TSE WAI KEE v. CHONG KIU NA

DCCJ 2751/2013

CIVIL ACTION NO 2751 OF 2013

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JUDGMENT

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Introduction

1.  This is a dispute between ex-lovers over the ownership of a property known as Flat C & Flat Roof on the First Floor of Block 2, Hong Wah Mansion, No 18 Nam Hong Street, Hong Kong (“Property”). 

2.  In this action, the plaintiff (“Mr Tse”) seeks a declaration that the Property is held by the defendant (“Madam Chong”) (collectively referred as “Parties”) on trust for the Parties as tenants in common. He also asks for an order for the transfer of it into their joint names as tenants in common in such shares as the court shall determine as well as an order for sale.  

3.  Madam Chong denies his claim saying that she is the sole legal and beneficial owner of the Property.  In reliance on a tenancy agreement (“Tenancy Agreement”) signed between the Parties in December 2012 which was post-dated 10 January 2013, she counterclaims for vacant possession of the Property, arrears of rent and mesne profits. 

Background

4.  In or around 1999, the Parties became lovers.  They started to cohabit and live together with Mr Tse’s parents at the parents’ home.  Subsequently, they cohabited at Mr Tse’s grandmother’s home.  

5.  In or around 2001, Mr Tse purchased a flat (“HOS Property”) in his sole name under the Home Ownership Scheme.  The purchase was funded with a loan secured by a legal charge granted to him.  The Parties lived in it until Mr Tse sold it back to the Housing Authority at the original purchase price in 2003.  They then lived together with Mr Tse’s parents at a property rented by Mr Tse.

6.  In or around 2004, Mr Tse rented the Property and lived therein with Madam Chong and his brother.  His brother moved out subsequently.  Subsequently, his brother moved out from it. 

7.  In or around the second half of 2006, the Parties fell apart.  Madam Chong moved out from the Property to live with her friends in Lamma Island.   Subsequently, the Parties reconciled but their relationship remained unstable. During that period, the landlord (“Landlord”) of the Property notified Mr Tse of his intention to terminate the lease (“Lease”) with him and to sell the Property. 

8.  On or around 10 October 2006, the Landlord entered into a provisional sale and purchase agreement with Madam Chong for the sale of the Property to her at a consideration of HK$1,210,000.  Formal sale and purchase agreement was signed between them on or around 21 October 2006 in that the completion date was scheduled on 14 November 2006.

9.  On or around 9 November 2006, Mr Tse entered into an agreement (“Cancellation Agreement”) with the Landlord for cancellation of the Lease effective on 13 November 2006.   

10.  On or around 12 November 2006, the Landlord acceded to Madam Chong’s request to postpone the completion date scheduled on 14 November 2006 to allow more time for the arrangement of conveyancing documents.   Subsequently, the assignment of the Property was signed between both of them. 

11.  The down payment and the purchase expenses (“Initial Payments”) were funded by a personal friend and the mother (“Mother”) of Madam Chong.  The balance of the purchase price of HK$1,038,000 was financed by the legal charge (“Centaline Charge”) granted by the Centaline Finance Limited.  Madam Chong and the Mother were the co-borrowers to the Centaline Charge. 

12.  In or around March 2010, Madam Chong mortgaged (“BOC Mortgage”) the Property to the Bank of China and discharged the Centaline Charge.  She was the sole borrower and mortgagor.  All the monthly installments under the Centaline Charge and the BOC Mortgage were paid with the funds out of her bank accounts.  

13.  Save for several months, the Parties had cohabited in the Property from the purchase of it until they broke up and Madam Chong moved out from it in late 2012.  Except for a couple of months, Mr Tse had generally paid a monthly sum of HK$3,500 to Madam Chong until the signing of the Tenancy Agreement in late 2012.  It is stated therein that the Property was leased by Madam Chong to Mr Tse at a monthly rent of HK$6,500 for the period between 24 December 2012 and 23 December 2013.  Since then, Mr Tse had paid a monthly sum of HK$6,500 to Madam Chong until 23 May 2013.

14.  On or around 10 June 2013, Madam Chong commenced an action against Mr Tse for vacant possession of the Property, arrears of rent and mesne profits in the Lands Tribunal.  On or around 12 August 2013, Mr Tse undertook to the court, on a without prejudice to his liability basis, to pay her HK$6,500 per month from 24 May 2013.  The action has then been transferred to the District Court and become inaction since then.

15.  On or around 29 July 2013, the present action was commenced.

Mr Tse’s position

16.  In relation to the main claim, Mr Tse, through his Counsel, Mr Liu, confirms that:-

(a) he abandons his claim for the sale of the Property;

(b) his claim for up to 50% beneficial interest in the Property is premised solely on common intention constructive trust.  The doctrine of resulting trust is not relied on;

(c) there was neither express agreement nor express common intention between the Parties to the effect that the Parties were to share the beneficial interest of the Property jointly;

(d) he relies on the following allegations to infer the Parties’ common understanding and intention that he is a co-beneficial owner of the Property:-

(i) his contributions to the Initial Payments through a loan granted by the Mother to the Parties;

(ii) an express agreement between the Parties that they were to pay the mortgage installments jointly;

(iii) his payments for mortgage installments and household expenses;

(iv) his renovation works and payment of maintenance expenditure.

