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HCA 3013/2015
[2022] HKCFI 174
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 3013 OF 2015
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| BETWEEN |
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KWAN KWAI LIN |
1st Plaintiff |
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KWAN KWAI LIN, the Administrator of
the estate of YEUNG HO WAI, deceased |
2nd Plaintiff |
and |
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YEUNG ON KI |
Defendant |
________________________
Before: Hon Wilson Chan J in Court
Dates of Hearing: 4 to 8 and 25 October 2021
Date of Judgment: 14 January 2022
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J U D G M E N T
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A. INTRODUCTION
1.The present case concerns the beneficial ownership of the subject property, namely, Flat A, 6th Floor, Campbell House, No 9 Kik Yeung Road, New Territories (the “Property”).
2.As to the parties:
(1) The 1st plaintiff (“Kwan”) was the husband of Madam Yeung Ho Wai, deceased (the “Deceased”);
(2) The 2nd plaintiff is the Administrator of the Estate of the Deceased (namely, Kwan);
(3) The defendant was the lawful and natural sister of the Deceased.
B. PARTIES’ RESPECTIVE CASES
3.The plaintiffs’ claim(s) against the defendant related to 2 main aspects, namely:
(1) The beneficial interest in the Property, and the defendant’s breach of trust relating thereto (“Claim 1”);
(2) The unauthorised withdrawal/misappropriation of NZD16,885.07 (the “NZD Sum”) and RMB22,492.04 (the “RMB Sum”) from the joint bank account held by Kwan and the defendant with Citibank to the defendant’s personal bank account on 23 June 2015 (“Claim 2”).
B1. Claim 1 - The subject agreement/trust arrangement for the Property in Yuen Long
4.It is the plaintiffs’ case that in or about July 2003, Kwan and the Deceased (on the one hand), and the defendant (on the other) intended to purchase the Property at the purchase price of HK$600,000.
5.It is the plaintiffs’ case that at all material times prior to the entering into the agreement for the sale and purchase of the Property dated 8 August 2003 (the “SPA”), it was expressly agreed between Kwan/the Deceased and the defendant that inter alia:
(1) The Property would be purchased under the sole name of the defendant;
(2) The defendant would obtain loans (the “Loans”) to finance the purchase of the Property, ie the mortgage loan from a bank and a loan from the Hong Kong Housing Authority (“HA”) (as the defendant, who did not own any property, was eligible for obtaining the loans under the then “Home Assistance Loan Scheme” implemented by HA);
(3) To secure the Loans, both Kwan and the Deceased would be the guarantors for the repayment of the Loans;
(4) Kwan and the Deceased would be solely responsible for making monetary contribution to the purchase of the Property, including making the upfront payment and repayment of the Loans, and the defendant was not required to make any monetary contribution.
6.The common agreement and/or common understanding and/or common intention between Kwan/the Deceased and the defendant was that Kwan and the Deceased would be jointly entitled to the beneficial interest in the Property; and the Deceased’s family (ie the Deceased, Kwan and the daughter, the “Deceased’s Family”) be entitled to reside in the Property.
7.In reliance of and/or pursuant to the said agreement above:
(1) The SPA was entered into by the defendant as the purchaser under her sole name dated 8 August 2003;
(2) The defendant (as the borrower) obtained the Loans in the sum of HK$570,000 (by the Mortgage Loan Facility Letter dated 3 October 2003 from the Bank of China (HK) Ltd, and HA) to finance the purchase of the Property;
(3) Kwan and the Deceased acted as guarantors and executed the “Deed of Guarantee” dated 8 October 2003 in favour of the defendant for the repayments of the Loans;
(4) Kwan and the Deceased duly made the upfront payment of HK$30,000 for the purchase of the Property;
(5) On 10 October 2003, the purchase of the Property at HK$600,000 under the above arrangement was completed. The Property was assigned to the defendant by the Assignment dated 10 October 2003;
(6) Kwan and the Deceased duly made the monthly repayments of the Loans (from about June 2003 to about June 2013), under the arrangement that the Deceased would on each and every calendar month (by direct debit) transfer the sum required for monthly repayment of the Loans to the defendant’s BOC account, and the monthly repayment of the Loans would be debited from the defendant’s BOC account accordingly;
(7) Kwan and the Deceased had been responsible for the payments of the Government rent, management fees, and utilities bills, etc of the Property, and the defendant would not be required and had not paid for the same.
8.At all material times since October 2003, the Deceased’s Family had resided at the Property (with the defendant as well). Since around October 2007, the defendant moved out of the Property to cohabitate with her then boyfriend (now her ex-husband).
9.After the defendant had moved out in 2007, the Deceased’s Family still continued to reside at the Property.
10.Regrettably, the Deceased passed away on 4 June 2013 (from cancer).
11.At all material times (after the Deceased had passed away), Kwan and the Daughter were and are still residing at the Property, which is their only place of residence.
12.It is the plaintiff’s case that shortly after the death of the Deceased, despite the aforesaid trust agreement/arrangement, the defendant voluntarily repaid the remaining Loans on behalf of Kwan (albeit it was later discovered that the defendant had in fact already re-mortgaged the Property to obtain an over HK$2 million loan on 15 April 2015 as stated below).
13.In this regard, it is the plaintiffs’ case that he has all along been willing to make repayment (as the true beneficial owner of the Property). By their previous solicitors’ letter dated 10 May 2017 (of Messrs Li, Kwok & Law), the plaintiffs wrote to indicate that he would repay to the defendant for all the said repayment made by her (from July 2013 to April 2017) by instalments (and cheques were enclosed). However, the said cheques were returned by the defendant’s former solicitors, Messrs Cheung & Liu dated 23 May 2017.
14.Despite the plaintiffs’ demand and/or request, including the demand letter of the plaintiffs’ former solicitors Messrs Li Kwok & Law dated 8 December 2015, the defendant has still failed and/or refused to recognise the plaintiffs’ beneficial interest.
