Ho Yat Wah v. Chung Hang Him, The Sole Executor Named in the Will of Madam Chan Yuk Mui, Deceased

Case No.CACV 149/2022[2024] HKCA 378[2024] 5 HKC 47

Court

Court of Appeal

Date09 May 2024

Judge—

Case Document

100%Judiciary

CACV 149/2022, [2024] HKCA 378

On appeal from [2019] HKCFI 3041

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 149 OF 2022

(ON APPEAL FROM HCA NO. 731 OF 2014 )

____________________

BETWEEN
	HO YAT WAH (何日華)	Plaintiff
	and
	CHUNG HANG HIM (鍾衡謙), THE Sole Executor named in the Will of Madam CHAN YUK MUI, deceased	Defendant

____________________

Before:

Hon G Lam JA, Hon Chow JA and Hon Anthony Chan J in Court

Date of Hearing:	11 April 2024
Date of Judgment:	9 May 2024

__________________

JUDGMENT

__________________

Hon Anthony Chan J (giving the Judgment of the Court) :

1.This is the Plaintiff’s appeal against the Order of B Chu J (“Judge”) dated 22 March 2022. The Order was made pursuant to a Judgment of the same date (“Judgment”) by which all but one of the Plaintiff’s claims against the estate of Madam Chan Yuk Mui (“Estate”) were dismissed. Various counterclaims of the Defendant (on behalf of the Estate) against the Plaintiff were upheld by the Judge, namely: (i) payment of HK$1,944,025.44 (“Sum”); (ii) vacant possession of a property in Parc Oasis, Kowloon (referred to as “Property 2” in the Judgment); and (iii) mesne profits from December 2012 to 31 May 2021 in the sum of HK$2,049,000, and from 1 June 2021 until delivery up of vacant possession of Property 2 at a monthly sum of HK$21,000 less any rates paid by the Plaintiff. The costs of the action were awarded against the Plaintiff.

2.The Defendant has filed an Amended Respondent’s Notice. In addition to advancing various additional or alternative grounds in support of the Judgment, there is a cross-appeal in respect of the interest for the Sum and on the mesne profits, as well as an account of the proceeds from the sale of a property in Willie Court, Kowloon (“Property 7”) and payment of the sum found due with interest[1].

Background

3.It will be seen below that the scope of this appeal is confined. Therefore, the factual background can be succinctly stated. In his action, the Plaintiff claimed for the return of various landed properties and assets held on trust for him by Madam Chan (“Chan”). It was alleged that the trust arose out of an oral agreement made between the Plaintiff and Chan in January 1990 (“Trust Agreement”) pursuant to which Chan agreed to hold assets owned by the Plaintiff as well as assets to be acquired by him for his sole benefit.

4.The trust properties claimed by the Plaintiff included 7 landed properties, jewellery worth over HK$3.8 million, investment in excess of HK$1.6 million and cash of over HK$21 million.

5.The landed properties were referred to in the Judgment as “Property 1” to “Property 7”. Property 1 (acquired in 1992) and Property 5 (acquired in 1996) were converted into connecting units in which Chan and her family were residing at the time of her death. Property 3 was a car parking space at Parc Oasis. Property 4 was sold in 2010. Properties 6 and 7 were sold in 2012. At the trial, due to the lack of writing for the Trust Agreement, the Plaintiff’s claim on these properties was based on common intention constructive trust and/or resulting trust[2].

6.This action was brought in April 2014, after Chan had passed away on 12 November 2012. Chan was first diagnosed with cancer in October 2007. In December 2010, it was discovered that the cancer had recurred. Chan then underwent medical treatment and her condition gradually worsened.

7.The Defendant (Chan’s son) denied the existence of any trust arrangement between the Plaintiff and Chan. He maintained that the landed properties and other assets were acquired by Chan with her own money and the money given to her by the Plaintiff as gifts because of their romantic relationship. As indicated above, various claims were made by the Defendant pursuant to his counterclaim.

