Lam Ka Kui v. Choi Yuen Ling

HCA 537/2017

[2020] HKCFI 2647

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 537 OF 2017

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J U D G M E N T

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A. Introduction

1.This case relates to the true beneficial ownership of the residential property located at Flat A, 7^th Floor, Block 2 and Car Park No 3 on Carpark 3, Villa Tiara, 9 Tuen Hing Road, Tuen Mun, New Territories (“TM Property”).

2.The TM Property was purchased in the joint names of the plaintiff and defendant in late 2013/early 2014.  At the time, the plaintiff and defendant were in a romantic boyfriend/girlfriend relationship.  But that relationship broke down in some acrimony after they had cohabited in the TM Property for just a few months from February to April 2014. There is no real dispute that it was the plaintiff alone who funded the entire purchase of the TM Property by way of deposits and down payments and in servicing the mortgage loan.

3.The plaintiff says he is the sole beneficial owner of the TM Property.  He says so based upon an alleged agreement or the common intention of the parties at the time of the purchase of the TM Property, or by way of resulting trust.

4.The defendant says she is the 50% beneficial owner of the TM Property.  She says it was an outright gift from the plaintiff, made out of love.

5.At trial, each of the plaintiff and the defendant gave oral evidence and, as part of the evidence, adopted their first and supplemental witness statements.  Each spoke to the various documents produced in these proceedings.  As a number of the matters in dispute turn on the credibility of the plaintiff and defendant, I shall return to my assessment of their evidence in some detail.

6.The plaintiff was represented by Counsel, Mr Victor Lui.  The defendant was represented by Counsel, Mr Yan Kwok Wing.

7.This is my Judgment after trial.

B.   The Law

8.Where a common intention constructive trust has arisen, ownership in the property is split into legal ownership and beneficial ownership.  The trustee holds the legal title on trust for the beneficiary: see, for example, Luo Xing Juan Angela v Estate of Hui Shui See Willy, deceased [2009] 12 HKCFAR 1 at §38.

9.Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the claimant regarding their shared beneficial interests in the property that matters.  The trust is constituted by the three elements of (1) the common intention, (2) the claimant’s detrimental reliance on their common intention, and (3) the unconscionability of the property owner departing from it.

10.The burden of proving each element of common intention, detrimental reliance and unconscionability is on the person seeking to show that the beneficial ownership is different from the legal ownership. The focus is on the intention of the parties at the time of acquisition of the asset.  Contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event.

11.Common intention can be expressed or implied. It can be deduced or inferred objectively from the parties’ conduct.  As a matter of common sense, it is easier to infer such an intention prior to the acquisition of property which results in an obvious change in legal ownership (rather than after such an acquisition where there is no change in legal ownership and a change in beneficial ownership is not otherwise apparent).

12.In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §§2.3-2.4, Cheung JA identified two situations where a common intention constructive trust may arise.  The first is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially.  The finding of such an agreement or arrangement can only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been.  The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property, and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust.  In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by mortgage instalment payments, will readily justify the inference necessary to the creation of a constructive trust.

13.A resulting trust arises by virtue of the plaintiff’s contribution in money or in some other way towards the property’s acquisition.  Equity holds the legal owner to be a trustee of that property for the plaintiff in an appropriate share, giving effect to the parties presumed intention.  Particularly in a domestic context, but also generally, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust.

14.Mr Yan raised the point in relation to section 23 of the Law Amendment and Reform (Consolidation) Ordinance, which provides that engagements to marry are not enforceable at law.  He also referred to the case of Ian Hung Wai v Cheung Sau Kuen (unreported, HCA 1541/2007, 26 July 2010) at §§57-59 – as upheld on appeal [2011] 3 HKLRD 458 – which was an application of that section to the facts of that case.  However, I agree with Mr Lui that the facts of this case simply render that section inapplicable, as here the plaintiff is not seeking to enforce any contract of marriage or sue for breach of promise of marriage.  Nor is there any reliance on any common law principle about the recovery of gifts given in anticipation of a marriage being premised on the imposition of an implied condition of the gifts that they should be returned when there is no marriage.  In this case, the plaintiff’s claim is based upon an actual agreement or words and conduct from which should be inferred a common intention.

15.Reference can also be made to Stack v Dowden [2007] 2 AC 432, where at §§68-69 it was emphasised that an intention to have beneficial interest different from legal interest in property is unlikely, and the task of showing that should not be lightly embarked upon.  It was recognised that, in family disputes, strong feelings are aroused when couples split up which can often lead the parties, honestly but mistakenly, to reinterpret the past in self exculpatory or even vengeful terms.  If a difference is to be found between the beneficial and legal interest, clear evidence will be required.  Unequal contributions to the purchase price of property will not likely be enough to move away from the starting point that equity follows the law.

16.I might also mention that general calls to fairness do not seem to me to arise in this case.  On the contest between the parties, either there was an agreement or common intention (as the plaintiff says) or there was not, and/or there was a gift (as the defendant says) or there was not.  What might now be thought, with the benefit of hindsight and different points of view, to be ‘fair’ is not going to assist in the resolution of this dispute.

C.   The Witnesses

17.In my consideration of the facts, and in making my findings, I have concentrated on the matters in dispute between the plaintiff and defendant which seem to me to be necessarily resolved to determine the central question in these proceedings.  There are a number of other aspects of the dispute which probably do not need to be resolved, although some of them will be relevant to matters of credibility.

