Lee Tso Fong v. Kwok Wai Sun and Another

HCA 272/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 272 OF 2005

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Before: Deputy High Court Judge To in Court

Dates of Hearing: 6 - 7, 10 - 14 September 2007; 1, 2, 8 and 11 April 2008

Date of Judgment: 9 May 2008

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J U D G M E N T

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INTRODUCTION

1.By this action, the Plaintiff seeks a declaration that she is the beneficial owner of the property at Flat A, 7^th Floor, Wai Cheong Building, 5-9A Gresson Street, Hong Kong (“Suit Property”) which she purchased and placed in the joint names of her eldest son, the 1^st Defendant and his wife, the 2^nd Defendant.  Subsequently, the marriage between the 1^st and 2^nd Defendants irretrievably broke down.  The 2^nd Defendant petitioned for divorce in the Family Court on 4 March 2004.  In the matrimonial proceedings, the 2^nd Defendant sought, among other relief, to transfer the Suit Property from the 1^st Defendant to her.  Then on 8 February 2005, the Plaintiff commenced the present proceedings in the High Court seeking the declaration.  On or about 14 February 2005, she joined in as an intervener in the matrimonial proceedings contending that she is the beneficial owner of the Suit Property.  The matrimonial proceeding was adjourned sine die pending the outcome of this action.

2.There is no dispute that the Suit Property was purchased with the funds of the Plaintiff.  The issue in this case is what was the intention of the Plaintiff at the time of purchase of the Suit Property.  The Plaintiff’s case is that she purchased the Suit Property as a residence for the Defendants so that their daughters could study in St Francis Canossian College in Wanchai, but she never promised making the Suit Property a gift to the Defendants.  She claims that the Suit Property is being held by the Defendants under a resulting trust for her benefit.  The 1^st Defendant defaulted in the present proceedings.  But in his financial statement dated 19 October 2004 filed for the purposes of the matrimonial proceedings, he declared that he had no beneficial interest in the Suit Property.  The 2^nd Defendant’s case is that the Suit Property was a gift by the Plaintiff to the two Defendants.  She claims that the Plaintiff had repeatedly told her that the Plaintiff’s husband (“Father”) intended to give one flat as a gift to each of his sons; and had represented to her that the Suit Property was a gift to the Defendants.  In addition, she also relies on the presumption of advancement.

3.I shall first state the principles of law which I perceive as being applicable, then make my finding of facts, and lastly apply the principles of law to the facts found.

THE LAW

4.There are two presumptions raised on the facts of this case: the presumption of resulting trust and the presumption of advancement.  In addition, Mrs Chan, counsel for the 2^nd Defendant, seeks to extend the presumption of advancement from the relationship between father and child to that between mother and daughter-in-law.  I shall first deal with the principle of law relating to these presumptions and then the court’s approach in resolving the two conflicting presumptions and the burden of proof.

Presumption of resulting trust

5.Counsel have no dispute that where a person purchases property with his own money and directs that the property be transferred to the name of another, in the absence of evidence to the contrary, there is a presumption that the property is held by the person to whom it is transferred under a resulting trust in favour of the person who provided the money for its purchase.  The law imputes a common intention in the parties to hold the property under a resulting trust even in the absence of such intention.  This presumption may be rebutted by proof of the actual common intention of the parties.  The classic authority for this proposition is Dyer v Dyer (1788) 2 Cox Eq 92.

Presumption of advancement

6.Dyer v Dyer is also the classic authority for the proposition that where a person purchases property and transfers it to the name of his child, there is a presumption that a gift was intended.  While not disputing that the presumption of advancement applies as between father and son or father and daughter, Mr Wong, counsel for the Plaintiff, submits that in Hong Kong there is no presumption of advancement for a mother buying a property in the name of her child.  He quotes the case of Watson v Smith [1998] 3 HKC 461, which was a decision of the Hong Kong Court of Appeal.  On the other hand, Mrs Chan argues that not only does the presumption operate as between mother and child, it also operates as between mother and son-in-law or mother and daughter-in-law.  She relies on the case of Dagle v Dagle Estate 70 DLR (4^th) 201 which was a decision of the Appeal Division of the Supreme Court of Prince Edward Island (“PEI”) of Canada in 1990.

7.In Watson v Smith, the daughter and her then boyfriend bought a flat in Happy Valley in their joint names.  It was subsequently arranged that the boyfriend would sell his half share in the flat to the mother and the mother would move into the flat and continue to make the mortgage repayments.  The conveyance was made not to the mother but to the daughter.  The mother and daughter disputed the nature of the transaction.  The daughter maintained that the half share bought by the mother was intended as a gift to her from the mother.  The mother denied there was any such intention and claimed that she had always intended to have the beneficial interest of her half share.  Yam J accepted the evidence of the mother and gave judgment for the mother.  The daughter appealed.  Mortimer VP held that it was a dispute on the facts and upheld the decision of Yam J.  Godfrey JA was conscious of the conflicting presumptions of resulting trust and of advancement.  He followed Bennet v Bennet (1879) 10 Ch D 474 and held there was no presumption of advancement when a mother makes a purchase of property in the name of her child.  He said at 464:

“When there is evidence available for the resolution of questions such as this, which unfortunately arise all too frequently, the court has to consider that evidence, and decide where the truth lies.  There are factual presumptions which can sometimes assist the court in resolving these questions, such as the presumption of advancement (ie gift).  However, since there is no equitable obligation on a mother to advance a daughter, there is no presumption of advancement when a mother makes a purchase of property in the name of her child: see Bennet v Bennet (1879) 10 Ch D 474.  Rather, in the absence of other evidence, there would in such a case be a presumption of a resulting trust, that is to say, that the property purchased belonged to the mother, as to the person who paid for it, no matter in whose name it was taken.  And, where it is said that money was advanced for the purchase of a property by way of gift to a donee, the donee has to prove that that was the case.  The burden of proof that a transaction was intended to be by way of gift rests on the donee: cp Seddon v Davidson [1968] 1 WLR 1083.”

Rogers JA concurred, essentially on the basis that the finding of fact of Yam J should not be disturbed.

8.Mrs Chan submits that the appellant in Watson v Smith was not legally represented and the Court of Appeal was not referred to the case of Dagle v Dagle Estate.  In that case, the Supreme Court of PEI rejected Bennet v Bennet as being outdated and extended the presumption of advancement between father and child to mother and child because of the modern obligation on women to provide towards their children.  MacDonald CJTD quoted with approval the opinion of Professor Waters in Law of Trusts in Canada, 2^nd ed (1984).  He held at 17:

“As to the application of the presumption of advancement in relation to fathers and mothers towards their children, Professor Waters in Law of Trusts in Canada, 2^nd ed (1984), at p. 315, states that the presumption appears to have retained all its original vigour.  He was speaking as to the father-child relationship.  The trial judge was of the opinion, although stating no case law to support that opinion, that the presumption arises on a gift from mother to child.  If the presumption is to continue to have weight for gifts to children then there can be no reason why it should not be applicable between mother and child.

Today, in contrast to the time of Jessel MR, there is an obligation upon a mother to support her children.  Section 17(1) of the Family Law Reform Act states that every parent has an obligation to provide support for his or her child.  Section 15(2) of the Divorce Act, 1985, S.C. 1986, c. 4, also provides that any spouse may be required to provide support for a child of the marriage.

Again referring to Waters in the Law of Trusts in Canada, p. 325, he states:

The presumption of advancement between father and child has not been subjected to any of the re-evaluation which in recent years has overtaken the presumption between husband and wife.  Consequently, there is no authority which imputes to it less force than it had at the time ofKrys v Krys.  It may well be that, reflecting the financial dependency that it probably, does, contemporary opinion would accord it little weight as between a father and an independent, adult child.  But the factor of affection continues to exists, something which cannot be presumed in the relationship between strangers, and possibly for this reason the courts have been no reason to challenge its modern significance.  The property relations between father and child are in any event quite different from those between contemporary husbands and wives.  This means that the full force of this uncertain state of the law as between the Scheuerman case and the Goodfriend minority judgment continues to apply to father and child resulting trust actions.

In Cohen v Cohen (1985), 60 AR 234 (QB), Justice Montgomery was of the opinion that the statement quoted by Cartwright J., supra, in Edwards v Bradley “would be stated differently today”.  He held in Cohen that there should be a presumption of a gift when a mother transfers property to a child.”

9.In Brown and another v Brown and another (1993) 31 NSWLR 582, the Court of Appeal of New South Wales of Australia in 1993 also entertained some doubts on Bennet v Bennet.  It held obiter that the relationship of mother and child is one which should now be regarded as capable of giving rise in equity to a presumption of advancement, but it expressly left the position open.  It was mentioned in that case, quoting Scott on Trusts, 4^th ed (1989) Vol 5 at 182, that in the United States the presumption applies in the case of mothers as in the case of fathers.  

10.Dagle v Dagle Estates commends a very novel and enlightening approach.  But Mr Wong submits that I am bound by the Court of Appeal decision in Watson v Smith.  On the principle of stare decisis, I consider I am bound by the decision of the Court of Appeal while decisions of other common law jurisdictions are only of persuasive value.  However, I must not forget that the law is a living thing.  It evolves with time and with changes in socio-economic conditions.  Unlike the presumption of resulting trust, where the law imputes a common intention between the parties when there was none, presumption of advancement is a rule of evidence.  It infers an intention which, according to human nature or human behaviour, must have been what was in the contemplation of the parties at the time of the relevant transaction.  Human nature or human behaviour is a reflection of the social norm which changes with time and with socio-economic conditions.  If socio-economic conditions change, the norm changes.  If the changes are substantial, likewise the changes in social norm and human behaviour will also be substantial.  Where the changes are so substantial, a stage may be reached when the basis on which the inference of common intention is to be drawn no longer exists or a new stage has been set for inference of some different intentions to be drawn as a matter human nature or human behaviour under the prevailing socio-economic conditions.  When this occurs, the law has changed. 

11.A typical example of the court adapting itself to the changing socio-economic conditions is the presumption of advancement by husband to wife.  That was a presumption which was recognised in the 19^th century: see Re Eykyu’s Trusts (1877) 6 Ch D 115.  As is noted in Halsbury’s Law of England, Vol 20(1) at paragraph 45 note 1, the strength of the presumption has been much diminished with changing conditions of society: see Silver v Silver [1958] 1 All ER 523 at 525, per Lord Evershed MR and Pettitt v Petttit [1970] AC 777 at 793, per Lord Reid.  In Pettitt v Pettitt, Lord Reid dis-applied the presumption because the consideration on which the presumption was created no longer existed due to changes in circumstances.  He held that the law must be flexible and the court must adapt itself to changing conditions.  He said at 793:

“I do not know how this presumption first arose, but it would seem that the judges who first gave effect to it must have thought either that the husbands so commonly intended to make gifts in the circumstances in which the presumption arises that it was proper to assume this where there was no evidence, or that the wives economic dependence on their husbands made it necessary as a matter of public policy to give them this advantage.  I can see no other reasonable basis for the presumption.  These considerations have largely lost their force under present conditions, and, unless the law has lost all flexibility so that the court can no longer adapt it to changing conditions, the strength of the presumption must have been much diminished.  I do not think that it would be proper to apply it to the circumstances of the present case.” 

12.In very much the same way as the court may dis-apply a presumption due to changes in circumstances, I think the court may extend the application of a presumption for the same reason.  The law is living and flexible.  It is capable of adapting to changing circumstances.  A judge’s duty is to find out what the law is and to give effect to it.  First instance judges are in the best position as front line judges to feel the pulse of the society and the pulse of the evolving law.  A judge would be abdicating his duty by slavishly following precedents under new circumstances when the basis for their application no longer existed and to leave it to the appellate process to find out what the law now is.  In finding out what the law is under the new circumstances, a judge does not offend the principle of stare decisis.

