Zhang Yuyan v. To Ngan Ho
Read the full judgment text of HCA 1298/2024 on BabelCite. This High Court CFI judgment was delivered on 31 March 2026.
1. This is a sad case where Madam To Ngan Ho, the Defendant (“Madam To”) now in her very advanced age has to face this lawsuit brought by her de facto daughter-in-law, the Plaintiff herein.
Cites 2 cases
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HCA 1298/2024 [2026] HKCFI 1932 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1298 OF 2024 ____________
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______________ DECISION ______________ INTRODUCTION 1.This is a sad case where Madam To Ngan Ho, the Defendant (“Madam To”) now in her very advanced age has to face this lawsuit brought by her de facto daughter-in-law, the Plaintiff herein. 2.Madam Zhang Yuyan, the Plaintiff (“Madam Zhang”), together with her de facto husband, a son of Madam To requested and arranged Madam To to purchase an apartment with a car parking space in Hong Kong in her name but to hold the same on trust for Madam Zhang. This was arranged, no doubt, for the convenience and benefit of Madam Zhang (for whatever reason) but at the risk of Madam To. 3.The risk duly materialized as Madam To lost her public housing unit due to the very fact that she is the registered legal owner of the subject properties she holds for Madam Zhang. A private apartment was then rented and paid for by Madam Zhang’s husband for Madam To to reside. 4.Sadly, Madam To’s son passed away. Thereafter, the rental payments for Madam To’s private apartment stopped and Madam To has to move to live in another apartment currently rented and paid for by her daughter. 5.Madam Zhang further commences the present proceedings against Madam To for various relief. 6.This is the substantive hearing of the Plaintiff’s summons dated 24 March 2025 (the “Summons”) for summary disposal of the disputes between the parties. 7.I have unusually adjourned this matter with the hope that the parties could amicably and sensibly settle this matter without incurring further legal expenses. Sadly, this hope falls through. MATERIAL FACTS 8.The present dispute is a family dispute between Madam To and Madam Zhang, who was her de facto[1]daughter-in-law and about two properties (collectively, “Properties”) situate in a development known as Le Pont, No. 99 So Kwan Wat Road, Tuen Mun, New Territories, Hong Kong (“Le Pont”), namely: -
9.Madam To is a 97-year-old illiterate lady. She has been widowed since 1963. She brought up four adult children on her own, including:-
10.Madam Zhang was the former de facto daughter-in-law of Madam To. She was the former (legally unmarried) partner of the Son. 11.Madam Zhang and the Son had two children, Tang Ping Hin (“Ping Hin”) and Tang Ming Yuet. 12.Madam To had been the tenant of a public housing unit in Sam Shing Estate, Tuen Mun (the “Public Housing Unit”). She had been residing at the Public Housing Unit since about 1993. 13.It is not in dispute that, in or about 2018, Madam To entered into a Sale and Purchase Agreement with the developer of Le Pont to purchase Flat 19C. Madam To’s case is that, sometime in or around 2018, she was brought by the Son and Madam Zhang to a property showroom two times. She was asked to wait, while the Son and Madam Zhang viewed the properties. She was later asked to sign on a sale and purchase agreement. She did so because she trusted the Son and Madam Zhang. She was also told not to inform other relatives of the purchase. 14.On the other hand, Madam Zhang suggests that there were no direct communications between her and Madam To. Instead, it was the Son who informed Madam To on behalf of Madam Zhang that there was an intended purchase. According to Madam Zhang, Madam To agreed that Madam Zhang “would remain [as] the sole beneficial owner”. 15.As to why this arrangement had to be made, Madam To’s case is that when she asked why her name needed to be used, the Son and Madam Zhang said that this would allow them to “save tax”. Madam To did not know what taxes were being saved. On the other hand, Madam Zhang’s case is that the Son did not want to hold the property by himself (or together with her). The Son trusted his mother and nominated her as the purchaser. I have to say that I do not find this entirely convincing as Madam To was at the material time in her late 80s already. 16.As to the parties’ understanding at the time, Madam To’s case is that she believed that there would be no adverse consequence to her. This is because, prior to the purchase, she was assured by the Son and Madam Zhang that they would take care of all things and expenses. She was under the impression that her general livelihood would not change after the purchase. 17.On the other hand, Madam Zhang maintains that there would be no adverse implication to her. She asserts that had she knew that Madam To would ask for indemnities, she would not have agreed with the Son to nominate Madam To as the legal owner. 