18.I do not intend to rehearse in this Judgment all of the evidence adduced by documents or orally, or all of the submissions made. But I have them in mind, as I have just heard the evidence and the submissions.  Indeed, it is because both Mr Lui and Mr Yan have been able to provide me with relatively full written closing submissions that I have been able to consider matters with the benefit of their oral points, so as to give judgment today.

19.In assessing the evidence, I have taken into account the demeanour of the witnesses, but without overemphasis because demeanour can be misleading.  More importantly, I have tested and weighed the witness evidence against the totality of the materials, and in particular any available contemporaneous documents, as well as taking into account what seem to me to be the inherent likelihoods and probabilities.

20.I have also looked at the chronology of events, which seems to me to be important to reach a proper understanding of what – on the balance of probabilities – happened, and why.  Though I will set out the facts in broadly chronological order, I have of course considered all of the matters whenever they occurred before making any conclusions.  This is because, where a witness has been discredited over one or more matters on which he or she has testified, that fact may be relevant to the assessment of his or her overall credibility.  On the other hand, just because a witness’ evidence may be found unreliable or even untruthful in some respect does not automatically mean that the totality of that witness’ evidence is unreliable or untruthful.

21.In my view, the plaintiff gave evidence in a somewhat mixed manner.  Parts of his evidence seemed fluid and natural, and even where there were additions to the content of his witness statements, those additions often came across as genuine further detail.  However, other parts of the evidence, including some additions to what was in his witness statements, appeared less convincing, more reticent and evasive, occasionally even a little aggressive to fairly gentle cross-examination, and less easy to reconcile with the other evidence.

22.As to the defendant, whilst much of her evidence was given in a straightforward manner, many parts appeared incomplete and evasive.  One example was in relation to her own family, and in particular her father’s business.  As I shall return to below, the plaintiff said in oral evidence the defendant told him that her father was one of the founders of the Tsui Wah restaurant business.  Originally, this was flatly denied, but in cross-examination the defendant gradually revealed that her father and his siblings had founded a Tsui Wah Café, and then opened a few more, albeit that they subsequently sold the name (and perhaps the business) to the now owner of the Tsui Wah Group.  When seeking to explain this apparent change in evidence, the defendant said that she thought she had been asked about the “group”, whereas when the business was first founded it was not a “group”.  This rather evasive acceptance of her father’s business history only lent credence to the plaintiff’s evidence, though his own reference to Tsui Wah had first been made in his oral evidence.

23.Further, even allowing for normal aspects of memory and recollection of events some years beforehand, there seemed to me to be some degree of trying to make events fit her own preferred chronology.  On several occasions, she orally abandoned or changed several specific assertions put forward in her own witness statements.  On occasions, she appeared to ‘flip-flop’ on points.  Ultimately, her evidence also suffered from numerous chronological problems.

24.To be fair to both the plaintiff and the defendant, the fact that they each gave what might be called ‘additional’ evidence, being evidence which was extra to or slightly deviating from the matters dealt with in their respective witness statements, can sometimes be explained as having been triggered by the lines of cross-examination.  This is neither unusual nor necessarily a point for criticism.  It is, therefore, not of itself always something to be taken against the witness.  It remains necessary to test the additional evidence against the other evidence, as well as the inherent likelihoods and probabilities.

25.Lastly, on matters of overall credibility, I would mention the copies of various WhatsApp messages deployed by the defendant in support of her case.  Though no formal challenge to authenticity has been filed, the plaintiff expressed suspicion as to whether the messages produced were unaltered.  As it happens, in cross-examination, the defendant accepted that she had produced only those messages which she considered were relevant to the matters in dispute between the parties, and that she had deleted from the records those matters she did not consider relevant.  This is unfortunate. Though I accept that the messages produced were themselves genuinely sent and received in the form and on the dates shown, the editing has at least deprived them of significant context, and on many occasions it is difficult to place great weight on particular messages without seeing the context in which they were sent and received.  The editing has also prejudiced the plaintiff, in that he has been unable to retrieve his own version of the exchanges between himself and the defendant, from which he might have pursued the line of enquiries which the rules relating to discovery permit and facilitate.

D.  The Facts

26.The plaintiff runs his own construction business, which he set up in 2006 or 2007.  As he explained during cross-examination, he was educated up to Form 2 and has been working since he was 16.  He clearly has some personal pride in his business, involving trucking, and his own ability to have made something of it.  His role in the business is on the practical side, and I accept the paperwork is largely performed by others.  At the time of the events giving rise to this claim in 2013, he was 35 or 36 years old.

27.The defendant is one year or so older than the plaintiff.  She is university educated, with a bachelor degree in business administration.  But at the time of all material events, she was unemployed and without income.  Currently, she works as a trainer of beauticians.

28.The plaintiff and the defendant first met in 2011.  They became romantically involved from around August or September 2012. Any dispute between them as to the precise date, or when they were first introduced, or who might or might not have been present at the introductions, seem to me to be irrelevant to the resolution of these proceedings.

29.It is common ground that they were in a close and intimate relationship by the end of 2012.  The plaintiff says he proposed marriage to the defendant in around March 2013, but she rejected him and told him that she would only consider marriage to the plaintiff when he had a private property for their matrimonial home.  The defendant wished to deny that she and the plaintiff were contemplating marriage in 2013, and said in evidence that they never discussed marriage in 2013.  However, in her own supplemental witness statement the defendant had stated that they had discussed marriage, albeit that it was uncertain as to when they would get married.

