Sze Ka Wai v. Choy Wai Ka

CACV 121/2021

[2022] HKCA 74

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 121 OF 2021

(ON APPEAL FROM HCA NO. 1825 OF 2018)

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BETWEEN

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Before:  Hon Cheung, Au and Chow JJA in Court

Date of Hearing:  17 December 2021

Date of Judgment:  18 January 2022

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.This is an appeal against the judgment of Deputy High Court Judge P Fung, SC that Mr Choy holds his half share of the property known as Flat 5, 6^th Floor, Block D, Yan Ming Court, No 100 Po Lam Road North, Tseung Kwan O, Sai Kung, New Territories, Hong Kong (“the Property”)  on trust for and on behalf of Ms Sze absolutely.

BASIC FACTS

2.Ms Sze and Mr Choy were formerly in a romantic relationship starting in the latter part of 2010.  In February 2011, they purchased the Property as joint tenants with the assistance of a mortgage loan from the Standard Chartered Bank (“SCB”):

(1)  On 12 February 2011, Ms Sze and Mr Choy as purchasers entered into a preliminary agreement for sale and purchase of the Property at the price of $2,850,000.

(2)  On 25 February 2011, Ms Sze and Mr Choy as “joint tenants” entered into a formal agreement for sale and purchase of the Property.

(3)  On 28 March 2011, the Property was assigned to Ms Sze and Mr Choy as joint tenants.

(4)  On 28 March 2011, Ms Sze and Mr Choy executed a mortgage of the Property in favour of SCB for a mortgage loan of $1,995,000.  The monthly repayment was around $6,400 odd.

3.Ms Sze and Mr Choy broke up in about February 2017.  For the purpose of this judgment, it is not necessary to go into the details of the cause of the break up.  There was, however, an incident which occurred after the break up which is relevant to the present appeal.  According to Ms Sze (as recited in §14 of the Judgment handed down on 25 February 2021, “the Judgment”),

“(32)  In late 2017, the Plaintiff approached a firm of solicitors, Messrs C K Charles Ho & Co (‘CKCH’)  with a view to asking them to help her to prepare documents for the Defendant to assign his half interest in the Property back to her. She was received by Wong who was a conveyancing clerk in CKCH. Wong advised her that if it was her intention to have the Property re-mortgaged, she should not ask the Defendant to assign his half share to her by way of a deed of gift because the banks would normally be reluctant to grant a mortgage on the basis of a deed of gift. She should therefore proceed by way of a sale and purchase with a consideration being stated. It was decided that a consideration of $4.5 million for the half share should be adopted. It represented a rough estimate of the value of a half share of the Property. She was further advised to instruct a separate firm of solicitors to act for her in the purchase whilst CKCH would act for the Defendant as vendor. She accordingly instructed the firm of Messrs Yung Yu Yuen & Co (‘YYY’)  to act for her.

(33)  After CKCH and YYY had prepared all the necessary documentation for the conveyance, she telephoned the Defendant to ask him to go with her to the office of CKCH for the purpose of signing documents for assigning his half share in the Property to her. The Defendant agreed.

(34)  On 8 January 2018, the Plaintiff picked up the Defendant in her car and drove to Mongkok to the office of CKCH. On that occasion, Wong had instructed his colleague, Cheung, to deal with the matter in his place. On arrival of the Plaintiff and the Defendant, Cheung explained to them the effect of the documents to be executed, namely, that the transaction was in the nature of a sale by the Defendant of his half share in the Property to the Plaintiff at a consideration of $4.5 million. The Defendant stated that he was willing to assign his half interest to the Plaintiff but questioned why a consideration of $4.5 million was set out in the documentation. He said that he was concerned about liability for tax because he was actually not going to receive any consideration for the transfer of his half share to the Plaintiff. After Cheung had explained to him that he would not be liable for any tax, the [Defendant] still said that he would like to consult his own lawyer before he would sign the documents. All the documents had in fact already been signed by the Plaintiff by that time. Anyway, since the Defendant refused to sign the documents, there was nothing that the Plaintiff could do…

