Chau Kwan Lam v. Chau Ka Yee Carie

HCA 1007/2015

[2025] HKCFI 1629

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1007 OF 2015

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J U D G M E N T

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THE DISPUTE

1.The plaintiff, Mr Chau Kwan Lam (“Father”), and the defendant, Madam Chau Ka Yee Carie (“Daughter”), are father and daughter.

2.The Father is and was at all material times the registered owner of Flat 8, 35/F, Block A, Yan Shing Court, 15 Wah Ming Road, Fanling, New Territories, Hong Kong (“HK Property”).

3.The dispute underlying this action is the beneficial ownership of the HK Property.

BACKGROUND

4.The matters recited under this heading are either expressly agreed[1] or undisputed or indisputable (e.g. being matters of undisputed records). For the avoidacnce of doubt, I find them to be facts.

5.The Father acquired the HK Property under the Home Ownership Scheme under a provisional sale and purchase agreement dated 16 November 1992 and an assignement dated 24 September 1993, with the Hong Kong Housing Authority (“HKHA”) as vendor.

6.The payment of the purchase price of $512,600 was financed to the extent of $486,970 by a term loan (“HK Property Loan”) from the Standard Chartered Bank (Hong Kong) Limited (“SCB”), the repayment of which was initially secured by an equitable mortgage of the HK Property dated 4 December 1992, which had subsequently been replaced by a legal charge dated 24 September 1993 (“HK Property Mortgage”) on completion of the sale and purchase.

7.In around late 1993 to early 1994, the Father married his second wife. Beginning from about 1998, the Father left Hong Kong to resettle in Panyu (番禺), Mainland China and start a small restaurant business there.

8.As for the HK Property, the Father had let the same for rental income until 30 June 2000.

9.In around July 2000, upon the expiry of the last tenancy of the HK Property, the Daughter and her boyfriend, Mr Yau Sai Fung (“Mr Yau”), moved into the HK Property.

10.Thereafter, the Daughter had:

(1)  discharged the monthly repayments of the HK Property Loan from July 2000 to January 2013 by depositing money into the Father’s mortgage account with SCB every month;

(2)  removed at their expense the unauthorised building works at the HK Property as specified in an order dated 20 February 2003 issued by the Building Authority (“BA”) to the Father spscifically[2] (“Building Order”), thereby obtaining the discharge of such encumbrance by way of the BA’s letter of compliance dated 17 July 2003;

(3)  shouldered all outgoings and expenses (including household expenses) of the HK Property.

11.On 17 December 2005, the Daughter and Mr Yau got married. They continued to live in the HK Property and had made known to the Father that they treated the HK Property as their matrimonial home.

12.In around 2006, the Father requested the Daughter to buy a property in Panyu (“Panyu Property”) in her name but to be held for and on behalf of the Father. The Daughter did so and took out a mortgage loan to finance the purchase, which the Daughter paid off monthly until the disposal of the Panyu Property in 2008.

13.In 2008, the Panyu Property was sold. All the proceeds of sale were kept by the Father.

14.In 2008, the Daughter and Mr Yau carried out, at their expense, major redecoration and renovation works at the HK Property. The Father was aware of such works.

15.On 7 January 2013, the HK Property Loan was fully repaid. SCB formally discharged the HK Property Mortgage was formally on 6 February 2014.

16.On 6 October 2014, the Father and the Daughter co-signed a joint letter addressed to the HKHA (“Transfer Application Letter”) in support of the Father’s application to transfer the HK Property into the Daughter’s sole name (“Transfer Application”). The Transfer Application Letter stated, inter alia, that:

(1)  the Father had not resided in Hong Kong or lived in the HK Property for at least 15 years;

(2)  it was the Daughter who had repaid the monthly mortgage repayments from 2000 by depositing the sum into the Father’s mortgage account with SCB every month; and

(3)  the transfer of ownership did not involve any monetary consideration.

17.On 8 October 2014, the Transfer Application was submitted to the HKHA under the cover of the Transfer Application Letter. The Transfer Application states the reasons for the transfer to be (1) that the Father had already moved to Mainland China and (2) that the Daughter had previously been repaying the monthly repayments of the HK Property Loan.

18.The HKHA did not approve the Transfer Application.

19.By a letter before action dated 5 January 2015 from the Father’s solicitors to the Daughter, the Father claimed that (1) he had granted a licence to the Daughter to occupy the HK Property (“Licence”) and (2) the Licence had been terminated. The Daughter was required to deliver vacant possession of the HK Property to the Father.

20.On 7 May 2015, the Father commenced the present action against the Daughter for vacant possession of the HK Property and damages/mesne profit until the delivery of vacant possession.

THE DAUGTHER’S CASE

21.Arising from the aforesaid background is the Daughter’s counterclaim for various declaratory reliefs to the effect that she is the sole beneficial owner of the HK Property.

