Wong Kwok Chung and Another v. Wong Kwok Wa

HCA 1806/2021

[2025] HKCFI 3629

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1806 OF 2021

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J U D G M E N T

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A.  Introduction

1.These proceedings are unfortunately another dispute between members of a family over the beneficial ownership of a property in Hong Kong. Some of the material events took place over 30 years ago, thus many of the allegations are understandably not supported by documents by reason of the lapse of time. The assertions would therefore have to be tested by their inherent probability and considered in light of the viva voce evidence given by the witnesses.

B.  Background

2.The property in question is Flat E, 7^th Floor, Block 13, No. 9 Shung King Street, Whampoa Garden, Site 2, Kowloon (the “Property”).

3.In gist, the Plaintiffs transferred the legal title of the Property to the Defendant on 23 November 1989 (the “Transfer”). The primary dispute is on what was intended by the parties. The Plaintiffs allege that the Transfer was not genuine with no consideration, and the Defendant only had all along held the Property under a common intention constructive trust. The Defendant on the other hand, allege that the Transfer was a genuine sale for valuable consideration.

4.The 1^st Plaintiff is the elder brother of the Defendant. The 2^nd Plaintiff is the wife of the 1^st Plaintiff, and the sister-in-law of the Defendant. The 1^st Plaintiff was a civil servant working at the Lands Department before his retirement from the civil service in around 2017.

5.The Defendant worked as a merchandiser with several companies between 1989 and 2019. He has since been working as an insurance agent.

6.Further, the Defendant is known to his family members as “華華”. Chiu Ki（趙姬）is the mother of the siblings (the “Mother”). The Mother passed away on 22 December 1993. Wong Wing Cheong（王榮昌）is the father of the siblings (the “Father”). Father is over 90 years old and did not give evidence in these proceedings. The siblings also have a younger brother Wong Kwok Fai（王國輝）who gave evidence in this trial. Their younger sister（王麗娟） sadly passed away last year.

7.Unless otherwise specified, the chain of events set out below in the rest of this section is not disputed.

Initial Purchase, Transfer, and Mortgages of the Property

8.On 30 April 1987, the Plaintiffs purchased the Property from the developer for HK$368,900, and took out a mortgage in their names for HK$290,000 from Bank of China to finance the purchase (the “BOC Mortgage”). They initially lived in the Property for about 2 years, from May 1987 to July 1989.

9.On 23 November 1989, the Transfer took place and the consideration was said to be HK$780,000. At the time of the Transfer, the Defendant signed documents for entering into a mortgage with HSBC (the “HSBC Mortgage”) for the purposes of redeeming the Property from the Bank of China so that the Property can be transferred to him.

10.As it shall be examined below, in relation to the HSBC Mortgage, there are three points of factual dispute:

10.1  the actual amount of the HSBC Mortgage drawdown;

10.2  whether the Defendant paid the Plaintiffs consideration of the Transfer (which would include the HSBC Mortgage drawdown);

10.3  it is not disputed that the HSBC Mortgage was eventually discharged on 16 August 2011. However, who in fact made the repayments of the HSBC Mortgage is disputed.

The purchasing of several properties in Sai Wan

11.About four months prior to the Transfer, on 1 May 1989, the Plaintiffs purchased another property on “1^st Floor, 25 Cadogan Street, Hong Kong” (“1^st Sai Wan Property”) for HK$615,000. It was purchased in the Defendant’s name and was sold by him to the Land Development Corporation after 9 years on 18 August 1998. The Defendant gave all the sale proceeds and allowances to the Plaintiffs subsequently.

12.About a month after the Transfer, on 29 December 1989, the Plaintiffs purchased another property on “3^rd Floor, No. 2 Kin Man Street, Hong Kong” (“2^nd Sai Wan Property”) for HK$390,000. This property was acquired in the Defendant’s name. After some 8 years on 21 July 1997, the Defendant transferred the 2^nd Sai Wan Property back to the 2^nd Plaintiff for no consideration, although it was stated in the assignment that the consideration was HK$700,000.

13.It is not in dispute that Defendant held the 1^st and 2^nd Sai Wan Properties on trust for the Plaintiffs. In his testimony, the Defendant furthermore described the returning of the sale proceeds of the 1^st Sai Wan Property and the transfer of the 2^nd Sai Wan Property with no consideration as 「履行承諾」(i.e. fulfilling his promise owed to the Plaintiffs).

14.About a year after the Transfer, on 24 August 1990, the 1^st Plaintiff purchased a flat at 2^nd Floor, No. 2C Davis Street, Hong Kong (“Davis Street Property”) in the name of the Father for HK$480,000. The 1^st Plaintiff’s original intention was that it would be the Father’s property for some form of old age maintenance. The Property was sold by the Father to the Land Development Corporation after 8 years on 8 June 1998. However, the Father gave the resumption money and allowances to the Defendant.

Mortgaging the Property with the Wing Lung Bank

15.On 29 December 2001, the Defendant mortgaged the Property to Wing Lung Bank, with the Defendant as the mortgagor and the 2^nd Plaintiff as the borrower (the “Wing Lung Mortgage”). The purpose was to raise a loan of HK$1,070,000 for the Plaintiffs’ use.

16.The Plaintiffs paid the monthly mortgage instalments ranging from about HK$7,198 to HK$8,466.50 per month to Wing Lung Bank Ltd. The Wing Lung Mortgage was discharged on 27 February 2015, after the Plaintiffs had repaid the outstanding loan on 29 December 2014. The title documents of the Property were kept by Cheung & Liu, Solicitors, (“Cheung & Liu”) who were instructed to undertake the discharge of the Wing Lung Mortgage.