(35)  After that occasion, the Defendant refused to go on to transfer his half share in the Property back to the Plaintiff…”

4.On 6 August 2018, Ms Sze commenced the action below claiming, inter alia, that she was the sole beneficial owner of the Property, and Mr Choy held his half share of the Property on trust for and on behalf of her absolutely.  On the other hand, in his Amended Defence and Counterclaim, Mr Choy claimed that he and Ms Sze were the beneficial owners of the Property in equal shares.

5.Ms Sze and Mr Choy’s respective cases were summarized by the Judge at §§8 and 9 of the Judgment, as follows:

(1)  Ms Sze’s case:

“(i)  The only reason why the Defendant became her co-owner was that she was unable to obtain a mortgage loan by reason of the fact that she, being a piano teacher by profession, was not able to show that she had a regular income. She was advised by a bank staff member of SCB that she could get someone who would be able to show that he or she had a regular income to join her in the purchase. Then it would be possible for her to get a mortgage loan. The Defendant offered to help her by becoming her co-owner and thus enable a mortgage loan to be obtained from a bank.

(ii)  The Plaintiff and the Defendant reached an agreement that she would in fact be the sole beneficial owner of the Property and that the Defendant would assign his interest in the Property to her as and when demanded by her.

(iii)  The Plaintiff had paid all the costs and expenses for acquiring the Property, including all the mortgage instalments, all by herself. The Defendant had contributed nothing towards the costs and expenses for acquiring the Property or towards the mortgage repayments.

(iv)  The Plaintiff and the Defendant remained as lovers until they broke up in about February 2017.

(v)  Although the Defendant would sometimes spend the night in the Property, he never really resided in it. He certainly never cohabited with the Plaintiff in the Property.

(vi)  The Plaintiff therefore claims her relief as set out in her Amended Statement of Claim on the basis of a common intention constructive trust.”

(2)  Mr Choy’s case:

“(i)  Although he and the Plaintiff had only started their relationship in the latter part of 2010, by the beginning of 2011, they were so deeply in love that they wanted to buy a flat together and start cohabiting. He admitted, however, that they did not think of marriage, at least, not until 2016.

(ii)  They agreed to purchase the Property by each contributing half of the costs and expenses for acquiring the Property and to pay the mortgage instalments in equal shares. They would become co-owners each having a half interest in the Property.

(iii)  It was he who contacted an estate agent known to him and located the Property.

(iv)  It was he who had arranged for the mortgage to be granted by SCB after having got a referral by a mortgage agency by the name of ‘M Referral’.

(v)  Although he did not make contributions by exactly calculated half amounts, he did give money initially and subsequently regularly to the Plaintiff, mostly in cash and sometimes by cheques drawn by his own customers, to cover the costs and expenses for acquiring the Property, for payment of the mortgage instalments, renovation, and household expenses, so that whatever money he had given to the Plaintiff would actually work out to be about half of all the total costs and expenses for everything.

(vi)  He expressly denies the agreement between him and the Plaintiff as alleged by the latter.

(vii)  After the purchase of the Property, he in fact moved into it and cohabited with the Plaintiff until they broke up in about February 2017. The Plaintiff changed the lock to the Property and he could no longer gain access to the Property.

(viii)  Thus, he is truly entitled to a half interest in the Property both legally and beneficially.

(ix)  He is further entitled to counterclaim for occupational rent for having been prevented by the Plaintiff from gaining access to the Property as from about February 2017.”