13.This presumption of advancement is based on the father-child relationship, the child’s dependence on the father, the father’s moral obligation to give and the common experience that the father, being older and having accumulated wealth, is more likely or is commonly intended to make gifts to his child.  The presumption does not apply to strangers or other relationships.

14.In much the same vein, Jessel MR held in Bennet v Bennet that the presumption did not apply as between mother and son.  He said at 478:

“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 …”

The rationale of that dictum must be understood in the light of then socio-economic conditions.  Bennet v Bennet was decided 129 years ago at a time when women had no independent financial means and no obligation to provide for their children.  The obligation and responsibility to provide for the wives and children rested on men alone.  The last fifty years, at least, the world has seen a change in the women’s dependence on men and their increased participation in society and world affairs.  More and more women have taken up employment and have filled top posts in government and the commercial sector.  Mrs Margaret Thatcher became the first woman prime minister of the United Kingdom and a woman president of the United States is probably in the making.  Along with the increased participation of women in the work place and the society, their contribution to the maintenance of the family increased.  With inflation, increases in cost of living and housing; and the demand for better living standard for the family, the mothers’ contribution is indispensable for many families.  The significance of the mothers’ contribution to the family is such that the society has also recognised it an obligation for the mothers along with the fathers to maintain the children of the family.  The legislature has imposed such statutory obligations to maintain the children on the mothers as well as the fathers: see for example, sections 5 and 6 of Matrimonial Proceedings and Property Ordinance and section 10 of Guardianship of Minors Ordinance. 

15.The common law is living and flexible.  It has never been held to be fixed in time.  As times and socio-economic conditions change, the common law also changes.  In view of the mothers’ participation in the work place and the importance of their contribution to the maintenance of the family, there is now no reason why when what their husbands do to their children can result in the presumption of advancement but what they do in similar manner cannot.  In just the opposite way as the wife’s dependence on the husband decreased, the significance of the mother’s contribution to the family increased.  In just the same way as Lord Reid thought it right that the presumption of advancement between husband and wife has lost it weight, a presumption of advancement between mother and child has emerged.  Given the prevailing socio-economic conditions in Hong Kong, in particular, women’s participation in society and in employment, the growing dependence of the family on the mother’s contribution, the obligation which the law imposes on women to provide for their children, it must be presumed, in the absence of evidence to the contrary that when a mother purchases property and transfers it to her child, a gift of the property to the child is intended.  The principle in Bennet v Bennet is now out of date. 

16.Godfrey JA’s dicta in Watson v Smith was based on the Bennet v Bennet.  He did not have the benefit of counsel’s argument and the benefit of being informed of the development of this aspect of the law in other common law jurisdiction.  Had it been otherwise, I believe he would have refused to follow Bennet v Bennet and found in favour of the presumption of advancement in a relationship between mother and child.  Despite that, the decision in Watson v Smith was well justified on the finding of fact by Yam J, which was unanimously upheld by the Court of Appeal.

17.Given the significant changes in circumstances, I consider Bennet v Bennet distinguishable from the present case and is not to be followed.  I find the law, as the socio-economic conditions now present themselves, is that the presumption of advancement applies equally to the relationship between mother and child and that between father and child.

18.The 2^nd Defendant is not a child of the Plaintiff but her daughter-in-law.  Mrs Chan submits that the presumption of advancement applies equally to the spouse of the child by reason of the very close relationship between the child and the spouse.  Mrs Chan quoted Knight v Biss [1954] NZLR 55, a decision of the Supreme Court of New Zealand.  I do not think that decision supports her proposition.  In that case, Turner J held that there was no presumption of advancement as between father and son-in-law and the onus was upon the son-in-law to prove that the father has placed himself in loco parentis to the son-in-law.  He said at 57:

“Where the transaction, however, amounts to a payment of money or a transfer of goods as between father and son-in-law, I do not find that there is any presumption of law in favour of gift, and the onus will be upon the son-in-law, unless the donor has placed himself in loco parentis to the donee.”

Turner J quoted some New Zealand authorities for the above proposition but the principles were not discussed.  I am quite unable to ascertain the principle of law established in that case, other than that there was no presumption of advancement as between a parent and the child-in-law and the child-in-law bears the onus of proving a transaction to be a gift.  I do not think that authority supports Mrs Chan’s proposition.  At the highest, that case decided that the burden may be discharged by showing that the donor has placed himself in loco parentis, which is just evidence on which a contrary intention of gift may be inferred.  In any event, Knight v Biss was about gift of money or chattel which is perfected upon delivery and not of real property to which the presumption of resulting trust applies.  I do not think Knight v Biss relevant.

19.I have not been referred to any authority on presumption of advancement to child-in-law in respect of real property.  Probably no such presumption exists.  The presumption of advancement is raised by reason of the very close family or blood relationship, i.e. that between parent and child.  It has been extended to adopted child, illegitimate child and exceptionally to grandchild of a deceased child, but no further.  It is restricted to immediate family members and not extended to child of a sibling or grandchild.  I think the real essence behind this family relationship is the parent and child relationship, the moral obligation to provide for the child and the commonly held intention of the parent to make gifts to the child.  However much one may wish to entertain the belief that the parent and child-in-law are in the same close relationship as that between the parent and child through the matrimonial bond of the child and his spouse, the reality is that the intimacy, the mutual exchange of love and affection and the mutual trust developed during parenting stage is absent in such a relationship.  Nor do I not think it is the commonly held intention of parents to make advancements to their children-in-law.  This is particularly so as the presumption of advancement between husband and wife has now lost its force.  In my view, in general, the parent and child-in-law relationship is not such as is capable of creating the presumption.  I do not find it appropriate to extend the presumption to the relationship between a parent and child-in-law.

20.There may well be many cases where, due to special circumstances, the parent and child-in-law relationship is much closer than that between parent and child.  Those cases are not substantial in relative terms and are exceptions rather than the norm.  In such cases, the proper course is for the child-in-law to prove a gift by rebutting the presumption of resulting trust with evidence of a contrary common intention.  The closeness of the relationship in such a case is a fact on which the common intention of a gift may be inferred.   

Conflict between presumption of resulting trust and presumption of advancement and burden of proof

21.Counsel dispute as to which party bears the burden of proof.  Mr Wong argues that the burden is on the 2^nd Defendant to rebut the presumption of resulting trust by adducing evidence to the contrary.  He relies on Dyer v Dyer and Seldon v Davidson [1968] 2 All ER 755, CA, in support of his proposition.  On the other hand, Mrs Chan argues that the Plaintiff bears the burden of proof. 

22.I do not think there is any simple rule that the burden of proof lies upon the party against whom the presumption operates.  Presumptions are rules of evidence.  They are not determinative of which party bears the legal burden of proof.  The legal burden of proof in any particular case depends on the circumstances in which the claim arises.  The general rule is Ei qui affirmat nopn ei equi negat incumbit probation.  Proof rests on he who affirms, not he who denies.  It therefore lies upon the party who substantially asserts the affirmative of the issue: see Constantine Line v Imperial Smelting Corporation [1942] AC 154 at 174.  This burden is fixed at the beginning of the trial by the state of the pleading. 

23.Prima facie, beneficial ownership goes hand in hand with legal ownership.  If a plaintiff seeks to divorce the beneficial ownership from legal ownership and to claim the beneficial ownership in the property which he purchased and transferred to the name of another, he must bear the burden of proving his equitable right which is inconsistent with the undisputed legal title.  He may discharge that burden by proving an express trust.  Or, he may be assisted by the presumption of resulting trust by proving that he paid the purchase price of the property.  But, like all presumptions, the presumption of resulting trust operates only in the absence of evidence to the contrary.  Once this presumption is raised, the party seeking to challenge it bears the evidential, but not legal burden, of adducing evidence to displace the presumption of resulting trust.  That party may adduce evidence of a contrary common intention of making a gift.  If that evidence is insufficient to displace the presumption of resulting trust, the presumption prevails.  But if that evidence is sufficient to displace the presumption of resulting trust, the party who has the legal burden will fail unless he can prove the resulting trust.

24.Where a parent purchases property and transfers it to his child, it is capable of raising both the presumption of resulting trust and the presumption of advancement by reason of the parent and child relationship.  Bearing in mind that the legal burden is on the party seeking to prove his equitable right which is inconsistent with the undisputed legal title, the parent who purchased the property and transferred it to his child must bear the evidential burden of rebutting the presumption of advancement, which is part of his legal burden of proving the resulting trust.  Thus, the legal burden is on the parent whether he is relying on the presumption of resulting trust or whether the presumption of advancement is raised against him.

25.The above conclusion is consistent with the commonly held opinion as to the nature of the presumption of advancement vis-à-vis the presumption of resulting trust.  In his Equity: A Course of Lectures, 2^nd ed (1936) at 77-80, Maitland referred to the presumption of advancement as a sub-rule that qualifies the presumption of resulting trust.  In Murless v Franklin (1818) 1 Swans 13 at 17; 36 ER 278 at 280, Lord Eldon referred to the presumption of resulting trust as the general rule which is subject to an exception where the purchaser was under a species of natural obligation to provide for the nominee.  In Napier v Perpetual Trustee (WA) (1980) 55 ALJR 1 at 3, Aickin J also spoke of the presumption of advancement as an exception to the primary presumption of resulting trust.  In Pettitt, Equity and the Law of Trusts, 6^th ed (1989), the learned author refers to evidence which rebuts the presumption of advancement as reinstating the presumption of resulting trust.  It therefore appears that the commonly held opinion is that the presumption of resulting trust is the basic rule while the presumption of advancement is the exception.  If so, the legal burden of proof must be on the parent seeking to rely on the presumption of resulting trust to rebut the presumption of advancement.  That would have been the case had the 1^st Defendant contested the proceeding.

26.In the absence of the parent and child relationship, as in the case of the dispute between the Plaintiff and the 2^nd Defendant, the presumption of advancement is not applicable. The presumption of resulting trust applies.  The onus is on the donee, i.e. the 2^nd Defendant, to rebut the presumption of resulting trust.  This onus is only an evidential onus.  The legal burden of proof remains with the Plaintiff.  The Plaintiff may be assisted by the presumption of resulting trust, but she has to prove the basic facts on which the presumption is raised.  If the 2^nd Defendant succeeds in discharging the evidential onus, the Plaintiff will fail unless she can discharge the legal burden of proof by proving an express trust.

27.I shall now turn to the finding of fact in this case.

Dramatis Personae

28.Hereunder is a dramatis personae of the characters involved in this action.

Lee Tso Fong (Plaintiff)

29.Madam Lee is the Plaintiff in this action.  She is a 76 years old widow.  She received primary education and is illiterate in English.  She and the Father are of Chiu Chow origin.  They have three sons (namely: the 1^st Defendant, “Edwin” and “Leuk”) and five daughters (namely: “Tammy”, “Annie”, “Aileen”, “Alice” and “Angela”).  She maintains a very closely-knit family in which the siblings are very supportive of each other.  She migrated to Canada in January 1994.  She returned to re-settle in Hong Kong in January 1999.  She is an authoritarian mother, but she knows about the passage of time and the need to adjust her thoughts to modern society.  She is a very warm and caring mother and grandmother.  Despite the commencement of the divorce proceedings by the 2^nd Defendant, she maintained contacts with the two grand-daughters and gave them pocket money.

