Cheng Fu Wan and Another v. Cheng Lok Yee

HCA 1532/2018

[2021] HKCFI 1881

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1532 OF 2018

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Before: Deputy High Court Judge William Wong SC in Court

Dates of Hearing: 21, 22 and 25 June 2021

Date of Judgment: 2 July 2021

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J U D G M E N T

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Introduction

1.In the present proceedings, the major issue in dispute is the beneficial ownership of a landed property known as Flat 4, 15^th Floor, Block C, Ming Ngar Court, No.11 On Po Lane, Tai Po, New Territories (“the Property”).  The Property is a domestic unit developed and sold by the Housing Authority under the “Home Ownership Scheme” (“the HOS”).

2.There is no dispute that the Property was purchased by Mr Cheng Lok Yee (“the Defendant”) upon his successful application under the HOS in 1985.  The Defendant has, since 1985, been the sole registered owner of the Property.  The purchase price was HK$120,200.  The Defendant paid HK$20,200 as down payment for the Property in 1985. The remaining balance of HK$100,000 was financed by a 10-year mortgage granted by the Hongkong and Shanghai Banking Corporation to the Defendant as mortgagor.  All the mortgage payments were paid in the name of the Defendant.

3.In 1996, the mortgage was fully repaid and thereby discharged. The Defendant redeemed all the title deeds of the Property and he is still keeping the title deeds of the Property as of today.

4.Madam Cheng Fu Kwan (“the 1^st Plaintiff”) is the Defendant’s younger sister. She claims for 5/6 beneficial interest in the Property on the basis of a common intention constructive trust and/or resulting trust.

5.It is the 1^st Plaintiff’s case that in about late 1985, another sister, Madam Cheng Choi Kwan (“Kwan”), met with the 1^st Plaintiff and her then partner (later husband), Chan Wing Hong David (“David Chan”) in a tea gathering in Park Hotel and informed them that the Defendant was allotted with a subsidized housing flat by the Hong Kong Housing Authority whilst he had applied for migration to Singapore and lacked the financial means to pay the purchase price of the Property.

6.It is alleged that Kwan on behalf of herself and the Defendant made the following representations to the 1^st Plaintiff and David Chan:

(1)   If the 1^st Plaintiff and David Chan did not intend to acquire the Property, the Defendant would not acquire it; and

(2)   If the 1^st Plaintiff and David Chan intended to acquire the Property, then notwithstanding such flat would be registered in the name of the Defendant, Kwan would initially pay the down payment and the 1^st Plaintiff and David Chan would be responsible for paying the mortgage installments during the mortgage period (“the Representations”).

7.Upon hearing the Representations, the 1^st Plaintiff and David Chan made known to Kwan that they decided to acquire the Property, of which the Defendant would hold the legal title, and they would pay all outstanding mortgage installments.

8.In early January 1986, Kwan and the Defendant informed the 1^st Plaintiff that the allotted flat was the Property.

9.It is the 1^st Plaintiff’s case that, by virtue of the aforesaid, before completing the purchase of the Property, a common intention had been formed between the 1^st Plaintiff and the Defendant (“the Common Intention”) to the effect that:

(1)   The 1^st Plaintiff would pay all the mortgage installments and interests to the mortgagee bank;

(2)   By making such repayments, the 1^st Plaintiff would acquire interests in the Property despite the Property being registered in the name of the Defendant; and

(3)   The Defendant was not to own the Property beneficially but to hold it as nominee for the 1^st Plaintiff.

10.Shortly after the completion of the purchase of the Property, Kwan and the Defendant notified the 1^st Plaintiff of the date of delivery of possession of the Property and passed on to the 1^st Plaintiff the keys of the Property and the Defendant’s bank passbook which was used for paying mortgage installments.

11.Later, the 1^st Plaintiff, with the assistance of her late father and David Chan, arranged for decoration works to be done on the Property and applied for supply or provision of utilities to the Property.

12.Acting in reliance on the Representations and the Common Intention and with the concurrence of the Defendant:

(1)   The 1^st Plaintiff agreed to make and did make all the mortgage repayments to the mortgagee bank throughout the mortgage period from March 1986 to March 1996 as well as miscellaneous expenses regarding the Property, including decoration costs, management fees and rates etc.; and

(2)   The 1^st Plaintiff and David Chan moved into the Property in March 1986.