8.For the trial of the action, 6 main issues were identified. Relevant to this appeal are issues (1) What was the relationship between the Plaintiff and Chan; (2) Was there the alleged Trust Agreement in about January 1990; (3) Was there a common intention constructive trust and/or a resulting trust; and (5) Whether the Defendant is entitled to his counterclaim in respect of the Loan of HK$2 million (“Loan”). It is right to say that the trial was primarily one of factual disputes.

The Judgment

9.There were factual and handwriting expert witnesses and the trial took 13 days. Save for a claim for medical expenses paid on behalf of Chan, each of the Plaintiff’s claims was dismissed by the Judge. The reasons were set out in the Judgement (107 pages) in which the evidence and the issues were analysed with care.

10.In rejecting the Plaintiff’s case, the Judge found that there was a romantic relationship between the Plaintiff and Chan, which started in early 1990s. Chan was the Plaintiff’s mistress[3]. The Judge rejected the Plaintiff’s case that the text messages (“Text Messages”) between him and Chan, which evidenced a close and intimate relationship between them, were fabricated[4].

11.In respect of the Trust Agreement, the Judge rejected the Plaintiff’s evidence of his reason or purpose of creating the same as not credible[5]. The Judge found that “there was no sufficient evidence of there being the alleged oral Trust Agreement or any trust agreement or express agreement entered into between [the Plaintiff] and [Chan] in about January 1990, as alleged by [the Plaintiff], or at any time thereafter”[6].

12.As regards the common intention constructive trust and/or resulting trust, the Judge was critical that the Plaintiff’s case had undergone a metamorphosis and was confusing, as there were no pleadings as to any common intention constructive trust and/or resulting trust, nor any particulars as to how the trusts arose[7].

13.In the section of the Judgment covering the trust issue[8], the Judge considered in detail, inter alia, Chan’s financial circumstances, the financial commitments relating to the purchase of the 7 Properties and whether the Plaintiff had made any payment for the purchases.

14.The Judge also analysed 3 documents executed by Chan which were said by the Plaintiff to support his case, namely, (i) a Specific Power of Attorney dated 13 September 2012 in favour of the Plaintiff for handling the sale of Property 7 (“SPoA”); (ii) a General Power of Attorney dated 4 October 2012 in favour of the Plaintiff under s.7 of the Power of Attorney Ordinance, Cap 31 (“GPoA”); and (iii) a confirmation letter dated 9 October 2012 (“Confirmation Letter”) which confirmed that Properties 2, 3 and 5 were purchased with money provided by the Plaintiff and that Chan only held them as trustee for him.

15.The Judge found that, apart from her salaries, Chan had other financial resources[9]. Also, there were gifts of money and money for general spending given by the Plaintiff to Chan. The Judge held that there was no sufficient evidence that the Plaintiff ever intended any repayment or accounting from Chan[10] in respect of such monies.

16.The Judge rejected the Plaintiff’s case[11] that the 7 Properties were purchased with his own funds and in some instances with the aid of mortgage. The Judge found no sufficient evidence that the initial down payments and other expenses for the purchases were paid by the Plaintiff or originated from him[12], and similar findings were made in respect of the mortgage repayments[13].

17.In respect of the SPoA and GPoA, the Judge noted that they would not give rise to any beneficial interest in Chan’s properties or assets or, in the event of a sale, any entitlement to the proceeds[14].

18.As regards the Confirmation Letter, the Judge had the evidence of Mr Lai (“Lai”), a cousin of the Plaintiff and a solicitor. Lai gave evidence for the Plaintiff. His evidence covered, inter alia, the circumstances under which he prepared the Confirmation Letter pursuant to Chan’s instructions. Despite expressing considerable reservations on Lai’s evidence, the Judge was “prepared to give [Lai] the benefit of doubt and find that [Chan] did sign the [Confirmation Letter] in his presence”[15].

19.However, the Judge, having considered a number of features in the evidence, was “not satisfied that [Chan] was fully aware of the contents of the [Confirmation Letter] and/or that it reflected her true intention”[16].

