Leung Yiu Man v. Chu Kuen
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HCA 1018/2021 [2024] HKCFI 2753 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1018 OF 2021 ________________________ BETWEEN
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________________________ J U D G M E N T ________________________ A. Introduction 1.In these proceedings, the Plaintiff claims a half interest in a flat registered solely in the Defendant’s name. It is undisputed that they had an affair in the past, though they never married. When the Defendant purchased the flat in 2004, the Plaintiff was single, and the Defendant was married. The Plaintiff contributed some money towards the purchase price, though the exact amount is disputed. The Plaintiff now asserts that, at the time of purchase, both parties had a common intention to share ownership of the flat, which was bought for investment purposes. The Defendant denies this, stating that the Plaintiff’s financial contributions were gifts made out of love and affection, and that the flat was intended for her own occupation in old age if necessary. Consequently, the Plaintiff commenced the present proceedings against her. 2.My finding is that there was no common intention between the parties as alleged by the Plaintiff. Additionally, I reject the Plaintiff’s alternative claim that he has an interest in the flat based on a resulting trust, which he argues arises from his contribution towards the purchase price. The reasons for these conclusions are explained below. 3.In this case, as in other cases on common intention construction trust, context is everything. Hence facts I should start with. Below I shall refer to the Plaintiff as “Leung” and the Defendant as “Chu”. B. Facts which are not disputed 4.The following facts are not disputed by the parties:
C. Questions for determination 5.The questions for determination are obvious, as formulated by Leung’s counsel:
6.In the Statement of Claim (as amended on 15 February 2023), Leung pleaded and defined the Common Intention as follows:
7.The Flat is registered in the sole name of Chu as owner. Leung asserts that he has beneficial interest in it, by reason of the Common Intention or alternatively a resulting trust in shares which are proportionate to Chu’s and his respective contributions to the purchase price (the “Resulting Trust”)[1]. As such, he takes up the burden to prove the Common Intention or the Resulting Trust. 8.Chu’s counsel proposes 25 issues for the Court to resolve. However, I find it unnecessary to address each one. The proposed issues encompass almost every fact pleaded in the Defence (re-amended on 7 March 2023). As will be elaborated upon in the legal principles discussed below, considering the question of a common intention constructive trust and the ancillary possibility of a resulting trust necessitates a holistic, rather than piecemeal, approach. Over-dividing the issues risks losing sight of the broader context. 9.Therefore, it is unnecessary for the Court to make definite findings on peripheral issues such as whether Leung paid approximately 90% of their expenses since around 2003, whether he bought Chu gifts, or whether he unsuccessfully searched for Chu at a restaurant owned by her friend between March and July 2020, as proposed by Chu’s counsel. Delving too deeply into these details would distract the Court’s attention from the determinative issues at hand. D. Credibility of Witnesses 10.Other than Leung and Chu, the parties did not call any witness. I have taken into account that the incidents occurred more than 20 years ago. It is understandable that their memories of the details might be less vivid. Therefore, slight inconsistencies and deviations from assertions in witness statements will not automatically render their evidence unbelievable. 11.Nonetheless, I do not find Leung to be a credible witness. His evidence is unreliable. Where his testimony conflicts with Chu’s evidence, I prefer Chu’s account. I will explain the reasons below. 12.First, during cross-examination, Leung often remained silent for 10 to 30 seconds after a question was posed, appearing to ponder the question. He did not explain these delays. On some occasions, he did not answer at all, despite prompting from Chu’s counsel and the Court, necessitating the repetition of the question. Leung did not exhibit the demeanour of a forthcoming witness. 13.Second, in many respects, Leung’s oral evidence contradicted his witness statements, which he had adopted under oath as his evidence in chief[2]. 14.Third, some of Leung’s oral evidence was inconsistent with or different from his pleaded case.[3] 15.Fourth, notably, on key topics, Leung retracted from his previous answers without good explanation during questioning. 16.For example, in paragraphs 10 and 14 of his witness statement, Leung alleged that he borrowed two sums of money, $112,900 and $350,000, from his mother and his mother and elder brother, respectively, to contribute towards the purchase price. Initially, Leung confirmed this. However, when asked why he needed to borrow the money and whether he had meagre earnings, he retracted, claiming he had savings and the money was his own. When paragraph 10 of his witness statement was specifically referred to, he pondered for a while and retracted again, stating that the money was indeed borrowed from his mother and elder brother, and that even though he had savings, he could still borrow from them:
