Tam Yim Yee v. Tam Luen Fat Dicky

DCMP 317/2022

[2025] HKDC 1451

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 317 OF 2022

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JUDGMENT

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A.  Introduction

1.This trial concerns the Plaintiff’s application under Section 6 of the Partition Ordinance (Cap 352) (“PO”) (“the Application”) and the beneficial ownership of a property known as Flat A on the 3^rd Floor, Primrose Court, No 56A Conduit Road, Hong Kong (“the Property”).

2.The Plaintiff and the Defendant are and were at all material times legal tenants-in-common of the Property.

3.In the Application, the Plaintiff seeks an order for sale of the Property.

4.The Defendant opposes the Application. He denies the Plaintiff’s beneficial ownership in the Property, alleging that the Plaintiff is only holding her share of the Property on trust for him. Further, the Defendant relies on undue hardship to oppose the Application.

B.  Agreed Background Facts

5.The following background facts are agreed between the parties.

6.In around 1992, the Defendant set up Plenty Fortune Limited (“PFL”) with Ms Lau Ngar Yee Yvonne (“Yvonne”), Mr Lee Kwok Wing Kevin (“Kevin”) and Mr Ng Wing Kan Kenneth (Kenny).

7.In around September 1993, Yvonne and Kevin invited the Plaintiff to join PFL. The Plaintiff then become acquainted with the Defendant.

8.PFL expanded its business to sourcing and retailing oriental antiques, and opened 2 shops, Artemis and Ad Lib.

9.The Plaintiff joined PFL in 1994. From 16 July 1994 up to 27 April 2019, the Plaintiff acted as a director of PFL. She was responsible for signing all cheques and bank accounts until 4 July 2019.

10.Since around the end of 1994, for around 20 years, the Plaintiff and the Defendant was in a romantic relationship.

11.In early 1995, the Plaintiff became a shareholder of PFL.

12.In June 1999, the Plaintiff and the Defendant set up Lotus Gallery Limited (“LG”) and operated it until October 2018. The Plaintiff was appointed a director of LG. Ms Yvonne Tam and Mr. Bebe Chan were registered as the shareholders of LG holding the shares on trust for the parties.

13.In 1999, the Defendant acquired all of Kevin Lee’s and Yvonne Lau’s shares in PFL at a consideration of HK$1,500,000 for himself and the Plaintiff.

14.In June 2000, the Plaintiff and the Defendant used LG as a vehicle to purchase two adjoining units in the Chai Wan Ming Pao Industrial Centre (“the Chai Wan Units”) for investment purposes at a price of HK$2,100,000.

15.On 22 October 2002, the Plaintiff and the Defendant purchased the Property at a consideration of HK$3,365,000 (“the Consideration”). The parties were registered as tenants-in-common of the Property.

16.On 22 November 2002, the purchase of the Property was completed. The Property was then mortgaged to Hong Kong and Shanghai Banking Corporation Ltd for a loan of HK$2,350,000 (“HSBC”, “the First Mortgage”).

17.There is a document titled “重要備忘錄” dated 12 February 2003 (“the 2003 Memorandum”). The parties are in dispute as to whether its terms reflected the parties’ true intention with respect to the Property:

(a)  In the original version of the 2003 Memorandum, p. 4. it was stated that:

“基於私人理由，DL[1]明確表示不欲擁有為蔚華閣3A之一半業權，但因為銀行借貸條例規限，單獨一人申請入息不符合銀行要求，所以DT/DL二人用聯名作借貸買樓。

…

直到所有DL之借款還清後，DL即到銀行或律師樓辦理手續把DL名下之一半業權轉回DT之名下。” (“the Term”).

(b)  In the revised version of the 2003 Memorandum (“the Revised Memorandum”), it was stated that:

“此次買賣樓宇業權是兩人共擁有， 若要賣樓必須經兩人同意才可出售。賣價亦要雙方同意。售出物業之款項，扣除所有文件雜費及銀行所欠之尾數，必須平均分成兩份，各[佔]一半。” (“the Revised Term”)

18.Around 2007, LG sold the Chai Wan Units at HK$4,200,000. The Plaintiff and the Defendant shared the profits equally.

19.In June 2011, the Plaintiff and the Defendant re-mortgaged the Property with HSBC and obtained a loan of HK$2,500,000 to be repaid by instalments over 15 years. The monthly repayment amount was approximately HK$15,184.

20.In or around October 2015, the Plaintiff and the Defendant opened a joint account with Chong Hing Bank. They re-mortgaged the Property with Chong Hing Bank and obtained a loan of HK$3,380,000.

21.Since July 2016, the Plaintiff voluntarily gave up receiving remuneration from PFL and LG to avoid conflict with the Defendant.

22.On 20 April 2019, the Plaintiff tendered her resignation as director of PFL. The Plaintiff’s last day of work was on 27 April 2019.