1^st Plaintiff’s request to the Defendant to transfer the Property back

17.In between 2019 and 2021, the 1^st Plaintiff sent several WhatsApp messages to the Defendant and Cheung & Liu, requesting the Defendant to transfer the Property to one of his sons, with the Defendant replying on one of the instances (on 18 April 2019) complying with the 1^st Plaintiff’s request by providing him with a copy of his HKID card.

18.The Defendant admitted that the 1^st Plaintiff did message him, and he did provide the documents and details as the 1^st Plaintiff pleaded, but denied that doing so was acknowledging the Plaintiffs’ beneficial interest in the Property.

The Defendant’s mortgaging of the Property with BEA

19.Sometime in 2016, the Defendant requested the 1^st Plaintiff to allow him to use the Property as security for obtaining a mortgage loan as he was in financial difficulties. The 1^st Plaintiff refused. The Defendant’s later explanation was that he was asking the 1^st Plaintiff to mortgage another property that was also situated at Whampoa Garden and not to mortgage the Property.

20.On 22 July 2021, the Defendant used the Property as security for obtaining banking facilities, by entering into a mortgage with the Bank of East Asia (the “BEA Mortgage”).

C.  Points of factual dispute

21.In short, the material points of factual dispute between the parties are as follows:

21.1  the genuineness of the Transfer and the reason why the Transfer took place;

21.2  the amount of the HSBC Mortgage drawdown, and which party was making the repayments until its discharge on 16 August 2011;

21.3  who managed the Property – i.e. who received the rent and paid the expenses arising from the Property such as property tax and management fees.

22.There is also an issue as to what is to be made out of the Defendant’s reaction when the 1^st Plaintiff requested him to transfer the Property to his youngest son.

Dispute as to the genuineness of the Transfer

23.Naturally, two different stories emerged as to why the Transfer took place and whether it was genuine.

24.The Plaintiffs’ case is as follows:

24.1  The Plaintiffs allege that the Transfer was without consideration and was not a genuine transaction. Shortly before the Transfer, Plaintiffs had thought about applying for public housing under a scheme for junior civil servants for the then Civil Service Branch in 1989 (“Scheme”).

24.2  The purpose of the Transfer (and also why the Defendant held the 1^st and 2^nd Sai Wan Properties on trust for the Plaintiffs) was to conceal the Plaintiffs’ ownership of properties so that they could comply with the eligibility criteria for the Scheme. The Plaintiffs subsequently gave up the idea in 1990, and have never submitted any application to the Civil Service Branch for public housing.

24.3  The Plaintiffs never received any consideration for the Transfer of the Property on 23 November 1989 or thereafter.

24.4  The 1^st Plaintiff had orally discussed and explicitly agreed with the Defendant (who was then working as a merchandiser) during family lunch gatherings during September to November 1989 that the Defendant would hold the Property in name for the Plaintiffs, and would return it to the Plaintiffs on their instructions in the future. Meanwhile, the 1^st Plaintiff would be responsible for all the expenses in relation to the Property.

24.5  Furthermore, the Plaintiffs say that there is a pattern that in the year of 1989, the Defendant started to hold three properties on trust for the Plaintiffs (the 1^st, 2^nd Sai Wan Properties, and the Property) for the same purpose of concealment. As aforementioned, insofar as the 1^st and 2^nd Sai Wan Properties are concerned, it is common ground that they were in fact held on trust for the Plaintiffs.

24.6  The 1^st Plaintiff thus says that there is a similar understanding regarding the Property.

25.The Defendant’s case is as follows:

25.1  The Defendant alleges that the Transfer was a genuine transaction with consideration consisting of two components:

(1)  1^st Component: the late Mother’s promise not to recover several loans advanced by her to the Plaintiffs:

(a)  when the Plaintiffs initially purchased the Property from the developer, that purchase was financed in part by a HK$75,000 loan advanced by the late Mother to the Plaintiffs to cover for the down payment of the Property (“1^st Loan”);

(b)  the Defendant alleges that this HK$75,000 came from housekeeping monies contributed by the Father, the Defendant, and their younger brother;

(c)  the Mother further lent around HK$30,000 (of which HK$15,000 came from the Defendant) to the Plaintiffs to purchase the 1^st Sai Wan Property to be held in the Defendant’s name (“2^nd Loan”);

(d)  the Mother further lent an unknown amount to the Plaintiffs to purchase the 2^nd Sai Wan Property (“3^rd Loan”);

(e)  the Plaintiffs attempted to convince the Mother to lend more monies to them to purchase more properties. The Mother refused. The 1^st Plaintiff then persuaded the Mother to ask the Defendant to purchase the Property from the Plaintiffs;

(f)  “Over the course of several meetings” between the Plaintiffs, the Defendant, the Mother, and the Father, on an unspecified date, the siblings and the Mother agreed that the Defendant would purchase the Property, and as first part of the consideration of the Transfer, the Mother would not seek repayment of the 1^st, 2^nd, and 3^rd Loans.

(2)  2^nd Component: it was agreed that the Defendant would purchase the Property at above market value to allow the Plaintiffs to have additional funds to increase their property investment portfolio.

(the 1^st and 2^nd Components are referred together by the Defendant as the “Proper Arrangement”)

25.2  The effect of the Proper Arrangement was therefore the combination of (1) the Mother not seeking repayment of the 1^st, 2^nd, and 3^rd Loans, and (2) the Plaintiffs receiving the proceeds of the HSBC Mortgage, which they then used the funds to purchase the 2^nd Sai Wan Property.

25.3  The Defendant claims that the reason behind the Proper Arrangement was that:

(1)  the Mother did not get along well with the 2^nd Plaintiff (i.e. her daughter-in-law) and did not wish for the 2^nd Plaintiff to have her name registered as owner of the Property, as the Mother believed that the Property was purchased using monies from the Wong family. The Proper Arrangement would achieve the Mother’s wish to have the Property be “kept within the Wong family”;

(2)  “out of sibling love”, the Proper Arrangement would enable the 1^st Plaintiff to achieve his dream of investing in further properties in the Sai Wan area; and

(3)  the 1^st Plaintiff assured the Defendant that purchasing the Property would not be a burden for him as the 1^st Plaintiff would arrange tenants to rent the Property at a sum that could defray any mortgage repayments (and the Property had an existing tenant at the time).

