Cheung So Yin-kay v. The Chartered Bank Hong Kong Trustee Ltd

HCA001196/1974

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 1196 OF 1974

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Coram: Li, J.

Date of Judgment: 14th April 1978 at 4.08 p.m.

Present: P. Yu and Chan (Gordon & Winter & Glynn) for plaintiff

R. Mills-Owens (Deacons) for defendant

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JUDGMENT

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1. This is a tragic case, tragic in the sense that an old lady who has suffered the loss of a son should have to fight an action against her son's wife. The background of this case is that in 1959 she purchased two flats, namely C1 and C4 of Great George Building in Paterson Street in the name of two of her sons. I will refer to only one of the flats that was purchased in the name of her son who subsequently predeceased her, that is Flat Cl. In 1964 she purchased a set of properties known as No.6 and 7 Canal Road East, also in the name of her son who predeceased her. The son was named CHEUNG Ng-lun alias CHEUNG Wood-lun. She purchased all the properties, both sets of properties with her own money. Ever since the date of purchase she collected rents and profits of the properties. At some times she even lived in Flat C1 for a short while. She paid all the rates, taxes and outgoings for these properties. These she treated as her own. Her son was affected by a form of mental illness. In 1967 he died taking his own life. Perhaps I should mention that she also had a savings account at the Liu Chong Hing Bank where she put in from time to time substantial sums of money of her own. The account was in the name of her son CHEUNG Ng-lun though operated by her with a chop and a specimen signature was also in her own handwriting. The son died on the 19th of March 1967. On the 20th of March she immediately withdrew every cent from that savings account in Liu Chong Hing Bank and closed it. The amount came to $122,800. After her son died there was the question of obtaining grants of letters of administration and that's where the dispute started. She wanted to be the administratrix and so did the widow of her deceaseds on. There was the question of estate duty and swearing of affidavits. These she entrusted to the family solicitor or a solicitor well known to them in Messrs. Lo & Lo.

2. The dispute arose in that the daughter-in-law at first wanted to be administratrix. She applied for a grant of letters but she had no money to pay for the estate duty. Then she left in a rather unhappy state of mind for Australia to make a living. To do so she renounced her right to apply for grant of letters. The plaintiff then applied. On subsequent advice, the daughter-in-law withdrew her renounciation and applied again. This time, the defendant, The Chartered Bank Hong Kong Trustee Ltd., was authorized by the widow of the deceased son to act for her and successfully obtained letters of administration. There was an advertisement by the defendants, The Chartered Bank Hong Kong Trustee Ltd., for claims against the estate. At that point the plaintiff, the mother, stepped in and claimed that she was in fact the owner of the properties, Flat C1 and 6 and 7 Canal Road East.

3. The plaintiff's case is that as she paid for all the properties, all along she collected rents and profits and paid all the outgoings and retained all the title deeds in her possession, she was the real owner of those properties. The son was holding the properties on a resulting trust for her. Similarly the bank account was also operated under the same principle and in the same way. The son didn't even know of the existence of that bank account. For this reason the plaintiff claim that there should be a declaration that the sets of properties, the flat and the houses in Canal Road, should be declared her properties and that the defendants, The Chartered Bank Trustee Ltd., should forthwith assign to the plaintiff the properties and pay for whatever consequential damages for mishandling the properties.

4. The defence is that the flat and the Canal Road properties were in fact gifts by the plaintiff to her deceased son in view of the parent and child relationship. It was alleged at one time that whatever money that was used for the purchase of these properties the money came from the plaintiff's husband who was the deceased son's father and that the son should have a share. However, in view of the documents agreed between the parties before the commencement of the trial, learned counsel for the defendant abandon this defence. The whole issue between the parties rests on one question, whether the properties were gifts by the plaintiff to her deceased son at the time of the purchase or the son was holding the set of properties in a resulting trust for the plaintiff. Similarly the same principle applies to the bank account with the Liu Chong Hing Bank. That is the issue.

