Yim Bo Ying v. Chung Iu Warm

CACV000125/1984

Equity - clean hands - public policy and the presumption of a resulting trust.

Where the Defendant himself disclosed by the case he pleaded and sought to prove that, having paid the purchase price for the whole of a building, he had had part of it conveyed into the Plaintiff's name (his mother-in-law) so that much less stamp duty was paid, it would be against public policy to permit the presumption of a resulting trust in his favour to arise. This principle is one of general application and is not limited to cases where it is sought to rely on evidence of an improper purpose to rebut the presumption of advancement.

BETWEEN

Coram: Sir Alan Huggins, V.-.P., Silke & Fuad, JJ.A.

Date of Hearing: 21 March and 1 April 1985

Date of Judgment: 19 April 1985

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JUDGMENT

__________

Fuad, J.A.:

1. This appeal concerns the beneficial ownership of part of a building. It is described as "The 1st Floor and Roof of the Building on Section B of Lot No.817 Section B in Demarcation District No.226, Tseng Lau Shue, Hang Hau, New Territories". The parties to the dispute are the Plaintiff Madam Yim Bo Ying, and her son-in-law Mr. Chung Iu Warm, who is the Defendant.

2. The hearing of the action in the Kowloon District Count has met with many and appalling vicissitudes. Madam Yim issued her Writ against her son-in-law as long ago as the 13th October 1981. Mr. Chung filed his Defence with a Counterclaim on the 5th November and the case first came before the District Court on the 11th December when the Plaintiff's Particulars of Claim were slightly amended. The action was heard by the Judge on the 19th October 1982 when he dismissed Madam Yim's claim and gave judgment for Mr. Chung on his Counterclaim. The learned Judge, as he explains, then adjourned the hearing to enable him "to record the judgment in writing". Thereafter, thinking that he had acted without jurisdiction, he decided that the action should be heard de novo in the High Court, and so ordered. Leave to appeal against this order was granted by the Judge to Mr. Chung on the 19th January 1983.

3. After Mr. Chung had obtained leave from the Master to set down his appeal to the Court of Appeal out of time, the appeal was heard on the 13th December 1983. The Court of Appeal held that the District Judge had had jurisdiction to hear the action and allowed the appeal. The Court ordered the Judge's judgment to be restored, and remitted the case to him to enter that judgment.

4. It appears that the order of the Court of Appeal was not filed until sometime in March 1984, and it was not until the 9th June 1984 that the Judge entered the restored judgment. Madam Yim then. wished to appeal but delayed (apparently there were negotiations between the parties) and had to obtain leave to appeal out of time. The Judge granted leave on the 19th June 1984.

5. When the Judge called for the original file so that he could record the reasons for his decision in favour of Mr. Chung, the file could not be found. Fortunately the Judge had available a copy of the "appeal bundle" prepared for the hearing before the Court of Appeal on the 13th December 1984, which contained the record of proceedings and photocopies of all the exhibits.

6. It was thus not until the 14th December 1984 that the Registrar forwarded the Judge's written Reasons to the parties. In these Reasons the Judge said "Having read the evidence and perused the exhibits I am confident I can recall the case sufficiently for me to comment on the evidence adduced."

7. I now turn to the pleadings. By her amended Particulars of Claim Madam Yim claimed that she was the registered owner of the premises in question. She averred that she had allowed her daughter Chow Tak Yin (who has since died) to move into the premises with her husband, Mr. Chung, "without payment". The licence thus granted to her daughter was revocable by notice or on her own death or that of her daughter; and it was determined by the death of her daughter on the 19th December 1978. Despite repeated oral requests, she alleged, followed by a solicitor's letter of the 1st September 1981, the Defendant had remained in the premises as a trespasser "and has further converted the said premises to his own use". Madam Yim claimed possession and mesne profits; alternatively damages for trespass and conversion.

8. Mr. Chung pleaded by his defence that he had bought the whole building in which the suit premises are situate in July 1976 for $150,000 and that at his request those premises had been conveyed into the name of Madam Yim. The following two paragraphs are important and so I will read them out:-

"	4.     It was the common intention. of the Defendant and the Plaintiff prior to and at the time of the said purchase and/or the execution of the said conveyance and assignment that the Plaintiff was to hold the said estate right title and interest in the said premises on trust for the benefit of the Defendant.
	5.    Further and/or alternatively the Plaintiff was at all material times prior to and at the time of the said purchase and/or the execution of the said conveyance and assignment well aware and had full knowledge of the Defendant's said intention particularised in paragraph 4 supra."

