Ng Luk Mui and Another v. Shiu Tsun Wai, Vincent and Another

DCCJ 2533/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2533 OF 2008

________________________

BETWEEN

________________________

Coram: Her Honour Judge H.C. Wong in Court

Dates of Hearing: 8-11, 21 June 2010

Date of Handing Down Judgment: 4 October 2010

________________________

JUDGMENT

________________________

1.The 1^st and 2^nd Plaintiffs claimed against the 1^st and 2^nd Defendants for:

(i)   a declaration that the 1^st defendant was guilty of breach of trust in transferring a property known as Flat E, 5th Floor, Tai Lung House, No. 123 Quarry Bay Street, Hong Kong (“the said Property”) to the 2^nd Defendant on 16 June 2005 under Memorial No. 05070701820046 when he knew or ought to have known he was in breach of his fiduciary duty as Trustee towards the 1^st and 2^nd Plaintiffs who were the beneficiaries under the trust;

(ii)   a declaration that the 2^nd Defendant was guilty of breach of trust in attempting to rent or sell the said Property in the open market and in evicting the 1st and 2nd Plaintiffs from the said Property knowing that she was in breach of her fiduciary duty as Trustee towards the 1^st and 2^nd Plaintiffs. 

2.In the alternative, the Plaintiffs sought:

(i)   a declaration that the 1^st and 2^nd Defendants were guilty of breach of trust in that they knew or ought to have known that the assignment date of 16 June 2005 Memorial No. 05070701820046 executed by the 1^st Defendant in favour of the 2^nd Defendant was a disposition and to defeat the benefits and interest of the 1^st and 2^nd Plaintiffs in breach of the trust;

(ii)   an order of injunction to restrain the 2^nd Defendant from renting out or selling of the said Property;

(iii)   an injunction to restrain the 2^nd Defendant from evicting the 1^st and 2^nd Plaintiffs or the family members from the said Property; and

(iv)   an order against the 2^nd Defendant for the execution of an assignment of the said Property in favour of the 1^st and 2^nd Plaintiffs as joint tenants.

3.The 2^nd Defendant objected to the claims of the two Plaintiffs.  She claimed the property was transferred to her by the 1^st Defendant for valuable consideration.  She denied that the 1^st Defendant was holding the said Property on behalf of the 1^st and 2^nd Plaintiffs.  She counterclaimed against the 1^st and 2^nd Plaintiffs and the 1^st Defendant jointly and severally for damages suffered by her for the wrongful occupation of and interference of the said Property.  In the alternative, she claimed she was entitled, if the Plaintiffs should succeed in their claims against her, to the return of the costs of renovation, the management fees and rates in the sum of $108,479 plus the repayment of the sum of $450,000 owed by the 1^st Defendant.

Background

4.The following facts are not in dispute :-

(i)   On 23 September 1982, the 1^st Plaintiff incorporated Silver Fortune Company Limited.  She was subsequently allotted 300,000 shares and the 1^st Defendant 100,000 shares.

(ii)   The said Property was acquired by Silver Fortune Company Limited (“the Company”) on 11 February 1992 for the sum of $600,000.

(iii)   On 10 February 1998, the Company transferred the said Property to the 1^st Defendant. 

(iv)   On 15 January 2005, the 1^st Defendant married the 2^nd Defendant in Hong Kong after a cohabitation period of 2-3 years.

(v)   On 16June 2005, the 1^st Defendant executed the transfer of the said Property to the 2^nd Defendant.  The transferred price stated in the assignment was $450,000.

(vi)   On 23 March 2008, the 2^nd Defendant petitioned for divorce against the 1^st Defendant under FCMC 3297 of 2008.  A Decree Nisi was granted by the Family Court on 13 October 2008 under the ground of irretrievable breakdown due to unreasonable behaviour.

(vii)   On 16 June 2008, the 1^st and 2^nd Plaintiffs issued a writ against the 1^st and 2^nd Defendants for the recovery of the said Property for breach of trust.

The Plaintiffs’ Case

5.The 1st Defendant Shiu Tsun Wai Vincent (“Vincent”) is the lawful grandson of the 1st Plaintiff and the natural born son of the 2nd Plaintiff.