Leung changed his evidence twice within a few questions. Coupling with the pauses, Leung did not behave as a truthful and straightforward witness. 17.On another occasion, Leung initially confirmed Chu had suggested purchasing a property for investment. However, during cross-examination, when asked why Chu would suggest this to him if she did not know his financial status, Leung retracted his confirmation. Contrary to his pleaded case and witness statement, he then claimed that it was he, not Chu, who had made the suggestion. Chu’s counsel then referred Leung to paragraph 6 of his witness statement, where he had stated that Chu suggested purchasing the property together for investment. When asked if paragraph 6 was incorrect, Leung initially agreed but then paused and changed his evidence again, stating, “It was written correctly.” Upon further clarification, he confirmed that it was Chu who had made the suggestion:
18.During re-examination, Leung’s counsel asked, in a leading manner, whether Leung understood the question. Leung stated that he understood the question but had misunderstood it.
19.The questions put to Leung were clear and simple. It was only when his answers were challenged or contradicted that Leung retracted and changed his evidence. Hence this Court infers that whenever Leung sensed that his answer was detrimental to his case, he swiftly changed or retracted it. 20.For the above reasons, I find Leung to be an unreliable witness. His evidence is generally incredible. 21.In contrast, Chu was much more forthcoming during cross-examination. She provided her answers straightforwardly. She readily accepted matters that she did not know or could not recall. E. Common Intention E1. Legal principles 22.The applicable legal principles are agreed. It is well set out by Madam Recorder Sit SC in Woo Tat Huen v Lee Wai Ping [2021] HKCFI 576, §§42-47:
23.Of particular relevance to the facts of the present case, in assessing the probable existence of a constructive trust or resulting trust, holistic consideration of the context is more important than arithmetical calculation, see the English House of Lords in Stack v Dowden [2007] 2 AC 432 at §§69-70 per Baroness Hale of Richmond:
24.In essence, I should consider all the circumstances of the present case to discern the true intention of Leung and Chu. Specifically, I need to determine whether the Flat was purchased as a potential residence for Chu in her old age, as she claims, and whether the money advanced by Leung was a gift to Chu motivated by love and affection. Alternatively, I must decide whether the Flat was purchased as an investment with the intention of equal ownership, as Leung alleges. E2. Context of this case 25.Having reviewed the evidence adduced by both parties, the following matters are of particular concern in the context of this case:
E3. Chu’s Registration as the sole owner 26.What happened at the time when the Flat was purchased? Why was the Flat only registered in Chu’s name? There is no written agreement between Leung and Chu. Therefore, in determining whether Leung has discharged the burden of proving the Common Intention, the Court should start by assessing the inherent probability of Leung’s case based on his testimony and the circumstantial evidence. 27.First, Leung did not provide a coherent explanation in his pleadings for why, despite allegedly owning a half interest in the Flat as an investment, he was excluded from being a registered co-owner with Chu. 28.In Leung’s Amended Statement of Claim (as quoted in paragraph 6 above), the first element of the Common Intention was that the property would be registered in Chu’s sole name. However, he did not explain why, if the Flat was purchased for equal investment[4], it was agreed to be registered solely in Chu’s name. He did not plead whether he discussed this arrangement with Chu at the time of reaching the Common Intention. Nor did he explain why he would agree to an arrangement that afforded him, as a co-investor, less protection. These are material facts which should have been pleaded. The absence of such pleas casts doubt on the truthfulness of Leung’s case, making it implausible and inherently improbable. 