23.On 3 May 2019, Messrs Yip Tse & Tang on behalf of the Plaintiff sent a letter to the Defendant requesting him to consent to sell the Property and share the net proceeds equally (“the 3 May Letter”).

24.In July 2019, the Plaintiff’s status as an authorised signatory of PFL was revoked.

25.On 9 February 2022, Messrs S T Cheng & Co on behalf of the Defendant rejected the Plaintiff’s request to sell the Property.

C.  The Parties’ Cases

C.1.  The Plaintiff’s case

26.It is the Plaintiff’s case that she and the Defendant is and were at all material times equal legal and beneficial owners of the Property.

27.In around mid-2002, the Plaintiff and the Defendant decided to buy the Property for investment purpose. It was agreed that the Property could be used as security for future loans for PFL’s business needs if required.

28.Before the acquisition of the Property, the Plaintiff and the Defendant entered into an oral agreement in or around October 2022 (“the 1^st Oral Agreement”), in which it was agreed that:

(a)  The Plaintiff and the Defendant would be tenants-in-common with each entitled to 50% of the legal and beneficial interest in the Property;

(b)  They would share payment resulted from the purchase, including but not limited to, down payment of the Property, stamp duty, commission for the estate agent, registration fee and legal fees (“the Purchase Price”), on a 50:50 basis; and

(c)  In the event that the Defendant chooses to reside in the Property, he would be responsible for repaying mortgages of the Property and some miscellaneous expenses other than the government rent, the management fee and utilities charges.

29.The total amount of the Purchase Price was HK$1,124,465.90. The Plaintiff and the Defendant should pay their half share of the Purchase Price at HK$562,232.95 each. However, at that time, the Defendant was only able to pay around HK$441,009 of the Purchase Price (with an outstanding amount of HK$121,224).

30.In the circumstances, the Plaintiff and the Defendant entered into another oral agreement on or about 12 February 2003 (“the 2^nd Oral Agreement”) whereby the Plaintiff agreed to pay the HK$121,224 (“the Sum”) on behalf of the Defendant to settle the balance of the Purchase Price with the Defendant agreeing to repay the Plaintiff.

31.The Plaintiff had also paid 50% of the decoration expenses in a total sum of HK$200,000.

32.At the time when the Property was purchased, there was no agreement between the parties that the Defendant would be the sole resident of the Property. At that time, the Plaintiff was considering divorcing her husband and might need to find a new residence. Hence, it was agreed between the parties that both of them could reside in the Property after its purchase. Nevertheless, as a matter fact, since the purchase of the Property up until the present, the Defendant has been residing in the Property.

33.The Plaintiff contends that the Defendant has breached the 1^st Oral Agreement in failing to make repayment of the mortgages of the Property or settling all the associated expenses for residing in the Property.

34.As a result of the Defendant’s above breaches, the Plaintiff has no alternative but to use the profits generated from Artemis to settle the mortgages and other expenses of the Property since 2004 up until the present. The Plaintiff had repeatedly demanded the Defendant to repay Artemis but to no avail.

35.The Plaintiff initially claimed that the Defendant has also breached the 2^nd Oral Agreement in failing to repay the Sum to her. In the Plaintiff’s Reply and Defence to Counterclaim dated 19 January 2023 at §11, she clarified that the Defendant has repaid the Sum to her in or around November 2003.

36.As to the 2003 Memorandum, the Plaintiff alleges that it did not reflect the true intention of the parties. The Plaintiff says that at that time she was considering divorce proceedings against her husband. The Defendant told her that her husband may lodge a petition and seek to share her assets including her Property. So, the Defendant advised the Plaintiff and dictate the terms of the 2003 Memorandum to the Plaintiff, including the Term, see p 4 of the 2003 Memorandum.

37.In around 2005, the Plaintiff and the Defendant reconciled and there was no urgent need for divorce proceedings anymore. On the other hand, the relationship between the Plaintiff and the Defendant deteriorated and the Plaintiff considered that she could not trust the Defendant anymore. As a result, the Plaintiff amended the 2003 Memorandum by replacing the Term with the Revised Term, see Revised Memorandum.

38.In around 2012, the Defendant was made aware of the above revision in the memorandum, but he had not raised any challenge against it until in the present case.

39.The Plaintiff and the Defendant’s relationship further turned sour and completely broke down in around early 2019. The Plaintiff wanted to terminate their partnership and sell the Property. The Defendant did not agree and did the follow to embarrass the Plaintiff and to make her scared, hoping that she would abandon her idea of selling the Property:

(a)  The Defendant went to the Plaintiff’s husband’s office on several occasions. Police had to be summoned to attend the scene;

(b)  The Defendant went to the Plaintiff’s residence to harass the Plaintiff and her family; and

(c)  The Defendant made threatening phone calls to the Plaintiff and/or sent her angry text and/or voice messages.

40.The Plaintiff could not tolerate anymore and hence sent the 3 May Letter requesting to sell the Property.