9. Mr. Chung averred that by reason of this arrangement, the premises were held by Madam Yim "upon an express and/or implied and/or resulting trust" for his benefit.

10. He counterclaim for a declaration to that effect and for orders directing Madam Yim to convey title to the premises to him.

11. Before I leave the pleadings I will read the Further and Better Particulars of paras.4 and 5 of the Defence which the Defendant supplied:-

"	Under Paragraph 4
	The Plaintiff was informed sometime in early July 1976 by the Defendant and his wife, prior to the execution of the said conveyance, that the Plaintiff will use the name of the Plaintiff as the registered owner of the said premises to save stamp duty on the conveyances and that the said use of the Plaintiff's name in the said conveyance was solely for the said purpose and no others. The Plaintiff consented to the use of her name in the said manner and for the said purpose and did execute the said conveyance pursuant to such an arrangement.
	Under Paragraph 5
	See the particulars supplied under paragraph 4 supra."

12. The original documents snow, inter alia, the following. On the 11th June 1976 the then owner of the property, Tat Lee Construction Ltd.  leased the whole building, including the suit premises to Mr. Chung for three years. On the 30th July 1976 these transactions took place:-

(a)	Tat Lee assigned the suit premises to Madam Yim for $75,000, and they were eventually registered in her name;
(b)	Madam Yim mortgaged the suit premises to Tat Lee for $25,000.

13. Tat Lee later re-assigned the premises to Madam Yim on payment of the sums covered by the mortgage of the 30th July "1976. The mortgage was a complicated device, it seems, to secure the balance of the purchase price, after the initial deposit had been made.

14. Only the parties themselves gave evidence before the Judge. Mr. Chung said that he owned the Chi Lack Machinery Factory and had moved his business to the suit premises in 1976. After he had been there for a short time he decided to buy the whole building because Tat Lee wanted to increase the rent. He was unable to finance the purchase himself and so he borrowed money from one of his customers in Singapore. He produced copies of letters he said he had written for this purpose (but not any replies he might have received).

15. Mr. Chung then testified that he had been told that if someone else bought the first floor, he would have to pay less stamp duty. He added: "All the money was paid for and financed by me. I merely made use of my mother-in-law's name." Among the other documents he produced was a receipt for the $10,000 deposit. This was in Madam Yim's name but he said that it had been paid by two cheques drawn by him. He also produced a number of receipts for the instalments due, all in Madam Yim's name and said that they were all paid by him, using sometimes personal cheques, sometimes cheques drawn on his firm's account, and sometimes cash. He had let the premises out in August 1977 and moved back in 1978.

16. Mr. Chung also showed the Court a number of receipts. relating to the premises showing that he had met some of the electricity and insurance bills.

17. The Defendant produced copies of two letters written by his wife (the Plaintiff's daughter) to their own daughter, clearly to be read by the girl long after her mother's death for she was only a few months' old at the time. They are deeply moving. They are both dated the 9th October 1978 (Mr. Chung said in evidence that he had dated them because his wife had forgotten to do so.) It will be recalled that she died on the 19th December 1981. In the first she expresses her hopes for her daughter and urges her to be a good girl and useful to society. She praises her husband and asks her to be tolerant of his occasional bad temper. It is only possible to surmise why he produced this touching letter.

18. The second letter is more pertinent, and I think it is necessary to read it out in full: -

"

My beloved daughter Hoi Yin,

The premises now situated at the 1st floor, Block B, Lot No.817, Tseng Lan Shue Village, Clear Water Bay is bought by the hard earning saving of your father. When this premises was bought, it was bought in the name of your grandmother. This is because at that time your grandmother did not understand and approve the marriage between me and your father, therefore she treated your father prejudicially. Fortunately your father worked hard on his business and was able to buy his own premises. And in order to beg for your grandmother's forgiveness and make her happy (it was therefore bought in her name). Our plan of buying the premises is that when your father grows old and retires closing down his business, he can rent out the property to subsidize your future living and education expenses until you grow up. Your father will give you this only memorial property if you can understand your parents' wishes, be a hard-working, simple good daughter. But I am worried that if your grandmother listens to outsider's command and control and if the property is to be resold, therefore your guardian, your father (as well), Chung Iu Warm can bring this my will. to certify that no one can resell (this property). Only my beloved daughter Hoi Yin is entitled to inherit."

19. In cross-examination Mr. Chung reiterated that he had placed the property in his mother-in-law's name to save stamp duty, on  the advice of his broker and not of his solicitors. He denied that his wife had used her mother's money for the purchase.