22.First, it is the Daughter’s case that, the Father had since about July 2000 expressed his intention to pass the HK Property to the Daughter “in the future ” subject to her fulfilment of the “1^st Agreement” under which the Daughter shall be solely responsible for settling:

(1)  the monthly repayments of the HK Property Loan starting from July 2000;

(2)  the Father’s credit card debts and personal loans incurred in or before July 2000 (“Father’s Debts”), part of which the Daughter says had been utilised by the Father as the starting capital for his business in Mainland China; and

(3)  all the expenses relating to the HK Property including management fees, rates and government rent and expenses for the repair, maintenance and improvement of the HK Property (as if the ownership of the HK Property had already been passed to the Daughter).

23.In return:

(1)  the Father’s interests in the Property would be extinguished;

(2)  further or alternatively, the Father would hold the Property on trust for the Daughter; and

(3)  further or alternatively, the Father would be estopped from denying the Daughter’s interest, or asserting his proprietary right, in the Property.

24.The Daughter contends that she had fulfilled the 1^st Agreement.

25.More particularly, she had spent nearly half of her monthly income on the repayment of the HK Property Loan and Father’s Debts. The former was repayable by instalments of around $6,000 per month when she first started repaying the same in July 2000. She would deposit around $6,000 into the Father’s mortgage account with SCB in the beginning of each month. Then, in around 2002/2003, with the assistance of her paternal aunt (i.e. the Father’s sister), Madam Chau Chau May 周秋薇 (“Aunt May”), the Daughter obtained a cut in the interest rate on the HK Property Loan, which reduced the amount of each monthly repayment instalment to around $3,000. At that time, the Daughter was working in a Korean mobile phone company at a monthly income of around $11,000, which had increased to around $15,000 by the time she left the company. After the reduction in the monthly repayments of the HK Property Loan, the Daughter started to make monthly living provisions of $3,000 to the Father.

26.While the Daughter took over the repayment of the HK Property Loan and Father’s Debts, Yau took up other household expenses, such as rates and government rent and the management fees of the HK Property and various utilities.

27.In around 2004, at the Daughter’s request, the Father assisted the Daughter in putting the Property on sale. It was envisaged by both that the proceeds of sale would be applied solely to finance the purchase of a larger property for the Daughter.

28.Second, according to the Daughter, notwithstanding the conclusion and fulfilment of the 1^st Agreement, the Father imposed a further agreement with the Daughter the fulfilment of which would really extinguish all of the Father’s interest in the Property (“2^nd Agreement”). The 2^nd Agreement is pleaded as follows:

(1)  In around 2006, the Father requested the Daughter to purchase the Panyu Property on his behalf as his permanent residence.

(2)  The Father told the Daughter that “the Debts repaid by the [Daughter] for and on behalf of the [Father] … shall cover all the deposits and mortgage repayments made by the [Father] at all material times.”

29.According to the Daughter, pursuant to the 2^nd Agreement, she had settled the monthly repayment of the mortgage loan for the purchase of the Panyu Property in the sum of $800 per month by passing the money to the Father for him to deposit into the relevant mortgage account. Together with the Athder’s living expenses, she would normally give $3,800 to the Father through her other paternal aunt, Madam Chau Chau Yuet (周秋月) (“Aunt Yuet”).

30.On this basis, the Daughter asserts the performance of the 2^nd Agreement.

THE FATHER’S CASE

31.The Father admits having informed the Daughter of his intention to pass the HK Property to her, but only after he had passed away.

32.In response to the 1^st Agreement, the Father claims to have allowed the Daughter to live in the HK Property as mere licencee. In return, the Daughter was simply required to be responsible for the monthly repayments of the HK Property Mortgage, which was about half of the market rent of a flat of a similar size in the neighbourhood. The Daughter should also be responsible for all the fees, expenses and incumbrances of the HK Property as she was the sole occupier of the same.

33.In this regard, by way of a letter dated 28 May 2015, the Daughter’s solicitors sought further and better particulars of the Licence and the circumstances in which it was granted. In the Father’s solicitors’ reply dated 1 June 2015, he explained the circumstances of the Licence as follows:

(1)  The Licence was made orally.

(2)  The Licence, which allowed the Daughter and Mr Yau (her then-boyfriend) to live at the HK Property, was granted when the Daughter returned to Hong Kong after she had completed her education in Australia in around 1998.

(3)  The Licence did not have any specific terms, except that the Daughter and Mr Yau had to move out, and surrender possession, of the Property when required by the Father to do so. The Daughter was also required to “pay the utilities expenses”.

34.The Daughter did not settle any credit card debts or personal loans for the Father.

35.The Father agreed that the Daughter had paid him money every month. However, he was uncertain about the amount. The Daughter would pay the Father’s younger sister. The Father returned to Hong Kong every 2 to 3 months. He would collect the monies from his younger sister in the region of $10,000 to $20,000. The Daughter would be paying on average more than $3,000 per month.

36.As for the 2^nd Agreement, the Father had mentioned to Mr Yau that he wished to purchase a property in Panyu as his permanent abode. However, as he did not have any income proof, he needed the Daughter to purchase such property, and to apply for a mortgage, under her name.