20.On the counterclaim of the Loan, the Judge rejected the Plaintiff’s case that the HK$2 million was the balance of proceeds of the sale of Property 6, which was returned to him by Chan pursuant to the Trust Agreement. The Judge found that the Text Messages clearly showed that the Plaintiff was asking Chan for the Loan which she had agreed, and the funds came from one of Chan’s bank accounts[17].

Grounds of appeal

21.There are 9 grounds of appeal, which may be dealt with under 4 topics as reflected by the skeleton arguments of Mr Chang SC, who appeared with Mr Chen and Mr Yau for the Plaintiff :

(1)  The appropriate weight to be attached to the Confirmation Letter, and whether the Judge had wrongly reached a conclusion on the Trust Agreement without regard to the Confirmation Letter (Grounds 1 and 7 of the Grounds of Appeal);

(2)  Whether Chan had sufficient financial resources to fund the purchase of the 7 Properties (Grounds 3 to 5);

(3)  Whether the Judge had erred in her approach with regard to the “financial contribution” of the Plaintiff (Ground 6);

(4)  The Judge’s finding on the Loan (Ground 2).

22.Grounds 8 and 9 add nothing to Grounds 1 to 7 and were not separately addressed in Mr Chang’s submissions.

23.It is readily apparent that in this appeal the Plaintiff does not seek to challenge the Judge’s findings against him on the other assets allegedly held under the Trust Agreement, eg, the HK$21 million cash.

24.The Judge made no separate award for the Loan because it was subsumed under the Sum. The counterclaim included, inter alia, 2 sums of money, namely, the Loan and a cash withdrawal of HK$1,162,662.44 made by the Plaintiff from Chan’s bank account with the use of the GPoA. The counterclaim over both sums was upheld by the Judge. In awarding the Sum, the Judge took into account the medical expenses which should be repaid to the Plaintiff by the Estate[18]. There is no appeal over the sum of HK$1,162,662.44.

The Confirmation Letter (Grounds 1 and 7)

25.The evidence concerning the creation of the Confirmation Letter was set out in the Judgment, [223], [224] and [232], which may be summarised as follows. On about 9 October 2012, the Plaintiff and Chan attended Lai’s office. Chan was in a wheelchair which was pushed by the Plaintiff. She looked tired and weak. She said to Lai that she wanted to sign something in order to transfer back to the Plaintiff all the landed properties and assets held by her for him. She referred to Properties, 2, 3, 5 and 7 as being held by her for the Plaintiff. Property 7 was being sold and under the SPoA, the Plaintiff could receive and deal with the proceeds directly.

26.Lai then advised Chan that it was undesirable to transfer the landed properties to the Plaintiff due to the incurrence of substantial stamp duty. He advised Chan to make a will to bequeath the properties and assets to the Plaintiff, but Chan rejected the idea. Chan repeated her desire to sign something to show that the properties and assets belonged to the Plaintiff. Lai told her that it would be difficult because a declaration of trust would also attract stamp duty. The Plaintiff then told Lai that he should go along with Chan’s wish. Lai then suggested signing a confirmation letter although its legal effect might be questioned. The Plaintiff agreed and Lai then prepared the Confirmation Letter.

27.Lai said that when he explained the contents of the Confirmation Letter to Chan, the Plaintiff had stepped out of the room. However, Lai asked the Plaintiff to return to the room to witness the signing of the Confirmation Letter by Chan.

28.Mr Chang submitted that this document plainly supported the Trust Agreement, and in turn, the existence of a common intention of the Plaintiff and Chan.

29.Although Mr Chang referred to Ming Shiu Chung v Ming Shiu Shum (2006) 9 HKCFAR 334, [84]-[91], for the proposition that a party is bound by the contents of a document he signed irrespective of whether he read it or understood its contents, Mr Chang did not suggest that the Confirmation Letter was a legally operative document and Chan was bound by the obligations it created. Indeed, no cause of action was pleaded in reliance on the Confirmation Letter. Mr Chang’s submission was that the document corroborated the Plaintiff’s case on the Trust Agreement.