Kwok Pik Kiu Tammy (“Tammy”)

30.Tammy is the eldest daughter of the Plaintiff.  She is very supportive of the family.  She is married.  In 1984, she purchased a flat in Chun Fai Building, Spring Garden Lane, Wanchai (“Chun Fai Property”) as a residence for the Father and the siblings.  Before she migrated to Canada in August 1989, she sold the property to her brother, Edwin.  When she learned about the Defendants’ financial problem while she was visiting Hong Kong in early 2003, she initiated discussion on a family arrangement to help the Defendants out of their financial problem.  She was not called to give evidence.

Kwok Wai Sun (1^st Defendant)

31.The 1^st Defendant is the eldest son of the Plaintiff.  He received primary education.  He used to be a printing worker.  He married the 2^nd Defendant in April 1989 and had two daughters born out of that wedlock in 1990 and 1992.  His marital relationship with the 2^nd Defendant deteriorated after the birth of the younger daughter.  The relationship further deteriorated in 1996 and eventually broke down in 2002 when he was unemployed.  He was hot-tempered and indulged in alcohol.  He abused the 2^nd Defendant and their daughters.  He was described by the Plaintiff as lousy and undisciplined.  After the 2^nd Defendant left him, he worked as a watchman.  He did not contest the present proceedings and was not called by either party to give evidence.

Kwok Pik San, Annie (“Annie”)

32.Annie is married and is living in Vancouver.  She visited Hong Kong in 2003 and offered to help to bring the family arrangement to a conclusion.  She was not called to give evidence.  Her involvement in the present action is not in dispute.

Kwok Pik Sing, Aileen (“Aileen”)

33.Aileen is single.  She migrated to Canada and lived with Tammy.  She was not involved in the present dispute.

Kwok Wai Leung Edwin (“Edwin”)

34.Edwin is the second son of the Plaintiff.  He was graduated from Wah Yan College and then the Hong Kong Polytechnic College in 1983.  He was a senior secretarial officer in the Wheelock group.  He was laid off in about October 2003.  He is the treasurer of the family.  He is entrusted by the Plaintiff in looking after the financial affairs of the Plaintiff and the probate matters of the Father.  He has a joint account with the Plaintiff from which he withdraws money for the expenses of the Plaintiff.  He maintains comprehensive financial records for the Plaintiff.  He was the architect of the family arrangement to assist the Defendants in solving their financial problems.  He is also a very supportive sibling of the 1^st Defendant.

Kwok Pik Ngai Alice (“Alice”)

35.Alice is single.  The 2^nd Defendant alleged that Alice had told her off in the dispute over the family arrangement.  Alice was not called to give evidence.  That dispute is of no relevance to the issue in dispute.

Kwok Pik Har Angela (“Angela”)

36.Angela is single.  She was graduated from St Francis Canossian College.  She worked as a secretary in the New World group, which gave her the opportunity to purchase a flat in Li Chit Garden, Li Chit Street, Wanchai (“Li Chit Property”)and a staff loan to finance the purchase.  She was very loving and caring towards the 2^nd Defendant’s daughters.  She played with them after dinner and gave them tuition.  Since the 2^nd Defendant left the Suit Property, she maintained contact with the 2^nd Defendant’s daughters and gave them pocket money of $3,000 a month.

Kwok Wai Leuk (“Leuk”)

37.Leuk is the youngest son in the family.  He is described as having a queer character and isolated himself from the other siblings.  He lived in the Father’s ancestral property in Cross Street while the other members of the family moved to the Chun Fai Property.  He was a manual worker.  He was unemployed at the time of the proceedings.  He is the legal owner of a flat in Lok Moon Mansion (“Lok Moon Property”) which was purchased with funds wholly provided by the Plaintiff. 

Hong Wai Yee (2^nd Defendant)

38.The 2^nd Defendant is the daughter-in-law of the Plaintiff.  She received primary education.  Through the introduction of Tammy, she came to know the 1^st Defendant.  She married the 1^st Defendant in April 1989.  She gave birth to two daughters in 1990 and 1992.  She filed a petition to divorce the 1^st Defendant on 4 March 2004 and left the 1^st Defendant on 15 April 2004.  Since then, she took up three part-time jobs and subsequently full-time employment to provide for herself and her two daughters.

Credibility of witnesses

39.The Plaintiff, Edwin, Angela and Leuk gave evidence in the Plaintiff’s case.  The evidence of Angela is not in dispute.  The 2^nd Defendant is the sole witness for the defence.  Hereunder is my overall view of their credibility.  Further reasons for my assessment is to be found in my analysis of their evidence.

Credibility of the Plaintiff’s witnesses

40.A special feature of this case is the extensiveness of discoveries and interrogatories sought by the 2^nd Defendant and the reluctance of the Plaintiff to disclose documents. 

41.Edwin is the person responsible for giving instructions to the Plaintiff’s solicitors and liaising with them on behalf of the Plaintiff.  Mrs Chan made a very forceful attack on the Plaintiff’s and Edwin’s credibility based on the Plaintiff’s changes of her case in respect of her beneficial ownership of the Lok Moon Property during the course of the discovery and of Edwin’s deliberate refusal to disclose some of his bank statements.  Edwin took the liberty of not disclosing them because of the voluminous amount of documents and he thought they were irrelevant.  He was asked to disclose documents which were almost twenty years old.  To that extent, his position is understandable.  But his neglect to comply with my order while he had the documents in his possession is contumelious.  I accept Mrs Chan’s submission that because of Edwin’s non-compliance with my order, I should draw adverse inference against the Plaintiff and Edwin.  I take that into account when assessing the credibility not only of the Plaintiff and Edwin, but of all the Plaintiff’s witnesses.  But having viewed the demeanour of all the witnesses and considered all the evidence in its totality, I am satisfied that the Plaintiff and her witnesses are credible, except as regards the Plaintiff’s beneficial ownership in the Lok Moon Property. 

42.The Plaintiff - Despite her age, the Plaintiff gave evidence in a cogent and consistent manner.  She disapproved the conduct of the 1^st Defendant, his drinking habit, his irresponsible attitude towards his family and his indebtedness.  She has no recollection of much of the 2^nd Defendant’s case put to her by counsel.  I do not consider her evasive.  I think she was telling the truth because what were put to her never occurred.  This is a case which turns on her subjective intention when purchasing the Suit Property.  Yet she uttered not a word about her express intention.  She was a responsible witness and did not exaggerate.  I find her an honest and credible witness.  I accept the Plaintiff’s evidence, except as regards her beneficial ownership in the Lok Moon Property.

43.Kwok Wai Leung Edwin - Edwin gave evidence in a responsible manner.  He was cogent in his evidence.  He was able to give an account of the events in a logical and sequential manner.  His answers under cross-examination were spontaneous.  Much of his evidence is corroborated by bank statements.  He was searchingly cross-examined about financial records over twenty years ago, which obviously was not anticipated by him in proceedings of this nature.  There were some occasions when he could not give precise answers without the opportunity of referring to his financial records.  On the whole, I find him a responsible and honest witness.  I accept his evidence except as regards the Plaintiff’s beneficial ownership in the Lok Moon Property.

44.Kwok Pik Har Angela - I am impressed by Angela’s supportive and selfless attitude towards the Defendants and their daughters.  I am satisfied that Angela was an honest and credible witness.  She gave evidence in a sincere and responsible manner.  I accept her evidence.  However, her evidence is not of great significance or relevance as she was not involved in the major issues in dispute.

45.Kwok Wai Leuk - Leuk is a simple minded person.  His evidence, save as to the beneficial ownership of the Lok Moon Property, is not in dispute.  I do not accept his evidence that he is holding the Lok Moon Property in trust for the Plaintiff.

Credibility of the 2^nd Defendant

46.The 2^nd Defendant is an uncompromising person.  There is no dispute that the 1^st Defendant was not a responsible husband or father, that he indulged himself in alcohol and that he was hot-tempered.  There is no doubt the 1^st Defendant was mainly to blame for the breakdown of the marriage.  However, the 2^nd Defendant blamed the Plaintiff for male chauvinism and for her special love and affection towards the 1^st Defendant.  She accused the Plaintiff and the siblings of over caring and pampering the 1^st Defendant such that the 1^st Defendant became undisciplined and dependent on their support.  The evidence shows that such comments are prejudiced.  The Plaintiff and none of the siblings have said a single kind word about the 1^st Defendant.  They did not deny the bad ways of the 1^st Defendant.  The Plaintiff frankly said that she would not trust the 1^st Defendant for anything. 

47.The Plaintiff and the siblings were equally supportive towards the 2^nd Defendant and her daughters.  Angela gave up her newly bought property to enable the Defendants to move from Tuen Mun to live in the Chun Fai Property so as to put the 1^st Defendant under supervision, to salvage their breaking marriage and to enable the two daughters to be enrolled in St Francis Canossian College.  Angela gave tuition and pocket money to the two daughters.  The Plaintiff bought her and the 1^st Defendant the Suit Property to live in.  The siblings proposed the family arrangement to solve the financial difficulties of the Defendants and principally to ensure the 2^nd Defendant and the two daughters would be properly maintained.  Whenever there were any serious disputes between the 1^st and 2^nd Defendants, the Plaintiff sent the siblings to the Suit Property to take the 2^nd Defendant and her daughters to the Plaintiff’s home for shelter. 

48.When the 2^nd Defendant learned about her daughters’ regular contact with the Plaintiff and Angela since she left the 1^st Defendant, she denied the Plaintiff’s and Angela’s access to her daughters.  Despite the hostility raised by this litigation and whatever laudable reasons she may have for not allowing her daughters to receive Angela’s pocket money or for keeping her daughters away from the 1^st Defendant, her severing the Plaintiff’s and Angela’s access to her daughters is unreasonable and unkind to the Plaintiff and all the family members, including her own daughters.  It shows that she allowed her hostility in her matrimonial relations with the 1^st Defendant to spill over to the family members. 

49.The 2^nd Defendant failed to appreciate she was on the receiving end of the love and care of the Plaintiff’s closely-knit family.  Not only that she was ungrateful for what she has received, she raised numerous false accusations against the Plaintiff and the siblings.  She raised numerous factual disputes over matters which are wholly irrelevant to the controversy in dispute.  Those disputes were pursued vigorously and uncompromisingly by her counsel, which I must take as being pursued on her instructions and insistence.  Most of those disputes were resolved against her on objective evidence.  I find the 2^nd Defendant an exaggerating witness.  She was exaggerating her case to draw sympathy and was concocting a case on false evidence.  I do not find the 2^nd Defendant a credible witness. 

The facts

50.The sole issue in dispute is the intention of the Plaintiff at the time of purchase of the Suit Property.  The main building block of the 2^nd Defendant’s case is that the Plaintiff had told her repeatedly between 1989 and 1997 that the Father intended to give one property to each of his sons and told her that the Suit Property was a gift to the Defendants.  She alleged that the Plaintiff had in fact bought each of her sons a property.  She also relied on a family agreement (“Family Agreement”) signed by the Plaintiff as evidence that the Plaintiff intended the Suit Property to be a gift to her and the 1^st Defendant.

The factual background

51.The following factual background is not in dispute. 

52.The Plaintiff’s family is a very closely-knit family.  The siblings are very supportive of one another.  The family used to live in the Father’s ancestral property in Cross Street with other family members of the Father’s siblings.  The living condition was very crowded.  In 1984, the family moved to the Chun Fai Property purchased by Tammy.  Edwin paid a nominal monthly rent of $1,000 which was later increased to $2,000.  When Tammy migrated to Canada in 1989, she sold the Chun Fai Property to Edwin which continued to be used as the residence of the family.