6.It is the evidence of the 1st Plaintiff, Madam Ng Luk Mui (“Madam Ng”), that she incorporated Silver Fortune Company Limited on 23 September 1982 for the purposes of her investments on the advice of her accountant.  As the Company required a second shareholder, she nominated her grandson Vincent, the 1st Defendant, as the second shareholder.  He was allotted as was Madam Ng one share when the Company was first incorporated. 

7.On 11 February 1992, Madam Ng decided to purchase the said property for a consideration of $600,000.  The property was registered in the name of Silver Fortune Company Limited (“the Company”) on the advice of her accountant even though the purchase price and the expenses including legal costs and stamp duty were all paid by her.  According to Madam Ng, since the purchase of the said Property, it was used by herself, Vincent and Vincent’s son from his first marriage, Vincent’s sister Bona and Madam Lo as their residence.  On 10 December 1998, the Company transferred the registered ownership of the said Property to Vincent as the purchaser, the consideration on the assignment was stated as $600,000 (see page 32 Bundle B).  According to Madam Ng and Madam Lo, Vincent did not pay any part of the consideration of $600,000 for the transfer.  Madam Ng said she was suffering from ill health at the time and decided to transfer the said Property to Vincent in order to minimize documentations after her death.  At the time of the transfer of the said Property, it was explained to Vincent that he would be holding the property on trust for herself and Madam Lo.  Furthermore, Vincent was told he could not sell nor let out the said Property until after Madam Ng’s and Madam Lo’s death and his son Victor’s 21 birthday.

8.On 18 October 2007, Madam Ng decided to wind up the Company.  According to her, since the transfer of the said Property to Vincent, the Company held no assets, there was no longer any reason to keep the Company.

9.Both Madam Ng and Madam Lo said the reason the said Property was purchased was because Vincent was returning from North America in 1992 after he finished his studies in North America.  The family was living in rented accommodations in the neighbourhood of Tai Lung House at the time, when the said Property came up for sale, Madam Ng decided to purchase it for the whole family to live in. When Vincent married his first wife Madam Wu So Wa, an American-born Chinese, in 1994, they came to live in the said Property with the Plaintiffs.  Soon after she gave birth to Victor in 1995, Madam Wu developed terminal cancer, she passed away on 26 October 1995.  It is the Plaintiffs’ case that since then the said Property had been used by Madam Ng, Madam Lo, Vincent and his son Victor as their residence.  After his marriage to the 2nd Defendant in January 2005, Vincent moved to the 2nd Defendant’s home in Choi Hung Estate and resided with the 2nd Defendant and her daughter from her first marriage.  His son Victor continued to reside with Madam Ng and Madam Lo.

10.Both Madam Ng and Madam Lo claimed they were ignorant of Vincent’s assignment of the said Property to the 2nd Defendant (“Madam Lam”) on 16 June 2005.  They only discovered he had done so in late August 2007 after they moved out of the said Property for renovation purpose.  On 29 August 2007, Madam Lam brought along an estate agent and a man who introduced himself as the tenant to the said Property demanding possession of the said Property.  A quarrel between Madam Lam and Vincent ensued resulting in the calling of the police.  On the next day, 30 August 2007, Vincent made a statutory declaration and registered it at the Land Registry, a copy of the declaration was given to the police. 

The 1^st Defendant’s Case

11.Vincent’s evidence supported the Plaintiffs’ case.  He claimed Madam Lam had never resided in the said Property and that he and Madam Ng and Madam Lo were living together with his son Victor at the said Property before his marriage to Madam Lam.  He denied the said Property had ever been left vacant until Madam Lam arranged for its renovation in June 2007.  He claimed the family had only moved out temporarily for the renovation work to be conducted.