6.The Judge considered that there were four major issues to be resolved[1], namely:

(1)  the financial contributions made by Ms Sze and Mr Choy (if any)  towards the initial purchase of the Property, the mortgage repayments and the household expenses;

(2)  whether Mr Choy did cohabit with Ms Sze at the Property;

(3)  what happened on 8 January 2018 when Ms Sze and Mr Choy went to the office of Messrs C K Charles Ho & Co (“CKCH”); and

(4)  what was the agreement between Ms Sze and Mr Choy in relation to the purchase of the Property.

7.Upon consideration of the evidence before him, the Judge made the following findings of fact:

(1)  In respect of the first issue, the Judge found that[2] -

(a)  Ms Sze had paid for the purchase of the Property, including all costs and disbursements (except for the commission of $28,500 to Midland), the down payment and all mortgage repayments, all by herself.

(b)  Except for the commission of $28,500 paid to Midland, Mr Choy did not contribute to any part of the purchase price, mortgage instalments and costs and disbursements for the purchase of the Property, whether by way of cash or cheques drawn with Ms Sze as payee.

(c)  Even if Mr Choy had purchased certain household goods which were put in the Property, they were of relatively small value and could not have formed the basis for any beneficial interest in the Property to be attributed to him.

(2)  In respect of the second issue, the Judge found that Mr Choy still kept a home with his ex wife at another flat and he never cohabited with Ms Sze at the Property[3].

(3)  In respect of the third issue, the Judge found that[4] -

(a)  Mr Choy did agree with Ms Sze to assign back to her his half share in the Property and to go to the office of CKCH to sign documents for that purpose.

(b)  On 8 January 2018, Mr Choy went voluntarily with Ms Sze to the office of CKCH to sign documents for the abovementioned purpose.

(c)  At the office of CKCH, Mr Choy stated in front of Ms Sze and Mr Cheung (a clerk of CKCH)  that he knew that he was not going to be paid any consideration for assigning his half share in the Property to Ms Sze but that he was worried about tax implications because the relevant document stated that he was going to receive the purchase price of $4.5 million and he would like to consult his own lawyer first.

(d)  In respect of the fourth issue, the Judge found that[5] -

“… the Defendant had in fact made a serious declaration against his own interest on 8 January 2018. Such a declaration is the strongest evidence in support of the Plaintiff’s case that it was agreed between her and the Defendant that she was to be the sole beneficial owner of the Property and that the Defendant should assign his half share in the Property to her without consideration upon demand by her”.

8.The Judge went on to consider the 6 questions referred to at §10-063 of Lewin On Trusts (20^th ed)  to be addressed when a claim is made by a person to displace the presumption that the beneficial ownership of property follows the legal ownership in a case where there is no express declaration of trust, namely -

“(1)  Does the case fall within the domestic consumer context, such that the common intention doctrine applies?

(2)  Is there evidence of an actual common intention, in the form of an agreement, arrangement or understanding between the parties that the beneficial ownership should not follow the legal ownership, either at the date when the property was first acquired or at some later date?

(3)  In the absence of such a common intention, can an agreement, arrangement or understanding to this effect be inferred from the parties’ conduct?

(4)  Has the claimant relied to his detriment on the common intention relied upon?

(5)  If there is an actual common intention, does it extend, either expressly or by inference, to the shares in which the property is to be beneficially owned?

(6)  If the common intention does not extend to the shares in which the property is to be beneficially owned, what is a fair share having regard to the whole course of the parties’ dealing in relation to the property, and to both financial contributions and other factors?”

and held as follows -

(1)  The doctrine of common intention constructive trust applied in the present case.

(2)  There was an agreement and a common intention between Ms Sze and Mr Choy that Ms Sze was to be the sole beneficial owner of the Property and that Mr Choy would transfer his half share in the Property to her upon demand.

(3)  Question 3 did not arise in view of his answer to question 2.

(4)  There was no doubt that Ms Sze relied on her agreement with Mr Choy to her detriment by having the Property assigned to them as joint tenants despite the fact that she was going to provide all the money for the purchase of the Property.

