Lai Lap Kee and Another v. Lai Jin Tong and Another

HCA 295/2016 & HCA 1442/2016
(Consolidated)

[2022] HKCFI 1476

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 295 & 1442 OF 2016

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(Consolidated pursuant to the Order of Master R Lai

dated 1st November 2016)

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Before:  Mr Recorder William Wong SC in Court

Dates of Hearing:  14-17 February 2022 and 25 February 2022

Date of Judgment:  23 May 2022

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JUDGMENT

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INTRODUCTION

1.These proceedings concern, mainly, the beneficial ownership of the ground floor and the first floor of a village house situate at the Remaining Portion of Sub-section 1 of Section C of Lot No.1595 in D.D. 106, Yuen Long, New Territories which is also known as No.141A Yuen Kong Tsuen, Kam Sheung Road, Yuen Long, New Territories (the “Village House”).

2.There is no dispute that Lai Sin Han Isabel (“Isabel”) is the legal and registered owner of the ground floor of the Village House. Isabel, however, does not claim any beneficial ownership of the same. Isabel’s case is that she holds the same, in equal shares, for both of his brothers, namely, Lai Lap Kee (“Kee”) and Lai Jin Tong (also known as Lai Lap Fai) (“Tong/Fai”). Kee and his wife, Seto Sha Li’s (“Seto”) case, however, is that Isabel holds the ground floor of the Village House solely for their benefit.

3.Tong/Fai is the registered owner of the first floor of the Village House. His case is that he is the legal and beneficial owner of the same. Kee and Seto, however, assert that Tong/Fai holds the same as their trustee and they are the real beneficial owners.

4.Seto is the registered and legal owner of the 2^nd floor of the Village House.

5.Mr Lai Man Hee, deceased (the “Father”) and Ms Chow Kar Lin, deceased (the “Mother”) are the parents of Kee, Fai and Isabel.

6.The Father and the Mother had the following children:-

(1)  Lai Yin Yee, born in 1955

(2)  Kee, born in 1956

(3)  Lai Lap Ming, born in 1958 (“Ming”)

(4)  Isabel, born in 1960

(5)  Tong/Fai, born in 1963

7.Ms. Ngan Ying Wah, formerly known as Ngai Shun Chun, is the ex-wife of Tong/Fai (“Ngai’). They were married on 18 July 1998 but divorced in 2004.

8.The parties have helpfully filed a list of agreed issues to the Court. However, I am of the view that there are two main issues in this consolidated trial, namely:

(1)  The beneficial ownership of the ground floor and the first floor of the Village House; and

(2)  Whether Tong/Fai is entitled to compensation and/or damages for his loss of use and enjoyment of the first floor and half of the ground floor of the Village House as from October 2009 to the date of repossession of the ground floor and the first floor of the Village House.

9.The disputes in this trial turn heavily on the assessment of the credibility of each party’s case.

APPROACH TO EVALUATION OF EVIDENCE

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

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

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

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

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

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

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

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

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

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

(5) the demeanour of the witness.

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

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

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

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

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

(4)  the demeanour of the witnesses.

12.I find the above guidelines helpful and will apply the same in assessing the credibility of the parties’ diametrically different versions of events.

BENEFICIAL OWNERSHIP

13.I have carefully considered the parties’ evidence, both documentary and oral testimony, and come to the firm view that Tong/Fai and Isabel’s evidence are to be believed and have no hesitation in rejecting Kee and Seto’s evidence as being not credible.

14.First, I have no hesitation to come to the view that Tong/Fai did contribute to the mortgage payments of the apartment in Block 39, City One, Shatin (“City One Block 39”). This is recorded in the Father’s diary and record (“Father’s Diaries”). In fact, Kee’s evidence is that he has no idea that Tong/Fai paid for the mortgage payments of City One Block 39.

