Mak Yuk King v. The Personal Representatives of Wong Wah Wai, Deceased

HCA 850/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 850 OF 2009

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BETWEEN

(By Original Writ and Order to carry on dated 11 June 2009)

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J U D G M E N T

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1.On 8 July 2008 Wong Tak Seng (“the deceased”) died intestate aged 75. In these proceedings the plaintiff (“Mdme Mak”) claims that upon his death she became entitled to three assets, which were all in the deceased’s sole name, absolutely. The three assets, which formed the bulk of his estate were, a flat at Flat A, 1/F Yiu Cheong Lung Building, 239 Lai Chi Kok Road, Kowloon (“the flat”), a credit balance in the Bank of China (“the cash”) and certain shares held by Ho Fung Shares Investment Ltd (“the shares”). The property was purchased in 1999 for $1.18 million, the cash at the time of death was $1.087 million and the shares were worth approximately $1.5 million at the time of death and are now worth $2.14 million.

2.The defendant (“Mr Wong”) is the deceased’s son.  He claims to be entitled to all the assets to the exclusion of the Mdme Mak.  Mdme Mak’s case is based on her claim that since about 1993 she and the deceased’s relationship was that of man and wife albeit that there had been no formal marriage.  The defendant’s pleaded defence is little more than non admissions.  He does not admit that Mdme Mak was his father’s de facto wife, he originally claimed she was merely an employee.  In evidence however, he added a second, somewhat inconsistent, limb to his defence suggesting that between 1993 and 2008 she had benefitted sufficiently from the deceased’s assets and she was not entitled to any more.

3.The legal basis upon which Mdme Mak makes her claim is twofold.  First, she seeks to prove a common intention constructive trust which, if established on the evidence, would enable the court to declare beneficial ownership of all or part of the assets in the estate in her favour.  Secondly, and in relation to the flat only, she relies on the principle of donatio mortis causa which again, if established by the evidence, would result in the whole beneficial interest in the flat being transferred to her.

4.The outcome of this case depends heavily on the court’s evaluation of the witnesses.  Mdme Mak gave evidence and called five witnesses.  Mr Wong gave evidence and called one witness.

5.The fact finding exercise is crucial in this case.  I will therefore refer to the evidence in some detail.

The facts

6.The following are the facts of this case as I find them to be based on the evidence given.  It is upon the facts as herein set out that I apply the legal principles upon which Mdme Mak relies.

7.The deceased first married in China in 1954 when aged 21.  He and his first wife only lived together for about 6 years until 1960.  He then went to Macau.  His son, Mr Wong, was born soon after he left.  In 1961 the deceased moved to Hong Kong where he lived and worked for the next 47 years until his death in 2008.

8.The deceased had no contact of any relevance with his first wife after 1960.  He provided some financial support until about 1972, but none thereafter.  In 1982 he received a letter from the People’s Court of Xin Hui County which, inter alia, contained a proposal from his wife that she divorce him and a request as to whether he agreed to such a proposal.  He did not reply.  The deceased had regarded himself as ‘single’ for many years after the separation.  There had been no marriage in the meaningful sense of the word since 1960.

9.The deceased only met his son, Mr Wong, for the first time in 1980 when he was aged 20.  In evidence Mr Wong attempted to portray a good relationship between himself and his father.  The weight of the evidence however suggested the opposite.

10.The deceased had helped Mr Wong to get established in Macau by purchasing a flat for him in 1992 for MOP 400,000.  (By this time he had met Mdme Mak and she had encouraged him to make the purchase).  Mr Wong has lived in Macau since.  He has brought up a family there.  He now has four children of his own.