15.Rather, the defendant by letter of her former solicitors Messrs Cheung & Liu dated 16 December 2015 demanded the plaintiffs to deliver vacant possession of the Property by 4 January 2016 (or legal proceedings would be commenced).
16.The plaintiffs therefore commenced the present action (by way of Writ of Summons) dated 18 December 2015.
B2. The plaintiffs’ beneficial ownership of the Property
17.The plaintiffs claim against the defendant on the following bases of (a) “express trust agreement”, (b) the inferred “common intention resulting or constructive trust”,and/or (c) on the basis that the plaintiffs having acted to their detriment on the faith that they had the whole interest in the Property, they should be entitled to the whole interest in the Property (or alternatively, in such shares as the court shall determine).
18.Kwan (in his personal capacity), and also in his capacity as the administrator of the estate of the Deceased (ie the 2nd plaintiff), commenced the present proceedings against the defendant.
19.Alternatively, in the event that only the Deceased (but not Kwan) is found to have made monetary contribution(s) for the purchase of the Property, it’s the plaintiffs’ case that the Deceased should still be the true beneficial owner of the Property, and such beneficial interest has now become part of her estate. The 2nd plaintiff as the administrator is entitled to claim such interest against the defendant.
B3. The defendant’s breach of trust by re-mortgaging the Property
20.Kwan subsequently discovered that the defendant (without his prior notice or knowledge) had re-mortgaged the Property to BOC for the loan of HK$2,310,000 (the “HK$2,310,000 Loan”) (as evidenced in the BOC Facilities Letter dated 15 April 2015), which act amounted to a “breach of trust”.
21.The defendant should repay the said sum of HK$2,310,000 to the plaintiffs (and/or to give an account for such sum).
B4. Claim 2: The defendant’s unauthorised withdrawal of foreign currencies
22.It is not disputed that on or about 17 June 2013, a sum of around HK$243,849 (the “Sum”), being the Deceased’s entitlement of her long-service payment and/or other payment from her employer, was paid into the bank account of the Deceased by her employer.
23.The Sum formed part of the estate of the Deceased (which the defendant had no right to use or dispose of).
24.Subsequently, in order to earn more interest, the plaintiffs had caused to exchange part of the Sum into NZD and part of the sum into RMB. On 23 June 2015, without the plaintiffs’ prior notice or consent, the defendant transferred and misappropriated the respective sums of NZD16,885.07 (ie the NZD Sum) and RMB22,492.04 (ie the RMB Sum) from the Deceased’s account into the defendant’s own bank account.
25.By solicitors’ letters dated 8 December 2015 and 27 January 2016, the plaintiffs demanded the defendant for the return of the NZD Sum and the RMB Sum. But the defendant refused to repay the said sums to the plaintiffs.
26.On such basis, the plaintiffs also claimed against the defendant for the NZD Sum and the RMB Sum (or the Hong Kong dollars equivalent).
27.The plaintiffs’ claim for the defendant’s withdrawal of the NZD Sum and the RMB Sum was amicably disposed of during trial upon the parties’ joint application, which resulted in the order dated 5 October 2021 and the defendant has undertaken to repay the Hong Kong dollars equivalent to Kwan. This claim is therefore no longer in issue before this court.
B5. The defendant’s case - the alleged “Common Understanding and/or Intention” in respect of the Property
28.On the other hand, it is the defendant’s case that prior to the execution of the SPA on 8 August 2003, there existed the alleged “Common Understanding and/or Intention” that:
(1) The Property would be purchased in the defendant’s own name (as the legal and beneficial owner);
(2) The defendant would be solely responsible for obtaining the mortgage loan(s) to finance the purchase;
(3) The Deceased would be the guarantor for the repayment of the mortgage loan to be taken out by the defendant;
(4) The defendant would pay the down payment of HK$80,000 upfront and from her own resources for the purchase of the Property;
(5) The defendant admitted that the monthly mortgage repayments would be made by the Deceased;
(6) In consideration of the monthly mortgage repayments, the defendant contended that she agreed to take care of their parents, and the defendant agreed to allow the Deceased’s Family (which included the Deceased, Kwan, and their daughter (“Daughter”)) to reside with the defendant in the Property under a “bare licence revocable upon reasonable notice” (the “Oral Licence”);
(7) Since around July 2003, the defendant had allegedly taken care of the parents. However, the father of the defendant and the Deceased passed away in or around March 2015, and the defendant has still duly taken care of their mother up till the present.
(collectively, the “D’s alleged Common Understanding and/or Intention”)
29.The defendant further contended that Kwan played no part in the formation of D’s alleged Common Understanding and/or Intention (between the Deceased and the defendant).
30.As to the Property, it is common ground that the Deceased’s Family resided with the defendant at the Property from around October 2003 to October 2007. Since around October 2007, the defendant moved out of the Property to cohabitate with her then boyfriend (now her ex-husband); but the defendant alleged that she continued to “orally license” the Deceased’s Family to reside at the Property in light of D’s alleged Common Understanding and/or Intention.
31.The defendant alleges that in or about early December 2015, the defendant revoked the Oral License and requested Kwan and the Daughter to move out of the Property by 4 January 2016, but they refused to move out and continued to wrongfully occupy the Property up till the present.
32.The defendant (as the registered owner) claims against the plaintiffs for inter alia vacant possession and mesne profits.
C. ISSUES AT TRIAL
33.The issues for trial are thus as follows:
(1) Whether the plaintiffs can prove that they have any beneficial ownership in the Property;
(2) Whether there was any breach of trust by the defendant by taking out the 2015 Mortgage;
(3) Whether the defendant is entitled to vacant possession and any mesne profits from the plaintiffs, and, if so, the quantum.
34.As the defendant no longer relies on illegality as a defence, she therefore submits that it is not an issue in dispute.