(5)  The express agreement and the common intention between Ms Sze and Mr Choy was that Ms Sze was to be the sole beneficial owner of the Property.

(6)  Question 6 was no longer relevant[6].

9.Accordingly, the Judge found in favour of Ms Sze, and granted, inter alia, the following relief:

(1)  a declaration that Mr Choy holds his half share of and in the Property on trust for and on behalf of Ms Sze absolutely; and

(2)  an order that Mr Choy do transfer all his interest of and in the Property to Ms Sze or as she shall direct.

THE APPEAL

10.Mr Choy was not satisfied with the Judgment, and lodged an appeal to the Court of Appeal by a Notice of Appeal dated 24 March 2021.  At the hearing of the appeal on 17 December 2021, this court granted Mr Choy leave to amend the Notice of Appeal.  In the Amended Notice of Appeal, 3 grounds are raised:

(1)  Ground 1 - The Judge’s approach to the common intention constructive trust issue was fundamentally flawed, in that he found that the trust existed solely by way of express agreement but failed to make any finding or evaluate the evidence relating to the oral agreement pleaded by Ms Sze in the Amended Statement of Claim.  There was no finding made with respect to the date and manner in which any agreement as to beneficial ownership of the Property was concluded.  The Judge completely ignored the evidence on this important issue and consequently failed to address any of the criticism made on behalf of Mr Choy at trial in this regard.  It was not open to the Judge to make a finding of free-standing, undated agreement which was not pleaded.

(2)  Ground 2 - The Judge erred in principle in his conclusion that the incident in January 2018 was the “strongest evidence” in support of Ms Sze’s case that there was an agreement that she would be the sole beneficial owner of the Property.  The Judge completely failed to explain why this incident was relevant to the existence of an agreement which was allegedly entered into nearly 7 years earlier, in February 2011.  If the Judge intended to mean that the agreement as to beneficial ownership was entered into in January 2018, this was contrary to Ms Sze’s pleaded case.

(3)  Ground 3 - The Judge’s finding of fact that Ms Sze contributed to the entirety of the initial amount for the purchase of the Property all by herself is unsustainable in the light of her own evidence of savings, earnings and her bank account balance in June 2012.  The Judge completely failed to address this in his Judgment.

GROUND 1 - JUDGE’S FINDING IN RESPECT OF EXPRESS AGREEMENT

11.Under this ground, Mr Jin Pao, SC argues that it was incumbent upon the Judge, having expressly disclaimed reliance on finding a common intention by way of inference from the parties’ conduct, to adequately explain within the parameters of the pleaded cases how and on what evidence the purported agreement as to the beneficial ownership of the Property came about in the first place.  But the Judge did not do so.  There was a total failure by the Judge to explain how, when, and on the basis of what express discussions this “agreement” was supposedly concluded between Mr Choy and Ms Sze.  No finding was made on Ms Sze’s pleaded case of an oral agreement entered into on or around 25 February 2011.  The existence of that oral agreement was not even mentioned by the Judge as one of the four major factual issues for determination.  To make matters worse, the Judge failed to address the serious objections taken on behalf of Mr Choy at trial as to the existence of the alleged oral agreement.  Rather than dealing with the pleaded issues, the Judge instead referred to an unpleaded incident in January 2018 as the “strongest evidence” of the agreement.  The Judge was not entitled to find in favour of Ms Sze on the basis of a free-standing, undated “express” agreement with an unclear basis.  The approach adopted by the Judge was seriously flawed.

12.In our view, the criticisms of the Judge’s approach in the determination of whether there was an oral agreement that, although the Property would be registered in the joint names of Mr Choy and Ms Sze, Mr Choy would have no beneficial interest in the Property and would merely hold the Property on trust for, or for the benefit of, Ms Sze, are unjustified.