13.It is also the 1^st Plaintiff’s case that in early 1987, she asked the Defendant to execute as assignment of the Property in favour of the 1^st Plaintiff. The 1^st Plaintiff proposed through David Chan a sum of HK$100,000 as consideration for vesting the Defendant’s 1/6 share of the Property in the 1^st Plaintiff so that the legal title of the Property could be vested in the 1^st Plaintiff.  The Defendant rejected the 1^st Plaintiff’s proposal but assured her that he would not claim any interests in the Property in the future (“Assurance”).

14.As such, the 1^st Plaintiff claims for:

(1)   A declaration that 5/6 share of the Property (or alternatively, such other share of the Property as the Court shall deem proper and appropriate) now standing in the sole name of the Defendant is held by him on trust for the 1^st Plaintiff absolutely; or

(2)   Alternatively, such sum of money as equivalent to the said 5/6 share of the Property (or such other share of the Property as the Court shall deem proper and appropriate) to be paid by the Defendant to the 1^st Plaintiff.

15.The Defendant’s case is simple and straightforward.  He denies that there was any common understanding or intention between him and the 1^st Plaintiff that the 1^st Plaintiff should acquire 5/6 of the beneficial interest of the Property.  He and Kwan both deny having ever made the Representations or Assurance to the 1^st Plaintiff.

16.The Defendant said that Kwan with his permission allowed the 1^st Plaintiff to reside in the Property on the condition or principle that she and whoever were to reside in the Property had to pay for all the related expenses including the monthly mortgage payment.  It is the Defendant’s pleaded case that out of brotherhood and fraternity love, Kwan as the manager of the Property and on behalf of the Defendant allowed the 1^st Plaintiff to reside in the Property at a license fee of HK$1,188 payable to the Defendant’s account for his own monthly mortgage repayment and the 1^st Plaintiff also had to pay all other outgoing expenses of the Property, including management fee and/or utility expenses etc. during the 1^st Plaintiff’s stay in the Property.

17.As such, all payments made by the 1^st Plaintiff in respect of the Property were in no way contribution to the payment of the purchase price of the Property, but were consideration paid to the Defendant to allow the 1^st Plaintiff to reside in the Property from early 1986 to 2000 or any definite period and for the expenses in using or occupying the Property.  Hence, the Defendant paid up all the parts of the mortgage loan of the Property and all interests and costs thereon on his own. He also arranged for discharge of the mortgage of the Property using his own money.

18.Further, the 1^st Plaintiff was allowed to decorate the Property upon consent given by the Defendant.

19.It is also the Defendant’s case that in around 1997 to 1998, David Chan suggested to purchase the Property from him at HK$100,000 but was rejected by the Defendant on the ground that he had to use the Property for his own use.

20.The second main issue in the present proceedings is the Defendant’s counterclaim against the 1^st and 2^nd Plaintiff for mesne profit. The Defendant’s case is that in about 2012, the 2^nd Plaintiff, with the consent of Kwan, moved in to reside in the Property.  She also had to pay for all the related expenses save that by that time the mortgage has been discharged and hence there was no need for the 2^nd Plaintiff to pay for mortgage payments.

21.In about July 2018, Kwan requested the 2^nd Plaintiff to vacate the Property.  Despite notice given by the Defendant to the 2^nd Plaintiff, through his solicitors by a letter dated 28 August 2018, to terminate the license or permission for the 2^nd Plaintiff to reside in the Property and for her to vacate the Property on or before 30^th September 2018, the 2^nd Plaintiff refused to do so and is still residing in the Property.

22.As such, the Defendant counterclaims against the 1^st and 2^nd Plaintiffs jointly and severally for delivery of vacant possession of the Property forthwith and payment of mesne profit for wrongful occupation of the Property from 30 September 2018 until the delivery of vacant possession of the Property.

23.The 2^nd Plaintiff’s case is that she accepted to reside in the Property with the consent of the 1^st Plaintiff, who is entitled to occupy the Property, and at the request of Kwan on behalf of the Defendant.  Hence, the Defendant is not entitled to require her to deliver vacant possession of the Property to him.