(e) he does not rely on any post-acquisition or ambulation agreement for establishing common intention or understanding.

17.  In relation to the counterclaim, Mr Tse confirms that he no longer challenges the validity of the Tenancy Agreement.  He admits his liability to pay a monthly sum of HK$6,500 to Madam Chong pursuant to the terms of it.  The defence of misrepresentation and mistake are specifically abandoned.  He says that he signed the Tenancy Agreement at her request and for her own purpose of securing payments for the mortgage instalments from him.

Legal Principle

18.  The general law on inferred common intention is succinctly summarized in the case of Mo Ying v Brillex Development Limited and Anor [2015] 2 HKLRD 985:-

(a) for sole name case, a common intention that the other party would have beneficial interest in the property is to be deducted objectively from the conduct of the parties;

(b) a finding as to subjective intention can only be made on an objective basis;

(c) detrimental reliance is a requirement for common intention constructive trust;

(d) the burden of proof rests on any party seeking to establish that equity should not follow the law to demonstrate that the beneficial interests to be different from the legal interest and in what way.

19.  In this case, Mr Tse has to show that he reasonably believed that the Parties’ common intention as at the time of the purchase of the Property, to be deducted from their conducts, was that he was to have beneficial interest in the Property and that he had acted to his detriment on the basis of that common intention.

20.  The Parties agree the issues to be determined are:-

(1) Can Mr Tse discharge the burden of displacing the presumption that the beneficial ownership of the Property follows the legal title and prove that the Property is held by Madam Chong on common intention constructive trust for the Parties?     (“issue 1”)

(2) Has Mr Tse acted to his detriment in reliance on the common intention that he would acquire a beneficial interest in the Property?  (“issue 2”)

(3) Is Mr Tse liable to Madam Chong’s counterclaim for vacant possession, arrears of rent and mesne profits?  (“issue 3”)

Initial Payments

21.  Mr Tse confesses that he has not made any direct payment for the Initial Payments with his own money.  He admits that the Initial Payments were paid by Madam Chong with the fund from the Mother and a loan from her personal friend.  He however avers that he has made contributions to the Initial Payments for the fund from the Mother was an interest-free loan (“Alleged Loan”) granted by the Mother to the Parties which was fully repaid by them with the money realized from the BOC Mortgage (“Mortgage Money”). 

22.  Madam Chong denies Mr Tse’s contribution to the Initial Payments.  She says that the Initial Payments were all paid by her with a cash gift of HK$150,000 (“Cash Gift”) from the Mother and a loan of USD8,000 from her personal friend.  

23.  I prefer Madam Chong’s evidence to Mr Tse’s evidence.  I do not believe that the Mother has ever granted the Alleged Loan to the Parties.  Mr Tse could prove neither the payment of the Alleged Loan nor the repayment of it.  Under cross-examination, he finally confessed that he did not actually know whether the Alleged Loan had been repaid or not.  This undoubtedly undermines his allegation of being a co-borrower to the Alleged Loan and a co-owner of the Property.

24.  Even though it is his case that the Mother has offered the Alleged Loan to the Parties face to face and that it has been fully repaid by the Parties, he is unable to account for the exact amount of it, the date of such offer, the date it was drawn down and the date of repayment.  It is impossible that he would have no knowledge about such material facts. 

25.  Further, his allegation that the offer of the Alleged Loan was for the purchase of the Property in the hope that the Parties could get married is far from convincing.  Mr Tse gives no solid reason as to why the Mother would have been so desperate for their marriage after her daughter chose to leave him shortly before the purchase.  Further, it is highly unlikely that the Mother, earning a monthly salary of several thousand dollars, would have offered a substantial loan, interest free and without repayment date, to a non-family member who had just reconciled with her daughter after break-up, leaving him to make repayment whenever he has spare money. 

26.  The untruthfulness of Mr Tse’s allegation is exemplified by his another allegation that the Parties did not get married in the end because the Mother was not satisfied with the “wedding cash gift” offered by him.  It is difficult to reconcile the inconsistent positions of the Mother in the two occasions, namely the grant of the Alleged Loan on very generous terms and the objection to marriage because of the inadequate “wedding cash gift”.   Again, Mr Tse volunteered no details about the event relating to the wedding cash gift.

27.  On balance, Madam Chong’s case is more logical.  She is able to account for the details of the whole payment arrangement with documentary proof in support.  Her bank account records prove that she received HK$150,000 from the Mother as well as USD8,000 from her personal friend immediately before the acquisition of the Property.

28.  Further, as the money realised from the BOC Mortgage after the discharge of the Centaline Charge was approximately HK$194,282 (“Realized Sum”), I accept Madam Chong’s contention that she would not have sufficient fund to repay the Alleged Loan to the Mother (Mr Tse alleged to be between HK$141,600 and HK$146,000) and to share the balance of it in the sum of HK$60,000 with Mr Tse equally, being HK$30,000 for each of them as alleged by Mr Tse.