15.The reason why the beneficial ownership of City One Block 39 is so important is that it is common ground that the deposit and down payment for the purchase of the Village House, in the sum of about HK$1.3 million, all came from the proceeds of sale City One Block 39. Kee and Seto’s case is that the Village House was gifted by the Father to them and they only allowed Tong/Fai and Ngan to reside in the Village House as a matter of sibling kindness. Such case will be hard to stand if the deposit and down payment for the purchase of the Village House all came from the proceeds of sale of City One Block 39 to which Tong/Fai had had a beneficial interest. There is no suggestion that somehow Tong/Fai gifted the sum of about HK$1.3 million to Kee and Seto.

16.This Court comes to the view that Tong/Fai was the beneficial owner of City One Block 39 because the Father did have a practice of making deposit and down payments to purchase properties for the benefit of his children. The Father’s Diaries also confirm the same. First, the Father did help Kee and Ming to purchase an apartment in Block 32, City One, Shatin (“City One Block 32”).

17.Kee’s case was that “[h]aving worked hard for some years, I had accumulated some monies in my bank in 1983. I wished to make some long term investment for parents.” He also said in his witness statement that:-

(1)  The total deposit was about HK$75,116 and he did pay around more than half of the deposits, so as to please his parents;

(2)  He assisted the Mother to repay the monthly mortgage of City One Block 32 since its acquisition in 1983 to 1995, but he ceased to do so thereafter;

(3)  It is utterly wrong to say that his parents intended City One Block 32 to belong to Ming or him. His parents always regarded City One Block 32 as their private assets.

(4)  “After Mother’s death, Ming applied the Letters of Administration for Mother’s estate and acquired the same on or about 9^th February 2015. In June 2015, Ming, acting as the sole administrator of Mother’s estate, sold City One Block 32 at the price of HK$5,050,000. At that time, there was no outstanding mortgage or charge. Ming took all such steps without my knowledge. Even worse, Ming misappropriated all the sale proceeds and left Hong Kong without notice. Since 2015, he and his family have been living in Taiwan. Anyhow, I have forgiven him.”

18.I find Kee’s evidence, as set out above, totally incredible. In his oral testimony, Kee unequivocally said that the deposit was paid by him but subsequently and almost immediately reimbursed by the Father. It was never a gift by him to his parents. The contrary is the truth. In fact, the parents paid for the deposit and down payment. Kee and Ming then paid for the mortgage. It was the intention of the parents that City One Block 32 would be beneficially owned by Ming and Kee after they had paid off the mortgage.

19.I accept Ming’s evidence that in about 1982 or 1983, although City One Block 32 was purchased in the name of the Mother, it was the Father who paid the deposit and down payment. Ming and Kee were responsible for paying the mortgage payments and after the mortgage was discharged, the property was owned by Ming and Kee in equal share. The purchase price was HK$255,116. The Father paid about HK$50,000, leaving HK$200,000 to be financed by a bank mortgage. Ming then told the Father that he preferred to pay HK$20,000 more as down payment and therefore, the final mortgaged sum was HK$180,000. In about 1986, Ming fully paid his share of the mortgage leaving Kee to continue to pay the monthly mortgage payment until the same was fully paid in 1988.

20.In 1995, Kee borrowed HK$500,000 from Ming. However, Kee had not repaid the same to Ming. In 2003, Ming was planning to get married and demanded Kee to repay the said sum. It was later agreed between Ming and Kee that, as City One Block 32 was then worth about HK$1 million, Kee would transfer his 50% beneficial interest in City One Block 32 to Ming in full and final settlement of his outstanding debt owed to Ming.

21.Hence, after the discharge of further encumbrances which were created from 1990 to 1995 for the benefit of Kee and his business, Kee handed over the title deeds of City One Block 32 to Ming. Ming kept the said title deeds until he sold the same after the death of the Mother.

22.All these events show that for all intent and purposes Ming and Kee were the beneficial owners of City One Block 32 and it is incorrect for Kee to allege that Ming had misappropriate the proceeds of sale and somehow he has forgiven Ming. I find Kee’s evidence in relation to City One Block 32 incredible.

