiff because in that case, Ribeiro PJ specifically found (at paragraph 34) that the company had borrowed money from its shareholders and from a bank to purchase the property.  Nor is Re Fortune King Trading Limited (supra)[6] of any assistance to the plaintiff because in that case, Madam Recorder Linda Chan SC specifically found (at paragraph 34) that the fund provided by the shareholder to purchase the property was by way of a loan advanced to the company.  Similarly, in Good Profit Development Ltd v Leung Hoi [1993] 2 HKLR 176 (referred to in paragraph 26 of Re Fortune King Trading Limited), Woo J (as he then was) found (at 181) that the funds for the purchase of the property were treated as a loan to the company.  These cases are very different from the present case because the sum of HK$558,534 was not a loan from the 1^st defendant to South Sea but was the 1^st defendant’s contributions to the purchase of the Property.

14.Secondly, the 1^st defendant’s case that at the time of purchase of the Property the parties intended that he would acquire a beneficial interest in the Property corresponding to his contributions is also supported by what the parties said in the meetings on 25 September 2009[7] and 12 October 2009[8].  I see no reason to disbelieve their evidence. 

(1)   At the meeting on 12 October 2009 amongst the 1^st defendant, Sung Leung, Madam Lam and Shuk Har, Sung Leung and the 1^st defendant stressed that because the Property was to be acquired by the 1^st defendant, and South Sea was used solely to hold the Property so acquired by him, he made the contributions to the purchase of the Property:-

Sung Leung:    “咁呢層樓你都明知輝仔買嘅時間，我哋買嚟係比我哋自住嘅”[9] [Underlining provided.]

Sung Leung:    “咁呢層樓 ，你都明確，我哋係賣咗濱海街有層樓，將啲錢投資落呢度買，買嚟自己住㗎啫。當時嘅環境點解用呢間公司持有呢?”[10]

1^st defendant:   “係南海持有”[11]

Sung Leung:    “… ，因為間樓係我買嘅”[12]

1^st defendant:   “層樓係我哋應該嘅，我哋自己比錢買 … 但我哋真金白銀攞錢買嘅”[13]

Sung Leung:    “層樓不溜都係我兩兄弟嘅 ... 層樓我兩兄弟俾錢買㗎”[14]

(2)   The 1^st defendant’s intention was shared by Daniel Ng, upon whose suggestion the Property to be acquired was held in the name of South Sea.  As noted in paragraph 20 of the Judgment, on 25 September 2009, the 1^st defendant, Sung Leung, Madam Lam had a meeting with Daniel Ng and Shuk Har.  At that meeting, Daniel Ng brought with him the one-page 12.05.2004 PSLA on which he wrote down the 1^st defendant’s contributions to the purchase of the Property in the total sum of HK$418,263, as follows: (a) further deposit of HK$100,000; (b) second deposit of HK$300,000; (c) miscellaneous expenses of respectively HK$6,703 and HK$11,560.  As also noted in paragraph 47 of the Judgment, at that meeting, Daniel Ng said that the sum of HK$418,263 was the 1^st defendant’s investment in the Property.

(3)   The 1^st defendant’s intention was also shared by Shuk Har, the other 50% shareholder and one of the three directors of South Sea (the other two directors were the 1^st defendant and Madam Lam).  At the meeting on 12 October 2009, Shuk Har said that Daniel Ng would transfer the Property back to Sung Leung and the 1^st defendant in March 2013 and that the Property was merely held in the name of South Sea (“三月佢轉返層樓比你哋，層樓淨係轉咗公司名”).