30.First and foremost, the evidence surrounding the Confirmation Letter was carefully considered by the Judge at length. The Judge referred to a number of unsatisfactory elements about this piece of evidence[19] :

(1)  The Judge was unable to understand why Lai would suggest to Chan to sign the Confirmation Letter when its legal effect was, in his view, questionable. Further, according to Lai’s evidence, the signing of the Confirmation Letter was apparently to placate the Plaintiff;

(2)  If Properties 2 and 5 belonged to the Plaintiff as stated in the Confirmation Letter, there was no reason for Chan to redeem those properties and pay off the loans and overdraft for which they were pledged shortly before the Confirmation Letter was signed (Chan gave instructions to Lai for the redemption on about 25 September 2012[20]). Lai did not seek clarification from Chan in that regard;

(3)  Lai’s evidence was that both the Plaintiff and Chan, one of whom was his relative and the other his friend, were his clients. There was more reason for cautiousness on Lai’s part and he should have been aware of the potential conflict of interest between Chan and the Plaintiff;

(4)  The SPoA would not give the Plaintiff any entitlement over the proceeds of sale of Property 7. There was no evidence that Lai had advised Chan accordingly. Nor was Property 7 or its sale proceeds mentioned in the Confirmation Letter;

(5)  Lai’s evidence was that in about the end of August 2012, Chan called him and told him that she wanted to make a will. The matter was not taken further due to Chan’s ill health[21]. There was no explanation why Chan wanted to make a will less than 2 months ago, but refused to agree to Lai’s advice to bequeath the properties and assets to the Plaintiff by a will;

(6)  Lai was seemingly unconcerned whether Chan was in a condition to sign the Confirmation Letter despite his observation that she was looking tired and weak. We would point out that, on Lai’s evidence, he had previously told the Plaintiff that Chan would need a doctor to certify her mental capacity for the purpose of making a will[22];

(7)  Instead of the Plaintiff, there should be other independent persons from Lai’s firm who could have witnessed the signing of the Confirmation Letter;

(8)  There was no interpretation clause in the Confirmation Letter despite Lai’s evidence that he had explained the contents of the Confirmation Letter to Chan. This was to be contrasted with the SPoA and GPoA both of which contained an interpretation clause. This Court was informed that there was no evidence on whether Chan could understand English;

(9)  Chan had signed 4 documents at Lai’s office in less than 2 months of each other and shortly before her death, namely, the SPoA, an Authorisation Letter in favour of Lai’s firm for the redemption of Properties 2 and 5[23], the GPoA and the Confirmation Letter. The Judge took the view that the documents evinced an inconsistency as to Chan’s true intention. In particular, the first 3 mentioned documents were inconsistent with the contents of Confirmation Letter;

(10)  Chan was re-admitted to hospital the day after the execution of the Confirmation Letter. According to the medical evidence, she was very weak;

(11)  The Confirmation Letter made no mention of Property 1 or the sale proceeds of Properties 4, 6 and 7, or the rest of the alleged trust assets, eg, the jewellery.

31.We agree with the Judge that the Confirmation Letter was only one of the many pieces of evidence which the Court had to evaluate in considering the common intention of Chan and the Plaintiff[24]. In our view, the Judge had considered the evidence with considerable care. It is trite that this Court would not disturb the factual findings of the court below unless the Judge had fallen into palpable error: see Wong Ka Yan Patrick v Cheung Ka Yu Nicole [2021] HKCA 3199, [21].

32.There is no basis to fault the Judge’s analysis of the evidence concerning the Confirmation Letter set out in para 30 above, save for sub-para (9). It appears that the Judge took the view that the other 3 documents were inconsistent with the Confirmation Letter because they did not have the effect of returning any properties or their proceeds to the Plaintiff, nor acknowledging the Plaintiff’s interest in any properties. We take the view that those documents would not assist in determining the common intention issue one way or the other. However, this minor wrinkle does not detract from the other findings made by the Judge.