53.In 1979, the 1^st Defendant and Annie applied for a Home Ownership Scheme flat.  They were allocated and purchased a unit in Chi Lok Garden in Tuen Mun (“Tuen Mun Property”).  Then Edwin moved into the property.  The 2^nd Defendant argued that the Tuen Mun Property was a gift to the 1^st Defendant by the Father.

54.In April 1989, the 1^st Defendant married the 2^nd Defendant and lived in the Tuen Mun Property, while Edwin moved back to the Chun Fai Property.  The Father died in December that year.  The Plaintiff became the head of the family and had control of the financial resources of the family.

55.The 2^nd Defendants gave birth to two daughters in 1990 and 1992.  The Plaintiff migrated to Canada in January 1994.  In 1995, Angela purchased the Li Chit Property. 

56.The marital relationship between the Defendants deteriorated since the birth of their second daughter because of the 1^st Defendant’s failure in providing for the family, his drinking habit and his hot-temper.  In 1996, the 2^nd Defendant proposed a divorce.  At about the same time, the Plaintiff returned from Canada.  At the invitation of Angela, the Defendants moved from the Tuen Mun Property to live with Angela and the Plaintiff in the Chun Fai Property, while Edwin moved to live in Angela’s Li Chit Property.  Leuk stayed in the Father’s ancestral property in Cross Street.  The other daughters had migrated to Toronto or Vancouver or had their own accommodation.  The purpose of the arrangement was to enable the Defendants’ daughters to enrol in St Francis Canossian College and to place the 1^st Defendant under the supervision of the Plaintiff and the siblings in the hope of salvaging a breaking marriage.  The 2^nd Defendant was also desirous of moving out of Tuen Mun as she was concerned about her daughters and worried about the juvenile problem in that area.  Upon the 1^st Defendant’s solemn promise to provide for the maintenance of the family in the amount of $8,000 and to restrain his temper, the 2^nd Defendant reconciled.

57.In early 1997, the ancestral properties in Russell Street and Cross Street were sold and the Father’s estate was liquidated.  The Plaintiff received about $5,830,000.  She instructed the 2^nd Defendant to purchase a flat in Wanchai as a residence for the Defendants and their daughters.  On 10 May 1997, the Defendants entered into a provisional sale and purchase agreement of the Suit Property subject to a tenancy at a price of $2,375,000.  The sale and purchase was completed on September 1997.  The Plaintiff paid the purchase price and legal costs.  She kept the title deeds and the tenant’s rental deposit.  She also received rent from the tenant.  The tenant vacated the Suit Property on expiry of the tenancy a year later.  The Suit Property was then renovated and furnished according to the desire of the Defendants.  The costs of the renovation and furniture were all paid for by the Plaintiff.  Since the end of 1998, the Suit Property was solely occupied by the Defendants and their daughters.

58.In September 1999, Leuk purchased the Lok Moon Property.  The purchase was fully financed by the funds of the Plaintiff.

59.In 2002, the 1^st Defendant became unemployed and could not provide for the family.  Again, he indulged himself in alcohol and abused the 2^nd Defendant and the daughters.  He also ran into debts.  Debt collectors frequented the Suit Property and the Chun Fai Property to press for repayment.  The 2^nd Defendant proposed to sell the Suit Property and move into public housing or rented accommodation so as to provide for maintenance of the family and to repay the 1^st Defendant’s debt. 

60.To save the Suit Property from being sold, the siblings proposed a family arrangement under which the Plaintiff would purchase the Suit Property from the Defendants for $1,152,000, with $144,000 to be set aside for repaying the 1st Defendant’s debt and the balance to be paid by 144 monthly instalments of $7,000, of which $1,500 would be paid to the 1^st Defendant and $5,500 would be paid to the 2^nd Defendant.  The Plaintiff and the Defendants executed the Family Agreement embodying the above terms in the beginning of November 2003.  A sum of $5,500 was deposited into the 2^nd Defendant’s bank account.  Shortly after that, the 2^nd Defendant refused to perform the Family Agreement and returned the $5,500 to the Plaintiff. 

61.On 4 March 2004, the 2^nd Defendant petitioned for divorce.  On 15 April 2004, she and the daughters left the Suit Property and took refuge from a charitable organisation.  They were subsequently placed in a public housing unit in Chaiwan.  The 2^nd Defendant took up part-time employment and eventually full-time employment to maintain herself and the two daughters.

62.Since the 2^nd Defendant left the Suit Property in April 2004 and until the last adjournment of this trial in September 2007, the two daughters maintained contact with the Plaintiff and Angela who gave them pocket money of $3,000 a month.  When this was revealed to the 2^nd Defendant at the trial, she stopped the two daughters from accessing the Plaintiff and Angela.

One property for each son

63.The main theme of the 2^nd Defendant’s case is the Father’s wish to buy a property for each of his sons.  Mrs Chan submits that by repeatedly mentioning the Father’s intention, the Plaintiff was adopting it as her own intention.  The 2^nd Defendant brought into issue the purchase of the following five properties which were purchased at various times by the sons and daughters of the Plaintiff.  I shall deal with the 2^nd Defendant’s theory of one property for each son first.

64.Tuen Mun Property - The Plaintiff’s case is that the Father was desirous of purchasing a Home Ownership Scheme property.  The Father, being a holder of ancestral properties, was disqualified from applying for the Home Ownership Scheme property.  Thus, the 1^st Defendant and Annie who were then the only members of the family who could provide proof of income, applied as nominees of the Father.  The 2^nd Defendant’s case is that she was told by the 1^st Defendant that Annie applied for the flat for use as her home after her marriage.  Annie was successful but did not wish to proceed with the purchase as Tuen Mun was too far away.  Hence, the Father bought it.  Mrs Chan refers to Part IV of the only page of the Home Ownership Scheme application form available from discovery, which showed that Annie’s husband was the first named person in the column of “applicant and other household members” and that his income was treated as the total income of all the household members.  This document supports the account of the 2^nd Defendant.  However, the footnote relevant to Part IV of the document is not available.  It is difficult to draw inference from this document that the 2^nd Defendant’s account is true.  However, the covering letter in which the document was enclosed was addressed to the 1^st Defendant but not Annie or her husband.  There is no dispute that the 1^st Defendant and Annie were joint owners of the Tuen Mun Property.  There could be no doubt that the 1^st Defendant was one of the applicants.  Whatever was the genesis of the application, it is common ground that Annie had no interest in the property and that the 1^st Defendant and Annie applied on behalf of the Father.  The 2^nd Defendant’s insistence to resolve this factual dispute as to who was the applicant is a waste of time.  With respect to counsel, she should not have allowed her client to indulge in this sort of wasteful discovery and meaningless dispute.

65.The real issue is whether the Tuen Mun Property was a gift to the 1^st Defendant by the Father.  It is Edwin’s evidence that he lived there by himself before the Defendants moved in.  The 2^nd Defendant disputed that.  Mrs Chan submits that because of the very closely-knit family relation and that Tuen Mun was too far away for Edwin who was then working in Wanchai, it was unlikely that Edwin would have lived alone in the Tuen Mun Property.  With respect, the 2^nd Defendant was not in a position to dispute Edwin’s evidence and Mrs Chan’s submission is just speculation.  While denying that Edwin’s personal belongings were kept in the Tuen Mun Property, the 2^nd Defendant admitted under cross-examination that one of the bedrooms was not occupied by her family and that there was a bed and a wardrobe or cabinet covered with dust in that room, but she did not know to whom those personal effects belonged.  It is incredible that for the seven years she lived in the Tuen Mun Property, she never asked to whom those personal effects belonged and was never informed that they belonged to Edwin.  Who else but Edwin could have been the user of that dust covered bed and the occupier of that room?  Her evidence is a pack of lies.  She did not even have the factual basis or the honest belief for disputing that Edwin had occupied the Tuen Mun Property before she and the 1^st Defendant moved in.  The 2^nd Defendant’s factual dispute is meaningless and serves no useful purpose. 

66.Mrs Chan submits that it is very telling that the Tuen Mun Property was transferred from the 1^st Defendant and Annie to Angela and Alice in March 1999, about three months after the Defendants had moved into the Suit Property, suggesting that the Tuen Mun Property was a gift to the 1^st Defendant which was then substituted by the Suit Property.  That is a possible inference.  But there was a reasonable explanation for the transfer.  According to the Plaintiff, the transfer was provoked by the 1^st Defendant allowing his friends to live in the Tuen Mun Property without her approval.  She did not trust the 1^st Defendant.  She did not feel comfortable merely replacing the lock of the property.  And as Annie, the only other co-owner, had migrated to Canada, I find the Plaintiff’s explanation credible. 

67.The Tuen Mun Property was first occupied by Edwin and not the 1^st Defendant.  Even after the Defendants moved into the property, Edwin’s personal belongings were still kept in the Tuen Mun Property, suggesting Edwin was as much a licencee as the Defendants were of the Father and then of the Plaintiff.  There was an incontrovertible reason for the Father buying the property and putting it under the joint names of the 1^st Defendant and Annie.  There is no dispute that the property was not an advancement to Annie.  There is no evidence, not even from the 2^nd Defendant, that the Plaintiff had ever told her that the Tuen Mun Property was a gift to the 1^st Defendant when the Plaintiff allegedly told her repeatedly of the Father’s wish to give one property to each son.  Viewed at the time of the purchase and the events immediately thereafter, the presumption of advancement is readily rebutted.  Since moving out of the Tuen Mun Property, the 1^st Defendant never exercised any right of ownership.  He never attempted to sell or to rent the property out despite his poor financial condition.  The fact that the Plaintiff was able to command the 1^st Defendant and Annie to transfer the property to Angela and Alice is strong evidence on which the presumption of advancement is rebutted and on which the inference could be drawn that the property was held under a resulting trust by the 1^st Defendant and Annie for the benefit of the Plaintiff independently of the presumption of resulting trust which is not rebutted.  Accordingly, I find that the Tuen Mun Property was not a gift to the 1^st Defendant.  The 2^nd Defendant was demonstrably dishonest and was obviously concocting a case that the Tuen Mun Property was a gift to the 1^st Defendant.

68.Chun Fai Property - This property was purchased by Tammy in 1984 for use by the Father and her siblings.  There is no dispute that Edwin paid a nominal rent of $1,000 per month which was later increased to $2,000.  There is no dispute that before Tammy migrated to Canada in August 1989, she sold the property to Edwin for $600,000.  There is incontrovertible evidence that Edwin financed the purchase with a mortgage loan of $420,000 from The Bank of East Asia Limited.  It is common ground that in February 1997, the Plaintiff lent Edwin $280,000 to discharge the outstanding mortgage loan and redeemed the property.  It is Edwin’s evidence that he paid the down payment from his savings and the proceeds of sale of his investments.  Edwin’s bank statement showed that on 4 July 1989 a lump sum of $190,000 was transferred into his account, which Edwin said was eventually applied towards making the down payment.  As for the repayment of the Plaintiff’s loan, there is incontrovertible evidence supported by bank statements (except for just one month) that Edwin transferred to the Plaintiff’s bank account $20,000 for thirty months since 28 February 1997, which included $10,000 being his monthly contribution to household expenses and $10,000 as repayment of the Plaintiff’s loan and an interest of $20,000.  There were occasions when Edwin paid more than $20,000, which he explained were his additional contribution on the occasion he received double pay or bonus from his employment or on the occasion of Mother’s Day.  His bank statements also showed that other than those thirty months, his monthly contribution to the household expenses was $10,000 only.