23.Tong/Fai is the youngest son. I accept his evidence that the Father told him that he should also have his own property and agreed to pay for the deposit and down payment for a small apartment in City One, Shatin. Hence, City One Block 39 was purchased, in the Father name, but with mortgage payments to be paid by Tong/Fai. Tong/Fai agreed to the said arrangement and dutifully paid the mortgage payments. In fact, Tong/Fai and Ngai moved to live in City One Block 39. Until the sale of City One Block 39, Tong/Fai and Ngai resided there.

24.Father’s Diaries also corroborate Tong/Fai’s case. Although Kee and Seto refused to accept the authenticity of Father’s Diary, they did not say that they were somehow faked or fabricated. They merely take the position that the records as set out in Father’s Diary might not be accurate. I accept that the contemporaneous records in Father’s Diaries have probative value. It records, inter alia, that the Father helped Kee and Ming to purchase City One Block 32, financed Isabel to purchase Avon Garden and importantly, assisted Tong/Fai to purchase City One Block 39 and the mortgage payments made by Tong/Fai.

25.Father’s Diaries do support Tong/Fai and Isabel’s case that at the material time, Tong/Fai and Ngai were looking for a larger property, in particular, a property that could accommodate their dogs which were gifted by Kee and Seto to them. Kee and Seto did drive them to inspect a number of properties. Eventually Kee suggested Tong/Fai to purchase the Village House by deploying the proceeds of sale of City One Block 39 to pay for the down-payment of the Village House. Tong/Fai agreed on the basis that as he paid for the deposit and down payment, he would only need to pay a lesser portion of the overall mortgage payments which were to cover his 50% beneficial interest of the ground floor of the Village House.

26.I also accept Ming’s evidence that initially it was the Father’s intention that all three sons should contribute to the purchase of the Village House and each son would have a floor of the same. However, Ming was not interested. Hence, only Kee and Seto and Tong/Fai proceeded to purchase the Village House on the agreement that Tong/Fai would contribute all the deposit and down payment from the proceeds of sale of his City One Block 39 and Kee and Seto would mainly responsible for defraying the mortgage payments albeit Tong/Fai would also need to contribute a small portion.

27.I have no hesitation to reject Kee and Seto’s case that the deposit and down payment for the Village House were all gifted by the Father to Kee personally because he was the eldest son in the family. It does not make any common and commercial sense that Father would deprive Tong/Fai of his beneficial interest in City One Block 39 when he had defrayed the mortgage payments and had resided there with his girlfriend then. It is hard to believe that the Father would have gifted the proceeds of sale to Kee and Seto so that Tong/Fai would have no beneficial interest at all in the Village House. This is highly improbable and unimaginable. In fact, Kee and Seto came up with their case when they did not know that Tong/Fai did contribute to the mortgage payments of City One Block 39.

28.Secondly, Tong/Fai’s case is supported by important contemporaneous documentary evidence which all point to the fact that  Tong/Fai did pay for his share of mortgage payments and decoration expenses of the Village House.

29.In a letter of offer dated 16 October 1995, with Tong/Fai and Ngai as borrower and Tong/Fai as mortgagor, there are some handwritten notes which show that the portion to be paid by Tong/Fai was HK$3,115.70 and the portion to be paid by SS (Seto) was HK$24,225.52 and the total was HK$24,222.52. This document was discovered by Kee and Seto and was kept by Seto at all material times. The sum of HK$24,225.52 matches Kee’s evidence that the total mortgage payment for the Village House was about HK$25,000.

30.On balance, I have no doubt that the note was authored by Seto and she had no reason to doubt the accuracy of the same. It is consistent with Tong/Fai’s case that he did contribute to the mortgage payments of the Village House albeit for a smaller portion as he contributed all of the deposit and down payment of the Village House. Unless Tong/Fai has beneficial interest in the Village House, there is no reason why he had to pay for the mortgage payments.