29.In attempting to address Chu’s plea in the Re-Amended Defence – that had there been a Common Intention, the Provisional Agreement would have been signed by both Leung and Chu[5] – Leung, in his Amended Reply[6], made two claims: first, on the night before choosing the Flat, around 11pm, Chu represented to Leung that since Leung was not her direct relative, his name could not be registered as a co-owner (the “Representation”); and second, that due to his limited education (only up to secondary three) and in reliance on the Common Intention, Leung did not investigate the truth of the Representation and agreed the Flat be registered in Chu’s sole name. 30.I have grave doubts about this explanation. The content of the Representation is obviously false. Leung claimed it was given after the Common Intention was reached, but he did not explain why or how the Representation came up. If the Common Intention had already been reached, there was no reason for Chu to make the Representation to Leung. It was not Leung’s case that he asked Chu why the Flat should be registered in Chu’s sole name. Even assuming Leung, due to his limited education, accepted the truthfulness of the Representation, it is not believable that he would rely on the Common Intention (as he pleaded) to avoid investigating whether the Representation was correct. Leung’s plea suggests that, relying on his earlier agreement to Chu registering the Flat as the sole owner, he agreed not to investigate the Representation and continued to accept Chu registering the Flat in her sole name. Initially, he did not plead why he accepted the Common Intention. All these pleas are inexplicable, cannot be understood, and hence, cannot be believed. 31.Second, and further, Leung’s said pleaded case is inconsistent with his witness statement and oral evidence. The “common intention” defined in the witness statement is not the same as the Common Intention defined in the Amended Statement of Claim[7]. In Leung’s first witness statement, he provided evidence on the common intention as follows:
Leung stated in his witness statement that the “common intention” was agreed only after Chu’s Representation that only direct relatives could be co-owners. As submitted by Chu’s counsel, this raises doubts about when and what the Common Intention was. During cross-examination, the following questions were asked of Leung:
32.I accepted Chu’s counsel’s submission that Leung’s pleaded case regarding when they reached the Common Intention that the Flat was to be registered in Chu’s name contradicted his averment in his witness statement and his testimony. 33.With this serious confusion as to the contents of the Common Intention, I cannot be satisfied that Leung has discharged his burden of proof of its existence. E4. Leung’s failure to question Chu’s Representation for 16 years 34.It was not until about 2019 – 16 years after signing of the Provisional Agreement in 2003 – that Leung discovered that Chu’s Representation was incorrect. This realization came when his family’s residence was sold and he consulted a lawyer:
35.The naivety and inconsistency displayed in Leung’s evidence is, in my view, appalling and hardly believable. 36.According to his witness statement, Leung accepted Chu as the sole registered owner of the Flat based on Chu’s Representation. This Representation was evidently untrue. Leung claimed ignorance due to his limited education. However, verifying whether a non-direct relative, like a friend such as Leung, could be registered as a co-owner, was a simple task. The falsity of the Representation was easily discoverable. This was highlighted during Leung’s cross-examination:
37.Leung repeatedly asserted that he believed Chu, which was his sole reason. Despite this, it was pointed out to him that he could record his agreement with Chu in writing to protect his rights. Specifically, he could have recorded in writing his contribution of $550,800 towards the Flat’s purchase price (as he alleges). He stated he did not, again citing his trust in Chu as the reason. “ Question: 你之前有冇要求過做任何信契 (trust deed)？
38.When he admitted that he did not enquire with anyone on the accuracy of the Representation, not even when he personally attended before a solicitor to sign the fresh mortgage in favour of Hang Seng in 2010. Nonetheless, he conceded that Chu could have been wrong on what she told him. 39.He was also asked whether his limited education had anything to do with his trust in Chu. He said he could not say:
40.He could not explain why he did not make any enquiry for 16 years. He also did not explain what then prompted him to ask the lawyer about the Representation when his own residence was sold in 2019. Neither were these questions clarified during re-examination. 41.From another perspective, Leung’s case is that he paid a total sum of $635,276, of which $550,800 was for down payments and $84,476 for mortgage instalments, for the acquisition of the Flat[8]. He claims that his contribution towards down payments was much more than Chu’s. If this were so, it begs the question why he, as the larger contributor, was not registered as the sole owner. He answered that he discussed this with Chu but decided to give the registered ownership to Chu as he was busier and trusted her:
Leung’s answer is perplexing because this was the first time he mentioned discussing the issue of registering in his name instead of Chu’s. Clearly, this allegation is relevant to the Common Intention, but it was not mentioned in his pleadings nor his witness statements. He did not explain this omission, nor was it clarified in re-examination. 42.Therefore, in my view, Leung’s evidence is perplexing, inexplicable, messy, self-contradictory, and cannot be believed. 43.Lastly on this topic, the fact that only Chu entered the draw[9] as a prospective buyer adds weight to her case that the Flat was not purchased for joint investment with Leung. As submitted by Chu’s counsel, if the Flat had been intended for joint investment, there was no reason why Leung would not have also entered the draw as a prospective buyer, at least to increase the chances of success. This aligns Chu’s evidence[10] that since she wanted to buy a flat for her own occupation in her old age, especially given her poor relationship with her husband at that time. E5. Leung’s absence of any complaints against the falsity of Chu’s Representation 44.Leung repeatedly stated to the Court under oath that he believed Chu. Sixteen years after, he discovered what Chu told him was incorrect – friends like him and Chu could indeed be co-owners of the Flat. Whether it was a deliberate lie or misinformation, he should have addressed it with Chu, even if he was not directly confronting Chu. When asked if he ever did so, he admitted he did not even mention it to Chu:
When asked why he did not raise this issue with Chu, he responded that it was because his residence was being purchased, and he wished to buy Chu’s share. This was no explanation. The sale of his residence and his intention to purchase Chu’s share cannot explain why he did not raise the issue of misrepresentation with her. When this was put to him, he simply agreed and did not explain further, nor was this clarified in re-examination. The evidence is bewildering. 45.Leung evidence becomes even stranger and less believable due to his complete lack of complaint even after his relationship with Chu turned sour. The situation became so confrontational that Leung went to Chu’s residence and displayed a banner outside that read “首譽六號屋 騙人血汗屋”, and a sheet of paper filled with accusations of Chu cheating him out of his flat[11]. Despite this, Leung never mentioned Chu’s misrepresentation, not in his WhatsApp communications[12] with Chu nor anywhere else. Given Chu’s Representation was crucial to Leung’s agreement for Chu to become the sole registered owner of the Flat, it would be expected that he would have brought it up if his case were true. 46.In conclusion, I find that Chu did not make the Representation to Leung. E6. The financial relationship between Leung and Chu 47.The financial relationship between Leung and Chu did not suggest that they were conducting an investment on an equal share basis, for the following reasons. 48.First, regarding the financial background, Leung’s evidence[13] stated that around 2004, he worked as an electrical maintenance worker with a monthly income of $10,000. He lived with his parents, elder sister, and younger brother, contributing $3,000 to $5,000 per month for household expenses. He also invested in blue chip stocks, earning a few thousand dollars in interest. Notably, he mentioned that Chu’s financial capability was much better than his. He further emphasized[14], almost exclamatorily[15], that a monthly mortgage contribution of $3,000 was significant, not to mention the additional costs for the deposit, down payment and legal fees when purchasing the Flat. 49.Given Leung limited means, if Chu had indeed suggested buying the Flat for investment on an equal basis, and considering the financial strain of regular mortgage contributions along with the deposit, down payment and legal fees, it is unlikely that Leung would have agreed. However, in his witness statement[16], he claimed that when Chu proposed the idea, he found it feasible and reached a Common Intention with him. This makes his evidence appear inconsistent. 50.Second, before the Flat was purchased, Leung recalled[17] that on 11 May 2004, he lent $90,000 to Chu to pay off her credit card debt. He admitted during cross-examination that they were already in a romantic relationship at that time. He did not mention that the money was lent at Chu’s request, nor was there any discussion on the terms of the loan, particularly the date of repayment. According to Leung’s own evidence, it was only in 2011 that he requested Chu to repay the loan. Given that $90,000 was ten times his monthly income and Leung knew Chu was financially more capable than him, his willingness to lend her the money indicates that he was infatuated with her, as submitted by Chu’s counsel. 51.Third, during cross-examination, Leung admitted that Chu had sufficient money to purchase her own property. Therefore, there was no need for Chu to ask Leung to buy the Flat jointly. Leung explained that although Chu had money, she wanted to invest together with him. This is hardly believable because, as mentioned earlier, Leung admitted that Chu did not know his financial status. Thus, there is no reason why Chu would want to join Leung in the purchase.