26.It should be noted that the Defendant is not able to provide the exact time of the Proper Arrangement, the amount of money allegedly lent by the Mother to the Plaintiffs, the amount of proceeds paid by him to the Plaintiffs, and the amount of the proceeds allegedly received by the Plaintiffs from the drawdown of the HSBC Mortgage.

27.The Plaintiffs deny the existence of the Proper Arrangement or that the Mother had lent any money to them for the purchase of the Property and/or the 1^st and 2^nd Sai Wan Properties.[1]

28.The Plaintiffs further maintain that the Defendant only held the Property on trust for the Plaintiffs like what he did with regards to the 1^st and 2^nd Sai Wan Properties for the purposes of concealment of true ownership.[2]

Dispute as to the amount of the drawdown of the HSBC Mortgage and who made the repayments towards the HSBC Mortgage

29.Paragraph 11 of the Amended Statement of Claim states the drawdown of the HSBC Mortgage to be HK$260,000. This was admitted at paragraph 11 of the Defence “subject to documentary proof”. [3]

30.As it will become apparent, neither party provided documentary proof of the drawdown. The Defendant later stated in his Supplemental Witness Statement that the drawdown was HK$620,000, although this amount is only supported by an unidentified payment schedule which the Defendant claims to be the repayment scheme for the HSBC Mortgage.

31.The Plaintiffs claim to have made repayments of about HK$4,000 per month to HSBC until the discharge of the HSBC Mortgage on 16 August 2011.

32.This was denied by the Defendant, who alleges that under the Proper Arrangement, it was he who would be paying the HSBC Mortgage payments, but the Plaintiffs agreed to arrange tenants to rent the Property at a sum sufficient to cover his mortgage payments.

Dispute as to who managed the Property after the Transfer

33.The Plaintiffs say that they were the party who were managing the Property after the Transfer (and thus exerted true ownership of the Property).

34.The Plaintiffs say that since the Transfer, the Property was rented out by them to successive tenants and the rental income was paid by the tenants directly into the 1^st Plaintiff’s bank account and/or the Plaintiffs’ joint account (a) from December 1989 to August 1993, (b) from 11 July 2018 to 10 July 2020, and (c) from 9 September 2021 to present. The keys of the Property were either held by them or the tenants (when rented out), and the Defendant never kept the keys nor visited the Property. Further, they were also responsible for the expenses in relation to repair and maintenance of the Property when a tenant had moved out and all the tenancy agreements in relation to the Property before and after the Transfer were all signed by the Plaintiffs.

35.Further, the Plaintiffs say that the monthly management fees, rates and Government rent, property tax, expenditure for Government rent and rates, property tax, and stamp duty, were all paid by them.

36.The 1^st Plaintiff produced a table regarding the rental income of the Property from 1989 to 2022 enclosed in Appendix 5 of his witness statement. It should be noted that the evidence in support of this table is also incomplete, as the 1^st Plaintiff could only provide the WhatsApp messages with a tenant on 17 August 2018 and 27 August 2018 showing the tenant deposited rent into the 1^st Plaintiff’s bank account on 27 August 2018.

37.Equally, the Defendant could not provide documentary evidence of who received the rental income to the Property, save as to the production of his savings account history from 1 January 2015 to 20 December 2021, which shows a regular monthly deposit of HK$15,000 to HK$16,000 being deposited to this account, which roughly corresponds to the Plaintiffs’ account of rental income generated from the Property. This will be discussed in greater detail below.

38.In relation to the two tenancy agreements produced by the Plaintiffs dated 11 July 2018 and 11 July 2019, the Defendant agrees that they were indeed signed by the 1^st Plaintiff, but pointed out that the tenancy agreements recorded the Defendant as the landlord. This is of little relevance as there is no dispute that the Defendant is the legal owner of the Property.

39.The Defendant admits that the Plaintiffs did take care of the tenancies of the Property after the Transfer but he claims that they only did so pursuant to the Proper Arrangement. The Defendant claims that he entrusted the Plaintiffs to arrange the Property to be let to tenants, and any sums incurred by the Plaintiffs came from excess of the rent received through the Property and with the Defendant’s consent.

40.Furthermore, the Defendant pleaded that as the 1^st Plaintiff did not discharge his filial piety duty to maintain the Father claiming he has “liquidity problems”, thus in 2001, the Defendant, in order to not cause the Father’s disappointment, suggested to the 1^st Plaintiff that (a) the Plaintiffs keep maintaining the Property according to the Proper Arrangement; (b) the tenants would deposit the rent directly to the Defendant’s bank account; and (c) the Defendant would then give the rent to the 1^st Plaintiff, who would in turn give HK$8,000 to the Father as his pocket money, and also to settle the management fee, rates, and Government rent of the Property with the rest of the rental income, and (d) the Plaintiffs would repay the Wing Lung Mortgage (the “2^nd Arrangement”).

41.The Defendant says the 2^nd Arrangement lasted until 2004 when the Plaintiffs’ financial situation improved. He claims that he then amended the 2^nd Arrangement in that (a) he would pay HK$10,000 from the rental income derived from the Property to the Father as pocket monies; (b) he would use the rest of the rental income to provide for the Father’s expenses; and (c) the 1^st Plaintiff would use his own money to settle the management fee, rates, and Government rent of the Property (the “3^rd Arrangement”).

42.The Defendant says that the 3^rd Arrangement lasted until 2015 when he was diagnosed with lymphoma and needed substantial sums for treatment and started requesting the 1^st Plaintiff to return the title deeds of the Property, to which the 1^st Plaintiff refused and instead paid HK$100,000 into the Defendant’s bank account around January 2016 and another HK$100,000 in June 2016.