(4)   Closely related to the 1^st defendant’s intention to acquire a beneficial interest in the Property corresponding to his contributions is his intention to purchase the Property as a residence for himself, Sung Leung and their family.  At the meeting on 12 October 2009, Sung Leung said that the 1^st defendant purchased the Property as a residence for the 1^st defendant and Sung Leung (“咁呢層樓你都明知輝仔買嘅時間，我哋買嚟係比我哋自住嘅”) [Underlining provided.]  Sung Leung’s evidence in this regard is in turn supported by the payment of the following expenses by the 1^st defendant for the purchase of the Property, i.e., $6,703 for legal costs; $3,500 for electricity deposit; $65,000 for decoration fees; $900 for management fees; $871 for rates and $20,000 for declaration fees.  Although this Court has found in paragraph 61 of the Judgment that as a matter of law these expenses could not be regarded as the 1^st defendant’s contributions to the purchase of the Property, as a matter of fact the 1^st defendant did pay these expenses.  In my judgment, in the circumstances of this case, the 1^st defendant’s intention to purchase the Property as a residence for himself, Sung Leung and their family is inseparable from and consistent with his intention to acquire a beneficial interest in the Property corresponding to his contributions.

(5)   As noted in paragraphs 12 and 13 of the Judgment, at around the time the Property was purchased, the Cheong Ling Property was also purchased in the name of South Sea.  Soon after the Cheong Ling Property was purchased, Shuk Har and Daniel Ng lived there until on or about 23 October 2007 when it was sold.  Shuk Har and Daniel Ng then moved to live in Flat 4C, Tower 4, Lakeside Garden, Sai Kung.  At the meeting on 12 October 2009, Sung Leung stressed that at the time of purchase of the properties, the parties intended that the Cheong Ling Property would belong to Daniel Ng and Shuk Har beneficially and the Property would belong to the 1^st defendant beneficially (“講返頭先長寧嗰度，買嗰度，公司買，公司供，買咗係你哋嘅.”).  I refer to paragraph 14(1) above in respect of Sung Leung’s evidence on the 1^st defendant’s beneficial interest in the Property.

15.Thirdly, the 1^st defendant’s case that at the time of purchase of the Property the parties intended that he would acquire a beneficial interest in the Property corresponding to his contributions is also supported by his evidence at trial, which I also accept. 

(1)   In cross-examination, the 1^st defendant was asked whether at the time of purchase of the Property he already knew that he had a beneficial interest in the Property by reason of his contributions, he answered in the affirmative and specifically said that it was he who actually purchased the Property:-

Mr Shum:     “對你嚟講，喺2004年中買入呢個相連單位嘅時候，你已經—你已經係咪已經知道，你已經知道你擺咗的錢入去買樓呢，你係有業權嘅?” [Underlining provided.]

1^st defendant: “呢個肯定係。”

Mr Shum:     “唔係，你當時已經有咁嘅知悉㗎喇。”

1^st defendant: “係。”

Mr Shum:     “你感覺到你擺錢入去，梗係有業權喇，係咪咁樣？” [Underlining provided.]

1^st defendant: “我實質係買㗎嘛。”[15].

Significantly, it was not put to the 1^st defendant that he did not know or intend to acquire a beneficial interest in the Property corresponding to his contributions or that it was not the parties’ intention at the time of purchase of the Property that the 1^st defendant would acquire a beneficial interest in the Property corresponding to his contributions; rather, the questions asked of the 1^st defendant were: there was no record in South Sea’s accounts of the 1^st defendant’s contributions, and there was no written record of the percentage of the 1^st defendant’s contributions.

(2)   The 1^st defendant gave unchallenged evidence that there was a consensus among the family members that as they were then living in rented accommodation, after the family business had been carried on for a number of years, they decided to use South Sea to purchase the Property and the Cheong Ling Property, which would be used as a residence of the two families[16] and would belong to them personally (“因為當時我哋做生意嘅時間呢，大家都係租樓住，咁做得有番咁上下年，想安居樂業嘅時間已經大家共識咗，用南海個名去買咗呢兩層樓，係私人自住用途，咁變相咗全部根本係係一個私人，佢當時賣咗之後，佢又覺得嚿錢係佢，所以佢就會攞番走，就自己走去買咗西貢翠塘花園嗰個單位。”)[17].