52.Fourth, right from the beginning of the Flat purchase, even according to Leung’s case, the respective contributions of Leung and Chu were not equal, contrary to the alleged Common Intention that each would contribute half of the purchase price. According to Leung’s evidence[18], when the Flat was purchased, he contributed $550,800 towards the deposit, down payment and legal fee and other expenses, whereas Chu only contributed $195,470. Leung explained[19] this by stating that Chu, due to insufficient savings, requested him to pay more deposit, promising the difference would be offset during the down payment, to which he agreed. However, Leung did not mention that this offsetting was ever done. Additionally, there is no evidence that Leung had ever requested Chu to repay the difference. 53.For completeness, regarding payments of the deposit, down payment, legal fees and expenses, according to Chu’s case[20], Leung only contributed $350,000 instead of $550,800 he alleged. Despite claiming this was an investment, Leung did not produce any documents, such as copies of cheques, deposit slips, or receipts, to record any of his payments. Given that Leung bears the burden of proof, and coupled with my earlier finding that he is an unreliable witness whose evidence is generally incredible, I prefer Chu’s account over Leung’s in this regard. 54.Fifth, after the purchase was completed on 22 February 2006, Leung’s contributions were inconsistent with his allegation that he and Chu agreed to contribute equally towards mortgage instalments and other expenses. Pursuant to the Common Intention, if true, both Leung and Chu were committed to paying the mortgage instalments and other expenses of the Flat in equal shares. However, even according to Leung’s own account, the contributions he and Chu made were insufficient, and he had defaulted on too many occasions – so frequently, in fact, that it casts doubt on whether Leung truly regarded himself as having an obligation to make regular contributions:
55.Sixth, regarding the expenses for repair and maintenance of the Flat, despite claiming in his witness statement that he paid such expenses in equal shares as requested by Chu from time to time[24], during cross-examination, Leung admitted that all the repair and maintenance expenses were paid by Chu. This admission came after he was referred to WhatsApp messages[25] between himself and Chu, where he asked Chu to outline the works and expenses, to which Chu responded with a detailed list, and he replied with his approval. This inconsistency between his witness statement and his oral testimony further underscores the unreliability of Leung’s evidence.
