Au Yeung Pui Chun v. Cheng Wing Sang
Read the full judgment text of HCA 2434/2015 on BabelCite. This High Court CFI judgment was delivered on 5 March 2021.
1. This is the trial of the action and counterclaim between the plaintiff and her son, the defendant, in relation to the beneficial interest in the residential premises known as Flat D, 30/F, Hoi Tao Building, 3 King Ming Road, Hong Kong (“ Property ”).
Cited by 22 cases · Cites 11 cases
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HCA 2434/2015 [2021] HKCFI 463 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2434 OF 2015 ________________________
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________________________ J U D G M E N T ________________________ Table of contents Paragraph
1.This is the trial of the action and counterclaim between the plaintiff and her son, the defendant, in relation to the beneficial interest in the residential premises known as Flat D, 30/F, Hoi Tao Building, 3 King Ming Road, Hong Kong (“Property”). 2.The Property was acquired in 1975 in the name of the plaintiff’s husband, Cheng Kan Fan (“Cheng Snr”), with the help of a mortgage loan from Hang Seng Bank (“Hang Seng”). There were some subsequent refinancing transactions. In particular, in April 1996 the Property was mortgaged to the Bank of Communications (“BoCom”) to secure the banking facilities granted to a company called La Verna Trading Co Ltd (“La Verna”). In September 1999 La Verna was in financial difficulty, and the Property was assigned by Cheng Snr to the defendant and two of his younger sisters, Queennie and Lydia, in the proportion of 90:5:5 respectively, and mortgaged to Po Sang Bank (“Po Sang”) in place of BoCom who was paid off. In October 2008, the defendant assigned a 40% interest in the Property to the plaintiff. In January 2009, Queennie and Lydia each assigned the 5% share held in her name to the plaintiff. Accordingly, the Property has since been registered in the name of the plaintiff and the defendant, as tenants in common, each as to 50%. 3.This skeletal history of the transactions involving the Property is common ground, but the detailed circumstances of, the reasons for and the consequences of these transactions are for the most part hotly contested between the parties. By her action, the plaintiff claims that she is the beneficial owner of the entire Property and that the defendant holds his 50% share on trust for her. The defendant, in contrast, counterclaims that he holds his 50% share beneficially and that the plaintiff holds a 40% interest in the Property on trust for him. 4.Cheng Snr and the plaintiff, both born in the 1920s, were husband and wife, with 5 children as follows: the defendant (born 1952); Macy (born 1954, deceased 1978); Queennie (born 1957); Lydia (born 1959); and Judith (born 1962). For convenience I shall refer to most of the family members by their first names, without intending any disrespect. 5.The plaintiff had throughout her career been a primary school teacher, retiring in 1990. Cheng Snr had also worked for some years as a school teacher but there is some debate about his precise occupation history which I discuss below. 6.The defendant was educated up to primary school level in Hong Kong. He did not excel in his studies, and went to study in England in 1970. He married Madam Leung Yuen Fun (“Leung”), his first wife, in 1976. In 1977 the defendant came back to Hong Kong with Leung and lived with his parents. Leung gave birth to their daughter, Patsy, in the same year. In 1978, the defendant moved to Switzerland to work as a chef, and later started a restaurant business there. Leung and Patsy stayed behind in Hong Kong and lived with Cheng Snr and the plaintiff until 1996, even though the defendant and Leung had divorced in 1983. The defendant remarried with his present wife, Mrs Sansan Tammuoi Cheng (“Sansan”) in 1989, and together they have a daughter named Celine. 7.As for Cheng Snr’s and the plaintiff’s daughters, Queennie moved out of the Property when she got married in 1979 but moved back to live with her parents in 2001 after her divorce. Lydia moved out in 1983 when she got married but she and her husband, Ng Wing Cheong, moved back into the Property in 2009 after Cheng Snr died in late 2008. Judith went to the United Kingdom for her studies in 1980 and appears to have lived abroad since. 8.The plaintiff’s current pleaded case, based on her Amended Statement of Claim, is as follows. Although the Property was purchased in Cheng Snr’s name, the plaintiff paid the purchase price, and the Property was beneficially owned by her upon its acquisition in 1975. In April 1996, with the consent of the plaintiff, Cheng Snr obtained banking facilities from BoCom, secured on the Property, to finance the business of La Verna, which was a company controlled by him. 9.In August 1999, BoCom’s loans, which amounted to around $2.92 million, could not be repaid. With the consent of the plaintiff, by a sale and purchase agreement dated 27 September 1999, Cheng Snr agreed to sell and the defendant, Queennie and Lydia agreed to purchase the Property in the proportion of 90:5:5. On 29 September 1999, the sale and purchase was completed, and the BoCom’s loans were repaid with the proceeds of a loan of $1.7 million borrowed by Queennie and Lydia from Po Sang on the security of the Property and a sum of $1,324,417.01 provided by Lydia through her husband, Ng Wing Cheong. The registration of the defendant as one of the tenants‑in‑common was for the sake of convenience in that Queennie and Lydia believed at the time that their combined income would be considered by Po Sang to be inadequate for approving the loan and that it was necessary for the defendant to join in as a co‑purchaser to enable his income to be taken into account. All this was done with the consensus that the plaintiff was the beneficial owner and that none of the “purchasers”, including the defendant, would acquire any beneficial interest in the Property. 10.Except for a total sum of $331,603.17 being part of his contribution towards the living expenses of Cheng Snr and the plaintiff, which was used towards repayment of the Po Sang loan, the defendant had not contributed towards the repayment of the Po Sang loan, which was repaid by Queennie and Lydia by monthly instalments and a final lump sum repayment in May 2008. Their total contribution, including the initial sum of $1,324,417.01, amounted to $3,456,279.37. Queennie and Lydia also paid $430,960 towards the cost of removing unauthorised structures in relation to the Property. 11.The plaintiff therefore avers that Queennie and Lydia each held their 5% interest in the Property and the defendant held his 90% interest as trustees on resulting trusts for the plaintiff. Alternatively, based on the proportion that $331,603.17 bears to the total outlay for repayment to the banks, the defendant holds 8.75% of the Property beneficially whilst the plaintiff, as assignee of Queennie and Lydia, holds 91.25% of the Property beneficially. 12.On 10 October 2008, the defendant assigned 40% of the Property to the plaintiff. On 16 January 2009, Queennie and Lydia assigned their legal title to 5% each in the Property to the plaintiff. On 19 October 2015, Queennie and Lydia assigned all their rights of and in the Property to the plaintiff. 13.The plaintiff therefore claims: (1) a declaration that the defendant held his 90% title (prior to 10 October 2008) and thereafter his 50% title in the Property for Queennie and Lydia, and, after 19 October 2015, for the plaintiff; alternatively, a declaration that the defendant held his 90% title and, since 10 October 2008, his 50% title for Queennie and Lydia jointly (and, after 10 October 2015, for the plaintiff) as to 91.25% and for the defendant himself as to 8.75%; and (2) an order that the defendant transfer to the plaintiff the appropriate portion of the legal interest held on trust for her. 14.The defendant’s case, as pleaded in his Re‑amended Defence and Counterclaim, is as follows. Cheng Snr used his own financial resources to purchase the Property, which was thus legally and beneficially owned by him. In around 1992, Cheng Snr told the defendant that he would transfer the Property to the defendant when he wanted it. In around October 1998, Cheng Snr told the defendant that the Property was for the defendant, as he was his only son and they were Chiu Chow people. 15.La Verna was not owned or controlled by Cheng Snr. It was Lydia and her husband, Ng Wing Cheong, and his elder brother, Ng Wing Shing, who carried on trading business through La Verna. It was at the request of Lydia that in April 1996 Cheng Snr agreed to mortgage the Property for banking facilities granted by BoCom to La Verna. Shortly prior to 16 April 1996 (the date of the mortgage), Cheng Snr stated in the presence of the plaintiff, Queennie, Lydia and the defendant that as the defendant was the only son and the eldest child, he wished to gift the Property to him, and that he was grateful for the defendant’s significant financial contributions to him and the plaintiff for their maintenance. 16.In September 1999, Cheng Snr informed the defendant that he had discovered that Lydia had incurred a large indebtedness to BoCom of around $3.7 million and that BoCom was demanding full repayment or possession of the Property. After discussions, the family agreed that (1) Queennie, Lydia and the defendant would purchase the Property from Cheng Snr, to be financed by (a) Queennie, Lydia and the defendant obtaining a mortgage loan from another bank, and (b) Lydia and Ng Wing Cheong and Queennie settling the balance; (2) Queennie and Lydia would be responsible for repaying the mortgage loan; and (3) the loan obtained by Queennie and Lydia and other monies that made up the purchase price of $3.8 million would be used to repay Lydia’s debt to BoCom. By then, Cheng Snr had decided to gift 90% of the Property to the defendant and to transfer 5% to each of Queennie and Lydia in light of their being responsible for repaying the mortgage loan. The defendant also relies upon the presumption of advancement. 17.From October 1999 to August 2000, the defendant lent about CHF 70,000 to Lydia to alleviate the financial problems of La Verna. The defendant had made significant financial contributions to his parents over the years. From July 1991 to September 2008, the defendant remitted a total of CHF 513,357 (equivalent to about $2,865,728) to Cheng Snr before he passed away on 31 October 2008. Thereafter, from January 2009 to July 2017 (except for the period from February to December 2015), the defendant remitted about CHF 84,074 (equivalent to about $645,602) to the plaintiff. The defendant and his wife, Sansan, also contributed around CHF 11,000 towards the removal cost of the unauthorised structures in around April 2014. 18.On about 1 October 2006 and again in early October 2007, Cheng Snr confirmed to the defendant’s family that the Property belonged to them. On 6 October 2008, at a meeting between Cheng Snr, the plaintiff, the defendant, Queennie and Lydia, the plaintiff expressed concern and insecurity about financial provision for her after the death of Cheng Snr, and proposed that the defendant transfer a 40% interest in the Property to her as security. No conclusion was reached at that meeting. But on that night, Cheng Snr, the plaintiff and Sansan met and agreed that the defendant would transfer a 40% interest in the Property to the plaintiff to give her peace of mind and would continue to pay the plaintiff CHF 800 per month, on the condition that the plaintiff would, within 5 years, make a will to leave that 40% interest in the Property back to the defendant and furnish a copy of the will to the defendant after it was made. Shortly afterwards, upon being told by Sansan, the defendant accepted that agreement (“October 2008 Agreement”). 19.On 10 October 2008 the defendant assigned 40% of the Property to the plaintiff pursuant to the October 2008 Agreement. Also, he continued to support the plaintiff financially by remitting CHF 800 to her every month until January 2015. The Assignment dated 10 October 2008 was made on a conditional basis in escrow in that it was not intended to take effect until the plaintiff made a will within 5 years as agreed. In breach of the October 2008 Agreement, the plaintiff failed to make a will leaving 40% of the Property back to the defendant. Accordingly, the defendant ceased remitting funds to the plaintiff in January 2015, although he resumed doing so after December 2015. 20.Further or alternatively, the plaintiff has been holding 40% interest in the Property upon a common intention constructive trust for the defendant on the basis that it was their common intention that during the plaintiff’s lifetime, she would hold that interest on trust for the defendant, and that upon her death, such interest would re-vest in the defendant. 21.The defendant claims (1) a declaration that he beneficially owns 90% of the Property or a declaration as to such respective interests of the defendant and the plaintiff in the Property as the court thinks fit; (2) a declaration that 40% of the Property registered in the plaintiff’s name is held on trust for the defendant; and (3) an order that the plaintiff transfer the 40% interest to the defendant. 22.On the plaintiff’s side, the plaintiff herself, Lydia, Queennie, Leung and Patsy were called, in that order, to give evidence at trial. For the defence, the defendant and Sansan gave evidence. 23.The contentious allegations and the seminal events go back a very long time indeed. The initial purchase of the Property took place over 45 years ago; the assignment to the defendant, Lydia and Queennie 21 years ago; and the October 2008 Agreement 12 years ago. In the light of the long lapse of time, I have had regard to the oft‑cited observations of Leggett J in Gestmin SGPS SA v Credit Suisse (UK) Ltd & another [2013] EWHC 3560 (Comm) at §§15-22, which I shall not set out here, though I bear in mind that they do not laying down any general principle for the assessment of evidence: see Kogan v Martin & others [2019] EWCA Civ 1645, §88. In a similar vein, in Watson v Foxman & others (1995) 49 NSWLR 315 at 319, McClelland CJ in Eq said:
Although his Honour was addressing evidence of the content of conversations, his observations seem to me to be of general application. 24.I have also borne in mind the guidance given by Stock JA in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 at §135:
25.The only safe course in a case such as the present, it seems to me, is to steer oneself with primary reference to the objective surrounding facts, such documentation as there is, and the inherent probabilities as they appear to the court taking into account all the circumstances including the motivations and characters of the people involved and the relationship between them. 26.There is very limited documentation beyond the commercial documents such as bank statements, mortgages and assignments. It is evident from the materials available that there was some written correspondence, either through email or WhatsApp, among the family members, in the later years prior to the litigation. But neither side has disclosed such correspondence beyond the limited samples presented in the trial bundles. 27.I have evaluated the witnesses’ testimonies in the context of the entirety of the evidence. Regrettably, as will be seen below, I have come to the view that none of the witnesses has told me the whole truth and none of them is so reliable that I can confidently accept his or her evidence in full. The evidence of the witnesses on each contentious topic has to be assessed with caution and care and with reference to the other evidence and overall probabilities. 28.One notable feature in the plaintiff’s case is that there has been a fundamental change of case made by amendment of her Statement of Claim in June 2017. Particular aspects of this change will be discussed below, but the main changes may be mentioned here. (1) The plaintiff originally stated that the Property was beneficially owned by Cheng Snr but now avers that it was beneficially owned by her. (2) It was originally stated that the Property was mortgaged to BoCom to finance Lydia’s trading business at her request, but now it is said that it was to finance the business of La Verna, that La Verna was controlled by Cheng Snr, and that the Property was mortgaged with the plaintiff’s consent. (3) There is a new plea by amendment that there was a consensus at the time of the transactions in 1999 that the plaintiff was and would remain the beneficial owner of the Property and that none of the “purchasers” would acquire any beneficial interest. (4) It was originally said that, after September 1999, Queennie and Lydia exercised the rights and discharged the incidents of ownership of the Property, but now it is said that it was the plaintiff who exercised the rights and incidents of ownership. (5) It was originally stated that the defendant held the 90% interest in the Property on resulting trust for Queennie and Lydia; now it is said that he held it on resulting trust for the plaintiff. 29.There was no explanation in the plaintiff’s witness statement or oral evidence for the changes in her case. The reliability of the plaintiff’s evidence is in my view considerably undermined by the unexplained fundamental change in her case from the original Statement of Claim (which was verified by the plaintiff’s statement of truth). 30.A further striking feature of the evidence of the plaintiff, Lydia and Queennie is that large parts of their witness statements are identical (subject to changing the pronouns and the like). The plaintiff’s witness statement contains an interpretation clause whereas Queennie’s and Lydia’s witness statements do not. The similarity is obvious from a cursory reading of the statements. A table of concordance has been set out in the defendant’s closing submissions. On counsel’s statistics, 41 out of 64 paragraphs of the plaintiff’s witness statement is precisely the same as the statements of Lydia and/or Queennie; 40 out of 50 substantive paragraphs of Lydia’s statement are substantially identical to the plaintiff’s and/or Queennie’s statements; and 36 out of 45 paragraphs in Queennie’s statement are in substance identical to corresponding paragraphs in the statements of the plaintiff and/or Lydia. 31.Putting forward substantially identical statements of different witnesses has been the subject of trenchant criticism by DHCJ Saunders in Ho Sin Ying v Chan Yiu Ling, the Administratrix of the estate of Tsang Kwong Lik deceased (HCA 90/2010, 13 July 2012) in the following terms:[1]
32.A similar approach was applied in Leung Wing Hong v Leung Yiu Cho, the administrator of the estate of Leung Kam Wah, deceased (HCMP 1473/2014, 11 August 2016), §§25-28; and Integrity Financial Advice Network Co Ltd v Chu Yau Shun (HCA 623/2012, 15 March 2016), §§36‑37. 33.Caution is also exercised in other jurisdictions towards substantially identical statements from different witnesses.[2] In Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674, Palmer J criticised a party’s solicitor for failing to appreciate that
and that:
34.In In the matter of Colorado Products Pty Ltd (in prov liq) [2014] NSWSC 789, Black J likewise considered that the degree of similarity between the affidavit evidence of 2 witnesses substantially devalued the weight to be given to the evidence of each,
35.In the present case, the striking similarities cannot, in my view, be accounted for by the fact that the plaintiff, Queennie and Lydia lived together. They suggest that the witnesses either conferred together about their evidence, or that they made their statements with reference to each other’s account, or that the drafter had prepared all 3 statements out of a common template. Indeed, the plaintiff admitted in cross-examination that before giving instructions to the lawyers, she, Queennie and Lydia had fully discussed their evidence (“商量過晒”). Lydia unconvincingly denied that there was any discussion. In all the circumstances, while I do not reject the statements altogether on this ground alone, the court must be very cautious in approaching them and the weight that can be placed on them has been greatly diminished. 36.The plaintiff’s oral evidence at trial differed substantially in many crucial aspects from the written statement attributed to her, as explained below. There are also a number of matters in her witness statement that the plaintiff said in oral evidence she had no knowledge about, such as the bank facilities granted by BoCom to La Verna, the Po Sang loan, and the removal orders for unauthorised structures. The fact that these matters appeared in her witness statement suggests again that it was a prepared template rather than a proper record of the facts that the plaintiff could speak to from her recollection. Furthermore, many passages in the plaintiff’s statement appear to be a reconstruction by reference to the financial documents, and a poor attempt at that because the documents were misinterpreted: see §§76, 80 and 81 below. The same mistakes appear in Lydia’s and Queennie’s witness statements. 37.It should be recalled that a witness statement is supposed to be a written statement “of the oral evidence which the party intends to adduce on any issues of fact to be decided at the trial”: Order 38 rule 2A(2). It should only contain evidence that the witness would be allowed to give had he been examined in chief orally, and evidence that the witness is personally able to give. For various reasons which I have set out in this judgment, the plaintiff’s statement cannot be accepted with any confidence as her independent recollection of the facts and events. 38.The witness statements of Queennie and Lydia are likewise problematic in being very similar to each other’s and to the plaintiff’s, and in containing reconstructions based on documents. Moreover, I do not regard them as independent witnesses. They (especially Lydia) appear to me to be the real protagonists in the litigation, with an indirect financial interest through the plaintiff. Indeed, the Statement of Claim originally asserted that the defendant’s 90% title in the Property was held on trust for them. The suit was started in the plaintiff’s name based on an assignment by them to the plaintiff executed one day before the writ. Even now, the prayer for relief seeks a declaration that the defendant was a trustee for them, and only for the plaintiff since 19 October 2015. 39.On one critical aspect, namely, the responsibility for La Verna’s bank indebtedness, Lydia had direct personal knowledge but I do not think she or Queennie told the truth. There are other aspects of their evidence which I have found unsatisfactory as mentioned in the discussion below. Overall I consider it necessary to take a heavily guarded approach to their evidence. 40.As to Leung, while she does not have a financial interest in the outcome of the litigation, she was really part of the family and not a wholly independent third party. She married the defendant in 1976, began living in the Property in 1977, and stayed there when the defendant went back to Switzerland in 1978. She lived with Cheng Snr and the plaintiff in the Property for almost two decades until 1996, even after her divorce with the defendant in 1983. She claimed to have no hard feelings from the and even from the fact that the defendant failed to pay maintenance, but I detected a hint of disdainful hostility on her part towards the defendant. I exercise caution in approaching her evidence, bearing in mind in particular what Leggatt J said in the English case of Gestmin SGPS SA v Credit Suisse (UK) Ltd & another [2013] EWHC 3560 (Comm) at §19: 41.Patsy lived in the Property from her birth in 1977 to 1996 and felt very close to the plaintiff, much more so than to the defendant. Judging from her written communication with the defendant in 2015, she was not affectionate towards the defendant. She has little contact with him since. She has no financial interest in the outcome of the case but is fuelled by an understandable desire to help her beloved grandmother win against her estranged father in any proper way. I have to say I am not satisfied that she told the truth in every respect. In particular, her interpretation of her written message to the defendant in 2015 stretched credulity (see §§99-100 below). It seems to me that her evidence might well have been affected by unconscious bias, wishful thinking, and a self‑righteous feeling that her side was morally in the right. 42.Nor am I impressed with the defendant’s and Sansan’s evidence. The defendant often made self-serving assertions of fact based on what he assumed to be the case rather than personal knowledge. He had to admit in oral evidence he had little knowledge of the financial status or arrangements in the family in the 1970s and 1980s. He was not able to explain the basis or source of some of the assertions in his witness statement. Sansan’s evidence about the October 2008 Agreement was inherently improbable. On their key claim of the October 2008 Agreement I do not believe their evidence at all. 43.I set out in this section the relevant facts, broadly in a chronological sequence, specifying the more major factual disputes where they appear and my findings thereon (without dealing with every minute detail where the parties disagree). Although the facts are presented chronologically, I have considered the evidence overall as a whole in evaluating it and in reaching my findings. E1.Acquisition of the Property 44.By a sale and purchase agreement dated 19 April 1974, Cheng Snr agreed to purchase the Property from one Fu Sang Co Ltd at the price of $300,000, of which $100,000 had to be paid by the date of that agreement and the balance of $200,000 was to be paid by 24 equal consecutive monthly payments of $9,642 each. It appears that the purchaser had to commence the monthly payments from 15 April 1974; at least this is what the schedule to the agreement provided. Clause 19A of that agreement appears to suggest that completion was to take place on 5 April 1974 when the balance of the price was to be paid, but this is inconsistent with the fact that the bank mortgage was only created on 16 June 1975. 45.By an assignment dated 16 June 1975, the Property was assigned to Cheng Snr by the developer, with Fu Sang Co Ltd joining as confirmor. On the same date, the Property was mortgaged by Cheng Snr to Hang Seng for a loan of $130,000 which, it is not disputed and I find, was used to pay the balance of the purchase price. 46.In other words, the purchase price of the Property appears to have been paid as to $100,000 in April 1974; as to an aggregate sum of $70,000, at some point(s) in time between April 1974 and 16 June 1975; and as to the remaining $130,000, on 16 June 1975, with money borrowed from Hang Seng. The terms of this loan were not clear from the mortgage deed except that the interest rate was 11.25% per annum or such other rate as was from time to time charged by the bank upon advances to customers. 