Wong San Mui and Another v. Ha Pa Yang, Patrick and Another

HCA006027/1993

1993, No. A6027

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram : Hon Woo, J. in court

Dates of hearing: 18, 19, 20, 21, 27, 28, 29 December 1995 and
                  2 January 1996.

Date of handing down judgment : 8 January 1996

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J U D G M E N T

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1. The 1st and 2nd plaintiffs are one and the same person, Madam Wong San Mui, a lady 87 years of age ("Madam Wong"). She brings this action as the personal representative of her late husband, Mr Hall Kimson ("Kimson"), and for herself. The claim relates to the ownership of a property known as Flat A, 20th Floor, No. 61, Broadway, Mei Foo Sun Chuen ("the suit property"). The suit property is registered in the name of the 1st defendant.

2. Madam Wong and the defendants are family members. Two children were born out of the wedlock between Madam Wong and Kimson, namely, Mr Ha Tin Cheung ("Tin Cheung") and Madam Xia Jun Chan ("Madam Xia"). Tin Cheung's estranged wife is Madam Sung Sun Po ("Madam Sung") and they have two sons, Mr Ha Pa Yang, Patrick (the 1st defendant) and his younger brother Mr Ha Pak Wing. Madam Sung was divorced or separated from Tin Cheung. The 1st defendant is married to the 2nd defendant.

3. By an amended petition in District Court Divorce Jurisdiction No.4126 of 1992 filed therein on 14 July 1992, the 2nd defendant is seeking a judicial separation from the 1st defendant and claims that the 1st defendant be ordered to transfer the suit property to her for her benefit. The amended petition has been registered as a lis pendens against the suit property.

4. The history relating to the suit property goes back to 1981. In that year, Kimson purchased a flat known as Flat A, 3rd Floor, No. 87, Broadway, Mei Foo Sun Chuen ("the 1st property"). It was registered in the names of Kimson and Madam Wong as joint tenants. The family including Kimson, Madam Wong, Tin Cheung, Madam Sung, the 1st defendant and Mr Ha Pak Wing lived there. In July 1983, Madam Wong was suffering from breast cancer and she had an operation which removed one of her breasts. The 1st property was sold on 14/5/84 for $350,000 and the suit property was purchased on 21/5/84 for $373,000.

5. The price for Kimson to acquire the 1st property in 1981 was $295,000. It was paid by Kimson with a loan of about $50,000 ($45,506 to be exact) from his employer, a mortgage loan of $220,000 from Chase Manhattan Bank ("Chase") and his savings. Madam Wong did not contribute a cent. However, the 1st property was assigned to Kimson and Madam Wong as joint owners. When the suit property was bought, the purchase money was $373,000. Kimson paid this price by applying the entirety of the proceeds of the sale of the 1st property, namely, $350,000 with a new mortgage loan of $220,000 from Chase. The proceeds of $350,000 were partly used to pay off the mortgage loan on the 1st property. The suit property was registered in the name of Kimson and the 1st defendant as joint owners. By a further charge dated 20 October 1987, Kimson and the 1st defendant further charged the suit property to Chase to raise a sum of $31,000 in banking facilities over the original mortgage loan of $220,000.

6. The plaintiffs' case is that Kimson had been paying all the mortgage instalments since the purchase of the 1st property and then the suit property. That continued until his death on 21 September 1990. The suit property should belong to Madam Wong solely. The bases are that Kimson paid the entirety of the purchase money for the suit property, out of the proceeds from the sale of the 1st property and his own moneys. Madam Wong was one of the two joint owners of the 1st property and therefore she had one half interest in the proceeds by way of gift from Kimson. Although the 1st defendant was a joint owner of the suit property before the death of Kimson, he had contributed nothing towards the purchase price or the mortgage instalments for the suit property. He only represented Madam Wong as such joint owner. When Kimson died, the right of survivorship enjoyed by the 1st defendant should be held by him in favour of Madam Wong. He should therefore hold the suit property, of which he is the sole legal owner after Kimson's death, in trust for Madam Wong absolutely.

7. On the other hand, the 2nd defendant's case is that the 1st defendant is the sole owner of the suit property by virtue of his surviving Kimson, the only other joint owner. By a late amendment to the Defence, the 2nd defendant also alleges that the 1st defendant is the sole owner of the suit property by way of a gift from Kimson and/or Madam Wong or alternatively a presumption of advancement operated in favour of the 1st defendant.