12.Vincent claimed Madam Lam had repeatedly demanded the transfer of the said Property to her to give her a sense of security, and he had repeatedly informed her he was only a trustee holding it on trust on behalf of the Plaintiffs and his son until he turned 21.  He further claimed he had told Madam Lam he did not have the original title deeds because they were kept by Madam Ng.  At the instigation of Madam Lam, he agreed to execute the transfer of the said Property and made the declaration on the loss of the title deeds.  He further claimed he had not received any consideration for the transfer of the property in June 2005.  He said the transfer was made because of the continuous nagging demand of Madam Lam threatening she would not look after the two Plaintiffs and his son Victor unless he agreed to transfer the property to her.  He had agreed to the transfer on her promise that she would hold the said Property on trust for the Plaintiffs and his son without disclosing to them the property had been transferred to her.

13.Vincent denied Madam Lam’s allegation that he was a habitual gambler and had accumulated a gambling debt of $450,000.  He further denied Madam Lam had paid off his gambling debts by borrowing from her own brother and from a friend together with the proceeds from the sale of her jewellery.

14.He agreed Madam Lam had secured a contractor to take up the renovation work at the said Property for about $50,000 to $60,000 instead of engaging Madam Lo’s contractor for $100,000.  He said Madam Lam had made use of the opportunity when Madam Ng, Madam Lo and Victor moved out of the said Property for the renovation and let out the said Property to a tenant in August 2007.

15.Vincent admitted he made a false declaration in June 2005 when he executed the transfer of the said Property to Madam Lam.  He claimed the statutory declaration on 30 August 2007 was true and correct.

The 2^nd Defendant’s Case

16.It is Madam Lam’s evidence that she first met Vincent in the summer of 2002 at the karaoke where she worked.  Vincent told her he had been living at the said Property by himself since 1998.  Soon after they met, they cohabitated at her Mong Kok home save for a two month period when Madam Lam’s mother visited Hong Kong from Fujian, and stayed in the Mong Kok residence while Vincent and herself stayed at the said Property at night.  She said Madam Ng and Victor were staying with Vincent’s younger sister Miss Siu Wing Sheung Bona at Flat A, 11th Floor, Fung Yuen Building, 414 Shaukeiwan Road, Hong Kong (“the Shaukeiwan flat”).  Madam Lo, on the other hand, was residing at one of the properties owned by her employer at 36 Leighton Road (“the Leighton Road flat”).  She claimed she had visited Madam Lo at the Leighton Road flat with Vincent.  That between the summer of 2002 and August 2007 when Vincent was living with her, the said Property was vacant and dilapidated, there was no running water.

17.Madam Lam admitted she knew about Vincent’s gambling habit before they were married. During their cohabitation, she had on more than one occasion lent money to Vincent to repay his gambling debts.  Because of her disapproval of his gambling, Vincent voluntarily surrendered his credit card to show he was earnest in his promise to stop gambling.  She further produced two documents written in Vincent’s handwriting in support.  The first one was dated 26 January 2005 in which he purportedly promised Madam Lam if he ever visited Macau again he would chop off one of his fingers (page 1 of bundle D).  The second was dated 15 October 2005 where Vincent purportedly promised he would not play Taiwan mahjong, gamble on football or gamble in Macau ever again (page 4 of bundle D).

18.It was around May 2005 that Madam Lam discovered Vincent was heavily indebted to illegal gambling establishments for his football bettings.  Vincent told her his debts amounted to over $400,000, he pleaded with her for help to repay his gambling debts.  In order to save her marriage, she agreed.  She sold her jewellery including a diamond ring for about $28,000 and other gold jewellery given to her by her mainland relatives which she sent to a jewellery workshop of a friend, she was given approximately $40,000 for them.  She then gave the $70,000 raised to Vincent to pay off some of his gambling debts.  She claimed she was under threat at the time from constant telephone calls from Vincent’s creditors to their home demanding repayment of his gambling debts.  She raised further sums by borrowing from a former intimate friend, Mr. Chan, the sum of $250,000.  The first payment of $150,000 was given to her at a karaoke.  The second payment of $100,000 was given to her at the Kwun Tong branch of the Hong Kong & Shanghai Bank.  On both occasions, she gave the money to Vincent as soon as she received the payment.

19.As Vincent’s gambling debts were over $400,000, she had to ask her own third elder brother Lam Chi Lap for a loan of RMB120,000, given to her in the presence of Vincent at a hotel room in Dongguan in China. 