43.The Plaintiffs deny there were such oral arrangements as alleged by the Defendant at all. The 1^st Plaintiff says that as the Defendant was in financial difficulties since late 2015, the Defendant borrowed money from him from 7 December 2015 to 25 September 2019, for a total amount of around HK$905,000 in 4 years.

Dispute as to the Defendant’s silence over the 1^st Plaintiff’s instruction to transfer the Property to his son

44.The Defendant says that after the early discharge of the Wing Lung Mortgage, the 1^st Plaintiff kept the whereabouts of the title documents from him. When the 1^st Plaintiff asked him to transfer the Property to his son, the Defendant was suffering from severe stress from his medical expenses and behavioural issues and mental problems of the Father, and “played along” so as to procure the whereabouts of the title deeds of the Property.

45.The Plaintiffs on the other hand, deny that the Defendant was kept from the whereabouts of the title documents to the Property. The Receipt on Discharge of Wing Lung Bank dated 27 February 2015 was registered in the Land Registry under Memorial No. 15031800010040 by Cheung & Liu on 17 March 2015, which is a matter of public record by conducting a land search, and there is no need for the Defendant to “play along” to procure their whereabouts. The Plaintiffs further said the Defendant never asked for the title documents.

D.  Legal Principles

46.The principles governing common intention constructive trust are trite. Ng J in the recent case of Ko Yin Fun v Ko Chi Hung & Ors [2024] HKCFI 1608 at §§45 to 49 provided a helpful summary of the relevant principles.

47.Firstly, equity follows the law. The beneficial interests reflect the legal interests in the property. The burden is on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon, see Stack v Dowden [2007] 2 AC 432 at [54], [56], and [68], as well as Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 (CA) at [5.5].

48.Secondly, common intention constructive trust might arise in two situations:

48.1  the first situation is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially;

48.2  the second is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. See for example Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at [2.3] – [2.4].

49.Third, in ascertaining whether there was a common intention between a plaintiff and a defendant, which is the first and foremost requirement for the imposition of a constructive trust, it is the objective intention of each party which was reasonably understood by the other party to be manifested by that party’s words and conduct that one must examine. Further, it is the parties’ common intention at the time of the acquisition of the property that is relevant, if there is no suggestion from anyone that the intention had changed, see Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §§47 to 48.

50.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, see Liu Wai Keung at [49].

51.In Leung Hang Lin v Lam Mei Yung [2019] HKCFI 2819 at §8, Deputy High Court Judge Alexander Stock, SC helpfully summarised the principles as follows:

“(1) The starting point is that equity follows the law. There is a presumption that the beneficial interest follows the legal interest. Where the property is registered in a defendant’s name, the plaintiff bears the burden of showing, on the balance of probabilities, that the defendant held the property on trust for him or her such that the beneficial ownership differs to the legal ownership.

(2) The burden may be discharged by showing that (i) there was a common intention held by the plaintiff and the property owner at the time of the purchase (or exceptionally, thereafter) that the beneficial ownership was to be different to the legal ownership, (ii) the plaintiff altered his position in detrimental reliance upon the common intention, and (iii) it is unconscionable for the property owner to assert ownership in reliance on the legal title. The constructive trust is constituted by the plaintiff’s detrimental reliance on the common intention and the unconscionability of the legal owner departing therefrom.

(3) The approach to ascertaining common intention is objective. One looks to the intention of each party which was reasonably understood by the other party to be manifested by the first party’s words and conduct.

(4) The doctrine is sometimes described as having two limbs. First, where at any time prior to the acquisition (or exceptionally, at a later date), there is an agreement, arrangement or understanding reached between the parties as to how the property is to be held beneficially, based on evidence of express discussions. Second, where there is no evidence to support such a finding but the court relies on the parties’ conduct as a basis from which to infer a common intention. There is some authority that under the second limb, direct contributions to the purchase price by a party who is not a legal owner will readily justify the inference.

(5) However, the modern approach is to assess the parties’ common intention by a holistic approach having regard to the context and the particular facts. The court is not constrained to consider only pure direct monetary contributions to the purchase price. In a Chinese setting, especially for the older generations, where explicit discussions on property rights within the family are not that common, the court has to pay more regard to circumstantial matters.”

52.Moreover, the following propositions are well-settled as regards to the approach to witness evidence and documentary evidence:

52.1  The Court will have regard to the inherent probabilities of the parties’ respective cases, and the internal consistency of the witnesses’ evidence and their demeanour when testifying at trial. Further, the Court will have regard to the contemporaneous documents, circumstantial evidence tending to support one account rather than the other, and the overall impression of the character / motivation of the witnesses: Re B (Children) [2009] 1 AC 1).

52.2  The Court bears in mind not only the witnesses’ demeanour in court, but also the history of events, and the contemporaneous documents and the inherent probabilities of the witnesses’ accounts: Esquire (Electronics) Ltd v The Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 at 494C.

53.In particular, when one is concerned with subsequent conduct, words and declarations as evidence of the intentions at the time of the transaction, the following passage from Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605 at §§55-56 per Stock NPJ is relevant:

“55. A question canvassed in the course of argument before this Court was whether those earlier and later events were admissible as evidence of intention at the time of transfers. It seems to me that they were and that the issue was one of weight. In the context of a question whether evidence of conduct subsequent to the registration of shares in the names of children was admissible to rebut the presumption of advancement, it was held in Shephard v Cartwright that whereas acts and declarations of the parties before or at the time of the transaction or so immediately after it as to render it a part of that transaction are admissible “either for or against the party who did the act or made the declaration. Subsequent declarations are admissible as evidence only against the party who made them, not in his favour.” The modern approach is less rigid in relation to evidence of subsequent conduct:

‘… it does not follow that subsequent conduct is necessarily irrelevant. Where the existence of an equitable interest depends upon a rebuttable presumption or inference of the transferor’s intention, evidence may be given of the subsequent conduct in order to rebut the presumption or inference which would otherwise be drawn.’ (Tribe v Tribe [1996] Ch 107 at 129 per Millett LJ, as he then was. See also Lavelle, above, at [17] to [19] and Snell’s Equity 33^rd ed., 25-013.)