33.On a proper analysis of the Confirmation Letter, it was not a weighty piece of evidence in the Plaintiff’s favour. It was made nearly 13 years after the Trust Agreement, and its contents were inconsistent with the Trust Agreement given that it only referred to Properties 2, 3 and 5. As the Judge had found, there was no sufficient evidence that those properties were purchased with the Plaintiff’s funds, contrary to the suggestion in the Confirmation Letter.

34.Further, the Text Messages, which were found by the Judge to be genuine, showed that the Plaintiff was (a) repeatedly requesting and begging (“索取乞討”) the Plaintiff for Property 2[25]; and (b) looking after the water leakage at Property 7 on Chan’s behalf[26]. Such evidence militated against the Plaintiff’s case that they were his properties.

35.Furthermore, shortly after the signing of the Confirmation Letter, Chan made a will with the help of another firm of solicitors. The Judge found that Chan had the testamentary capacity to execute the will. By that document, Properties 1, 2, 3 and 5 together with her residual estate were bequeathed to the Defendant. This constituted strong support for the findings of the Judge that Chan was not fully aware of the contents of the Confirmation Letter and/or that it did not reflect her true intention.

36.There is no reason for this Court to disturb the findings of the Judge in respect of the Confirmation Letter.

37.In respect of the criticism that the Judge had failed to take into account the Confirmation Letter in rejecting the Plaintiff’s case on the Trust Agreement[27], Mr Chang referred this Court to Mibanga v Secretary of State for the Home Department [2005] EWCA Civ 367, [24] and Bailey v Graham [2012] EWCA Civ 1469, [58] :

“… A proper consideration of the whole of his judgment demonstrates quite clearly that the judge did survey all the relevant evidence on a point before reaching his conclusion on it, the need for which was emphasised in Mibanga v Secretary of State of the Home Department [2005] EWCA Civ 367 [24].”

38.Firstly, the structure of the Judgment reflected the issues identified by the parties and set out in an agreed Scott Schedule[28]. Reading the Judgment as a composite whole, we do not believe that the criticism is made out.

39.Mr Li SC, who appeared for the Defendant with Mr Ah-weng and Ms Liu, referred this Court to R (MN) v Secretary of State for the Home Department [2021] 1 WLR 1956 (Eng CA), [108] :

“108 Whether a tribunal or other decision-maker has fallen into the ‘Mibanga error’ depends on an analysis of the reasoning in the individual case. Later cases have made clear that the question is one of form rather than substance: if it is evident that the tribunal has in fact taken the expert evidence into account as part of the primary assessment, it does not matter at what particular point in the decision it is specifically referred to. The point is well made at para 21 of the decision of the Asylum and Immigration Tribunal in HH (Ethiopia) v Secretary of State for the Home Department [2005] UKIAT 164:

‘there is a danger of Mibanga being misunderstood. Judgments in that case are not intended to place judicial fact-finders in a form of forensic straitjacket. In particular the Court of Appeal is not to be regarded as laying down any rule of law as to the order in which judicial fact finders are to approach the evidential materials before them. To take Wilson J's cake analogy, all its ingredients cannot be thrown together into the bowl simultaneously. One has to start somewhere. There is nothing illogical about the process by which the immigration judge in the present case chose to approach his analytical task.’

That passage was quoted with approval by Rix LJ at para 32 of his judgment in S v Secretary of State for the Home Department [2007] Imm AR 7 (see para 114 below). But the basic principle established by Mibanga remains important. It was succinctly summarised, and applied by this court in AM (Afghanistan) v Secretary of State for the Home Department(Lord Chancellor intervening) [2018] 4 WLR 78, where Sir Ernest Ryder SPT said, at para 19(a): ‘It is an error of approach to come to a negative assessment of credibility and then ask whether that assessment is displaced by other material.’ ”

40.With respect, it appears to us that the reference in R (MN) to “the question is one of form rather than substance” might well have been an inadvertent error. It should be a matter of substance rather than form, which is consistent with the ratio of the relevant cases.