20.Madam Lam’s evidence is supported by her brother Lam Chi Lap who gave detail evidence on the loan at the trial.  He had raised the money from a farming co-op society by bidding for a loan at high interest.  He produced in support the documents of the co-op society and the successful bidding contract dated 15 June 2005 signed by Mr Lam and two guarantors (see pages 2 and 3 of bundle D).

21.It is Mr Lam and Madam Lam’s evidence that Vincent had initially suggested the transfer of the ownership of the said Property to Mr Lam as a pledge for the loan from Mr Lam.  At Mr Lam’s suggestion, Vincent agreed to transfer the said Property to Madam Lam.  Mr. Lam said he had a business trading in agricultural produce which required ready cash for his transactions.  As the money would be lent to Vincent, he had to ask a friend for a bridging loan before he obtained the loan from the farming co-op society in mid June 2005.

22.According to Madam Lam, Vincent failed to learn from his mistakes and carried on with his gambling activities.  At the end of 2006, Vincent informed her he had stolen money from his employer amounting to several hundred thousand dollars to pay his gambling debts.  He asked her to transfer the property to Mr Ngan, a director of his employer, as repayment.  Madam Lam rejected his request.  Madam Lo and her friend Mr Ngan later arranged to meet Vincent and herself at Madam Lo’s flat in Leighton Road in Causeway Bay where they asked Madam Lam to transfer the said Property to Mr Ngan.  She again turned down the request.

23.Meanwhile, her brother Mr Lam was demanding for the repayment of the RMB120,000.  In order to repay the debt, she agreed with Mr Lam that the said Property should be let out for rental income and the rental income would be used to repay her brother Mr Lam by instalment.  The suggestion was supported by Vincent because he was not able to repay Mr. Lam.  Consequently, in July 2007, all the furniture and articles at the said Property were moved to a mini store at Kowloon Bay rented by Vincent and the said Property was renovated.

24.Madam Lam claimed that the renovation cost was $86,000.  At the end of the renovation works, she decided to partition a room in the premises, therefore the renovation costs was increased by $15,000.  The total costs of renovation came to $101,000.

25.As the unit had no water supply, she requested the Water Supplies Department to investigate and was told the disuse of the said Property had caused blockages to the fresh water pipes.  These were later replaced to provide water supply to the property.  She produced a statement from the Water Supplies Department dated 28 June 2007 on the said property showing the last payment of water rates was 3 September 1999, the sum paid was $59.  There was apparently no further payment nor water use since the end of 1999 up to June 2007 (see pages 97 and 98 of bundle D).

26.On the completion of the renovation in August 2007, Madam Lam put the said Property up for rental.  On 27 August 2007, at the office of Goodluck Property Agency and in the presence of Vincent and the prospective tenant Mr Wong and his wife Madam Mak, a lease was signed for a monthly rental of $5,800.  The estate agent’s commission of $2,900 was paid by Madam Lam on the same day (page 99 of bundle D).  She also received a rental deposit of two months rental and the first month’s rent in advance.

27.At about the same time, Madam Lam received a phone call from Mr Ngan offering to pay Madam Lam the sum of $100,000 for the transfer of the said Property to his name.  Madam Lam considered the offer unreasonable and rejected it.

28.On the night of 28 August 2007, Vincent had a row with her over some trivial matter and left her home.  She later discovered he had in fact plotted against her and brought Madam Ng to the said Property, changed the lock and refused the new tenant entry into the said Property.  As a result of her failure to deliver vacant possession, she had to compensate the tenant double rental deposit.  She had also paid up the outstanding management fee on the said Property of $250 per month.  Madam Lam asserted that throughout the period she was living with Vincent, she had paid his gambling debts repeatedly over and above the $450,000 stated consideration for the transfer of the said Property.  It is Madam Lam’s case that Vincent had never informed her he was holding the said Property on trust on behalf of Madam Ng, Madam Lo and his son.  She believed the present claim of the Plaintiffs to be a ploy to deny her of her right to the said Property.