20. Madam Yim then gave evidence. She said she was 70 years old. she said she had given all her money ($100,000) to her daughter for safe custody. She had saved the money from a business she had run with her own mother in Macau. She had worked as an amah in Hong Kong after her arrival in Hong Kong but had stopped work when her granddaughter had come along. She had come to know Mr. Chung when he had cohabited with her daughter and she had become pregnant. She had first objected to the liaison but had later relented. She expressed the. belief that the suit premises had been bought with her money, and in cross-examination said that her daughter had told her so. She said she believed her daughter would be honest when death approached.

21. I mean no disrespect to those who represented the parties in the Court below, but the Judge was presented with a very difficult duty due to the scantiness of the evidence and the way in which the respective cases were presented; and the failure to ask questions in chief and in cross examination) which spring so easily to mind.

22. In his judgment, the learned Judge recounts the history of the proceedings and reviews the evidence, oral and documentary. In commenting on the "Singapore letters" he noted that the Defendant had not produced "any of the correspondence received from his benefactor in Singapore."

23. I will now read the remainder of the judgment in full:

"	I had the opportunity of seeing both parties give evidence and although a great deal of time has passed the impression the Plaintiff made as a witness still remains as a vague, uncertain person who was far from convincing.
	I was well aware throughout that the various documents produced by the Defendant could equally be consistent with his being the occupier and manager of the suit premises rather than the beneficial owner. I was also careful to remind myself that the burden of proving the existence of a trust fell squarely on the Defendant on the balance of probabilities.
	The actual amount which the Defendant believed he would save by putting the suit premises in his mother-in-law's name has not been made clear and it was important that I give careful consideration to this because one does not take such a step without good reason.
	Two possible motives were suggested in the evidence. The first, by the Defendant, centred around the duty that would be avoided. The other, put forward in a letter from the deceased's wife suggested that it was done to seek his mother-in-law's forgiveness and make her happy. The avoidance of taxes and duties has been an obsession with mankind for centuries and I was satisfied. that the Defendant entirely accepted the advice he received about the saving of duty and acted upon it. His late wife's suggested reason was, in my view, the vision of a devoted wife rather than 'down to earth' realities which I have attributed to her husband. I was satisfied that on all the evidence before me and after assessing the credibility of both parties that the Defendant's version. was the correct one and I accordingly made the orders which he sought in his counterclaim. In doing so the Plaintiff's claim had to be dismissed with costs awarded to the Defendant and a certificate for counsel."

24. By saying that he accepted the Defendant's version, one can only conclude that the Judge accepted that he had paid all the purchase money for the premises and that the assignment was made in. the Plaintiff's name for the sole reason of saving stamp duty:

25. Although he does not mention the concept in his judgment, it must be (and this is how Counsel understood it) that the Judge applied the equitable rule that where property is transferred to a person other than the person providing the consideration for the transaction, the transferee holds the property on trust for the person providing the consideration - an implied or resulting trust - unless a contrary intention appears.

26. I remark in passing that the Defendant appears to have abandoned part of the case he pleaded. I have already read paras.4 and 5 of the Defence and the further and better particulars supplied. He was, of course, bound by those particulars. But he did not seek to prove by evidence that Madam Yim had been informed of the arrangement to have the premises conveyed into her name to save stamp duty; that she had agreed to the use of her name solely for that purpose; and that she had executed the conveyance in pursuance of such an understanding.

27. I must now mention two other documents that the Defendant produced. These were letters written by the Defendant's deceased wife. Both are dated the 15 October 1978. The first (presumably "To whom it, may concern") was translated thus:-

"        I, Chow Tak Yin, I suffering from cancer and is on the verge of death. Now I decide to give the property known

No.23, Tam Sham

as (1st floor, Block B, Lot No.817,) Tseng Lan Shue Village, (Clear Water Bay) to my husband, Mr. Chung Yiu Warm, and transfer to his name so that he can accept and administer it. This letter is. specially made as proof."

The second, addressed to the Sai Kung District Office, in translation, was in these terms:-

"I, Chow Tak Yin, request that the property

No.23, Tam Sham

known as.(1st floor, Block B, Lot No.817,) Tseng Lan Shue Village, (Clear Water Bay,) Licence No.6878, be transferred into the name of my husband, Mr. Chung Yiu Warm, as a gift since I am suffering from cancer and my condition is very critical. Therefore it is my most sincere wish to especially request the carrying but of the transfer of name formality. I hereby salute."