41.Paragraph 95 of the Judgment referred to the Plaintiff’s reliance on, inter alia, the Confirmation Letter as a document signed by Chan in relation to the Trust Agreement.

42.Mr Li pointed out that the Judge’s finding at para 133 that there was no sufficient evidence of the Trust Agreement was prefaced with the reference to “[h]aving considered all the evidence and what has been stated above …”.

43.It would have been preferable for the Judge to refer these also to the findings set out in the later part of the Judgment on the Confirmation Letter. On the other hand, it is a point of substance whether the Judge had reached her conclusion on the Trust Agreement without regard to the Confirmation Letter. The Judgment has to be read as a composite whole. The criticism is not made out.

44.Secondly, the reliance on the Mibanga principle would not assist the Plaintiff unless the Confirmation Letter was a piece of material or weighty evidence in support of the Trust Agreement. It should not be overlooked that in Mibanga the evidence in question was a medical report which detailed the extensive injuries of the applicant on which he relied to support his asylum claim. In this case, as found by the Judge, the Confirmation Letter was not a piece of evidence which supported the Plaintiff’s case.

45.For these reasons, we are unable to agree with Grounds 1 and 7.

Chan’s financial resources (Grounds 3 to 5)

46.The starting point is that the 7 Properties were legally owned by Chan. The Plaintiff bore the burden to show that the beneficial interest differed from the legal ownership: see Stack v Dowden, [2007] 2 AC 432, [68]. Apart from the payment of medical expenses, the Plaintiff’s case was comprehensively rejected by the Judge, including his contention that he had paid for the Properties.

47.There was a substantial amount of evidence and submissions before the Judge on the financial resources of Chan, which were meticulously analysed by the Judge in conjunction with the financial commitments for purchasing each of the Properties. However, it is apparent from the Judgment that the evidence of Chan’s financial resources was incomplete (probably due to the passage of time). Indeed, there was no demur to Mr Li’s submission that the “financial picture of Chan’s income and assets [was] highly incomplete”.

48.It was submitted that the money for general spending and gifts of money from the Plaintiff to Chan referred to in the Judgment, [210], could not be used for the purchase of the Properties by reason of the timing of such payments. First, read in the context of [197] to [209] of the Judgment, the Judge was addressing the contention that various payments set out in Annex 3 to the closing submissions of the Plaintiff’s counsel[29] were made to Chan for payment of properties and assets held under the Trust Agreement[30]. Second, the submission ignored the evidence of Madam Ngaw (one of Chan’s best friends), who was accepted by the Judge as a reliable and credible witness, that Chan said to her that since the start of her relationship with the Plaintiff she was given money as maintenance and expensive gifts. Some of the gifts were shown to Ngaw by Chan[31]. Such evidence was hardly surprising in light of the relationship between the Plaintiff and Chan. There is no reason why the maintenance and gifts should not be regarded as part of Chan’s financial resources.

49.It must be remembered that the purpose of examining the financial resources of Chan was to see if she was unable to purchase the Properties with her means, which was described by the Judge as a recurring theme in the Plaintiff’s case[32].

50.We are not satisfied that the Judge had fallen into palpable error on the findings over Chan’s resources. Grounds 3 to 5 are therefore rejected.

Assessment of the “financial contribution” of the Plaintiff (Ground 6)

51.It is contended by the Plaintiff that the Judge erred in holding that there was a need for the Plaintiff to plead and/or prove that his payments or transfers to Chan related to a specific property. The finding on his relationship with Chan gave rise to a domestic context under which general financial and non-financial contribution to a relationship ought to be taken into account even if they might not be referable to specific properties in determining whether there was a common intention constructive trust. Mr Chang relied on, inter alia, Grant v Edwards [1986] Ch 638, 657A-B.

52.We agree with the Defendant that this is a surprising submission given the Plaintiff’s case that all the Properties were acquired with his money. His case was rejected by the Judge, and there was no finding that the Plaintiff had made any payment towards the purchase of any of the Properties.