13.Ms Sze’s pleaded case of the oral agreement (“the Oral Agreement”)  in the Amended Statement of Claim was as follows:

“[2] The circumstances leading to the acquisition of the Property are set out hereinbelow:-

(1)  The Plaintiff and the Defendant started going out with each other in or around mid-2010 and became lovers soon;

(2)  The Plaintiff is and was a piano teacher at all material times. In or around early 2011, she intended to buy the Property for long-term investment purposes and for her own use;

(3)  After identifying the Property as a prospective flat to be acquired, the Plaintiff approached several banks to enquire on the granting of mortgage to assist with her acquisition of the Property;

(4)  Due to the irregular nature of her income as a piano teacher and the lack of proof of continuous and sufficient income stream, the Plaintiff was unable to obtain a mortgage from the bank for the purpose of the acquisition of the Property;

(5)  Upon the advice of the bank and the fact that the Defendant had proof of stable income as a director of his family business, the Defendant offered to help the Plaintiff by agreeing to be named as a joint owner and borrower so as to obtain and procure for easier mortgage approval; and

(6)  The Plaintiff accepted the Defendant’s offer to help.

[3] In the premises, to facilitate the application for mortgage loan and for convenience sake, it was orally agreed between the Plaintiff and the Defendant in or around 25 February 2011, the following express terms (‘the Oral Agreement’):-

(a)  The Property would be registered under the joint names of the Plaintiff and the Defendant;

(b)  The Defendant would have no beneficial interest in the Property and merely hold the Property on trust for and on behalf of the Plaintiff; and

(c)  The Defendant would transfer back his interest of and in the Property to the Plaintiff or her nominees upon demand.

[4] Pursuant to the Oral Agreement but not otherwise, the Plaintiff and the Defendant purchased the Property at a consideration of HK$2,850,000 …

[10]  By reason of the Oral Agreement pleaded in paragraph 3 above, the beneficial interest of the Properly belongs solely to the Plaintiff and the Defendant was and is purely holding his half share of and in the Property on trust for and on behalf of the Plaintiff.  The Defendant has no beneficial interest nor share in the Property.”

14.At §14 of his Judgment, the Judge summarized the evidence of Ms Sze in respect of the Oral Agreement, as follows:

“(10)  She made inquiries with various banks about obtaining a mortgage loan. Her applications had been rejected by HSBC because she could not show that she had a regular income. She also applied to the Bank of China (HK)  and SCB. When she approached SCB, she was advised by a staff member of that bank that it would be difficult for her to obtain a mortgage loan because she could not show that she had a regular income and that she should try to get someone with a regular income or with a stable financial background to join her in the purchase of any property.

(11)  In the meantime, she had started a romantic relationship with the Defendant in the latter part of 2010.

(12)  On learning about this, the Defendant offered to assist her by using his financial background based on the fact that his parents had been in the pharmacy business and owned some medicine shop. He could provide proof of his stable income as a director of his parents’ family company by the name of ‘Po Man Dispensary Company Limited’ (‘Po Man’). She trusted him because he was her boy friend and accepted his offer of assistance.

(13)  It was decided that they would acquire the Property as co-owners. She had no idea about the distinction between a joint tenancy and a tenancy-in-common.

(17)  As mentioned above, it is the case of the Plaintiff that she had paid all the costs and expenses for the acquisition of the Property, including all mortgage repayments, and that the Defendant has not paid a cent towards the same.

(22)  The Plaintiff says that immediately after the signing of the PSPA, it was orally agreed and commonly understood between the Defendant and herself that: -

(i)  The Defendant would be registered as a nominal co-owner of the Property purely for the purpose of securing the mortgage from SCB.

(ii)  The Defendant would hold his share on the Property on trust for her and on her behalf. He would transfer his interest of and in the Property back to her if and when she asked him to.

(iii)  As she would be the only true owner of the Property, she would be solely responsible for paying the initial deposits and mortgage loan instalments for the purchase of the Property as well as all related expenses.”