28. When we first saw these letters during the hearing of the appeal, in view of the way the translations had been prepared, we enquired of Counsel whether they had in fact been properly translated. It transpired that they had not, and that the true translation of each letter required the words in parentheses to be omitted, leaving in their place just the expression "No.23, Tam Sham". At first, Counsel for the Respondent told us that he accepted that the letters referred to the suit premises but when we went into the matter further, it became clear that they did not, and Counsel withdrew his concession. Inadvertently the Judge had been misled when he said in his judgment, referring to the "several letters ostensibly written by the Defendant's wife", "These letters seek to explain why the suit premises were put in her mother's name and requesting that they be restored to the name of her husband" The latter part of this sentence can only be a reference to the two letters I have just read.

29. Since the Judge immediately thereafter commented "It is significant that the Plaintiff did not dispute the authenticity of these letters" it may well be that he placed some reliance on the mis-translated letters in favour of the Defendant. This is unsatisfactory.

30. With due respect to the Judge, his judgment does not make it clear whether he rejected Madam Yim's evidence that she had given a large sum of money to her daughter to manage for her and had asked the daughter to buy a flat for her; and that her daughter had told her that the suit premises had indeed been bought for her. It is true that the judge found her an unconvincing witness but it was not necessary to disbelieve Madam Yim (who could not say what had happened to her money) to find for the Defendant. As I read the notes of her cross-examination, the Defendant was not challenging her evidence that she gave all her savings to her daughter and later told her to buy a flat for her. I think Madam Yim was entitled to an express finding on this in the light of the fact that the "Singapore letters" showed clearly that a few weeks before the flat was bought the Defendant was short of money and apart from his mere "say so" he did not produce evidence to show how he came to be in funds.

31. It is trite law that the presumption of a resulting trust in favour of a person who has paid the purchase money for property is rebutted if there is an indication of an intention at the material time to benefit the person to whom the property is transferred [see HALSBURY (4th Edition) Vol.48, para.605]. The second letter by the Defendant's wife, intended for the eyes of her infant daughter when she grew up, indicated a "contrary intention", for if what she wrote revealed the true position, then, even if the Defendant had indeed paid all the purchase money out of his own resources, the letter, on its face, shows that a gift to Madam Yim was intended.

32. The Defendant did not attempt to explain the grave inconsistency brought to light by the letter he himself produced (no doubt to bolster up his case). I have already read what the Judge said about this, and in my judgment, with profound respect, he strayed into the realms of pure speculation so that his decision on this vital. issue is vitiated. In my  judgment the Defendant was entitled to a finding on this matter untainted by mere conjecture.

33. These matters incline me towards a decision that would involve a re-trial (much though this is would be a matter for regret). Ore final consideration reinforces this view. The Judge here, through no fault of his own, was writing his judgment two years after he had seen the witnesses. I have no doubt whatever that he did his best and fully appreciated the handicap under which he was working, but since his judgment is based principally on his assessment of the demeanour of the parties, on the case as presented in the District Court, I think that ` justice would dictate that there should be a re-trial so that if the parties' demeanour remained critical, this handicap would be removed. But other considerations arise.

34. I recounted, at the beginning of my judgment, the tortuous history of these proceedings. As it happened a new ground of appeal was sought to be introduced when we began hearing this appeal on the 21st March. Since, as will be seen an issue of public policy had been raised, I agreed with my Brothers that leave should be given to Miss Sze to argue the new ground. This necessitated an adjournment to give time to Mr. Jerome Chan, for the Respondent, to consider the point. This was the new ground:

"        That the learned trial judge, when accepting that the purchase money was in fact made by the Defendant, erred in ruling that there was a resulting trust in favour of the Defendant when it was against public policy to permit such presumption of resulting trust to arise in the instant case when. the admitted purpose for the Defendant to vest the suit premises in the name of the Plaintiff was improper and illegal, namely, to save stamp duty which was otherwise payable to the Government."

35. Gascoigne v. Gascoigne⁽¹⁾ established the proposition that where a person pats property into the name of his wife or child, he is not permitted to rebut he presumption of advancement thereby raised by leading evidence that his motive was not one of advancement but in reality to effectuate an illegal or immoral purpose. There a man took a lease of land in his wife's name and built a house on it with his own money. This he did to save his property from his creditors, and his wife knew about the motive and connived in the transaction. When the man later claimed the beneficial interest, Lawrance, J. and Lush, J. held that he could not be allowed to rebut the presumption of advancement by setting up his own "illegality and fraud" - whether or not the point had been taken at the trial.