30.To be fair to the defendant, she has explained that she was drawing a distinction between (as Mr Yan has described it in submission) ‘levels’ of conversations.  The defendant accepted that there had been many occasions on which there were ‘casual’ discussions about the possibility of marriage, as might be expected of a courting couple in a serious relationship.  But, her point was that the plaintiff had never formally asked her to marry her, and she had never committed to marry him.  Though the defendant has sought to emphasise that there was no ‘commitment’ to marry, I do not think that particularly helps her case.  The key point is that whatever discussions were held between the plaintiff and defendant in late 2013 was clearly at a time when they were contemplating marriage.  That the defendant might not actually have stated or entered into any ‘commitment’ would actually go to support the plaintiff’s position in this case, as it is inherently less likely that the plaintiff would agree to a substantial gift to someone who had not committed to their future together.

31.At the time, the plaintiff lived in a property in Fanling, New Territories, which he had purchased under the Home Ownership Scheme in early 2001 (“HOS Property”).

32.There is evidence, which I accept as correct, that the plaintiff placed the HOS Property on the market for sale, with an estate agent in late February 2013.  I note the estate agent’s letter does not identify the basis of the date 27 February 2013, and no computer record is attached, but I nevertheless accept the evidence.  I also reject the defendant’s evidence that the HOS Property was put on the market only in June 2013.  The defendant says that, if it was in February, she was unaware of that at the time, but I do not think that (if true) assists her case.  Rather, that chronology of putting the HOS Property on the market at that time tends to support the plaintiff’s case. There is no other explanation offered as to why the plaintiff would wish to sell the HOS Property at that particular time, after having lived there happily for several years.  It is also noteworthy that the HOS Property was in Fanling, but the TM Property was in Tuen Mun.  I accept the plaintiff’s explanation that the he later chose a property there, because the defendant wished to live close to her own mother in Tuen Mun.

33.Another matter relevant to the date when the plaintiff decided to sell the HOS Property arise from what has been called the ‘red paint incident’.  The defendant suggested that the decision to move from the HOS Property was precipitated by a concern about loan sharks seeking to collect on a loan borrowed by the plaintiff’s mother in February 2013 from a finance company/lender in Macau.  The defendant says that about one month later, the office of the plaintiff’s sister was splashed with red paint, and the plaintiff and defendant started to worry about the safety of living in the HOS Property.

34.However, the defendant’s evidence on this ‘red paint incident’ was unconvincing.  It also seems to me to be contrary to the inherent probabilities.  First, there was no reason for the HOS Property address to have been provided to the loan sharks by anyone.  The plaintiff’s mother did not live there, it was not put up as security, and the plaintiff was not a guarantor of the loan.  Secondly, the defendant’s evidence as to when and in what circumstances the address was supposedly given to the loan sharks was shifting.  Thirdly, it came out in oral evidence that the plaintiff’s mother (who may well have been concerned about her own safety) went to stay for a short period at the HOS Property; but it makes no sense that she would go to stay there if she had disclosed that address to the loan sharks and was scared of them.  Fourthly, the ‘red paint incident’ was reported by the plaintiff’s sister to the police on 11 March 2013, which was after the plaintiff had instructed estate agents in late February.  Indeed, it was the defendant’s own evidence that the plaintiff’s mother had disclosed the HOS Property address only after the ‘red paint incident’, so the chronology is against her. Fifthly, the plaintiff continued to reside at the HOS Property until it was ultimately sold in November 2013.  The delay in sale in part was explained by the selling price being unattractive.  This counters the suggestion that the plaintiff or the defendant had any serious concern about the safety or security of continuing to live or stay there.

35.In his oral evidence, the plaintiff explained that the defendant told him she would not consider marriage to him unless he owned a private property – that is, not a HOS property – in part because her father was a wealthy man, so that she was not willing to live in a HOS property after her own marriage.  As Mr Yan has noted, that latter part of the evidence had not featured in the plaintiff’s witness statement.  But I do not think it was a late invention or embellishment; rather, it appeared to be a spontaneous addition of further and credible detail.  Indeed, it fits the evidence overall.

36.There was also a new point raised by the defendant in her oral evidence, when she stated that she did not even know the difference between HOS and private property at the time.  Not least bearing in mind that the defendant was a long-term Hong Kong resident with a bachelor degree in business administration, I find that hard to accept.  Given the importance of the point in the plaintiff’s case about the need and reason to change from ownership of a HOS property to a private property, it is also another of the points that it might be thought would have been raised by the defendant much earlier if it were correct.

37.There is a dispute between the parties as to whether they actually cohabited at the HOS Property in 2013.  The plaintiff says they did not, though he accepts that the defendant spent two or three nights a week there on an irregular basis.  He says that she did not have a key to the HOS Property, and she did not receive mail there.  Indeed, the way in which the defendant’s case was put to the plaintiff in cross-examination did not sound like actual cohabitation, but rather was one of an intimate relationship with occasional overnight stays.

38.The defendant says that they did cohabit at the HOS Property throughout 2013.  She has produced a photocopy of what she says was her key, but on the other hand I note that she did not give the HOS Property as her address in any of the documents relating to the purchase of the TM Property.  For example, on the mortgage application, the defendant gave an address at which she said she had been residing since 1986.  In her own oral evidence, the defendant accepted that she never treated the HOS Property as her residential address, and on occasion she referred to it as “his home” as distinct from her own home.