24.I should also mention that initially the 2^nd Plaintiff also has a proprietary claim over the beneficial interest of the Property on the basis that she had contributed all the building improvement funds in the total sum of HK$59,314.00 to Hong Yip Service Company Limited, the management company of the Property.  However, at the pre-trial review dated 12 April 2021, leave was granted to the 2^nd Plaintiff to withdraw her entire claim against the Defendant.  As such, this Court needs not deal with the 2^nd Plaintiff’s pleaded claim.

25.This case turns on the oral discussion in Park Hotel in 1985 and whether the Common Intention was formed as a result of such discussion.  The parties’ cases are diametrically opposite to each other. Hence, this Court has to assess the credibility of the parties’ case by taking into account all the relevant circumstances of the case into account.

Assessment of Oral Testimony

26.In Lee Fu Wing v Yan Paul Po Ting [2009] 5 HKLRD 513, Deputy High Court Judge Au (as he then was) at p 524 helpfully set out the well-established approach on assessment of witnesses as follows:

(1)   whether the party’s case is inherently plausible or implausible;

(2)   whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3)   where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests.  This is relevant to the assessment of his overall credibility; and

(4)   the demeanour of the witnesses.

27.Lord Bingham in his book The Business of Judging at pp 5 – 6 insightfully said:

“Let me then turn to the central questions. Faced with a conflict of evidence on an issue substantially effecting the outcome of an action, often knowing that a decision this way or that will have momentous consequences on the parties’ lives or fortune, how can and should the judge set about his task of resolving it? How is he to resolve which witness is honest and which dishonest, which reliable and which unreliable? How, as between competing experts in a field not his own, is a judge to determine where the truth lies? Is our existing way of resolving expert conflicts the best way? I shall begin by considering the resolution of issues of primary fact, the choice between first-hand eye-witnesses. Then I shall turn to expert evidence.

The normal first step in resolving issues of primary fact is, I feel sure, to add to what is common ground between the parties (which the pleadings in the action should have identified, but often do not) such facts as shown to be incontrovertible. In many cases, letter or minutes written well before there was any breath of dispute between the parties may throw a very clear light on their knowledge and intentions at a particular time ….

The most compendious statement known to me of the judicial process involved in assessing the credibility of an oral witness is to be found in the dissenting speech of Lord Pearce in the House of Lords in Onassis v Vergottis. In this he touches on so many of the matters which I wish to mention that I may perhaps be forgiven for citing the relevant passage in full:

‘Credibility’ involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problem. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection even subsequently altered by unconscious bias or wishful thinking or by over-much discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness. And motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process. And in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.

Every judge is familiar with cases in which the conflict between the accounts of different witnesses is so gross as to be inexplicable save on the basis that one or some of the witnesses are deliberately giving evidence which they know to be untrue. There are, no doubt, witnesses who follow the guidance of the Good Soldier Sveyk that ‘The main thing is always to say in court what isn’t true,’ as a matter of principle, but more often dishonest evidence is likely to be prompted by the hope of gain, the desire to avert blame or criticism, or misplaced loyalty to one or other of the parties. The main tests needed to determine whether a witness is lying or not are, I think, the following, although their relative importance will vary widely from case to case:

(1) the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred;

(2) the internal consistency of the witness’s evidence;

(3) consistency with what the witness has said or deposed on other occasions;

(4) the credit of the witness in relation to matters not germane to the litigation;

(5) the demeanour of the witness.

The first three of these tests may in general be regarded as giving a useful pointer to where the truth lies. If a witness’s evidence conflicts with what is clearly shown to have occurred, or is internally self-contradictory, or conflicts with what the witness has previously said, it may usually be regarded as suspect. It may only be unreliable, and not dishonest, but the nature of the case may effectively rule out that possibility.” (Emphasis added).

28.I find the above guidelines helpful and will apply the same in assessing the credibility of the Plaintiffs and the Defendant’s respective case.

29.Having heard the oral testimony of the witnesses and having regard to the conduct of the parties, the contemporaneous documents and the parties’ submissions, on balance, I am of the view that the parties did not form any common understanding or intention as alleged by the 1^st Plaintiff and David Chan.  I come to this view for a number of reasons.