69.The 2^nd Defendant disputes that Edwin paid the down payment of $180,000 and repaid the Plaintiff’s loan of $280,000.  But she has no evidence whatsoever in support of her challenge of Edwin’s evidence.  That is perfectly understandable.  She mounted very extensive interrogatories and discoveries.  In the last of such applications for discovery, I ordered the Plaintiff to provide certain bank statements of Edwin.  Mr Wong submitted that the Plaintiff could not produce the bank statements as those statements belonged to Edwin, a third party.  I rejected his submission and pointed out to Mr Wong that Edwin is not a third party but the Plaintiff’s witness who has given witness statements in support of the Plaintiff’s case and that the Plaintiff is deemed to have control of documents in the possession of her witness.  I warned the Plaintiff through her counsel that if the Plaintiff failed to comply with my order for discovery, I might draw adverse inference against her or her witnesses where appropriate.  Subsequently, Edwin produced all, but two categories of, bank statements.  Mrs Chan submits that I should draw adverse inference against Edwin and reject his evidence.

70.The first category of documents were bank statements in support of the source of funds for the deposit of $190,000 into Edwin’s bank account on 4 July 1989 which was used to pay the down payment of $180,000 in August 1989.  According to Edwin, he had anticipated the purchase of the property for some time and he started calling in his fixed deposits and selling his shares.  He received the proceeds of sales of his shares from his stockbrokers in the form of a cheque or cheques.  He could not recall how the cheque or cheques and his fixed deposit or deposits turned into one lump sum transfer into his bank account on 4 July 1989.  Mrs Chan submits that on Edwin’s account, the proceeds of sale of shares or calling in of fixed deposits should be entered into his bank account as separate deposits as and when the money became available.  She argues that the lump sum deposit of $190,000 was probably from the Plaintiff.  She submits that if Edwin’s account is true, Edwin would be able to produce proof of the various fixed deposits and proceeds of his sale of shares.  She further submits that because of Edwin’s contumelious breach of my order for discovery, I should draw adverse inference against him and reject his evidence. 

71.The 2^nd Defendant’s solicitors have unequivocally sought discovery of the source of funds for the $190,000 deposit.  The Plaintiff’s solicitors replied on 17 August 2007 that as the transfer dated back to more than eighteen months, Edwin was unable to recall what the source of the said deposit was.  In the witness box, Edwin came up with an explanation that the source of funds was his fixed deposits and proceeds of sale of shares.  I appreciate that Edwin has made very substantial disclosures of the documents required of him.  Documents, such as bought and sold notes of his shares or his accounts with stockbrokers may not be available after these eighteen years.  I should not take his failure to produce those documents against him.  But his explanation could not explain why the transfer was in one lump sum.  I appreciate the difficulty of recalling events which happened eighteen or nineteen years ago.  However, the first time purchase of a property must be an important and significant event.  Edwin had a whole year since the request by the 2^nd Defendant’s solicitors to gather his recollection.  In my view, the circumstances are such as to suggest that Edwin and the Plaintiff had something to hide about the source of this transfer.  I draw the adverse inference urged upon me by Mrs Chan that the transfer was from the Plaintiff’s funds.

72.The second category of documents were bank statements from The Bank of East Asia Limited in respect of monthly repayments of the mortgage loan.  Edwin’s evidence is that he paid lump sums of $10,000 into that saving account every now and then for the bank to make monthly debits of the mortgage instalments.  He produced a statement from The Bank of East Asia Limited showing that monthly mortgage payments were paid up to January 1997 and the balance of $282,117.36 was settled in full on 5 February 1997.  That outstanding balance was discharged by the loan of $280,000 from the Plaintiff.  But Edwin did not produce the bank passbook showing the source of funds for making the monthly mortgage payments.  Mrs Chan submits that Edwin had something to hide and that discovery might disclose, for example, the funds in The Bank of East Asia Limited account from which the monthly instalments were debited were from a source which Edwin did not wish to disclose.  She further submits that I should draw adverse inference against Edwin and find that the monthly mortgage payments were not paid by Edwin, but by the Plaintiff.  The Plaintiff’s failure to disclose her bank statements for that period adds further suspicion.  However, Edwin had said under cross-examination that he had the bank passbook with him, but that was not followed up by Mrs Chan.  In the circumstances, it may not be fair to draw the adverse inference against Edwin. 

73.As for the Plaintiff’s loan of $280,000 to Edwin, Mrs Chan submits that it was a gift from the Plaintiff’s distribution of the proceeds of sale of the ancestral properties which were liquidated at about that time.  However, there is incontrovertible evidence, except for one month, that Edwin repaid the Plaintiff’s loan of $280,000 with interest.  I accept Edwin’s evidence that he had repaid the loan of $280,000 to the Plaintiff.  Furthermore, if Edwin was obliged to repay the Plaintiff’s loan of $280,000, it was most unlikely that he would not be required or obliged to repay the earlier monthly instalments if they had been paid for by the Plaintiff.  The repayment of the Plaintiff’s loan was inconsistent with the Plaintiff having paid the mortgage instalments for Edwin before she lent him $280,000 to enable early redemption of the property.  Furthermore, even as early as 1995 when the Plaintiff paid for the purchase of the Li Chit Property, she had at her disposal not less than $3,000,000.  Had she really wanted to make an advancement to Edwin by paying off the outstanding balance of the mortgage loan and the mortgage instalments for Edwin, she could have done so in 1995 rather than to wait till February 1997.  The suggestion that the Plaintiff paid the monthly instalments and redeemed the Chun Fai Property for Edwin does not make good sense. 

74.Edwin appeared to be a very responsible and dutiful son.  There is incontrovertible evidence that he contributed $10,000 every month towards the household expenses of the family.  He contributed additional amounts when he received bonuses or double pay or on Mother’s Day.  His contribution was very substantial and much more than what was necessary for his share of the household expenses.  He paid rent for the Chun Fai Property for the family to live in.  Thus, despite the adverse inference I may drawn on his credibility because of his failure to comply with my order for discovery, in the totality of the evidence, I find it impossible to draw the inference that the monthly instalments were paid by the Plaintiff.  Accordingly, I am satisfied that Edwin, at least, paid the monthly mortgage instalments and repaid the loan from the Plaintiff for the early redemption of the property. 

75.I therefore find that the Plaintiff only helped Edwin in the purchase of the Chun Fai Property by providing him with $190,000 but Edwin substantially provided for the purchase price with his mortgage of $420,000 from The Bank of East Asia Limited.  The Chun Fai Property was not a gift by the Father or the Plaintiff to Edwin.

76.Lok Moon Property - This property was purchased in September 1999 at a price of $2,200,000 and registered in the name of Leuk.  Its purchase was financed by a mortgage loan of $1,000,000 with the American Express Bank Limited under Leuk’s name, but the monthly mortgage payments were paid by the Plaintiff.  The balance of the purchase price was also paid by the Plaintiff.  Thus, there is no dispute that the Plaintiff paid for the whole of the purchase price of this property and had the property put under Leuk’s name.  Both the Plaintiff and Leuk claimed that the property was held in trust for the Plaintiff.  The 2^nd Defendant argues that this property was a gift from the Plaintiff to Leuk.

77.Originally, the Plaintiff’s pleaded case was that she did not pay for the purchase price of the Lok Moon Property for Leuk.  In paragraph 25 of her Reply to the 2^nd Defendant’s Defence, the Plaintiff pleaded:

“25.  The Plaintiff avers that she has never purchased any property as a gift to any of her sons.  The Plaintiff had never paid for the purchase price for the properties owned by her sons, including Edwin Kwok and Kwok Wai Leuk, the Plaintiff repeats paragraphs 16 and 17 hereinabove”.

78.While under the hot pursuit by the 2^nd Defendant’s solicitors for discovery of the Plaintiff’s bank statements for the period when the Lok Moon Property was purchased, the Plaintiff changed to a new case that Leuk purchased the property with a mortgage loan and she paid the balance of the purchase price and hence she owned some beneficial interest in the property.  In a letter dated 14 August 2006 in response to the 2^nd Defendant’s solicitors’ request for discovery, the Plaintiff’s solicitors wrote:

“The Lok Moon Mansion was purchased in 1999 at a purchase price of HK$2,200,000.00 by our client under the name of Mr Kwok Wai Leuk.  Part of the purchase price was by way of a mortgage loan of HK$1,000,000.00 from a bank and repayable by Mr Kwok Wai Leuk, the balance of HK$1,200,000.00 of the purchase price was paid by our client.

Mr Kwok Wai Leuk and Miss Kwok Pik [Har] Angela well understood and acknowledged that the properties beneficially (though not 100%) belonged to our client though they were the legal owners thereto and respectively owned some beneficial interest in the properties.”

79.Upon further discovery, the Plaintiff yet changed her case again.  Her last version is that she paid the entire purchase price for the property and that Leuk held the property in trust for her.  Her solicitors wrote on 13 August 2007 as follows:

“The Lok Moon Property was legally owned by Kwok Wai Leuk, the Plaintiff’s son, but held in trust for the Plaintiff.”

80.Edwin, who was responsible for giving instructions on behalf of the Plaintiff to her solicitors, sought to reconcile the difference between the second and the third versions by arguing that he misunderstood the solicitors’ letter of 14 August 2006 in that the words “though not 100%” was referable only to the Li Chit Property held in the name of Angela and not to the Lok Moon Property.  I reject his explanation as being inconsistent with the plain meaning conveyed by the letter. 

81.In view of the multiple changes in the Plaintiff’s case and the background against which the changes were made, I draw the adverse inference that the Plaintiff’s case is incredible and that the Plaintiff, Edwin and Leuk were not telling the truth about the Plaintiff’s beneficial interest in the Lok Moon Property.  There is no dispute that the Plaintiff provided the entirety of the purchase price for the property and put the property in the name of Leuk.  The presumption of resulting trust could be raised.  But, having disbelieved the evidence of the Plaintiff and her witnesses and having regard to the mother and child relationship, I find that the presumption of resulting trust is rebutted by the presumption of advancement.  I therefore find that the Lok Moon Property was a gift by the Plaintiff to Leuk.

82.Li Chit Property - Li Chit Property was a property development of the New World Development group in which Angela worked.  She bought this property in 1995 with a staff loan of $1,300,000 from her employer and the Plaintiff paid the balance of $2,100,000.  It was hers and the Plaintiff’s common understanding that the Plaintiff has some beneficial interest in the property.  Though the Plaintiff and Angela were cross-examined at some lengths about the source of funds for the purchase of this property, Mrs Chan does not now seek to argue that the Plaintiff’s contribution to the purchase price was an advancement.  In any event, that issue is outside the scope of the 2^nd Defendant’s pleaded case.  On the basis of the common understanding of the Plaintiff and Angela, I have no difficulties to find that the Plaintiff and Angela are beneficial owners of the property and the Plaintiff’s contribution to the purchase price was not a gift to Angela.  The property was occupied by Edwin.

83.Conclusion - In conclusion, while I am satisfied that the Plaintiff purchased the Lok Moon Property as an advancement to Leuk, I am far from being satisfied that she purchased the Chun Fai Property for Edwin or that the Father purchased the Tuen Mun Property for the 1^st Defendant.  The 2^nd Defendant’s theory of one property for each son falls apart.  The truth is that the Plaintiff maintains a very close relationship with her children.  She is a loving and caring mother and a very sensible person as well.  She is in the habit of helping her children.  In the exercise of her discretion over the distribution of the family wealth, she gave priority to the needs of her children.  She gave more to the ones who need her help most and less to those who were in good position to look after themselves.  She has no preference for the eldest son and has no intention of buying each son a property. 