39.On balance, I prefer the plaintiff’s evidence in this regard.  I find that that the plaintiff and the defendant did not actually cohabit prior to the purchase of the TM Property.  After the TM Property had been acquired and renovated, the plaintiff and the defendant cohabited there for a short time, until the defendant moved out in April 2014.

40.The HOS Property was eventually sold, though it took some time for a purchaser to be found.  Completion of the sale took place in early 2014.  It was the timing of the sale of the HOS Property which permitted the purchase of the TM Property.  The provisional sale and purchase agreement for the sale of the HOS Property was signed by the plaintiff earlier on the same day that he signed the provisional sale and purchase agreement (“PSPA”) to purchase the TM Property.

41.On 3 November 2013, the plaintiff entered into the PSPA in relation to the purchase of the TM Property at the price of $3,490,000 (“Purchase Price”).  The plaintiff was named as the (sole) purchaser on the PSPA.

42.Also on 3 November 2013, the plaintiff had earlier entered into an estate agency agreement for purchase of a residential property in Hong Kong (the flat viewing paper), appointing the agent as his agent for the proposed purchase of the TM Property.  The plaintiff was also named as the (sole) purchaser on that agreement.

43.However, on 4 November 2013, the PSPA was amended to add the defendant as one of the purchasers of the TM Property.  The amendment was made with the consent of the vendors.  The circumstances as to why that change was made are central to the resolution of this action.

44.The plaintiff says that when the defendant became aware that he had signed the PSPA in his sole name, she requested that the TM Property be held in their joint names before she would consider marriage.  In those circumstances, the plaintiff says, he and the defendant agreed on 3 November 2013 (“Agreement”) that:

(1)  in consideration of the defendant becoming the legitimate wife of the plaintiff the plaintiff would acquire the TM Property in the joint names of the plaintiff and defendant, notwithstanding that the plaintiff would be solely responsible for the poor payment of the purchase price, whether by payment of deposits or balance or by his servicing by himself any mortgage taken out in their joint names;

(2)  if the marriage, which was anticipated to take place towards the end of 2014, did not occur, then a condition of the Agreement would have failed and the plaintiff would be entitled to call for the return of the defendant’s joint interest in the TM Property;

(3)  so that, in the event that the defendant at any time prior to the end of 2014 decided not to proceed to marriage with the plaintiff, from that point of time she would hold the interest in any form in the TM Property for and on behalf of the plaintiff, and would forthwith upon his request procure the necessary actions to transfer that interest to the plaintiff.

45.The plaintiff says in the alternative that it was agreed between himself and the defendant on 3 November 2013 (“Common Intention”) that:

(1)  in contemplation of marriage to the defendant, the plaintiff would acquire the TM Property in their joint names, notwithstanding that he would be solely responsible for the full payment of the purchase price, by payment of all deposits and any mortgage instalments taken out in relation to a mortgage in their joint names;

(2)  the defendant’s joint interest would be held on trust for the plaintiff until the marriage, which was anticipated to take place in 2014 and upon which event the defendant’s joint interest in respect of the TM Property would be given to her as a gift (in other words, the defendant’s joint interest was a conditional gift, with the condition being the marriage);

(3)  so that, in the event that the defendant at any time prior to the end of 2014 decided not to proceed to marriage with the plaintiff, from that point of time she would hold the interest in any form in the TM Property for and on behalf of the plaintiff, and would forthwith upon his request procure the necessary actions to transfer that interest to the plaintiff.

46.Hence, says the plaintiff, it was only because of the Agreement and/or the Common Intention that he made arrangements with the counterparties to the PSPA to make the amendments so that the defendant became one of the purchasers, and one of the signing parties.

47.The defendant says that the plaintiff had promised her in June 2013 that when he bought a matrimonial home he would give her half of it out of love and without conditions.  In answer to my questions, the defendant says the plaintiff said exactly that.  However, it seems strange to me that the plaintiff would have said anything about the absence of conditions at a time when the plaintiff was yet to suggest that there might be conditions.  In any event, the chronology of the defendant’s version depends, in part, on the date she says the HOS Property was put on the market.  As I have already pointed out, the chronology is against the defendant in that regard.  But the defendant says that on the evening of 3 November 2013, she reminded the plaintiff of that earlier promise, and that was the reason why the PSPA was subsequently amended to add her as a purchaser.

48.I reject that case, as being significantly less likely than the case put forward by the plaintiff.  There is no dispute that the plaintiff and the defendant viewed the TM Property together.  After doing so, and after deciding that the plaintiff would purchase it, the two of them were also present together with the vendors when the PSPA was signed.  On the evidence, I think it likely that the PSPA was signed at the TM Property.  This is what the defendant said in oral evidence, though it had been put to the plaintiff in cross-examination that after the viewing the plaintiff and defendant went with the estate agent to the estate agent’s office to negotiate the purchase price.  The plaintiff says there was not really much negotiation, as the vendors refused to drop the asking price.  But in any event, wherever it was signed, both plaintiff and defendant were present when the PSPA was signed on 3 November 2013.