Analysis

30.First, apart from the alleged discussion in early 1987, the 1^st Plaintiff has never raised the issue of beneficial ownership of the Property directly with the Defendant from 1985 to 2018.  During the long period of time, the Defendant could have sold or even remortgage the Property without the knowledge of the 1^st Plaintiff.  This fact, by itself, does not sit well with the allegation that the 1^st Plaintiff is and was at all material times, one of the beneficial owners of the Property.

31.Secondly, when it comes to the discussion in Park Hotel in late 1985, I accept Kwan’s evidence that the issue of ownership of the Property was never discussed at all.  Although there were some minor discrepancies in Kwan’s oral testimony, overall, I find Kwan to be a credible witness.  Her evidence is that originally she had intended to reside in the Property and a condition for such residence was that she had to pay for all outgoing expenses including mortgage payments which at that time was about H$1,188.  As it turned out, she had to go to Malaysia with her daughter. Hence, she asked the 1^st Plaintiff whether she would like to reside in the Property on the same terms.  Kwan also mentioned that if the 1^st Plaintiff was not interested, one of the Defendant’s in-laws would be.  The 1^st Plaintiff expressed the view that she would like to move in the Property as the outgoings including payments for the mortgage installments would be lower then what she was paying at the time.  At the relevant time, she rented an apartment in Waterloo Road.  I note that although Kwan’s oral testimony did not confirm that the 1^st Plaintiff lived in a cubicle in Tsim Sha Tsui, her evidence was that as the 1^st Plaintiff worked in Tsim Sha Tsui, she thought that the 1^st Plaintiff lived in Tsim Sha Tsui.  I do not find this minor discrepancy affects the overall credibility of Kwan. She is an independent witness and she has nothing to gain in the present dispute.

32.On the contrary and thirdly, I find the 1^st Plaintiff and David Chan’s evidence hard to believe.  As the evidence unfolded during the trial, the Defendant did not immigrate to Singapore in late 1985 or 1986.  In fact, he was working in Hong Kong with a Singaporean company at the relevant time and his salary was about S$3,000 per month which was about HK$15,000. In 1985 to 1986, that was not a low salary.  The Defendant’s financial status was not challenged during cross-examination.  In such circumstances, I find it quite inherently improbable that the Defendant would have, through Kwan, related the alleged message to the 1^st Plaintiff and David Chan that he was about to immigrate to Singapore and would not have the financial means to purchase the Property unless the 1^st Plaintiff and David Chan were to “purchase” the same by paying all the mortgage payments.  There was no necessity for the Defendant to do so at the relevant time.

33.Indeed, Kwan’s evidence was that she merely asked whether the 1^st Plaintiff was interested in moving in the Property and not whether to purchase the Property.  Kwan would not have any authority on behalf of the Defendant to ask if the 1^st Plaintiff was interested in purchasing the Property.

34.Fourthly, on the 1^st Plaintiff’s case, the Representations were allegedly made to both the 1^st Plaintiff and David Chan, it is not at all sure how and why only the 1^st Plaintiff subsequently become the 5/6 beneficial owner of the Property.  

35.Fifthly, I agree with Mr Wong’s submissions that if there were discussions about the beneficial interest of the Property, there would be discussions about how much the Defendant would contribute and how much the 1^st Plaintiff would contribute and when would the title be transferred to the 1^st Plaintiff etc..  According to the 1^st Plaintiff’s own case and once again confirmed by the 1^st Plaintiff and David Chan in court, when the Common Intention was formed at the coffee shop of Park Hotel, the Defendant had not even selected the unit (later known as the Property).  Therefore, the 1^st Plaintiff and David Chan had no idea about the basic particulars of the unit, including:

(1)   The location, such as in Kowloon, Hong Kong or New Territories.

(2)   The price or the range of the price.

(3)   The rough total sum of the mortgage, its length and its monthly installments.

(4)   The size of the Property, 2 or 3 bedrooms.

(5)   The exact ratio or share of the beneficial interests of the Property.

(6)   When and how the Defendant would transfer the legal title of the Property back to the 1^st Plaintiff. For example, who should be responsible for paying the necessary premium?

36.I am of the view that it is hard to imagine that if the 1^st Plaintiff was indeed considering whether to reside in and own a yet to be selected HOS flat, one or more of the above issues would not be discussed.  It would be a major decision to be made at the material time given that the 1^st Plaintiff had never owned any property before.  The absence of such discussion sits better with Kwan’s evidence that there was no discussion about ownership at the material time.