8. Madam Wong's viva voce evidence is not of a high quality. Sometimes she remembered something, but at other times she tended to forget. Many a time, she did not answer questions put to her in cross-examination direct. On a few occasions, she also disowned the contents of parts of her witness statement which was adduced as her evidence in chief. She did not understand the meaning of "trust" or "beneficial ownership" used in her witness statement but she insisted that she had a right to remain in the suit property. I do not, however, find that she was dishonest, although sometimes she forgot things and was incoherent. That was to be expected of her, who is 87 years of age. I find some parts of her evidence truthful and reliable. Throughout her evidence, one trail was always maintained, and she would not forget or tell an untruth about it. She and Kimson had a happy married life lasting 64 years. Kimson had all along promised to look after her. Kimson purchased the 1st property and in turn the suit property for him and her to live in and for her old age. Her case was supported by the documents produced in this action and the circumstances of the family as described by her and the 1st defendant. The moneys for the purchase of the 1st property and the mortgage instalments in respect thereof were provided by Kimson alone, and that property was registered in the joint names of Kimson and Madam Wong. Part of the purchase money was in fact a loan from Kimson's employer, who told Madam Wong after Kimson's death to treat it as a funeral gift and she was not required to repay. It is quite clear that the proceeds of sale of the 1st property were applied towards repayment of the mortgage loan on the 1st property and payment of part of the price for the suit property. The fact that the monthly instalments for repaying the mortgage loan on the suit property were paid by Kimson before his death was partly supported by contemporaneous bank statements. On the other hand, there is hardly any evidence that anyone else, let alone the 1st defendant, provided any of such moneys. I have no doubt that Madam Wong being a woman of no means or income of her own, Kimson had promised and had intended to keep his promise that she would be able to stay in the 1st property and its replacement in the form of the suit property. In view of the evidence, I find as a fact that a half share of the 1st property was intended by Kimson to be a gift to Madam Wong. The presumption of gift in this respect is not rebutted by any evidence before me.

9. It is pertinent to note the following passages at Halsbury's Laws of England, Vol. 22, paras. 1065 and 1066:

"Where a husband purchased property or made an investment in the name of his wife, a gift to her was presumed in the absence of evidence of an intention to the contrary. There was a similar presumption where the property was purchased or the investment made by the husband in their joint names, the wife becoming entitled to the property in the event of her surviving her husband. Where the purchase or investment was made by the husband in the joint names of the husband and wife and third persons with regard to whom no presumption of gift arose, the third persons were trustees for the husband and wife and the survivor."

"No presumption of gift from a wife to a husband arises from a transfer into his name, or into their joint names, of shares or stock belong to her, or from a purchase of property with her money, or an investment of her money, in his name or in their joint names. Where property is bought with money belonging to a wife and conveyed to her husband, there is a resulting trust in favour of the wife in the absence of proof by the husband of a contrary intention on her part."

10. When the 1st property was sold in 1984, and the proceeds were applied towards the purchase of the suit property, I do not have any evidence that Kimson changed his mind or that Madam Wong rejected the gift. The 1st defendant was used as a signatory to the assignment of the suit property. This was argued by Mr Lam on behalf of the 2nd defendant as that Kimson intended the 1st defendant to be a beneficial joint owner of the suit property, taking the share that used to or should belong to Madam Wong. The argument can only succeed if it was the intention and wish of Kimson and Madam Wong that she was to be deprived of her interest in the proceeds and her interest in the suit property which was partly bought with the proceeds. The effect of this assumption is that after the death of Kimson, the 1st defendant would automatically become the full legal and beneficial owner of the suit property by way of survivorship, to the exclusion of any other member of the family, and in particular, Madam Wong. There is hardly any evidence to support such an intention of Kimson. Similarly, there is no evidence whatsoever that Madam Wong agreed to be deprived of her share in the proceeds, and consequently in the suit property. Her evidence was to the effect that she would not care what her husband did relating to the proceeds and the properties. She treated the moneys of Kimson as the communal property between Kimson and her. She said that there was no difference between husband and wife regarding money. This concept of communal property in her mind, in my view, displaces any possible evidence or inference that she agreed that she should have no interest in the proceeds of the 1st property or in the suit property.