5. So far as the law is concerned, I don't think there is much dispute between learned counsel for the plaintiff and learned counsel for the defendant. The law is fairly clear. Having considered the authorities cited by Mr. YU, counsel for the plaintiff, I am satisfied that where the situation arises when a parent purchased property in the name of a child it was the intention of the parent at the time of the purchase, immediately before or immediately after the purchase, that counts and everything depends on the intention of the alleged donor. Such intention is to be collected from various circumstances including evidence of her subsequent conduct. In most of the cases cited to me the donor had died and the evidence adduced before the court would be past events. The donor would not be in court to testify as to his or her intention, However, this is a different case. The alleged donee had died the alleged donor is very much alive. She is in court to give evidence of her intention. All her declarations subsequent to the purchase may be relevant. But it is her intention at the time of the purchase that counts.

6. I will proceed to deal with this aspect given by the plaintiff who is the alleged donor. I propose to deal with the properties in one compartment and deal with the bank account in another. I will deal with the properties first.

7. According to the plaintiff whose evidence is the sole oral evidence before this court when she purchased the properties her son - the deceased son was still living in 1959 - had been suffering from some mental illness. She was afraid that there was no one to provide for him. She had been looking after him, paying for his keep and maintenance all along. At that time she had every expectation that the son would survive her. She feared that her son would have nowhere to live and no one to look after him after her death. She purchased two flats in the Great George Building in Paterson Street one at Flat C1 and another flat C4 in the name of the deceased son's brother with a hope that after she died the other brother would look after the son, the deceased son, should be survive her. Having purchased that in the son's name she immediately asked the son to sign a power of attorney in her favour. Similarly in 1964 she also purchased the property in 6 and 7 Canal Road East. Immediately after the purchase or shortly after the purchase she asked her son, the deceased son, to execute a general power of attorney in her favour, That was the way in which she managed the properties. It is of interest to observe that while she said that the properties were held by the son in trust for her she did not see fit at that time to have this trust expressly mentioned in the documents or deeds of assignment, nor indeed in any power of attorney. This is understandable because she said that once she died the son would not require to go through the procedure of applying for letters of administration or for probate of her will and that the son would then step into her shoes vis-a-vis the properties. The fact that the documents have not mentioned any trust is neither here nor there But there is the other aspect to the case. The plaintiff's son got married sometime in 1966. A few months after the marriage her son died on the 19th of March 1967. The question of having to "swear affidavits to satisfy the estate duty office as to the estate of her son was necessary. First, the son's widow filed an affidavit which included the properties Flat C1 of Great George Building and 6 and 7 Canal Road East as part of her deceased son's estate. No mention was made that there had been any resulting trust for the plaintiff. The plaintiff subsequently had two occasions to file corrective affidavits for the same purpose. These are evidence in documents 'B' 21 to 24 and 'B' 25 to 28. In neither of these corrective affidavits signed and sworn by the plaintiff that the question of trust property was mentioned. Had the properties been held in trust, in favour of the plaintiff, obviously they should not be included as part of the estate of her deceased son. Once the properties are excluded very little or practically no estate duty would be payable in view of the size of the estate. However, the plaintiff saw fit to allow the properties to be included in the son's estate. As a result estate duty of ever $19,000 had to be paid to the Government. There are numerous correspondence between the plaintiff and the solicitors then acting on her behalf, namely, Messrs. Lo & Lo, and correspondence by Lo & Lo to various Government offices, namely, the Land Registry, the Estate Duty Office. In all these correspondence the properties at C1 and at Canal Road were treated on the basis that they were part and parcel of the deceased son's estate. Such subsequent conduct of the plaintiff would reflect on her intention. But there is something more important. In the course of her evidence the plaintiff appears to accuse her then solicitor of acting in every way contrary to her instructions. According to her the payment of estate duty, the treatment of the properties as part of her deceased son's estate were not her instructions. Her instructions were that if she should pay the estate duty then the properties would be managed by her, and would go back to her, This possibly was due to lack of understanding of legal procedure and law, or that the plaintiff refused to know them or understand them. Further in the course of cross-examination when the plaintiff says that as long as the son was living the property was his and he could give it to the grandson, but when he died - that means the deceased son died - the property should belong to her. Learned counsel for the plaintiff in re-examination asks her to explain that statement. She repeats the same. She says that even at the time of the purchase between 1959 and 1964 that was her sentiment, namely, that as long as her son lived the property belonged to the son and when the son died the property would belong to her. Well, that is completely inconsistent with the allegation of trust. If the son should live possessed of the properties he died possessed of the property. The only conclusion I can draw in view of her evidence and of her conduct in dealing with her son's estate is that she meant the son to have these properties. She mistakenly believed that when the son died the property would then go back to her as the oldest member or and the head of the family.