The Dispute

29.Mr Chan, Counsel for the 2nd Defendant, submitted that as Madam Lam is the holder of the legal title, the burden is on the Plaintiffs to prove the beneficial ownership belonged to them.  Mr Chan further submitted that the burden of proof is on the Plaintiffs and the 1st Defendant to show the beneficial ownership of the said Property was divorced from legal ownership.  He referred to the judgment of Deputy Judge To (as he then was) in the case of Lee Tso Fong v Kwok Wai Sun and another [2008] 4HKLRD 270 where he held:

“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 undisputable legal title.”

30.Mr Chan further relied on section 17 of the Conveyancing and Property Ordinance Cap 219 :

“unless the contrary intention is expressed in the assignment, an assignment shall operate to assign all the estate, right and interest in the land assigned which the assignor has in that land and which he has the power to assign.”

31.Mr Chan submitted that the Plaintiffs and 1^st Defendant’s allegation of trust with reference to the assignment of the said Property in 1998 by the Company is not sound, that the assignment in 2005 between Vincent and herself was a genuine transaction.  The burden is on Vincent to show the legal ownership of Madam Lam under the 2005 assignment is divorced from the beneficial ownership when he claimed he had executed the transfer to satisfy Madam Lam and give her a sense of security.

The Law

32.The law on resulting trusts is set out at page 269 of Underhill on Trusts and Trustees, 14 Edition:-

“Article 31

Resulting trusts where purchase made in another’s name or property voluntarily transferred to another

(1) When real or personal property is conveyed to a purchaser jointly with others, or to one or more persons other than the purchaser, a resulting trust will be presumed in favour of the person who is proved (by parol or other evidence) to have paid the purchase-money in the character or purchaser (as opposed to that of donor or lender).

(2) This presumption may be rebutted:

(a) by parol or other evidence that the purchaser intended to benefit the others; or

(b) by the fact that the person in whom the property was vested was the lawful wife or child of the purchaser or was some person towards whom he stood in loco parentis, or was trustee of a settlement by which he previously settled property.

In any of these cases a prima facie (but rebuttable) presumption will arise that the purchaser intended the ostensible grantee or grantees to take beneficially, or, in the last mentioned case, upon the trusts of the settlement in question.”

33.On the presumption of advancement, at page 284, the author said:

“The rule was stated thus by Viscount Simonds in Shephard v Cartwright:

‘The law is clear that, on the one hand, where a man purchases shares and they are registered in the name of a stranger, there is a resulting trust in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the purchaser then stood in loco parentis there is no such resulting trust, but a presumption of advancement. Equally it is clear that the presumption may be rebutted but should not give way to slight circumstances.’

Where the presumption has arisen and not been rebutted it will not be destroyed by anything (such as change of mind on the part of the donor) that happens subsequently.”

34.The operation of the presumption of advancement is explained also at paragraph 23-05 of Snell’s Equity 2007 Edition at page 573:-

“As has been seen, B will not be presumed to hold property on trust for A, although A has provided the purchase-money, if the presumption of advancement applies to explain the payment from A to B as a gift. The evidential weight to be attached to the presumption is now less than in the past. Changing social and economic conditions have made the presumption a less reliable guide as to A’s true intention in providing the money than it might once have been. Where modern experience indicates that the presumption does not provide any firm rational basis for presuming an intention to make a gift between parties in the position of A and B, then the presumption may only be of slight probative value. The court will always strive to determine the real intentions of the parties. It may only resort to the presumption of advancement where evidence of those real intentions is absent and a default rule is needed.”

Presumption of Advancement

35.If a man buys a property and has it conveyed to his wife, prima facie it is a gift to her.  In the present case, so far as the 16 June 2005 assignment is concerned, it is not Madam Lam’s case that Vincent transferred the said Property to her for the love and affection he held for her but because he was desperately in need of money to repay his gambling debts.  He offered to transfer the said Property to Mr Lam as a pledge for the loan of RMB120,000. The said Property was eventually transferred to her at her brother’s request because Vincent had borrowed over $320,000 from Madam Lam who sold the jewellery for $70,000 and borrowed from her former intimate friend $250,000. With the RMB120,000 she borrowed from her brother, Vincent owed Madam Lam HK$400,000 odd.  According to Madam Lam, that was why the consideration for the assignment was stated as $450,000. 