47.An issue has arisen as to the source of the first $170,000 paid towards the price. The plaintiff’s case in her Amended Statement of Claim is that she paid the purchase price of, and beneficially owned, the Property. The defendant disagrees: he avers that Cheng Snr used his own financial resources to purchase the Property and became its legal and beneficial owner. 48.The plaintiff worked as a primary school teacher from September 1951 onwards, retiring as a certificated mistress in August 1990. Her salary as at August 1990 was $14,640 per month. Cheng Snr also worked as a teacher from around 1952 to 1965. I accept that the plaintiff took a training course and became certificated in around 1956, and therefore earned a somewhat higher salary than Cheng Snr as a teacher. 49.In 1965 Cheng Snr quit teaching and began running a cafeteria at Rediffusion (Hong Kong) Ltd, which was then in North Point. It is likely that he managed to make a profit, as he carried on the business for 4 years, but it would appear that the business was not attractive enough for him to continue it when Rediffusion moved to the Kowloon side in around 1969. After that, he continued to work for some years. 50.The plaintiff, Lydia and Queennie all said that Cheng Snr worked part‑time only between 1970 and 1973 and that his income during that period was low. I accept Cheng Snr might not be working full‑time in those years but it is not clear how frequently he worked. No detail of his income was disclosed. It seems to me their evidence on his level of income was simply a self‑serving assumption. 51.In her witness statement,[6] the plaintiff said that she paid the $170,000 out of her personal savings, and that they (by which I take her to mean she and Cheng Snr) decided to have the Property registered in Cheng Snr’s name because she wanted him to “look good” in front of her maiden family. They were happily married and so she did not mind the Property being put in his name. They always thought that whatever was his was also hers, and vice versa. 52.In cross‑examination, however, the plaintiff initially agreed that the $170,000 did not come from her savings or her father’s money. When it was put to her that the $170,000 was funded by her husband, she disagreed, and said that part of it was funded by her, and part of it by her husband. When she was reminded that her witness statement claimed that she alone paid the amount, she again confirmed that she contributed a part only and it was not solely funded by her. She recanted this in re‑examination, and asserted that she funded the initial payment and that the Property belonged to her. I place little weight on her answers in re‑examination which only took place the next day and in which her counsel quite improperly tried repeatedly to lead. I do not believe the plaintiff’s explanation that she did not know what she was thinking during cross‑examination. 53.The plaintiff also could not explain what she meant by registering the Property in Cheng Snr’s name to make him look good and eventually agreed that that was not the purpose of registering the Property in his name. 54.There was no detail as to whether the down payment was actually split into a lump sum of $100,000 followed by monthly payments of $9,642 as provided in the sale and purchase agreement. The plaintiff admitted – and I would infer anyway – that her salary then was not enough to pay $9,642 per month. 55.In closing, counsel for the plaintiff found themselves in the unusual position of having to submit that their own client’s viva voce evidence should be treated with caution and the weight that could be placed on it was compromised. The reason given is that she had since August 2016 been diagnosed with dementia. There are several problems with this submission. First, there is no medical evidence whatsoever as to the extent and effects of the plaintiff’s dementia. While dementia is associated with memory loss, for some it is memory of recent events that is affected. No next friend[7] has been appointed for the plaintiff and, for all I know, her solicitors and counsel had considered her mentally fit enough to give evidence. Secondly, the plaintiff did not say she could not remember what happened. Rather, she spontaneously and lucidly said that both she and Cheng Snr contributed towards the initial payment for the purchase price. Thirdly, this submission, if accepted, would also cast doubt on the reliability of the plaintiff’s witness statement, which was made in March 2018. To deal with this problem, counsel said the plaintiff’s evidence was that her memory only started to deteriorate in 2020. In fact, what she said in re‑examination was that “今年開始咩嘢都唔記得喇” (“starting from this year, everything I can’t remember”), and she did not know if she had this problem when she gave her witness statement. Further, this is obviously a bootstrap argument: if the plaintiff had serious memory loss, how could one rely on her evidence as to when she first had such memory loss? In any event, her witness statement did not become evidence until it was adopted and confirmed by the plaintiff in oral evidence, and this only took place at the trial. 56.Lydia’s and Queennie’s witness statements, as mentioned above, were largely in similar terms to that of the plaintiff, asserting that the $170,000 came from the plaintiff’s personal savings. They adhered to that version in their oral evidence and claimed that it was based on what their parents told them on several occasions over the years. Neither Queennie nor Lydia could really quite explain how registering the Property in Cheng Snr’s name would make him look good to the plaintiff’s maiden family when he did not have a job, and simply said that it was very common in those days for a family home to be registered in the husband’s name. Queennie also said she assumed that Cheng Snr’s income was lower than the plaintiff’s both as a teacher and when he was working in the early 1970s. Queennie was only aged 17‑18 and Lydia 15‑16 in 1974 to 1975, and I doubt if they would have been privy to precise and detailed information regarding the source of the $170,000. What they said is inconsistent with the plaintiff’s evidence in cross‑examination. They gave no details of the occasions on which they were allegedly so informed by their parents. I also doubt that the parents would have specifically told the children which of them financed the purchase of the Property. If the plaintiff, as she said, had wanted Cheng Snr to look good in front of her family, I doubt that they would have repeatedly made clear to the children that the purchase monies came solely from her, as such information could easily spread to her own family. 57.As to Leung’s evidence, she was not present in Hong Kong until 1977 and so did not have direct knowledge of the details of the initial payment. Her claim that Cheng Snr had told her a few times that the Property belonged to the plaintiff as she had paid for it, is inconsistent with the plaintiff’s oral evidence. In her oral evidence Leung clarified that what Cheng Snr said was the plaintiff paid for the Property and it was in his name. But she did not suggest that Cheng Snr had unequivocally told her that the plaintiff solely funded the purchase of the Property and that he himself had made no contribution and had no beneficial interest in it whatsoever. Leung’s claim that the Property belonged to the plaintiff exclusively does not sit well with Leung’s own evidence that Cheng Snr and the plaintiff had a very close relationship, and did not have any notion of which asset belonged to which of them (“我從來都冇見過佢哋分得好清楚，佢哋唔分清楚嘅，媽咪同爹哋佢哋兩個咩嘢都撈亂嘅”; in translation: “I have never seen a clear division between them. They did not divide (things) clearly, Mom and Dad, the two of them mixed everything”). 58.Patsy was only born in 1977 and obviously had no personal knowledge relating to the purchase of the Property. She admitted she was not clear as to who funded the initial payment or the monthly mortgage repayments. She seems to have simply inferred from the fact that Cheng Snr was not working but the plaintiff was, that the money must have come from the plaintiff. But her personal memory of what Cheng Snr did on a daily basis could only date from the 1980s onwards. Her evidence on the present issue is of very little value. 59.Not only has the assertion in the witness statements that the plaintiff paid the entire sum of $170,000 with her personal savings been repudiated by the plaintiff’s own evidence in cross‑examination, it is also inconsistent with the case originally pleaded in the Statement of Claim indorsed on the writ. There it was expressly stated, and verified by the plaintiff, that between 16 June 1975 and 27 September 1999, the Property “was beneficially owned and registered in the name of Cheng Senior”.[8] 60.Counsel for the plaintiff submitted that this was merely a conclusion of law and could be withdrawn at any time, and was withdrawn when the Statement of Claim was amended and the material facts (ie the source of payment of the purchase price) pleaded. With respect, this misses the point. Since the Property was their matrimonial home, any trust that existed would primarily have arisen from a common intention constructive trust rather than a resulting trust (see §§175-178 below), and so the intention of the plaintiff and Cheng Snr at the time as regards the beneficial ownership is highly material to whether the Property was held on trust by Cheng Snr. The plaintiff’s original admission that Cheng Snr was the beneficial owner is wholly inconsistent with the existence of any common intention that he held the Property in name only. It is also wholly inconsistent with the assertions in the witness statements of the plaintiff,[9] Queennie[10] and Lydia[11] that there was some consensus within the family that the plaintiff was, or would remain, the beneficial owner of the Property. The witnesses gave no explanation why the original Statement of Claim was expressed in those terms. 61.Further, in the plaintiff’s letter to the defendant dated 5 May 2015, she stated:
It seems to me that what the plaintiff wrote was clearly an acknowledgment that the Property represented assets left behind by Cheng Snr. It is inconsistent with the alleged understanding within the family that the plaintiff solely paid for the purchase of the Property and was therefore its sole beneficial owner. When asked about this letter in cross-examination, the plaintiff said that Cheng Snr was the owner of the Property and had always been financially healthy and had not lost money in his investments. 62.On the other hand, I also think that the defendant’s assertion that the initial payment was wholly paid by Cheng Snr is unreliable. The defendant had gone to England for his studies in 1972. I accept that he had telephone conversations with Cheng Snr from time to time and that in these conversations, the father would tell the son about significant matters in the family, such as the purchase of the Property. But I do not believe that Cheng Snr would have said to the defendant specifically that he used his own money, to the exclusion of the plaintiff, to make the initial payment. 63.The plaintiff has the burden of proving her allegation that she provided the entire initial payment of $170,000. On the evidence, I find that the plaintiff has failed to prove her allegation. I do not accept that the finances of the plaintiff and Cheng Snr were as separate as the plaintiff’s witnesses implied. This was a couple born in the 1920s and married in 1952. They had a close relationship to each other. They had built a family. More probably than not, they did not pay attention to which of them owned which particular assets of the family. I do not accept the assertion in the witness statements of the plaintiff, Queennie and Lydia that the plaintiff paid the entire sum of $170,000 using her personal savings. It is wholly improbable that between 1974 and 1975, the plaintiff had disposable assets to the tune of $170,000 whilst Cheng Snr was penniless. More probably than not, as the plaintiff said in oral evidence, both of them contributed financially towards the down payment of $170,000, without calculating or recording who paid how much. Part of that sum would have been paid in 1974, perhaps shortly after Cheng Snr ceased working, and was likely to have been funded in part by the family savings to which his income would have contributed. 64.There was no pleading of any specific common intention at the time and so the topic was not investigated. As Lydia said, the plaintiff was a submissive wife and deferred to Cheng Snr as the head of the family. The fact is that the Property was acquired in Cheng Snr’s name, and it is quite possible that they intended that the Property would as such be beneficially owned by him, with the confident expectation that it would be used as the family home. In any event, the plaintiff has not proved any common intention that the Property was to be held in his name on trust for the plaintiff absolutely. E2.Payment of the Hang Seng mortgage and further charges 65.The extent of the banking facilities from Hang Seng was later increased from $130,000 to $164,000 in January 1976, and further to $210,000 in July 1979. Two further charges on the Property dated 16 January 1976 and 20 July 1979 respectively were executed by Cheng Snr to secure the increased facilities. There is no evidence as regards the purposes of the two increases or how the proceeds were used. 66.The plaintiff’s witness statement[12] says she paid the monthly repayment instalments for the Hang Seng loans using her savings and income from her salary; Queennie started working in 1975 and Lydia in 1977 and they both gave her money every month to help her repay the mortgage loan; eventually she fully repaid it in May 1980 with her savings, money inherited when her father passed away, and money her mother gave her. No detail was given as to the amount of the plaintiff’s income at the time or the cash gifts or inheritance (though there is evidence her salary was $14,640 per month when she retired in August 1990). 