11. I therefore find as a fact that Madam Wong did not intend to give her share of interest in the proceeds from the sale of the 1st property or in the suit property to the 1st defendant. Moreover, there is no evidence that Kimson intended to give her interest in the proceeds or in the suit property to the 1st defendant on her behalf. Her evidence was to the effect that the name of the 1st defendant was "added" to the suit property, and that was after the suit property had been purchased.

12. The 1st defendant gave evidence as a witness for the plaintiffs. Judgment had been entered against him in default of defence on 26/1/95. He admitted that he had contributed nothing towards the purchase money or the monthly instalments until the death of Kimson in respect of the suit property. It was argued by Mr Lam on behalf of the 2nd defendant that the 1st defendant's evidence must be viewed against the background that the 2nd defendant was laying a claim on the suit property, and that the 1st defendant had his own interest to serve in taking the suit property out of his own hands. I do have a strong suspicion about this motive of the 1st defendant. However, the hard fact remains, the contemporaneous documents from the various banks with which Kimson had established accounts do not bear out that the 1st defendant had contributed anything towards the payments for the suit property. Further, I accept the evidence that at the time of the purchase of the suit property, neither Tin Cheung nor Madam Xia was in Hong Kong, and that might be one of the reasons why the 1st defendant was asked to take the assignment as a joint owner with Kimson. The 1st defendant had not yet come of age at the time; he was not yet 21 years old, yet he was told to participate in the assignment. His younger brother would be even younger and it would be worse if the younger brother would become a joint owner. Madam Wong's evidence that after Kimson's death, she asked the 1st defendant to cause Tin Cheung's name to be added to the suit property and her failed attempt to have that carried out by a solicitor also supported the fact that there was no exclusive gift of the suit property to the 1st defendant. If Madam Wong intended the 1st defendant to be the absolute owner, she would not have asked him to add his father's name to the suit property. If the 1st defendant ever treated himself as the absolute owner after Kimson's death, he would not have even considered such a proposition. He admitted that he even went to solicitors to ask for the wish of Madam Wong to be carried out, and was disappointed when the legal costs involved were too high.

13. In the cross-examination of Madam Wong, there were the following questions and answers:

Q I suggest to you that at the time of the purchase of the 2nd property (i.e., the suit property), it was your intention that your husband and the 1st defendant should become the joint tenants.

A No, I did not say so.

Q And it was also your intention that should your husband die, the 1st defendant should inherit the 2nd property.

A I don't know this sort of thing.

This, to me, is very clear evidence of a denial to both questions. In particular, the answer to the second suggestion must be tantamount to a categorical denial. She did not know how the 1st defendant would inherit the 2nd property. She could not have intended something which she did not know. Her evidence, which I accept, was to the effect that she could not bear the idea of herself being evicted from the flat. In the circumstances, she could not have intended that the 1st defendant would have such an interest in the suit property so as to be able to evict her. I find as a fact that neither Kimson nor Madam Wong had intended that the 1st defendant would be the absolute and beneficial owner of the suit property after the death of Kimson.

14. Mr Lam on behalf of the 2nd defendant relied heavily on the presumption of advancement or gift. He submitted that Kimson and/or Madam Wong were in loco parentis towards the 1st defendant, and the placing of the suit property in the joint names of Kimson and the 1st defendant must be presumed to be a gift to the 1st defendant with the attached benefit of survivorship. Halsbury's Laws of England, Vol. 24, para. 524 states:

"Where a father, or a person who has put himself in loco parentis, purchases either real or personal estate in the name of a child alone, or in the joint names of the child and of himself or a stranger, the father or other person is presumed to have intended to make a gift to the child. The presumption does not exist where the purchase is made by a mother, but slighter evidence may be sufficient to prove an intention on her part to advance the child than would be required in the case of a purchase by a stranger."

15. In Bennet v. Bennet (1879) 10 Ch D 474, at 477-478, Jessel, MR said:

" So that a person in loco parentis means a person taking upon himself the duty of a father of a child to make a provision for that child. It is clear that in that case the presumption can only arise from the obligation, and therefore in that case the doctrine can only have reference to the obligation of a father to provide for his child, and nothing else.

But the father is under that obligation from the mere fact of his being the father, and therefore no evidence is necessary to shew the obligation to provide for his child, because that is part of his duty. In the case of a father, you have only to prove the fact that he is the father, and when you have done that the obligation at once arises; but in the case of a person in loco parentis you must prove that he took upon himself the obligation.