15.The Judge also summarized the evidence of Mr Choy at §17 of the Judgment, which it is not necessary to set out here.

16.At §19(1)  of his Judgment, the Judge assessed the evidence of Ms Sze.  He accepted that Ms Sze was by and large telling the truth.  Although in relation to some matters, such as the question of the payment of the agency fee to the estate agent where her answer might not be entirely satisfactory, the Judge was prepared to give her some allowance on the basis that the incident took place about 10 years ago and her memory might not have been accurate.

17.The Judge also assessed the evidence of Mr Choy at §19(4)  of the Judgment.  It is plain that the Judge was not impressed by Mr Choy’s evidence, and did not find him to be a truthful witness:

“I take the view that the Defendant is obviously a very clever person and a quick thinker. For every question, he always seemed to have an answer, although very often not convincing. Sometimes when he felt that he was being cornered, he would become evasive, for instance, by flipping through the trial bundle before him, apparently trying to buy time to think of a good answer. Many parts of his evidence I do not believe to be true. I shall deal with those in my analysis below. It is noteworthy that in his final submissions, counsel for the Defendant chose to adopt a somewhat negative approach regarding the credibility of the Defendant. Instead of urging the Court to find the Defendant to be an honest witness, he just submitted that even if the Court were not to believe in the truthfulness of the Defendant, it did not mean that the Court should accept the evidence of the Plaintiff as being truthful and that, the burden being on the Plaintiff to show that the registered legal title should be upset, her case should fail. This is perhaps an indication of the quality of the Defendant’s evidence even in the eyes of his own counsel.”

18.At §20 of the Judgment, the Judge explained that his view of the witnesses was “formed as a result of [his] overall assessment of their evidence, taking into account the inherent probabilities or improbabilities of their respective evidence on particular matters, the sufficiency or insufficiency of documentary or other evidence in support of their evidence and their respective conduct in the course of the proceedings leading up to the trial.”

19.As earlier mentioned, at §62 of the Judgment, the Judge held that Mr Choy’s declaration on 8 January 2018 was the strongest evidence in support of Ms Sze’s case that she was the sole beneficial owner of the Property and that Mr Choy should assign his half share in the Property to her without consideration upon demand by her.  At §70(ii)  and (v)  of the Judgment, the Judgment reiterated or affirmed his finding that there was an express agreement and common intention between Ms Sze and Mr Choy that Ms Sze was to be the sole beneficial owner of the Property and that Mr Choy would transfer his half share in the Property to her upon demand.

20.Reading the judgment as a whole, we consider it to be clear that the Judge found the Oral Agreement as pleaded by Ms Sze proved on the basis of Ms Sze’s evidence given at the trial which the Judge obviously accepted.  We do not accept Mr Pao’s argument that the Judge failed to explain how, when, or on the basis of what express discussions the Oral Agreement was concluded between Mr Choy and Ms Sze, or failed to make a finding on Ms Sze’s pleaded case of the Oral Agreement entered into on or around 25 February 2011, or found in favour of Ms Sze by reference to a free-standing, undated “express” agreement with an unclear basis.

21.In respect of the contention that the Judge failed to address the serious objections taken on behalf of Mr Choy at the trial as to the existence of the Oral Agreement, Mr Pao raised two particular points at the hearing of the appeal on 17 December 2021.

22.First, Mr Pao argued that the Judge failed to consider why it was necessary for Mr Choy to be named as a joint tenant if the effect of having Ms Sze as the sole owner of the Property with the benefit of a mortgage could be achieved in the same way had Mr Choy been made a personal guarantor.  In our view, there might well have been different ways in which the mortgage transaction could have been structured to address the bank’s objection to granting a mortgage loan to someone like Ms Sze alone who did not have a regular income, or proof of a regular income.  However, the evidence of Ms Sze, which the Judge plainly accepted, was that she was advised by SCB to try to get someone with a regular income or with a stable financial background to join her in the purchase of the Property.  We do not consider that the Judge was required to speculate on why the mortgage transaction was not structured in the other way as suggested by Mr Pao, ie with Ms Sze as sole borrower and mortgagor and Mr Choy as guarantor.