67.Although it is not in dispute between the parties, I have some doubt whether the loans borrowed from Hang Seng had in fact been fully repaid by May 1980. The re‑assignment from Hang Seng was dated 8 May 1980, coinciding with the mortgage to FNCB Financial Ltd (“FNCB”) referred to below. What might well have happened was that the loan from FNCB was used in part to settle an outstanding balance due to Hang Seng, though it cannot be seen from the documents whether this was in fact the case. Nothing, however, turns on this, and I am prepared to proceed on the basis that the Hang Seng mortgage loans had been repaid by May 1980. 68.As to the instalment repayments made for the Hang Seng loans, again, the oral evidence of the plaintiff in cross‑examination was markedly different from her witness statement. When asked an open question of who paid the monthly mortgage instalments, the plaintiff said spontaneously that she paid part of them. When asked who paid the other part, she answered it was her husband, though she could not recall the proportions. Clearly the plaintiff was the person with the most direct knowledge of this matter. 69.The others’ evidence was either based on their own assumption or based on what Cheng Snr allegedly told them. While Cheng Snr might have mentioned to the family that the plaintiff’s income was used towards paying the mortgage loan, I do not think he would have specified that he himself did not pay anything. I accept that Cheng Snr no longer had a job after the purchase of the Property, but, as the plaintiff’s witnesses accepted, he invested in stocks and shares. 70.It is also likely that Queennie and Lydia, after starting work, also began to contribute towards the family expenses in the late 1970s. Their statements said that they gave money to the plaintiff, but I do not believe they would have distinguished between their parents at the time. Irrespective of whether they handed the money to their mother or their father every month, it would have been money given to their parents together as their contribution towards the family expenses overall (“家用”), as they said, including the mortgage repayments for which Cheng Snr was solely legally responsible. 71.The plaintiff also said that her mother gave her money from time to time in the 1970s, which I accept, except that I do not think there was any clear intention that the money was given to the plaintiff exclusively rather than to the couple who had a family to raise and a mortgage to repay. As Cheng Snr was the borrower and mortgagor, any help given towards the loan repayments would also be assistance rendered to him. I accept that the plaintiff inherited some money after her father died in around 1978 but hers was a family of 12 siblings and there is no evidence what the plaintiff’s share was, even in terms of the order of magnitude. It seems unlikely to be very substantial, for otherwise it was inexplicable why the Hang Seng loan had to be increased by $46,000 in 1979, and why the Hang Seng mortgage was replaced in May 1980 by a large loan of $450,000 from FNCB with hefty interest. I accept that the plaintiff would have used any inheritance she received towards the general family expenses including the mortgage repayments. 72.The defendant’s evidence is more realistic on this issue. He thought the plaintiff might have helped pay the mortgage instalment repayments but he was not sure and did not know the exact amounts. 73.I find that the plaintiff has again failed to prove that she alone funded the mortgage instalment repayments to Hang Seng. More likely than not, Cheng Snr and the plaintiff used any income that they each had, and the contribution to the family from Queennie and Lydia after they started working, together with some financial help from the plaintiff’s mother, to defray the family expenses including mortgage repayments. 74.On 8 May 1980, the Property was mortgaged to FNCB, in place of Hang Seng, for a loan to Cheng Snr in the amount of $450,000, repayable by 60 instalments of $11,428 each. 75.In her witness statement (§18), the plaintiff says that the Property was used as security for this loan with her consent; that most of the money borrowed was used to finance Judith’s studies in the United Kingdom and Switzerland; and that all the monthly repayments were paid by the plaintiff using her savings and income, and the loan was fully repaid by March 1984. 76.I do not accept that the monthly repayments, in the sum of $11,428 each, were all paid by the plaintiff alone. Her monthly salary would have been substantially lower than that amount. In fact, in cross‑examination the plaintiff agreed that she did not repay that sum every month and that her husband paid it. From the way she responded in cross‑examination, I doubt that the plaintiff had any specific recollection of the loan from FNCB. Much of the relevant part of the plaintiff’s witness statement[13] concerning the FNCB loan and the initial BoCom loan to Cheng Snr appears to have been a reconstruction from the financial documents as to which the plaintiff had very little understanding. 77.More likely than not, the couple again simply used all the resources available at their disposal, including any income Cheng Snr derived from his investments, the plaintiff’s salary as a teacher, and contributions from the children, to pay all the outgoings of the household including the loan repayments to FNCB. 78.Again, it is not clear whether the FNCB loan had been fully repaid by March 1984, or whether the next mortgage loan was a refinancing exercise. There would have been an incentive to re-finance, given the very high effective interest rate under the FNCB loan. E4.Mortgage to Bank of Communications 79.On 17 March 1984, the FNCB mortgage was redeemed. On the same date, Cheng Snr executed a mortgage of the Property in favour of BoCom to secure general banking facilities to the extent of $150,000 (at the interest rate of 15.5% p.a.), together with a loan of $200,000 (at the interest rate of 14% p.a.) repayable by 24 equal monthly instalments, granted to Cheng Snr. The plaintiff says the Property was used as security with her consent, for the purpose of Cheng Snr’s personal investments which included investments in stocks and shares. 80.On 20 March 1986, a further charge on the Property was executed by Cheng Snr in favour of BoCom to secure another loan of $150,000. The plaintiff’s witness statement said that Cheng Snr’s investments were losing money and he needed “further finance” by obtaining a further loan of $150,000.[14] It is quite clear from the plaintiff’s oral evidence that she had little recollection about this further charge, though she accepted that Cheng Snr repaid it himself. Lydia also admitted she had no knowledge or recollection of the matter and had based her witness statement on the documents retrieved, but she insisted, in my view unreasonably, that the plaintiff repaid these loans. It is plain that the part of the plaintiff’s witness statement on these loans in the 1980s (and the identical passages in Queennie’s and Lydia’s statements) were a reconstruction, and a poor one at that, as they misinterpreted the document. The deed actually stated that the previous loan of $200,000 had been repaid. The new loan was not an additional loan and did not suggest that Cheng Snr had been losing money in his investments. 81.Five years later, another further charge on the Property dated 26 March 1991 was executed by Cheng Snr in favour of BoCom to secure further general banking facilities (without any specified limit). Again, the plaintiff in truth had no impression about this at all. The plaintiff’s, Queennie’s and Lydia’s witness statements asserted that the further charge was given because Cheng Snr was “still losing money” in his investments and needed further finance.[15] This is, again, a flawed reconstruction. In fact, as recited in the deed of charge, the previous loan of $150,000 borrowed under the charge of 20 March 1986 had been “fully paid and satisfied”. Queennie’s evidence that she actually knew and recalled the matters in the relevant passages of her witness statement cannot be true. E5.Alleged conversation in 1992 between Cheng Snr and the defendant 82.The defendant said that in around 1992, when he came back to Hong Kong for a visit, Cheng Snr gave him a Rolex watch and also said he would transfer the Property to him when he wanted it. The defendant told Cheng Snr that he only wanted him to live a long life and did not want anything from him. It is not disputed that Cheng Snr gave the defendant a Rolex watch. But I do not think this is probative of any gift of the Property to him. After all, the defendant was the only child of Cheng Snr who would wear a man’s watch. I do not accept that Cheng Snr told the defendant he would transfer the Property to him when he wanted it. The only evidence in support is the defendant’s oral evidence, which I do not find reliable. E6.Alleged announcement by Cheng Snr in April 1996 83.The defendant says that shortly before 16 April 1996 (the date of the Second Mortgage mentioned below), Cheng Snr stated in the presence of the plaintiff, Queennie, Lydia and the defendant that he wished to transfer the Property to the defendant because (1) the defendant was the only son and the eldest child of the family and, in accordance with Chiu Chow tradition, Cheng Snr wished to gift the entire interest in the Property to him; and (2) Cheng Snr was grateful for the significant financial contributions the defendant had made to him and the plaintiff for their maintenance. 84.I do not accept that this alleged conversation happened. At around this time, Cheng Snr was being asked by Lydia to help obtain finance for La Verna by mortgaging the Property to BoCom a second time, which he eventually agreed. It was unlikely that he would have said he wished to transfer the Property to the defendant. There is no supporting evidence other than the defendant’s testimony, which I do not find reliable in this regard. E7.Second mortgage to BoCom for banking facilities for La Verna 85.On 16 April 1996, Cheng Snr executed a further mortgage (called Second Mortgage) of the Property in favour of BoCom to secure general banking facilities for La Verna. Lydia and her brother-in-law, Ng Wing Shing, executed the deed as directors of La Verna on its behalf. As is usual, under the deed, Cheng Snr and La Verna jointly and severally covenanted to repay BoCom all present and future indebtedness of La Verna. 86.The plaintiff’s case is that La Verna was a family company set up in 1994 for the business of labelling and garment packaging. It was controlled by Cheng Snr as de facto owner, who decided in 1995 to change the business to trading in daily consumer products. The day‑to‑day operations were carried out and managed by various family members. The shares of La Verna were registered in the children’s names because Cheng Snr had plans to pass the business to others in the family when he retired. The banking facilities granted by BoCom in April 1996 were obtained by Cheng Snr to finance the trading business of La Verna, secured on the Property with the plaintiff’s consent. 87.I do not accept the plaintiff’s case on La Verna. The corporate structure of La Verna had nothing to do with Cheng Snr. When La Verna was incorporated in September 1994, it had 100,000 issued shares, of which, until September 1995, Ng Wing Cheong held 51,000 shares, Ng Wing Shing held 19,000 shares, and one Cheung Fook Yuen held the remaining 30,000 shares. These 3 persons were also the directors. It is not clear whether Mr Cheung was Cheng Snr’s friend or the friend of Ng Wing Cheong and Lydia, but he was clearly not part of the family. The plaintiff has not been able to offer any credible explanation why the shares of a Cheng family company would have been vested in this way. Even if Ng Wing Cheong, as a son‑in‑law, could be regarded as part of the Cheng family, the other two persons plainly could not. 88.In September 1995, Cheung Fook Yuen transferred his 30,000 shares to Ng Wing Cheong, while Ng Wing Cheong transferred 30,000 shares to Lydia, and the directors became Ng Wing Shing and Lydia. 89.The shares in La Verna were prima facie the property of their registered holders. Whether before or after these transfers, there was nothing in writing to show that the shares belonged to Cheng Snr or to “the family” as a whole. It is difficult to believe that despite being registered holders, all these apparent members of the company held shares for the Cheng family without any written record of that fact. Nor have Ng Wing Cheong, Ng Wing Shing and Cheung Fook Yuen given evidence to that effect. 90.The plaintiff’s current case is also inconsistent with what was originally pleaded in her Statement of Claim, which read as follows.
