Peter Man Ho Laye v. Tam Ma Lai and Another

CACV 260/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 260 OF 2010

(ON APPEAL FROM HCA 1780 OF 2009)

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BETWEEN

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Before : Hon Cheung, Kwan and Chu JJA in Court

Date of Hearing : 19 October 2011

Date of Judgment : 31 October 2011

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J U D G M E N T

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Hon Cheung JA :

1.The plaintiff who is the registered owner of the premises situated on the First Floor, 54, Tin Hau Temple Road, Hong Kong (‘the premises’), obtained judgment from Deputy High Court Judge Au Yeung for, amongst other things, an order that the defendants shall deliver vacant possession of the premises to him.

2.The 2^nd defendant now appeals against the judgment.  She is the widow and the administratrix of the estate of Laye Hong Kin (黎康健) deceased (‘the deceased’).

3.The plaintiff is the nephew of the deceased who was his 6^th uncle.  Another uncle who featured prominently in this case is the plaintiff’s 5^th uncle (‘the 5^th Uncle’), Laye Hong Hong. 

4.The 2^nd defendant’s case is that although the premises was registered in the name of the plaintiff, it was the deceased who provided the purchase price of the premises by way of down payment, monthly mortgage repayments and early redemption of the mortgage.  In other words the premises were held by the plaintiff on resulting trust for the deceased.

Undisputed facts and the parties’ case

5.The Judge summarised the undisputed facts and the parties’ case as follows.

‘ Undisputed Facts

3.  The following are undisputed facts or facts supported by indisputable documentary evidence which I find to be true and correct:

4.  Peter’s (i.e. the plaintiff) father (“the Father”) emigrated to the USA in about 1967. Peter’s mother, Peter and his brother (“Tommy”) were left to live with the 2 Uncles and a servant at the Premises which were then rented. The 2 Uncles took care of Peter’s family.

5.  In 1971, Peter and Tommy moved to the USA and have resided there ever since.  The 2 Uncles continued to live in the Premises with Peter’s mother who was ill and the servant.

6.  In July 1986, Peter and his Father visited the Uncles.  On 30 July 1986, Peter executed a Power of Attorney (‘the 1986 Power of Attorney’) appointing the 5^th Uncle (not the Deceased) as the attorney for the purpose of purchasing the Premises and taking out a mortgage.

7.  On 2 February 1987, Peter became the registered owner of the Premises.  The down payment for the purchase was $100,000.  A mortgage was taken out in the name of Peter with the Wing On Bank Limited (“the Bank”) for the balance of the purchase price in the sum of $200,000.

8.  The mortgage was redeemed by an accelerated payment of about $87,934.67 (“the accelerated payment”) on 12 February 1993.  By a power of attorney in 1993 (“the 1993 Power of Attorney”) given by Peter, the title deeds were retrieved from the Bank.

9.  On 18 February 2000, the Deceased married Madam Tam (i.e. the 2^nd defendant).

10.  Both Uncles had lived in the Premises until the end of their lives, on 18 July 2000 and 1 April 2007 respectively.  Peter, Tommy and the 2 Uncles remained close throughout their lives.

11.  On 5 June 2007, Peter wrote to Madam Tam stating that he and Tommy would send 2 more months’ maintenance to her.  He gave notice to recover possession by 31 August 2007.  Madam Tam replied by letters dated 30 July, 10 August and 11 August 2007, refusing to move out.

12.  Peter commenced proceedings on 5 August 2008 (originally by originating summons which was later converted to a writ action) for possession of the Premises and mesne profits.

The Plaintiff’s Case

13.  Peter claims that his Father initiated the idea of purchasing the Premises to accommodate the Uncles in view of their retirement and age.  He was designated by his Father as the owner.  He appointed the 5^th Uncle as attorney to implement the purchase.  He paid the down payment with a gift of US$5,000 from his Father and his own savings of US$l0,000 from past earnings and student loans.  He borrowed a loan of US$7,500 from Tommy which covered the first 2 years’ mortgage instalments.  He continued to pay the mortgage by sending monthly sums to the Uncles.  He made the accelerated payment with his own savings of US$2,000 and another loan of US$l0,000 from Tommy.  All loans from Tommy had been fully repaid.  In addition, both he and Tommy had been sending monthly maintenance to the 2 Uncles until the end of their lives.

14.  Since purchase of the Premises, the 2 Uncles had been in occupation as licencees of Peter.  Madam Tam had an implied licence from Peter through the Deceased to stay in the Premises.