D. RELEVANT LEGAL PRINCIPLES
D1. Express trust
35.Equitable interest in land must be created or disposed of in writing. See section 5 of the Conveyancing and Property Ordinance, Cap 219 (“CPO”):
“(1) Subject to section 6-
(a) no equitable interest in land can be created or disposed of except by writing signed by the person creating or disposing of the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;
(b) a declaration of trust respecting land or any interest therein shall be manifested and proved in writing signed by the person who is able to declare such trust or by his will.
(2) This section does not affect the creation or operation of resulting, implied or constructive trusts.”
D2. Common intention constructive trust
36.The starting point where there is sole legal ownership (as is the present case) is sole beneficial ownership, and the onus is for the non-owner to show that he has any interest at all: Stack v Dowden [2007] 2 AC 432, §56; Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343, §28.
37.In this case, there is no dispute that the burden is strictly on the plaintiffs to establish that beneficial interest in the Property does not lie with the defendant.
38.In the more recent case of Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §§2.3-2.4, Cheung JA identified two situations where a common intention constructive trust may arise:
(1) The first is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially. The finding of such an agreement or arrangement can only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been.
(2) The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property, and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by mortgage instalment payments, will readily justify the inference necessary to the creation of a constructive trust.
39.Further, in either case the court should have regard to the inherent probabilities in light of the surrounding circumstances at the time the Property was acquired. The modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context. In a domestic context, the court is not constrained in that exercise by pure direct monetary contributions to the purchase price: Primecredit (ibid) §§1.4-1.6 (per Lam VP, as he then was).
40.If it is possible to resolve the matter by reference to common intention (particular in the domestic context), then there is no need to resort to resulting trust: Primecredit (supra) §1.3 (per Lam VP).
D3. Resulting trust
41.A resulting trust arises under two sets of circumstances (see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708A-D):
(1) Where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of the property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B; the money or property is held on trust for A (if he is the whole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions; and
(2) Where A transfer property to B on express trusts but the trusts declared do not exhaust the whole beneficial interest.
42.The presumption of resulting trust is always subject to the absence of contrary evidence. The presumption is easily rebutted by the proof of actual common intention of the parties: Lee Tso Tong v Kwok Wai Sun [2008] 4 HKLRD 270, §5; Primecredit (supra) §2.15 (per Cheung JA).
43.When there is sufficient evidence on actual intention at the time of the transaction, there is no room for the operation of presumption of resulting trust: Yuen Yat Shan Fiona v Sit Hin Kai [2005] 4 HKC 170, §30 (per Tang JA, as he then was).
44.As indicated above, the Court of Appeal in Hong Kong has made clear that if it is possible to resolve the matter by reference to common intention (particular in the domestic context), then there is no need to resort to resulting trust: Primecredit (supra) §1.3.
D4. Assessment of credibility of witnesses
45.Credibility of witnesses is of material importance in this case. In relation to assessment of credibility of witnesses, reference is made to Hui Cheung Fai & Another v Daiwa Development Limited, HCA 1734/2009 (unrep, 8/04/2014), §§75-83 (per Deputy High Court Judge Eugene Fung SC) for the guiding principles.
E. BENEFICIAL INTEREST IN THE PROPERTY
E1. The plaintiffs bear the burden of proving that the beneficial interest in the Property does not lie with the defendant
46.As discussed at paragraph 36 above, the starting point where there is sole legal ownership is sole beneficial ownership. The onus is on the non-owner to show that he has any interest at all.
47.The fact that the defendant pleaded the D’s alleged Common Understanding and/or Intention between herself and the Deceased does not detract from the fact that the plaintiffs bear the burden to prove their own case, viz, there was a common intention constructive trust (or a resulting trust as the fallback position).
E2. Fundamental differences between Kwan’s oral evidence, his pleaded case and his evidence in the Witness Statements
48.As submitted by the defendant, there were major inconsistencies between Kwan’s oral evidence, his pleaded case and the evidence in his Witness Statements on the material issues in dispute.
49.Firstly, the plaintiffs pleaded that the “agreement” in question was between Kwan and the Deceased on the one hand, and the defendant on the other (see Re-amended Statement of Claim (“RASOC”), paragraph 3). In paragraph 10 of his 1st Witness Statement, he said that it was after a “tripartite discussion” (“三方討論”) that the arrangement was decided.
50.However, it transpired from the cross-examination of Kwan that in fact he was not present in any of the discussions between the Deceased and the defendant, he did not know about the exact content of the conversation (if any) between the Deceased and the defendant, and he did not know about the defendant’s reaction during the conversations. In further questioning by the court, Kwan agreed that he had in fact never discussed the purchase of the Property with the defendant directly, and that whatever he now says “the defendant agreed to” at that time was in fact merely what the Deceased told him. However, Kwan did not give any specific time frame or details as to when the Deceased allegedly told him about those matters.
51.This is highly material because the plaintiffs’ central case is that there was a common agreement/intention between Kwan and the Deceased and the defendant with the content pleaded at paragraph 3 of the RASOC. Given that: (1) Kwan was not present in the discussion, (2) he admittedly did not know what was exactly discussed between the Deceased and the defendant, and (3) Kwan did not give any evidence (or was completely evasive) as to what exactly his wife had told him (even if she did) after she purportedly discussed/agreed with the defendant, then how can Kwan now claim that there was truly such a common agreement/intention between himself/the Deceased and the defendant? The Deceased has unfortunately passed away and there is no chance to cross-examine her as what she had allegedly agreed with the defendant according to the plaintiffs’ case. In light of the above, I agree that the plaintiffs’ case ought to be dismissed on this point alone.
52.The defendant further submits that Kwan’s oral evidence in this respect is also highly telling on his complete lack of credibility and reliability.