53.In any case, this is not a fair criticism of the Judgment. The Plaintiff denied his relationship with Chan, and he advanced no alternative case of financial contribution in a domestic context. Hence, the Judge was never required to consider such an alternative case. Properly understood, the findings in the Judgment on the lack of linkage between the Plaintiff’s funds and the acquisition of any specific property[33] were made in the context of evaluating the Plaintiff’s case that he paid for the Properties.

54.Further, it is clear from the following dicta in Grant that there needs to be a common intention that the claimant should have an interest in the property. Then his financial and non-financial contributions made in reliance of such belief, which do not have to be referable to the property, would be taken into consideration in determining the ownership of the property :

“In many cases of the present sort, it is impossible to say whether or not the claimant would have done the acts relied on as a detriment even if she thought she had no interest in the house. Setting up house together, having a baby, making payments to general housekeeping expenses (not strictly necessary to enable the mortgage to be paid) may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant's belief that she has an interest in the house. As at present advised, once it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house …”

55.The Judge found no common intention on which the Plaintiff could rely upon. This ground has no leg to stand on.

The Loan (Ground 2)

56.The Plaintiff challenges the finding against him in respect of the Loan. The submissions turn upon the proper understanding of the relevant Text Messages. The Plaintiff submitted that the Judge had misread or misunderstood the same, leading to an erroneous conclusion. We disagree.

57.It is clear from the Text Messages that there was, prior to the Loan, another loan of HK$2 million granted by Chan to the Plaintiff (we were informed that the loan was made on 5 March 2012). It was repaid by the Plaintiff in tranches by 17 April 2012.

58.On 2 May 2012, the Plaintiff asked Chan for another loan of HK$2 million in the following terms: “… can you please return the HK$2 million tomorrow for emergency use?” (“明天還番200萬來應急好嗎?”). In reply, Chan said: “What return! It is a high interest loan …” (“咩還番呀,是借貴利”).

59.Mr Chang relied upon the use of the word “return” as militating against a loan. However, read in the context that the Plaintiff had just repaid a loan of HK$2 million to Chan, the use of that term simply suggested that he wanted to have the HK$2 million back for emergency use.

60.There is no basis to suggest that the Judge had misunderstood the evidence. There is no merits in Ground 2.

The cross-appeal

Interest

61.It is reasonably clear that the award of interest was overlooked by the Judge. It was claimed by the Defendant and no reason was given in the Judgment to reject the same.

62.In respect of the cross-appeal for interest on the Sum, the parties are in agreement that interest should be awarded on the Sum at prime plus 1% from the date of the counterclaim (4 June 2014) to date of Judgment and thereafter at judgment rate(s) until payment.

63.As regards interest on mesne profits, the Judge held that the rent-free occupation of Property 2 by the Plaintiff was with Chan’s knowledge and consent but such occupation ended upon Chan’s death on 12 November 2012. Accordingly, the Plaintiff was required to pay mesne profit of HK$2,049,000 for the occupation of Property 2 from December 2012 to 31 May 2021 and thereafter at HK$21,000 per month until delivery of vacant possession, subject to the deduction of rates paid by the Plaintiff from the date of Chan’s death[34].

64.The parties agreed that vacant possession of Property 2 was delivered by the Plaintiff to the Defendant on 30 June 2022. The calculation of mesne profits of HK$2,049,000 was based on the historical monthly market rent which Property 2 would have commanded, without any compensation for loss of use of the money. The loss of use is premised on the proposition that the rental income would have been generated on a monthly basis if not for the occupation by the Plaintiff. This is the basis of the Defendant’s interest claim.

65.Mr Chang relied on a trilogy of cases to support the contention that no interest ought to be payable on mesne profits because it would over compensate the Defendant. There cases were Persaud v Glenealy Mansion Ltd [1987] 1 HKC 112 (CA), 125D and 127C; Whitwham v Westminster Brymbo Coal and Coke Co [1986] 1 Ch 894, 899; and Trafigura Beheer BV v Mediterranean Shipping Co SA [2008] 1 All ER (Comm) 385 (Eng CA), [44]. Such reliance is misplaced.