The Defendants’ case

15.  Madam Tam sues in her capacity as administratrix of the Deceased and her personal capacity.  She asserts that it was the Deceased who provided the down payment and alone discharged the mortgage.  By reason of his advanced age and to circumvent difficulties in taking out a mortgage, he purchased the premises in Peter’s name.  The Deceased also asked the 5^th Uncle to be his attorney to handle the documentation.  All along the Deceased or, after his death, Madam Tam had been in possession of the title deeds.  The Deceased was the real beneficial owner.’

6.The 2^nd defendant had also relied on adverse possession at the trial which is no longer relied upon by her.

The finding by the Judge

7.The Judge made the following finding on the ownership of the premises :

‘ 131. In 1983/84, the 5^th Uncle told Peter and Tommy that the Deceased’s employment was terminated because Wyco went bankrupt and the 5^th Uncle was expecting retirement. The Father decided in about 1985 that Peter should purchase the Premises for the Uncles. The common intention of Peter and the Deceased was for Peter to be the real owner and to bear all costs of the purchase. At that time, Peter and Tommy had already graduated and were in employment.

132. Shortly after this decision was made, Peter received notice of admission to the medical school for the year 1985.  He quitted his job by the end of August 1985 and studied medicine for 4 years.

133. The decision to purchase took about 2 years to mature.  In July 1986, Peter and his Father came to Hong Kong for the purpose of executing the 1986 Power of Attorney authorizing the 5^th Uncle to purchase the Premises and to take out a mortgage.  In the meantime, the Uncles negotiated as sitting tenants with the landlord and successfully agreed on a purchase price of $300,000.  The Assignment was executed on 2.2.1987.  The mortgage in the name of Peter was for $200,000 repayable over 10 years.  The monthly repayment was about $2,000 odd, similar to the rent the Uncles were previously paying.

134. Peter had the ability to and did pay the down payment and mortgage instalments.  Tommy had the ability to and did assist Peter.  Peter sent his own savings from past earnings and student loans totalling about US$l0,000 and a gift of US$5,000 from the Father to the 5^th Uncle to pay for the down payment of $100,000.  He borrowed US$7,500 from Tommy to cover the first 2 years’ mortgage repayment.  In addition, Peter had been sending US$l00 to US$200 to the Uncles per month.  Tommy has also been sending the Uncles US$200 per month.  He increased it to US$300 when his income increased and when the Father expressed concern when the US$7,500 was running short.

135.   After his graduation from medical school, Peter secured a highly remunerative job.  He borrowed US$l0,000 from Tommy.  Together with his own savings of US$2,000, he made an accelerated payment to pay off the mortgage.  All loans to Tommy had been repaid.

136. The Deceased had savings of HK$l00,000 and joint savings with the 5^th Uncle of HK$30,000.  Theoretically, he could afford the down payment.  The monthly mortgage was more or less the same as the rent and theoretically he could also afford to pay it.  The bank policy existed and the Deceased would not be able to take out a mortgage in his own name had he needed to.

137. The 5^th Uncle retired in about 1990.  The Deceased was employed by Wyco until 1984; he might have other jobs until 1989 but the identity of the employer and income level was unclear.  He had alternate income from oil painting but the level of income was unclear.  Applying all his deposits and income to purchase the Premises would consume allhis funds and left him with virtually no means to meet his and the 5^th Uncle’s retirement life.  It was thus improbable that he would be able to afford the purchase or meet a 10 year mortgage.  Madam Tam claims that the Deceased paid the accelerated payment.  Again, the source of such payment was not proven.

138. There was no tearing up exercise as claimed by Madam Tam and Mr Chow (‘the 2^nd defendant’s witness’).  Accordingly, there was nothing to associate the Deceased with the Bank Account from which the mortgage repayments were made.

139. I find Peter’s case to be credible despite the lack of crucial banking documents. The Uncles were in occupation as licensees of Peter.  Even if I do not believe him, I am not satisfied that Madam Tam has discharged the burden of proving that it was the Deceased who funded the purchase of the Premises.  There was no contemporaneous documentary evidence to prove the means of the Deceased or to correlate the payment of purchase monies with the Deceased’s own resources.  The claim of Madam Tam as an executrix based on resulting trust fails.’

Application to adduce new evidence

8.Mr. Chan Chi Hung S.C. who appeared with Mr. Jeffrey Tam for the 2^nd defendant (both of them did not appear below) applied for a re-trial of the action on the basis of the new evidence which the 2^nd defendant now seeks to produce and which were not disclosed at the trial. 