41.The Plaintiff claims, inter alia, an order for sale pursuant to Section 6 of PO and for repayment of the Sum.

B2.  The Defendant’s Case

42.On the Defendant’s case, it was intended that he would be the sole beneficial owner of the Property:

(a)  The Property was for him to reside in;

(b)  The Plaintiff’s legal joint ownership in the Property was only for satisfying the income threshold required by HSBC for the Defendant’s mortgage application to fund his purchase of the Property;

(c)  The Defendant admits that there was an arrangement for sharing payment of the Purchase Price, but said that it was only a temporary arrangement;

(d)  The Defendant admits that there was an agreement that immediately upon the Defendant moving into the Property, the Defendant would be responsible for repaying the mortgages and other miscellaneous expenses of the Property, including the utility bills.

43.The Defendant says that the parties’ common understanding and intention was recorded in the 2003 Memorandum which included, inter alia, the following terms:

(a)  To facilitate the Defendant’s purchase of the Property, the Plaintiff lent 2 sums of HK$441,009 and HK$242,447, being a total of HK$683,456 to the Defendant (“the Lent Sum”);

(b)  As soon as the Lent Sum is repaid by the Defendant to the Plaintiff, the Plaintiff would immediately arrange to have her legal ownership of the Property transfer to the Defendant;

(c)  The Defendant would contribute a sum of HK$441,009 himself;

(d)  The Defendant referred back to the arrangement in §42 above.

44.After the Property was purchased, the Defendant has been living in it for almost 2 decades. The Defendant has been suffering from various long-term and/or chronic illnesses in his brain, heart, pancreas, eyes, skin, as well as various illnesses as pleaded in §9 of his Defence and Counterclaim dated 22 December 2022.

45.Pursuant to the 2003 Memorandum, the Defendant solely paid the monthly mortgage instalments and miscellaneous expenses of the Property (“Repayments and Expenses”) by way of the following payment arrangements:

(a)  The Mortgage Repayment Arrangement:

(i)  The Defendant generated revenue by consigning his art pieces to PFL. PFL, in exchange and by way of commission, repaid the Defendant’s entitlement in the consigned goods and the sale of other goods of PFL (“the Defendant’s Revenue”);

(ii)  PFL would then pay the Repayments and Expenses for the Defendant as a set-off against the Defendant’s Revenue.

(b)  PFL had paid the following sums for and on behalf of the Defendant:

(i)  A total sum of HK$1,304,025.97 between March 2008 and May 2011; and

(ii)  A total sum of HK$747,322 between 2011 and 2015.

46.In or around November 2003, the Defendant repaid HK$121,224 of the Lent Sum to the Plaintiff. Thereafter, the Plaintiff refused to accept further repayments from the Defendant and insisted on having a beneficial share in the Property.

47.In around April 2015, the Plaintiff and the Defendant met to discuss repayment arrangements between them (“the April 2015 Meeting”). In the April 2015 Meeting, the Defendant proposed to pay the Plaintiff HK$2,000,000 as repayment and a token of appreciation for her contribution in PFL over the years. The Defendant said that the Plaintiff should arrange to transfer her legal interest in the Property to the Defendant immediately.

48.The Plaintiff ignored the Defendant’s above proposal and handed to the Defendant the Revised Memorandum. The content of the Revised Memorandum was different the 2003 Memorandum in that, inter alia, the Term was replaced by the Revised Term. The Defendant alleges that the revision was made by the Plaintiff without his knowledge or consent.

49.The Defendant says that the parties’ intention has always been for the Defendant to contribute to the mortgage repayments and outgoings of the Property. It was agreed and/or the common intention between the partis that the Defendant would be the sole legal and beneficial owner of the Property.

50.The Defendant denies that he had done anything to cause embarrassment or threat to the Plaintiff. The Defendant did attend the Plaintiff’s husband’s office, but it was only because the Defendant failed to ask the Plaintiff to revoke her status with the banks as an authorised signatory of the PFL after the Plaintiff resigned as a director thereof, and the Defendant wanted to ask the Plaintiff’s husband to help contact the Plaintiff.

51.The Defendant relies on common intention constructive trust and claims that it was the parties’ common intention that the Plaintiff was to hold 50% of the Property on trust for him:

(a)  The Property was acquired in the circumstances alleged above;

(b)  In reliance upon the common intention, the Defendant contributed towards the Purchase Price, the mortgage instalments and other outgoings of the Property by way of the Repayment and Expenses;

(c)  As a result, it would be inequitable or unconscionable for the Plaintiff to depart from the parties’ common intention.