The Plaintiff’s instruction on the purchase of the Suit Property

84.Since September 1996, the Plaintiff returned to Hong Kong and lived in the Chun Fai Property for about six months in a year.  The Chun Fai Property was about 420 square feet in area with two bedrooms.  The Defendants and one of their daughters occupied one bedroom.  Angela and the other daughter occupied the other bedroom.  The Plaintiff slept in the sitting room during her stay in Hong Kong.

85.According to the Plaintiff, the 2^nd Defendant often complained to her about crowdedness in the Chun Fai Property.  That evidence is corroborated by Angela’s.  Hence, when funds became available after the liquidation of the Father’s estate in 1997, the Plaintiff told the 2^nd Defendant to look for a property of not more than $2,000,000 as a residence for the Defendants and their daughters.  The Plaintiff never told the 2^nd Defendant that the property was to be purchased as a gift to the Defendants or words to that effect.  Her intention was to relieve the crowded living condition in the Chun Fai Property and to facilitate the two daughters studying in St Francis Canossian College.

86.According to the 2^nd Defendant, she had never complained about crowdedness.  She said that her relationship with the Plaintiff was fairly good until the divorce proceedings commenced.  She often had casual conversations with the Plaintiff and the Plaintiff told her on a number of occasions that the Father wished to make a gift of a property to each of his sons.  The Plaintiff told her that the Plaintiff did not trust the 1^st Defendant despite he was her eldest son because he was lousy, undisciplined and not educated.  The Plaintiff repeatedly told her that the Plaintiff would as a matter of priority ensure that the 1^st Defendant would be looked after and that his family members have a roof over their heads.  Then, in early 1997, the Plaintiff told her in a very serious manner that the Father’s estate had been liquidated and the Plaintiff was in a financial position to buy the Defendants a property.  The Plaintiff told her to look for a property not exceeding $3,000,000 to purchase.

87.The Plaintiff denied she had such conversations with the 2^ndDefendant.  Her counsel suggested that the 2^nd Defendant learned about the liquidation of the Father’s estate over dinner table and made up the allegation of the Plaintiff’s offer of buying the Defendants a property as a gift.  The 2^nd Defendant replied that she was nobody in the family and was the last person to learn of anything which happened in the family.  This is inconsistent with her evidence that until the divorce proceedings her relationship with the Plaintiff had been good, that she had casual conversations with the Plaintiff and that the Plaintiff told her about liquidation of the Father’s estate.  Her allegation is also inconsistent with the extensive knowledge she had of the various property acquisitions by the siblings, in particular of Leuk’s purchase of the Lok Moon Property which occurred after her marriage.  Such knowledge enabled her to mount extensive and damaging interrogatories and discoveries against the Plaintiff.  Probably the 2^nd Defendant had learned about the liquidation of the Father’s estate from her casual conversations with the Plaintiff, but that is neither here nor there.

88.On the basis of her demeanour, I do not believe in the 2^nd Defendant’s evidence.  She was exaggerating her case by drawing sympathy.  One cannot reliably assess what to believe of such a witness.  On the basis of objective facts, it has been clearly shown that her theory of one property for each son does not come up to scrutiny.  I accept that the Plaintiff purchased the Lok Moon Property as a gift for Leuk.  But the Chun Fai Property was clearly purchased by Edwin, even though the Plaintiff or the Father contributed or might have contributed to the down payment of $180,000.  That alone is sufficient to destroy the 2^nd Defendant’s theory and cast doubt on her evidence about what the Plaintiff had allegedly told her.  But of course, the fact that at the time of the alleged promise the Plaintiff had not actually bought any property for her other two sons did not preclude her from promising a gift to the Defendants.  But I find that unlikely.

89.Mrs Chan argues that the timing of the transfer of ownership of the Tuen Mun Property from Annie and the 1^st Defendant to Alice and Angela tied in nicely with the delivery of possession of the Suit Property to the Defendants.  On that basis, she submits that the Suit Property was a gift in substitution of the Tuen Mun Property.  I reject that submission.  Firstly, I have found that the Tuen Mun Property was not a gift to the 1^st Defendant.  Secondly, despite the 2^nd Defendant’s allegation of what the Plaintiff had repeatedly told her about the Father’s wish to buy one property for each son, there was no evidence from the 2^nd Defendant that the Plaintiff had ever told her that the Tuen Mun Property was a gift pursuant to that wish of the Father or that the Plaintiff was to buy the Defendants another property in Wanchai as a substitute for the gift of the Tuen Mun Property.  If what the 2^nd Defendant said was true, it would only be natural for the Plaintiff to have mentioned the above in one of her many conversations with the 2^nd Defendant on this topic.  Plainly, the 2^nd Defendant’s allegation was a concoction.

90.Furthermore, it is the 2^nd Defendant’s evidence that when she was viewing a property in Caine Road, the Plaintiff objected to buying that property and said that if the 2^nd Defendant bought that property she might not even have money to pay for the daughters’ travelling expenses to go to school.  According to the 2^nd Defendant, she cried bitterly and said that she wanted a divorce.  The Plaintiff did not dispute that the 2^nd Defendant had mentioned about divorce but could not remember if it was on the same occasion.  If as the 2^nd Defendant alleged, it is inconceivable that the Plaintiff being aware of the risk of a divorce would unreservedly promise a gift of a property to the 2^nd Defendant.

91.The 2^nd Defendant raised another irrelevant factual dispute.  She insisted that the Plaintiff had instructed her to look for a property worth not more than $3,000,000.  The Plaintiff said that she had put a ceiling at $2,000,000.  The dispute was seriously and vigorously pursued by the 2^nd Defendant and her counsel which resulted in a series of interrogatories and discoveries.  On the facts, the Suit Property was purchased at $2,375,000 which slightly exceeded the ceiling set by the Plaintiff but was not anywhere near the ceiling of $3,000,000 as alleged by the 2^nd Defendant.  Throughout the years, the Plaintiff obtained $5,830,000 from the Father’s estate.  She paid $2,100,000 to enable Angela to purchase the Li Chit Property and $280,000 for purchasing a permanent graveyard for the Father.  In addition, a sum of $1,300,000 ($200,000 in Canadian currency) had been remitted to the Plaintiff as her living expenses and for purchasing property in Canada.  On that calculation, the Plaintiff would only have $2,150,000 left of the Father’s estate.  The Plaintiff might have other financial resources including the Tuen Mun Property and other savings at her disposal.  It was indeed admitted by Edwin that in March or April 1997, the Plaintiff still had $3,000,000 in fixed deposit.  But I do not think the Plaintiff would be so imprudent as not only to exhaust the funds from the Father’s estate but also to deplete her other savings by promising to purchase a property of $3,000,000 for the Defendants.  Eventually, the Defendants chose to purchase the Suit Property subject to a tenancy at $2,375,000.  She gave no reason why she did not look for a more expensive property.  She gave no evidence of any change of mind on the part of the Plaintiff or of any pressure from the Plaintiff to purchase a cheaper property.  I accept the Plaintiff’s evidence.  But as I have already indicated, the dispute served no useful purpose.  If at all, it proves anything, it is that the 2^nd Defendant was finding every opportunity to present herself as being oppressed to draw sympathy. She is an exaggerating and unreliable witness.

92.Accordingly, I find the Plaintiff’s evidence credible.  The living condition in the Chun Fai Property was indeed crowded for six people and the Plaintiff had to sleep in the sitting room.  On the other hand, the 2^nd Defendant used to live in the more spacious accommodation in the Tuen Mun Property of over 600 square feet.  It is credible that she raised the problem of crowdedness.  This part of the Plaintiff’s evidence is corroborated by Angela, whose credibility I have no doubt.  Upon the 2^nd Defendant’s complaint of crowdedness, the Plaintiff offered to buy a property of not more than $2,000,000 as a residence for the Defendants and their two daughters.  The Plaintiff might have mentioned about the liquidation of the Father’s estate in her casual conversations with the 2^nd Defendant, but I am satisfied that she had not represented to the 2^nd Defendant that it was the Father’s wish to buy one property for each son or that the property was intended as a gift to the Defendants.  However, because of the then prevailing property market condition, no suitable property at that price was available.  The 2^nd Defendant made a prudent choice of purchasing the Suit Property with a sitting tenant at a price of $2,375,000, which marginally exceeded the ceiling set by the Plaintiff.

The Family Agreement

93.The Family Agreement is the other important building block of the 2^nd Defendant’s case.  She also raised numerous factual disputes about the circumstances leading to the signing of the Family Agreement.  Her position is inexplicable.  On the one hand, she took the view that the Family Agreement was a valid and binding agreement and she relied on it as evidence of the Plaintiff’s recognition of her beneficial interest in the Suit Property.  On the other hand, she alleged that she was forced into signing the Family Agreement by fraud and undue influence and she refused to perform the Family Agreement. 

94.The following evidence of the Plaintiff are not in dispute.  Tammy happened to visit Hong Kong in 2003 and learned about the Defendants’ financial problem.  At her initiative, the siblings discussed a family arrangement for the purpose of maintaining the Defendants’ family and to protect the Suit Property from being sold.  Edwin drafted the first proposal of a family arrangement for the Defendants’ consideration.  Under that proposal, the Plaintiff would purchase the Suit Property from the Defendants for $1,080,000 to be paid by 120 monthly instalments of $9,000.  The siblings were the main contributors to the monthly instalments.  The Plaintiff was to pay about $1,500 to $2,000.  The Plaintiff did not take part in the formulation of the family arrangement.  She was persuaded by Edwin to agree to it.  The proposal was given to the Defendants, but they did not respond. 

95.In October 2003, Annie visited the Plaintiff from Canada.  Edwin drafted a second proposal of a family arrangement under which the Plaintiff would agree to purchase the Suit Property from the Defendants for $1,152,000 to be paid by 144 monthly instalments of $8,000 with effect from 1 October 2003.  From the purchase price, $144,000 would be set aside for repaying the credit card debt of the 1^st Defendant and a monthly sum of $1,500 would be paid to the 1^st Defendant while the balance of $5,500 would be paid to the 2^nd Defendant.  In addition, Edwin would undertake to pay the 2^nd Defendant $1,000 as education subsidy for the two daughters.  Again the Defendants did not respond. 

96.According to Edwin, about a day or two before Annie was due to return to Canada, she was desirous of concluding the family arrangement.  On that evening, the Plaintiff, the siblings and the Defendants had dinner.  After dinner, Angela took the two daughters back to the Suit Property, while the Plaintiff, Edwin, Annie, her husband and the Defendants went to the Chun Fai Property to have a discussion.  Edwin gave the Family Agreement to the Defendants to sign.  The terms of the Family Agreement is the same as that contained in the second proposal except that Edwin’s undertaking to provide an education subsidy of $1,000 was removed.  Edwin explained to the Defendants that he could not undertake to pay the education subsidy as he had received notice of laid off from his employer. 

97.According to the 2^nd Defendant, a day before the execution of the Family Agreement, she telephoned the Plaintiff and informed her that she was willing to sell the Suit Property for $6,500 a month.  On the following day, the Defendants went to the Chun Fai Property to sign the Family Agreement.  She said that neither did Edwin explain the Family Agreement to her nor did he mention about his laid off.

98.The following is common ground.  While the 2^nd Defendant was hesitating whether to sign the Family Agreement, Annie told her that if she was not greedy she better sign.  The 2^nd Defendant cried hysterically and signed.  A sum of $5,500 was subsequently deposited into the bank account of the 2^nd Defendant.