29.  I am not impressed by Mr Liu’s argument that the Mother would not have given the Cash Gift to Madam Chong because of the Mother’s humble salary and her financial burden of supporting another daughter’s overseas education.  In my view, it is natural and indeed common in Hong Kong for a mother to financially assist her child in acquisition of property.  I see no reason why the Mother would not have financially assisted Madam Chong as she did for another daughter.  It is apparently an act of a caring mother to provide a stable home for her daughter. 

30.  For reasons above, I believe that the Mother gave the Cash Gift to Madam Chong for her to purchase the Property as her own property.  The Mother has never granted the Alleged Loan to the Parties for the acquisition of the Property as their joint property. 

31.  I do not lose sight of the fact that Mr Tse had been silence on the fact that part of the purchase price of the Property was funded with a loan from Madam Chong’s personal friend until after such fact was pleaded in Madam Chong’s defence and counterclaim.  He gives no account of any facts relating to such loan or whether it has been repaid or not.  Absent any challenge to Madam Chong’s contention that she has repaid such loan all by herself,  I have no reason not to believe her.

32.  In the premises, I am satisfied that the Initial Payments were paid solely by Madam Chong with the Cash Gift and a personal loan from her friend which has been repaid by her.  Mr Tse has not made any financial contribution to the Initial Payments.

Mortgage

33.  As to the argument on whether there was an agreement between the Parties that they would jointly pay for the mortgage installments and whether the monthly payments made by Mr Tse were for mortgage installments, namely a monthly payment of HK$3,500 from the purchase until late December 2012 and thereafter HK$6,500, I prefer Madam Chong’s case. I believe that there was no such agreement and that the monthly payments made by Mr Tse were for his use and enjoyment of the Property instead of for mortgage repayment.

34.  The fact is that the Mother and Madam Chong were co-borrowers to the Centaline Charge and Madam Chong was the sole borrower to the BOC Mortgage.  Mr Tse has never been a party to either of the said two mortgages, thus, not legally liable to repay those loans.  Further, absent any solid reason for the Mother to shoulder the liability of the Centaline Charge, involving a loan of HK$1,045,985, for him, the fact that she was a co-borrower to the Centaline Charge tends to support Madam Chong’s case that the Property was her own property instead of a joint property of the Parties. 

35.  Madam Chong’s contention that she was able to pay the mortgage installments on her own and accordingly had no reason to join Mr Tse as co-purchaser was well supported by her tax returns.  From 2006 to 2013, her monthly income was close to or more than double of the monthly mortgage installment.  

36.  On the contrary, as admitted by Mr Tse and demonstrated from his bank account records, he was a renovation worker without stable income.  Throughout the years, his savings had from time to time been kept at a minimal level, usually ranging from less than one hundred dollars to several thousand dollars.  He was worse off at the time of the purchase of the Property as well as of the applications of the two mortgages.  I accept Madam Chong’s argument that financially she had no reason to join him as a co-owner.

37.  Further, Mr Tse’s bank account records match with Madam Chong’s allegation that he did not make monthly payments to her when he did not live in the Property in the second half of 2010.  Such fact also surfaced during the cross-examination of Mr Tse.  Such evidence supports her contention that his monthly payments were for his use and enjoyment of the Property instead of mortgage repayments.  

38.  I do not lose sight of the fact that Mr Tse has not adjusted or reduced the amount of his monthly payment to Madam Chong according to the amount of the monthly mortgage installment.  After the grant of the BOC Mortgage in March 2010, the monthly mortgage installment has been significantly reduced from approximately HK$6,200 (under the Centaline Charge) to around HK$5,100 (under the BOC Mortgage).  The fact that his monthly payments of HK$3,500 (prior to the signing of the Tenancy Agreement in late December 2012) were not reduced accordingly goes contrary to his allegation that his monthly payments were for paying mortgage instalment with Madam Chong jointly.

39.  By the same token, given that the monthly mortgage installment was approximately HK$5,100 at the time of the signing of the Tenancy Agreement, Mr Tse’s allegation that the Tenancy Agreement was to secure his payments for the whole sum of the monthly mortgage installment at HK$6,500 after his exclusive use of the Property is blatantly untrue. I must add that his evidence in court is that his monthly payments were solely for mortgage instalments exclusive of household expenses.

40.  In fact, Madam Chong’s allegation that Mr Tse had at times been in financial difficulties resulting in his repeated requests for loan from her, thus, her refusal to disclose the actual amount of the Realized Sum to him is supported by his bank account records as well as his pleaded case that he was short of cash and therefore unable to pay the monthly payments to her in a couple of months. At trial, Mr Tse finally agreed that the total amount of the monthly payments made by him is less than the amount of HK$304,500 as pleaded in his statement of claim. 

41.  For reasons above, Mr Tse’s allegation that the Parties have agreed to jointly repay the mortgage instalments and that he has paid the mortgage instalments is far from convincing. 