56. As a matter of common experience, contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event, especially in the case of “self serving statements or conduct of the transferor, who may long after the transaction be regretting earlier generosity.” That rationale is not restricted to evidence in rebuttal of presumptions but embraces any evidence from which an inference of the transferor’s intention may properly be drawn.”

E.  Analysis

54.The Court is very much alive to the fact that the present dispute arose from a transaction that took place some 36 years ago. After such long lapses of time, memories of key witnesses are expected to fade, and documentary records that may assist in the proof of the underlying transactions cannot realistically be expected to be kept in all their completeness.

55.In these specific circumstances, it would not be reasonable to criticise the parties for minute discrepancies over their recollection of their respective versions of events, or their failure to come to strict documentary proof of their respective factual claims.

56.At the heart of the dispute is the intention behind the Transfer. As the preceding paragraphs pointed out, each party has proffered their respective versions of events, but neither side provided contemporaneous documents of sufficient credence that could go to prove the genuineness of the Transfer. It is particularly worthy to note (and not meaning as criticism in the parties’ preparedness of their cases) that:

56.1  Neither party could tender any contemporaneous documents proving whether any consideration was given for the Transfer;

56.2  Neither party could tender any contemporaneous documents showing the amount of the drawdown of the HSBC Mortgage, and whether the Plaintiffs received the drawdown as consideration for the Transfer.

57.Due to the lack of (contemporaneous) documentary proof and the inherent unreliability of witness accounts (not meaning as criticism) of events that occurred over three decades ago, the Court is mindful not to place much weight on either side’s unsupported factual account of events to resolve a factual discrepancy. Rather, weight would be placed more heavily on:

57.1  the undisputed facts;

57.2  the remaining available documentary evidence that “speaks for itself” – while much of it is not contemporaneous by nature, it is still able to prove certain subsequent conduct that could give rise to inferences of the intention of the parties at the time of the Transfer;

57.3  where there is material factual dispute, whether the parties’ versions of events are internally consistent.

58.Being mindful that it is the Plaintiffs’ burden to prove that beneficial interest does not follow legal interest (see Stack v Dowden), adopting the above methodology, the Court shall examine the following contested issues that concern not just the surrounding circumstances of the Transfer, but also the parties’ subsequent conduct: (i) the motive of the parties behind the Transfer; (ii) which party paid the mortgages in relation to the Property; (iii) who managed the Property by paying the expenses in relation to the Property including property taxes and management fees; (iv) which party took the rent from the Property; (v) the pattern of the holding of various properties by the Defendant as trustee for the 1^st Plaintiff / Plaintiffs; and (vi) the explanations given over the various WhatsApp messages between the parties discussing the Property.

E1.  Motive of the Parties behind the Transfer

59.At the heart of the dispute is thus, whether there is evidence that shows the parties had intended for the beneficial interest to depart from the legal title. This calls for an examination of the motives behind the Transfer. Each party has given their own account as to why the Transfer took place. As it shall be apparent in due course, neither party has adduced evidence of sufficient credence in support of their contention:

59.1  The Plaintiffs’ case is that the Transfer of the Property, together with the purchasing of the Sai Wan Properties under the Defendant’s name was to conceal their ownership of these properties as they had thought about applying for public housing scheme under the Civil Service Branch for allocating public housing to junior officers.

59.2  The Defendant’s case is that the Transfer was genuine, and that the consideration for the Transfer is made up of (i) the late Mother’s promise not to recover three loans made to the 1^st Plaintiff, and (ii) the drawdown of the HSBC Mortgage, which the Defendant says is taken out “above market value”.

60.One of the Defendant’s main lines of attack in cross-examination relates to the Plaintiffs’ means to purchase the 2^nd Sai Wan Property one month after the Transfer. It was put to the 1^st Plaintiff that given the financial information proffered in his evidence between 1986 and 1989, it would not be possible for him to save up enough money to make a further purchase in the 2^nd Sai Wan Property without receiving monies from the Transfer.

61.The Defendant also questioned the 1^st Plaintiff’s motive in making the Transfer in cross-examination, citing that the according to the Circular Memorandum No. 43/96 issued in 1996 concerning the Civil Service Public Housing Quota 1996/97 that applicants eligible to the scheme must be serving at or below MPS Point 21 and not on a rank scale reaching MPS Point 25 or equivalent. As the 1^st Plaintiff was already at Point 19 in 1990, and the application process can take up to a year, the alleged plan to apply could not have been the motive behind the Transfer.

62.On the other hand, the case could be open and shut if the Defendant is able to show that he had in fact paid the Plaintiffs consideration for the Transfer. The Defendant however admitted in cross-examination that, not only was he unable to provide evidence of the consideration paid to the Plaintiffs, he also did not know the amount of HSBC Mortgage drawdown, nor the actual transfer price of the Property.

63.The alleged loans advanced by the late Mother formed the other component of the alleged consideration for the Transfer. It goes without saying that the late Mother could not testify, and the evidence from either party on the late Mother’s means was largely down to oral testimony with very little reliable contemporaneous documents in support. The reliability of such evidence in attempting to prove the late Mother’s ability to partly finance the Transfer is dubious at best.