E7. Conclusion 56.For the above reasons, I reject Leung’s claim. There was no Common Intention reached between Leung and Chu as he alleges. Chu did not agree with Leung to purchase the Flat jointly in equal shares; she purchased it for her own purposes. F. Nature of Leung’s money given to Chu 57.I have concluded that Chu’s account is more credible and that Leung had indeed given $350,000 to Chu for her purchase of the Flat. The question now is: what is the nature or intention of this advancement? 58.Chu’s evidence[26] in this regard is:
59.Leung denied Chu’s account. 60.I accept Chu’s account, for the following reasons:
61.Therefore, I find that the money advanced by Leung to Chu for the purchase of the Flat was given out of love and affection for her. 62.Consequently, no resulting trust arises. Leung’s alternative claim of Resulting Trust is rejected. 63.Lastly, for completeness, I should mention that Leung relies on certain WhatsApp messages with Chu to argue that Chu has admitted he had interest in the Flat. In my view, this is a red herring. As submitted by Chu’s counsel, it was only in December 2019 that Leung first claimed to Chu that he owned half of the Flat, which she denied. However, as Leung threatened to disclose their relationship to Chu’s husband, Chu continued to communicate with Leung and acceded to some of his requests in hopes of settling the dispute. On 29 September 2020, she issued a cashier order for $1 million to Leung, hoping that he would agree to settle the dispute upon receiving the payment. Leung denied making threats. However, messages such as “已過了一個多星期黃太你未有遵守承諾妥善對待我們的糾紛，這樣我別無選擇再度拜訪你屋苑，奉勸一句你不知羞字怎樣寫都要想想黃生和你的小朋友感受。” clearly constitute serious threats. Therefore, Leung’s suggestion that Chu has admitted his claim out of such threats is nothing but a red herring. G. Overall Conclusion and Disposal 64.For the above reasons, the Plaintiff’s action is dismissed. 65.Costs should follow the event. I make an order nisi that the Plaintiff pay the Defendant’s costs of the action, including all reserved costs, to be taxed if not agreed. This order shall become absolute unless either party applies for variation within 14 days from the date of this judgment. 66.I thank counsel for their assistance.
Mr Yuen Siu Kei, instructed by TKC Lawyers, for the plaintiff Mr Victor K H Chiu, instructed by Au, Thong & Tsang, for the defendant [1] Paragraph 21A of the Amended Statement of Claim [2] In discussing the issues below, I will refer to several specific instances. [3] I will refer to several specific instances below. [4] As pleaded in paragraph 1 of the Amended Statement of Claim [5] Paragraph 7 of the Re-Amended Defence [6] Paragraph 4(f) & (g) [7] There has been no application to the Court to reconcile the inconsistency by amending the pleading or the witness statement. [8] Paragraph 38 of the Plaintiff’s closing submissions [9] The Flat was part of a new development then under construction called Indihome. Due to high demand, prospective buyers had to enter a draw to secure a unit. [10] Paragraphs 6, 10 and 15 of Chu’s witness statement [11] Hearing Bundle B, page 323 [12] Hearing Bundle B, tab 57 [13] Paragraph 3 of Leung’s witness statement [14] Paragraph 5 of Leung’s witness statement [15] The latter half of paragraph 5 of Leung’s witness statement reads: “即使本人當年與黃太有情侶的關係，但每月三千元左右的供款對本人而言絶對不是一個小數目，更遑論於購買樂悠居時要支付的訂金、首期及律師費呢！”. [16] Paragraph 6 of Leung’s witness statement [17] Paragraph 6(b) & (c) of Leung’s supplemental witness statement [18] Paragraph 17 of Leung’s witness statement [19] Paragraph 11 of Leung’s witness statement [20] Annex 1 to the Defendant’s closing submission [21] Paragraph 20 of Leung’s witness statement [22] Paragraph 22 of Leung’s witness statement tabulates each contribution he made towards mortgage instalments and other expenses of the Flat. [23] Paragraph 23 of Leung’s witness statement [24] Paragraphs 4 (b), (f) and (g) of Leung’s supplemental witness statement [25] Hearing Bundle B, tab 57, pages 285-288 [26] Paragraphs 16, 20 and 21 of Chu’s witness statement [27] Paragraphs 26, 27, 34 and 35 of Chu’s witness statement and paragraph 34 of the Defendant’s closing submissions [28] Paragraph 6(a) of Chu’s witness statement [29] Paragraph 6(b) of Chu’s witness statement [30] Hearing Bundle B, tab 57, page 332
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