Household expenses

42.  As to the household expenses, Mr Tse’s evidence is ever-changing.  He fails to reconcile the inconsistencies between his pleaded case, his witness statements and evidence in court.    His evidence in court is that his monthly payments of HK$3,500 and subsequently HK$6,500 did not include his payments for household expenses.  On the other hand, he could not provide any solid evidence to prove his payments for the household expenses prior to his exclusive use of the Property in late 2012, still less of documentary proof. 

43.  On evidence, I prefer Madam Chong’s case that his monthly payments were payments for his use and enjoyment of the Property together with utilities.  Her case explains the reasons as to why his monthly payments were not reduced or fixed according to the amount of the mortgage instalments as well as why he did not pay for the monthly payments when he did not live in the Property.

44.  Madam Chong’s case is also in line with the previous conducts of the Parties for years.  It is common ground that Madam Chong was used to make monthly payments to Mr Tse for her use of the premises leased by him throughout their cohabitation and that her contributions were more or less the same as those paid by him or other co-occupiers of the relevant premises, including Mr Tse’s Parents and his brother. 

45.  The only exception is that Mr Tse’s Parents had lived in the HOS Property rent-free.  I however accept Madam Chong’s evidence that that exception was made in consideration of Mr Tse’s Parents’ serious financial difficulties at that time.  They had sold their residential property and had no choice but to live with the Parties. 

46.  Under cross-examination, Mr Tse admitted that there was a mutual understanding and arrangement between the Parties that one could not live in a property leased or owned by the other without paying contribution for the use and enjoyment of it and the contribution should be more or less equal.   Such admission supports Madam Chong’s case.

47.  Mr Tse alleges that Madam Chong has once gained access to his bank account and made transfers without authorization.  Lacking any solid evidence as to the dates, the amounts and the transferees of the alleged transfers, he fails to prove the truth of such allegation and the relevancy of it with the present claim. 

48.  By reason of matters set out above, Mr Tse’s allegation of express agreement on paying the mortgage instalments jointly is not true.  I also do not believe that he has ever made any direct contributions to the mortgage installments.  I find that the mortgage installments were all paid by Madam Chong.  His monthly payments were plainly for his use and enjoyment of the Property rather than for mortgage repayments.

Renovation expenses

49.  I do not believe that Mr Tse has ever carried out extensive renovation works on the Property or that he has paid substantial amounts for the renovation work or maintenance expenses as he alleged.  Those are bare allegations without solid evidence or documentary proof in support. 

50.  Further, he offers no sensible explanation as to why he could have undertaken renovation works up to an aggregate amount of HK$100,000 where no approval for renovation work or working permit was issued to him by the management company of the Property.  His explanation that he was the owner of the Property and was therefore not required to apply for such approvals is an affront to commonsense. 

51.  Taking into account of Madam Chong’s application for approval for renovation work and working permits to the contractors recruited by her for the period between 15 June 2010 and 15 July 2010 as well as her payment for the renovation deposits to the management company, I find her case that the renovation work in mid-2010 was carried out by her at her own costs in several ten thousand dollars which were paid out of the Realized Sum more convincing.

52.  Moreover, as to Madam Chong’s payment of HK$6,000 (“Renovation Sum”) to Mr Tse in mid-2010, I believe it was for the renovation work for the Property undertaken by him as demonstrated in their Whatapps messages, instead of solely for the material cost for the renovation work as alleged by him.  In any event, be that payment was for labour cost or for material cost, it tends to support her contention that he would not have carried out extensive renovation work on the Property unilaterally at his own costs without asking her for payments.  Under cross-examination, he finally confessed that he had not carried out the renovation work on the Property as promised in 2010 because of the inaction of the workers engaged by him. 

53.  Absent any solid evidence that Mr Tse had done substantial work on the Property, I accept Madam Chong’s argument that his free works for the Property were limited to some minor repair or small painting works.   There is no evidence to suggest that such works were so substantial to the extent that he could not reasonably have been expected to embark on unless he was to have an interest in the Property.  There is also no evidence to show that his works have enhanced the value of the Property or that he has undertaken them in reliance on the common intention that he would have beneficial interest in the Property.

54.  Similarly, as to his allegation that he has once paid several thousand dollars for the fire-fighting system, the contemporaneous documents show that it was Madam Chong who paid for the fire-fighting system as well as other maintenance expenditures.  There is indeed no evidence of his payment for the renovation or maintenance of the Property that raises an inference of requisite common intention. 

55.  On the evidence before me, I find Mr Tse has neither provided direct financial contributions to the purchase price nor has he undertaken to pay the Initial Payments or mortgage repayments.  I am not convinced that substantial renovation or maintenance work on the Property has been done or funded by him.  His evidence does not support the inference of an agreement or common intention that he was to have a share in the Property.  This is sufficient to dispose of his claim. For completeness sake, I will consider all the circumstances of this case to see whether the conducts of the Parties have given rise to common intention.

Financial aspect

56.  At trial, Mr Tse sought to argue that the past dealings between the Parties from January 1999 to the acquisition of the Property lend support to his case that the Parties had all along intended to own landed properties together for their matrimonial home.  I am not impressed. 