36.It is not disputed that at the time of transfer the value of the said Property exceeded $450,000 as Madam Lam herself admitted the property was valued at $900,000 (see her financial statement at page 90 of bundle B).  Even though Madam Lam claimed she had been lending money to Vincent for his gambling debts before and during their marriage, it was her evidence that the total amount of the money lent by her including the loans obtained through her did not amount to anything close to $900,000.  It follows she was not a bona fide purchaser of good value of the said Property.

37.As it is not Madam Lam’s case that the 2005 assignment was a gift to her from Vincent, no presumption of advancement between husband and wife existed.  The presumption of advancement from husband to wife is therefore rebutted.

Presumption of Resulting Trust

38.On the resulting trust claimed by the 1st Plaintiff Madam Ng, the evidence of her incorporating the Company in 1982, the Company’s purchase on 2 February 1992 of the said Property with money completely financed by Madam Ng and the said Property’s transfer to Vincent in February 1998 are not in dispute.  The only disputed issue is whether Vincent was holding the said Property on behalf of Madam Ng, Madam Lo for the duration of their lives and on behalf of his son until the age of 21.  On this issue, the burden is on Madam Ng to rebut the presumption of advancement for it is undisputed Madam Ng had put up the purchase price for the said Property and Vincent did not pay any part of the purchase money in 1998 when the property was transferred to him by the Company.

39.Mr Chan, Counsel for Madam Lam, challenged the Plaintiffs’ claim of resulting trust based on the 1998 transfer of the said Property to Vincent by the Company.  He argued that the Plaintiffs had failed to produce sufficient evidence to show the transfer was not to a bona fide purchaser with good consideration. The Plaintiffs’ claim that the 1998 assignment was not supported by consideration from Vincent is supported by the evidence of the Plaintiffs and Vincent who admitted he did not pay any part of the $600,000 for the transfer in 1998 nor did Vincent pay for the allotment of the Company’s shares.  If Madam Lam’s allegation of Vincent as a habitual and compulsive gambler is true, Vincent could not be in a position to pay the $600,000 for the transfer in one lump sum.  As there was no evidence of a mortgage on the said Property to finance the purchase, the inference is, Vincent did not pay the purchase price for the transfer in 1998.

40.As to the argument of advancement by persons in loco parentis in support of Madam Lam’s claim that the said Property was a gift from Madam Ng, page 288 of Underhill’s Law on Trusts and Trustees has this to say:-

“The presumption of advancement in favour of persons to whom the purchaser stands in loco parentis, has been held to arise in the case of an illegitimate child, a grandchild whose father was dead, the nephew of a wife who had been practically adopted by the husband as his child, and a stepson who had not come to live with the person alleged to have been in loco parentis until he was sixteen years old. But it would seem that the person alleged to have been in loco parentis must have intended to put himself in the situation of the person described as the natural father of the child with reference to those parental offices and duties which consist in making provision for a child.”

41.The relationship between Madam Ng and Vincent is one of grandmother and grandson, such a relationship is not within the category of persons in loco parentis. Vincent has a working mother, Madam Lo, who was a full-time supporter of Vincent and her younger sister Bona before they reached the age of majority. Therefore, it was not necessary for Madam Ng, the grandmother, to be responsible and put herself in loco parentis as the natural father or someone having to make provision for him in any way.

42.I have been referred to the case of Lee Tso Fong v Kwok Wai Sun and Hong Wai Yee where Deputy High Court Judge To (as he then was) cited the judgment of the Hong Kong Court of Appeal in the case of Watson v Smith [1998] 3HK 461, where Godfrey JA held at page 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 (i.e. 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 Benntt (1879) 10 30 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.”

(see paragraph 7 of Judge To’s Judgment).

43.Deputy Judge To commented that the law is living and flexible and the court may extend the application of a presumption adapting to changing circumstances, that more and more women have taken up employment and the obligation in responsibility to apply to the children did not rest on men alone.  He, however, refused to find there was a presumption of advancement in that case where the 2nd defendant claimed there was a presumption of advancement between mother and daughter-in-law.