11.In evidence Mr Wong exaggerated the regularity of his contact with the deceased.  His claim of frequent visits for periods of about 2 weeks each was contradicted by other evidence.  His travel records since 2000 revealed on average 3‑4 visits per year and during the last 4 years of the deceased’s life those visits were for about 2 hours each time, returning to Macau the same day.  Between June 2004 and July 2008, Mr Wong entered Hong Kong from Macau only 8 times and on every occasion returned the same day.  When the deceased was in hospital for 1‑2 months prior to his death it was Mdme Mak who dealt with the formalities in the name of his ‘wife’, rather than Mr Wong as next of kin.  For example the consent forms for surgery and anesthesia were signed by her.  Mr Wong’s involvement, however, increases after his father’s death.  He obtained the death certificate, he applied for the administration of the estate and he settled the funeral expenses (albeit from money released from the deceased’s bank account by court order).

12.No photographs of him or his children with the deceased were produced in evidence, whereas photographs of the deceased with Mdme Mak and her daughters were produced in abundance.  For example, vacation photographs, family banquets and, in particular, photographs of Mdme Mak’s younger daughter’s wedding in London were all produced.

13.Evidence was also given by Mdme Mak, which I accept, of the deceased and his son quarrelling.  The infrequent occasions when Mr Wong came to Hong Kong were not always happy occasions.  The picture given, which I believe to be accurate, is of a strained relationship; remote not close.

The relationship between the deceased and Mdme Mak

14.Having had various types of employment in Hong Kong the deceased set up a Chinese medical practice in the 1980’s based on his personal knowledge of Chinese herbs and medicines.  He gave free medical advice but derived income from the sales of herbs and medicines to his patients.

15.Thus, at the age of about 50, having lived alone in Hong Kong for about 20 years and without owning any property, he started up in business.  He did not employ any staff until he met Mdme Mak in about 1989.  She first met the deceased when she went to his clinic as a patient.  They got to know each other and Mdme Mak soon became the deceased’s first (and only) employee and was paid about $4,000 a month.

16.The relationship developed and she became his ‘de facto’ wife in about 1993.  I fully accept Mdme Mak’s evidence that she worked very hard at the clinic.  She made it cleaner, busier, more profitable and more successful.  She and her family helped by collecting herbs from the hillsides in Hong Kong and over the border.  She acquired many herbs for the clinic in this way (for free) and also at cheaper prices from contacts in the mainland.  At the clinic her daily routine was to get up very early, prepare herbs, boil teas, attend to customers and so on.  She and the deceased ran the business together.  After 1993 she was no longer paid a wage.  The business provided for their joint income.

17.Mdme Mak had 2 young daughters when she first met the deceased.  The deceased brought them up as his own after 1993.  1993 was the year in which Mdme Mak divorced her former, husband, who had left her and her daughters about 10 years earlier, and the year in which they formally announced, by way of a banquet in her home village in Panyu, to her relatives that their relationship had become one of ‘de facto’ man and wife.  Mdme Mak’s first husband died the next year.

18.As stated before, dozens of photographs were produced covering many years all showing normal family occasions.  The deceased’s commitment to Mdme Mak is particularly illustrated by his generosity to and concern for the welfare of her two daughters.  He contributed over $1 million over a five year period towards the younger daughter’s education in U.K. and on the occasion of her marriage, also in U.K., he gave her a gift of £10,000.  He also helped with the education of her elder daughter by contributing approximately $200,000 towards it.  On many occasions family vacations were taken, sometimes all four went, sometimes just the deceased and Mdme Mak and sometimes the deceased and a daughter.  On the latter occasions Mdme Mak remained in Hong Kong to run the clinic.  All such vacations were evidenced by photographs.

Assets

19.The three assets in issue in these proceedings can all be said to have been acquired since and as a result of the deceased and Mdme Mak becoming de facto husband and wife.  The only source of income was from the business and it was the improving fortunes of the business which (a) funded the purchase of the property in 1999, (b) sourced the cash in the deceased’s bank account and (c) enabled the purchase of the shares.  The improving fortunes of the clinic can be largely attributed to Mdme Mak’s contribution and influence. 