99.According to the 2^nd Defendant, which is not disputed by the Plaintiff, the 2^nd Defendant told the 1^st Defendant that she was not going to sell the Suit Property to the Plaintiff because she had not read the Family Agreement before signing and that the terms of Family Agreement were not the same as those under the second proposal.  On a subsequent evening, Edwin, Alice and Annie went to the Suit Property to have a discussion with the Defendants.  They had an argument.  The 2^nd Defendant then went outside the Suit Property and fetched two bags of empty beer bottles to show to the siblings.  Just as she was doing so, the 1^st Defendant rushed out of his room and assaulted the 2^nd Defendant.  The 2^nd Defendant then called for the police. 

100.It is also common ground that on the following day, the 2^nd Defendant went to the Chun Fai Property where she was received by the Plaintiff and Alice.  An argument broke out between the 2^nd Defendant and Alice and the 2^nd Defendant slapped Alice once on the face.  She returned the money to the Plaintiff and refused to sell the Suit Property.  The Plaintiff said that the 2^nd Defendant threw the money at her, but the 2^nd Defendant denied.

101.The 2^nd Defendant’s evidence about the circumstances leading to the signing of the Family Agreement was vague and imprecise.  She was vague as to how and when she realised that she would be given $1,000 less under the Family Agreement.  She was inconsistent as to why she refused to perform the Family Agreement.  At one stage, she said the reason was because she would be paid $1,000 less.  At another stage, she said it was not because of the $1,000 that she refused to sell the property but because she had not read the Family Agreement and that the terms of Family Agreement were different from those under the second proposal.  That is a distinction without a difference as effectively it meant she was not willing to sell for $1,000 short.  She also said she wanted to keep the Suit Property for her daughters.  Then she put the blame on the Plaintiff and the siblings for spoiling the 1^st Defendant and giving him whatever he wanted.  She is demonstrably vague and imprecise about the circumstances of signing of the Family Agreement.  She was evasive and her evidence is unbelievable.  By way of contrast, Edwin’s evidence was cogent and convincing.  He described how discussion on the family arrangement began with Tammy’s initiative, the further input by Annie, the dinner before Annie’s return to Canada, Angela taking the two daughters back to the Suit Property, the meeting in the Chun Fai Property, Annie’s remarks about the 2^nd Defendant’s greed, the 2^nd Defendant’s crying and then the signing of the Family Agreement in the Chun Fai Property.  Edwin’s evidence is clearly to be preferred.

102.The really telling point is the nature of the Family Agreement.  What has Edwin to hide by not disclosing the withdrawal of his undertaking to give education subsidy?  The Family Agreement was an extremely fair and equitable agreement.  According to the 2^nd Defendant’s expert, Messrs Dudley Surveyors Limited, the open market value of the Suit Property was $1,560,000 presumably as at the date of the valuation report in January 2005.  Mrs Chan concurs that the price of $1,152,000 in October 2003 was a fair open market price.  I agree with that view, which is in line with the general property market trend between 1997 and 2005.  Thus, it was an agreement for sale and purchase of the Suit Property at open market price.  Under clause 3 of the Family Agreement, for as long as the purchase price was not fully paid during the period of twelve years, the Defendants and their daughters were entitled to reside in the Suit Property rent free.  Clause 7 expressly stated that the Family Agreement was entered into in consultation with the family members for the purpose of meeting the financial difficulties of the Defendants and their needs for accommodation over the forthcoming period of twelve years.

103.The purpose and extreme fairness of the Family Agreement is amply demonstrated by clause 5 which provides:

「上述交易的所有律師費用及文件註冊費用全部由買方負責。為更公平對待此項交易，買方特同意賣方有優先權隨時可以在退回以前所收取的一切款項後購回上述單位，但賣方若提出此要求時要負責全部律師費用及文件註冊費用(包括之前買方曾付出的任何有關費用)。」

Translation:

The solicitors’ fees and registration fees for documents in respect of the above transaction shall be borne by the purchaser.  For the fairer treatment of the above transaction, the purchaser specifically agrees that the vendors shall have an option to re-purchase the above mentioned flat upon return of all moneys previously received, provided that if the vendors make such a request, they shall bear all solicitors’ fees and registration fees for documents (including the relevant fees paid by the purchaser previously).

This clause would give the Defendants an option to re-purchase the Suit Property by returning all the money received under the Family Agreement, without interest.  The option would be exercisable at any time, at least during the life of the Defendants and not limited to the twelve years during which the purchase price would be paid.  The effect of this clause is that after the Defendants had the benefit of the use of the $1,152,000, they can re-purchase the Suit Property irrespective of its appreciation in value in the intervening years by returning the money interest free and paying the legal costs.  The Family Agreement as stated in clause 7 was intended to help the Defendants in their time of need.  If the Defendants could find gainful employment, they could easily pay off the moneys received and re-purchase the Suit Property.  The earlier they could find employment, the easier it would be for them to repay.  Or in twelve years, if not earlier, the Defendants’ daughters would have completed their university education and would be in a position to take up employment and to repay, with the help of a mortgage if necessary.  The option makes it amply clear that it was not the Plaintiff’s or the siblings’ intention to acquire the Suit Property.  The repayment term is very easy and relaxed.  The Plaintiff’s and the siblings’ purpose was to protect the property from being sold by the Defendants and squandered away.  The Family Agreement was designed to help the 1^st Defendant to rebuild himself after clearing his credit card debt and to provide for maintenance of his family at least until the younger daughter would have finished her university education.  It was an agreement made with utmost fairness and good intention. 

104.The siblings are all loving and caring people.  Their sole purpose was to assist the Defendants and not to take advantage of them.  Edwin’s education subsidy was outside the consideration for sale of the Suit Property.  I find it utterly impossible to believe that Edwin would have withdrawn his undertaking from the Family Agreement without letting his brother or the 2^nd Defendant know and misled them into signing the Family Agreement.  Furthermore, the Family Agreement was a one page document type-written in Chinese.  The 2nd Defendant is literate and can read and write Chinese.  It is inconceivable that Edwin would have tried to practice a trick on the 2^nd Defendant by not telling her that she would be receiving $1,000 less.  The 2^nd Defendant’s disputes are meaningless.  If at all the disputes prove anything, it is that the 2^nd Defendant was exaggerating.  She reciprocated the siblings’ most honourable intention in solving her and the 1^st Defendant’s financial problem with ingratitude.  She was trying to draw sympathy by dishonestly smearing the siblings as very oppressive people trying to take advantage of her by forcing a sale of the Suit Property on her.  I accept Edwin’s evidence and reject the 2^nd Defendant’s.  The 2^nd Defendant’s evidence in respect of the Family Agreement completely exposed her as an exaggerating witness fighting her case on concocted evidence.

THE ANALYSIS

A summary of the relevant facts

105.On the instruction of the Father, the 1^st Defendant and Annie purchased the Tuen Mun Property in 1983 as trustees of the Father.  It was not a gift to the 1^st Defendant.  Edwin resided in the Tuen Mun Property initially.

106.In 1984, the Plaintiff and her family moved into the Chun Fai Property which was purchased by Tammy.  In April 1989, the Defendants married and moved into the Tuen Mun Property.  Edwin moved out and lived in the Chun Fai Property.  

107.In August 1989 when Tammy migrated to Canada, Edwin bought the Chun Fai Property with the down payment paid by the Plaintiff.  The balance of the purchase price was paid by Edwin.  The Father died later that year.

108.The Defendants gave birth to two daughters in 1990 and 1992.  Soon after that, their relations deteriorated.  The Plaintiff migrated to Canada in 1994.

109.Towards the end of 1995, Angela purchased the Li Chit Property with the help of a staff loan from her employer and with the balance of the purchase price paid by the Plaintiff.  At the invitation of Angela, the Defendants moved from the Tuen Mun Property to the Chun Fai Property in about August 1996.  The purpose was to enable the Defendants’ daughters to enrol in St Francis Canossian College and to put the 1^st Defendant under closer supervision of the Plaintiff and the siblings so as to salvage the breaking marriage.  Edwin moved out of the Chun Fai Property to the Li Chit Property to provide more room for the Defendants.  The Tuen Mun Property was left vacant.

110.The Plaintiff returned from Canada in September 1996 and lived in the Chun Fai Property with Angela, the Defendants and their two daughters.  The relationship between the Plaintiff and the 2^nd Defendant had been good until the 2^nd Defendant instituted divorce proceedings.  They had casual conversations.  The 2^nd Defendant complained about the crowded living condition in the Chun Fai Property.  In early 1997, the Father’s estate was liquidated and funds became available.  The Plaintiff instructed the 2^nd Defendant to look for a property in Wanchai costing not more than $2,000,000 as a residence for the Defendants and their daughters.  Her intention was to relieve the crowded living condition in the Chun Fai Property.  She had not told the 2^nd Defendant expressly or by implication that the property was to be purchased as a gift to the Defendants. 

111.Due to the escalating property market, the 2^nd Defendant bought the Suit Property subject to a tenancy at $2,375,000 which slightly exceeded the ceiling set by the Plaintiff.  The Plaintiff paid the purchase price and legal costs and directed the Suit Property to be transferred to the joint names of the 1^st and 2^nd Defendants.  The title deeds of the Suit Property were kept by the Plaintiff.  The Plaintiff also kept the rental deposit of the tenant and collected rent from the tenant.  When the tenant moved out of the Suit Property at the expiry of the tenancy in September 1998, the Suit Property was renovated and furnished according to the Defendants’ design and at the expenses of the Plaintiff.  Then the Defendants and their family moved in.

112.In March of the following year, at the instruction of the Plaintiff, the 1^st Defendant and Annie transferred the Tuen Mun Property to Angela and Alice.  Later that year, the Tuen Mun Property was sold with all the proceeds handed over to the Plaintiff.  Also, later that year, the Plaintiff bought the Lok Moon Property as a gift to Leuk. 

113.In 2002, the 1^st Defendant became unemployed.  He resumed his drinking habit, neglected to provide for the family and abused the 2^nd Defendant and their daughters.  He ran into debts.  Whenever necessary, the Plaintiff provided the 1^st Defendant with money to maintain his family.  The 2^nd Defendant suggested selling the Suit Property so as to maintain the family.  The 1^st Defendant disagreed.  Then the siblings worked out a family arrangement.  Towards the end of October or beginning of November 2003, the Plaintiff and the Defendants signed the Family Agreement under which the Plaintiff agreed to purchase the Suit Property from the Defendants for $1,152,000 to be paid by 144 monthly instalments.  Subsequently, the 2^nd Defendant refused to perform that agreement.  She filed a divorce petition and left the Suit Property with her daughters.

Whether the presumption of resulting trust is rebutted

114.The main building blocks of the 2^nd Defendant’s case is her theory of one property for each son and the Plaintiff’s acknowledgement of the Defendants’ beneficial interest in the Family Agreement.

115.The 2^nd Defendant’s theory of one property for each son failed.  She was only able to prove that the Lok Moon Property was purchased by the Plaintiff as a gift to Leuk.  I am satisfied that the Tuen Mun Property was never intended as a gift to the 1^st Defendant and that the Chun Fai Property was purchased by Edwin though with some financial assistance from the Plaintiff or the Father.  Though short of proving her theory, the gift of the Lok Moon Property to Leuk and the financial assistance to Edwin in the purchase of the Chun Fai Property are evidence of the Plaintiff’s habit of making advancements to her children in the purchase of property.  