Evidence of Intention

44.In the present case, there is no expressed declaration of trust indicating the actual intention of the person who paid the purchase price, Madam Ng.  The Court therefore has to look at evidence adduced to find if there is such indication from Madam Ng and Vincent.  Madam Ng denied the 1998 transfer to Vincent was a gift to him, she claimed he held it on trust for herself, Madam Lo and Victor.  This was supported by Vincent’s evidence.  The most telling piece of evidence I find is the fact that the title deeds have been kept by Madam Lo.  It is her evidence that since the Company’s purchase of the said Property, the title deeds were kept by her in a bank deposit box.  After the assignment transferring the registered ownership of the said Property to Vincent, who by then was a mature adult with a 3 year old son, the title deeds again were kept by Madam Lo in a bank deposit box.  They were never kept by Vincent or given to Vincent.

45.Paragraph 23-10 of Snell’s Equity:-

“Acts and declarations admissible

The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration; subsequent acts and declarations are only admissible as evidence against the party who made them, and not in his favour. Thus, if a father buys property, and has it conveyed into the name of his son, the father’s declaration at the time of the purchase that he wished the son to hold as trustee for him would be admissible to rebut the presumption of advancement; but although the father’s subsequent declarations could be used by the son to support the presumption of advancement, they could not be used in evidence by the father to rebut it. On the other hand, the subsequent acts and declarations of the son may be used against him by the father, and may rebut the presumption of advancement if there is insufficient evidence of the intention of the father at the time of the purchase to counteract the effect of those acts or declarations. The fact that the son permits the father to receive the profits of the property has been said to be no evidence against him, for it an “act of revenue and good manners”, but it is otherwise if the father retains the title deeds.”

46.The authority of Warren v Gurney [1944] 2 All E.R. 472 showed the fact that the father retained the title deeds is a good indication of the father’s intention in revoking the presumption of advancement to a son.

47.Based on the aforesaid authorities, in particular, the Court of Appeal case of Watson v Smith, I find there is no presumption of advancement from Madam Ng to Vincent, her grandson, when the said Property was transferred by the Company into Vincent’s name in 1998.  In spite of Madam Lam’s evidence on the circumstances when the said Property was transferred by Vincent to her in 2005, the evidence is insufficient to support her claim that Vincent was not a trustee holding the property on trust on behalf of Madam Ng for the benefit of Madam Ng, Madam Lo and Vincent’s son even though Vincent may not have told her of the trust.  On the other hand, I find there was strong evidence from Madam Ng that she had put up the money to purchase the said Property.  Consequently, the presumption of advancement to Vincent is rebutted.  I find there is a presumption of resulting trust in respect of Madam Ng’s purchase of the said Property.

48.At the same time, there was insufficient evidence to show Madam Lam had any knowledge that Vincent was holding the said Property on trust for the Plaintiffs and his son.  I am convinced she was deceived by Vincent that the said Property belonged to him leading to the 2005 transfer.  Because of his gambling habit, Vincent was constantly in need of money and had borrowed money from her since before their marriage.  I reject his evidence that Madam Lam had promised to look after the Plaintiffs and his son after the transfer and had agreed to move into the said Property to live with the Plaintiffs and his son.  The said Property is a 300 sq. ft. unit consisting of one large room, a kitchen and bathroom, it is clearly unsuitable to accommodate 5-6 persons.  The fact that Vincent moved into Madam Lam’s public housing unit instead of Madam Lam moving to the said Property after the marriage is strong evidence against Vincent’s claimed reasons for the 2005 transfer. 

49.It is highly unlikely Madam Lo did not know about the 2005 transfer and the loans from Madam Lam or she would not have requested Madam Lam to transfer the said Property to Mr. Ngan nor would Mr. Ngan offer to pay $100,000 for the transfer in 2006.  Madam Lam gave such details in her description of the meetings with Madam Lo and Mr. Ngan that I find they must have taken place.  The story about Vincent’s stealing money from his employer was probably concocted to persuade Madam Lam to transfer the said Property to Mr. Ngan, the director of Vincent’s employer and a friend of Madam Lo.  I further find there were strong evidence adduced by Madam Lam showing the said Property was vacant before the renovation in July 2007, such evidence included the many months of unpaid management fees usually collected by the management calling on the said Property, the blocked water pipes due to disuse and Mr. Yip’s description of the contents and appearance of the said Property before the renovation.