52.In the Defendant’s Closing Submissions dated 27 February 2025 (“D’s Closing”), the Defendant submits that:

(a)  He owes the Plaintiff a sum of HK$562,233, being half share of the Purchase Price. He indicates that he is willing to pay the above amount and submits that upon such payment, the Plaintiff should transfer the legal title of the Property to him;

(b)  a common intention constructive trust was created from the arrangement reached between the parties at the time when the Property was purchased. The arrangement was that the Plaintiff was to hold her 50% legal interest on trust for the Defendant until the latter repaid her the HK$683,456 finance which the Plaintiff paid on behalf of the Defendant for the purchase of the Property. Upon the Defendant’s repayment, the Plaintiff would transfer her legal interest in the Property to the Defendant.

53.The Defendant raised the defence of laches and alleges that the Plaintiff should be debarred from bringing the claim as the Defendant has been conducting himself in ways that are and could only be consistent with his sole beneficial ownership in the Property for more than 12 years. The Defendant does not seem to be pressing this line of defence anymore in the trial.

54.The Defendant counterclaims, inter alia:

(a)  A declaration that the Plaintiff holds the legal and beneficial interest in the Property on trust for the Defendant;

(b)  A declaration that the Plaintiff is estopped from seeking an order for sale of the Property.

C.  Agreed List of Issues

55.The parties have agreed on the following list of issues, with a minor difference in one of the issues below:

(a)  Whether the Plaintiff holds the Property on trust for the Defendant, or if the joint tenancy reflects their true legal and beneficial ownership of the Property;

(b)  Whether the sale of the Property would cause undue hardship to the Defendant which may affect the court’s decision on whether to grant an order for sale under Section 6 of the PO;

(c)  Whether the Plaintiff is entitled to an order for sale of the Property under the PO, and whether the proceeds from the sale should be distributed equally between the parties, given their joint tenancy [and all written records made by and/or between the parties][2]; and

(d)  Whether the Plaintiff is entitled to recover any outstanding amounts from the Defendant, considering the Plaintiff’s claim that she used her personal funds and the company resources to finance the purchase of the Property, renovation, utilities fees, and mortgage repayments.

D.  Whether the Plaintiff is holding the Property on trust for the Defendant

D1.  Legal principles

56.Where a property is conveyed to two persons as joint tenants/tenants-in-common without any declaration of trust, the starting point is that their legal and beneficial interests in the property are joint and equal, unless and until the contrary is proved. The burden of proof lies on the party seeking to establish that equity should not follow the law and that both of them had a common intention that their beneficial interests be different from their legal interests and in what way, see Stack v Dowden [2007] 2 AC 432 at §§68 to 69. As Recorder Stewart Wong SC observed in §29 of Erwiana Sulistyaningsih v Tsui Yun Bun Barry and Anor [2017] HKCFI 2321, the burden of showing such contrary intention is high.

57.The legal principles concerning common intention constructive trust has been summarised by DHCJ Eugene Fung SC in Mo Ying v Brillex Development Ltd [2014] 3 HKLRD 224 at §§33-46 as follows:

(a)  A common intention constructive trust requires (a) a common intention that the plaintiff (i) should have a beneficial interest in the property (where there was sole legal ownership) or (ii) was the sole beneficial owner (where there was joint legal ownership); and (b) the plaintiff has acted to his/her detriment on the basis of that common intention;

(b)  The burden is on the person seeking to show that the beneficial ownership is different from the legal ownership;

(c)  The common intention, or the agreement, arrangement or understanding, between the parties may be based on express discussions between them or inferred from their conduct;

(d)  To found any express agreement, arrangement or understanding between the parties, there must have been some actual discussions between them, however imperfectly remembered and however imprecise their terms may have been;

(e)  When inferring common intention, the search is to ascertain the parties’ actual shared intentions to be deducted objectively from their words and their actions. The parties’ whole course of conduct in relation to the property must be taken into account in determining their shared intentions as to its ownership;

(f)  Factors which may be relevant to divining the parties' intentions include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the property was acquired in joint names (or sole name); the purpose for which the property was acquired; the nature of the parties’ relationship; 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;

(g)  Direct contributions to the purchase price by one party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference;

(h)  In terms of detrimental reliance, there must be some connection between the plaintiff’s conduct and his/her belief that he/she has an interest in the property.

58.In Lam Ka Kui v Choi Yuen Ling (unrep,) HCA 537/2017, 23 October 2020, Coleman J set out the approach in showing common intention constructive trust, and pointed out that the focus is on the intention of the parties at the time of the acquisition of the asset. 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.

59.In Chen Kam Nga v Lee Ho Yin [2021] HKCFI 1352, the Court held at §§50 to 51 that the modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context. She further pointed out that:

“51. Where a person is added as a party to a contract to enable the obtaining of a loan, this fact, by itself, is not a basis for holding that there was no intention for that person to be a beneficial owner. On the contrary, the fact that the property could not be bought without the person incurring liability, or potential liability, would be some ground for inferring that the person was to be beneficially interested: Re Lau Hiu Tuen HCB 8430/2006, 20 August 2015, at §11, G Lam J.” (Emphasis added)

D2.  Analysis

60.Having considered all the evidence and taking a holistic approach, I am of the view that the Defendant has failed to discharge his burden to show that the parties intended the beneficial ownership in the Property to be different from the legal title. The Defendant has failed to show that the alleged common intention constructive trust exists. Amongst other things, I have taken the following matters into account in reaching the conclusion.