36. The same principle was applied in Re Emery's Investment Trust ⁽²⁾ by Wynn-Parry, J. In that case a husband bought American bonds in the name of his wife, who was a citizen of the U.S.A., to evade American Federal tax. The intention found by the Judge was that the spouses should own the bonds in equal proportions in equity. It was held that the presumption of advancement could only be rebutted by proof of the intent to evade tax, and the husband would not be permitted to prove this intent. And so, despite the fact that the wife was a party to the design, she was entitled to retain the whole.

37. This line of authority was approved in Tinker v. Tinker⁽³⁾ where a husband conveyed property into his wife's name so that it could be protected from his creditors if his new garage business failed. His attempt to rebut the presumption of advancement failed. Lord Denning, M.R. said this at page 141:

"....I am quite clear that the husband cannot have it both ways. So he is on the horns of a dilemma. He cannot say that the house is his own and, at one and the same time, say that it is his wife's.  As against his wife, he wants to say that it belongs to him. As against his creditors, that it belongs, to her. That simply will not do. Either it was conveyed to her for her own use absolutely: or it was conveyed to her as trustee for her husband. It must be one or other. The presumption is that it was conveyed to her for her own use: and he does not rebut that presumption by saying that he only did it to defeat his creditors. I think it belongs to her."

38. Another case cited to us was Palaniappa Chettiar v. Arunasalam Chettiar⁽⁴⁾ where, strangely enough, the earlier authorities to which I have referred do not appear to have been mentioned. The facts were that a father who owned 139 acres of land cultivated with rubber in Malaya transferred 40 acres to his son for a purported consideration which had never been paid. He did this so that he would be more favourably assessed under certain statutory regulations. When the father asked his son to execute a power of attorney so that a sale of the 40 acres to a third party could be effected, the son refused. The father was not permitted to rebut the presumption of advancement. Lord Denning, giving the judgment of the Judicial Committee of the Privy Council said at page 302:

"

The father had also to get over this. pertinent question: If he intended the son to take as a trustee, why did he not insert on the memorandum of transfer the words 'as trustee' and register the trust as he could have done under section 160 of the Land Code?

In these circumstances it was essential for the father to put forward a convincing explanation why the transfer took the form it did, and the explanation that he gave disclosed that he made the transfer for a fraudulent purpose, namely, to deceive the public administration into thinking that he only held 99 acres of land and his son 40 acres, whereas in truth he himself meant to hold the whole 139 acres. Once this disclosure was made by the father, the courts were bound to take notice of it, even though the son had not pleaded it: see Scott v. Brown, Doering, McNab & Co.

What, then, was the effect of this disclosure? If the fraudulent purpose had not been carried out, there might well have been room for repentance and the father might have been allowed to have the land retransferred to him, as in the cases to which Mr. Stabb referred, such as Davies v. Otty and Symes v. Hughes, to which might be added Petherpermal Chetty v. Muniandy Servai where the subject was fully considered by their Lordships' Board. But where the fraudulent purpose has actually been effected by means of the colourable transfer, there is no room for repentance. The father has used the transfer to achieve his deceitful end and cannot go back on it. He cannot use the process of the courts to get the best of both worlds - to achieve his fraudulent purpose and also to get his property back. The courts will say: 'Let the estate lie where it falls,' see Sajan Singh v. Sardara Ali and Kiriri Cotton Co. Ltd. v. Dewani."

39. It will have been seen that all these cases involved the presumption of advancement. However, Groves v. Groves⁽⁵⁾ was not such a case. There the plaintiff alleged that he had purchased and paid for an estate. His case was that he had bought the estate in the defendant's ancestor's name with a view to giving him a vote for the county. At the conclusion of his judgment at pages 174-175 the Lord Chief Baron said:

"The plaintiff asks for equity and does not come with clean hands to receive it. It appears to me that I ought to dismiss this bill upon every one of the three grounds to which I have referred:- first, . because the fact, that the plaintiff advanced the money, is not satisfactorily proved; secondly, because, if the plaintiff did in fact advance the money, there seems reason to suppose, that originally the parties did not understand that Simon was bound to convey the estate as and when the plaintiff should direct; and lastly, because the illegality of the plaintiff's original purpose should, under all the circumstances, prevent this Court from aiding him."

40. Mr. Chan submitted on behalf of the Respondent that the issue of "improper motives" was only relevant where the presumption of advancement was involved. It was only that presumption that was not rebuttable by evidence of an improper motive. All the cases were examples of this, save Groves v. Groves⁽⁵⁾ which established no new principle, for the true basis of the decision in that case was that the Court was not satisfied that the Plaintiff had in fact advanced the purchase money for the estate.