50.I find Vincent to be a thoroughly untruthful witness, he tried to conceal he had borrowed from Madam Lam to feed his gambling habits and pay his gambling debts.  The two handwritten notes were clearly written and signed by Vincent to Madam Lam to pacify her after she discovered he had been gambling again and again.  They reflected Vincent’s true character.  They showed he would be ready to lie in order to get out of a difficult situation.  I find Madam Lam and Mr. Lam to be truthful and straight-forward witnesses.  Her witnesses Mr. Wong and Mr. Yip were also honest witnesses who spoke the truth.

Conclusion

51.Based on the undisputed evidence of Madam Ng on her payment of the purchase price of the said Property and the rebuttal of the presumption of advancement, I hold Madam Ng has succeeded in her claim of resulting trust, the legal title shall be restored to her.

52.On the detailed account from Madam Lam together with the supporting evidence from Mr. Lam and Mr. Wong whose brother bought Madam Lam’s gold jewellery, I am satisfied Madam Lam did sell her jewellery, obtained $250,000 from her former intimate friend Mr. Chan and RMB120,000 from her brother and paid them to Vincent to settle his gambling debts.  Based on the IRD record of Hong Kong exchange rate for taxable income in June 2005, RMB120,000 was equivalent to HK$107,040 (at RMB0.892 to HK$1).  Consequently, the value of Madam Lam’s loan to Vincent in June 2008 was $(70,000 + 250,000 + 107,040) = $427,040. 

53.Madam Lam produced a quotation and receipts from the decoration contractor for the renovation of the said Property, the one month rent returned to the tenant and the receipt for the estate agent’s commission (pages 6-14 of bundle D).  She is entitled to recover the payments on the renovation of the said Property from the 1^st Plaintiff and the estate agent’s commission and double deposit penalty to the tenant from the 1st Defendant amounting to $5,800 x 2 + $2,900 = $14,500.  Furthermore, I am satisfied the 2nd Defendant did pay the management fees on the said Property from September 2006 to date at the rate of $250 per month as the registered owner.  The Plaintiffs shall repay to her the said sum of $250 x 48 = $12,000 and rates at $1,479.

54.I grant the following orders:-

On the Plaintiffs’ claim:

(a)   a declaration that the 1^st Defendant was guilty of breach of trust in transferring the said property to the 2^nd Defendant on 16 June 2005 under Memorial No. 05070701820046;

(b)   an order that the 2^nd Defendant do execute an assignment of the said Property in favour of the 1^st Plaintiff; in default thereof an order that the Registrar of the District Court or such competent officer of the Court be appointed to execute the said assignment, with liberty to apply;

On the 2^nd Defendant’s counterclaim:

(c)   judgment to the 2^nd Defendant against the 1^st Plaintiff the costs of renovation in the sum of $101,000, rates and management fee at $13,479 and against the 1^st Defendant the sum of $14,500;

(d)   judgment to the 2^nd Defendant in the sum of $427,040 against the 1^st Defendant.

Interests

55.Interest on the counterclaim at half judgment rate from the date of counterclaim to the date of judgment, thereafter at judgment rate.

Cost

56.Costs to follow the event.  The 1st Defendant shall pay the costs of the Plaintiffs; the Plaintiffs and the 1^st Defendant shall bear the costs of the 2nd Defendant, to be taxed if not agreed with Certificate for Counsel.

Mr. Peter Fan Chor Ming of Messrs. Edmund Cheung & Co. for the 1^st and 2^nd Plaintiffs

1^st Defendant, in person, present

Mr. Alwin Chan instructed by Messrs. Danny Lau & Lam for the 2^nd Defendant

2nd Defendant's appeal to Court of Appeal allowed. Please refer to CACV51/2011 dated 10 October 2011