49.If there had really been an earlier promise that the intended matrimonial home would be purchased in joint names, and that half of the property would be gifted to the defendant, surely she would have intervened at some point before the PSPA was signed on 3 November 2013.  It does not seem to me to make sense to suggest that she had forgotten the promise even at the time they were looking at an agreement to purchase the property, or that she only suddenly remembered later that day.  I find that the PSPA was signed by the plaintiff as sole purchaser, when the defendant was present and when she knew that she had not been asked to sign in any capacity.  Indeed, the defendant accepted in oral evidence that the purchaser’s address was written on the PSPA by her, it being her address (on the basis that the plaintiff had by then sold the HOS Property so did not wish to put it as his address).  Her earlier suggestion that she was in a different room of the property when the PSPA was signed is clearly not true.  The defendant did not make any objection to the plaintiff signing as sole purchaser, nor raise the idea that she should also be one of the purchasers because of a prior promise, and that is because the purchase of the private property by the plaintiff actually met her demand that he should do so.  There had been no prior promise of a gift.

50.In oral evidence, she explained that whether she obtained a half share was not important to her, because she had a home herself and somewhere to go.  She also said that it was not for her just to remember every day what the plaintiff had said.  I find the defendant’s explanation for her having forgotten about the gift wholly unconvincing, when she was standing in the property, having just agreed with the plaintiff that it should be purchased, and at the very point of its purchase as she helped fill out the PSPA.

51.The plaintiff also gave evidence which ‘rang true’ when he was asked who initiated the idea of joint names and who proposed a condition of marriage to change to joint names.  The plaintiff said that at the HOS Property, on the evening of 3 November 2013, the defendant raised the idea of joint names, saying she would break up with him if her name was not added, and that adding her name would demonstrate to her that the plaintiff really loved her.  In reply, the plaintiff asked if after the documents were changed and she refused to marry, then what would happen.  That seems to me to be a very natural response.  Indeed, on the defendant’s own insistence that she had never committed to any marriage, it is even more obviously the natural response.  The plaintiff says that the defendant promised she would definitely return the property if they did not marry.  She made it clear that her father was rich, pointing out he was one of the founders of the Tsui Wah Café, and that she would not be greedy.  Because the value of the TM Property was not very high, he believed her.  I accept that evidence.  The defendant’s later denial that she had described her father in that way was, of course, significantly weakened by the rather grudging acceptance of the connection between her father and Tsui Wah Café made in cross-examination, and only lends further credence to the plaintiff’s version of events on the evening of 3 November 2013.

52.It was only in oral evidence that the defendant suggested that she had not even been at the HOS Property on the evening of 3 November 2013.  Though she said she had made a general denial of that point by denying the whole of the relevant paragraph in which the plaintiff had given his description of what he said occurred at the HOS Property that evening, it might be thought that a specific denial would have been appropriate and, if true, quickly given.  Perhaps the best answer as to why the plaintiff’s version could not be correct would have been to point out that she had not even been present in the apartment at the time of the alleged conversation.  I do not accept her late evidence, which seems to me to be a change of tack.  I also note that, in cross-examination of the plaintiff, it was specifically put to him that the plaintiff and the defendant went back to the HOS Property on the evening of 3 November 2013, and questions were put on matters which occurred there and then.

53.Indeed, the plaintiff’s evidence was bolstered by another natural answer when the plaintiff was asked in cross-examination why he had not reduced the agreement or common intention into writing.  First he said it was because he truly believed the defendant would not cheat him of half the value, not least where she had not contributed even a penny to the property, be it in purchase price, utilities, or management fees.  As he went on to say, having started to work at 16, it is simply impossible for him to give away half of the property.  As he put it, buying a property meant everything to him as he spent all his savings.  Later in his evidence, he even said it was impossible for him to give half of the property away in an expression of love.  That may not sound generous, but in my assessment of the plaintiff it did sound credible.

54.Nor do I think the criticism, that the plaintiff should have known to put an agreement into writing because he was an experienced businessman, is well made.  First, his business is a construction business, with particular types of arrangements and agreements which are unlikely to be similar to the agreement in this case.  Secondly, this was a domestic scenario in which, as might be expected, he trusted the woman who he thought was going to be his wife and truly believed what she said as correct.

55.Having rejected the defendant’s version of the events on the evening of 3 November 2013, and having accepted the plaintiff’s version, that is essentially the end of the necessary analysis.  But I have of course considered those events, and preferred the plaintiff’s version of them, in light of the various other matters of context and credit.  In so far as they occurred after 3 November 2013, I can deal with them as follows.

56.The estate agent suggested to the plaintiff and the defendant that they use a mortgage broker or ‘middleman’, mReferral, to assist them in finding a mortgage loan.  There is some dispute between the plaintiff and defendant as to which bank or banks were referred to them by mReferral, but that dispute does not seem to me to be of great moment.  I do accept that there were initial difficulties in obtaining a mortgage loan because of the relatively low clear income level of the plaintiff (the defendant apparently having no income which might be brought into account). Ultimately, an application was made successfully to Wing Hang Credit (“WHC”), although in circumstances I can deal with below.

57.The plaintiff says that on about 11 November 2013, the defendant realised (because he told her) that he wanted to apply for a 90% mortgage.  He said that the defendant reacted by saying she was afraid that she might become a negative equity asset owner if the property value were to drop, so wanted her name to be removed.  The plaintiff agreed to that change, but later was told (he says) by WHC that if there was to be a change of name, the procedures might not be able to be completed in time to permit completion of purchase on the required completion date of 13 January 2014.  As that might result in a loss of the deposit, that is why the purchase went ahead in the joint names.  Nevertheless, the plaintiff says the defendant agreed to give him a power of attorney (“POA”) so that he could sell the property on its own in the future.  However, after first stalling, the defendant has since flatly refused to provide the POA.  Whilst it might be said that asking for a POA then was inconsistent with the lack of any previous written record, it seems to me that it arises from the absence of prior record.  That it was only gently pressed to begin with is also consistent with the plaintiff’s stated then trust in the defendant.