37.Mr Wong for the Defendant submitted that the location is important as 1^st Plaintiff was then working in Tsim Sha Tsui.  The size of the Property is also material as she would be residing with David Chan and a single person unit might not be suitable.  Additionally, she must be concerned to know about how much down payment the Defendant would pay and how much mortgage installments she would have to pay.  This also goes directly to the exact beneficial interests in the Property that she was acquiring.  The subject matter is a landed property with long term commitment.  This must be an important decision in her life.  If the Common Intention exists, there is no sensible reason as to why the 1^st Plaintiff would not have discussed the issues set out in paragraph 35 above with Kwan.  Incidentally, I also note that HK$20,200 divided by HK$120,200 (the purchase price) is not exactly 1/6.  It is not even sure whether there was a discussion about the exact ratio of beneficial ownership between the 1^st Plaintiff and the Defendant. On balance, I find that there was no discussion on the beneficial ownership of the Property in 1985 as alleged by the 1^st Plaintiff.

38.Sixthly, I find the 1^st Plaintiffand David Chan’s case that in 1987, they proposed to offer HK$100,000 to the Defendant to buy out his 1/6 beneficial interest in the Property incredible.  David Chan gave evidence that on top of the HK$100,000 which would be paid to the Defendant, they would also be responsible for paying the premium to the Housing Authority which was about HK$40,000.

39.Both the 1^st Plaintiff and David Chan accepted that the total price of the Property would then be about HK$240,000 which consisted of (a) HK$100,000 payable to the Defendant, (b) HK$100,000 outstanding mortgage payments and (c) premium to be paid to the Housing Authority in the sum of about HK$40,000.

40.David Chan accepted that the prevailing market price of a property in the private market similar to the Property might be even lower than HK$240,000.  With the offer of HK$100,000, the Defendant could have pay almost 40-50% as down payment for a similar property in the private market.  Mr Wong for the Defendant submitted that it would be too good to be true and there was no sensible reason for the Defendant to have rejected such an offer.  I agree.

41.I also accept Mr Wong’s submission that in 1987, what the Defendant had actually paid for the Property was HK$20,200.  With the lapse of only 2 years, the value of the Defendant’s 1/6 interest in the Property increased by nearly 5 folds.  David Chan’s answer was that he was a generous person.  He might well be a generous person but to make an offer which was about 5 folds of the original investment and for the Defendant to reject such a generous offer is hard to believe.

42.Indeed, David Chan’s evidence is that he was also looking for properties in the private market and had intended to buy one in late 1985. He said he sufficient means.  I agree that if that were the case, he could have use his HK$100,000 to buy a property in the private market instead of purchasing the Defendant’s 1/6 entitle in the Property for HK$100,000.

43.I also find the Assurance incredible. David Chan’s evidence is that the Defendant on the one hand rejected the offer of HK$100,000 to buy out his 1/6 beneficial interest in the Property, on the other hand assured the 1^st Plaintiff and David Chan that he “would not claim any interests in the Property in the future. Because of such assurance, Gloria and I did not press the issue.” (Paragraph 17 of David Chan’s witness statement).  I find this hard to believe.  In essence, it means that the Defendant would give up all his beneficial interest in the Property when he specifically rejected the offer of HK$100,000 to buy out his 1/6 share.

44.When being asked on what was his understanding that the Defendant would not claim any interest in the Property in the future, David Chan then said that he understood it to mean that he and the 1^st Plaintiff would have a life interest in the Property in the sense that they could reside in the Property for life and thereafter the entire property right would revert back to the Defendant. This does not sit well with the Common Intention.

45.There is no justifiable reason, even on the 1^st Plaintiff’s case, that the Defendant would have voluntarily given up his proprietary interest in the Property.

46.Although Ms Leung for the Plaintiffs submitted that this is only David Chan’s own understanding and there was no communication amongst the 1^st Plaintiff, David Chan and the Defendant on the issue of life interest, I find it hard to believe that if there was indeed a common understanding or common intention as agreed in 1985, David Chan could have an understanding that he and the 1^st Plaintiff would have a life interest in the Property and thereafter the entire proprietary right in the Property would revert back to the Defendant.