116.The other important building block of the 2^nd Defendant’s case is the Plaintiff’s acknowledgement in the Family Agreement of the Defendants’ beneficial interest in the Suit Property. That acknowledgement is reflective of the Plaintiff’s intention when purchasing and transferring the Suit Property to the Defendants.  Mr Wong submits that the court should only consider the intention of the parties at the time of the transaction.  That is a correct proposition.  Acts and declarations of the parties before or at the time of the purchase of the property or so immediately after it as to constitute part of the transaction are admissible in evidence either for or against the party who did the act or made the declaration.  However, subsequent acts and declarations which reflect on the intention of the parties are also admissible to the extent that they are evidence against the party who did the act or made the declaration, but not in his favour.

117.Mr Wong argues that the Family Agreement, being a family arrangement, is not a legally binding agreement.  I respectfully disagree.  Whether it is binding is a matter of intention, i.e. whether the parties intended to enter into a legally binding relationship.  Edwin said there was no such intention.  The 2^nd Defendant said there was.  The test is an objective one.  The parties had entered into a prolonged negotiation.  Edwin prepared up to ten versions of the agreement for discussion with the Defendants.  The terms to be agreed were reduced in writing.  In earnest, they urged the 2^nd Defendant to execute the Family Agreement.  It is open to me to find that the parties intended to enter into a legal relationship.  But even if I find that they did not, the Family Agreement does not cease to be a document evidencing the intention of the Plaintiff at the time of the purchase of the Suit Property.  It is admissible as evidence against the Plaintiff.

118.Under the Family Agreement, the Plaintiff agreed to purchase from the Defendants the Suit Property for $1,152,000, which was a fair open market price.  That may be taken as an acknowledgement of the Defendants’ legal and beneficial interest in the Suit Property.  That is an acknowledgement that when the Plaintiff directed the Suit Property to be transferred to the joint names of the Defendants, she intended it to be a gift to the Defendants.  Edwin said that the Plaintiff took no part in the drafting of the agreement.  He said that Plaintiff’s initial reaction upon being told of the family arrangement was that she objected as she considered she already had beneficial ownership in the Suit Property.  However, she was persuaded by Edwin into agreeing for the benefit of the Defendants and their two daughters.  Edwin emphasised that he adopted the word “re-sell (售回)” to convey the idea that the Plaintiff was already the beneficial owner.  Be that as it may, the Plaintiff assented to the Family Agreement by signing as a party to the agreement.  It is well settled law that interpretation of a contract is the ascertainment of the meaning which the contract would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract: see Investor’s Compensation Scheme Ltd v West Broomwich Building Society [1998] 1 WLR 897 at 912 to 913.

119.Even with the full knowledge that the Plaintiff provided the purchase price for the Suit Property and put it under the joint names of the Defendants, her agreement to purchase or the Defendants’ agreement to re-sell at the open market price can only convey to a reasonable reader that what was being purchased or sold was the legal as well as beneficial ownership in the Suit Property.  If the Plaintiff was the beneficial owner of the Suit Property, the price could only have been a nominal one and not the open market price. 

120.Likewise, even bearing in mind that the Family Agreement was a financial arrangement to enable the Defendants to overcome their financial problem, the option under clause 5 clearly conveys to a reasonable reader that the Defendants would be entitled to re-purchase the legal and beneficial interest which they would have sold.  It makes no sense for them to pay the market price of the Suit Property to re-acquire legal ownership in the Suit Property for no other purpose than to hold it for the benefit of the Plaintiff.

121.Furthermore, there is no evidence of the Plaintiff raising any objection or asserting her right over the Suit Property since she learned of the 2^nd Defendant’s desire to sell the Suit Property.  Instead, she signed the Family Agreement to purchase it from the Defendants at market price.  She only instituted the present proceedings a year after the 2^nd Defendant commenced divorce proceedings.

122.For the above reasons, I am satisfied that the Family Agreement is a recognition by the Plaintiff of the Defendants’ legal and beneficial interest in the Suit Property.  It is evidence that the Plaintiff intended the transfer of the Suit Property to the Defendants as a gift and that she did not retain any beneficial interest in the Suit Property. 

123.Mrs Chan refers to the following evidence as further evidence of the Plaintiff’s intention of advancement.  The relationship between the Plaintiff and the 2^nd Defendant was good.  The Plaintiff was in the habit of advancing to the Defendants and their family.  She financially supported the Defendants’ family in a substantial manner for many years.  She provided residence for them while living in Tuen Mun.  These evidence supports the intention of advancement.

124.Mr Wong refers to the following facts which are not disputed by the 2^nd Defendant.  The Plaintiff kept the title deeds of the Suit Property, retained the rental deposit of the tenant and collected rent from the tenant.  He also submits that the Plaintiff kept a set of keys of the Suit Property.  This fact is disputed by the 2^nd Defendant.  Mr Wong submits that these facts fortify the presumption of resulting trust.  Title deeds and keys are indicia of title to property.  Retention of the title deeds by the Plaintiff is some evidence of her intention of retaining the beneficial interest in the Suit Property.  But in view of the familial relationship between the Plaintiff and the Defendants, retention of the keys lose much of its value as evidence of intention.  It is not unusual under such circumstances for the Plaintiff to keep a set of keys to access the two grand-daughters or as a spare in case of accidental lock out.  As for retention of rental deposit and collection of rent, those facts are irrelevant if the gift was, as Mrs Chan argues, to take effect upon delivery of possession of the Suit Property after the tenancy expired.

125.The presumption of resulting trust raised by the fact of this case is a weak one.  The Suit Property was transferred to the joint names of the 1^st and 2^nd Defendants.  The Plaintiff explained that it was for the convenience of managing the property as the Defendants would be living in the Suit Property.  That is hardly a convincing explanation.  She trusted Edwin for all her financial affairs and she knew the 1^st Defendant was lousy, undisciplined and untrustworthy.  She put the property in his name jointly with the 2^nd Defendant regardless.  That must be some evidence that she intended the Suit Property to a gift to the Defendants.  She delivered possession of the Suit Property to the Defendants after having it renovated and furnished according to their design.  This is strongly suggestive of a perfected gift than of a trust. 

126.The Plaintiff has always proved herself to be a supportive, loving and caring mother.  She loves and cares for all her children and her two grand-daughters.  She gave assistance to her children in the purchase of their properties.  She helped Edwin and Angela to finance the purchase of their property.  She purchased a flat for Leuk who is less capable than her other children.  Likewise, she purchased the Suit Property for the 1^st Defendant who always had financial problems.  She maintains a very close relationship with her children.  She also maintains a very close relationship with the 2^nd Defendant and the two grand-daughters.  She supported the Defendants’ family.  She renovated and furnished the Suit Property so that the Defendants can live there in comfort, improve their marital relationship and bring up their daughters in a nice and comfortable environment and that their daughters could complete their education in St Francis Canossian College. 

127.Bearing in mind the character of the Plaintiff and weighing all the above considerations together, in particular the Plaintiff’s intention as reflected in the Family Agreement, I find it more likely than not that the unspoken intention of the Plaintiff was that she intended purchasing the Suit Property as a gift to the Defendants jointly.  It was part of her effort to salvage the Defendants’ breaking marriage and to make it convenient for their daughters to study in St Francis Canossian College.  Her good intention was also understood as such by the Defendants.  She perfected the gift by delivering vacant possession of the Suit Property to the Defendants after she had the Suit Property renovated and furnished.  She made a happy and sensible decision which was certainly right at the time she made it.  Sadly, as the events turned out, the gift fell into the unworthy hands of her son and the ungrateful hands of her daughter-in-law.  I find that the presumption of resulting trust is rebutted.

128.The 1^st Defendant defaulted in these proceedings.  Mr Wong submits that the Plaintiff is entitled to have judgement against the 1^st Defendant.  I respectfully disagree.  On my analysis of the law, because of the mother and son relationship, the presumption of advancement applies.  The burden is on the Plaintiff to rebut that presumption.  In just the same way and for the same reasons as I am able to find on the evidence before me that the presumption of resulting trust against the 2^nd Defendant is rebutted, the presumption of advancement in favour of the 1^st Defendant is not rebutted by the Plaintiff.  Thus, the presumption of resulting trust against the 1^st Defendant is also displaced.  If I am wrong about the way the two presumptions operate in the case of the 1^st Defendant, the presumption of resulting trust must have been rebutted on the facts of this case.  Thus, despite the fact that the 1^st Defendant defaulted in these proceedings, I am unable to enter judgment against him.

129.The Plaintiff’s claim against both the 1^st and 2^nd Defendants must be dismissed.

Costs

130.This case was set down for trial with five days reserved.  Counsel took eleven days to finish.  The case involves some argument on the law, but is otherwise factually simple.  The relevant facts are summarised in paragraphs 105 to 113.  Except for the source of funds for making the down payment for the purchase of the Chun Fai Property and the Plaintiff’s intention in purchasing the Lok Moon Property, none of the facts stated therein were in dispute.  However, Mrs Chan spent a disproportionately long time in pursuing other irrelevant factual disputes which are all resolved against the 2^nd Defendant.   

131.Through her counsel, the 2^nd Defendant raised many trivial and irrelevant disputes of facts.  She claimed that the Tuen Mun Property was a gift to the 1^st Defendant when she had absolutely no basis for making that assertion.  That part of her case is clearly concocted.  She argued that the Plaintiff instructed her to look for a property costing not more than $3,000,000 and not $2,000,000.  She disputed about the circumstances under which she signed the Family Agreement.  She alleged that the siblings coerced and fraudulently misled her into signing the Family Agreement, when she was not seeking to have the Family Agreement set aside.  Rather, she relied on the Family Agreement and she succeeded principally because of the Family Agreement.  All these factual disputes are irrelevant and are resolved against her.

132.She raised her theory of one property for each son.  With that proposition, she mounted very extensive and expensive interrogatories and discoveries.  She managed to show that the Plaintiff paid the purchase price of the Lok Moon Property for Leuk and paid the down payment of the Chun Fai Property for Edwin.  The discoveries yielded some evidence of marginal value.  However, her proposition failed.

133.The Plaintiff had a good case, but she tried to make it better by concocting a false case and giving false evidence.  Even on the Plaintiff’s case, the presumption of resulting trust is a very weak one.  The 2^nd Defendant could have easily rebutted that presumption by her close relationship with the Plaintiff and the Family Agreement.  She could have easily succeeded even on the undisputed facts.  However, she chose to indulge in meaningless and irrelevant and trivial factual disputes which were all resolved against her.  Had the defence been conducted in good faith, the case could have completed within less than four days and without the need for the extensive interrogatories and discoveries.  Tremendous amount of costs are wasted. 

134.The Plaintiff is to blame for commencing these proceedings, which in the end prove to be unmeritorious.  Under normal circumstances, she should bear the costs of the Defendants.  However, because of the way the defence was conducted, this is an appropriate case to depart from the general rule of costs to follow the event.  It is obvious that the Plaintiff was made to incur unnecessary costs, far more than what she should be liable for, including her own as well as the Defendants’ costs, had the defence been properly conducted.  In the circumstances, I think it fair that despite the 2^nd Defendant is successful, she should be deprived of her costs.  Accordingly, I make a costs order nisi that there be no order as to costs.

CONCLUSION

135.The Plaintiff’s action against both the 1^st and 2^nd Defendants is dismissed.  There be no order as to costs, save that the 2^nd Defendant’s own costs be taxed in accordance with the Legal Aid Regulations.

Mr King Wong, instructed by Messrs Lau & Ngan, for the Plaintiff

1^st Defendant:  Kwok Wai Sun, in person (absent)

Mrs Dora K H Chan, instructed by Messrs Hau, Lau, Li & Yeung, for the 2^nd Defendants, assigned by the Director of Legal Aid