18.Completion of the purchase of the Properties took place on 24 August 2020. From the Assignment, the developer “as beneficial owner” assigned Flat 19C to Madam To “to hold the same unto the Purchaser…for the residue of the terms of years grated by the Government Lease”. 19.There is also no dispute that the down-payment for the purchase originated from Madam Zhang. 20.In addition, the parties obtained a mortgage from Hang Seng Bank Limited (the “Legal Mortgage”). Under the Legal Mortgage, Madam To is the mortgagor and both Madam Zhang and Madam To were co-borrowers and thus jointly and severally liable to the full extent of the indebtedness. Both Madam Zhang and Madam To warranted (with personal liability) to the mortgagee bank that the full beneficial owner of the Property is Madam To. 21.On or about 12 January 2021, Madam To signed a further sale and purchase agreement with respect to the Car Parking Space. The assignment was completed on 20 January 2021. 22.On or about 16 January 2021 (i.e., a few days after the agreement for sale and purchase of the Car Parking Space was signed but before completion of the conveyance), arrangements were made for Madam To to execute a will (the “2021 Will”). Madam To’s daughter, Suk Yee, accompanied her to attend a firm of solicitors, Messrs. Ng & Partners. 23.According to Suk Yee, it was on this occasion that Suk Yee for the first time learnt that Madam To had purchased a residential property (i.e., Flat 19C). In this regard Madam To confirmed that, because she was told not to disclose the existence of the purchase to anyone, she did not disclose such to Suk Yee until then and although the conveyancing documents were handled by Suk Yee’s relatives (who were solicitors), Suk Yee has also confirmed that they have never disclosed such matters to Suk Yee before. 24.Suk Yee then suggested Madam To to make enquiries with the Housing Authority to see if there were any contradictions between Madam To’s holding of the Properties and her status as a public housing tenant. 25.A few days later, the family attended the Housing Authority’s office at Sam Shing Estate. 26.To Madam To’s surprise, she was told by the Housing Authority’s staff that she could not keep the Public Housing Unit. She had to vacate from the Public Housing Unit within 21 days. 27.Madam To’s case is that, after the above encounter, she duly surrendered and vacated the Public Housing Unit, and a family meeting took place amongst her and, inter alios, the Son and Madam Zhang. 28.There are factual disputes between the parties with regards to this family meeting. Madam To’s case is that, during the family meeting, several assurances were made by the Son and Madam Zhang to her (collectively, the “Assurances”):-
29.Madam Zhang denies the existence of the Assurances. 30.It is undisputed, however, that Madam To then moved to a leased property situate at Hanford Garden, Tuen Mun and from about October 2021 to at least until December 2022, the rent of the said property (as well as other expenses such as buying furniture and utility bills) was paid by the Son and Madam Zhang. 31.The parties differ on the reasons why the Son and Madam Zhang made provisions for Madam To after she lost the Public Housing Unit. It is Madam To’s case that the above acts constituted actual performance of the Assurances; and on the other hand, Madam Zhang claims that the Son only did so “gratuitously”. 32.The Son passed away in November 2022. 33.About one week after the Son’s death, another family meeting was convened. The Son’s last will was pronounced in front of the various family members, including Madam Zhang. 34.There are factual disputes on what happened during this meeting. It is Madam To’s case that Madam Zhang reaffirmed the Assurances by promising to take care of her for the rest of her life. Madam Zhang denies making such promise. 35.However, by December 2022, just one month after the Son’s death, Madam Zhang ceased to pay Madam To’s rent and other expenses. 36.Madam To’s other relatives (in particular, Suk Yee) have since been defraying expenses for her.[2] 37.Madam To’s case is that by reason of the holding of the Properties, she had lost the Public Housing Unit and she had also lost the financial support which the Son and Madam Zhang promised to give her. The long and short of the above is that Madam To, who had obtained no financial benefit from the trust arrangement, ended up in a worse-off position. 38.It is also Madam To’s case that, after some confrontations with Madam Zhang and Ping Hin with regards to Flat 19C, she felt annoyed by these matters. She then decided to take legal advice, upon which she learnt that the Properties were, as a matter of law, held on trust for Madam Zhang. 39.On 16 June 2023, Madam To’s solicitors wrote to Madam Zhang’s the Plaintiff’s solicitors. I agree that in the said letter, Madam To proactively recognised Madam Zhang’s beneficial interest in Flat 19C. The said letter reads, inter alia, that:-