23.Second, Mr Pao pointed out that Ms Sze’s pleaded case was that the Oral Agreement arose “on or around 25 February 2011” (that being the date of the formal sale and purchase agreement).  However, in her witness statement, she claimed that the Oral Agreement arose “immediately after signing of the PSPA”, which was entered into on 12 February 2011.  Mr Pao complained that there was an obvious inconsistency between Ms Sze’s pleaded case and evidence which the Judge failed to deal with in the Judgment.

24.Ms Sze was cross-examined on this inconsistency, and explained that while the Oral Agreement was formed earlier, she adopted the date of 25 February 2011 as the date of the Oral Agreement in the pleading because that was the date with legal effect when she signed the formal agreement for sale and purchase at a law firm (我覺得最終係所有嘢係因為我律師樓簽, 我覺得呢一個日期係比較有法律效用, 我所以就咁樣寫囉).  Ms Sze also said that at the time of the signing of the formal agreement for sale and purchase, Mr Choy had said to the staff of the law firm that he held the Property on trust for her in order to obtain the mortgage (因為當時簽文件嘅時候, 蔡生都有同當時嗰個職員講話佢係信託幫我去借呢個按揭, 跟住就同佢講話可唔可以將--因為我哋係有兩個名喺度㗎嘛, 就將我個名係喺所有文件都係行先嘅, 就同咗個職員咁講, 所以我嗰日就將呢個日期就訂為最後一個落實嘅日期… 就係由睇樓之前, 即係簽臨約之前已經係傾咗呢樣嘢, 只不過我就冇將嗰個定為一個好確實嘅日期, 而我確實日期嗰日就係因為我覺得嗰日有法律效用, 上律師樓傾, 而佢又有同嗰面職員咁講, 所以定嗰個日子係嗰一日, 就為之最後確實日期咁樣囉).

25.In considering this “inconsistency” between Ms Sze’s pleaded case and her evidence, it is important to take into account that the Oral Agreement could not possibly have come out of the blue at the time of the signing of the formal sale and purchase agreement at the law firm.  Ms Sze’s evidence was that after having been advised by SCB to try to get someone with a regular income to join as a co-owner of the Property but before the signing of the preliminary sale and purchase agreement, she had a discussion with Mr Choy about adding his name as a co-owner of the Property and Mr Choy offered to “lend” his name as a co-owner to facilitate the mortgage application[7], and the Oral Agreement was made immediately after the signing of the preliminary sale and purchase agreement[8]. The Judge was entitled to accept Ms Sze’s explanation of the “inconsistency” between her pleaded case and her evidence.  The “inconsistency” is, in any event, a minor one which we do not consider it necessary to be expressly dealt with by the Judge in the Judgment.

26.We shall deal with the relevance of the incident on 8 January 2018 in our consideration of Ground 2 of the appeal below.

GROUND 2: INCIDENT ON 8 JANUARY 2018

27.We have already set out Ms Sze’s evidence in respect of the incident on 8 January 2018 at the office of CKCH in §3 above. Her evidence was supported by Mr Cheung and Mr Wong, whose evidence the Judge also accepted[9]. That incident shows that Mr Choy was willing to transfer his share in the Property back to Ms Sze for no consideration.  The Judge was, in our view, entitled to find Mr Choy’s words and conduct on that occasion to be an admission against interest, and strong (or the strongest)  evidence in support of Ms Sze’s case of the Oral Agreement.