37.The Father used the amount of $30,000 gifted from Mr Yau to the Father for the Daugther’s hand in marriage (彩禮) to make the down payment for the purchase of the Panyu Property. He then used his own income and savings to settle the mortgage repayments. In 2008, he sold the Panyu Property under the authorisation of the Daughter.

ISSUES

38.The parties have prepared an Agreed List of Issues which takes the form of a list of the factual disputes as gleaned from the pleadings.

39.Mr Victor KH Chiu, counsel for the Daughter, has confirmed in closing submissions that there is no need to consider the application of the doctrine of promissory estoppel or the operation of resulting trust.

40.Having considered the pleadings and the submissions of both parties, the central dispute in this trial is:

(1)  whether the Father had granted a mere licence to the Daughter;

(2)  whether the 1^st Agreement and the 2^nd Agreement existed and were perfomed by the Daughter;

(3)  if so, whether the conclusion and performance of such agreements gave rise to a “common intention” constructive trust or estopped the Father from denying the Daughter’s interest in the HK Property.

41.Although the Daughter in her opening submissions and the Father in his closing submissions did cater for the possibility of a partial beneficial interest in favour of the Daughter, neither party left open the possibility of a shared beneficial ownership on pleadings or in evidence. This is especially so when the Daughter suggests a partial beneficial interest only by way of a resulting trust, an argument which is clearly inapplicable to the instant case and is (rightly in my view) abandoned orally during closing submissions. That being the case, I propose not to venture into a quantification exercise in the absence of pleadings or evidence by either party.

LEGAL PRINCIPLES

42.The doctrines of, and authorites on, “common intention” constructive trusts and proprietary estoppels, are for present purposes well-settled. I only need to set out them as follows.

Common Intention Constructive Trust

43.The starting point is that the beneficial ownership of a property follows the legal title. As the HK Property was registered in the sole name of the Father, the Daughter bears the burden of proof in showing on a balance of probabilities that the Father held the same on trust for her.

44.The elements of a common intention constructive trust are well-settled: see e.g. Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD at [46]-[50]. The Daughter must prove that:

(1)  there was a common intention between the Father and the Daughter that the Daughter was to be the beneficial owner of the HK Property despite that the registatrion of the same in the Father’s name;

(2)  the Daughter altered her position in detrimental reliance upon such common intention; and

(3)  it is unconscionable for the Father to assert ownership in reliance on his legal title to the HK Property.

45.This is a case involving a common intention arising post-acquisition. The Daughter is seeking to assert her proprietary interest around 7 years after the acquisition of the HK Property pursuant to an agreement reached after the acquisition of the HK Property.

46.In Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 at [34]-[36], Johnson Lam J (as he then was) analysed a series of relevant case law in detail and distilled the following pertinent principles:

(1)  If the common understanding were only formed after the acquisition of the property, this would imply a change in the beneficial ownership of the property. The evidence must support an inference that there was a fresh agreement as to beneficial ownership before the court can give effect to the common understanding. In other words, in that situation, there must be some evidence to infer that the original beneficial owner has agreed to give up some of his interest in the property in favour of the other party.

(2)  If the circumstances so demand, a constructive trust can arise some years after the property has been acquired by, and registered in the sole name of, one party who (at the time of the acquisition) was, beyond dispute, the sole beneficial owner. In the absence of an express post-acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition.

(3)  In Stack v Dowden [2007] 2 AC 432 at [138], Lord Neuberger said in a dissenting judgment that “‘compelling evidence’…is required before one can infer that, subsequent to the acquisition of the home, the parties intended a change in the shares in which the beneficial ownership is held. Such evidence would normally involve discussions, statements or actions, subsequent to the acquisition, from which an agreement or common understanding as to such a change can properly be inferred”.

(See also Ng Po Yu v Lam Kai On, the Executor of the Estate of Wong Mui (deceased) [2018] HKCFI 1618 at [43]-[45]; and Ho Lai Lei v Mang Wan Kwan Simon [2020] HKCFI 527 at [38]-[41])

47.In ascertaining the common intention, it is to be deduced objectively from the parties’ conduct. The relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party: Gissing v Gissing [1971] AC 886, 906; Jones v Kernott [2012] 1 AC 776 at [51].

48.The courts do not just focus on financial contributions. Instead, the courts are to adopt a holistic approach and consider a wide basket of factors: Stack (supra) at [60] & [69] per Baroness Hale:

“60. …The law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it.

…

69. In law, ‘context is everything’ and the domestic context is very different from the commercial world. Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties’ true intentions. These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties’ relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses. ….”

49.Even though the non-exhaustive considerations are listed in the context of the joint legal ownership of a home, they remain to be a relevant and useful yardstick in the present case.

Proprietary Estoppel

50.The principles on proprietary estoppel are also well-established. See e.g. Szeto Chak Mei v Chan Lam Shan, HCMP 836/2012, unreported, 1 March 2016, at [31]-[42]. Applying such principles, the Daughter must first establish

(1)  that the Father had made a representation or assurance as the owner of the HK Property to her;

(2)  that she had relied on such representation; and

(3)  the detriment to her in consequence of her reliance on the representation.