64.As discussed above, given the long lapse of time from the Transfer and the lack of contemporaneous records, it would be unfair to hold the point against either party:

64.1  On the Plaintiffs’ side, it would be unfair to require the Plaintiffs to be able to account with accuracy, fine details of their precise financial records from over 30 years ago. Similarly, the questioning of whether the Plaintiffs’ true motive in the Transfer is to conceal ownership in a proposed application for public housing that never materialized is a red-herring – the Defendant had no difficulty accepting that he has also held the Plaintiffs’ other properties on trust and in those instances, he never required the Plaintiffs to have a motive.

64.2  On the Defendant’s side, while criticisms can be made against the Defendant’s failure to support his claims with financial records proving the Transfer or failure to proffer any evidence that backs up the late Mother’s alleged loans, it would be fair to say that the lapse of time has made the proof of the Defendant’s case difficult to say the least.

65.Thus, given the unreliability and lack of material documentary record from both sides at the time of the Transfer, as aforementioned, much of this case will have to turn on the undisputed facts and subsequent conduct of the parties.

E2.  Who made the mortgage repayments?

66.It is not disputed that the Defendant was the mortgagor and borrower of the HSBC Mortgage. Neither party proffered any contemporaneous evidence that showed the exact amount of the HSBC Mortgage drawdown.

67.Each party claimed they made the mortgage payments. As the property market was on the rise during the material time of the dispute (and the Property had all along been put on the rental market), it is common ground that the rent generated by the Property was more than sufficient to cover the monthly mortgage payments (save for the months when the Property was vacant for renovation), and that this was how the mortgage was generally been paid.

68.The Plaintiffs’ case in this regard is largely reconstructed from a table adduced in the 1^st Plaintiff’s witness statement that details rent received by the Plaintiffs during the period from 1989 to the present. The discussion as to which party received rent from the Property would be dealt with in detail below, but the Plaintiffs’ case on payment of the HSBC mortgage alone is based largely on oral testimony.

69.The Defendant’s case on mortgage payments is also unsupported by documentary evidence, save as to a “Savings Account History Report” generated by HSBC for the Defendant’s account 490-0-012115. The record shows a sum of around HK$ 3,400 was withdrawn every fortnight from that account from 1 January 1999 to 31 December 2000 with a remark under the “Deposits” column as “Loan Rep”.

70.The Court is unable to accept the Plaintiffs’ case that they were the party responsible for paying the HSBC Mortgage on oral testimony alone.

71.However, the Defendant’s evidence must be equally examined with the same degree of vigour. The Court is equally not convinced of the unequivocal nature of the “Savings Account History Report”, which on the face of the document, never identified the loan as a mortgage, which could well be a revolving loan, and in any event, only covered a short span of 2 years.

72.Given the state of the evidence, the Court is unable to draw a conclusion as to which party was responsible for the payment of the HSBC Mortgage.

E3.  Rent

73.The evidence on rent is more telling. As indicated above, the Plaintiffs claim that the rental income was paid by the respective tenants directly into the 1^st Plaintiff’s bank account and/or the Plaintiffs’ joint account. This is summarized in Appendix 5 of the Plaintiffs’ witness statement, and further explored in the Plaintiffs’ Closing Submissions. In gist, the 1^st Plaintiff’s case on rent is as follows:

73.1  From 1989 to 1993 (about 48 months), monthly rentals of HK$8,000 received from one Cathay Pacific flight attendant were received by the 1^st Plaintiff by his HSBC account 018-9-058035. He then paid the mortgage amount of about HK$4,000 into the Defendant’s HSBC account 490-0-012115.

73.2  From 1994 to 1996 (24 months), the monthly rentals of HK$7,200 were paid by a company tenant into the Defendant’s HSBC account 490-0-012115. The Defendant would give back the rental surplus (after deducting the mortgage repayments) back to the 1^st Plaintiff from time to time.

73.3  During the renovation period in 1996, the 1^st Plaintiff paid the monthly mortgage repayments using his own money deposited into the Defendant’s HSBC account 490-0-012115.

73.4  For the period from 1997 to 1999 (24 months), the monthly rent of HK$7,000 was paid by a company tenant into the Defendant’s HSBC account 490-0-012115.

73.5  For the 6-month renovation period in 1999 – 2000, the 1^st Plaintiff paid the monthly mortgage by making payments using his own money deposited into the Defendant’s HSBC account 490-0-012115.

73.6  From 2000 to 2003 (about 26 months), the tenant paid the monthly rentals of HK$7,000 into the 1^st Plaintiff’s HSBC account 018-9-058035. The 1^st Plaintiff then paid the mortgage of about HK$4,000 into the Defendant’s HSBC account 490-0-012115 until mid-2001.

73.7  From 11 July 2018 to 10 July 2020, the monthly rentals of HK$16,000 from Polytechnic University students were paid into the Plaintiffs’ Bank of China joint account 014-69710091892.

74.It is common ground that much of what the Plaintiffs claim is only supported by their oral testimony. However, the WhatsApp messages between the tenants of the Property dated 17 August 2018 and 27 August 2018, did indicate that at least in these two instances (and accepted by the Defendant), rent generated by the Property was directly deposited into the Plaintiffs’ joint bank account.

75.The Court further notes the communication between the 1^st Plaintiff and the Defendant via WhatsApp dated 27 August 2018 where the Defendant refers to the tenant of the Property as a tenant “belonging” to the 1^st Plaintiff:「大佬，你個租客係唔係搬走咗，到依家都冇交租」

76.Further, the 1^st Plaintiff in fact signed off multiple tenancy agreements in relation to the Property.

77.It should be noted that the Plaintiffs do not deny that on certain occasions, rent would be deposited directly by the tenant into the Defendant’s account. The Plaintiffs’ explanation is that the Defendant has in the past required financial assistance from the Plaintiffs, and the payment by the tenant directly into the Defendant’s account is a form of such financial assistance given with the 1^st Plaintiff’s consent.