53.Secondly, the down payment issue. The plaintiffs pleaded at paragraph 4(d) of the RASOC and said in his 1st Witness Statement at paragraph 10(c) that he and the Deceased had contributed a total amount of “around HK$30,000” to the down payment, with no breakdown, and no documentary evidence adduced. In this connection, as submitted by the defendant:
(1) There is no bank evidence adduced by Kwan in relation to his own financial capacity/records whether in 2003 or at all;
(2) In his cross-examination, Kwan for the very first time in these proceedings claimed that he had taken HK$5,000 cash and passed it to his wife for the alleged purpose of contributing to the down payment. As pointed out by the court in the course of his cross-examination, HK$5,000 out of the HK$30,000 would have been a significant portion of the down payment. There was no reason why he did not mention this in his pleadings or Witness Statement, had it been the truth;
(3) Kwan did not mention - when he had the chance to do so - that he had given such an amount to his wife in Day 1 of his cross-examination when he was asked as to why he had not disclosed any evidence of his financial capabilities;
(4) After discussion was exchanged between the court and counsel and after Kwan returned to the witness box, Kwan then suddenly added that in fact the HK$5,000 came from a larger sum of cash of HK$6,000 or HK$7,000 that he allegedly obtained from the ATM. He claimed that the balance was used to buy home related items. Having considered his answers and demeanour, Kwan was clearly making up evidence along the course of his questioning;
(5) Kwan further admitted later in his cross-examination (Day 2) that he in fact did not know how much exactly the deposit for purchase of the Property amounted to, and he did not know how the down payment was paid;
(6) Further, on the one hand, Kwan said that he “did not know” whether the defendant was the one who paid for the initial HK$10,000; on the other, Kwan disagreed that the defendant was the one who paid for a further HK$20,000 deposit. He later on added that “at that time my wife told me that she had dealt with the deposit” (“當時我太太講左俾我聽，個訂佢搞掂”). Upon being further questioned by the court, Kwan admitted that in fact he did not know what might have had occurred between the Deceased and the defendant in relation to the down payment issue;
(7) As submitted by the defendant, it is likely that Kwan claimed in these proceedings that he and his wife paid HK$30,000 as down payment simply because the mortgage and loan documents revealed that loans totaling HK$570,000 were obtained and that the purchase price was HK$600,000. In fact, he has no knowledge as to who had actually paid for the down payment. He simply assumed that it was his wife who had done so on the basis of what she purportedly told him. However: (a) there is no chance to test this against the wife’s evidence; (b) even on Kwan’s evidence, one cannot rule out the possibility that in fact the defendant was telling the truth and she was the one who paid or contributed to the down payment, as Kwan admitted that he had no knowledge of what might have had happened between his wife and the defendant;
(8) What Kwan said in his cross-examination in this regard also runs contrary to the SPA which did not mention that there was any further initial deposit of HK$20,000. To the contrary, the defendant explained in her oral evidence that she was the one who issued a cheque of HK$10,000 for the initial deposit;
(9) Kwan was evasive and disingenuous when he claimed in his cross-examination that he did not know how much savings his wife had in October 2003, and he had “forgotten” about how much savings he had at that time as well. This also runs contrary to his allegation that he and his wife did not have independent financial resources (“並非財政獨立”), a point which will be further dealt with below.
54.Thirdly, the monthly mortgage repayment issue. It was averred in his 1st Witness Statement that Kwan and the Deceased were the ones who paid for the monthly repayments (RASOC paragraph 4(e), 1st Witness Statement paragraph 11(e)). However:
(1) In Day 1 afternoon of Kwan’s cross-examination, Kwan was asked why there was not a single shred of evidence adduced from his bank statements. At first, he said that it was because nothing in relation to his income was relevant to these proceedings. Upon clarification being sought by the court as to whether he meant that “from the beginning to the end” (“由始至終”) he had not paid for anything, he answered “yes”;
(2) Later in his evidence, Kwan suddenly volunteered that when his wife had insufficient money to pay for the monthly installments, he had given her some cash taken from the ATM and he claimed that his wife would not pay him back the money. He later claimed that there were a few of such occasions in which he gave his wife HK$3,000 or HK$4,000;
(3) It should be highlighted that: (a) Kwan confirmed that he was not certain if his wife truly used the money to pay for the monthly repayments; (b) Kwan had never mentioned this in any of his Witness Statements; (c) his evidence in this regard lacked details and he was evasive and vague in his cross-examination (for example, he could not recall in what year did those transactions allegedly take place); and (d) there is no bank evidence at all to support his allegation, and yet he claimed previously that he did not disclose any bank documents of his because he believed that they were irrelevant to these proceedings;
(4) Again, Kwan appeared to be making up evidence along the questioning. Further, even if what he said were true: (a) the court cannot be sure if the money was in fact used to repay the monthly mortgages (even he himself said he did not know), and (b) the amount is in any event very small; and
(5) Save for those few occasions, Kwan admitted that it was the Deceased who made all the monthly mortgage repayments.
E3. The inherent probabilities of the case lie strongly in favour of the defendant
55.I agree that the inherent probabilities of the case lie strongly in favour of the defendant, for the following reasons.
56.First and foremost, it is the plaintiffs’ case all along that the defendant was the one who “voluntarily” made all monthly mortgage repayments after the Deceased’s death. In this regard, upon being cross-examined, Kwan suddenly claimed that after the Deceased’s death, there was a telephone call with the defendant in which the defendant said that she would “help” (“幫手供”) Kwan repay the monthly mortgages. Kwan claimed that he replied there was no need for the defendant to do so; and the defendant somehow “insisted” she would help repay and that was the end of the conversation.
57.As submitted by the defendant, this is plainly incredible:
(1) This conversation was never mentioned in his Witness Statements. His description of the content of the conversation was also vague and he answered evasively;
(2) Kwan admitted in cross-examination that he knew that the defendant got married shortly after purchasing a flat in Tuen Mun Town Plaza (some time in 2008) and she got divorced in 2011. He also admitted that he knew that sometime later (which the defendant says in around 2012), the defendant purchased another property in Century Gateway (瓏門) and re-married Benson in around April 2015;
(3) In other words, the defendant was a married person with a family, who had the financial burden of owning two flats, with modest income. It is simply incredible - and inherently improbable - that she would have “volunteered” to “help” Kwan make the monthly repayments in return for nothing, unless she was the one who truly had interest in the ownership of the Property.