51.These elements are not separate watertight compartments. The fundamental principle is that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end, the court must look at the matter in the round: Gillett v Holt [2001] Ch 210, 225C.

THE EVIDENCE

52.The Father gave evidence for himself. The witnesses for the Daughter were herself and Mr Yau.

53.This case rests on the credibility of the parties. The principles on assessing credibility of witnesses are trite and need not be repeated here: e.g. Hui Cheung Fai v Daiwa Development Ltd, HCA 1734/2009, unreported, 8 April /2014, at [77] to [83].

54.As is common between members of the same family, much is said and done based on love and trust. Members of the family commonly do not prepare formal documents to record arrangements made between them.

55.I also bear in mind that the relevant key events took place more than a decade or two ago and the witnesses’ recollections of events may be hazy. Documentary evidence is also sparse as parties would not keep them for such long periods of time or they become misplaced.

56.For reasons set out below, I have come to the following assessment of the witnesses:

(1)  The Father is not a well-spoken or sophisticated man. That being said, I find his evidence to be unshaken under cross-examination. His version of events also accords with inherent probabilities and common sense. I accept him as an honest and reliable witness.

(2)  In contrast, the Daughter and Mr Yau were overly cautious and measured in their evidence. Although Mr Yau gave evidence in support of the Daughter’s case, Yau was not present when the purported discussions or agreements were reached. His witness statement also largely adopts the contents of the Daughter’s witness statement. Whilst I would not go so far as to find that their testimony was deliberate or calculated, I would place less weight on their evidence.

57.Where there is any conflict in evidence, I prefer that of the Father over the Daughter.

ANALYSIS AND FINDINGS

Whether there was a common understanding as to the passing of beneficial ownership of the HK Property

Approach

58.The question of whether there was a common intention that each party should have a beneficial interest in the property has been described as the primary or threshold question: Mo Ying v Brillex Development [2014] 3 HKLRD 224 at [36].

59.It is the intention commonly held by the Father and the Daughter, if any, which matters: e.g. Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 at [38], citing Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400, 409.

60.Accordingly, the matter that needs to be dealt with foremost is to ascertain if there was a common intention between the Father and the Daughter.

61.The Daughter needs to prove that there was a fresh agreement as to beneficial ownership before the court can give effect to the common understanding: Chan Chui Mee (supra) at [34].

62.Even if I find that the parties had entered into the 1^st Agreement, such common intention must have changed again when the parties entered into the 2^nd Agreement. Even if I do find that the parties agreed to the 1^st Agreement, this would be insufficient for the Daughter to succeed on her case. The Daughter must demonstrate a common intention stemming from the agreement and performance of the 1^st Agreement and the 2^nd Agreement.

63.In ascertaining common intention, I bear in mind the principle set out in Lloyds Bank v Rosset [1991] 1 AC 107, 132-133; and Liu Wai Keung (supra) at [49]:

“Such intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned based on evidence of express discussions. It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention”

64.Both the Father and the Daughter gave evidence of their express agreement or understanding: they are in agreement in that the Father told the Daughter that he would give the Property to her in the future.

65.However, they digress as to whether this could amount to a common intention.

The Father’s Case

66.The Father’s pleaded case is that he told the Daughter “about his intention to pass the Property to her after he passed away”. His witness statement also states that “I told her my intention to leave the Property to her after I passed away in the future.”

67.Under cross-examination, the Father also confirmed that he had mentioned to the Daughter that he intended to pass the HK Property to her in the future “間屋將來都係畀你㗎喇”. He did not mention that it would be after his death “我死咗之後”, although it was what he meant.

The Daughter’s Case

68.The Daughter’s pleaded case is that the Father told the Daughter and her 2 aunts (namely, Aunt May and Aunt Yuet) of his intention to pass the Daughter in the future. They entered into discussions on passing the ownership of the HK Property to the Daughter subject to the completion of the 1^st Agreement. The Father said that he would give the HK Property to her in the future “佢話佢將來會畀我嘅，咁同埋包括埋嗰個還債囉，還本囉” (emphasis added).

69.In around 2006, the common intention between the Father and the Daughter changed as the Daughter would be required to fulfil both the 1^st Agreement and 2^nd Agreement before she would have ownership of the HK Property.

Whether the Father and the Daughter Reached the 1^st Agreement

70.I remind myself that the Daughter bears the burden of proving on the balance of probabilities that it was the common intention between herself and the Father and she would be the full beneficial owner of the HK Property upon completion of the 1^st Agreement and the 2^nd Agreement.

71.To begin with, there is no dispute that the Daughter did settle the monthly repayments of the HK Property Loan from July 2000. There is also no dispute that the outgoings of the HK Property were taken care of by her. The parties differ as to who settled the Father’s Debts.

72.However, the repayment of the HK Property Loan and the Father’s Debts (and the other payments) is by itself insufficient for the Daughter to succeed.

73.The Daughter needs to show that the payments were made pursuant to the pleaded common intention shared with the Father. The Father must have also intended to dispose of the HK Property in favour of the Daughter upon completion of those acts.