66.Whitwham was the first case in time and it was referred to in both later cases. It was a case of trespass to land by tipping. The land owners’ contention that the proper measure of damages was the reasonable value of their land for tipping purposes was upheld by the court. The tipping value was assessed by the official referee on the basis of 500l. per acre. Interest was excluded by the court from the computation of damages. It was held that: “[t]o give interest would be to treat the plaintiffs as having invested their damages at interest in the hands of the defendants”. However, it is important to bear in mind that the tipping value was assessed as of the date of the official referee’s special report.

67.Persaud was a mesne profit case. However, in that case the mesne profits were assessed on the basis of the letting value of the property as of the date of judgment to be applied for the period where the property was occupied by the trespasser (see 125C-D and 127B-C). One can see that the computation of mesne profits in this case contained an element of compensation for the loss of use of the “notional rent” because the entire period of wrongful occupation was assessed at the monthly rent as of the date of judgment (the evidence was that the letting value had increased over time).

68.Trafigura Beheer was a case by cargo-owners against defendant shipowners on breach of contract of carriage. It was held by the English Court of Appeal that it was wrong to award interest on an award of the value of the goods at the date of judgment. The reason being that although the claimants did not have the money when they expected to have it, they were compensated for that by the increase in the value of the cargo. To award interest would therefore constitute a double benefit ([43]).

69.These cases are distinguishable because in the present case the calculation of mesne profits did not contain an element which might reflect the loss of use of the “notional rent” which would have been payable monthly since December 2012. We see no reason why the Defendant should be deprived of his interest claim on the mesne profits.

70.In this case, the computation of the interest due on the mesne profits would be a complex exercise by reason of the lengthy period of wrongful occupation and the variation in rent and interest rate over time. Sensibly, the parties had expressed no disagreement with the proposal of this Court that in the event that this cross-appeal is upheld, the award of interest should be based on a broad brush approach, namely, one half of the total interest calculated with reference to the total rent payable and the interest payable thereon based on the prevailing prime rates plus 1%.

Account of the sale proceeds of Property 7

71.In respect of the account of the sale proceeds of Property 7, given that (a) the Plaintiff was a fiduciary under the SPoA granted to him to deal with the sale of Property 7 and (b) his admission that the sale proceeds were received by him, there is no reason why this relief should not be granted. We are inclined to agree with Mr Li that this was an inadvertent oversight by the Court below. We also uphold this cross-appeal.

Procedural matters

72.Finally, we wish to make 2 observations. Firstly, Mr Li had chosen to lodge 2 sets of written submissions in this appeal, one on the Defendant’s cross-appeal and the other in reply to the Plaintiff’s appeal. Where a respondent has chosen to lodge separate submissions on the appeal and on his cross-appeal, in order to avoid unnecessary duplication the submissions on cross-appeal should be confined to addressing the issues of that appeal.

73.Secondly, where there is an apparent oversight by the trial judge in dealing with a relief, the party seeking the same should have applied under the slip rule to have the matter considered by the judge instead of lodging an appeal.

Disposition

74.For the reasons given above, this appeal is dismissed. The cross-appeal is allowed and we make an order that :

(1)  Interest at prime plus 1% from 4 June 2014 to date of Judgment and thereafter at judgment rate(s) until payment be awarded on the Sum and be paid by the Plaintiff to the Defendant;

(2)  Interest be awarded against the Plaintiff in favour of the Defendant on mesne profits up to the date of Judgment to be computed in accordance with para 70 above and thereafter at Judgment rate(s) until payment;

(3)  There be an account of the sale proceeds of Property 7 and payment of sum found due by the Plaintiff to the Defendant with pre-judgment interest at prime plus 1% and thereafter at judgment rate(s) until payment.

75.The costs of this appeal and the Respondent’s Notice be to the Defendant with a certificate for 2 counsel.

76.We are grateful to counsel for their assistance.