31.I also reject Kee and Seto’s case that such payments were to defray Tong/Fai and Ngai’s daily expenses. The note clearly shows the respective shares of Tong/Fai and SS (Seto) in a document in relation to mortgage payments. I accept Tong/Fai’s case that he and Ngan did make further monthly contributions to a pooled common fund for defraying miscellaneous common expenses, like dog foods, by putting cash into a box. But that is different from his contribution to the mortgage payments.

32.I also accept Ngai’s evidence that Seto would inform her and Tong/Fai how much mortgage payment Tong/Fai needed to pay in a particular month for Tong/Fai’s share of the ground floor and Tong/Fai would deposit the said sum into Seto’s bank account accordingly.

33.Further, there is another contemporaneous document, a copy of a bank statement, with a handwritten note which sets out Tong/Fai’s contribution to renovation, namely, HK$1,764.80. Seto confirmed that the note was written by her but she could not recall why she wrote those words and figures on both documents.

34.I accept Ngai’s evidence that Seto would inform her and Tong/Fai how much decoration expenses Tong/Fai had to pay in a particular month. Tong/Fai paid about HK$5,000 to HK$6,000 per month for his share of both mortgage payments and decoration expenses.

35.The above two contemporaneous documents show that Seto would inform Tong/Fai how much mortgage payments and decoration expenses he needed to pay every month. Tong/Fai only paid for the shortfall of his share of the purchase price at about HK$110,000 as well as HK$125,000 as decoration expenses plus interests and it was Seto who did the monthly calculation.

36.Thirdly, Seto’s Hang Seng Bank statements (“Seto’s HSB Account”) also tally with Tong/Fai’s evidence in that it can be seen that monthly payments were made to Seto’s HSB Account punctually at the end of each month or the first day of each month. This evidence matches Tong/Fai’s evidence that he and/or Ngai would pay his share of the mortgage payments and decoration expenses each month by bank transfers. The sums also match with the figures stated in the handwritten notes. I accept that Tong/Fai did pay his share of the monthly mortgage payments and decoration expenses to Seto.

37.Fourthly, Tong/Fai was the mortgagor of the first floor of the Village House. He and Ngai were also the borrowers of the mortgage loans related to the said floor. If he were not the beneficial owner, it is difficult to see why he needed to assume such liabilities.

38.Fifthly and importantly, there is no dispute that Tong/Fai re-mortgaged the first floor of the Village House for an “all-monies” loan in 2011 with Dah Sing Bank Limited. Kee gave evidence that he opened the door for the officer of Dah Sing Bank Limited to inspect the first floor of the Village House so that Tong/Fai could re-mortgage the first floor of the Village House. He also knew that if Tong/Fai failed to repay the same, Dah Sing Bank could take possession of the first floor of the Village House.

39.This is only explicable if Tong/Fai is both the registered and beneficial owner of the first floor of the Village House. It is difficult to believe that Kee and Seto would have allowed Tong/Fai to mortgage their property for Tong/Fai’s personal purposes. This is particularly so as it is Kee and Seto’s evidence that Tong/Fai first agreed to settle the monthly mortgage payments of the first floor of the Village House and then went back on his promise and decided not to purchase the same. Kee also gave evidence that he was of the view that Tong/Fai had no financial ability and could not afford to pay for the mortgage of the first floor of the Village House. His evidence is that Tong/Fai then needed to borrow money from Dah Sing Bank Limited for he had a girlfriend from the Mainland and also a 10 years-old son. Under such circumstances, it is hard to believe that Kee and Seto would have consented and actually assisted Tong/Fai to re-mortgage the first floor of the Village House on an “all-monies” basis.

40.Ms Lau for Tong/Fai submitted that it is inexplicable as to why Kee and Seto did not make enquiries as to how much Tong/Fai borrowed, what was the interest rate that Dah Sing Bank charged, what were the payment terms. They did not even ask for a copy of the re-mortgage document. They also did not even bother to check if the re-mortgage had been repaid in full. These are all indicia pointing to the fact that Tong/Fai is both the registered and beneficial owner of the first floor of the Village House.