58.Plainly, the reason why the defendant continued to repay the monthly mortgage instalments - up till the present and after the 2015 Mortgage was taken out (which was admitted by Kwan in cross-examination) - is simply because she is the true beneficial owner of the Property. Indeed, there was no discernible reason why she would have opted to do so unless she was the true owner.
59.As submitted in the defendant’s Opening, the defendant’s case is that she deposited a total of HK$209,900 into the BOC mortgage account between 8 February 2013 and 8 April 2015, and indeed she said in her cross-examination that she had saved up HK$130,000 and completely paid off the original loans and took out the second Mortgage in May 2015. Afterwards, she was the one who continued to repay the monthly mortgage repayments after the 2015 Mortgage was taken out.
60.Second, a closer scrutiny of the scope of the purported “common agreement/intention” alleged by the plaintiffs, measured against the evidence adduced before the court, reveals an inherent lack of sense:
(1) Even according to the plaintiffs’ own case, the “common agreement” did not include any agreement on whether the defendant would live with the plaintiffs in the Property, until when, and/or whether she would need to pay rent. Kwan later on admitted that no rent was actually required to be paid by the defendant and he gave no good answer as to why no rent was charged despite she resided with them for 4 years;
(2) In cross-examination, Kwan gave evidence that there was in fact no arrangement that the defendant would live with the plaintiffs, until later he “heard” from his wife that the defendant would also stay in Property with the plaintiffs and he found it acceptable;
(3) However, according to the purported “common agreement”, no benefit would in fact be enjoyed by the defendant. The defendant would have to use up her first owners’ interest-free loan quota from the HA to purchase a flat in which she allegedly has no interest in; at the same time, however, there was no discussion or agreement that the defendant would be allowed to live in the Property despite using up her one-off loan quota;
(4) Furthermore, there was no discussion or agreement as to how to protect the purported interest of the plaintiffs under the “common agreement”, such as a discussion or agreement on when the defendant would have to transfer the Property back to the plaintiffs. Kwan further admitted in oral evidence that there was no discussion at all to ask the defendant to sign a written document, or to ask her to execute a Declaration of Trust, to acknowledge or to protect the plaintiffs’ interests. The answer in essence was because the plaintiffs “trusted” the defendant. This is inherently improbable, given that the Property was allegedly the single most important family asset of the plaintiffs;
(5) In this connection, upon being cross-examined, Kwan claimed for the first time that his wife had told him that arrangements could be made to transfer the Property back after repaying all mortgage loans (“太太講過供完樓先搞轉名囉”). This was never suggested in any of his Witness Statements;
(6) As can be deduced from his oral evidence, save for alleged expenses such as meals and car-related expenses, and perhaps (even if he is to be believed) the few occasions that he passed cash to his wife, there is no evidence that he has made any contribution to the outgoings of the Property:
(a) Although Kwan claimed that he did pay some management fees, there is no documentary evidence, and the management fees receipt did not indicate who paid the relevant amounts;
(b) Kwan admitted in cross-examination that before his wife’s death, the wife was the one who paid for all of the Government rates and rent;
(7) The fact that Kwan paid very little, if at all, in relation to the purchase of the Property and/or its outgoings all the years does not sit well with his allegation that he was also part of an agreement between the defendant and the Deceased;
(8) In this connection, it should be noted that there is no fallback position from the plaintiffs. Their stance all along is that the common agreement was between Kwan and his wife, and the defendant, and there is no alternative to this. Kwan’s case of common intention constructive trust is based on this factual assertion.
61.Third, as admitted by Kwan in cross-examination, the Property is the single biggest family asset of himself and the Deceased. It is also clear from the Schedule of Assets attached to the Letters of Administration of the Deceased’s Estate (who died intestate) that she left very little behind. And yet, according to Kwan, after the Deceased was diagnosed with cancer for the second time, and when the Daughter was very young (around 12, 13 years old), he and the Deceased in fact had no discussion on how to deal with the Property, such as whether to ask the defendant to transfer it back to her/them, and whether to prepare a Will to deal with the Property after her death.
62.It is inherently improbable that the Deceased and Kwan would not have discussed and/or made arrangements to take the Property back from the defendant in light of the Deceased’s rapidly declining health. The probable reason is that Kwan and the Deceased were not the true owners of the Property and that is why there was no such discussion or arrangement.
63.Fourth, along the same vein, nothing was done by the Deceased and/or Kwan throughout the years (from 2003 to these proceedings) to “take back” the Property from the defendant, until the defendant asked Kwan and the Daughter to leave the Property in December 2015 viz the breakdown of the parties’ relationship.
64.To the contrary, the WhatsApp messages on 15 June 2014 tend to suggest that Kwan was in fact trying to persuade the defendant to sell him the Property for valuable consideration. Upon being cross-examined, Kwan admitted twice that those WhatsApp messages show that he and the defendant were negotiating the sale price of the Property (“Q: 呢度顯示你地討論緊真金白銀買賣，係度議價，同意?” “A: 呢度係呀”; “Q: 雙方討論緊用咩簡直，真金白銀賣俾你?” “A: 同意”). If the plaintiffs were the true beneficial owners of the Property, there was no reason why Kwan would have been negotiating with the defendant on the price to purchase the Property from her.
65.Notably, Kwan claimed in his cross-examination that there was a telephone call shortly after his wife’s death between himself and the defendant, in which he asked when the defendant would transfer the Property back to him. According to him, the defendant said that she would “keep it for the time being” (“keep住先”) and his reply was “you think about it, because eventually the flat belongs to my daughter”.
66.This is, again, completely incredible. Firstly, the existence of the conversation was never mentioned in any of his Witness Statements. The alleged content also does not sit well at all with Kwan’s own admission that in June 2014 the parties were negotiating the price to sell him the Property. Kwan’s alleged reply to the defendant’s alleged answer is also very odd - he basically accepted that the defendant could “keep for the time being” a very valuable asset, as if it was over a casual conversation. It does not make sense at all.
