Cheung Wai Lam v. Cheung Kok Sun

HCA 1310/2019

[2019] HKCFI 2825

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1310 OF 2019

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BETWEEN

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J U D G M E N T

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1.The plaintiff (“Father”) and the defendant (“Son”) are father and son. The Father commenced this action in respect of 2 plots of land that the Son allegedly holds on trust for him.

Procedural background

2.After the writ with the amended statement of claim has been served, the Son filed the acknowledgement of service indicating no intention to contest the claim.

3.By summons filed on 26 August 2019, the Father applies for default judgment pursuant to O 19, r 7 of the Rules of the High Court (“RHC”).

4.In addition to verifying the service of these proceedings, the Father filed his affirmation and that of his another son in support of the application.  Documentary evidence was exhibited.

5.At the hearing on 10 September 2019, the master directed the Father to file further affidavit to address the merits of the claim and the existence of other parties who may be affected by the claim as well as to lodge a draft order.  The Father did so subsequently.  At the hearing on 10 October 2019, the master adjourned the present application to a judge in chambers.  Hence this hearing.

Principles

6.As counsel for the Father submitted, in an application for default judgment, the court is supposed to determine whether judgment should be given by considering whether the case of the plaintiff as pleaded suffices to support his entitlement to the relief claimed.  It is not necessary to prove the case by evidence.  See Hong Kong Civil Procedure 2020 (Vol 1) (“HKCP”) at §19/7/14.

7.In the present application, the Father claims for declaratory relief.  Whilst it is a rule of practice of the court not to make a declaration of rights in default, the court may nevertheless do so to do the fullest justice to the plaintiff in the circumstances of the case.  The question is whether the plaintiff has a genuine need for the declaration in order to obtain the fullest justice in respect of his entitlement.  See HKCP (above).

Discussion

8.According to his pleading, the Father’s case is as follows.

9.The Remaining Portion of Section B of Lot No 3720 (“Lot 3720 BRP”) and the Remaining Portion of Sub-section 3 of Section B of Lot No 3720 (“Lot 3720 B3RP”) in Demarcation District No 104, Yuen Long, New Territories are adjacent lots of land.

10.By two assignments dated 24 November 1997, the Father and a Mr Liu Kwun Cheung (“Liu”) became the registered owners as tenants in common of the above two lots respectively.  According to the Father, the purchase price for the two lots came entirely from him.

11.Sometime before 2003, with a view to the Father acquiring the interest of Liu in the two lots, the Father came to an agreement or understanding with the Son that: (i) the interest of Liu in the two lots would be assigned to the Son as the Father’s nominee, and the Son would hold the same on trust for the Father; and (ii) the Son would transfer and assign the same to the Father forthwith upon the Father’s request.  The Son also made oral representation or assurance that he would abide by these terms.

12.The above understanding was known by Liu.

13.Pursuant to the above understanding, and by two assignments dated 30 June 2003 and 16 July 2003, Liu assigned to the Son his interest in Lot 3720 BRP and Lot 3720 B3RP. The Son has no beneficial interest in the lots, but holds the legal title on trust for the Father.

14.Since the assignments in 2003, the Father was at all material times the only person in actual and full control of the two lots.  He collected rent from both lots and kept the same for his own use without having to account any part of it to the Son.  He also paid for the utilities and related expenses concerning the two lots.  The Son is said to be estopped from denying the above understanding.

15.Since 2018, the Father has repeatedly requested the Son to transfer and assign the two lots to him but to no avail.  Letter before action from the Father’s solicitors dated 2 January 2019 was sent to the Son.  The Son has failed or refused to accede to the request in accordance with the understanding mentioned above.

16.Hence the commencement of the present action.

17.On the basis of the pleaded case, the Father may not found his entitlement on the basis of the understanding per se, as the same failed as an enforceable declaration of trust in the absence of writing.  However, the pleading affords the entitlement to claim on the basis of a constructive trust arising out of the common understanding at the time of the transfer and assignment of Liu’s interest to the Son, which was coupled with the Father’s control of, expenditure on and income from the two lots all on his own subsequently.  As pleaded, estoppel against the Son from denying such common understanding could arise.

18.The pleading, on its face, affords the Father with the entitlement to the relief claimed in respect of his interest in the two lots.

19.As mentioned, somehow affidavit evidence has been filed for the purpose of the present application both by the Father and his other son, Cheung Kwok Yuen (“CKY”) and pursuant to the direction of the master.  Insofar as such evidence may be taken into account, they tell the follows:

(1)  The conveyancing documents mentioned above were produced.

(2)  The contribution towards the purchase of the two lots in 1997 entirely by the Father was explained by reference to documents.

(3)  Liu had collected and kept the rental income from the two lots to his own use.

(4)  The Father was minded to nominate one of his children to take up the assignment of Liu’s interest in the two lots in 2003.  Amongst his seven children, five of them were unable to do so for different reasons.  Upon the refusal of CKY, the Son was asked and he agreed to do so.

(5)  In view of (2) and (3) above, there was no actual payment of the agreed consideration for the assignment of Liu’s interest in the two Lots to the Son in 2003.  The Father also paid for the expenses in connection with the conveyance then.

(6)  The two lots are now vacant, and there is no other party who may be in a position to claim any interest in them.  Nor is any one of the two lots subject to any prior encumbrance.

20.The affidavit evidence, if taken into account, reinforces the entitlement of the Father to the relief claimed.

21.In view of the nature of the claim, full justice cannot be afforded to the Father in respect of his entitlement, if the declaratory relief is denied.  There is nothing apparent that should prevent the court from allowing the claim for such relief without a trial in the circumstances.

Disposition

22.I make the following orders:

(1)  Declaration that the Son has been and still is holding his ½ share and interest in the two lots on trust for the Father;

(2)  Order that the Son do within 28 days take all necessary steps and execute all necessary documents to assign and transfer his ½ share and interest in the two lots free from encumbrance to and in favour of the Father absolutely, failing which a partner of Leung Kin & Co, solicitors for the Father, shall on behalf of the Son execute all the necessary documents to effect the transfer.

[Discussion re costs]

23.In view of the stance of the Son in the present action, I feel surprised that the commencement of the present action could not be prevented, particularly when both parties are reported to reside under the same roof[1]. Nevertheless, the Father has conducted the proceedings herein after the commencement of action partly in accordance with the direction of the master. In the circumstances, I see no reason why the Father should not have the costs of this action, including any costs reserved.  As requested, costs shall be taxed if not agreed.

Mr Ivan Lee Chun Hay, instructed by Leung Kin &Amp; Co, for the Plaintiff

The Defendant was not represented and did not appear