(3)   The 1^st defendant gave unchallenged evidence that he made a clear distinction between the beneficial ownership of the Property and the Cheong Ling Property.  He said that the Property belonged to him and the Cheong Ling Property belonged to Daniel Ng and Shuk Har (“因為在我心目中呢，我分得好清，自己住緊嗰層就係自己，家姐同姐夫買嗰層就係佢哋，所以我一路都唔會—即係我自己心中，我係—即係我追住自己要住，真係真真—確確實實係我自己嘅嘢。”)[18].

(4)   The 1^st defendant gave unchallenged evidence that at the time of purchase of the Property and the Cheong Ling Property, there was a consensus among the 1^st defendant, Sung Leung, Daniel Ng and Shuk Har that the mortgage repayments for the respective properties which belonged to them personally (“私人物業”) would be paid out from the revenue of the family business and that he did not have any beneficial interest in the Cheong Ling Property, which belonged to Daniel Ng and Shuk Har.

Mr Shum:   咁你知唔知道長寧個供款?

1^st defendant:  都係震東同Femme攞錢出嚟供。

Mr Shum:    係你估吖，定抑或有人講畀你聴㗎?

1^st defendant:  哦，呢個大家嗰陣時—即係四個人都有個共識係會係咁樣做，因為以我哋—根本我哋嘅人工人係太少，一定係以—諗住—開頭諗住一家人，都係一舊錢啫，咁大家喺合資嘅生意度攞錢出嚟供番自己嗰個私人物業，自己住嗰度都合理吖嘛。[Underlining provided.]

Mr Shum:   四個人，你指邊四個?

1^st defendant:  趙崇亮，趙淑霞，伍健文同我囉。

Mr Shum:   係，咁以你自己嘅睇番，長寧呢個物業你自己有冇業權㗎?

1^st defendant:  實質性係冇嘅。

Mr Shum:   係，實質性有冇?

1^st defendant:  冇嘅。

Mr. Shum:   冇嘅。[19]

D.   REJECTION OF THE PLAINTIFF’S SUBMISSIONS

16.I reject Mr Shum’s submissions that as the meeting on 12 October 2009 took place 5 years after the purchase of the Property, what Sung Leung and the 1^st defendant said at the meeting was not relevant to the intention of the parties at the time when the Property and the Cheong Ling Property were purchased[20]. It is clear that at the meeting on 25 September 2009, Daniel Ng was mentioning about the intention of the parties at the time when the Property was purchased in 2004, i.e. that the sum of HK$418,263 was regarded by the parties as the 1^st defendant’s investment in the Property.  It is also clear that at the meeting on 12 October 2009, the 1^st defendant and Sung Leung were mentioning about the intention of the parties at the time when the Property and the Cheong Ling Property were purchased: see their evidence summarised in paragraph 14 above. 

17.With respect, Mr Shum’s reliance on Shephard & Anor v Cartwright & Ors [1955] AC 431 (where Viscount Simonds said that “the facts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the cat or made the declaration … But subsequent declarations are admissible as evidence only against the party who made them, and not in his favour” is misplaced because at the meetings on 25 September 2009 and 12 October 2009, the parties were mentioning about their intention at the time the Property and the Cheong Ling Property were purchased and were not making “subsequent declarations”.

18.There is also no merits in the submissions that the only thing that could be discerned from the discussions at the meetings was that the properties were intended to be used as residence of the family members[21] or that there was no clear evidence at the meetings that the parties were asserting beneficial ownerships in the Property[22].  These submissions ignore the evidence summarised in paragraphs 14 and 15 above and must be rejected.

19.I also reject Mr Shum’s submission that some of the 1^st defendant’s answers in cross-examination[23] show that he agreed that “he was to hold his shareholding in South Sea which was the way he had an interest in the Property”. 

(1)   Given my observation in paragraph 6 above (i.e., the principles on resulting trust for a corporate context were never raised by Mr. Shum at the original trial but were only raised by him in the appeal proper before the Court of Appeal), it is extremely doubtful that Mr. Shum was asking the 1^st defendant questions on his beneficial ownership of the Property by reason of the fact that he was a 50% shareholder of South Sea.