67.Kwan further claimed that there was a second telephone call (also not mentioned in his Witness Statements) in 2014 in which the defendant said that she would “add BB’s name” to the Property and that she would make a Will. When asked what his response was, Kwan claimed that at that time the parties’ relationship was good and he thought that the Property was going to be left to his Daughter anyway. This is again very odd - if what he said were true, his Daughter would only be able to obtain the Property upon the defendant’s death, which would probably be a long time away, and there was no guarantee from the defendant to that effect.
68.Fifth, the parties’ respective financial resources also point in favour of the defendant on the inherent probabilities of this case:
(1) Whilst Kwan claimed that he and his wife did not have independent financial resources (“並非財政獨立”), the evidence shows otherwise:
(a) Kwan admitted himself in evidence that he and his wife did not have any joint account;
(b) As can be deduced from his oral evidence, save for alleged expenses such as meals and car-related expenses, and perhaps (even if he is to be believed) the few occasions that he passed cash to his wife, there is no evidence that he has made any contribution to the outgoings of the Property;
(c) Although Kwan claimed that he did pay some management fees, there is no documentary evidence, and the management fees receipt did not indicate who paid the relevant amount;
(d) Kwan admitted in cross-examination that before his wife’s death, the wife was the one who paid for all of the Government rates and rent;
(2) Kwan said in oral evidence that he only earned around HK$8,000 in around 2003. To the contrary, the defendant in her evidence told the court that in fact she had an accounting job earning HK$9,500/month (between 2000 to June 2001), and then from May 2002 onwards she became a part-time teacher earning about HK$800/day, and that she managed to save up HK$4,000/month. All the aforesaid was not challenged in her cross-examination. The defendant further testified that Kwan did not contribute to his wife’s “生養死葬”, which allegation was not further challenged in her cross-examination;
(3) The bank statement evidence of the defendant also shows that her income was much higher than the Deceased and Kwan at least in 2012 - which shows that the defendant had a salary of HK$41,100 in May 2012;
(4) As such, any suggestion that because Kwan and/or the Deceased were “more senior” of age and had somehow better financial ability in 2003 to purchase the Property in question does not begin to get off the ground;
(5) As admitted by Kwan in oral evidence, the defendant held at least 2 other properties (Tuen Mun Town Plaza and Century Gateway)whilst the Deceased and Kwan did not hold any properties at all;
(6) The plaintiffs accept that the defendant did advance HK$50,000 to the Deceased as a gift to help the Deceased in 2012. According to the defendant, she further gave the Deceased another HK$70,000 in 2013; and
(7) All in all, the defendant was a person who had the financial capability, as opposed to the plaintiffs, to purchase the Property in 2003 which adds to the inherent probabilities of her case.
69.Sixth, the defendant’s case that she in fact wished to gift the Daughter the Property at a later stage is also inherently probable, and even consistent with Kwan’s evidence:
(1) Kwan admitted that the defendant owned two other properties other than the Property in question, that the defendant’s mother owned the Tin Shui Wai property, and that the defendant was the only next generation who was surviving. In other words, after the death of the defendant’s mother, the defendant would likely be passed the ownership of the Tin Shui Wai property as well, making her the owner of three properties;
(2) The plaintiffs’ own case is that the defendant cared a lot for the Daughter and even treated her like her own child (it was put to the defendant that she treated the Daughter as “視如己出”), that the defendant and the Deceased were very close, and that the defendant promised to take care of the Daughter after the Deceased’s death. This is consistent with the defendant’s wish all along that she would gift the Property to the Daughter at a later stage of her life;
(3) That the Property might, one day, be given to the Daughter (although parties dispute whether it is a “transfer back” to the Deceased’s family or a “gift” from the defendant) is in fact part of Kwan’s own understanding as well;
(4) The defendant’s wish to gift the Property to the Daughter at a later stage is also consistent with what she said in the contemporaneous WhatsApp messages of 15 June 2014. Further, as pointed out by this court, Kwan never appeared to have complained in the WhatsApp messages, nor in his oral evidence, that there was any problem with the defendant “gifting” the Property to the Daughter. Kwan’s explanation in court was that he thought that parties were in a good relationship and that he did not give the matter any thought at that time as long as the Property would go to the Daughter eventually. However, this simply defies common sense. One would have expected Kwan to immediately deny any suggestion from the defendant that she would “gift” the Property to the Daughter, as that would have implied that the defendant was the true owner of the Property - and yet Kwan never so denied or complained. Clearly, this is because the plaintiffs were never the true owners of the Property. Kwan was content at that time with the defendant’s answer, because the defendant was the true owner and the best he could do was really to trust that the defendant would execute her intention of gifting the Property to Daughter when she becomes older.
70.Seventh, there was good reason why the defendant let the Deceased and Kwan reside in the Property and there was nothing improbable regarding the defendant’s version of the agreement. As the defendant explained in her cross-examination, the Deceased’s family lived in the Fu Yee Property which was far away. The Deceased asked if she and her family could “stick” with the defendant and live with her until they had the ability to move away. However, shortly after the Deceased’s family managed to sell the Fu Yee Property in 2006, and having lost HK$320,000 from that transaction, the Deceased was diagnosed with cancer and so the defendant did not request her family to leave the flat in light of the adversities.
71.Eighth, Kwan’s allegation that his wife also paid some housekeeping money (“家用”) to her parents is not credible. In cross-examination, he admitted that he did not actually know how much his wife allegedly paid and that they had no joint account. He claimed that he would drive his wife to her parents’ home and that she would then pay her parents, but this is not mentioned in his Witness Statements at all and lacks details. There are no bank statements to support his allegation either. Furthermore, given the overall evidence as to the Deceased’s and Kwan’s financial capacity, and that they had a family to raise, Kwan’s evidence in this regard is incredible - there is simply no evidence save for his mere say-so that his wife had the ability to, and did, give any money to her parents throughout the years.