47.Mr Wong for the Defendant also submitted that when the Defendant openly rejected to transfer any title of the Property to the 1^st Plaintiff in 1987, the 1^st Plaintiff must have reacted by either stop paying the mortgage payments or take further actions to protect her interest in the Property.  I agree.

48.To sum up, I do not find it credible that the alleged event in 1987 happened.  In my view, this seriously undermine the overall credibility of the 1^st Plaintiff and David Chan on their case of the Common Intention that the 1^st Plaintiff should have 5/6 beneficial interest in the Property.

49.Seventhly, I also find it inexplicable that, in 1996, it was the Defendant who arranged for the discharge of the mortgage of the Property by using his own money.  Ms Leung for the Plaintiffs did not challenge the Defendant’s evidence that there were fees to be paid before the mortgage could be discharged and it was all paid by the Defendant.  If the 1^st Plaintiff had 5/6 beneficial interest in the Property, it is highly unlikely that the Defendant would not have asked for contribution from the 1^st Plaintiff.

50.I also find it strange that ever since 1996, the title deeds of the Property are kept by the Defendant.  The 1^st Plaintiff never demanded or requested the Defendant to hand over the title deeds of the Property to her. It is common ground that no demands were ever made. In such situation, the Defendant could sell or remortgage the Property in any way he deems fit. This does not sit well with the 1^st Plaintiff’s case of a common understanding or common intention that she has 5/6 beneficial interest in the Property.

51.When being asked on why the 1^st Plaintiff did not even ask for the title deeds of the Property, both the 1^st Plaintiff and David Chan said that given what happened in 1987, they thought that it would be pointless to ask for the return of the title deeds of the Property because the Defendant had rejected them in 1987.  I find this difficult to fathom. If indeed the Common Intention exists and the 1^st Plaintiff had already performed her side of the bargain by fully discharged the mortgage payments, it would only be natural for her to ask for the title deeds of the Property.  What happened some 9 years ago could hardly be a reason for not even making such a demand or request.  The more probable explanation is that the Defendant was and is at all material times the sole beneficial owner of the Property and hence it is only normal and natural that he should keep the title deeds of the Property and he could deal with the Property in any way he deems fit as the absolute beneficial owner of the Property.

52.Eighthly, I also note that the 1^st Plaintiff and David moved out of the Property in 2000 when they purchased their own HOS flat in Tin Shui Wai.  If the 1^st Plaintiff and the Defendant were indeed co-owners of the Property, one would have expected the 1^st Plaintiff to discuss with the Defendant as to how the Property should be dealt with after 2000.  There were no such discussion at all. On the 1^st Plaintiff’s evidence, she never discussed that with the Defendant.  On her case, she allowed Kwan to move in the Property and resided there on the basis that she would pay for all the outgoing expenses of the Property.  By that time, the mortgage has been fully discharged.

53.I find Kwan’s evidence on this issue more credible.  Her evidence is that after the 1^st Plaintiff and David Chan moved out of the Property, with the consent of the Defendant, she moved in to live in the Property.  Later, she also arranged her niece to reside in the Property, again, with the consent of the Defendant. She never had to ask for consent from the 1^st Plaintiff as she was never a beneficial owner of the Property.

54.Indeed, the conduct of the 1^st Plaintiff after 1996 does not sit well with her claim that she is a beneficial owner of the Property.  In between 1996 to 2000, she never discussed with the other beneficial owner on whether she needed to pay any rent or payment for exclusive occupation of the Property.  The absence of such discussion lends support, in my view, to the Defendant’s case that he allowed the 1^st Plaintiff and David to reside in the Property provided that they paid for all the related expenses.

55.After 2000, it was never 1^st Plaintiff’s case that Kwan was her attorney or manager of the Property and yet Kwan could and indeed actually arranged various family members, including herself, to reside in the Property without the need to obtain any consent from the 1^st Plaintiff.  On the contrary, I accept Kwan’s evidence that save and except the 2^nd Plaintiff, she did obtain consent from the Defendant.

56.Mr Wong for the Defendant also submitted that when the 1^st Plaintiff and David Chan sold their Tin Shui Wai HOS flat in early 2020, they did not even attempt to take back the Property.  Instead, they rented somewhere else at the monthly rent of HK$15,000.  The 1^st Plaintiff and David Chan’s evidence is that they are happy to allow Kwan and/or the 2^nd Plaintiff to reside in the Property for as long as they desire.  Mr Wong submitted that this is hard to believe as one does not normally choose to give up one’s right to reside in one’s own property and then live in a rented property to one’s financial detriment. I agree.