41. Mr. Chan argued that all the Defendant had to do in this case was to prove that he had paid all the purchase money for the suit premises - the presumption of a resulting trust would then arise by operation of law. He was not (as was the position in the presumption of advancement cases) obliged to rely on his own illegality to advance his claim.

42. It seems to me that all the cases are founded on the basic principle that he who seeks equity must come with clean hands to receive it. I respectfully agree with the learned editors of SNELL (28th Edition) p.182 where it is said "There is no resulting trust where it would be against public policy to permit the presumption", relying on Groves v. Groves ⁽⁵⁾ ,

43. I do not say that the position might not have been different had Mr. Chung himself not disclosed the purpose for which the property he said he had paid for was conveyed into Madam Yim's name. In such circumstances the case of Haigh v. Kaye⁽⁶⁾ might have applied. Lord Denning referred to that case in Chettiar v. Chettiar⁽⁴⁾, at page 301, in these terms:-

"In the conveyance it was stated that a sum of ￡850 had been paid by the defendant for it. The plaintiff proved that no such sum was paid and claimed that the defendant was a trustee for him. Now 'in that case the plaintiff had no reason to disclose any illegality and did not do so. It was the defendant who suggested that the transaction was entered into for a fraudulent purpose.  He sought to drag it in without pleading it distinctly and he was not allowed to do so."

44. In our case, by paras.4 and 5 of his Defence, as further particularised, Mr. Chung himself revealed the purpose for which Madam Yim's name had been used, and gave evidence to like effect.

45. Mr. Chan also contended that it would be unfair to the Defendant if this Court were to decide the controversy between the parties on the grounds of public policy in all the circumstances for Mr. Chung had had no opportunity of putting forward any innocent explanation for his course of conduct that he might have had; Mr. Chung might not have realised that what he was doing was illegal; this Court did not know what instructions he gave his solicitors or what advice he might have been given.

46. Apart from what he pleaded in his Defence, and the Further and Better Particulars, this is what Mr. Chung said in evidence in chief:-

"I had already purchased the ground floor and I was told if I also purchased the first floor I would have to pay a lot more stamp duty. If someone else bought it, it would be free of tax. That is why I bought it in my mother-in-law's name. Document 7 shows the stamp duty paid was only $20. Originally the purchase price of the ground floor was $90,000 and the first floor $60,000. We just divided the total price in two, i.e. $75,000 for each. All the money was paid for and financed by me. I merely made use of my mother-in-law's name."

In the Judge's notes of Mr. Chung's cross-examination, the following passage occurs:-

"	Q.	You say the whole reason you placed the property in your mother-in-law's name was to avoid stamp duty?
	A.	Yes."

47. The documents produced by Mr. Chung show, and it is so conceded, that only $20 stamp duty was paid in respect of the property conveyed into his name, and $20 in respect of the suit premises. His Counsel at the trial, in reply to a submission by the opposing Counsel that the Defendant's reasons for putting the property into Madam Yim's name were incredible, told the trial Judge that the saving in stamp duty had amounted to $6,400.

48. In my respectful opinion the passage I have cited from the judgment of the Privy Council in Chettiar's case ⁽⁴⁾ gives a guide as to the proper approach of a court asked to grant equitable relief in this kind of case. In our case Mr. Chung had to answer the same "pertinent question" as Mr. Chettiar, senior, had had to answer - particularly since there was evidence that he and Madam Yim had not been on good terms. It was therefore essential for [the Defendant] to put forward a convincing explanation why the transfer took the form it did, and the explanation that he gave disclosed that he made the transfer for a fraudulent purpose, namely to deceive the Collector of Stamp Revenue into thinking that it was proper to charge duty at a rate that would be considerably less than the duty chargeable had both parts of the building been conveyed into his name, whereas in truth he himself meant to hold the beneficial estate in the whole building. "Once this disclosure was made.... the courts were bound to take notice of it, even though [the Plaintiff] had not pleaded it."

49. In my view, what Lord Denning, M.R. said in Tinker v. Tinker⁽³⁾, at page 141, is also helpful. Paraphrasing his words to accommodate the case before us, Mr. Chung, too, was on the horns of a dilemma, for he carrot say that the property in dispute is his own and, at the same time, say that it is Madam Yim's. As against her he wants to say it belongs to him; to the Collector he wants to say something on these lines - "Although the vendor disposed of the title to the whole building on the same day, the sale and purchase of the ground floor and cockloft formed an entirely separate transaction from that of the first floor and roof for I bought the former and Madam Yim the latter."