40.One would have thought that such is a most reasonable offer. Nonetheless, Madam Zhang took issue with Madam To. She did not claim herself to be the beneficial owner of the Properties. Instead, her solicitors’ reply letter stated, inter alia, the following:-
41.On 27 June 2023, Madam To’s solicitors wrote back to confirm that in addition to Flat 19C, the Car Parking Space was also held on trust for Madam Zhang. 42.On 30 June 2023, Madam Zhang’s solicitors responded. The letter states, inter alia, as follows:-
43.I find this to be inconsistent with Madam Zhang’s stance in the present case. Had she simply agreed to the proposal from Madam To’s solicitors, the legal title and the beneficial interests of the Properties would have been transferred to her, and she would not need to commence the present action. She then ran a case that there was a common understanding that the beneficial owner was Ping Hin. This is different from her present case that there was “a common intention and/or common understanding between the Plaintiff and the Defendant that the Plaintiff is the sole beneficial owner of Flat 19C and the Car Parking Space”. 44.Instead, she insisted that Ping Hin should be the beneficial owner of the Properties. This is contrary to Madam To’s understanding that Madam Zhang is and should be the beneficial owner. 45.Further letters were exchanged between the parties on 5 July 2023, 12 July 2023, 26 July 2023 and 31 July 2023. It appears from these letters that Madam Zhang was threatening legal proceedings. In response, Madam To specifically mentioned through her solicitors that, if Madam Zhang commenced proceedings, the Defendant would seek an indemnity from the Plaintiff. Madam Zhang did not proceed to issue proceedings at the time. 46.About 10 months later, on 28 May 2024, Madam Zhang changed stance. In her solicitors’ letter dated 28 May 2024, it was stated, inter alia, that:-
47.Mr Lau for Madam To submitted that this is too late and too little. Too late in the sense that by then there were no more offers to accept. Too little in the sense that Madam Zhang has not offer any indemnity to Madam To. 48.Madam To has repeated for a number of times that the transfer of the Properties shall be “subject to your client’s agreement to discharge the mortgage and to pay all legal costs and disbursements” and that the Legal Mortgage “shall be discharged in full on the completion date” at Madam Zhang’s costs and expenses but whilst Madam Zhang appears willing to pay for the transactional costs, it does not appear that she was willing to redeem the Legal Mortgage. Indeed, even up to the stage of her reply affirmation, she was only prepared to say that she would bear the “costs and expenses, including stamp duty and legal costs for the preparation of the relevant Release / Discharge”.[4] She did not mention how the substantive liabilities thereunder were to be dealt with. 49.At the end, no settlement was reached between the parties. 50.Madam Zhang subsequently commenced this action. 51.On 25 March 2025, Madam Zhang issued the Summons. ANALYSIS AND DETERMINANTION 52.As far as the relief for the declarations of beneficial ownership of the Properties are concerned, I agree with Mr Lau’s very helpful submissions that there is no need for such declarations. Madam To has never denied that Madam Zhang is the beneficial owner of the Properties. 53.Mr Lau is correct that in the present case, it was Madam To who proactively wrote to Madam Zhang to recognise her interest. These exchanges took place in mid-2023, a time well before these proceedings were on foot. 54.There exist no contested legal rights between the parties. As a matter of principle, the Court does not give advisory opinions. In the absence of contested legal rights, whether subsisting or future, the Court has no jurisdiction to make a declaration: see Gouriet & Ors v. Attorney General [1978] AC 435 at 501D-G per Lord Diplock. 55.Declarations should not be made simply because there are admissions by the parties whether in pleadings or otherwise: see Wu Chiu Ting v. Ng Sun Wah & Anor (unreported, HCA 7927/1988, 21 February 1990) at §§. 3-5 (a case concerning undisputed beneficial interest claims in relation to partnership assets). See also Lam Hung v. Lau Tin Sheung [2020] HKDC 12 at §§23-33. This also applies to the application for declaration on the existence of a resulting trust which is not disputed. 56.As the application for summary judgment based on common intention constructive trust, I am of the view that there are serious and bona fide disputes as to the existence of such common intention. 57.First, the parties have offered diametrically opposite accounts as to the circumstances relating to, and reasons behind, the purchase. These disputed circumstances are relevant to the determination of the existence of the asserted common intention. Madam To had explained that until she received full legal advice in early 2023, she did not have any understanding about the concepts of “holding on trust” or “beneficial ownership”. These claims are consistent with her modest background and lack of education. I accept that it is arguable that when Madam To did not even know of these legal concepts, it is improbable that she would have reached some sort of complex trust arrangement with the Son and/or Madam Zhang. Prima facie, her saying that she simply signed the various legal documents upon the Son and Madam Zhang’s arrangements merits further investigation. This is a matter that should go to trial. 