20.I am satisfied that the reason that all these assets were in the deceased’s sole name is twofold.  First, the deceased was of a particular generation, background and culture to whom it would be regarded as normal to put such assets in his sole name.  Moreover Mdme Mak was of a similar background who would not question it.  Secondly, there were particular reasons given in evidence which I accept.  One particular reason for putting the property into the deceased’s sole name was so as not to jeopardize Mdme Mak’s entitlement to her public housing unit which she held in Shatin.  Similarly, when the shares were bought their advisor said words to the effect that “There is no need for joint names as you are man and wife.” 

21.The business was run on a cash basis and the deceased’s bank account reflected the increasing profits therefrom.  A joint bank account was opened which was used solely for housekeeping matters.  It usually had a modest credit balance for this purpose.  It was suggested that because the business had flourished and because it was a cash business Mdme Mak may have benefitted financially in her own account.  This was a speculative suggestion based on evidence concerning the monthly turnover of the business.  I consider that no weight be attached to the suggestion.  I reject the notion that Mdme Mak would have or could have hoarded funds from the business for her sole benefit.

The flat

22.All the evidence suggests that the flat became the matrimonial home.  It had three bedrooms.  The business was also run from the property.  The deceased and Mdme Mak shared a bedroom.  They had lived together in their previous accommodation but in much more cramped conditions.  I accept that the purchase of the flat was a joint decision designed to improve their family circumstances.  I reject completely Mr Wong’s suggestion that it was purchased, partly in connection with a possible move for him from Macau to Hong Kong.  The totality of the evidence points to the fact that in 1999 his circumstances played no part at all in the buying of the flat.

23.Mdme Mak’s five witnesses each supplemented the overall picture with small but important pieces of evidence. Mdme Mai Zhong Chang was Mdme Mak’s nephew’s wife.  She knew of the relationship since 1993.  She visited Hong Kong from China regularly and was able to confirm the domestic arrangements and the working arrangements.  She heard the deceased make disparaging remarks about his son.  A lifelong friend of Mdme Mak’s, Li Qiong, was able to confirm the deceased’s attitude towards his son by reference to comments he made when she was helping to comfort him when very ill in hospital in Guangzhou in 2008.

24.A cousin, Mak Kam Chuen (a Hong Kong resident) corroborated Mdme Mak’s evidence concerning her contribution towards making the business a success.  She also recalled an incident in the early 1990’s when the deceased’s ex wife and daughter came to Hong Kong to visit but he refused them entry to his clinic.  Kong Zoek Kai had been a security guard of the building in which the matrimonial home was situated.  He had known Mdme Mak and the deceased for over 10 years, he thought they were married.  They were known as Mr and Mrs Wong.  Finally, Zhang Ze Tao, Mdme Mak’s nephew-in-law lent her $270,000 when the deceased was ill in 2008.  This money was needed for his hospital treatment.  He underwent serious surgical treatment and had many scans etc.  The money could not be obtained from the deceased’s bank account because he was hospitalized in China and so Mr Zhong helped out.  He is still waiting to be repaid.  He produced an I.O.U. in support of this loan.

Credibility

25.It will be obvious from all of the above that I found Mdme Mak and her witnesses to be reliable.  I am satisfied that the true picture of the relationship came from them. Mr Wong however did not give an accurate picture of his relationship with his father and his attempt to portray Mdme Mak as an employee for many years after 1993 was hopeless.  He was not willing to concede Mdme Mak’s entitlement to any of his father’s assets.  He was unwilling or unable to face the weight of the evidence which contradicted his case.  His claim that she was a mere employee and also that she had “had enough already” was untenable.