91.Thus the plaintiff’s case then was that it was at Lydia’s request that Cheng Snr mortgaged the Property to finance the trading business of Lydia, and that later, neither Cheng Snr nor Lydia was able to repay the debts. Whilst to be precise the facilities were granted to La Verna and not Lydia, quite plainly this pleading implied that La Verna was Lydia’s venture or that of herself and her husband. Neither the plaintiff nor Lydia was able to explain why the case had initially been pleaded in that way. If it was fundamentally incorrect, one would have expected Lydia, in particular, who accompanied the plaintiff whenever she went to the solicitors, to correct it at the outset. 92.In 1994, when La Verna was set up, Ng Wing Cheong left his job at Towngas and worked in La Verna. At around the end of 1996, Lydia also gave up her job at Hallmark Cards in order to work full‑time for La Verna. It is likely that they did so because La Verna was largely their business. 93.Further, it is common ground that, as described in more detail in §119 below, Ng Wing Cheong contributed a lump sum of $1,324,417.01 for repaying BoCom in September 1999, but did not obtain anything in return, and Lydia was only assigned 5% of the Property. This is in my view indicative that La Verna was the venture of Lydia and Ng Wing Cheong (together with Ng Wing Shing), and that they felt obliged to take responsibility for La Verna’s failure. While Lydia said Queennie was assigned 5% of the Property in view of her becoming a borrower of the Po Sang loan, she was unable to offer any credible explanation why she herself was only assigned 5% even though she was also a borrower and her husband put up over $1.32 million to help repay BoCom. 94.Contrary to what was put down in her witness statement, the plaintiff agreed in her oral evidence that La Verna was not Cheng Snr’s company and was not controlled by him. She also accepted that Cheng Snr was so infuriated in 1999 that he lost his breath when he learnt that La Verna had incurred a large indebtedness to BoCom. 95.In her oral evidence Lydia maintained that La Verna was set up and owned by Cheng Snr (with the initial capital sourced from the plaintiff) as a family company. She agreed that Ng Wing Shing and Cheung Fook Yuen were not part of the family, but said that it was Cheng Snr who decided to get them to help and thus put certain shares in their names, and that she did not fully understand Cheng Snr’s thinking in this regard. When asked whether the shares belonged to the registered shareholders, she equivocated and finally said they had no beneficial interest, even though she had earlier said they were given shares to give them an incentive to perform. She was evasive as to whether Ng Wing Cheong had prior experience of working in the garment industry. I find her evidence on La Verna wholly unsatisfactory and unconvincing. 96.Although Queennie’s witness statement was in similar terms to Lydia’s, she said in her oral evidence that she did not know the details about La Verna, that she did not participate in it, and that much of what she knew about La Verna was based on what she had heard from others. I do not think her evidence on this topic is of much value. 97.Leung’s evidence on La Verna was also unconvincing. She ceased living in the Property in 1996. She did not know who put up the capital for the company or who the shareholders were, but still asserted that Cheng Snr called the shots. 98.The plaintiff’s pleading accepted that 12 sums of money were remitted by the defendant to Hong Kong each month between October 1999 and September 2000 totalling $331,603.17 (equivalent to approximately CHF 70,000), which was applied towards the repayment of the Po Sang loan.[16] A document prepared by Lydia at the time recorded those sums under the heading “Record of sums borrowed by Cheng May Yan [Lydia] from Cheng Wing Sang” (“鄭美茵現借鄭永生款項紀錄如下”). This suggests that the indebtedness to Po Sang, incurred to discharge the debt to BoCom, was regarded as Lydia’s responsibility. Lydia was unable to provide any intelligible reason why she drew up a record with that heading. She said that the money was remitted by the defendant to Cheng Snr as living expenses, that Cheng Snr was worried that the defendant would later say the remittances were for mortgage repayments, and that she reassured Cheng Snr by promising to record the defendant’s payments. I do not believe this evidence, which does not begin to explain the description she had written. 99.Further, the plaintiff’s current case on La Verna is contradicted by the WhatsApp messages between the defendant and Patsy in May 2015. The father and daughter were having an unfriendly exchange at the time. On 21 May 2015, the defendant wrote to Patsy as follows:
On 23 May 2015, Patsy replied:
100.When cross‑examined, Patsy tried to explain away what she had written by claiming that her Chinese was not very good, that defence counsel had misunderstood her meaning, and that what she meant was that Lydia had shouldered the responsibility for the loan. I do not believe that evidence, which reflects her lack of impartiality as a witness. It seems to me clear that both the defendant and Patsy understood that the crisis of the indebtedness to BoCom in 1999 was created by, and regarded as the responsibility of, Lydia and her husband. 101.Counsel for the plaintiff relied on Cheng Snr’s letter to BoCom dated 7 August 1999 (referred to in §111 below) to contend that he recognised that the banking facilities had in reality been used by him in the business of La Verna. I do not agree. By the terms of the mortgage, Cheng Snr was jointly and severally liable with La Verna to repay its indebtedness to BoCom. Even though the debts were run up by Lydia and her husband, Cheng Snr could not escape liability. The letter simply recognised his legal liability and sought information from the bank for the purpose of a potential refinancing arrangement. 102.I find that La Verna was at the material times held and owned by its shareholders, namely, Lydia, her husband and her brother‑in‑law. They controlled its day‑to‑day operations and ran its business. At Lydia’s request Cheng Snr had mortgaged the Property in 1996 to secure La Verna’s banking facilities and become personally legally liable for any indebtedness, but within the Cheng family such indebtedness was regarded as Lydia’s responsibility. E8.Alleged conversation in October 1998 103.The defendant said that when his family visited Hong Kong in around October 1998, Cheng Snr gave him a Van Cleef & Arpels gold and diamond watch which he had purchased in the 1960s and told him that the Property was also for the defendant. Cheng Snr told him that as he was his only son, according to Chiu Chow tradition he would give him everything and would not leave the Property to the plaintiff as she was of similar age to Cheng Snr. 104.The plaintiff in evidence accepted that Cheng Snr gave the defendant the watch, but I do not think that it shows that Cheng Snr was likely to have promised the defendant that the Property would be given to him. Nor do I find the defendant’s self-serving evidence about the Property reliable. E9.The defendant’s remittances to the parents 105.There is evidence from the defendant that at least from 1991 he had remitted funds from Switzerland, either through his own bank account or Sansan’s, to his parents in Hong Kong. The details are as set out in the table below.
106.The defendant himself ran into financial difficulty in 2000 and was formally made bankrupt in Switzerland in around November 2001. Nevertheless, I accept that there was in addition approximately CHF 20,000 (equivalent to $120,000) wired through the post office by Sansan on his behalf to Cheng Snr between November 2000 and September 2004. 107.I find that the assertion in the plaintiff’s witness statement,[17] repeated in the witness statement of Queennie[18] and Lydia,[19] that the only financial contribution the defendant had made to the family was $331,603.17 between 1999 and 2000 as contribution towards the living expenses of Cheng Snr and the plaintiff, is false. In oral evidence, the plaintiff said the defendant did remit money to the parents, but not with regular frequency. 108.In fact, in the plaintiff’s letter to the defendant dated 5 May 2015, referred to in §61 above, the plaintiff wrote:
In that letter and in a further letter to the defendant dated 29 July 2015, the plaintiff referred to the fact that the defendant had been remitting funds to her through banks, though the plaintiff has failed to disclose any of her bank statements even from the more recent years. These letters show that the defendant had been remitting money to the plaintiff, but stopped in around February 2015. 109.I prefer the defendant’s evidence in this respect. I find that the defendant did, between 1991 and 2017, remit money to Cheng Snr and, after his death, to the plaintiff, in the amounts set out above. E10. Assignment to Queennie, Lydia and the defendant in September 1999 110.La Verna ran into financial difficulties and by August 1999, it owed approximately $2.93 million to BoCom which it was unable to repay. As stated above, it was regarded as a crisis created by Lydia and her husband (and perhaps Ng Wing Shing as well). Cheng Snr was very upset and concerned upon learning the size of the indebtedness, as it could result in the bank’s repossession of the Property. There would naturally have been anxious discussions within the family how to deal with it. Eventually it was decided to restructure the debts by obtaining a new mortgage loan upon a “sale” of the Property within the family. 111.Accordingly, on 7 August 1999, Cheng Snr wrote to BoCom as follows:
112.On 18 August 1999, BoCom’s solicitors replied, indicating that the amount payable to redeem the mortgage would be around $2.93 million. It can be seen from a subsequent letter of the same solicitors dated 20 September 1999 that the amount then due was owed entirely by La Verna ($1.63 million being overdraft, and $1.29 million on inward bills). This is also implicit from Cheng Snr’s letter of 7 August 1999. It follows that all the loans and facilities granted by BoCom to Cheng Snr personally based on the first mortgage and further charges created in 1984, 1986 and 1991 (see §§79-81 above) had already been repaid. I reject the argument appearing in the plaintiff’s witness statement[20] (and also in Lydia’s witness statement[21]). It was argued, relying on the fact that the bank’s letter of 18 August 1999 mentioned all 4 existing charges on the Property, that since the earlier 3 charges were for securing loans made to Cheng Snr, the bank’s demand for repayment must therefore also cover Cheng Snr’s personal loans. This argument is highly unlikely to have originated from the plaintiff herself, but seems to me to be another misconceived point put into her statement by those who prepared it, based on their own or Lydia’s flawed and incomplete understanding of the documents rather than the plaintiff’s knowledge and recollection. 113.On around 25 August 1999, Cheng Snr (as vendor), and Queennie and Lydia (signing both for herself and for the defendant) (as purchasers) signed a provisional sale and purchase agreement relating to the Property. The agreement stated that the price was $3.8 million, and that an initial deposit of $190,000 had been paid at the time of signing. It is common ground that the notion of a “sale” was fictitious, and that no sum of $190,000 changed hands by way of deposit or otherwise. 114.Lydia, meanwhile, possibly with the help of Queennie, had approached Po Sang regarding a possible mortgage loan to be secured on the Property. On 27 August 1999, following the initial oral approach, she wrote to provide Po Sang with information about her own and Queennie’s employment, attaching a copy of the provisional sale and purchase agreement. 115.By 2 letters dated 31 August 1999 to Queennie, Lydia and the defendant, Po Sang stated that it was prepared to grant a loan of $1.7 million to Queennie and Lydia as borrowers on the security of the Property (with Queennie, Lydia and the defendant as mortgagors), with interest at the prime rate (8.5% then), repayable by 168 monthly instalments. Both the borrowers and the mortgagors were to be legally liable for repayment of all sums owed. By September 1999, the defendant had returned to Hong Kong. He, as well as Queennie and Lydia, countersigned the letters, accepting the arrangement offered. 116.On 27 September 1999, Cheng Snr, as vendor, signed a formal sale and purchase agreement with Queennie, Lydia and the defendant, as purchasers (in the proportion of 5%: 5%: 90% respectively), for the sale and purchase of the Property. It stated that a deposit of $870,000 had been paid, and that $2.93 million being the balance of the price was to be paid on the completion date, 29 September 1999. Again, the document was a sham, because there was no sale and purchase being effected, and no deposit of $870,000 or any other sum had changed hands. 117.By an assignment dated 29 September 1999, stated to be made in consideration of the price of $3.8 million, Cheng Snr assigned the Property to Queennie, Lydia and the defendant to hold as tenants in common in the respective shares of 5%, 5% and 90%. 118.On the same date, Queennie, Lydia and the defendant as mortgagors, and Queennie and Lydia as “Requesting Party”, and Po Sang as mortgagee, executed a legal charge whereby Queennie, Lydia and the defendant mortgaged the Property in favour of Po Sang as security for the banking facilities to be provided to Queennie and Lydia. Although he was not one of the borrowers, the defendant also assumed a legal obligation to repay the loan by virtue of the joint and several covenant to pay under the mortgage. 119.It is common ground that the money thus borrowed from Po Sang was used (together with $1,324,417.01 from Ng Wing Cheong) to repay BoCom, and as a result the charges on the Property in favour of BoCom were released and replaced by the mortgage in favour of Po Sang. To be precise, on completion, the movements of funds were as follows: $1.7 million was advanced by Po Sang; $1,324,417.01 was transferred from Ng Wing Cheong to the purchasers’ solicitors; $2,927,762.01 was paid to BoCom as redemption monies; $85,600 was paid as stamp duty; and $11,055 was paid as solicitors’ fees and disbursements. It is also common ground that no part of the purchase price was in fact paid to Cheng Snr, and that the Property continued thereafter to be the residence of Cheng Snr and the plaintiff. 