58.Secondly, Mr Lau has correctly reminded this Court that when Madam To first suggested to assign the Properties to Madam Zhang, her initial and immediate reaction was to deny those claims and positively suggest that Ping Hin was the beneficial owner of the Properties. This cannot be a mere mistake because Madam Zhang was then legally represented; and she (through her solicitors) repeated the same allegations for more than once. This tends to negate the existence of the pleaded common intention. 59.For the above reasons, there are serious issues to be tried on Madam Zhang’s common intention constructive trust claim. As such, the application for summary judgment is dismissed. 60.Further, I am of the view that there is no basis to apply for an injunction against Madam To. There is no evidence that she will dispose or transfer the Properties out of the reach of Madam Zhang. In fact, Madam To has repeatedly asked Madam Zhang to arrange for the transfer of the Properties to her subject to indemnification. Nonetheless, Madam Zhang refused. 61.The key issue is that whether Madam Zhang is, at this stage, entitled to have the legal titles of the Properties vested in her without indemnity and equitable lien as set out in Madam To’s Counterclaim. This Court is assisted by the parties’ supplemental written submissions on this specific key issue. 62.Madam Zhang seeks to strike out Madam To’s Counterclaim under O.18, r.19 of the Rules of High Court. The legal principles relating to striking out applications are well established. I do not intend to rehearse the same. Alternatively, she seeks “[t]he question of law, namely, whether the Defendant, as a trustee under a resulting trust, is entitled to indemnity in respect of all liabilities, costs and expenses incurred by her as pleaded in the Counterclaim filed [sic] 27 December 2024, be determined” and “[i]f the question…is determined in the affirmative, the Counterclaim filed [sic] 27 December 2024 be struck out” on the basis of O. 14A r. 1 of the Rules of High Court. 63.Mr Yau for Madam Zhang accepts that the question was incorrectly drafted. Should the question be answered in the affirmative (i.e., that Madam To, qua trustee, is entitled to an indemnity), there is no reason why the claim should not be allowed to proceed to trial. 64.Mr Yau for Madam Zhang at the hearing fairly agreed to indemnify Madam To for her costs and expenses in relation to the discharge of the mortgage and all costs and expenses in relation to the transfer of the legal title of the Properties to her, but upon instructions, refused to give Madam To an indemnity for her potential tax liability and her loss of enjoyment of the Public Housing Unit. 65.On the special facts of this case, the Court had hoped that a satisfactory settlement agreement could be reached. Unfortunately, the parties cannot reach any agreement. 66.As a matter of law, the right to indemnity is not dependent upon establishing any contract in the strict sense between the settlor and the trustee, but subsists as a matter of general law as between the trustee and his beneficiaries: see Lewin on Trusts (20th Ed) at §48-004 and Equity Trust (Jersey) Ltd v. Halabi [2023] AC 877 at §62. 67.In addition to statutory footing now given under Trustee Ordinance (Cap. 29) ss. 41Q and 41U, the authorities establish the existence of a trustee’s indemnity in equity: see Lewin on Trusts at §19-003. 68.The right to indemnity is not dependent on any agreement or common intention of the parties. The indemnity simply represents the “price” paid for “the gratuitous and onerous service of trustees”: see R v. Beddoe [1893] 1 Ch 547 at p. 558. As the Privy Council held in Equity Trust at §62:-
69.As to enforcement, the authorities establish that the trustee’s indemnity is enforceable by an equitable lien over the trust property: see Lewin on Trusts at §19.044. In X v. A, B & C [2000] EWHC Ch 121, Arden J (as she then was) observed at §18 that:-