78.The 1^st Plaintiff submitted in his evidence a record of all the instances (and the relevant monetary amounts) where the 1^st Plaintiff has “lent” money to the Defendant as a form of financial aid (in addition to the rent paid into the Defendant’s bank account), which adds up to HK$905,000 between 2015 and 2019. Under cross-examination, the Defendant agrees that the 1^st Plaintiff did provide him with loans when he was in financial difficulty, although he took the view that these loans did not have to be repaid as the money goes to helping with the Father’s living expenses.

79.It is not in dispute that the 1^st Plaintiff managed the Property at all material times and was in charge of finding tenants, fixing the amount of rent, and enforcing the payment of such rent. Regardless of who was receiving the rent, the Defendant admitted under cross-examination that the 1^st Plaintiff decides who to rent to, the amount of rent, when to rent and when not to rent.

80.In his submissions, Mr Cheung Man Keung for the Defendant has understandably little to submit on the case of rent. In particular, while the Defendant says the Polytechnic University students paid their rent to his bank account, the WhatsApp messages indicated the recipient of the rent (at least by the Polytechnic University students in 2018) is WONG K*** C****, “018-9-058035”, that being the 1^st Plaintiff’s HSBC bank account number.

81.The Defendant’s positive case on rent is the submission of his savings account history from 1 January 2015 to 20 December 2021, which shows a regular monthly deposit of HK$15,000 to HK$16,000 being deposited into this account, which roughly corresponds to the Plaintiffs’ account of rental income generated from the Property.

82.But then, the Plaintiffs actually do not dispute that on many occasions, rent (and in addition to rent, further personal loans) were paid directly into the Defendant’s bank account as a form of financial aid.

83.In light of the aforesaid evidence, the following issues are relevant:

83.1  If the Defendant’s case is true and that the Transfer is a genuine, clean-cut sale of the Property by the Plaintiffs to the Defendant, why would the Plaintiffs continue to so-called “manage” the Property for the Defendant at their own expense?

83.2  The Defendant’s explanation is to fall back onto the so-called “2^nd Arrangement” and “3^rd Arrangement”, where the Defendant pleaded that, in gist, that the reason why 1^st Plaintiff would continue to maintain the Property is because it was “agreed” between the siblings that the 1^st Plaintiff would continue to maintain the Property (including the payment of related expenses, to be dealt with below) and the Defendant would use the rent generated by the Property to maintain the Father.

83.3  The Plaintiffs deny the existence of the 2^nd and 3^rd Arrangements and there is no contemporaneous evidence (other than the Defendant’s own say-so) proving their existence. The said arrangements were also a somewhat unnecessarily convoluted mechanism to provide for the Father.

83.4  How the Father was maintained has no real or necessary connection to the Property. The funds used to maintain the Father does not have to come from the Property, which is why this explanation appeared as a reason manufactured ex post facto to explain why the Defendant would in certain instances pay the Plaintiffs rent derived from the Property, and why the Plaintiffs had been negotiating with tenants.

83.5  In particular, the 3^rd Arrangement (which the Defendant pleaded to be in operation between 2004 and 2015 for 11 years) suggested that it was agreed between the siblings that the rental income derived from the Property would be used to maintain the Father, and the 1^st Plaintiff would contribute to the Property’s expenses as a subsidy towards the maintenance.

83.6  This is needlessly convoluted – if the Transfer was a genuine sale, the simplest and most commonsensical way would be for the 1^st Plaintiff and for the Defendant to maintain the Father with their respective funds. There is no feasible explanation (especially where the Defendant’s pleaded arrangements are not supported by any documentary evidence) why the siblings needed to adopt this needlessly complex mechanism to tie their financial obligations in maintaining their Father to the Property. In any event, the 3^rd Arrangement as pleaded by the Defendant concluded in 2015, yet the Plaintiffs continued to receive rent in relation to the Property.

84.On the other hand, if the Plaintiffs had always been the true beneficial owners of the Property, this justified why they had an interest in negotiating with the tenants, and also explained why the Plaintiffs did receive rent directly from the tenants in certain cases. In periods where rents were deposited into the Defendant’s bank account by the tenants, the explanation that this was some form of financial aid by the Plaintiffs is also more believable since the Defendant himself admitted in cross-examination that he received financial aid from the 1^st Plaintiff on a number of occasions.

85.Balancing the two very different accounts, the Court takes the view that insofar as the receipt of rent is concerned, the Plaintiffs’ case is far more credible.

E4.  Expenses: Government Rent, Rates, Management Fees, and Taxes

86.As briefly alluded to in the foregoing section, the Defendant accepts in his own case (at least in relation to the 3^rd Arrangement) that the Plaintiffs had been paying the expenses in relation to the Property, including that of property tax and management fees. The Court has also taken the view that the Defendant’s explanation is unconvincing.

87.The Plaintiffs adduced evidence that they have been paying the management fees, rates (in that the demand notes were sent to the Plaintiffs’ residential address), and property taxes in relation to the Property, and well after the lapse of the Defendant’s pleaded 3^rd Arrangement. The Defendant himself accepted in cross-examination that the Plaintiffs did pay the property taxes well after the lapse of the 3^rd Arrangement.

88.The Defendant in cross-examination explained that the 1^st Plaintiff only paid these expenses for the Defendant as a form of financial aid to alleviate the Defendant’s financial burdens at the time.

89.The Court is not persuaded by the explanation, especially when it is part of the Defendant’s own case that the Plaintiffs had always been paying the expenses in relation to the Property, at least under the 3^rd Arrangement. The Court takes the view that insofar as the payment of expenses in relation to the Property, the Plaintiffs’ version is much more probable.