120.While the above facts concerning the transactions in 1999 are largely undisputed, a critical question that arises is why the Property was arranged to be “sold” and assigned to Queennie, Lydia and the defendant and in the specific proportion of 5%, 5% and 90%, and what the intention and understanding was at that time with regard to the ownership of the Property. 121.The plaintiff’s pleaded case is that the defendant was included as one of the assignees “for the sake of convenience” only, in that, at that time, Queennie and Lydia believed that their combined income would be considered by Po Sang to be inadequate for approving the loan and that it was necessary for the defendant to join in as a co‑purchaser, so that his income could be taken into account. It is pleaded that Queennie and Lydia undertook to pay off the Po Sang loan to enable Cheng Snr and the plaintiff to continue to live in the Property, and that there was a “consensus” among the parties, including the plaintiff, that she was the beneficial owner and that none of the “purchasers” would acquire any beneficial interest in the Property. 122.I am unable to accept fully the plaintiff’s pleaded case or the evidence tendered on her behalf. First, I do not accept that there was some express consensus within the family that the plaintiff was to remain the sole beneficial owner of the Property. This alleged consensus was only mentioned for the first time in the Amended Statement of Claim in June 2017. The witness statements of the plaintiff,[22] Queennie[23] and Lydia[24] that followed in March 2018 all stated, in virtually the same terms, that during the family discussions, it was made clear that the Property was to be assigned back to the plaintiff after the Po Sang loan was repaid, and that the defendant, Queennie and Lydia had all agreed and said that the plaintiff would remain the beneficial owner. As explained above, the credibility of this was seriously undermined by the original pleading that Cheng Snr was the beneficial owner. Also, it is inexplicable how it could have been said (as the writ stated) that Queennie and Lydia were the beneficial owners after 1999, if there were in fact the consensus now alleged. The assignment by Queennie and Lydia of their rights to the plaintiff dated 19 October 2015 expressly recited that by reason of their payment of the purchase price in 1999 and repayment of the Po Sang loan thereafter, “(a) the Assignors [ie Queennie and Lydia] are the beneficial owners of the [Property]; or alternatively (b) the Assignors and Cheng Wing Sang are beneficial owners to the extents of their respective contributions towards the costs of the acquisition”. The letter from the plaintiff’s solicitors to the defendant dated 24 October 2015 accompanying a copy of the writ also expressly stated that Queennie and Lydia had “at all times, been the beneficial owners” of the Property and that in suing the defendant, the plaintiff was asserting the right assigned by them to her. The alleged consensus is also inconsistent with the plaintiff’s own letter to the defendant dated 5 May 2015, as quoted above in §61. 123.I also have much difficulty with the suggestion that the defendant was added as a purchaser because it was Queennie’s and Lydia’s belief that their combined income would be considered by Po Sang as inadequate for the approval of the loan. The witness statement of Lydia stated (as repeated in the plaintiff’s and Queennie’s statements):[25]
124.The letter to Po Sang of 27 August 1999 and the attached provisional agreement show, however, that at that time, the provisional agreement had already been signed, with the defendant being one of the 3 purchasers. The version of events given in the witness statement, suggesting that the defendant was added later into the transaction, is inconsistent with this objective fact. If it is said that Po Sang had indicated earlier, in a telephone conversation or otherwise, that the combined income of Queennie and Lydia might be inadequate for the purpose of the loan and that the defendant was added into the transaction for that reason, then this is inconsistent with the fact that Lydia’s letter of 27 August 1999 gave no information at all about the defendant’s employment or income. It is common ground that, in fact, no income proof relating to the defendant was ever submitted to Po Sang throughout the transaction. 125.The defendant was resident and worked in Switzerland. It is inherently improbable that adding his name would provide any comfort to a lender in Hong Kong. In fact, Lydia’s letter to Po Sang of 27 August 1999 only gave the employment details of Queennie and Lydia, and Po Sang’s letters dated 31 August 1999 approving the loan stated Queennie and Lydia were to be the borrowers. 126.The plaintiff’s oral evidence shows that she had little knowledge of the events in August and September 1999. To many questions about the Po Sang loan, she simply said “I don’t know”. I find her evidence of the relevant intention at the time of little value. 127.There is also a significant inconsistency between Lydia’s and Queennie’s evidence. Lydia was adamant that from the outset, when she first approached Po Sang, it was already planned that she and Queennie would both be borrowers. Queennie’s evidence, however, was that when Lydia first approached Po Sang, she learnt that her income alone would not be adequate, and so Cheng Snr asked Queennie to help by becoming a co‑borrower. 128.Further, the plaintiff’s case that the defendant’s name was added out of a concern that Queennie’s and Lydia’s combined income might be considered inadequate does not explain why the Property was transferred to the defendant, Queennie and Lydia in the proportions of 90:5:5 (both in the formal agreement and in the assignment). The bank is unlikely to have been interested in the apportionment between them, so long as all the owners became mortgagors. In fact, Po Sang had already approved the loan on 31 August 1999 before the proportions of 90:5:5 emerged. More generally, if there were an agreement that the 3 purchasers were to be nominees holding the Property for the plaintiff absolutely, it would have been pointless to specify any specific shares as the apportionment would be meaningless. The legal title to the Property could instead simply have been transferred to them as joint tenants or tenants in common in equal shares. 129.The defendant’s case is that by that time, Lydia had incurred a large overdraft loan owed to BoCom of around $3.7 million and the bank was demanding full payment and threatening recovery of possession of the Property. After discussions, it was agreed that the Property would be “purchased” by Queennie, Lydia and the defendant, to be financed by a mortgage loan from another bank with the balance funded by Lydia, her husand and Queennie, and that Queennie and Lydia would be responsible for repaying the new mortgage loan. Cheng Snr had initially wished to gift the entire Property to the defendant, but in light of Queennie and Lydia being responsible for repaying the new mortgage loan, he decided that Queennie, Lydia and the defendant would own the Property in the respective shares of 5%, 5% and 90%. 130.I do not fully accept the defendant’s evidence in relation to this event either. The debt owed to BoCom was around $2.93 million, not $3.8 million. I do not think there would have been any discussion of a “gift” as such in the crisis of 1999. It is not clear what the market value of the Property was at that time, in the wake of the Asian financial crisis, and whether there was any equity left beyond the indebtedness to BoCom. 131.Rather, it seems to me there is some truth in the plaintiff’s witness statement[26] and those of Queennie[27] and Lydia[28] (though it was not mentioned in the plaintiff’s pleading) that at the time, the defendant, Queennie and Lydia promised they would repay the Po Sang loan. It also seems to me that assigning 90% to the defendant in the expectation that he would help repay 90% or the lion’s share of the Po Sang loan is more consistent with an intention that the assignment carried with it the beneficial ownership than with an intention that the assignees were merely nominees. 132.I find that the assignment of the Property was triggered by the problem of La Verna’s indebtedness to BoCom which it was unable to pay. The family decided to refinance the debts. Lydia and her husband, who were regarded as responsible for the crisis, contributed a lump sum of $1.32 million. Lydia, together with Queennie who had a steady salary, managed to secure a mortgage loan from Po Sang which they would help repay by instalments. The family were given to understand that the defendant would also help repay the monthly instalments, indeed probably the lion’s share, by remitting money from Switzerland. In these circumstances Cheng Snr assigned the Property to Queennie, Lydia and the defendant in the proportion of 5:5:90. I reject the plaintiff’s case that there was an express agreement that the plaintiff would be or continue to be the beneficial owner of the Property, or an express agreement that the assignees would not acquire any beneficial interest, and the defendant’s case that there was an express gift of 90% to the defendant. 133.I recognise that my conclusion in essence rejects both the plaintiff’s and the defendant’s cases. I appreciate that this should only be done in special circumstances. But after careful consideration I consider that I cannot fully accept either party’s case as probable. “When the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality”: Briginshaw v Briginshaw (1938) 60 CLR 336 at 361, per Dixon J. E11. Repayment of the Po Sang loan 134.As mentioned above, I reject the plaintiff’s evidence that the defendant never made any financial contribution (save in the admitted sum of $331,603.17 between 1999 and 2000) towards the living expenses of the parents, and I find that the defendant had in fact remitted funds to the parents as set out above, both before and after 1999. How the funds were then used was a matter for the parents. 135.No doubt unexpectedly, the defendant was bankrupted in Switzerland in around 2001 and remained a bankrupt until around 2004. The defendant said he went bankrupt because he sent all his money then to Hong Kong to help the family. It is unnecessary to make a finding on the cause of his bankruptcy. The fact is that, whether because of his bankruptcy or otherwise, the defendant’s monthly remittance to Hong Kong dropped to a much lower level than before 1999 and was far below that needed to fund the monthly mortgage repayment or a major portion of it. There was, I believe, much disappointment on the part of those in Hong Kong that the defendant did not remit as much money back as expected. This is consistent with Patsy’s message to the defendant in May 2015 quoted in §99 above. 136.From October 1999 to May 2008, monthly instalment repayments were made towards the Po Sang loan, with interest at the prime rate. The actual amounts of the monthly instalment varied between approximately $14,500 and $18,300, and were paid out of a joint account opened by Queennie and Lydia with Po Sang. On 29 May 2008, a lump sum of about $836,000 was paid, also out of the joint account, fully repaying the entire loan. There was no investigation in the trial of the respective contributions as between Lydia and Queennie. 137.The defendant said that on 1 October 2006, during the bus ride from the airport when his family came to Hong Kong for a visit, Celine was worried that they would miss the fireworks display, and Cheng Snr told her in the presence of the defendant, Sansan and the plaintiff that she need not worry as the Property belonged to the defendant’s family and she could come back to Hong Kong and watch the fireworks display every year. 138.In October 2007, according to Sansan, while she was watching the fireworks display with Cheng Snr, he asked her to consider returning to settle in Hong Kong, as it would not cost her family much if they stayed in the Property which belonged to them (ie the defendant’s family). 139.I find the evidence of such incidents unreliable. Even if there were these incidents, they were not occasions on which the participants would have paid particular attention to the precise beneficial ownership of the Property. After so many years, the accuracy of the recollection of such casual conversations must to my mind be highly doubtful. 140.I accept that Leung and Patsy had a dinner with Cheng Snr and the plaintiff at a Thai restaurant in Hong Kong in 2007, where Cheng Snr said he was very concerned there would be no one looking after the plaintiff after he passed away, and asked if Patsy would be willing to move back to Hong Kong to look after the plaintiff. According to Leung, Cheng Snr also told them that the Property was then “registered in the Defendant, Lydia and Queennie’s names, who are just bare trustees for the purpose of obtaining a loan in 1999 for the business of La Verna, but he now wants the [Property] to be transferred back to the Plaintiff”. Patsy’s statement was in virtually identical terms in this regard. I do not find their evidence in relation to the Property reliable. Leung herself could not recall whether Cheng Snr told her the Property was registered in those names, and did not quite understand what the phrase “bare trustees” meant and admitted that they were not the words of Cheng Snr. Likewise, when asked to recall what Cheng Snr said, Patsy did not suggest that Cheng Snr told her about any “bare trustees”. She said he told her that he was 70 at the time in 1999 and would not be able to get any loan, and as the defendant, Queennie and Lydia had regular income, he transferred the Property to them in the form of a sale and purchase. This does not in itself indicate that the transferees were nominees. Quite clearly Leung’s and Patsy’s witness statements had been prepared by the draftsman using his own inferences and conclusions. 141.Their statements went on in the same passage to say that Cheng Snr told them that although the Property was initially purchased in his name, the price was actually paid by the plaintiff, and hence he thought it should be transferred back to the plaintiff. However, in oral evidence Leung admitted that Cheng Snr did not say this at the dinner. I also do not believe that he would have gone into specifics on the source of the purchase monies or that he would have specifically said he himself contributed nothing towards the acquisition (see also §57 above). E13. Request to the defendant for transfer of Property 142.The plaintiff, Queennie and Lydia stated that starting in around June 2008, Cheng Snr and the plaintiff requested the defendant, Queennie and Lydia to transfer the Property back to the plaintiff. I think there was probably a request to that effect, though it was not for a transfer “back” to the plaintiff as the Property was not assigned by her in the first place. In particular, on 3 July 2008, a Hong Kong solicitors firm, on Lydia’s instructions, wrote to the defendant in Switzerland, enclosing a draft power of attorney and stating:
The draft power of attorney however recited that the defendant was the “registered or beneficial owner” of the 90% interest in the Property and, if executed, would authorise Lydia to sell and dispose of that interest to anyone for such price as should seem reasonable to the attorney. 143.As shown by the documentary evidence from the courier, however, the letter was not delivered. I accept the defendant’s evidence that he did not receive it. The plaintiff, Queennie and Lydia seem to accuse the defendant of having evaded the delivery of this letter, but the allegation is in my view not made out, as the defendant’s family was, on their evidence which I accept, away on holiday at the time. 144.It is probable that Lydia gave instructions to the solicitors with the knowledge of Cheng Snr and perhaps the plaintiff. They probably contemplated at that point asking the defendant to transfer at least part of the 90% interest held by him to them. 145.I place little weight on these requests, however, in the ascertainment of the common intention back in 1999 given that they were subsequent, potentially self-serving conduct, and not a reliable guide to the intention 9 years earlier, particularly in light of the substantial intervening changes in circumstances: the defendant was bankrupted between 2001 and 2004; contrary to the family’s expectations, he remitted relatively small amounts to Hong Kong after 2000 and hence gave little help in repaying the Po Sang loan, which had recently been discharged; and Cheng Snr was aging and felt worried about providing for the plaintiff. All this could have led to a change of intention between 1999 and 2008. E14. Assignments in 2008 and 2009 and the October 2008 Agreement 146.It is common ground that in late September or early October 2008, the defendant came back to Hong Kong for a visit. He executed an assignment dated 10 October 2008 of a 40% interest in the Property to the plaintiff. Although the assignment stated it was made pursuant to a sale and purchase at the price of $1.92 million (which would put the value of the entire Property at $4.8 million), there was in fact no such price agreed or paid. 147.It is common ground that Queennie and Lydia also executed an assignment dated 16 January 2009 of each of their 5% interest in the Property to the plaintiff. Again, although the assignment is stated to have been made pursuant to a sale and purchase of the interest at the price of $480,000, no price was in fact paid. I accept that the solicitors were probably instructed to prepare this assignment at the same time as the defendant’s assignment, and that it was executed later in January 2009 probably to avoid the two assignments being viewed as a single transaction which would attract higher stamp duty. 148.Obviously there was a discussion between the parents and the defendant before he executed the assignment. The parties’ evidence on what happened that led to this assignment is, however, very different. 149.The defendant’s case is that the October 2008 Agreement (described in §18 above) was made on the night of 6 October 2008, and that the assignment dated 10 October 2008 was executed on a limited and conditional basis as an escrow pursuant to the October 2008 Agreement. It was not intended to take effect unless and until the plaintiff fulfilled the condition of making a will as agreed, devising the 40% back to the defendant, which she failed to do. Also for this reason, the defendant ceased remitting CHF 800 to the plaintiff between February and December 2015. 150.I do not accept the defendant’s allegation of the October 2008 Agreement. There is no contemporaneous written record of the agreement. The allegation entirely depends on the defendant’s and Sansan’s evidence. I do not believe what they said in this regard. 151.The assignment dated 10 October 2008 by the defendant to the plaintiff was on its face an absolute assignment. There was nothing conditional about it. The plaintiff in oral evidence also denied that it was conditional. If it were expressly agreed to be conditional, there was no reason why it would not have been so stated in the assignment, or why the condition would not have been at least recorded in a side letter or agreement. It was also improbable that such an agreement would have given the plaintiff as long as 5 years to make a will if there was nothing otherwise in writing. 152.In his evidence, the defendant essentially said that the October 2008 Agreement was Sansan’s idea. The defendant’s pleading and his and Sansan’s witness statements stated that the agreement was that the plaintiff’s will would re-vest the 40% interest in the defendant. In oral evidence, however, the defendant inconsistently said that the agreement was for the will to leave the 40% interest to Sansan, though he thought Sansan would then give it to him. Sansan’s oral evidence, in contrast, was that the 40% was to be left by will to the defendant, not to her. It is hard to believe that, if there were in fact such an agreement, the defendant’s and Sansan’s understanding of it would be different on such a central point. 153.On the defendant’s case, the plaintiff had been in breach since October 2013, 5 years after the agreement. But there is no record at all of the defendant raising this with the plaintiff, or demanding that she perform it and make a will. In oral evidence the defendant said Sansan had chased the plaintiff. According to Sansan, she had written to the plaintiff in January 2015 reminding her to make a will as agreed. The letter was not in evidence, and Sansan said it was posted to the plaintiff. However, the plaintiff’s letter of 5 May 2015 to the defendant stated:
There was no reason for the plaintiff to lie in this letter. I find that Sansan did speak to her in the way recorded. What Sansan said to the plaintiff is inconsistent with the existence of the October 2008 Agreement, under which the monthly remittances would not need to be refunded. The letter is also evidence indicating that Sansan had not chased the plaintiff for the will as alleged. 154.The plaintiff’s letter to the defendant of 29 July 2015 referred to a telephone call from him on 25 May 2015. If he had mentioned anything about the October 2008 Agreement in that conversation and explained why he was not remitting money to her, she would not have written the letter of 29 July 2015 in the way she did, proposing to implement the arrangements mentioned in her earlier letter. I find that the defendant did not mention anything to the plaintiff in that conversation along the lines of the October 2008 Agreement. 155.Despite the plaintiff’s letters of 5 May and 29 July 2015 (and the fact that the latter specifically asked the defendant to keep it as a record), there was no response from the defendant or Sansan. This would be very difficult to understand if the October 2008 Agreement actually existed. Nor could the defendant give a credible explanation. First, the letters mentioned that the defendant had not remitted money to the plaintiff for 3 months; yet the defendant did not retort by saying that he had ceased paying her because she had failed to honour their agreement. The letters stated that the defendant had 50% of the Property; yet the defendant did not respond that he in fact owned 90% as the condition for the assignment of 40% to the plaintiff had failed. Further, the plaintiff proposed that what the 4 siblings (including the defendant) paid towards her living expenses be reimbursed to them out of the sale proceeds of the Property after her death; yet the defendant did not remind her that his remittances would not need to be reimbursed because they were paid in consideration of the plaintiff leaving the 40% interest back to him, or remind her to make the promised will, or remind her that the proceeds of sale could not be used in the way proposed because 90% would belong to him. 156.Similarly, one would have expected Sansan to respond to Lydia’s email to Celine of 31 October 2014 which was copied to her (referred to in §168 below) and which stated that the defendant owned 50% of the Property, and to clarify that in fact the defendant owned 90% if the October 2008 Agreement existed. But Sansan did not respond. 157.I find that, on the balance of probabilities, the October 2008 Agreement did not exist. 158.For her part, the plaintiff’s witness statement said that during the defendant’s visit to Hong Kong in October 2008, in Queennie’s presence, he asked Cheng Snr and the plaintiff to give the Property to him because he was their only son. They told him that the request was out of the question, and insisted that he assign the Property back to the plaintiff as soon as possible. The same evidence appeared in Queennie’s witness statement. 159.I do not accept in full the evidence in the plaintiff’s and Queennie’s witness statements. In oral evidence the plaintiff agreed that at that meeting, the defendant did not ask for the Property to be passed to him. Rather, she asked the defendant to transfer 40% of the Property to her, and that was because he had not repaid the sum of $300,000 that she had lent him in the early 1990s. She felt insecure at that time and persuaded the defendant to transfer 40% of the Property to her so that she could feel more secure. 160.In her oral evidence Queennie came up with what she said were the actual words used in the conversation. I do not think her evidence is reliable. The conversation took place in 2008. There was no contemporaneous record of it. Human memory of such an incident is all too fallible, as common experience shows (see §23 above). 161.I find that the defendant did discuss with his parents the transfer of at least part of the 90% interest to the plaintiff. I do not think that the parents considered the defendant was obliged to transfer all 90% to the plaintiff. I do not think the matter had anything to do with the $300,000 that the plaintiff claimed she advanced to the defendant when he started his restaurant business. As can be seen from the table in §105 above, the defendant remitted far more than that sum to his parents in the 1990s. Anyhow, as Queennie admitted, in the end they reached a consensus that the defendant would transfer 40% to the plaintiff. Instructions were given to the solicitors to prepare the assignment accordingly. 162.In cross‑examination, Lydia claimed she did not know and did not ask why the defendant agreed to transfer only 40% to the plaintiff, even though she said she had been pressing the defendant to transfer all 90%. I find it improbable that Lydia, who had been involved earlier in instructing solicitors to write to the defendant, did not try to find out in what circumstances the defendant agreed that he would transfer a 40% interest to the plaintiff. More probably than not, she found out that there was a consensus between the defendant and their parents for him to transfer 40% to the plaintiff. 163.Notably, there is nothing to suggest that for 7 years thereafter there was any complaint from any quarters that the defendant had failed to assign his remaining 50% to the plaintiff, or that anyone had considered that the defendant held the remaining 50% as nominee only. On the contrary, the communications in 2014 and 2015 referred to in §§164-170 below suggest that the defendant was regarded as substantive owner of 50% of the Property. When the action was brought in October 2015, the complaint was not that the defendant wrongly refused his parents’ request to transfer the remaining 50%. Rather, the writ complained that he failed to transfer 90% to the plaintiff despite the demand in Lydia’s solicitors’ letter of 3 July 2008 (which, as seen above, did not in fact make that demand) and that the Property belonged to Queennie and Lydia until the assignment of 19 October 2015. E15. Expenses relating to the Property 164.After Cheng Snr died on 31 October 2008, there was no event significant to this action until 2014. In around 2014, pursuant to orders issued by the Government, Queennie and Lydia caused certain works for removal of unauthorised structures on the roof of the Property and for repairs to be carried out. The defendant was asked to contribute and Sansan remitted CHF 11,000, from her own funds, to Lydia in April 2014 for this purpose. 165.Later in 2014, Lydia gave the defendant an account she prepared, stating that the cost of the removal works, insulation works, works on the staircase, floor tiles and railings etc for the roof, and various items of equipment for the roof such as a parasol and a barbecue. The total came to $428,460. The document stated that the defendant’s share was 50% of the expenses, ie $228,330, of which $91,000 had been paid (being presumably the CHF 11,000 remitted by Sansan). 166.At the end of 2014, Lydia prepared another statement of account for the defendant, detailing the monthly expenses of the plaintiff. What is significant for present purposes is that the document included 50% of the amounts of rates and government rent for the Property as the plaintiff’s own expenses, and deducted 50% of the amounts of rates and government rent from the defendant’s monthly remittance of around $6,000 to Hong Kong, leaving the remainder as the defendant’s net contribution towards the plaintiff’s expenses. 167.These accounts show an understanding and acknowledgment that the defendant was a 50% owner of the Property and as such responsible for 50% of its outgoings. Lydia’s explanation that she was simply following what was stated in the conveyancing documents does not seem to me credible. If there was a consensus that the defendant was simply holding the Property as nominee for the plaintiff, or for Queennie and Lydia, it would not make sense for the defendant to be asked to pay 50% of expenses. 168.What Lydia wrote to Celine in October 2014 was to the same effect. At that time, Sansan intended to send another CHF 5,000 to Hong Kong as the defendant’s contribution to the expenses, and asked her daughter, Celine, to help arrange it. Celine, not knowing the background, asked Lydia what the money was for. Lydia replied on 31 October 2014 as follows:
169.I do not accept Lydia’s evidence that she did not consider she needed to explain to Celine as she was of the younger generation. On the contrary, it would be important that the defendant’s daughter should not be led to believe that the defendant owned 50% of the Property if he was in fact a mere nominee as Lydia now asserts. It seems to me that this communication again signifies an acknowledgment that the defendant beneficially owned 50% of the Property. 170.After January 2015, the defendant stopped remitting money to the plaintiff (up to December 2015). This became a matter of concern to the plaintiff, as evidenced by her letters of 5 May and 29 July 2015 to the defendant (referred to in §§61, 108 and 154 above). The letter of 5 May 2015 also evinced an understanding that the defendant had a 50% beneficial interest in the Property. I do not agree with the plaintiff’s submission that the letter showed that the plaintiff treated the Property as her own. She was there making a proposal to ensure that her living expenses would be funded by the children. Nor do I accept the plaintiff’s evidence that the reference in the 5 May 2015 letter to “50%” for the defendant was a mistake for “25%”. The letter referred to 50% twice. The first reference was not to the defendant as 1 out of 4 siblings, but to “the original proportion of 50%” each (“依原本的比例分配各50%”), which I consider to be a clear reference to the division of the ownership of the Property into two halves. In the second reference, the plaintiff specifically appealed to the defendant on the basis that his 50% would still yield a substantial amount (“TOMMY你的50% 仍有數百萬港幣”). Also, the plaintiff was unable to give any credible explanation why she did not correct this alleged “mistake” in her subsequent letter of 29 July 2015, or even in her witness statement. 171.The defendant and Sansan said that they stopped the monthly payment because the plaintiff did not honour her side of the bargain under the October 2008 Agreement by making a will. I reject that evidence. The 5 years for the plaintiff to make a will had expired by October 2013, but the remittance did not stop then, nor was there any evidence of complaint. There was no mention of anything like the October 2008 Agreement or the defendant’s alleged reason for stopping his remittance in the plaintiff’s 2 letters of 2015. This suggests that the defendant had not told her the alleged reason. Nor did the defendant reply to the plaintiff’s letters by pointing out this reason, which would have been the natural thing to do if it were true. 172.In October 2015, Queennie, Lydia and the plaintiff consulted lawyers, and decided to sue the defendant. It is clear from the writ of summons, Queennie’s and Lydia’s assignment of their rights to the plaintiff dated 19 October 2015, and the plaintiff’s solicitors’ letter dated 24 October 2015, that they took the view at that time that the Property belonged to Queennie and Lydia immediately prior to the assignment. For reasons that were not revealed, it was decided that Queennie and Lydia would assign all their rights to the plaintiff and the action would be brought in the name of the plaintiff; hence the assignment dated 19 October 2015 and the solicitors’ letter dated 24 October 2015 giving notice of the assignment to the defendant. F. Analysis of the parties’ claims 173.Based on the above findings of fact, I now deal with the claims advanced by the parties. F1.The plaintiff’s claim of beneficial ownership from 1975 to 1999 174.The plaintiff’s pleaded case is that although Cheng Snr was the registered owner of the Property on its acquisition, she was the beneficial owner “in that the purchase price was paid by the Plaintiff”. Since the plaintiff has failed to establish the factual premise, her claim that she was the beneficial owner of the Property from 1975 onwards failed. 175.I would add that, even if it was proved on the balance of probabilities that she funded the initial payment and all the instalment repayments of the Hang Seng mortgage loan, it would not automatically follow that she was the beneficial owner. The Property was her matrimonial home with Cheng Snr. It is at least arguable that in the absence of any express trust, the beneficial ownership of such a property, if at variance from legal ownership, depends on the existence of a common intention constructive trust, rather than a resulting trust which focusses exclusively on the source of payment of the purchase price. Thus it was stated in Stack v Dowden [2007] 2 AC 432 at §31 per Lord Walker:[29]
And at §60 Baroness Hale likewise said:
176.These passages were quoted in part by the Court of Appeal in Mo Ying v Brillex Development Ltd & another [2015] 2 HKLRD 985 at §5.12 and §5.13.[30] Similarly, at §53 of their joint judgment in Jones v Kernott [2012] 1 AC 776, Lord Walker and Baroness Hale added:
177.The plaintiff’s closing submissions incorrectly asserted that the resulting trust concept as the applicable principle was considered appropriate by all the members of the court in Stack v Dowden, and quite improperly quoted several paragraphs from Lord Neuberger’s judgment in that case as support for their contention without specifying that it was a dissenting judgment.[31] 178.In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §1.3, Lam VP also said:
179.The plaintiff, however, has only averred that she paid the purchase price. She has not pleaded any common intention, whether express or to be inferred or imputed, that she was to have the entire beneficial ownership despite that the Property was purchased in Cheng Snr’s name. Nor has she pleaded any detrimental reliance on her part in support of a common intention constructive trust in her favour. As a result, these matters were not the focus of investigation at trial. In these circumstances, even if she had proved she funded the purchase, I doubt very much that she could simply rely on that fact to found a constructive trust or resulting trust. It is, however, unnecessary to deal with this question since the plaintiff has failed, on my findings, to establish that she solely funded the purchase price. F2.The plaintiff’s alternative case? 180.In closing submissions, counsel for the plaintiff suggested if the plaintiff was found to have contributed in part towards the purchase price, a sufficient common intention could be inferred that she had a shared interest in the Property to the extent of her financial contribution.[32] I do not think this submission is open to the plaintiff. The question of common intention in relation to a family home is one of fact and depends on a wide range of factors — “the whole course of dealing between them in relation to the property”[33] and not just the respective financial contributions of the spouses towards the purchase price. This was not pleaded at all or focussed upon in evidence. It cannot be raised for the first time in final submissions. 181.The plaintiff’s counsel also argued that even if the court accepted the defendant’s case and found that the initial payment and mortgage loan repayments were funded by Cheng Snr alone, there could still be a common intention constructive trust in favour of the plaintiff such that she and Cheng Snr had equal shares of the beneficial ownership of the Property.[34] This point does not arise on the facts as found but, for the same reason as stated in the preceding paragraph, it is in any event not open to the plaintiff. 182.It should be pointed out in fairness that it appears that both points are raised in opposition to the defendant’s claim of a gift in 1999, rather than in support of the plaintiff’s own claim. Nevertheless, since there was no requisite pleading in the plaintiff’s Amended Reply and Defence to Counterclaim and no investigation at trial, the points cannot be relied on by the plaintiff. F3.The plaintiff’s case of consensus in 1999 that she would remain beneficial owner 183.I have found above (see Section E10 above) on the facts that there was no consensus at the time of the transaction in 1999 that the plaintiff was to remain the beneficial owner of the Property. F4.The defendant’s case of gift in 1999 184.I have rejected the defendant’s evidence of an express gift by Cheng Snr in September 1999 (see Section E10 above). 185.The defendant in addition relies on the presumption of advancement. It is not strictly necessary to deal with this, since for the reasons given herein, I reject the plaintiff’s claim and the defendant’s counterclaim, and there is no separate claim involving Cheng Snr’s estate. I would, for completeness, briefly discuss the point as follows. 186.As stated in Section E10 above, I do not accept the plaintiff’s allegations that the defendant was included as one of the assignees of the Property in 1999 for convenience to enable his income to be taken into account for the purpose of obtaining the Po Sang loan, or that there was an express agreement that the assignees would not acquire any interest in the Property. I remain in some doubt as to the true precise common intention in 1999. In the exceptional circumstances of this case, it seems to me there is scope for the operation of the presumption of advancement, so that unless rebutted, the assignment of 90% of the Property by Cheng Snr to the defendant would be presumed to carry the beneficial interest. Admittedly the presumption is a weak one, especially given that the defendant was a working adult son not dependent on Cheng Snr: Suen Shu Tai v Tam Fung Tai [2014] 4 HKLRD 436, §10.17. But the evidence accepted does not seem to me sufficient to rebut it. The fact that the arrangement was prompted by the need to discharge the indebtedness to BoCom and to avoid repossession of the Property by the bank does not seem to me to evince a contrary intention. The fact that the defendant became one of the mortgagors meant that he took the Property subject to a charge and accepted liability under the covenant to repay, but does not contradict the presumption that the he beneficially obtained in effect the equity of redemption. The plaintiff’s allegations as to subsequent requests for the defendant to transfer back his interest in 2008 (see Section E13 above) amount to subsequent declarations and conduct by Cheng Snr and should as such be given very little weight: Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605, §§55‑56; see also §145 above. F5.The defendant’s case of the October 2008 Agreement 187.Since the defendant’s factual allegations of the October 2008 Agreement are not established (see §157 above), that claim (whether on the basis that the assignment dated 10 October 2008 was an escrow subject to an unfulfilled condition or that there was a common intention construction trust in favour of the defendant) fails. It is unnecessary to deal with the various legal objections raised against it on behalf of the plaintiff. I should mention that there was no contention that a resulting trust arose in favour of the defendant in relation to the 40% interest assigned to the plaintiff in October 2008. I would not have entertained any such argument, even if raised, as it was not pleaded and not investigated in evidence. 188.For the above reasons, both the plaintiff’s action and the defendant’s counterclaim are dismissed. 189.On a nisi basis, there will be no order as to costs.
Mr K M Chong and Mr Philip S Y Li, instructed by Lau, Chan & Ko, for the Plaintiff Ms Wendy W Y Yeung and Ms Karen W L Wong, instructed by Humphrey & Associates, for the Defendant [1] These observations are not affected by the decision of the Court of Appeal allowing the appeal: CACV 173/2012, 16 August 2013. [2] Similar caution was exercised in English cases such as Smith New Court Securities Limited v Scrimgeour Vickers (Asset Management) Limited [1992] BCLC 1104 at 1115-6; Dr Jones Yeovil Ltd v The Stepping Stone Group Ltd [2020] EWHC 2308 (TCC), §47; Wake (A Child) v Johnson [2015] EWHC 276 (QB), §§66-70. [3] §89. [4] §90. [5] §18. [6] §§13-14. [7] See Order 80 rule 2 of the Rules of the High Court (Cap 4A). [8] §2. [9] For example, §§43 and 47. [10] For example, §§35 and 39. [11] For example, §§38 and 42. [12] §17. [13] §§18-21. [14] §20. [15] §21 of the plaintiff’s witness statement. [16] §9 of the Amended Statement of Claim. [17] §45, though I note that some further remittances from the defendant between October 2004 and July 2017 were admitted in her Amended Reply at §10. [18] §37. [19] §40. [20] §§28‑29. [21] §§23‑24. [22] §§37, 43. [23] §§29, 35. [24] §§32, 38. [25] See the plaintiff’s witness statement at §§33-34 and Queennie’s witness statement at §§25-26. [26] §38. [27] §30. [28] §33. [29] See also §3 per Lord Hope. [30] Contrast the Singapore case of Chan Yuen Lan v See Fong Mun [2014] SGCA 36, referred to in Mo Ying at §6.13, which preferred a resulting trust approach to the question of beneficial ownership of a matrimonial property. [31] Plaintiff’s closing submissions, §50. [32] Plaintiff’s closing submissions, §55. [33] Oxley v Hiscock [2005] Fam 211 at §69, approved in Stack v Dowden [2007] 2 AC 432 at §§12, 36, 60-61. [34] Plaintiff’s closing submissions, §§57-60. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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