Representations

26.Reliance is placed on a number of representations uttered by the deceased in her later life.  Placed in the context of the foregoing overall picture the representations relied on are entirely believable.  Mdme Mak said that the deceased had said to her that he would take care of her and her daughters and that there was nothing to worry about “even if he died”.  In March 2008 when he was becoming seriously ill he assured her that “the money” was hers.  When in hospital in Guangzhou in June 2008 he said that he would put the flat into joint names when he got back to Hong Kong.  In fact he died in early July 2008 and had not done so.  Li Qiong who was helping to look after the deceased when in hospital gave similar evidence.

27.Consistent with these representation is the unchallenged fact that when the flat was first purchased, the deceased handed over the title deeds to Mdme Mak for safe keeping.  Thereafter, presumably content in the knowledge that she had them, he never asked to see them again.

The legal bases to Mdme Mak’s claims

1.  Donatio Mortis Causa

28.This principle is solely relevant to the flat. I am satisfied that all the necessary ingredients are made out by the evidence. When seriously ill the deceased made statements to the clear effect that he wished Ms Mak to inherit the flat in the event of his death.  I do not doubt that he made this intention clear.  He confirmed in words, knowing of his serious illness, the natural consequence of his actions, years earlier, when he gave her the title deeds.  In my judgment by his words prior to death he converted her custody of the title deeds into a gift of the property after his death.  A similar situation is specifically dealt with by Professor Borkowski in ‘The Law of Donatio Mortis Causa’ (1999):

“[t]he delivery need not be made at the same time as the donor expresses his intention to give. It may be made before or after the words of gift, as, for example, in Sen v Headley [1991] 2 All ER 636, CA where the donor slipped the keys to his house and to a steel box (containing the deeds) into the donee’s handbag some time before he expressed his intention that she should have the house on his death. The antecedent delivery was sufficient. Sometimes such delivery may have been made to the donee for some purpose other than making a gift, but the later words of gift will transform the bailment into a donatio.” [at 6.3]

29.Thus the ingredients of (a) an intention (b) expressed with the real possibility of death occurring in the near future and (c) that the property will pass on death are all satisfied.  His statement when in hospital that he would put the house into joint names when he returned to Hong Kong (presumably having recovered from his illness) reflects his intention as to her entitlement at that time. Whether or not he would have in fact done so cannot be predicted.  It nonetheless remains the case that the gift was to take effect upon death. 

2.  Constructive Trust and/or Proprietary Estoppel

30.This principle is relevant to all three assets and if made out permits the possibility of apportionment.  Four ingredients must be considered:

(a)  did the deceased and Mdme Mak share a common intention that they were beneficially entitled to the assets in issue?

(b)  did the deceased make any representations to that effect?

(c)  did Mdme Mak rely on such common intention or representation to her detriment?

(d)  would it be unconscionable for Mr Wong to deny whatever Mdme Mak’s beneficial interest might be.

31.My findings of fact clearly result in questions (a), (b) and (d) being answered in the affirmative.

32.As for ingredient (c) Mr Newman Lam, counsel for Mr Wong, submits that it has not been satisfied.  In short he submits that she and her daughters far from it being to her detriment in fact benefitted financially from any such intention. Moreover, it is submitted, that Mdme Mak would have conducted her life in the same or similar way regardless of whether any representations had been made.  Thus, any representations by word or deed that may have been made were not relied on.

33.Mr Lam developed the argument further.  I have merely paraphrased it.  However, I do not accept the submission.  I think it places too narrow an interpretation on the words reliance and detriment.  In a case such as this one does not look for “detriment” in a hypothetical analysis of the finances and one does not look for ‘reliance’ on a hypothetical appraisal of what motivated Mdme Mak to conduct her life after meeting the deceased in the way she did.

34.In my judgment the elements of detriment and reliance are satisfied by a common sense view of the entire duration of the relationship.  Once they committed themselves to each other in 1993 she devoted herself to him and his business.  She took no salary, she worked long hours, she made the business sufficiently profitable for them and her daughters to live on.  She trusted the deceased to continue to provide for her and her daughters after his death, as he had done during his life.  She permitted the assets to be in the deceased’s sole name, without question.  She did not try and persuade him to write a will.