61.First, as admitted by the Defendant, at the time when the Property was acquired, his income was insufficient to meet the requirement of HSBC for the First Mortgage. The parties were able to obtain the First Mortgage only by adding both of their income together to meet the above requirement. As a co-borrower of the loan with the Defendant under the First Mortgage, the Plaintiff has personally incurred liability to repay the loan. Applying the principles in Chen Kam Nga (supra), this is a factor pointing to the Plaintiff being a beneficial owner of the Property.

62.Second, the Defendant also admitted that the Plaintiff had paid the Purchase Price at the time when the Property was acquired. While the Defendant subsequently repaid part of the Purchase Price to the Plaintiff, it remains a fact that the Plaintiff had put up the funds for the Purchase Price out of her own pocket in the beginning. This is in line with the Plaintiff’s case that she was intended to be one of the beneficial owners of the Property.

63.The Defendant alleged that the Plaintiff helped him to obtain the First Mortgage and made initial payment of the Purchase Price solely out of their close relationship. I do not accept the allegation. Given the substantial amounts involved, it is unlikely for the Plaintiff to have agreed to incur such liability and make such payment without intending to acquire a beneficial interest in the Property.

64.Prior to the acquisition of the Property, the Plaintiff and the Defendant had purchased the Chai Wan Units for investment purpose. As the Defendant also accepted, after the above units were sold in around 2007, each of the Plaintiff and the Defendant received HK$1 million as profits. The Plaintiff and the Defendant’s joint ownership of the Property is consistent with their practice back then of make investment together in real estate properties.

65.Third, there was a contemporaneous note prepared by the Plaintiff recording the steps which the parties took from 12 October 2022 to 25 October 2022 for the purchase of the Property (“the 2002 Memorandum”). In the 2002 Memorandum, the Plaintiff recorded that on 25 October 2002, the parties attended Messrs Ng & Shum to sign the Sale and Purchase Agreement. The Plaintiff specifically stated that the parties would be sharing the ownership of the Property equally (“物業之業權是每人一半”). There is no suggestion whatsoever that the Plaintiff would be holding her share of the Property on trust for the Defendant.

66.The Defendant’s evidence is that he does not think he has seen it at the time. He said that he did not pay much attention to the documents which the Plaintiff prepared as he trusted her.

67.I accept that the content of the 2002 Memorandum reflected the parties’ intention immediately before, as well as, at the time of the acquisition of the Property. According to the Defendant, the Plaintiff has always been an organised person, who had the habit of reducing important work of PFL and private matters into writing, especially when money was involved. Irrespective of whether the Defendant had sight of the 2002 Memorandum, it is more likely than not that the Plaintiff had prepared the 2002 Memorandum as a contemporaneous record of what was being done when the Property was acquired and how the ownership of the Property was to be shared. Back in 2002, the parties were still in very good terms, there is no reason for the Plaintiff to state anything in the 2002 Memorandum which did not reflect the truth.

68.Fourth, regarding the 2003 Memorandum, having considered the parties’ evidence, including their oral evidence, I accept the Plaintiff’s case that p. 4 of the said Memorandum was prepared by her on the advice of the Defendant to avoid the Plaintiff’s husband seizing her share in the Property in the event that the Plaintiff commences divorce proceedings against him.

69.The 2003 Memorandum was prepared in February 2003, around 3 months after completion of the acquisition of the Property. It is inconsistent with the 2002 Memorandum which was prepared during the time when the Property was acquired, and which recorded that the parties would be joint owners of the Property.

70.P. 4 of the Memorandum is at odds with the contents of the other 3 pages of the 2003 Memorandum. Reading pp. 1 to 3 of the Memorandum as a whole, it is more consistent with the Plaintiff’s case that the parties were to jointly own the Property (hence sharing the Purchase Price, the renovation costs and having the land premium, rates and management fees to be paid out from their joint bank account), while the Defendant shall be responsible for paying the mortgage repayments and the utilities relating to the Property once he moves in the Property:

(a)  In p. 1 of the Memorandum:

(i)  It was stated that on 12 October 2002, the parties agreed to purchase the Property (“於2002年10月12日由 DT/DL雙方同意買入”);

(ii)  It was also stated that the parties agreed that they would equally share the payments for the down payment, stamp duty, commission for the estate agency, registration fees and legal fees, ie the Purchase Price (“DT及DL[雙]方同意買樓之訂金，印花稅，地產公司之佣金，登記費及律師費各出一半”);

(iii)  It was recorded that the Purchase Price was a total of HK$1,124,465.90. Each of the Plaintiff and the Defendant paid HK$441,009. As for the remaining HK$242,447, it was paid in advance by the Plaintiff, and it will be repaid by instalments by “DD” (“最後總數共付出HK$1,124,465.90以完成買賣合約連所有雜費（請參閱買幹德道之數目紀錄共三頁紙）

DT/DL合共付出HK$882,018，即每人各付出HK$441,009@。餘下尚有HK$242,447之尾數則由DL (譚艷儀)私人借出，並由DD分期歸還。”)

The Defendant argued that “DD” here means that the instalment payments were to be made from the bank account jointly opened by the parties, but not by the parties together. I do not agree with the Defendant’s contention.