50. Once Mr. Chung revealed that he had realised that more stamp duty would have been due if the truth had been known that the purchaser of both parts of the building had been the same person, I do see what he could have told the Court (had this issue been canvassed at the hearing) that would satisfactorily have resolved the dilemma of his position. I would respectfully echo and adopt the phrase Lord Denning himself adopted from another case: "This simply will not do." It is to be noted that in Tinker v. Tinker⁽³⁾ the Court of Appeal accepted the Registrar's finding that the husband had acted honestly, and yet he was held not entitled to succeed.

51. It should not be overlooked that the principal relief claimed by the Defendant was a declaration. This is, of course, a discretionary power which in my view a Court would be most hesitant to exercise in Mr. Chung's favour in all the circumstances, the authorities cited to us apart.

52. My conclusion on this issue would render an order for a retrial foreshadowed earlier in my judgment, pointless.

53. For these reasons I would say "Let the estate lie where it falls" (Chettiar v. Chettiar⁽⁴⁾, at page 303). I would therefore allow the appeal and set aside the declaration and the consequential orders made in the Defendant's favour, and make appropriate orders in favour of the Plaintiff in the form that I understand the Vice-President will propose.

Sir Alan Huggins, V .-P.:

54. I have come to the same conclusion.

55. The Defendant adduced no evidence to support his pleading of an express trust. The alleged resulting trust depended upon a payment by the Defendant of the purchase price for the suit premises with his own money. Throughout I was doubtful whether the implicit finding that the money was the Defendant's was correct, but I was anxious whether there was sufficient ground upon which we could interfere with that finding. The Defendant adduced no evidence of a writing to support his allegation of a contract to buy the whole house at a price of $150,000, and the weight of the evidence appeared to me to suggest that the $75,000 paid for the suit premises was part of the savings placed by the Plaintiff in the custody of her daughter. As Fuad, J.A. has said, there were numerous obvious matters which called out for investigation and about which neither party was asked. Nevertheless, the judge said that, "after assessing the credibility of both parties", he was satisfied that the Defendant's version of the entire events was the correct one.

56. The judge appeared to rely heavily on what he deemed to be the inherent likelihood of the two possible motives suggested in the evidence for the Defendant's putting the suit premises in the name of the Plaintiff:

"The first, by the Defendant, centred around the duty that would be avoided. The other, put forward in a letter from the deceased's wife, suggested that it was done to seek his mother-in-law's forgiveness and make her happy. The avoidance of taxes and duties has been an obsession with mankind for centuries and I was satisfied that the Defendant entirely accepted the advice he received about the saving of duty and acted upon it. His late wife's suggested reason was, in my view, the vision of a devoted wife rather than the 'dawn to earth' realities which I have attributed to her husband. I was satisfied that on all the evidence before me and after assessing the credibility of both parties that the Defendant's version was the correct one."

To the extent that this conclusion was based on his view that the daughter's opinion, expressed in one of her letters, was wrong rather than that it was merely to be given very little weight it was, I think, mere speculation. Had the judge said simply that he preferred the oral testimony of the Defendant (whom he had seen) to the written testimony of a witness he had not seen and who was giving only her assessment of the Defendant's motive, we would probably not have been asked to review his decision. The question is whether we can be sure that the judge would have come to the same conclusion if he had not speculated in the way he did: is there a real danger that his assessment of the credibility of the evidence was affected by his speculation? The judge found the Plaintiff to be "a vague, uncertain person who was far from convincing", but he never said that he disbelieved her unchallenged evidence that she had paid over her savings to her daughter and had subsequently asked her to buy a flat. It is, of course, true that, even if the judge had believed the Plaintiff on these matters, there was no direct evidence that the daughter did hand over part of the Plaintiff's savings to the Defendant to buy the suit premises. Perhaps more important is the fact that the judge did not appreciate that the two letters dated the 15th October, 1978 and written by the Plaintiff's daughter to her daughter did not in fact refer to the suit premises at all. Had they done so, they would have been inconsistent with the testimony of both parties, but this was one of the matters left uninvestigated. The judge appears to have thought that these two letters were among those which sought "to explain why the suit premises were put in her mother's name and requesting (sic) that they be restored to the name of her husband". I am persuaded that there is a real possibility that, if all the evidence had been properly considered,  he might have come to a different conclusion. But for the additional point which has been argued, therefore, I would have reluctantly agreed to a retrial.