41.Kee said that if Tong/Fai failed to make repayments, Dah Sing Bank Limited would have taken possession of the first floor of the Village. He would then and there found out whether Tong/Fai had failed to keep up with the re-mortgage payments. I find this hard to believe. If Kee and Seto were the beneficial owner of the entire Village House, it is difficult to fathom why they would not be interested to find out the outstanding mortgage obligations and were satisfied to find out the same after the mortgage bank were to take legal actions.

42.Sixthly, on 20 July 2007, Seto asked Tong/Fai to go to a solicitors firm to collect the title deeds of the first floor of the Village House. There was no mention that Tong/Fai should pass the said title deeds to Kee and Seto. Thereafter, the said title deeds are still with Tong/Fai. I accept that this also sits well with the fact that Tong/Fai is the legal and beneficial owner of the first floor of the Village House.

43.Seventhly, Ngan was one of the borrowers in relation to the mortgage of the first floor of the Village House. She then was only the girlfriend of Tong/Fai. They did not get married until 1998. I accept Ms Lau’s submission that it is quite inconceivable that unless Tong/Fai has beneficial interest in the first floor of the Village House, she would agree to be a borrower just to help Kee and Seto to purchase the entire Village House.

44.I also note that Kee’s evidence on this issue is inconsistent. In court, he gave evidence that it was Father who asked Ngan to stand as one of the borrowers. In the Consolidated Statement of Claim, Kee and Seto pleaded that it was Kee who invited Ngai to be one of the borrowers. I do not find Kee and Seto’s evidence credible.

45.Eighthly, given that the deposit and down payment of the entire Village Hose came from the proceeds of sale of City One Block 39 which Tong/Fai had had beneficial interest, I find it hard to believe that the reason why Tong/Fai chose not to have any beneficial interest in the Village House is, as Kee and Seto said, his and Ngan’s incomes were not able to defray the related mortgage payments and decoration expenses. First, the amount of monthly mortgage and decoration expenses to be paid by Tong/Fai, as outlined above, were not substantial. Secondly, Tong/Fai’s employment records and tax returns show that they were perfectly capable of paying his share of the mortgage payments and decoration expenses.

46.Ms Lau for Tong/Fai also relied on the forged signatures of Tong/Fai in the declaration forms of the Rating and Valuation Department. Basically, Seto signed the forms on behalf of Tong/Fai and declared Tong/Fai to be the legal and beneficial owner of the first floor of the Village House. Seto said that she had contacted Tong/Fai and got his approval. Tong/Fai said that Seto never contacted him on this issue. It is fairly understandable that as Tong/Fai is the registered owner of the first floor of the Village House, a declaration to that effect had to be made. As it is common ground that Seto handled all the paper works in relation to the management of the Village House, I do not find it particularly relevant as to whether Seto had got Tong/Fai’s approval before she signed on his behalf.

47.Based on the above analysis of the evidence, I have no hesitation to come to the firm view that Tong/Fai is the legal and beneficial owner of the first floor and a 50% beneficial owner of the ground floor of the Village House.

48.Additionally, I also find Kee and Seto’s evidence unbelievable. On the other hand, Tong/Fai, Ngan, Ming and Isabel’s evidence are all consistent and corroborated by contemporaneous documentary evidence. I have no difficulty in accepting their testimony.

49.As analysed above, Kee’s evidence in relation to City One Block 32 is full of inconsistencies. In his pleadings, he pleaded that he contributed substantial money as a gift to the Mother to purchase City One Block 32. In his witness statement, he stated that he wished to make some long term investment for his parents. In court, he said that he took the Mother to purchase the property and paid a few thousand dollars. Father then reimbursed him. He admitted that it was the Father who paid for all the deposits.

50.In relation to Ming’s beneficial interest in City One Block 32, in his witness statement he said that it was utterly wrong that the parents intended the said property to belong to him and Ming. However, in court, he said that Father asked him and Ming to be responsible for the mortgage payments. He also borrowed a sum of HK$500,000 from Ming. As he did not repay Ming the said sum, the Mother asked him to transfer his 50% beneficial interest in City One Block 32 to Ming in 2003.