E5.  WhatsApp messages between the 1^st Plaintiff and the Defendant

90.The most damaging piece of evidence against the Defendant’s case is the series of WhatsApp messages between the 1^st Plaintiff and the Defendant requesting the Defendant to transfer the Property to his youngest son:

90.1  On 18 April 2019, the 1^st Plaintiff by WhatsApp message told the Defendant that the 1^st Plaintiff would want to transfer the Property to one of his sons. The 1^st Plaintiff asked the Defendant to send his Hong Kong ID card to him by WhatsApp so that he could take that to Cheung & Liu for preparing the documents of transfer. The original text reads as follows: “細黃埔我想轉番名畀阿B佢哋  你whatsapp你嘅身份證畀我攞去律師樓做契”. The Defendant complied with this request, supplying the 1^st Plaintiff a copy of his HKID card.

90.2  On 18 November 2020, the 1^st Plaintiff by WhatsApp message instructed Cheung & Liu to prepare documents for transferring the Property from the Defendant to his youngest son, Wong Ching Yiu（王證堯）for a purported consideration of HK$6 million.[4]

90.3  On 25 February 2021, the 1^st Plaintiff sent a WhatsApp message to the Defendant enclosing a name card of Mr Wu Chi Wai of Cheung & Liu, which reads:「我搵咗張廖律師做二期黃埔轉名手續，你幾時得閒先約胡先生律師樓簽名，佢話要提早三幾日通知」.

90.4  On 8 September 2021, the 1^st Plaintiff sent a WhatsApp message to the Defendant, also enclosing the name card of Mr Wu Chi Wai of Cheung & Liu, and said the following:

「華華，我喺 whatsapp 要求你將黃埔花園二期 13 座 7 樓 E 室單位轉返名畀我同你大嫂，大嫂早兩星期前亦喺電話提過你要轉返層樓嘅業權畀我哋，但至今未收到律師樓胡先生通知話你已經上去簽轉名手續，我現在通知你，如果你係 2021 年 9 月 30 日前仍未上去律師樓辦理轉名手續，層樓會即時交由律師處理。」

91.When questioned as to why the Defendant on 18 April 2019 would comply with the 1^st Plaintiff’s request by supplying him with a copy of his HKID, the Defendant gave several explanations. Firstly, he said he thought the 1^st Plaintiff wanted to purchase the Property from him. Secondly, he said he complied as the Father was not feeling well on the day and did not think too much of it. He also wanted to find out where the 1^st Plaintiff kept the title deeds to the Property.

92.The Court finds these explanations difficult to follow. Firstly, the WhatsApp message made use of the words「轉番名」, which does not connote any meaning of a desire to purchase the Property.

93.Secondly, by 25 February 2021, it is quite clear that the 1^st Plaintiff has set the property transfer arrangements in motion by informing the Defendant that the 1^st Plaintiff has already engaged solicitors. Contrary to what the Defendant claims (that he mistaken the 1^st Plaintiff’s request on 18 April 2019 as a desire to purchase the Property) the Defendant never clarified if the 1^st Plaintiff was indeed seeking to purchase the Property. The natural response (if the Defendant was the true beneficial owner) would be to retort by clarifying and exerting ownership. But even at this point, the Defendant had chosen to stay silent. At no point in time did the Defendant remind the 1^st Plaintiff of the “Proper Arrangement”, “2^nd Arrangement”, or “3^rd Arrangement” as alleged, further suggesting that these arrangements are probably fictitious and shoehorned to explain many of the Plaintiffs’ conduct that exert their ownership status.

E6.  The “Pattern”

94.The Defendant admits he has held properties on trust for the Plaintiffs before. It is not in dispute that Defendant held the 1^st and 2^nd Sai Wan Properties on trust for the Plaintiffs, which he has described the returning of the sale proceeds of the 1^st Sai Wan Property and the transfer of the 2^nd Sai Wan Property with no consideration as 「履行承諾」 (fulfilling a promise).

95.This is a highly relevant factor as the Plaintiffs can show that the Defendant has been a trustee for the Plaintiffs in the past, holding various properties purchased by the Plaintiffs at around the same time.

96.The Court is mindful that the burden of proof lies with the Plaintiffs to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way.

97.Given the lack of contemporaneous documents, much of this case has to be based on (1) the parties’ subsequent conduct; (2) the undisputed facts; and (3) the internal consistency of the parties’ cases.

98.Evidence in relation to who paid the mortgages has been lacking, but there is evidence on receipt of rent. The Plaintiffs could show some evidence of them receiving rent from the Property despite not being the legal owner. Furthermore, even on the Defendant’s own case, it is undisputed that the Plaintiffs have always been in charge of managing the Property’s rent. Yet the reason provided by the Defendant as to why the Plaintiffs would be interested in managing the rent of a Property that they allegedly have no beneficial interest in is needlessly convoluted.

99.Similarly, it appears the evidence that the Plaintiffs have been paying much of the Property’s expenses is largely not disputed. Again, the Defendant could not provide a sensible and internally-consistent explanation as to why the Plaintiffs would keep doing this for over decades if they did not have beneficial interest in the Property.

100.Coupled with the Defendant’s initial compliance in facilitating the transfer of the Property without consideration to the 1^st Plaintiff’s youngest son, and the fact that the Defendant had historically been holding properties on trust for the Plaintiffs, I take the view that on balance, the Plaintiffs have successfully shown that it is more likely than not that they had all long been the beneficial owners of the Property.

F.  Conclusion and Orders

101.By reason of the aforesaid, it is clear to me that the Plaintiffs have all along been the beneficial owners of the Property and that it was held on trust by the Defendant for them since it was assigned to the Defendant on 23 November 1989. I therefore grant the declarations to the aforesaid effect as sought in favour of the Plaintiffs.

102.I also make a costs order nisi that costs of these proceedings be paid by the Defendant to the Plaintiffs to be taxed if not agreed.

Mr Wallace Cheung, instructed by Messrs Choi & Liu for the 1^st and 2^nd Plaintiffs

Mr Cheung Man Keung, instructed by Messrs Chan & Ho for the Defendant