72.Finally, the following miscellaneous points, taken together with the above points, also support the defendant’s case and point to the lack of credibility on Kwan’s part:
(1) The renovation expenses: In his cross-examination, Kwan suddenly claimed that the renovation expenses amounted to HK$100,000 and it was his wife who told him that. Notably: (a) initially he said that it was his wife who paid for the renovation and not him, later on he changed his evidence and said that he paid for some bathroom tiles; (b) later he claimed that in fact his wife borrowed a personal loan to cover the renovation expenses; (c) none of the aforesaid was stated in any of his Witness Statements; (d) it is inherently unbelievable that his wife would have obtained a personal loan of HK$100,000 to pay for renovation expenses but not to use that to pay for the down payment of a flat - if that were the case, there would have been no need to use the defendant’s HA loan quota and have the Property held in the defendant’s name;
(2) The flat viewing arrangement: In cross-examination, Kwan admitted that at least later in 2002, the defendant joined him and the Deceased to view flats together. Kwan admitted that the defendant was a teacher. There was no plausible reason why the defendant would spend time to view flats with the couple if she had no interest at all in the Property. This is so in particular when, according to the plaintiffs, there was no agreement initially that she would reside in the flat. To the contrary, according to the defendant in her evidence, in fact Kwan had never checked out any flats with her at that time and she had only viewed two flats;
(3) It transpired from the cross-examination that Kwan could not even tell the court if he had any budget in mind when he purportedly tried to look for flats in 2002 and 2003. He was also evasive generally regarding how the couple allegedly came about to decide to purchase this particular flat. Further, he did not even know that the HA loan was interest-free instead of low interest;
(4) The plaintiffs put to the defendant that she was asked if she objected to the purchase of the Property only because the Deceased cared a lot about the defendant’s feelings. This at least shows that it is the plaintiffs’ own case that the defendant was consulted as to whether she objected to the purchase of the Property, which does not sit well with the plaintiffs’ allegation that the defendant had no interest at all in the Property, in particular when the plaintiffs’ case is that initially there was not even any agreement that the defendant would reside in the Property;
(5) Kwan admitted in cross-examination that in fact the defendant had the keys to the Property all along, even after she moved away in 2007;
(6) Despite Kwan claimed in his Witness Statement that the defendant knew that he would be a guarantor “from an early stage” (“一早已知悉”), he admitted in his cross-examination that in fact the defendant only knew about this after 8 August 2003, which is also what the defendant said in her oral evidence.
E4. The WhatsApp messages
73.As a starting point, in none of the WhatsApp messages was there any reference to a common agreement between the plaintiffs and the defendant, which Kwan agreed.
74.As to the 15 June 2014 messages:
(1) As mentioned in paragraph 64 above, upon being cross-examined, Kwan admitted twice that he and the defendant were negotiating the sale price of the Property in those messages;
(2) The content is consistent with the defendant’s case that she wished to gift her Property to the Daughter at a later stage, which supports the conclusion that she is the true owner of the Property.
75.As to the 24 November 2015 messages:
(1) The defendant said that Kwan must leave the Property if he did not pay for certain medical expenses of the Daughter. Further, the defendant said that she did not take any rent from Kwan. Notwithstanding such accusations, Kwan did not respond by saying that the Deceased or him or both of them were the beneficial owners instead;
(2) The defendant said that she is the flat owner and she will trust Kwan for just one more month. Kwan simply responded by saying that “I am living here…”, without asserting any right as the owner of the Property;
(3) In cross-examination, Kwan had no convincing explanation of the above and simply said it was because parties were arguing and therefore he did not respond to each and every allegation;
(4) The defendant complained that Kwan used up all the Deceased’s money and insurance pay-outs; yet, again, there is no evidence in the messages that Kwan denied it.
76.As regard the 11 November 2014 messages:
(1) This set of messages was adduced by the plaintiffs. There is clear cherry-picking by the plaintiffs - in that the audio message reply of the defendant was not adduced and the plaintiffs’ counsel claimed that his instructions was that the said message is “irrelevant”;
(2) The defendant explained in her cross-examination what she meant in those messages. In essence, she was worried that after she sold Kwan the Property, he could and would sell it at HK$3 million odd (prevailing market price) and use up the balance to repay his loans. All in all, I accept there is nothing in these messages which is inconsistent with the fact that the defendant is the beneficial owner of the Property.
77.As to the 4 August 2015 messages, they show that plainly Kwan had knowledge of the withdrawal of the NZD and RMB by 4 August 2015. In fact, Kwan himself admitted in cross-examination that when he used the word “misappropriation” (“挪用”) in the proceedings, it was a mere “feeling”.
78.As to the messages between the defendant and the Daughter:
(1) Notably, the Daughter was not called as a witness. Little weight if any should be placed on her messages as there is no chance to cross-examine her as to the content of her messages;
(2) In any event, importantly, the defendant said that she had to lead a frugal life to allow the Daughter and Kwan to live in the Property (“我點解仲要節衣縮食，比金寶你地住?”). Even in the heat of the argument with the Daughter, the defendant did not waver from the position that she was in truth the owner and merely allowed Kwan and the Daughter to occupy the Property;
(3) The defendant also frankly admitted that she did scold the Daughter in the messages but she explained the reasons why (namely, the Daughter refused to go to school, and fought with her mother even when she was doing her chemotherapy).
E5. The defendant is a credible and reliable witness
79.I accept that the defendant was frank and straightforward in answering questions. Her evidence was consistent throughout her cross-examination, and she was generally consistent with what she had said in her Witness Statements. Her oral evidence and stance is also consistent with the WhatsApp messages adduced and accords with the inherent probabilities of the case. All in all, I agree that she is a credible and reliable witness.