58.The formal sale and purchase agreement (“SPA”) was made one week later, on 18 November 2013.  As was put to the plaintiff in cross-examination, attending the solicitors to sign the SPA was an opportunity when the plaintiff could have asked for them to draw up and for the defendant to sign the POA. The plaintiff explained that he did not do so, first because the defendant had been stalling, but also because he still believed the defendant would sign.  I accept that evidence.

59.The payment structure for the purchase set out in the SPA was for (1) an initial deposit of $100,000 (which the SPA acknowledged had already been received), (2) a further deposit of $249,000 to be paid on 16 December 2013, and (3) the balance of $3,141,000 to be paid upon completion.

60.There is a dispute between the parties as to the source of the funds used by the plaintiff to pay the further deposit of $249,000.  The defendant says that the plaintiff required a loan from the defendant’s sister of $150,000 to be able to make that deposit.  There is no dispute that the plaintiff did indeed take a loan from the defendant’s sister in that amount.  The defendant has produced a bank statement from her sister identifying that the sum was transferred on 20 November 2013.

61.I accept the plaintiff’s evidence that he used his own savings and the money obtained from the deposits from selling the HOS Property to pay the deposits for the purchase of the TM Property.  The money borrowed from the defendant’s sister in November 2013 was used by him for a particular additional business project, which he would not have been able to take on if he did not have the money.  I think that is the point being made in the relevant WhatsApp messages.  As the project was performed, and made a profit, the plaintiff repaid the money within a fairly short time, on 21 and 22 January 2014, together with $3,000 of interest.  That interest was paid on a short-term loan between connected ‘family’ members (defendant’s sister to defendant’s boyfriend) also points to the money having been borrowed for a commercial purpose.  Similarly, I also accept that the sum of $60,000 borrowed from the defendant’s mother in January 2013, which was also quickly repaid, was not necessary for nor used for completion of the purchase of the TM Property.

62.But, in any event to some extent, the dispute between the parties on this point is something of a red herring.  Where the plaintiff’s business was a sole proprietorship, whether the monies borrowed from the defendant’s sister were used by the plaintiff himself as part of the second deposit for the purchase of the TM Property, or by the plaintiff in his sole proprietorship (which would have freed up other funds for the deposit) seems to make little difference.  As the plaintiff accepted in evidence, there is little practical difference between money which is his money which money is the business’s money.

63.Further, whilst I accept that it is likely that the defendant’s sister and mother were only prepared to lend money to the plaintiff (for whatever reason) because she asked them to, and because she was in a relationship with the plaintiff, that is not something which can give rise to any beneficial ownership.  Nor, to be fair, is that argument put forward.

64.On the documents, the application for a mortgage loan from WHC was formally made on 27 November 2013.  I would expect there to have been some prior contact with WHC, some testing the waters perhaps, before the formal application.  It is the defendant’s case that the application was necessitated by the refusal of the other banks to grant a mortgage facility.  However, I prefer the plaintiff’s evidence that no formal application had been made to any other bank, and the only formal application was made to WHC (in part, in association with Pan Asian Mortgage Co Ltd (“Pan Asian”) – see below).  I think what likely happened is that the middleman sounded out the banks it first suggested, and received feedback that the income level of the plaintiff was unlikely to lead to a successful application for a mortgage from those banks.

65.On the chronology, and because the formal application was only made to WHC on 27 November 2013, it is perhaps unlikely that the plaintiff could have spoken to anyone at WHC on 11 November 2013, as he said, to explore the possibility of removing the defendant’s name from the purchase.  In re-examination, the plaintiff suggested that he already had in mind WHC on that date, which is why he spoke to them.  Bearing in mind the use of the middleman, I am not sure this discrepancy casts significant doubt on the plaintiff’s version of events.

66.It also seems to be the case that the intended 90% mortgage would not be granted, because the plaintiff’s average earnings were less than $28,000, and the defendant had no income.  So instead there would have to be an 80% mortgage.  This meant that the plaintiff had to find and pay the additional 10%.  He says he did so from his own resources.  I accept that evidence.  The application for the WHC facility was in relation to a ‘high LTV mortgage loan’ offered in association with Pan Asian.

67.On the mortgage application document, the plaintiff gave his address as the HOS Property.  But the defendant gave a different address.  As to the respective financial positions of the parties, the plaintiff identified his business and that he had net earnings of an average $25,000 a month.  There is also a figure of $60,000, on the defendant’s side of the form.  She says that is the monthly income figure for the rent of shop premises of which she is the co-owner (as joint tenants) with her parents. Though the copy of the printed form in the trial bundle is almost illegible at the material point, I accept that the reference to $60,000 is as against the place to write in any monthly income from any source other than employment or business.

68.It seems logical to me that that figure was included to bolster the prospects of the mortgage loan application.  However, it does not seem to be in dispute between the plaintiff and defendant that the defendant was never expected to make any actual contribution to support the mortgage, whether from her own income or elsewhere.  There is some force in the point made by the plaintiff in evidence when he said that if that was a true level of income, the lenders would likely have readily granted a 90% mortgage. It is, therefore, difficult to know what effect the addition of that reference had on the approval process.  But, in any event, I do not think it gives rise to any beneficial ownership interest.