Apportionment

35.The court was informed, towards the end of the trial, that the costs of the funeral expenses and a sum of $300,000 for Mr Wong’s legal expenses has already been deducted from the deceased’s bank account.  In round terms therefore about $500,000 remains in that account.

36.My findings in this case lead me to conclude that Mdme Mak be declared entitled to absolute beneficial ownership of the flat.  Given that significant sums have already diminished the deceased’s bank account, I conclude also that she be entitled to the whole of the remaining balance.  In so declaring I assume that the $300,000 released from the account to Mr Wong for his legal expenses has been used for that purpose.  I have taken into account the fact that he has had the benefit of that sum.

37.Finally, I do not think Mr Wong should leave entirely empty handed.  When considering what apportionment would be just in all the circumstances the court has a discretion but cannot impute an intention which would be contrary to the evidence.  It is a difficult exercise which amounts to, in effect, second guessing what a will might have said had one been written.  Bearing in mind that the deceased purchased a flat for his son in 1992 I do not think he would have wanted to disown him completely when he died.  I consider an equitable apportionment of the remaining asset, namely the shares, would be a 50:50 split.  I therefore declare that Mr Wong be entitled to a 50% share of the deceased’s share portfolio as set out in Liu, Chan & Lam’s letter to the court dated 7 February 2013.  

38.For the sake of completeness I now turn to two factual issues which featured at trial.

(a)  Medical expenses

39.As a separate item Mdme Mak is claiming a sum of $400,000 being the amount she paid in medical expenses during the deceased’s illness.  This sum has not been satisfactorily particularized.  I accept, however, that because of the nature of the deceased’s illness and the length of his stay in hospital the expenses would have been significant.  The most reliable part of her evidence on this issue concerned the loan from her nephew-in-law for $270,000 which was supported by an I.O.U.  The bulk of the balance was made up by, according to Mdme Mak, a loan from her elder daughter in the sum of $120,000.  I do not think it necessary to make a separate order in respect of this claim.  I have taken it into account when declaring the balance of the deceased’s bank account to be Mdme Mak’s absolutely.

(b)  Panyu property

40.A few days before trial the defence produced evidence concerning the purchase of a flat in Panyu village on the mainland. It was purchased in 1997 for approximately $220,000 in the joint names of the deceased and Mdme Mak’s younger daughter.  Again Mdme Mak’s evidence concerning this flat was not clear.  She was not involved in its purchase and only visited it for vacation purposes.  She said it was sold for approximately the same price ($220,000) to another relative in 2005 because at that time the deceased was ill and in hospital and money was required for medical expenses.  She agreed that there is no documentary evidence that the deceased had sold his interest in that flat.  She said his signature was not necessary because it was between relatives.

41.Mr Lam placed some reliance on the “Panyu flat” issue.  He submitted it reflected poorly on Mdme Mak’s credibility and it demonstrated that the deceased was willing to put property into joint names if he so wished.  With this background it could be inferred that the deceased’s choice to put the Hong Kong property into his sole name was because he did not wish Mdme Mak to have a beneficial interest in it.

42.Her vagueness on this issue may be attributed to her lack of involvement in it.  In any event, in my judgment undue weight was placed on it.  Its relevance was marginal and it did little to diminish the reliability of Mdme Mak’s evidence on the key issues in the case.

43.I invite the parties to draw up the appropriate order consistent with my decisions in paragraphs 28-29 and 36-37 above.  I also make a costs order nisi that the defendant pays the plaintiff’s costs to be taxed if not agreed.

Mr Ken To, instructed by Joseph Leung & Associates, for the Plaintiff

Mr Newman Lam, instructed by Liu, Chan & Lam, for the Defendant

Please refer to CACV47/2013 for the relevant appeal(s) to the Court of Appeal.