9.The evidence falls into two categories.  First, salaries tax documents of the deceased between 1984 and 1988 and, second, bank saving books of the 5^th Uncle and documents relating to his income. 

Ladd v. Marshall requirement

10.The principles governing the admission of new evidence after trial are well established.  The appellant needs to show that

1)  the evidence could not have been obtained with reasonable diligence for use at the trial;

2)  the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive;

3)  the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.

Ladd v. Marshall [1954] 1 WLR 1489 per Denning LJ (as he then was) at 1491.

Explanation for the late disclosure

11.The two categories of documents were disclosed at different times.  Those relating to the tax position of the deceased were disclosed on 28 December 2010 and those relating to the financial position of the 5^th Uncle were disclosed on 16 February 2011.

12.The 2^nd defendant’s explanation for the late disclosure of the first category of documents was that after the judgment was given below, on 9 December 2010 she started to remove the collection of appropriately 1,000 gramophone records and 1,000 books of the deceased and she discovered the documents in an old paper bag buried beneath the shelves where the records were kept.

13.In respect of the second category of documents, the 2^nd defendant’s explanation was that as she was preparing to vacate the premises, she found these documents (together with others) in a plastic bag inside a small hanging cabinet fixed on the ceiling outside the toilet of the premises.  She used to place empty suitcases and toilet rolls in the cabinet but she had never seen the deceased and the 5^th Uncle opened the cabinet.

14.It should be pointed out that the 2^nd defendant had about one week before the trial disclosed 127 pages of family correspondence.  Her explanation was that the documents were found in a box when she attempted to take photographs of the oil paintings drawn by the deceased.  The Judge disbelieved the 2^nd defendant’s explanation for the late discovery.

My view on the explanation

15.I am not satisfied that the two categories of documents could not with reasonable diligence be found by the 2^nd defendant before the trial.  The premises were of only about 850 sq. feet.  It was occupied by the 2^nd defendant.  It is simply unbelievable that the 2^nd defendant could only have found the documents after the handing down of the judgment on 22^nd November 2010 and in such a piecemeal manner.  The discovery of the correspondence before the trial, if indeed they were discovered so late, ought to have prompted her to carry out a thorough search in the premises of other relevant documents.

Skone v. Skone

16.Mr. Chan S.C. in order to overcome this difficulty relied on Skone v. Skone [1971] 1 WLR 812, which he submitted had applied a less stringent consideration of the reasonable diligence requirement under the first limb of Ladd v. Marshall when the new evidence showed that a strong prima facie case of wilful deception of the court had been disclosed.  In that case the husband petitioned for divorce on the ground of his wife’s adultery with S.  The wife did not take part in the proceedings apart from entering an appearance stating her intention to defend the petition.  S who was a co-respondent denied adultery with the wife and further stated that he had repelled the wife’s advances and commented adversely on her conduct.  The Judge dismissed the petition.  The Court of Appeal refused to admit new evidence in the nature of love letters purportedly written to the wife by S, the content of which revealed that they had committed adultery together.  The House of Lords allowed new evidence to be admitted and ordered a new trial.  Lord Hodson at page 816 dealing with the question whether the new documents could have been obtained by reasonable diligence, held that,

‘ The situation of the wife is or was, however, at the material times a peculiar one in that she was in the opposite camp in the sense that she was anxious not to do anything without the approval of the co-respondent, feeling that her interests were bound up with his. The petitioner was advised by counsel, as I have said, and I find it impossible to hold that in these circumstances it is right to hold that the petitioner failed to exercise due diligence in this matter. The position and attitude of the wife as a potential if not actual ally of the co-respondent is relevant and I do not think the petitioner of his solicitors can be criticised for not obtaining or seeking to obtain a statement from her after the inquiry agent had failed to do so. Some support for this view is to be found in an analogous case of Bills v. Roe [1968] 1 W.L.R. 925. This was a road accident case but the observations of Harman L.J., at p. 930, as to approaching persons in the opposite camp are, I think, relevant in this connection. True that the wife changed her mind after the trial and produced the incriminating letters but it was not to be foreseen that she would do this.’

17.One can see immediately the context in which the first condition in Ladd v. Marshall was said to have been satisfied, namely the documents were held by one who was initially thought to be in the opposite camp.