74.As a result of the following matters, I have come to the view that there existed no such common intention as a matter of objective deduction. The Father and the Daughter were not ad idem as to when the Daughter would become the beneficial owner of the HK Property even after the completion of the 1^st Agreement and the 2^nd Agreement.

First: the Daughter herself did not share the pleaded common intention

75.To begin with, I accept that the Daughter was led by the Father to believe that she would eventually have an interest in the property concerned: Mo Ying (supra) at [59].

76.However, in my view, that by itself is not enough for a finding of a common intention as the basis for a constructive trust.

77.The pleaded common intention is that, as a result of an agreement between the Father and the Daughter, the Daughter would be the owner of the Property after fulfilling the 1^st Agreement and the 2^nd Agreement.

78.As between the Father and the Daughter, however imperfectly remembered and imprecise the terms may be, I have had regard to the principle that it would not be a barrier to finding that there was an express agreement, arrangement or understanding between them: Mo Ying (supra) at [38(1)] and [40(1)].

79.I do not take the Daughter to be running a case based on a contractual claim, which would require a term to be certain or ascertainable.

80.The parties are family members and not legal professionals. It is not out of the ordinary for them to reach an agreement that was vague and unparticularised.

81.Although I can accept that there was an express agreement or understanding that the Father had intended to give up his interest in the Property in favour of the Daughter, I do not think that there can be an “intention commonly held” between them when they were not ad idem as to when the Daughter’s interest in the HK Property would crystallise.

82.As it transpired during cross-examination, even upon the Daughter’s own understanding, she agreed that even after performing the 1^st Agreement and 2^nd Agreement, the Father was to transfer the HK Property to her in the future.

83.This is in stark contrast to her pleaded case, which suggests the extinguishment of the Father’s right upon the performance of the 1^st Agreement and 2^nd Agreement.

84.Thus, the Daughter’s evidence does not support her pleaded case that the Father’s interest in the Property was extinguished upon complete performance of the 1^st Agreement and 2^nd Agreement. In other words, the Daughter’s pleaded common intention is directly contradicted by her own evidence.

85.Moreover, both the Father and the Daughter did not have any express discussions as to when “the future” would be.

86.Mr Chiu argued that the Daughter would be vested with the entire beneficial interest of the HK Property upon completing the 1^st Agreement and 2^nd Agreement as a result of equity stepping in once the Daughter acted to her detriment in reliance upon the promise on part of the Father.

87.As set out in the authorities above, the court is engaged in the exercise of ascertaining and giving effect to the common intention of the parties. It is not for the court to abandon the search for the result which reflects what the parties must, in the light of their words and conduct, be taken to have intended in favour of the result which the court itself considers fair: Stack (supra) at [61].

88.Mr Chiu has cited a series of authorities in support of the proposition that a common intention could be inferred even though no definite time was given by the legal owner as to when the property would be transferred to other party.

89.I agree with such proposition as a general principle. However, each case inevitably turns on its own facts. Moreover, the facts of those cases include a basket of other considerations which could assist the courts in deducing the common intention.

90.In considering this case holistically, and as further elaborated below, I have reached a different conclusion.

91.I find the conversations with the Father relied upon by the Daughter to be insufficient to form the basis for an express common intention.

Second: the Father had not intended to dispose of the HK Property at that time

92.When the alleged common intention was formulated in around July 2000, the Daughter had just turned 24 years old and the Father was around 41 years old.

93.I have not lost sight of the fact that the Father had already moved permanently to Mainland China with his second wife as of 2000, and he may not have had thought of moving back to Hong Kong anytime soon. From 2000 to 2013, the Father usually stayed with his younger sister whenever he returned to Hong Kong. He had only gone back to the HK Property twice, including once on the Daughter’s marriage.

94.Even though the Father did not expressly mention that the HK Property was to be given to the Daughter only after he passed away, I find it inherently improbable that the Father would have intended to permanently dispose of the HK Property when he was still relatively young.

95.I do not think it surprising that Father had not asked about the HK Property at all during that time period, except for the Building Order. As far as he was concerned, the Daughter was settling the mortgage repayments and was living with Mr Yau in the HK Property. As the Father usually stayed with his younger sister even when he returned to Hong Kong for short stays, there was little reason for him to visit the HK Property and disturb a married couple’s residence.

96.Thus, I find on a balance of probabilities that the Father at that time did not intend to permanently give up ownership of the HK Property during his life time. I am aware of the principle that the common intention is to be considered objectively. Though not determinative by itself, I consider this matter relevant in the holistic consideration of the circumstances.

Third: the Daughter’s contributions to the mortgage were not pursuant to a common intention

97.There is no disagreement that the Daughter did not pay rent for occupying the HK Property but had paid off the remainder of the HK Property Loan.

98.Mr Chiu took exception with the fact that it was never the Father’s pleaded case that a condition of the Licence was that the Daughter had to be responsible for the monthly loan repayments.

99.There is some force in this argument. Although the statement of claim could and should have been better pleaded and particularised, I do not regard this as creating any insurmountable difficulty.