70.Based on the lien, the trustee may retain trust assets until he has been indemnified: see Lewin on Trusts at §19-044. 71.As regards contingent or future liabilities for which he may become accountable, to the extent required to meet the worst case on the basis of reasonable but not fanciful assumptions: see Concord Trust v. The Law Debenture Trust Corporation [2005] 1 WLR 1591 at §34. 72.I am of the view that it is reasonable that such right to indemnity should apply to all trustees without distinction to whether the trustee is appointed under an express, resulting or constructive trust. The learned authors of Lewin on Trusts at §19-038 are of the view that constructive trustees are entitled to an indemnity. I agree that as a matter of principle, the maxim that “he who seeks equity must do equity” applies with the same force to resulting and/or constructive trustees. 73.On the facts, first, I am of the view that Madam To’s claim for an indemnity in respect of potential tax liabilities cannot be summarily dismissed or struck out. I have deliberately adjourned the hearing for the parties to confer on this sensitive matter. Now that Madam Zhang refuses to give an undertaking to cover such potential tax liabilities, I am of the view that such liabilities cannot be said to be fanciful. This Court has reduced the consideration of the purpose of the arrangement, i.e., for Madam To to hold the Properties on trust for Madam Zhang, in writing in this judgment. It is reasonably expected that the Inland Revenue Department, upon having sight of this judgment, would investigate into the reasons for having arranged Madam To to be the registered owner of the Properties. It might well be that the arrangement was for the purpose of evading stamp duties. I am sure that Madam To had no idea of the purpose behind the arrangement, but the same cannot be said of Madam Zhang and the Son. 74.Secondly and importantly, as a matter of equity and fairness, it is perfectly and reasonably arguable that Madam Zhang should also indemnify Madam To of her additional rental and relocation expenses after she lost the Public Housing Unit. Madam Zhang ceased to pay rent for her alternative residence shortly after the death of the Son. 75.I am in complete agreement with Mr Lau that there are factual intricacies which suggests that, in the context of this particular trust, Madam Zhang should reimburse Madam To of her accommodation expenses. It is a fact that the Public Housing Unit had always been Madam To’s only home. When the Public Housing Unit was surrendered (and Madam To agree to continue with holding the Properties), it must have been apparent to all family members including the Son and Madam Zhang that Madam To would need to seek alternative accommodation. The arrangement then was not that the legal title should be transferred back to Madam Zhang immediately with proper explanations be given to relevant authority including the Inland Revenue Department. 76.Madam To suffers a substantial loss in her office as a trustee for Madam Zhang. It is arguable that Madam Zhang should indemnify Madam To for the said loss. There is evidence which shows that the Son and Madam Zhang did consider themselves responsible for Madam To’s loss and did agree to provide her with an alternative residence. 77.It is Madam To’s evidence that as early as in 2018, the Son and Madam Zhang had assured Madam To that they would be in charge of “everything”. When the Public Housing Unit was lost, the Son and Madam Zhang volunteered the Assurances. Madam Zhang did repeat the Assurances after the Son’s death. 78.Furthermore, there was actual performance of the Assurances. At least for the initial year or so, the Son did pay for the rent of the alternative accommodation. Whilst Madam Zhang claims that the Son did so gratuitously, I am of the view that such factual disputes can only be resolved in a full trial. 79.I also note that Madam Zhang suggests that a sum of HK$2 million having been previously advanced from Ping Wai Development Limited (“PWDL”) to Madam To. However, I am of the view that the relevance of this fact needs to be ventilated in the trial not least because it is PWDL’s own case (presumably that the sum was advanced as a loan and should be repaid. 80.I am of the view that Madam To should not be prejudiced by her agreeing to basically lend her name to Madam Zhang to purchase the Properties. DISPOSITION 81.For all the above reasons, I hereby dismiss the Summons dated 24 March 2025. 82.As far as costs are concerned, I make a costs order nisi that madam Zhang is to pay for the costs of and occasioned by Madam To, on a party to party basis, if no agreement can be reached. This costs order nisi should be made absolute within 14 days from the date of hereof unless an application is taken out to vary the same within the 14-day period. 83.Finally, I like to express my gratitude to Mr Yau for Madam Zhang and Mr Lau for Madam To for their very able assistance.
Mr Jeff YAU, instructed by Chiu Liang & Co., for Plaintiff Mr Martin LAU, instructed by Ho, Tse, Wai & Partners, for Defendant [1] Madam Zhang did not legally marry Madam To’s son. However, their relationship was recognised by the family. [2] Both Madam To and Suk Yee confirmed the “payment on behalf” (代付) mechanism. [3] This refers to Ping Hin. [4] Mr Lau for Madam To points out that in her Amended Statement of Claim Madam Zhang said she duly repaid the mortgage repayments and “intends to continue” to make full repayment. This stopped short of any concrete undertaking. There is no indication that Madam Zhang is willing to “bail out” Madam To from her obligations under the Legal Mortgage. | ||||||||||||||||||||||||
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