57.  No doubt that the Parties had on and off cohabited with each other since January 1999, their relationship had however turned sour and they got separated from time to time.  They had all along kept their finance independently and separately.  They operated separate bank accounts.  They did not have the practice of pooling their financial resources together or disclosing their earnings or financial status to each other.  They asked for reimbursements of expenses and repayment of loans from each other.  Their past dealings and the whatapps messages show that they were alive to their own interests and were in lack of mutual trust over money matters.  The suggestion that they intended to own landed property of substantial value together does not sit well with their past conducts. 

Purpose of purchase

58.  Mr Tse says that the Property was purchased by the Parties with a view to get married.  I am not convinced.  I find Madam Chong’s case sits comfortably with the background facts.  The Parties’ relationship was not smooth during the 14 years of co-habitation.  Shortly before the purchase of the Property, they fell apart again.  In the normal course of events, it is highly unlikely that she would have purchased the Property together with him and that the Mother would have granted him an interest-free loan of substantial sum without imposing any repayment date.  More importantly, there is simply no evidence that they have ever taken any concrete step to get married.

59.  Mr Tse’s allegation that he had once purchased a diamond ring for Madam Chong does not advance his case any further.  The ring was purchased in 2008.  He cannot seek support from such fact to prove his intention of marriage in 2006.

60.  Further, I fail to see how some people had addressed Madam Chong as Mrs Tse and that she had once mentioned about marriage would have taken Mr Tse’s case any further.  The reality remains that the parties have at no time taken any concrete steps to get married.

61.  On balance, I find the evidence of Madam Chong and the Mother more convincing.  I believe that the Property was purchased as Madam Chong’s own property as the Mother intended Madam Chong to have a stable home, to live close to her parents’ home and to live in the city instead of the Lamma Island for her safety and convenience.  The Mother therefore offered her the Cash Gift to financially assist her to achieve such intention.   The Property was chosen for it was close to the Parents’ home, within their budget and the Landlord planned to sell it.

62.  Mr Tse’s attempt to discredit Madam Chong by saying that he has not planned to live apart from her or to rent a flat for his own accommodation before the acquisition of the Property is futile.  Such argument ignores the facts that shortly before their reconciliation and the purchase of the Property, she had already left him and moved out from the Property.  Further, he was served with a notice to quit from the Landlord.  He might have been unwilling but he actually had no choice but to look for his own accommodation until Madam Chong purchased the Property and was willing to live with him.

63.  I believe that in the end Madam Chong was willing to let Mr Tse live with her in the Property as he had financial difficulty in renting a flat for himself and paying all the incidental expenses as well as his commitment to contribute a monthly sum of HK$3,500 for his use of the Property.  Her case is logical and consistent with the past dealings of the Parties and the financial situation of Mr Tse. 

Past dealing

64.  Mr Tse tries to argue that the purchase of the HOS Property is an evidence pointing to the fact that the Parties had all along intended to purchase landed property together.  I do not agree.

65.  In my view, Mr Tse’s allegation that he held the HOS Property as sole legal owner on trust for the Parties jointly is not true.  I do not believe that they jointly paid the mortgage installments or shared the profits generated from the sale of it.  His reason of not joining Madam Chong as co-owner because of her refusal to cease to be a registered member of her parents’ public house so as to mislead the relevant authority, aiming at keeping a more sizable flat for her parents is far-fetched.  Not only that he gave no solid evidence to support such serious accusation, it is not sensible for Madam Chong risking herself unlawfully and financially just for keeping a slightly bigger flat for her parents. 

66.  Further, Mr Tse’s failure to give the breakdown and calculation of the sale proceeds and the profits alleged to have shared equally with Madam Chong casts doubt on his allegation. It is also noteworthy that the HOS Property was indeed sold back to the Housing Authority at the original sale price.  There should be no profit at all.

67.  I believe, on balance, that the monthly payments made by Madam Chong when living in the HOS Property were for her use and enjoyment of it.  The amount she received from Mr Tse after the sale of it,  which was less than the amount he alleged to have shared with her as profits, was repayment of a loan owed to her.  Her contention is consistent with the fact that she was used to pay him for her use and enjoyment of the landed properties rented by him.

68.  In any event, even if, which I do not so find, the HOS Property was purchased by the Parties jointly, it was purchased in 2001 and sold in 2003, long before the acquisition of the Property.  It is difficult to see how such venture has any direct relevance to the purchase of the Property bearing in mind that it is Mr Tse’s own allegation that the profits had been shared between the Parties equally (which I do not believe).  In my view, such allegation indeed embarrasses his case.   It is illogical for the Parties with an intention to purchase a matrimonial home jointly to have shared the profits equally for their respective use.

69.  As elaborated above, I do not find Mr Tse’s parents’ living in the HOS Property rent-free is an indication that it was the Parties’ joint property.  I accept Madam Chong’s explanation that the rent-free arrangement was to support Mr Tse’s parents through their difficult time.

Mr Tse’s name was not included in the title documents

70.  The reasons for not joining him as co-owner in the conveyances or a party to the two mortgages as given by Mr Tse are self-contradictory.  His pleaded case is that Madam Chong has unilaterally handled the purchase and signed all the relevant documents without his knowledge or participation and accordingly deprived him of his right to name himself as joint owner.  