69.On 29 November 2013, the plaintiff entered into the sales and purchase agreement to sell the HOS Property.  Under the terms of that agreement, the total purchase price of $1,920,000 was to be paid by (1) an initial deposit of $80,000 (acknowledged as already paid), (2) a further deposit of $112,000, due on the signing of the agreement, and (3) the balance of $1,728,000 due upon completion.

70.The terms also identified that all deposits payable under the agreement should be paid to the vendor’s (that is, the plaintiff’s) solicitors as stakeholders, who were not to release the deposits to the plaintiff unless the solicitors prove to the satisfaction of the purchaser’s solicitors that the balance of the purchase price is sufficient to discharge the existing legal charge/mortgage.  In cross-examination of the plaintiff, Mr Yan sought to suggest that provision prevented the plaintiff from having received the first two deposits prior to completion of the sale.  The plaintiff, however, said that he had received the two deposits when they were made.  I accept that evidence, as the proper reading of the provision would not have prevented payment or release of those deposits to the plaintiff where the amount needed to redeem his mortgage on the HOS Property was less than $395,000, and it seems obvious that the purchaser’s solicitors would have been satisfied that the balance of the purchase price in the vastly greater sum of $1,728,000 would be sufficient to discharge the mortgage.

71.On 7 December 2013, Pan Asian acknowledged the application for the mortgage loan offered in association with WHC, and indicated that it would process the application subject to payment of a refundable earnest deposit of $30,000.  The same letter acknowledged receipt of that sum by cheque (which was drawn on the account of the plaintiff’s business).

72.On 18 December 2013, WHC gave in principle approval to a loan in the principal amount of $2,792,000 (with an additional program participation fee of $54,329.60).  The principal amount was the 80% loan.  No separate letter was received from Pan Asian.  On 27 December 2013, WHC sent a formal Facility Letter in relation to the mortgage loan facility called a Super First Mortgage Loan (which appears to be the type of loan in which Pa Asian was involved).  Again, there is no separate letter from Pan Asian.  As a result, the plaintiff has always paid the mortgage instalments to WHC only.

73.Whether the plaintiff had to pay off previously outstanding loans prior to the loan approval from WHC – and there is some conflicting evidence on the point – seems to me to be of little import. Ultimately, the mortgage loan facility was granted on the basis of whatever was then the plaintiff’s financial position.

74.There is some evidence in the exchange of WhatsApp communications in early January 2014, that the plaintiff was nervous about finding the necessary funds to complete the purchase.  But where funds were provided by him, with the benefit of whatever loans or business funds were deployed, and completion was achieved on the appropriate date, that evidence seems to me to be of little weight.  It might also be noted that completion of the sale of the HOS Property, which provided some funds back to the plaintiff, occurred just three days later.

75.Completion of the purchase of the TM Property occurred on 13 January 2013.  Completion of the sale of the HOS Property occurred on 16 January 2013.

76.The plaintiff was pressed in cross-examination as to why he had not fixed any date for marriage nor taken any of the steps towards a marriage, such as buying a wedding or engagement ring, and booking a banquet.  The plaintiff explained that was because they had decided to arrange for a matrimonial home at the beginning of 2014 and then get married by the end of 2014, so that they had in effect a whole year to make the arrangements.  It must be noted that no arrangement appeared to be made even by April 2014, when the defendant moved out of the TM Property.  But that may be explained by the relatively rocky relationship from almost as soon as their cohabitation at the TM Property began.  That she moved out within two months or so is an indicator that the relationship may not have been so sufficiently stable for them to focus on wedding arrangements.  I also accept the plaintiff’s evidence when he said that the fact that they had not made plans said a lot, because as he posed in one answer “do you think a ring matters more than a matrimonial home?”, and he asserted that buying a property was a solid plan.

77.I accept that the defendant was fully involved in the preparations and arrangements for the sale of the HOS Property by the plaintiff and the purchase of the TM Property.  As the parties were then in a close and intimate relationship, at least considering the possibility of marriage, that is hardly surprising.  It is even less surprising when it is remembered that the plaintiff had full-time employment running his business, whereas the defendant was then unemployed and might have been able to deploy her time in those arrangements.

78.Perhaps the best argument that could be put forward is that the defendant would not have lent the assistance she did to the purchase of the TM Property, by her various liaison with agents, lenders and her own family, unless she believed that she had a would obtain a beneficial ownership interest in the TM Property.  That argument has not really been put. But, even if it had, it seems to me to be rather neutral.  On the plaintiff’s case it was envisaged that the defendant would obtain a beneficial interest in the TM Property, albeit on condition that the marriage would go ahead by the end of 2014.  On both sides’ cases, though perhaps with different emphasis, both the plaintiff and the defendant were at least considering marriage to each other in late 2013.  Further, it was at least envisaged that the defendant would live in the TM Property for some period of time.  It was only natural for her to be involved in the process of its purchase, but that does not create beneficial ownership.

79.I have taken into account the fact that after January 2014, and even after the parties had otherwise ceased all contact in mid-2014, the plaintiff made little effort to secure the POA.  He may have made requests from time to time that the defendant should give him such a document, but the occasions appear to have been relatively few.  In any event, it does not seem to be in dispute that the plaintiff did make the requests, but there is a dispute as to what was the defendant’s response.  She says she refused to sign any POA on the basis that her half share in the TM Property was a gift from the plaintiff. But, I do not think that point, even if true, is of significant value to the assessment as to what were the original circumstances which led to the defendant being named as one of the two joint tenants when the TM Property was purchased.