18.Skone was applied by Mayo JA (as he then was) in Kwan Chui Kwok Ying and Another v. Tao Wai Chun and others (CACV 58/1995) where there was a prima facie case of deception.  Again the new documents there were in the possession of third parties.

19.Here the situation is different.  The documents were in the possession of the 2^nd defendant all the time. She could with reasonable diligence discover them before the trial.

No prima facie case of deception

20.In any event, I do not accept that there was a prima facie case of deception by the plaintiff in respect of his evidence on the provision of the purchase price.

21.The plaintiff’s case on the purchase of the premises is that he paid for the down payment of about HK$100,000 by a cheque of US$15,000 which he gave to the 5^th Uncle, he had been paying US$100 to US$200 per month to the 5^th Uncle for the monthly mortgage payment and he remitted US$12,000 to redeem the mortgage.

22.As found by the Judge the 2^nd defendant did not state how the deceased paid for the down payment.  In respect of the monthly payment, the 2^nd defendant said that the deceased was the holder of a bank account with Wing On Bank in which approximately $2,800 per month was paid from it to meet the mortgage instalments.  At the trial a credit advice from the Wing On Bank account was produced showing the payment of approximately $2,800.  The 2^nd defendant further gave evidence that in 2000 the deceased told her to tear up his bank passbook and credit advices for the mortgage instalment payment since the mortgage had been redeemed.  The 2^nd defendant also called her son Mr. Chow who testified that he cut up the passbook with a pair of scissors and he also tore 60 to 70 sheets of credit advice.  As to the mortgage redemption, the 2^nd defendant said that the deceased used his saving of about $100,000 to redeem the mortgage.

23.The Judge rejected the 2^nd defendant and her witness’s evidence on the tearing up of the passbook or credit advices.

24.In assessing the relevance of the new evidence, one has to bear in mind that first, the burden of establishing the resulting trust was on the 2^nd defendant and second, the 2^nd defendant only married the deceased in 2000, which was seven years after the redemption of the mortgage.  What she knew about the purchase of the premises must come from a source (i.e. the deceased if he had told her about it) which is no longer available for cross-examination.  By contrast the plaintiff and his brother’s evidence was direct evidence of the purchase which was tested in Court and the Judge had observed them in giving evidence.

The bank saving books

25.I will address first the new evidence on the 5^th Uncle’s financial position.  The 2^nd defendant produced five saving books :

1)  Wing On Bank (‘Wing On’) saving account no. 307-105-056362 for the period November 1990 to October 1993 (‘Wing On No. 1 account’);

2)  Wing On saving account no. 307-105-63626 for the period October 1993 to April 1994 (‘Wing On No. 2 account’);

3)  Hang Seng Bank (‘Hang Seng’) saving account no. 280-7-106907 for the period August 1987 to October 1989 (‘Hang Seng No. 1 account’);

4)  Hang Seng saving account no. 280-6-343980 for the period November 1989 to July 1995 (‘Hang Seng No. 2 account’); and

5)  Hang Seng saving account no. 280-6-343980 for the period July 1995 to May 1998 (‘Hang Seng No. 2 account’).

26.Wing On No. 1 account was used for the purpose of the mortgage repayment of $2,802.30 per month debited on the 16^th day of each month and also for the redemption of the mortgage.

27.Hang Seng No. 1 and No. 2 accounts were for the purpose of, amongst other things which are not apparent, the 5^th Uncle receiving his monthly salaries.  The reason why there were two Hang Seng accounts was because, according to the 2^nd defendant, the 5^th Uncle mislaid his Hang Seng No. 1 account and he had to open the Hang Seng No. 2 account to receive his salaries.  But the first book was later found and hence the 5^th Uncle had two accounts.

28.The 2^nd defendant contends that these accounts discredited the plaintiff’s case that he was responsible for the payment of the monthly mortgage or the redemption by sending remittance to the deceased.  She submitted that Wing On No. 1 account did not show any remittance of such sums.

29.What is shown in this account is that there is a regular deposit of $2,800 each month followed by a withdrawal of $2,802.30 for the mortgage payment in the following month.  That is as far as the relevance of this account is concerned.  There is no indication as to the source of the monthly deposit of $2,800.  The account also does not support the 2^nd defendant’s contention that it was the deceased who was paying this monthly sum. 

30.The Hang Seng No. 1 and No. 2 accounts also do not shed much light on the source of $2,800.  They only showed a regular pattern of payment of salary on the 16^th day of each month followed by a withdrawal of approximately the same amount by cash on the same day.