80.The following evidence can be highlighted in particular:
(1) She explained the discrepancy between paragraph 3(1)(d) of the Re-amended Defence and Counterclaim and paragraph 10(d) of her 1st Witness Statement as to the nature of the HK$80,000. She explained that it was upfront “預付資金” for the purchase of the Property which included down payment, legal fees, stamp duty, agency fees and renovation fees. She saw those as amounts that she had already prepared (“預備呢筆錢”) and therefore used the term “預付資金” in her Witness Statement and “for the purchase of the Property” in her pleadings;
(2) She explained what led to the Common Understanding and/or Intention with the Deceased. After the Deceased learnt that the defendant was going to purchase the Property, the Deceased told the defendant that she wished to “stick” to living with the defendant at the Property as the Deceased wished to move back to Yuen Long city centre. The defendant calculated that the monthly mortgage repayments amounted to around HK$4,000/month. Since the Deceased was an administrator at school and always needed to visit the bank (consistent with what Kwan said), they agreed that the Deceased would pay the monthly mortgage payments and the defendant would take care of their parents by passing them HK$8,000 to HK$10,000 in cash, as she was single and often visited her parents at Tin Shui Wai, whereas the Deceased was busy with her own family duties. Since the defendant was concerned as to what would happen if the Deceased ceased paying the mortgage repayments - which would mean that the defendant would have to shoulder both the monthly repayments and the living expenses of her parents - she therefore requested the Deceased to be a guarantor of the loans. It was only after signing the SPA that the Deceased told her that Kwan would also become a guarantor;
(3) When questioned by the court as to whether the arrangement between the Deceased and the defendant was merely for convenience or whether there was an agreement, the defendant at first said that it was both. She further clarified after the morning break that there was indeed an agreement (“協議”). Notably, later in her evidence, she emphasized a few times that she was solely responsible for all of the living expenses of her parents (eg “我頂左父母嗰度” “總之我話供款你搞掂，父母我搞掂” “總之我要孭晒父母嘅嘢，就係咁啦”), which was not a fixed sum. The amounts were taken out as cash from ATM machines which was also reflected in the bank statements that she adduced;
(4) Whilst it may be said that the Common Understanding and/or Intention as suggested by the defendant is less conventional than what one might have expected, yet after hearing the defendant’s evidence, I agree that there is nothing incredible about the Common Understanding and/or Intention alleged by her.
E6. Kwan is an incredible and unreliable witness
81.Reference is made to sections E2 and E3 above, where this court has highlighted various clear inconsistencies between the plaintiffs’ pleaded case, Kwan’s Witness Statements and his oral evidence; the inherent improbabilities of the plaintiffs’ case; and the lack of evidential support of Kwan’s suggestions.
82.I agree that Kwan has been generally evasive and vague in his cross-examination. This court concludes that Kwan is an incredible and unreliable witness. Reference is made to the applicable legal principles set out in Hui Cheung Fai & Another v Daiwa Development Ltd & Other, (supra) at §§77-83 in this regard.
E7. Fong Po Ling’s evidence (DW2) (“Fong”)
83.According to Fong’s Witness Statement, inter alia:
(1) The Deceased had told her that Kwan was not a responsible husband and father. When she was ill, Kwan did not take care of her nor accompany her to see doctors, nor did he provide any financial support to the family;
(2) The Deceased told her that she had thought about divorcing Kwan. The Deceased had also told her that Kwan was bad in managing his finances and was addicted to spending money, and that Kwan had to rely on the Deceased to support him financially;
(3) From her observation, the Deceased loved her Daughter but it appeared that their relationship was not close;
(4) On the other hand, the Deceased had a very close relationship with the defendant and the Deceased had told Fong that the defendant had gifted HK$50,000 and HK$70,000 cash to the Deceased to assist her medical expenses. The Deceased gave her valuables to the defendant before she passed away.
84.Notably, there was not much cross-examination of Fong. I took into account Fong’s evidence which generally corroborates the defendant’s version of facts.
E8. Evidence of Cheung Ying Ming (PW2) and Ho Ching Man (PW3)
85.I placed little weight on the evidence of PW2 and PW3. In short, their evidence is purely hearsay from alleged casual conversations with the Deceased many years ago. As such, little weight if any should be accorded to that evidence.
F. COUNTERCLAIM BY THE DEFENDANT
86.The counterclaims for vacant possession and mesne profits rise and fall with the main issue of beneficial interest in the Property. The parties have agreed that the amount of notional monthly rent is HK$8,000 from 4 January 2016 to 31 December 2020, and HK$9,000 from 1 January 2021 onwards.
G. CONCLUSION AND DISPOSITION
87.The plaintiffs bear the burden of proving that the beneficial interest in the Property lies with the plaintiffs despite the defendant being its legal owner. In light of the above, I find that the plaintiffs have failed to prove that there is any common intention constructive trust between Kwan and the Deceased on the one hand, and the defendant on the other.
88.To the contrary, I hold that the defendant’s version of facts is to be believed, and I thus find that there is no resulting trust either.
89.Accordingly, I find that there is no defence to the defendant’s counterclaims.
90.In the premises, I order as follows:
(1) The plaintiffs’ claims in these proceedings against the defendant be dismissed;
(2) The plaintiffs do deliver vacant possession of the Property to the defendant within 28 days;
(3) The plaintiffs do pay mesne profits for occupation of the Property at the rate of HK$8,000 per month from 4 January 2016 to 31 December 2020, and thereafter at the rate of HK$9,000 per month from 1 January 2021 onwards;
(4) The costs of the action (including all costs reserved, if any) be paid by the plaintiffs to the defendant, such costs are to be taxed on the party and party basis if not agreed.
91.The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.
92.Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.
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(Wilson Chan)
Judge of the Court of First Instance
High Court |
Mr Billy N P Ma, instructed by Messrs Kwok Hei Law Office, for the 1st and 2nd plaintiffs
Ms Deanna Law, instructed by Messrs Alex To & Co, for the defendant
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