As could be seen from p.3 of the Memorandum, when the parties’ joint bank account was referred to, the word “joint account” would be mentioned (“所有地租, 差餉及管理月費支則由DD之共同戶口支付。”).

When one looks at p. 2 of the Memorandum, the consigned goods of the parties were referred to as “DD 雙人在公司寄賣貨…”, and it was recorded that on 11 February 2022, the parties received the proceeds of the consigned goods in a total amount of HK$18,463 (“11-2-2002 DT/DL收回四張寄賣貨之款項共計HK$18463 (Artemis @ No. 143022”). From the above, it is clear that “DD” and “DT/DL” were used interchangeably in the 2003 Memorandum to refer to the parties themselves, as opposed to the joint bank account of the parties as contended by the Defendant.

Hence, when it was stated in p. 1 of the Memorandum that the remaining amount of HK$242,447 shall be paid in advance by the Plaintiff, and repaid by instalments by “DD”, it meant that the Plaintiff and the Defendant were both responsible for making the repayment, and that the Defendant’s liability would only be half of the amount, ie HK$121,224[3].

(iv)  As for the renovation fees, it was stated that it would be settled by the proceeds of sale of the shares in the account which the parties used to jointly purchase shares (“至於單位裝修之費用則用DT/DL合資買股票支戶口支出。雙方同意將當時所持有的所有股票二人名下儘管價位甚低也全部賣掉套現已支付單位裝修之用。”)

(b)  In p. 3 of the Memorandum:

(i)  It was stated that a total of HK$189,623 was paid by the parties for the renovation fees (each paying HK$94,812). The Plaintiff cannot pursue her share of the renovation fees in the future (“DT/DL一共付出HK$189,623（每人各付$94,812）是大家同意裝修之整數。若有額外費用，應由自己私人付出。所付之一半費用亦不能於日後追討。”);

(ii)  As for the mortgage repayments, it was stated that they would be paid by the parties for the time being. From the time when the Defendant moves into the Property, he should be the one repaying the mortgage personally. The Defendant should also pay all the utility bills and the maintenance of the Property (“蔚華閣3A之每月供款暫由DT/DL雙方支付。由搬入蔚華閣入伙3A之日開始，每月銀行之供樓款項，大約HK$13,000應由DT私人付出。屋內之保養，維修，水電，煤亦應有住客DT私人支付。”;

(iii)  All the land premium, rates and monthly management fee shall be paid from the joint account of the parties (“所有地租，差餉及管理月費支則由DD之共同戶口支付。”).

71.Fifth, in the version of the《買干德道蔚華閣之數目紀錄》attached to the Revised Memorandum, there was a record that on 14 November 2003, the Defendant repaid the Sum and it was further stated that the remaining HK$131,224 will be counted towards the Plaintiff’s contribution to the purchase of the Property (“DT歸還以上一半費用共 HK$121,224 14-11-03 #520532; 餘下一半當是DL買樓之一份”). Next to the above entries, there appears to be an initial of the Defendant. In any event, the parties were still in good terms back in 2003, it is unlikely that the Plaintiff would have stated something untruth in the said record.

72.Sixth, I accept the Plaintiff’s case that she subsequently revised the 2003 Memorandum and replaced the Term with the Revised Term to reflect the true intention of the parties regarding the ownership of the Property (which was already recorded in the 2002 Memorandum), as there was no longer any plan to divorce her husband.

73.On the Defendant’s case, he was shown the memorandum in which the Term was replaced by the Revised Term in 2015 and he was very shocked seeing the revision. However, apart from sending a WhatsApp message to the Plaintiff on 28 April 2015 saying that he was scared that the 2003 Memorandum has been revised (“改成咁，心寒”), the Defendant did not take any step to compel the Plaintiff to rectify the change. Considering the above evidence, I find it more likely than not that the Defendant all along knew and intended the Property to be jointly owned by himself and the Plaintiff, and that the Plaintiff’s revision of the 2003 Memorandum by including the Revised Term was only to reinstate the correct understanding of the parties’ intention into the record.

74.Seventh, as for the Defendant’s WhatsApp message to the Plaintiff on 29 April 2015, it was not clear on the face of the message that it has anything to do with the ownership or payment relating to the Property. Having further considered the parties’ oral evidence, I find that the above WhatsApp message was unclear and insufficient to show that there was any agreement between the parties that the Plaintiff would be holding her share of the Property on trust for the Defendant, and that the finance which she had contributed to the purchase of the Property were all loans extended to the Defendant.