31.At most the 2^nd defendant can show that the 5^th Uncle had provided for the monthly mortgage payment and the redemption from his bank passbooks.  But it was never the 2^nd defendant’s position below that the 5^th Uncle had made any financial contributions towards the purchase of the premises.  The documents relating to the 5^th Uncle’s income are irrelevant. 

32.Further these accounts do not contradict in any way the plaintiff’s case that he had given the 5^th Uncle US$100 to US$200 per month and US$12,000 for the redemption.  As to the absence of entries of remittance either in the Wing On or the Hang Seng accounts, this assumes that the 5^th Uncle only had these two sets of bank accounts.  At this late stage of the proceedings such an assumption cannot readily be made in the absence of clear evidence.

33.The 5^th Uncle retired in December 1992 and the early redemption of the mortgage was made on 27 January 1993.  One possible theory is that the amount of $230,000 odd paid into the 5^th Uncle’s Wing On No. 1 account was his pension money, from which the final payment of $86,275.34 was made for the mortgage redemption.  However, quite apart from being a possible theory only, this again does not show that the plaintiff had not remitted US$12,000 to the 5^th Uncle.  An equally possible theory is that the US$12,000 was included in the $230,000 odd.  The evidence is simply insufficient to demonstrate that there was a prima facie case of deception by the plaintiff.

34.The 2^nd defendant now says that the deceased told her that he had invested in shares and the amount of $230,000 odd represents the proceeds of sale of the shares.  This evidence was not referred to or tested at the trial.

35.Mr. Chan further forcefully argued that considering that the deceased and the 5^th Uncle were living together, the deceased had a saving of HK$100,000 by 1985 and had joint savings with the 5^th Uncle in the sum of HK$30,000, the possibility is that the deceased might have pooled resources and income with the 5^th Uncle and contributed towards the payment and the redemption of the mortgage, thus acquiring a beneficial interest in the premises.  This would entitle the 2^nd defendant as a beneficiary under the estate of the deceased to remain in the premises.

36.Civil litigation requires the parties to put their cards on the table in order to ensure finality of proceedings.  The 2^nd defendant was represented by counsel below.  Issues in dispute were identified and adjudicated upon on their merits.  As the Judge had pointed out, on the defence’s case, the 5^th Uncle was never regarded as having contributed in any way towards the purchase or the household expenses.  It was the 2^nd defendant’s evidence in paragraph (6) of her witness statement that the 5^th Uncle was of fragile health and did not earn much, and had to be looked after by the deceased.  The Court cannot at this late stage allow a different case which had not been properly identified and tested to be raised so that it may be considered in the re-trial.  Such a course is not permissible.

The salary documents

37.The plaintiff said that the deceased retired in 1984 whereas the new documents showed that he only retired in 1987. The difference of the year of retirement which is by just a few years only does not mean that the plaintiff had perjured himself as contended by Mr. Chan.

38.The Judge’s finding was not based solely on the exact year of retirement of the deceased.  The Judge found that the deceased lost his job in 1984.  But she also considered the possibility of the deceased working until 1989 although she found the identity of the employer and his income level were unclear.  I do not consider that the new evidence had seriously undermined the Judge’s finding because what is more important is her view that the deceased by applying all his deposits and income to purchase the premises would consume all his funds and left him with virtually no means to meet his and the 5^th Uncle’s retirement life.  It was thus improbable that he would be able to afford the purchase or meet a 10 year mortgage.

39.This is a finding that the Judge was entitled to make even if it is shown that the deceased had worked until early 1987 instead of 1984.

Conclusion

40.The 2^nd defendant has failed to satisfy the burden of having the new documents admitted.  Accordingly the application is refused and her appeal is dismissed with costs to the plaintiff.  The 2^nd defendant is legally aided.  Her costs are to be taxed in accordance with Legal Aid Regulations.  I am of the view that her appeal can be handled by one counsel.  Hence I will not grant a certificate for two counsel.

Hon Kwan JA :

41.I have the benefit of reading in draft the judgment of Cheung JA.  I respectfully agree with his judgment and the orders he proposed to make.

Hon Chu JA :

42.I agree with the judgment and the orders proposed by Cheung JA.

Miss Elsie Yiu, instructed by Messrs Christine M. Koo & Ip, for the Plaintiff

Mr. Chan Chi Hung S.C. and Mr. Jeffrey Tam, instructed by Messrs Raymond Cheung & Chan, assigned by the Director of Legal Aid, for the 2^nd Defendant