(1)  The issue of the mortgage repayments first surfaced in the defence and counterclaim as a term of the 1^st Agreement.

(2)  The material term of the Licence relied upon by the Father was that the Daughter was allowed to stay in the HK Property until the Licence was terminated. The Father was not bringing a claim against the Daughter for a breach of the terms of the Licence by failing to settle the mortgage contributions.

100.In this connection, Mr Chiu also emphasises that the Father could not rightly say the precise year of commencement of the Licence. Again, this was an event which took place between members of a family a long time ago. I do not think that the difference of a few years in this matter would impeach the Father’s credibility.

101.In the absence of an express agreement, I agree with Mr Chiu that the general principle is that direct contributions to the purchase price by the party who is not the legal owner by payment of mortgage instalments will readily justify the inference necessary to the creation of a constructive trust: Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 (CA) at [2.4]. However, that principle is in relation to the second limb of “common intention” constructive trusts.

102.The Daughter’s pleaded case solely relies on the first limb of “common intention” constructive trust as she says that the Father had expressly stated his intention to pass the HK Property to her upon performance of the 1^st Agreement and the 2^nd Agreement.

103.In other words, it has always been the Daughter’s case that she, inter alia, repaid the HK Property Loan and the Father’s Debts pursuant to an agreement with the Father.

104.It is not pleaded that the common intention was that the amount of the Daughter’s contributions to the HK Property Loan would correspond to her beneficial ownership in the HK Property.

105.Thus, I agree with Mr Lawrence Cheung, counsel for the Father, that the Daughter’s case relies on the express oral agreements between father and daughter and that this is not a case which the court should infer a constructive trust based on conduct or circumstantial matters.

106.It follows that this is not a case where it would fall into the second limb of “common intention” constructive trusts. Instead, only the first limb of “common intention” constructive trust would be applicable, if at all: Primecredit Ltd (supra) at [2.3]. This distinction is important since:

(1)  the finding of such an agreement, arrangement or understanding can only be based on evidence of express discussions between the parties, however imperfectly remembered and however imprecise the terms;

(2)  this is independent of any inference to be drawn from the conduct of the parties; and

(3)  once a finding to this effect is made, the party asserting a beneficial interest has to show he has acted to his detriment or significantly altered his position in reliance on the agreement in order to give rise to a constructive trust.

107.That being the case, it is unnecessary for me to address the second limb of “common intention” constructive trusts. I do not need to consider whether my findings and conclusion on beneficial ownership could be supported by inference drawn from the conduct of the parties.

108.In any event, the parties’ other conduct remains relevant as a matter by reference to which their assertions about the agreement or understanding must be gauged and tested: Liu Wai Keung (supra) at [50].

109.Further, in relation to the financial contributions other than in repayment of the HK Property Loan, such as in discharge of household expenses, such monetary contributions are insufficient to raise the inference of a common intention that by making such contributions the maker should have a share in the interest of the property owned by the recipient of such contribution: Re Wong Sun [2019] HKCFI 2244 at [62]-[63].

110.In assessing the circumstances holistically, I give particular weight to the facts that:

(1)  In 2000, the Daughter was working as a secretary with a monthly income of around $9,500. The Daughter found it difficult to rent a place even with the help of her aunts.

(2)  The Daughter would have been unable to rent property of a similar size in the same neighbourhood.

(3)  Upon the Daughter’s return to Hong Kong in around 1997, she lived with Aunt Yuet. It is not in the evidence as to whether there were discussions about the Daughter’s living arrangements at that time, though she was keen to be independent and have her own place.

111.Although the Father expressly denied that he had rented out the HK Property in his reply and defence to counterclaim, he admitted in cross-examination that he had allowed a friend of a friend, one Madam Leung Yin (“Madam Leung”), to stay at the HK Property from around 1998 to June 2000.

112.The Father and Madam Leung did not sign any written tenancy agreement. Madam Leung would pay a few thousand dollars to the Father. The Daughter was told that it was in the sum of $6,000 per month.

113.One could rhetorically ask this question: Why would the Daughter agree to pay off the HK Propety Loan on her own volition if she was eventually going to be the beneficial owner of the HK Property?

114.When placed in its proper context, it is not unnatural for matters to unfold in this manner. One could readily understand why the Daughter would undertake the responsibility of paying off the HK Property Mortgage and the relevant expenses of the HK Property:

(1)  She would be able to have a place of her own without having to pay market rent, which she could not have afforded anyway.

(2)  Discharging the mortgage, wshich she could afford, would benefit her father. She was essentially paying rent in the form of the mortgage repayments.

115.Thus, I find that the acts of repayment by the Daughter were not pursuant to the pleaded common intention.

Fourth: the Daughter did not repay the Father’s Debts pursuant to the common intention

116.The parties differ as to whether the Daughter settled the Father’s Debts. A major thrust of the Daughter’s case is that other than making financial contributions relating to the HK Property since July 2000, she had also settled the Father’s Debts as part of the agreement to obtain ownership of the HK Property.

117.Contemporaneous documents, such as bank statements, would understandably be sparse given the long lapse of time.