57. That additional point seems to me conclusive in favour of the Appellant. In asking the Court to declare a resulting trust in his favour the Defendant seeks Equity. He come before us admitting that his object in taking an assignment of the suit premises in the name of the Plaintiff was to evade stamp duty. Fuad, J.A. has reviewed all the authorities cited to us and I respectfully agree with the broad statement of principle which he has adopted from Snell's Principles of Equity (28th Ed.) 182:

"There is no resulting trust where it would be against public policy to permit the presumption."

No useful purpose would be served by my repeating what he has said.

58. I, too, would allow the appeal and enter judgment for the Plaintiff on the claim and counterclaim. There should be an order for possession and for payment by the Defendant of mesne profits from the 19th of December 1978, to be assessed by the Registrar if not agreed.

(1)    [1918] 1 K.B. 223

(2)    [1959] Ch. 410

(3)    [1970] P. 136

(4)    [1962] A.C. 294

(5)    (1829) 3 Y. & J. 163

(6)    (1872) L.R.7 Chi. 469

Silke, J.A.:

59. My Lord Fuad, J.A. has set out the matrix of' facts with sufficient particularity and, with respect, clarity to make any reiteration by me unnecessary.

60. Of it I would simply say that I am not quite so impressed as was the trial judge - and I am not unmindful of the bizarre history of this action in so saying - with the validity of the evidence of the defendant.

61. It is at least strange that the defendant should place the suit premises in the name of his disapproving mother-in-law for the reasons which he has advanced - the saving of, to him, an unknown amount of stamp duty.

62. The plaintiff's evidence of her having handed over her life savings to her daughter and of her request that the daughter buy her a flat with the proceeds was not fully explored at trial. As I understand it the daughter had, by then, a child. In the normal course of events the daughter, in her early 30s, would be expected to outlive the mother who was in her mid sixties. It was the plaintiff's uncontested evidence that she had been unhappy with the liaison her daughter had formed with the defendant.

63. It is also noteworthy that the defendant totally failed to give any evidential backing to the particulars which he pleaded of an express agreement as between himself and his mother-in-law. Further there lies against him the contents of one of his own. documents, the dying mother's letter to her young daughter which sits ill with his basic contention that he simply intended to save the duty for it clearly implied a gift to make the mother-in-law "happy".

64. I do not, however, find it necessary to consider whether, in coming to the decision which he did, the trial judge was wrong in his findings as to the specific facts nor whether he took into consideration that which he should not or failed to consider that which he should.

65. The issue, in my judgment, turns on the new ground of appeal which Miss See Kin has, by leave, argued.

66. Gascoigne v. Gascoigne⁽¹⁾ may not, on its facts, be in terms with the situation here. Its principles however are applicable and Mr. Chan has not, despite his research and endeavours, persuaded me to the contrary. While that report was not before the Judicial Committee nevertheless a similar line was taken in Chettiar v. Chettiar⁽²⁾.

67. The defendant here seeks an equitable finding from this Court: that there did arise, accepting his evidence at trial, a resulting trust based upon his provision of the purchase monies for the flat.

68. I have, as did the Lord Chief Baron in Groves v. Groves⁽³⁾, doubts as to the defendant's proof. Even more I do not think that the stated illegality of the defendant's purpose can now assist him in the seeking of an equitable remedy. From his own unequivocal evidence it is clear that, having leased the entirety of the house, when to buy it the total consideration was split into two halves -$75,000 being apportioned to the top floor and $75,000 to the bottom floor. The amount of duty in each case would have been $20. This avoided, again if the defendant's evidence is accepted, the payment of proper stamp duty on a full consideration of $150,000. I do not see how the defendant can now seek to resile from or further explain that clear evidence.

69. It is clearly established that there can be no resulting trust where it would be against public policy to permit of the presumption. The defendant's hands are not clean in his seeking of an equitable remedy and in the circumstances here, as we know them, I would find against the erection of the presumption and decline to uphold the trial judge's finding of the existence of a resulting trust.

70. I, too, would allow the appeal and agree with the Orders which the Vice-President proposes.

(1)     [1918] 1 K.B, 223

(2)    [1962] A.C. 294 (PC)

(3)    (1829) 3 Y, & J. 163

Representation:

Miss Sze Kin (Peter C. Wong & Co.) for the Plaintiff/Appellant

Mr. Jerome Chan (Yung, Yu, Yuen & Co.) for the Defendant/Respondent