51.I am of the view that Kee and Seto incorrectly presented a case that both City One Block 32 and City One Block 39 were the parents’ properties. This would tally better with their case that the proceeds of sale of City One Block 39 were a gift by the Father to him absolutely for the purchase of the Village House. I find that this version of events inherently improbable and unbelievable.

52.I also bear in mind that Kee and Seto’s original pleaded case was that Seto is the sole beneficial owner of the first floor and the ground floor of the Village House because she was the one who solely paid for the deposit and the mortgage of the said properties. Kee and Seto subsequently abandoned this allegation and put forward a new version that the deposit and down payment were paid by the Father as a gift to Kee personally.

53.Kee admitted that the Father wanted all his sons to have their own property. Given that City One Block 32 was admittedly bought for Kee and Ming, it is more probable that the Father did help Tong/Fai with the deposit and down payment to purchase City One Block 39, a smaller apartment. In the circumstances, it is inherently unlikely that Father would have gifted all the proceeds of sale of City One Block 39 to Kee alone.

54.Further, Kee and Seto’s allegation that they kept chasing Tong/Fai for the return of the title deeds and they even asked Lai Sin Han to help is contradicted by Lai Sin Han’s evidence that she never helped them to do so.

55.Similarly, as Seto basically adopted Kee’s evidence and given her initial pleaded case that she paid for the deposit and down payment of the Village House, I do not find her evidence to be credible. Her evidence about the handwritten notes is evasive.

56.On the contrary, I find Tong/Fai and Ngai’s evidence credible. He is the youngest son in the family and in terms of character, mild and considerate. I accept his evidence that he did not litigate until the last minute as he did not want any litigation amongst siblings.

57.Ngan’s evidence is similarly credible. She has no interest in the Village House. I accept that she came to the court to tell the truth. She did exactly that.

58.Isabel discovered the Father’s Diaries and I accept her evidence that the same had been written by the Father. She was criticized for not having stated in writing the shared ownership of the ground floor of the Village House by Kee and Tong/Fai during the pre-action stage. That is true. However, I accept her explanation that at that stage she did not know that Kee and Seto were after Tong/Fai’s 50% shares in the ground floor of the Village House. She was planning for immigration to Taiwan and Kee had sent messages that might well have been troubling to her. Under such circumstances, she had a discussion with Tong/Fai who reassured her that Kee and Seto might just be worried about her leaving for Taiwan and further reassured her that even if Kee and Seto were to sell the ground floor of the Village House, they would still repay Tong his share of the proceeds of sale. It was under such circumstances that she offered to convey the title of the ground floor of the Village House to Kee.

59.I find Isabel’s evidence credible. Although she could have instructed her lawyers to state clearly that the ground floor of the Village is jointly owned by Kee and Tong/Fai, she has offered a credible explanation. In any event, the Court takes into account all the circumstances of the case. There is also no motive on the part of Isabel to lie to this Court. She claims no interest in the subject property. Overall, I find her to be an honest witness.

60.For all the reasons stated above, I come to the view that Tong/Fai is the legal and beneficial owner of the first floor of the Village House while he and Kee jointly own the ground floor of the Village House as co-owners.

RENTAL PAYMENTS/MESNE PROFITS

First Floor of the Village House

61.In early 2000, after a quarrel between Seto and Ngan, Tong/Fai and Ngan decided to move out of the Village House but on the agreement that Tong/Fai needed not continue to pay for his share of the mortgage payments.

62.I accept that there is an agreement between Tong/Fai and Kee and Seto that the latter should cease occupying the first floor and the ground floor of the Village House after 2007 when the mortgage was paid in full.

63.There is no dispute that Kee and Seto used and is still using the entire Village House exclusively for their own benefit.