75.Eighth, even taking the Defendant’s to its highest and assuming all the mortgage repayments and utility payments made by PFL were made on his behalf as set-offs of the consignment commissions owed by PFL to him, this is consistent with the Plaintiff’s case and p. 3 of the 2003 Memorandum that the mortgage repayments and utility payments should be borne by the Defendant as the one residing in the Property.

76.Lastly, regarding the HK$700,000 loan by the Defendant to PFL, even assuming the entire HK$700,000 was a personal loan from the Defendant to PFL derived from the loan obtained from the remortgage of the Property to HSBC in 2011. It cannot unequivocally show that the Defendant is the sole beneficial owner of the Property. The total amount of loan obtained through the remortgage was HK$2,500,000, being a 50% owner of the Property, the Defendant was entitled to HK$1,400,000 of the loan. He was perfectly entitled to lend part of his share of the above loan (being HK$700,000) to PFL as his personal loan to PFL.

77.For the above reasons, I find that the Plaintiff and the Defendant are and were at all material times joint beneficial owners of the Property as tenants-in-common, in line with their legal ownership.

E.  Whether the sale of the Property would cause undue hardship to the Defendant

E1.  Legal principles

78.The principles governing the Court’s exercise of direction whether to grant an order for sale under Section 6 of the PO have been summarised by Au-Yeung J in Cheung Wing Kuen Samuel v Ip Chui Sum [2021] HKCFI 2535 at §§9-11:

(a)  A co-owner has a basic right to rid himself of the shackles of co-ownership and, if he has no other remedy, ask for an order for partition or sale;

(b)  When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner) that such an order will not be beneficial to all the co-owners; and

(c)  Whether an order for sale is beneficial to all the co-owner is not determined by the dissent of the opposing co-owners or the assertion by them that it is not beneficial. It has to be determined by the court objectively.

79.In Re Lau Hiu Tuen (unrep, HCB 8430/2006, 20 August 2015), G Lam J (as he then was) held at §§21-24 that:

“21. What is meant by the phrase “such an order will not be beneficial to all the co-owners” in (b) above seems to me to be that the order will be beneficial to some only of the co-owners, not that the order will be beneficial to none of the co-owners. Accordingly, an order for sale would not be refused unless all the co-owners would be benefitted by its refusal or, in other words, an order for sale would be detrimental to all the co-owners, or unless it will result in very great hardship to one co-owner. See also Beautiglory Investment Ltd v Tang Moon Sum & others, HCMP 531/1989, 10 December 2003, at §32.

22. The same approach was stated earlier in Fook Sun Enterprises Co Ltd v Cromwell Investment Co Ltd & Ors [1973-1976] HKC 335 at 337H-I, where Briggs CJ said:

“It was suggested that this was not a case for the court to make an order for sale under section 6 of the Ordinance: but that the proper course for the court to take was to make no order under section 2(c) of the Ordinance.

I do not agree. I agree with Mr. Litton’s interpretation of section 2(c) of the Ordinance. I think that a court would only make no order, neither an order for partition nor an order of sale, when the interests of all the parties would be better served by their continuing to remain co-owners, or where the facts show that to make such an order would result in very great hardship to one co-owner.”[1]

…

24. In the absence of argument it would not be appropriate for me to deal in any depth with this recent divergence of judicial opinion. I propose to proceed on the basis of the authorities decided under the Partition Ordinance which establish the principle that the court will make an order for sale on the application of a co-owner unless it is satisfied that all the co-owners would be better served by the refusal of the order or that making an order would result in very great hardship to one co-owner.” (Emphasis added)

80.In Re Tong Chi Kit [2023] HKCFI 639 Ng J summarised the relevant principles at §34:

“34. In Wong Chun Kei v Poon Vai Ching [2007] 1 HKLRD 825 at [16] – [19], Recorder Joseph Fok SC (as he then was) held that in proceedings under the PO, where it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded, the burden being on the opposing co-owner, that such an order will not be beneficial to all the co-owners or that it will result in very great hardship to one co-owner. Hardship, for the present purpose, includes pecuniary as well as practical detriment. Whether an order for sale is or is not beneficial to all the co-owners is to be determined by the court objectively, balancing the interest of the one against the other: Wong Chun Kei v Poon Vai Ching at [106] – [108]; Re Cheung Chan Hong [2015] 2 HKLRD 1 at [13].” (Emphasis added)

81.The parties do not seem to dispute that it is impracticable to partition the Property, which must be the case given the nature of the Property, being a flat in a multi-storey building. Any partition of the Property would likely involve structural modifications which may affect the other units in the building where the Property is located.