(2)   As a matter of fact, the questions asked by Mr Shum of the 1^st defendant were not directed at his beneficial interest of the Property by reason of the fact that he is a 50% shareholder of South Sea.  Rather, they were directed at the 50/50 shareholding in South Sea registered in the respective names of the 1^st defendant and Shuk Har and the fact that the Property was held in the name of South Sea, which is not in dispute.

(3)   The Chinese words “有份” used by Mr Shum are ambiguous since they could mean either legal interest or beneficial interest.  They are to be contrasted with the questions on the 1^st defendant’s beneficial interest in the Property (“業權”) which Mr Shum specifically asked the 1^st defendant (set out in paragraph 15(1) above).  If it is the plaintiff’s case that the 1^st defendant did not have any beneficial interest in the Property corresponding to his contributions or that it was not the parties’ intention that the 1^st defendant would acquire a beneficial interest in the Property corresponding to his contributions, the plaintiff should have specifically put the questions to the 1^st defendant.  I fail to see how the plaintiff can now make the submission in paragraphs 23 and 24 of the plaintiff’s submissions when he had failed to specifically put the relevant questions to the 1^st defendant in cross-examination.

20.As to Mr Shum’s repeated references to the “mutual intentions” of the parties[24], it is well-established that the material intention is that of the provider of the purchase money: Calverley v Green (1984) 155 CLR 242, per Gibbs CJ at 251 and per Mason and Brennam JJ at 261; Re Superyield Holdings Ltd [2000] 90, at 107D-E per Recorder Kotewall SC; Re Fortune King Trading Limited (supra), at paragraph 23 per Madam Recorder Linda Chan SC.  In the present case, the intention of the 1^st defendant, the provider of the purchase money, at the time of purchase of the Property is clear: see the evidence summarised in paragraphs 14 and 15 above.  So is the intention of Daniel Ng and Shuk Har: see also the evidence summarised in paragraphs 14 and 15 above.  Bearing in mind that South Sea was a family company, I do not agree that its intention (if relevant) could only be demonstrated by minutes of directors’ meetings or discussions amongst the directors at the time of acquisition of the Property, which Mr Shum seems to be suggesting[25].  In paragraph 22 of the CA Judgment, the Court of Appeal mentioned about all the circumstances of the case and the evidence relevant to the parties’ intention at the time of purchase of the Property without mentioning about minutes of directors’ meetings or discussions amongst the directors.

E.   CONCLUSION AND ORDER 

21.For the reasons set out above, I find that the 1^st defendant has rebutted the inference that the beneficial interest of the Property acquired in the name of South Sea with some of the funds provided by him was intended to pass to South Sea and has proved on a balance of probabilities that at the time of purchase of the Property, the parties intended that he would acquire a beneficial interest in the Property corresponding to his contributions.

22.In this connection, I refer to paragraph 62 of the Judgment in which this Court held that the 1^st defendant has a 30.77% beneficial interest in the Property as calculated therein.  As the 1^st defendant is entitled to a 30.77% beneficial interest in the Property by virtue of a resulting trust and as the plaintiff’s interest is subject to it, the plaintiff’s claim for possession and mesne profits falls to be dismissed.  I grant a declaration that the 1^st defendant is the beneficial owner of the Property to the extent of 30.77% under a resulting trust.

23.There is no reason why costs should not follow the event.  I make a costs order nisi that the plaintiff do pay the 1^st defendant the costs of the re-trial to be taxed if not agreed with certificate of counsel.  As the Court of Appeal ordered that the costs of the original trial be in the cause of the re-trial, I also make a costs order nisi that the plaintiff do pay the 1^st defendant the costs of the original trial.  In both cases, the 1^st defendant’s own costs are to be taxed in accordance with the Legal Aid Regulations.

24.Last but not least, I thank counsel for their assistance.

Mr Erik Shum and Mr Victor Cheung, instructed by Simon C W Yung & Co, for the plaintiff

Ms Jennifer Tsui, instructed by Cheung & Choy, assigned by the Director of Legal Aid, for the 1^st defendant

The 2^nd defendant was not represented and did not appear