8. As far as the bank account is concerned her evidence is that she opened the account with all her money and she operated the account from time to time. The intention was that she must keep a substantial sum of money in a bank so that when she died the son would not be in need. She says: "I operated the account that when I died my son would have it". Although she borrowed the son's name, she used a chop, she signed the son's name herself. The son never knew of the existence of this bank account. The very day the son died she withdrew all the son's money. I had a look at the statement of account at document 'A' 316 to 318. I find that from time to time the plaintiff put in various sums of money for deposit of three months. After deposit of three months there was no immediate replacement or redeposit. Some redeposits were made after a gap of some four months, three months or two months. In other words there were certain times of the year when there was no money in the account at all, and that is the only evidence before me.

9. Coming back to the general picture, I am satisfied that the plaintiff being a widow and having a son suffering from mental illness took upon herself, as a mother, to provide for him. There is every indication to show that when she purchased the property it was intended to be an advancement in view of her answer. The money aspect is to be seen in a different light. The money was there. But it was not deposited to be an immediate gift to the son. The son would have the money when she died and after she died. In other words, at the time when she deposited the money it was intended for the son after she died and not as a gift per se at the time of deposit, Thus I must treat the bank account on different basis. These are all the evidence as such. And Mr. Mills-Owens reminds me with a passage in Snell at page 179. As far as the money is concerned he says that:

"Thus where a husband puts property into his wife's name, he cannot be heard to say that he did so to defeat his creditors, or to evade government restrictions or taxes, whether British or foreign, and that his wife knew this. The rules of equity cannot be used to aid iniquity, and the presumptions will apply unless a proper ground for rebutting them is both pleaded and proved."

I must confess that there is every indication that the plaintiff when depositing the sums of money intended to enable the son immediately to with draw the money upon her death with out having to go through application for grants of probate or letter of administration. However I cannot presume that she had a guilty intent to evade estate duty. For this reason I will not act on that passage.

10. Having said so much, the sum total of this judgment is that the plaintiff's action must be dismissed insofar as it concerns the properties. The defendant's counterclaims in the first four paragraphs must succeed, namely, that there shall be a declaration that the deceased's said child CHEUNG Tai-wai is the only beneficiary in the estate of the deceased subject to the maintenance for the deceased's said widow according to Chinese law and custom; (2) an order for the plaintiff to deliver up all the title deeds in relation to the flats in question, a declaration that the plaintiff has no interest therein; thirdly, an order that the defendant is to receive proceeds of sale of the Canal Road property .....; and fourthly, an order that the plaintiff is to account for what is due to the said estate of the deceased in respect of rents, profits and income received by the plaintiff. Of course the plaintiff is entitled to set off all the outgoings and, I presume, although it is not asked, the estate duty that she paid in respect of the deceased son's estate. And the counterclaim in paragraph 5 about the bank account, the money that has been withdrawn from the bank account is dismissed.

11. Having heard learned counsel on the subject of costs, I do feel that the matter of costs should follow the events. I now realize that in cases of this nature when there is any doubt in the construction of documents and in any ambiguous point in law may apply to court for direction and costs met out of the estate. But this is a claim and depends very much on evidence of fact. For these reasons I will order that the plaintiff's action to be dismissed with costs to the defendant and the defendant will succeed in its counterclaim with costs. The costs should be on party and party basis. I do not see any justification in this case to order costs at common fund. However, I would add to this direction that the widow, as a necessary witness has a long way to come from Australia, This should be taken into account.

Representation:

P. Yu and Chan (Gordon & Winter & Glynn) for plaintiff

R. Mills-Owens (Deacons) for defendant