57.Ninthly, when David Chan purchased the Tin Shui Wai HOS flat in 2000, the 1^st Plaintiff was the co-owner of the said property.  Their evidence was that at the relevant time, a staff from the Housing Authority suggested to them that it was better to co-own the said property as if one of them were to pass away, the other could continue to live in the same.  I accept Mr Wong’s submission that if the 1^st Plaintiff was indeed a 5/6 beneficial owner of the Property, she would have asked herself or the staff in the Housing Authority whether she, a co-owner in the Property, could be a co-owner of yet another HOS flat.  The fact that the 1^st Plaintiff never thought about this issue could only mean that she never considered herself to be a beneficial owner of the Property.  I am of the view that there is strength in Mr Wong’s submission on this point.

58.Tenthly and importantly, in a pre-action letter from the solicitors for the 2^nd Plaintiff who is also the solicitors for the 1^st Plaintiff dated 3 September 2018, it is stated, inter alia, that:

“We are instructed that our client has no knowledge of what you mentioned in paragraph 2 as regarding paragraph 3, there exists an agreement between the elder sister Cheng Choi Kwan and our client, allowing our client to reside in the Property since 2012 for such period as she desires without paying rent but subject to her settlement of the outgoings of the Property as and when due during her occupation of the Property.

Moreover, we have instructions that your client, having paid no contribution towards the purchase or the instalments for mortgage of the Property, should not be considered as the beneficial owner thereof. As a result, regarding what you mentioned in paragraph 4, our client’s residing at the Property will not be affected by your client’s termination of the authority given to CHENG Choi Kwan (if any).”

59.The 2^nd Plaintiff only relied on a personal agreement between Kwan and herself.  There was no allegation at that stage that somehow the 1^st Plaintiff was the 5/6 beneficial owner of the Property and the 1^st Plaintiff, qua owner, has allowed the 2^nd Plaintiff to reside in the Property on the conditions as set out in the letter.  One would have thought that if indeed the 1^st Plaintiff has such beneficial interest, she would have communicated the same to the 2^nd Plaintiff.

60.Indeed, although in her witness statement, the 2^nd Plaintiff stated that in March 1986, there was a family gathering and there were discussions that “Fu Kwan and David were going to pay for the mortgage of the Property and that therefore Fu Kwan and/or David would own a major part of the beneficial interest of the Property despite the Property was registered under Big Brother’s name”, in her oral testimony, the 2^nd Plaintiff testified that during the said gathering, there was no discussion about beneficial ownership of the Property.  This, I agree, does not assist the 1^st Plaintiff’s case.  I agree with Mr Wong for the Defendant that if indeed the 1^st Plaintiff was and is a co-owner of the Property, for over 20 odd years, it is hard to believe that there was not even a discussion about the same in any settings, social or otherwise.

61.The 2^nd Plaintiff’s reliance on a personal agreement with Kwan, in my view, supports the Defendant’s case that Kwan was and is his manager of the Property. That is why the 2^nd Plaintiff resorted to allege a personal agreement with Kwan.  The 2^nd Plaintiff did not in the said letter allege that it was the 1^st Plaintiff who, qua owner, allowed her to reside in the Property.

62.Mr Wong for the Defendant also submitted that if the 1^st Plaintiff and the Defendant were indeed to co-own the Property, they would have, at least, some discussion on the practical arrangement as to the exact ratio of beneficial ownership and the practical arrangement if they were to co-occupy the Property.  The absence of such discussion supports the absence of the Common Intention.   I agree.

63.Finally, I find it incredible that if indeed the 1^st Plaintiff has a beneficial interest in the Property, she has never discussed the same with the Defendant through the years concerning the maintenance or uses of the Property. Over the years, although they have gatherings, the 1^st Plaintiff and David Chan never directly talk to the Defendant about the Common Intention .

64.During cross-examination David Chan for the first time mentioned that in around mid-2018, there was a discussion between Kwan and him during which Kwan told him that the Defendant was about to sell the Property and the proceeds would be shared between the Defendant and Kwan.  Kwan then discussed how she would divide up her share of the sale proceeds with the 1^st Plaintiff and David Chan.  It was due to a failure to reach an agreement amongst Kwan, the 1^st Plaintiff and David Chan that the Plaintiffs commenced the present proceedings to protect their beneficial interest in the Property.