118.The Daughter claims that she discovered that the Father had accumulated credit card debts and personal loans totalling around $190,000.

119.The Daughter explains that the burden to repay the Father’s Debts in Hong Kong rested upon herself with the help of her 2 aunts since the Father was in China with a limited income. She says she settled part of the Father’s Debts by making direct payments into his accounts and settled the rest of such liabilities by transferring money to Aunt Yuet, who would then make the appropriate repayment.

120.The Father denies that the Daughter had settled any of his outstanding credit card debts or personal loans. He suggests that the credit card debts were incurred to pay the Daughter’s tuition fees and living costs in Australia. The Daughter did not have the financial ability to repay the Father’s Debts. They were settled by the Father’s mother’s savings. He also remembers that it was his younger sister who was handling the issues arising from his credit card debts.

121.On the evidence before this court, there is no direct evidence showing that the Daughter had repaid the Father’s Debts.

(1)  Looking at the Daughter’s bank account records with Shanghai Commercial Bank, which include her passbook spanning from around February 2002 to August 2014 and her savings transaction history from around June 2008 to February 2013, they do not show the precise nature or purpose of the withdrawals. Those bank records merely show a series of regular withdrawals and payment of the Daughter’s own credit cards.

(2)  Aunt Yuet’s bank passbook spanning from around March 2012 to November 2013 shows a series of regular deposits and withdrawals in similar sums.

122.I can accept that the Daughter paid off part of the Father’s Debts over time. However, the Daughter did not explain how she assumed responsibility for the Father’s Debts and how she enlisted the help of her aunts.

(1)  There is no evidence of the Daughter’s own financial or employment situation at the time. Even though they are family members, it is difficult to envisage the viability of the Daughter repaying the Father’s credit cards and personal loans on her own.

(2)  There are also no particulars as to how the Daughter asked her aunts to help with the repayment. Nor is there any evidence showing how much the Daughter and the aunts respectively repaid the Father’s Debts.

(3)  There is no direct evidence illustrating the purposes of the Father’s Debts.

(4)  The Daughter could not dismiss the possibility that part of the Father’s Debts were taken out by the Father in order to pay for her tuition fees and living costs in Australia.

(5)  The Daughter agreed that the credit card loans were incurred partly via her supplementary credit card.

(6)  The Daughter has pleaded that part of the Father’s Debts were taken by the Father as the starting capital for his business in Mainland China. However, she has not put forward any evidence to support this contention or show the amount(s) so used by the Father.

123.I also accept the Father’s evidence that a substantial part of his debts was incurred in support of the Daughter’s education in Australia. I also accept that a portion of the Father’s Debts were incurred by the Daughter via her supplementary credit card.

124.However, I find it difficult to accept the Daughter’s argument that it would be contrary to common sense for the Father to agree to an unequal bargain.

125.In essence, the Father would be agreeing to part with the entirety of the HK Property, which was his only valuable asset at the time and for which he had repaid over 80 instalments of mortgage repayment. In return, the Daughter would, inter alia, repay the Father’s Debts, part of which had been incurred by and for the Daughter.

126.Even on a rough calculation, the Father’s repayment of the HK Property Loan would out-value the Father’s Debts by a considerable margin. This is even more so when an appreciable portion of the Father’s Debts were incurred by and for the Daughter.

127.Much like the situation with the Daughter’s repayment of the HK Property Loan, I do not find the Daughter’s discharge of the Father’s Debts to the extent found above to be in pursuance of the requisite common intention.

Fifth: the Daughter only exercised her rights as though she were the owner of the HK Property

128.The Daughter said in cross-examination that when she moved into the HK Property, she had already taken it as her own. Her witness statement states that she would be “occupying the Property as if the ownership of the Property had passed to me” (my emphasis). I do not see this as her assertion of her ownership rights there and then, but she could exercise rights as though she were the owner of the HK Property.

129.In 2005, when the Daughter and Mr Yau sought the Father’s permission to get married, they had made known to the Father that they had co-habited at the HK Property since around 2000 and it would continue to be their matrimonial home. The Father apparently agreed.

130.Other than repaying the HK Property Loan, one of the major matters that the Daughter relies on is that she and Mr Yau had expended a considerable amount of money on redecorating or renovating the HK Property in around 2008:

(1)  The Daughter explains that she was already paying off the HK Property Mortgage. She would continue living at the HK Property. As she felt that the HK Property was her home, she decided to renovate thde same.

(2)  The Daughter had even taken out a personal loan of around $80,000 with DBS Bank to pay for the renovation.

(3)  The loan approval letter from DBS Bank was dated 29 October 2007. The loan proceeds was paid into the Daughter’s bank account on 9 November 2007.

(4)  Yau had also produced sketches of his designs of furniture and interior of the HK Property.

(5)  It is also agreed that the Father knew of such works.

131.It is not difficult to see why the Father did not object to the renovation of the HK Property:

(1)  The Property must have been subject to wear and tear since its purchase.

(2)  Having moved into the HK Property in 2000, the Daughter and Mr Yau had by 2008 resided there for around 8 years.