71.  On the contrary, Mr Tse’s witness statement stated that the Property was registered in the sole name of Madam Chong pursuant to an agreement between the Parties.  They had agreed that she was to hold half share of the interest of it on trust for him. 

72.  Mr Tse’s ever-changing position was exemplified by his evidence in court.  Mr Tse, through Mr Liu,confirms that there was indeed neither express agreement nor express common intention to the effect that Madam Chong was to hold part of the interest of the Property on trust for him.  Worse still, he then testified that after a discussion with Madam Chong, they agreed that he would not apply for mortgage as co-owner because of lack of income proof.  

73.  When asked to reconcile the inconsistencies among his pleadings, witness statements and testimony, Mr Tse could not offer any convincing explanation.  He is obviously not a credible witness. 

74.  As to his final position at trial that he was deprived of the chance to name himself as co-owner because of his ignorance of the arrangements relating to the signing of the conveyancing documents and the completion of the sale, I do not accept.  It is disproved by the Cancellation Agreement.  The Cancellation Agreement was to take effect just one day before the scheduled date of completion. Even though the date of completion was subsequently postponed, it is impossible that he would not have been aware of the signing of the various conveyancing documents and the completion date as the whole arrangement had a direct impact on his right to live in the Property. 

75.  It is clear from the evidence of the Parties at trial that the Cancellation Agreement was to satisfy the requirement of the Centaline Charge that the Property could not be subject to a tenancy with a non-owner.  It was therefore signed in a rush resulting in Madam Chong paying compensation to the Landlord for postponement of the completion date so as to allow more time for the preparation for the completion. Her contention is well supported by contemporaneous documents.  It is impossible that Mr Tse had no knowledge of those arrangements.

76.  Further, the reasons he gave for entrusting Madam Chong with handling the purchase and mortgage of the Property are unconvincing.  The reason that he himself had solid experience in purchasing landed property and taking out mortgage through his purchase of the HOS Flat and accordingly entrusted Madam Chong with handling the purchase and the mortgage of the Property was inexplicable.  He failed to explain the relevance and causation between the two events.   

77.  More importantly, such reason is in direct contradiction to his another reason that he entrusted Madam Chong with such tasks because he was not competent to handle the purchase and mortgage of the Property.  Suffice it to say that throughout the years, he was the one who rented or purchased premises for accommodation.  I have no hesitation in finding that this is just another clear example of his untruthfulness.  Likewise, his allegation that he had no time to handle the purchase and accordingly entrusted Madam Chong with the task is rejected for the same reason.

78.  The reason that Madam Chong had experience in working in law firm and therefore insisted on handling all arrangement by herself is unimpressive.  Given that her experience was limited to junior clerical work in a law firm many years ago, I am convinced by her contention that her limited experience would not have caused Mr Tse leaving all the arrangements for the purchase and mortgage to her without any involvement if he had an interest in the Property.

79.  Having considered each and every reason given by Mr Tse, I find none of them to be true.

The BOC Mortgage

80.  Mr Tse’s untruthfulness is further revealed by his evidence relating to the BOC Mortgage.  His case is that the application for the BOC Mortgage was to implement the Parties’ plan to purchase another landed property or to replace the Property.  He alleges that even though the plan had not been carried out, the BOC Mortgage was obtained for the purpose of repaying the Alleged Loan.  He says that the Mortgage Money, after discharging the Centaline Charge and the Alleged Loan, was shared between the Parties equally, thus, HK$30,000 (“Sum”) for him. He says that the Sum evidenced his beneficial interest in the Property.

81.  On balance, I find Madam Chong’s contention that her application for the BOC Mortgage was to obtain a loan more beneficial to her as well as to realize some cash for renovation of the Property and her own use more convincing.  I believe her allegation that the Sum was indeed a loan to Mr Tse.  She has never shared the Mortgage Money with him as co-owner nor repaid any loan to the Mother as he alleged.

82.  Firstly, it is impossible that Mr Tse could not account for any details about his alleged purchase plan or targeted property, still less of the reasons of not carrying the plan out.  His alleged purpose of the BOC Mortgage is plainly untrue.

83.  Secondly, given that Mr Tse’s alleged purchase plan had not been carried out, it is an affront to commonsense that the Parties would have continued obtaining the BOC Mortgage for the purpose of repaying an interest-free loan (without repayment date) to the Mother, bearing in mind that the BOC Mortgage was by nature a loan which carried interests.

84.  Thirdly, Mr Tse’s admission under cross-examination that he actually did not know whether the Alleged Loan had been repaid and the exact amount of it renders his case on this issue wholly unbelievable.

85.  On the other hand, the fact that the BOC Mortgage was more beneficial to Madam Chong as compared to Centaline Charge supports her case.  It offered a more substantial loan which carried lower interest rate, lesser amount for monthly instalment and longer repayment period.  Coupled with the renovation work arranged by her in mid-2010, I accept her case that the BOC Mortgage was applied partly for carrying out renovation work for the Property and partly for her personal use.