64.Although there is an exchange of units and Kee and Seto were and are residing on the first floor of the Village House, I am of the view that as the first floor of the Village House, in law, belongs to Tong/Fai and Kee and Seto also occupied and is still occupying the second floor of the Village House, they should pay for mesne profits of the same, for a period of 6 years (the relevant limitation period) prior to the issuance of Tong/Fai’s counterclaim dated 6 December 2016 and thereafter.

65.Applying the calculation proposed by Tong/Fai, for the period from 6 December 2010 to 30 September 2011, the mesne profit should be HK$5,600 x 9 months + HK$4,666.67 (25 days) = HK$55,066.67.

66.Up to 25 February 2022, the total sum should be HK$1,203,069.67. Thereafter, Kee and Seto should pay Tong/Fai the sum of HK$10,500 per month until the delivery of vacant possession of the same to him.

Ground Floor of the Village House

67.The position of the ground floor of the Village House is different. It is co-owned by Kee and Tong/Fai. After the disputes between Seto and Ngan, Tong/Fai and Ngan opted to move out. They were not forced out or ousted by Kee and Seto.

68.Although I accept Tong/Fai and Ngan’s evidence that Kee and Seto did change the password and locked the door of the ground floor of the Village House, there is no evidence that after they opted to move out, they have ever attempted to move back or tried to gain access to the ground floor but were denied such access. Unity of possession precluded such claims otherwise than in cases of ouster (including “constructive exclusion”) as in domestic violence cases, or where an operative agreement rendered the co-owner in occupation an agent or bailiff so as to come under a duty to account to the other. (See Cheung Lai Mui v Cheung Wai Shing [2021] HKCFA 19.)

69.Kee did admit that he had changed the password to the lock but he told Tong/Fai and Ngai of the new password. Ms Lau submitted that based on the fact that Kee and Seto were in sole occupation of the entire Village House, there is no special reason why they need to change the password of the door to the ground floor. However, I am of the view that there can be good security reasons to change passwords occasionally or even frequently. I do not accept that change of password to the ground floor during or after Tong/Fai and Ngan’s move out amounts to exclusion. The fact remains that there is no attempt by Tong/Fai and Ngan to move back or to utilize the ground floor of the Village House.

70.Hence, I dismiss Tong/Fai’s claim for mesne profits for the ground floor of the Village House.

DISPOSITION

71.By reason of the analysis of the evidence as set out above, save and except the claim for damages or mesne profit for the ground floor of the Village House, I agree with the answers proposed by Tong/Fai at paragraph 124 of his closing submissions.

72.Accordingly, I make the following orders:

(1)  A declaration that Tong/Fai is the legal and beneficial owner of the first floor of the Village House;

(2)  A declaration that Tong/Fai and Kee are co-owners, in equal share, of the ground floor of the Village House;

(3)  An Order that Kee and Seto do deliver up vacant possession of the first floor of the Village House to Tong/Fai forthwith.

(4)  An Order that Kee and Seto do pay the sum of HK$1,203,069.67 and as from 25 February 2022, a monthly sum of HK$10,500 until the delivery of vacation possession of the first floor of the Village House to Tong/Fai.

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

(1)  In relation to Kee and Seto’s claims, as they are dismissed, Kee and Seto should pay the costs of and occasioned by such claims to Tong/Fai and Isabel, to be taxed on a party to party basis, if the parties cannot agree.

(2)  In relation to Tong/Fai’s counterclaims, he is entitled to 80% of his costs of and occasioned by such counterclaims to be taxed on a party to party basis, if the parties cannot agree.

74.Finally, I thank all counsel for their helpful assistance to this court.

Mr Paul Wong instructed by Cheng, Chan & Co. for the Plaintiffs (by Original Action) and Defendants (by Counterclaim)

Ms Lorinda Lau instructed by Chow Wong & Lawyers (assigned by DLA) for the 1^st Defendant (by Original Action) and the Plaintiff (by Counterclaim)

Mr Forest Fong instructed by Cheung & Yeung, Solicitors for the 2^nd Defendant (by Original Action)