(3)  It was in both the Father’s and Daughter’s interests to have the HK Property renewed. The Father would have the HK Property in an improved condition. At the same time, the Daughter and Yau could live there more comfortably.

132.The Daughter also relies on the fact that she sorted out the issues with the Building Order. I do not consider this to be a weighty factor as this was part of the expenses for living at the HK Property, regardless of the nature of one’s occupation. With rights come obligations: the Daughter was also responsible for the related expenditures of the HK Property “as if the ownership of the Property” (my emphasis) had already passed to her.

133.Moreover, I have had regard to the Daughter’s version of events:

(1)  In around 2003 to 2004, the property prices in Hong Kong had dropped significantly due to the SARS outbreak. The Daughter saw that as an opportunity to replace the HK Property with a bigger flat for herself and Mr Yau.

(2)  She also made clear to the Father that the proceeds of the intended sale were to finance the purchase of a larger flat for herself and Mr Yau. The Father did not raise any objection to her proposal to sell the HK Property and use of the sales proceeds.

(3)  Ultimately, the Daughter did not sell the HK Property without any further explanation.

134.I find the Daughter’s version of events to be contradictory to the existence of the 1^st Agreement. The fact that the Daughter could sell the HK Property to finance her purchase of a bigger flat is at odds with the agreement at that time that she would have become the owner of the HK Property only upon her fulfilment of the 1^st Agreement.

135.Thus, I do not think that this adds much to bolstering the Daughter’s case by proving the existence of or otherwise ascertaining the common intention.

Sixth: there is no evidence that the Daughter otherwise tried to assert her rights as the owner of the HK Property

136.With the onus of proof on the Daughter to prove the existence of the pleaded common intention, I note that there are no contemporaneous documents from 2000 which would otherwise shed light on the arrangement between the Father and the Daughter.

137.Likewise, other than the various highly inconclusive payments, the Daughter’s case is bereft of any evidence tending to support the beneficial interest that she would eventually receive.

138.Other than renovating the Property and paying the relevant dues, there are no other acts on part of the Daughter which is indicative of her asserting or reinforcing her rights as owner against the HK Property.

139.This is remarkable as the 1^st Agreement and the 2^nd Agreement were supposedly completely performed by January 2013. Yet, there is nothing at all showing that the Daughter had since become the beneficial owner of the HK Property. There is no evidence of any conversations to that effect or any requests for the HK Property to be transferred to her. It appears that the first time this idea of the 1^st Agreement and the 2^nd Agreement only surfaced in the defence and counterclaim.

140.I have not lost sight of the Daughter’s reliance on the Father’s knowledge that the HK Property was treated by the Daughter and Mr Yau as their matrimonial home. This is neither here nor there. The reference to matrimonial home is neutral as it only connotes a place of residence of a couple or a family. People can equally call rented accommodation their matrimonial home.

Findings on the 1^st Agreement

141.For the reasons set out above, I find the assertion of the 1^st Agreement to be a mere afterthought. There is no common intention or understanding. This ought to be the end of the Daughter’s defence and counterclaim.

142.Likewise, even if I consider the matters holistically and objectively, I would be unable to infer any common intention from their conduct.

The 2^nd Agreement

143.The Daughter’s case rests on the co-existence of the 1^st Agreement and the 2^nd Agreement.

144.Given my above findings relating to the 1^st Agreements, it is strictly unnecessary for me to deal with the 2^nd Agreement.

PROPRIETARY ESTOPPEL

145.Nor is it necessary to consider the Daughter’s alternative case based on proprietary estoppel as the Daughter is relying on (1) the conclusion of the 1^st Agreement and the 2^nd Agreement as the making of representations or assurances by the Father as the owner of the HK Property to her and (2) the performance of such agreements by her as detrimental reliance on the Father’s representations or assurances.

DISPOSITION

146.For the reasons set out above, I dismiss the Daughter’s counterclaim and give the Father judgment against the Daughter for the delivery of vacant possession of the HK Property.

147.Mr Cheung has confirmed in his closing submissions that the Father will no longer pursue the claim for mesne profits.

148.On the Father’s claim for damages, Mr Cheung indicates in his closing submissions that the Father seeks damages to compensate him for the rental of alternative accommodation from January 2015 when he was denied access to the HK Property.

149.I do not think this to be an appropriate approach in dealing with matters. Whilst I take heed of the principle that particulars need not be given for general damages (Hong Kong Civil Procedure 2025 at §18/12/11), the Father did not plead any matters which form the basis of the damages sought, namely, that the Father had to seek alternative accommodation and the method for assessing damages. I do not think it is proper to simply change the basis of damages claimed at the last minute.

150.I would only grant nominal damages in the sum of $100 to the Father.

151.I also order, on a nisi basis, the Daughter to pay the Father’s costs of the action, to be taxed, if not agreed, on a party and party basis.

Mr Lawrence Cheung, instructed by Francis Kong & Co, for the plaintiff

Mr Victor KH Chiu, instructed by Fan & Co, for the defendant