86.  Madam Chong’s allegation that the Sum was a loan to Mr Tse sits well with the fact that he had been in financial difficulties from time to time.  I accept her explanation that she had to protect herself from disclosing the actual amount of the Realized Sum to him, apparently for avoiding him from asking for substantial loan from her. 

87.  Further, in light of the unstable relationship of the Parties, I accept her explanation for not taking any legal action, other than sending whatapps messages, for the repayment of the Sum was to prevent herself from hanging on with him.  I also accept her answer for not deducting the Renovation Sum from the said loan was because she needed his renovation work as his charges were more reasonable than other contractors. 

88.  Mr Tse’s admission of failing to carry out the renovation work he promised to do in mid-2010 supports Madam Chong’s allegation that the substantial renovation work in mid-2010 was arranged and paid by her out of the Realized Sum.  He then moved out from the Property and ceased paying the monthly payments during the months of his absence.

89.  In fact, Mr Tse’s complaint that Madam Chong had spent the part of the Realized Sum for her personal use, including payment of credit card debts and tax, does not assist his case but tends to indicate her sole ownership of the Property, thus, her full use of the Realized Sum.

90.  In my view, the Parties’ conducts relating to the BOC Mortgage support Madam Chong’s case that she is the sole beneficial owner of the Property.

Tenancy Agreement

91.  As to the fact that Mr Tse entered into the Tenancy Agreement with her and has made monthly payment of HK$6,500 to her from late 2012, Madam Chong avers that it was a genuine tenancy agreement between the Parties whereby she leased the Property to him for his exclusive use on the terms contained therein.  Pursuant to it, she moved out from the Property and continued to receive monthly rental payments from him until 24 May 2013.

92.  At trial, Mr Tse admitted that he indeed had no defence to the counterclaim and the Tenancy Agreement was valid and binding on him. He however alleged that he had signed it at her request for her purpose of securing his payments of mortgage installments.  On balance, I find Madam Chong’s allegation more convincing. 

93.  Firstly, his entering into the Tenancy Agreement is inconsistent with his allegation that he is a co-owner of the Property.  Secondly, his explanation that he signed it for the purpose of pacifying Madam Chong is unsustainable.  The Tenancy Agreement is entitled formal tenancy agreement which contains the fundamental and usual terms of a tenancy agreement.  The usual obligations of the landlord and tenant are specified therein.  He is obliged to pay rent, to return the Property upon termination of the tenancy and is not allowed to sub-let the Property. 

94.  On the other hand, Madam Chong is entitled to terminate the tenancy upon any breach of the terms by Mr Tse.  She is obliged to pay government rents, tax and management fees as landlord.  In summary, all the terms point to the single fact that she is the owner of the Property while Mr Tse is a tenant.

95.  Thirdly, the fact that the Tenancy Agreement is for a term of one year rather than the whole term of the BOC Mortgage runs counter to Mr Tse’s allegation that it was designed to secure payment of mortgage installments from him.  On the contrary, it supports Madam Chong’s case that she only planned to lease the Property to Mr Tse on a short-term basis to enable him to look for an affordable flat for his own accommodation.

96.  Fourthly, the fact that Mr Tse had added a number of tenancy terms into the Tenancy Agreement demonstrates that he was not only in a position to bargain with Madam Chong, he actually had considered the terms of it and designed various terms to protect himself as a tenant.  Obviously, those terms were wholly unnecessary if not to protect him as a tenant.  In particular, the term that he has already paid one month deposit to Madam Chong undermines his allegation that the Tenancy Agreement was to secure his mortgage repayment only. 

97.  The other terms he added were to secure his exclusive possession of the Property by prohibiting Madam Chong’s entry or leaving any property in it without his approval.  His explanation that his addition of those terms was to play a trick on her is nonsensical and unbelievable.

98.  Fifthly, his hostility to her found vent in the terms he added.  His allegation that his entering into the Tenancy Agreement was to please Madam Chong and to mend the relationship with her could not be true.

99.  Sixthly, none of the terms imposed any duty or liability of paying mortgage installment on him. Lacking any sensible explanation, it is unbelievable that the Parties would not have simply signed an agreement to secure the payments for mortgage installments from Mr Tse but took all the troubles to draft, re-draft and sign a tenancy agreement instead.

100.  Seventhly, Mr Tse’s explanation at trial on his demand for rental receipts were to test if Madam Chong really meant to rent the Property to him is in direct contradiction to his whatapps messages at the material times.  In the latter, he demanded rental receipts for his application for public housing.  Absent any explanation on the inconsistency, the contemporaneous communication should be attached with more weight. 

101.  Not only that the Parties’ post-acquisition conducts run against Mr Tse’s case, his words in the whatapps messages also serve as declarations against his case.  It has never been mentioned that the Tenancy Agreement was for the purpose of securing mortgage payments from him or that the Property was belonged to the Parties jointly. Instead, his demand for two-year tenancy instead of one year, his admission on liability to pay rent and his threat to remove all Madam Chong’s belonging with the removal expenses be deducted from the rent payable by him all contribute to confirm his intention of entering into the landlord and tenant relationship with Madam Chong. 