65.I have no difficulty in rejecting such evidence.  First, this new evidence is never mentioned in the 1^st Plaintiff or David Chan’s witness statement.  I am fully aware that a witness might not include every bit of facts in his or her witness statements and sometimes material facts do surface as a result of cross-examination.  Nonetheless, I am of the view that if there were any truth in David Chan’s testimony on this very important topic, the same would have been covered in his witness statement.

66.Secondly, it is not entirely clear to this Court as to how Kwan could have acquired any beneficial interest in the Property.  Kwan has never made any such claim.

67.For the above reasons, I do not find the 1^st Plaintiff’s case of the Common Intention credible and will reject the same.

68.Mr Leung for the Plaintiffs submitted that the Defendant’s pleaded case is inconsistent with the Defendant’s oral testimony and evidence.  For example, the pleaded monthly license fee of HK$1,188 does not sit well with the documentary record that the monthly mortgage payments were not exactly HK$1,188 per month.  I agree.  But I accept the Defendant’s evidence that at the time of the application of the mortgage, the monthly repayment was about HK$1,188 but then interest rates did vary and hence the monthly repayment sum would not stay at exactly HK$1,188. This is reasonable.  I find the Defendant’s case that whoever resides in the Property has to be responsible for all related expenses is credible.  This is evidenced by the conduct of the 1^st Plaintiff, Kwan and the 2^nd Plaintiff.

69.As to the plea that the Defendant paid up all or any parts of the mortgage loan and all interests and costs thereon on his own, technically, it is true as mortgage payments were deducted from the Defendant’s bank account.  From the mortgage bank’s perspective, it was the Defendant who paid for the mortgage loans.  Hence, the Defendant arranged for the discharge of the mortgage and the title deeds of the Property was released to the Defendant. He keeps the same from 1996 to now.

The Defendant’s Counterclaims

70.Having found that the Common Intention does not exists, it follows that the 2^nd Plaintiff has no right to stay in the Property without the consent of the Defendant and the 1^st Plaintiff was not in a position to confer any right on the 2^nd Plaintiff to stay in the Property.

71.I agree with Mr Wong for the Defendant that one of the grounds relied upon by the 2^nd Plaintiff to stay in the Property is the consent by the 1^st Plaintiff, an alleged beneficial owner of the Property.  But for such allegation, the Defendant, qua absolute owner of the Property, would have been able to evict the 2^nd Plaintiff well before the conclusion of the present proceedings.

72.Accordingly, I agree that the 1^st and 2^nd Plaintiff should be jointly and severally liable for the sum of HK$94,050 as market rent from 30 September 2018 to 3 January 2020 and thereafter at HK$6,216 per month until delivery up of vacant possession of the Property to the Defendant.

Conclusion

73.For all the reasons stated above, I make the following orders:

(1)   The Plaintiffs’ claims are dismissed;

(2)   The 2^nd Plaintiff do deliver up vacant possession of the Property to the Defendant within 14 days herein;

(3)   The 1^st and 2^nd Plaintiffs do jointly and severally pay the sum of HK$94,050 to the Defendant as the market rent for the period between 30 September 2018 and 3 January 2020, and HK$6,216 per month thereafter until the delivery up of the Property;

(4)   The registration of the Writ of Summons in the present proceedings in the Land Registry with the memorial no. 18070500410019 against the Property be vacated forthwith.

74.As far as costs is concerned, I make a costs order nisi that:

(1)   the 1^st Plaintiff do pay costs of and occasioned by her claim to the Defendant, on a party to party basis, to be taxed if not agreed.

(2)   the 1^st Plaintiff and 2^nd Plaintiff do pay costs of and occasioned the Defendant’s counterclaim to the Defendant, on a party to party basis, to be taxed if not agreed.

75.Finally, it remains for me to thank Ms Leung for the Plaintiffs and Mr Wong for the Defendant for their helpful assistance to this Court.

Ms Teresa Leung, instructed by Y S Lau & Partners, for the 1^st and 2^nd plaintiffs

Mr Paul Wong, instructed by Ong & Chung, for the defendant