But in our law there is no moral legal obligation -- I do not know how to express it more shortly -- no obligation according to the rules of equity -- on a mother to provide for her child: there is no such obligation as a Court of Equity recognises as such."

16. I have already made a finding that there is no evidence that Madam Wong intended her share in the proceeds from the sale of the 1st property or her interest in the suit property to be given to the 1st defendant. Due to the departure of Madam Sung from the family sometime between 1981 and 1984, and due to the fact that Tin Cheung was often out of Hong Kong, Madam Wong and Kimson must have lavished love and affection on the 1st defendant and supervised him. Yet the 1st defendant was at least 18 years of age by the time and had started to work and make his own income. Mr Miu argued that it was therefore questionable that there remained any need for anyone to take over the office and duty of the parent to make provision for the 1st defendant. Anyhow, Madam Wong, being a housewife and without any income of her own, cannot be presumed to have taken up that obligation. The presumption of advancement, in my view, cannot possibly apply to Madam Wong.

17. It is, however, a vexed question whether Kimson stood in loco parentis of the 1st defendant when he asked the 1st defendant to take up the assignment of the suit property in the joint names of himself and the 1st defendant, so as to give rise to a presumption of advancement, in the sense that if he died, the 1st defendant would be beneficially entitled to his share in the suit property. Did Kimson assume the office of a father towards the 1st defendant? Madam Xia was married, had a family of her own, and was not in Hong Kong. Kimson and Madam Wong disapproved of Tin Cheung's deeds. Tin Cheung was a womaniser and that put the marriage between him and Madam Sung on the rock. Madam Sung was apparently a filial daughter-in-law to the old couple who sympathised with her. She did not know how to take care of babies and the 1st defendant had been cared and looked after by Madam Wong since he was born. Before the 1st defendant started to work, Kimson was the sole supporter of this extended family, all living under the same roof. Tin Cheung was often out of Hong Kong, and Madam Sung had left before the suit property was purchased. Even when the 1st defendant commenced to earn an income, that was meagre and Kimson continued to support the family, though with small contributions from the 1st defendant. Ha Pak Wing was younger and there is no evidence that he had also started to work. In all the circumstances, I find it more probable than not that Kimson stood in loco parentis of the 1st defendant and his younger brother.

18. Mr Miu argued that it was against good sense that if the presumption of advancement was applied in favour of the 1st defendant, the younger brother would not inherit anything from Kimson or Kimson's estate. However, this does not affect my view that Kimson assumed the office of a father towards the brothers. Moreover, the position of the 1st defendant as the eldest paternal grandson must have a significant bearing on the mind of Kimson who had only limited assets, little more than the suit property. Convenience is not acceptable as a ground to make the 1st defendant a joint tenant instead of Madam Wong, for she executed the assignment to sell the 1st property just a week prior to the date of the assignment regarding the suit property. The fact that the 1st defendant had not yet come of age when signing the latter assignment is more supportive of an intention to advance than a wish to avoid trouble and costs.

19. There is no evidence of a contrary intention expressed by Kimson before and during the assignment, and the presumption of advancement in favour of the 1st defendant therefore arose. The fact that Kimson is presumed to make a gift to the 1st defendant cannot affect Madam Wong's position, for she never intended nor knew that a gift had been made (even if that was the case) of her share in the suit property to the 1st defendant. All along, Kimson believed, though it transpired that he was wrong, that he would survive Madam Wong, and if he died, the 1st defendant would be the sole legal owner of the suit property. But his thoughts and belief could not have affected Madam Wong's rights in the suit property now that she turned out to out-live him. Kimson's presumed intention can only be given effect to by allowing his own interest in the suit property to be given to the 1st defendant after his death. Madam Wong's interest will remain intact and unaffected.

20. The 1st defendant, however, gave evidence that when he took up the suit property as one of the two joint owners, he was told by Kimson in the presence of Madam Wong that that was to avoid incurring trouble and legal fees. He, as a legal joint owner, was intended to administer the suit property for the benefit of all the beneficiaries of Kimson's estate in the event of Kimson's death. He was, in fact, holding as a trustee. Yet he was unable to explain his duties as a trustee or as an administrator of the property. I view his evidence with grave suspicion, not only because he might very well wish to avoid any attack on the suit property by his wife, the 2nd defendant, but that he was an evasive and unreliable witness. His evidence that he was a mere trustee of the suit property and his acquiescence in the judgment being entered against him in default of defence were contradicted by various documents, notably the further charge that he created as late as August 1994 in which he allowed himself to be described as the sole beneficial owner of the suit property.