82.There can also be no dispute that the parties’ relationship has completely broken down. The evidence shows that there were acts of violence and heated arguments between the parties. It is artificial for the Defendant to suggest that the above behaviours were irrelevant in the Court’s consideration as the parties’ heated arguments only concern the parties’ conduct of their businesses but not the Property. What is clear is that the parties have demonstrated hostility towards each other and it would be difficult, if not impossible, for them to deal with the Property as co-owners anymore. In such circumstances, the Plaintiff is entitled to rid herself of the shackles of the co-ownership.

83.The Defendant relies on undue hardship to resist an order for sale. He says that he is suffering from various medical conditions (including clival meningioma, chronic pancreatic neoplasm, Type 2 diabetes, eye conditions, very high risk of heart disease, haematuria and knee pain), rendering him unable to handle the physical and mental stress associated with moving out from the Property which he has been living in for decades and finding a new residence. He claims that this would increase the risk of him not being able to monitor his various medical conditions.

84.I am unable to accept the Defendant’s submissions. The Defendant attended Court and gave oral evidence without any difficulty. There is no suggestion that any of his medical conditions would lead to imminent threats to his life. During his evidence-in-chief, he confirmed that his haematuria has improved even though an operation is still required. As for his prostate condition, it is controlled by medication as he is very scared of undergoing operation. The evidence shows that the Defendant’s medical conditions are under supervision by his doctors and controlled by mediations and treatments.

85.In the circumstances, I am not satisfied that the Defendant would suffer very great hardship if an order for sale is granted.

86.I am prepared to grant an order for sale in the present case.

F.  Whether the Plaintiff is entitled to an order for sale of the Property under the PO, and how the proceeds from the sale should be distributed

87.I will grant an order for sale of the Property. As I have found that the Plaintiff and the Defendant are beneficial co-owners of the Property as tenants-in-common, the net proceeds should be distributed equally between the Plaintiff and the Defendant, see order in Section H below.

G.  Whether the Plaintiff is entitled to recover any outstanding amounts from the Defendant

88.In the Prayer of the Plaintiff’s SOC, she claims the Sum as an outstanding amount payable by the Defendant. As the Plaintiff now confirms, the Defendant has repaid this Sum in November 2003. Hence, I will not allow the Plaintiff’s claim in this regard.

H.  Disposition and Costs

89.I will make the following orders:

(a)  A declaration that the Plaintiff and the Defendant are equal legal and beneficial owners of the Property holding as tenants-in-common;

(b)  The Property be sold pursuant to Section 6 of the PO;

(c)  The Property shall be placed on the open market for sale forthwith at such price and on such terms as the Plaintiff thinks fit;

(d)  The conveyancing procedure of the sale of the Property be committed to a conveying solicitor upon the choice of the Plaintiff (“the Conveyancing Solicitors”);

(e)  The Defendant do join in the sale and conveyance of the Property and do all things as may be necessary to procure the sale of the Property with vacant possession;

(f)  The Defendant do within 180 days of this Order deliver up vacant possession of the Property to the Plaintiff provided that the Defendant shall permit prospective purchasers to inspect the Property on reasonable notice given by the Plaintiff or an estate agent;

(g)  The Defendant shall within 7 days of any request by the Plaintiff or her agents, sign and execute all necessary instruments and do all acts as are necessary to effect the sale of the Property to the purchaser under the offer accepted by the Plaintiff, failing which [a partner of the Conveyancing Solicitors] be appointed pursuant to Section 8 of the Partition Ordinance (Cap 352) and/or Section 5 of the Trustee Ordinance (Cap 29) to execute, on behalf of the Plaintiff, any necessary documents (if any) to give effect to this Order and to convey the Property and all interest therein to the purchaser;

(h)  The proceeds of sale of the Property shall be applied according to the following priority:

(i)  In discharge of all existing encumbrances (if any);

(ii)  In discharge of all government rent, rates, taxes and other outgoings due and affecting the Property, if any;

(iii)  In payment of the legal costs and disbursements of the sale of the Property to the Conveyancing Solicitors;

(iv)  In payment of any additional expenses (if any) as may be required to deal with any enquiries from prospective purchasers or agents;

(v)  The remaining balance of the proceeds of sale of the Property be paid to the Plaintiff and the Defendant in equal shares, subject to (vi) below;

(vi)  Out of the Defendant’s share of the sale proceeds, the settlement of the Plaintiff’s costs of and incidental to these proceedings; and

(vii)  There be liberty to apply without limitation for directions on the terms and manner of the sale of the Property in the absence of agreement between the Plaintiff and the Defendant.

90.As the Plaintiff is the overall successful party in these Proceedings, I make a costs order nisi that costs of and occasioned by these Proceedings be paid by the Defendant to the Plaintiff (including any costs reserved), with Certificate for Counsel for the trial. The order nisi shall become absolute unless an application to vary is made within 14 days from the date of this Judgment.

Ms Yue Percy PS, instructed by Wan Yeung Hau & Co, for the plaintiff

Mr Suen Ivan, instructed by S T Cheng & Co, for the defendant