28.Mr Pao argues that it was unclear, from §62 of the Judgment, as to when the “agreement” was actually entered into by the parties on the Judge’s findings, and it was not open to the Judge to find a free-standing, undated and unpleaded agreement based on the incident on 8 January 2018.  Mr Pao further argues that, “[t]o the extent that the Judge meant that an agreement was entered into in January 2018, this is not permissible for the simple reason that this was not Ms Sze’s pleaded case.  The January 2018 incident is not even mentioned in the ASOC at all.  The Judge was not entitled to make a finding of fact in support of a case which was not pleaded by anyone.”[10] As earlier mentioned, we do not consider that the Judge found in favour of Ms Sze on the basis of a free-standing, undated or unpleaded agreement.  We also do not consider the Judge treated the incident on 8 January 2018 as forming the basis of the Oral Agreement relied upon by Ms Sze.  As we read the Judgment, the Judge was saying that the incident on 8 January 2018 provided the strongest “evidence” in support of “the Plaintiff’s case that it was agreed between her and the Defendant that she was to be the sole beneficial owner of the Property and that the Defendant should assign his half share in the Property to her without consideration upon demand by her”[11].  The reference to the “Plaintiff’s case” is, we believe, to the Plaintiff’s pleaded case of the Oral Agreement.  Ground 2 is, in our view, based on a mis-reading of the Judgment.

GROUND 3 - MS SZE’S FINANCIAL CONTRIBUTIONS

29.Under this ground, Mr Choy challenges the Judge’s finding of fact that Ms Sze had paid for the purchase of the Property all by herself, including all costs and disbursements (except the estate agent’s commission of $28,500 to Midland)  and the down payment in the total sum of around $900,000[12], on the basis that:

(1)  according to Ms Sze’s evidence in cross examination, her monthly income was $35,000 to $40,000 in 2010;

(2)  according to her witness statement (as confirmed in cross-examination), she had savings of around $1 million by late 2010[13];

(3)  given that roughly $910,000[14] was spent by her in the initial purchase of the Property, her savings would have been depleted to roughly $100,000;

(4)  yet her BOC bank statement showed that she had savings of around $1.17 million as at June 2012, which means that she needed to save around $71,500 per month, which was an impossible task given her income level at that time.

30.However, as submitted by Mr Jonathan Chang, SC:

(1)  In respect of Ms Sze’s savings by late 2010, she said in re-examination that she had savings of about $1.5 million to $1.6 million, and that the figure of $1 million stated in her witness statement was incorrect due to the long lapse of time.  Her evidence in this regard was apparently accepted by the Judge.  At §14(5)  of the Judgment, the Judge summarized Ms Sze’s evidence as follows: “By around late 2010, she had managed to save up to well over $1 million, in fact, in the region of $1.5 million or $1.6 million”.  In our view, the Judge was entitled to accept Ms Sze’s evidence on this issue.  On this premise, Ms Sze’s savings increased by about $480,000 to $580,000 during a period of about 18 months from late 2010 to June 2012.

(2)  In respect of Ms Sze’s income level, her evidence at the trial was that her monthly income was in the range of $35,000 to $40,000 in late 2010, and in the range of $35,000 to $60,000 between 2010 and 2019.  There was no specific evidence on her monthly income level during the period from late 2010 to June 2012.

31.Taking into account the totality of Ms Sze’s evidence, we do not see that Mr Choy has made out a case that the Judge’s finding of fact that the Plaintiff had contributed to the entirety of the initial amount for the purchase of the Property (less the estate agent’s commission)  is unsustainable as contended under Ground 3.

32.In conclusion, all 3 grounds of appeal are rejected.

DISPOSITION

33.The Defendant’s appeal is dismissed with costs to the Plaintiff (including the costs of the amendments to the Notice of Appeal), to be taxed if not agreed with certificate for 2 counsel.

Mr Jonathan Chang, SC & Mr Timothy Lam, instructed by Tung, Ng, Tse & Lam, for the Plaintiff / Respondent

Mr Jin Pao, SC & Mr Simon Wong, instructed by Benny Kong & Tsai, for the Defendant / Appellant