102.  It is true that Mr Tse has subsequently sent out several whatapps messages asserting his contribution to the mortgage repayment.  However, those messages were only sent to Madam Chong many years after the acquisition of the Property and apparently in contemplation of legal proceedings.  They were contradicted to his position in the past.  They are self-serving, equivocal and lack of details.  They attract no weight and could not be found in his favour.

103.  Taking all the circumstances into account, I take the view that Mr Tse entered into the Tenancy Agreement with full knowledge and intent that it was a binding tenancy agreement between the Parties.  It is a genuine and valid tenancy agreement that is legally binding on the Parties.  I am satisfied that Madam Chong, being the sole legal and beneficial owner of the Property, leased it to Mr Tse for rent.  It is not an agreement to secure mortgage repayment from him.  He was a tenant but not a co-owner.  Madam Chong has proved her counterclaim. 

104.  Mr Tse is liable to pay for the monthly rental payment of HK$6,500 from 24 December 2012 to the termination the Tenancy Agreement due to his failure to pay rent on 24 May 2013.  In any event, the tenancy expired on 23 December 2013.  He is duty bound to deliver vacant possession of the Property to Madam Chong which he failed to do despite repeated requests.  Mesne profits are claimed at the rate of HK$6,500 per month, i.e. the same rate as per the Tenancy Agreement.  Madam Chong is therefore entitled to recover mesne profits at a monthly rate of HK$6,500 from him until the delivery of vacant possession. 

105.  Given that the Parties confirmed at trial that Mr Tse had already paid a monthly sum of HK$6,500 to Madam Chong up-to-date and that there was no outstanding payment by then, an order enforcing Mr Tse to make rental payments or pre-trial mesne profits to Madam Chong is not necessary.  In the premises, he shall be liable to pay mesnse profit since then until his delivery of the vacant possession of the Property, giving credit to any payments he has made during this period.  

106.  It is well established legal principle that no pre-judgment interest shall be awarded for mesne profits. see Purton Investment Limited v Hui Ping Kam HCA4174/ 1989 Master Chan 5 January 1990. 

Credibility

107.  In consideration of Mr Tse suffering from illness, I have allowed resting periods for him from time to time during his cross-examination.  My observation is that he could fully understand the questions and express himself clearly without difficulty.  For the reasons set out above, I do not find him to be a credible or honest witness.

108.  The Mother and Madam Chong are complained to have intentionally painted a distant relationship between Mr Tse and the Mother.  I do not agree.  I accept Madam Chong’s explanation that her silence to the Mother on her relationship with Mr Tse, their cohabitation and residences for years until 2004 was to avoid disappointing her parents as she was young at that time and the parents were traditional.  I am not of the view that the whole series of acts raise any issue of credibility on her. 

109.  The complaint that the Mother was unable to account for the dates or details of several events involving Mr Tse does not stand bearing in mind that those events were just casual gatherings which took place many years ago.  They were not of any particular importance to the extent that they should have captured her memory.  

110.  Having examined all the evidence before me, I find the evidence given by the Mother and Madam Chong is logical and consistent with the background facts.  Their evidence remained unshaken despite extensive cross-examination.  For any inconsistent evidence between Mr Tse, Madam Chong and the Mother, I prefer the evidence of Madam Chong and the Mother.

Conclusion

111.  Having considered all the evidence, legal authorities as well as the oral and written submissions of both parties, I find that Mr Tse has neither undertaken any liability to pay the Initial Payments and mortgage instalments nor made any direct contribution to them.  He has not done any substantial renovation or improvement work on the Property or substantially funded such work.

112.  I have carefully examined the relationship of the Parties, their personalities, their past dealings, their conducts and the overall circumstances both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust.  I find there is no evidence that justify the inference necessary to the creation of a constructive trust.  There is no factual basis either at the time of the purchase of the Property or at some later date for a common intention to share the beneficial interest in the Property to be established, inferred or input in this case.

113.  In the premises, for issue 1 and 2, I rule against Mr Tse. His claim is bound to fail.  I form the view that he has no beneficial interest in the Property at all.  As to issue 3, I find Madam Chong has succeeded her counterclaims on the delivery of vacant possession of the Property and the mesne profits.

Order

114.  I order that:-

(1) Mr Tse’s claim be dismissed;

(2) Mr Tse do deliver the vacant possession of the Property to Madam Chong within 28 days from the date hereof;

(3) Mr Tse do pay mesne profits at a monthly rate of HK$6,500 to Madam Chong from 24 May 2015 to the date of delivery of vacant possession of the Property.

Costs Order

115.  Costs follow the event.  I make an order nisi that the costs of this action including the main claim and the counterclaim and all costs reserved, be paid by Mr Tse to Madam Chong in accordance with section 19(1) of the Legal Aid Ordinance, Cap. 91.  Certificate for counsel is granted. The Parties’ own costs be taxed in accordance with the Legal Aid Regulations.

116.  In the absence of application to vary by summons within 14 days, the costs order nisi shall become absolute.

117.  I thank both Counsel for their assistance.