80.I have also taken into account the fact that there is some evidence that in January 2015 the defendant once asked the plaintiff to rent out the TM Property and to share the rent received.  It appears to have been a request made only once, and it was immediately shot down in strong terms.  In the overall context, this evidence is relatively neutral.

81.Perhaps more significant is the defendant’s response to the plaintiff’s letter before action, sent by his solicitors on 3 February 2017.  That letter asserted that the plaintiff was the sole beneficial owner of the TM Property, and that the joint names arose from the mutual understanding that the TM Property would be held on trust for the plaintiff pending the intended marriage.  There was also reference to the agreement that the defendant would sign the POA, so that the plaintiff could sell the TM Property on his own and receive all proceeds of sale.  After a holding letter on 13 February 2017, solicitors for the defendant, whilst making a general non-admission of the allegations in the demand letter, simply stated that the TM Property was purchased by both the plaintiff and defendant “as their matrimonial home planning for their marriage in future”.  The letter continued that the parties cohabited in the premises for several months immediately after obtaining physical possession from the former owner(s), and that the defendant unwillingly left the premises to avoid further physical abuse by the plaintiff who did the physical abuse against her at least twice during the cohabitation.

82.From that letter it can be seen that the defendant appeared to confirm the purchase of the TM Property was as the intended matrimonial home of the plaintiff and the defendant who were planning for their marriage.  Though there is reference to ‘purchase’ by both of them, significantly there is no suggestion that the plaintiff gifted any interest in the TM Property to the defendant.  The defendant’s attempts in oral evidence to distance herself from that letter, and to suggest that it was not written on her instructions (despite the letter expressly stating that the solicitors had instructions to act for her) were unimpressive.  Again, it might be thought that if it was the defendant’s case throughout that she had been gifted half of the property, she would have said so to her solicitors and that would have been the first and clearest point to have been made in the letter.  It was not.

83.As to the reference to physical assault, I accept that there is some evidence in the photograph (which the defendant sent to the plaintiff on 10 February 2014) and in the WhatsApp messages in February and April 2014 which lends support to her allegations that the plaintiff assaulted her.  The plaintiff, of course, vehemently denies any such assaults.  But, with my concerns as to the assistance which can safely be taken from the messages, I am not sure that I can resolve this area of the dispute.  Ultimately, if there were physical incidents as some of the evidence suggests, that may well explain, at least in part, the breakdown of the relationship between the parties.  Another part of the explanation may lie in the plaintiff’s description of the defendant’s behaviour once they had moved into the TM Property.  But I do not think that either explanation for the breakdown is of any real significance in considering whether or not there was an agreement or common intention in relation to the ownership of the TM Property.

84.There were also some fairly aggressive voice messages left by the plaintiff on the defendant’s WhatsApp, in and after April 2014.  In his evidence, the plaintiff accepted that he left the messages, and that they were not polite, but they were born of frustration and he is only human.  Though unattractive, I also do not think those messages are really material in the consideration of events overall.

E.   Result

85.In the circumstances, I find in favour of the plaintiff.

86.There was an agreement (the Agreement) made between the plaintiff and the defendant, binding on them, as to the basis upon which the TM Property was purchased.  The same result can be reached by way of the common intention constructive trust (the Common Intention), where the plaintiff relied upon the common intention in acting to his detriment and it would be unconscionable for the defendant depart from it.  On the basis that there is clear evidence of an agreement or common intention, there is no need to resort to any resulting trust.

87.The Agreement or Common Intention envisaged that the defendant would only receive beneficial interest in the TM Property if the parties were actually to marry by the end of 2014.  Although the TM Property was purchased in the joint names of the plaintiff and defendant, the effect of the agreement or common intention was that the defendant would hold her interest on trust for the plaintiff.  In circumstances where the parties did not marry by the end of 2014, or it became clear before that date that they would not marry, it was their agreement or common intention that the defendant’s title would be returned/transferred to the plaintiff.

88.Where it is not in dispute that it was always anticipated that purchase of the TM Property would be funded only by the plaintiff, and that it was in fact funded only by the plaintiff, seems to me to make perfect sense (including commercial sense) that the defendant would not obtain any beneficial interest in the property unless and until the contemplated marriage in fact occurred.  As I have stated, this is not a matter of ‘fairness’ assessed by looking backwards at events, but rather an assessment of the evidence as to what actually happened.  Once the marriage ceased to be in contemplation, and it was clear that the relationship had broken down, it is obvious – and it was the parties’ agreement or common intention – that the defendant would not obtain any beneficial interest in the TM Property.  There was no gift.

89.The plaintiff is entitled to, and I grant him a declaration that, the defendant holds title in the TM Property on trust for the plaintiff.  The envisaged marriage between the parties did not occur, and plainly will not occur.  The plaintiff is entitled to call for the return to him of full title.  The defendant is ordered forthwith to transfer her title in the TM Property to the plaintiff, and is further directed to take all such action and steps as may be necessary to give effect to that order.

90.The counterclaim falls to be dismissed. Therefore, any questions as to any order for sale (and whether such an order should be granted now or later) simply fall away.

91.As to costs, I see no reason why the costs should not follow the event.  In the circumstances, I order the defendant to pay the plaintiff’s costs of the action, including all costs reserved, to be taxed if not agreed.

Mr Victor T. S. Lui, instructed by Deannie Yew and Associates, for the plaintiff

Mr Yan Kwok Wing, instructed by Ho & Partners, for the defendant