21. Although Madam Wong used to be a joint owner with Kimson in respect of the 1st property, her joint ownership cannot be said to continue regarding the suit property. After the sale of the 1st property, her interest in one half of the proceeds could not be translated or converted into a joint interest in the suit property, because the joint ownership had been severed by the sale and she was not made a joint owner of the suit property. The investment of her one half share in the proceeds in the purchase of the suit property should, in my view, be transformed into one half interest in the suit property as a co-owner. Kimson was free to give away his own half interest in the suit property to the 1st defendant upon his death. The disposition of Kimson's interest in the suit property in this manner had also the effect of severing the joint entitlement between him and Madam Wong in the suit property. I do not accept the notions that the 1st defendant represented Madam Wong to take up her joint interest in the suit property or that she should take all the interest in the suit property when surviving Kimson.

22. I have not forgotten about the 2nd defendant's evidence. Her evidence is, in my view, inconsequential. She was not privy to the matters concerning the purchase of the 1st property or the 2nd property or to the conversations between Kimson, Madam Wong and the 1st defendant, who were the key parties to the issues in this action. She could not give any meaningful evidence regarding those issues save to allege what she was told by the 1st defendant and Madam Wong. Yet a number of such important alleged conversations were neither contained in her witness statements nor put to the 1st defendant or Madam Wong. She altered a significant allegation in her witness statement that the suit property was about 100 square feet larger than the 1st property. She has her own purposes to ensure that the suit property belongs to the 1st defendant alone, for she would be able to lay hands on it if or when she is separated or divorced from him. I place no reliance on her evidence.

23. A question arises as to the monthly mortgage repayments made by the 1st defendant and later by his mother, Madam Sung, after Kimson's death. The fact that the 1st defendant denied that he made those repayments in order to acquire an interest in the suit property creates a bar against his claiming any interest in the suit property for that reason. Madam Sung has not given evidence before me, and I do not think it is proper to pass any judgment on her intentions in her payments of the mortgage instalments since October 1993 when the 1st defendant could not afford making such payments any more. Madam Wong's evidence is that Madam Sung proposed to give her money and she asked Madam Sung to pay the money into the Chase account. The effect of this evidence is that Madam Sung paid the mortgage instalments as a gift to Madam Wong. The 1st defendant said that Madam Sung was making loans to him. However, I do not need to decide this question as Madam Sung is not a party and she has had no opportunity to address me. Nor is the question necessary to be decided in this action.

24. There is the further charge created by the 1st defendant in favour of Ms Tsang Kit Han for a sum of $665,790. The further charge was made in contravention of the conditions of the mortgage and further charge in favour of Chase and ranked after those prior incumbrances. Whatever action that Chase and Ms Tsang may take against the suit property or the 1st defendant is not an issue in this action, and I do not propose to deal with it.

25. In the end, I find for the 2nd plaintiff, Madam Wong, in this action, although I dismiss the claim of the 1st plaintiff, namely, the estate of Kimson. I find that the 1st defendant is and was after the death of Kimson holding the suit property in trust for himself and Madam Wong in equal shares. I therefore make a declaration that the suit property now registered in the name of the 1st defendant is held by him as trustee for himself and Madam Wong in equal shares. The judgment herein entered against the 1st defendant on 26 January 1995 by default shall be disregarded insofar as it conflicts with this judgment. The registration of the Amended Petition for the Judicial Separation under Memorial No. 5346277 as a lis pendens against the suit property is objectionable insofar as it is premised on the assumption that the 1st defendant is the sole beneficial owner of the suit property. I also make an order in terms of paragraph (3) of the relief.

26. Although this action was brought on behalf of the estate of Kimson and Madam Wong, Mr Miu had in fact argued the case in favour of Madam Wong alone. The part of the claim that attempts to take the suit property out of the hands of the 1st defendant is also unsuccessful. In the circumstances, I am of the view the proper and reasonable order for costs is that the plaintiffs and the 2nd defendant do bear their own costs. Their respective costs be taxed in accordance with the legal aid scheme. This is the order for costs nisi that I make.

Representation:

Mr Nelson Miu, instructed by Messrs Michael Cheuk, Wong & Kee, for the plaintiffs.

Mr Christopher Lam, instructed by Messrs Chan & Cheng, for the 2nd defendant.