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DCCJ 1917/2018
[2021] HKDC 378
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 1917 OF 2018
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| BETWEEN |
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LAI KO CHOY |
Plaintiff |
and |
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LAI KIN (黎健) |
1st Defendant |
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KWONG LAI SIM (鄺麗嬋) |
2nd Defendant |
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Before: Deputy District Judge George Lam in Court
Dates of Hearing: 12, 14 – 16 October 2020
Date of Judgment: 9 April 2021
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JUDGMENT
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INTRODUCTION
1. The plaintiff is an 85-year-old gentleman coming back from Orange County, California of the United States. He asks the Court to grant him an order to get back his property in Hong Kong. Unfortunately, the defendant is his son (the 1st defendant), whom he said he loves most even today. The 1st defendant’s love and respect for his father is no less. During the 1st defendant’s early childhood, there was a period of 4 to 5 years when the plaintiff raised the 1st defendant all by himself, living in Guangzhou, Mainland China while the younger son was living with the mother in their home village far away. That was when the plaintiff and the 1st defendant had developed an extremely strong bonding.
2. The plaintiff said he had given HK$600,000 to the 1st defendant to have purchased a property, with the said sum as down payment, in Hong Kong on his behalf in 2003. The purchase price was then HK$1 million.
3. The property concerned is a residential unit at Flat 2705, 27th Floor, Block B, Kai Tin Towers, 61 Kai Tin Road, Lam Tin, Kowloon (“the Property”) registered under the joint names of the 1st defendant and the 1st defendant’s wife (the 2nd defendant).
4. The 1st defendant said the sum of HK$600,000 received was an outright gift from his father, the plaintiff, in support of the purchase of his matrimonial home. The current market price of the Property is agreed at HK$6.55 million.
5. By this action, the plaintiff seeks a declaration that the defendants had been holding the Property on trust for him.
6. The rateable value of the Property as of the date of the Writ was HK$146,520 and therefore this case is within the jurisdiction of this Court.
BACKGROUND
7. The plaintiff was born in Vietnam in 1935. Subsequently, he moved to Mainland China where he married his wife, who is also from Vietnam. They gave birth to their sons Lai Kin (the 1st defendant) in 1963 and Lai Chun Ming Milton (“Milton”) in 1971 in Mainland China.
8. In the 1960s, the plaintiff worked as a technician in a factory in Guangzhou and he also had to take up the mother’s role in taking care of the 1st defendant. His wife was a doctor in Vietnam but could not practice in China. She stayed in the home village in another distant county to take care of the younger son Milton. The plaintiff described how he was exhausted for those years in raising the 1st defendant by himself and, according to his memory, that was how much he loved the 1st defendant and how their close relationship was developed.
9. In 1973, the plaintiff and his entire family migrated to Hong Kong. They resided near the plaintiff’s mother-in-law in Happy Valley. It was in an old building. The children went to school and grew up in that local area. The plaintiff worked as a printing staff at a newspaper company. His wife worked as a helper for other people’s families.
10. In 1981, they moved to another old building in Wanchai. Milton got admitted to a top high school. But the 1st defendant, after finished Form 5 in high school, had to start working at the age of 18 and making contributions to the family’s expenses. He worked as an electrical technician at the Sanatorium Hospital in Happy Valley, and he would give a portion of his monthly salary to his father as savings for him.
11. In 1989, the plaintiff’s family, except the 1st defendant, immigrated to the United States on the ground of family reunification with their overseas relatives. The 1st defendant was left behind in Hong Kong because he, being the elder son of the family, was then over 21 years old at the time, falling out of the dependent category in the family’s application. No matter how reluctant they were when the family was being parted, the 1st defendant had to remain in Hong Kong by himself.
12. In 1995, the 1st and 2nd defendants got married. It was until 1996 that the plaintiff and his wife together with Milton came back to Hong Kong for the tea ceremony (the customary Chinese ceremony for the celebration of marriage) of the defendants, they first met the 2nd defendant. The defendants lived in a public housing unit of the 2nd defendant’s family.
13. In February 2003, the plaintiff gave HK$600,000 to the 1st defendant for purchasing the Property. The reason for giving that money is in dispute. However, it is not in dispute that, among the money he received, the 1st defendant used HK$300,000 for paying the down payment, and the remaining HK$300,000 for later renovation of the Property. The defendants obtained a mortgage loan of HK$700,000 to pay for the balance of the purchase price. The Property was purchased at HK$1 million under the joint names of the 1st and 2nd defendants.
14. Sadly in or about February 2005, the 2nd defendant had suffered a miscarriage and went into the hospital when she was on her way back from a trip to Guangzhou with the plaintiff’s family. It was a family trip to Guangzhou and the Long Mu Temple (龍母廟) in Zhaoqing, China. The plaintiff disputes the purpose of visiting the temple was to pray for the 1st and 2nd defendants to have offspring. The 2nd defendant was not aware that she was already pregnant prior to joining the trip.
15. Following that, in or around April to June 2005, the 1st defendant had suffered severe kidney disease and was hospitalized. He was admitted into the Intensive Care Unit twice. Despite recovery, he was put on long-term medications and would not be able to father children anymore.
THE PLAINTIFF’S CLAIM
16. The plaintiff’s case is that, in or about late 2002, the plaintiff and his wife started planning to return to Hong Kong for their eventual retirement. Therefore, the plaintiff decided to buy an apartment in Hong Kong for that purpose.
17. As the 1st defendant was living in Hong Kong, the plaintiff asked the 1st defendant to assist in looking for an apartment worth around HK$1 million.
18. It was agreed between the plaintiff and the 1st defendant over a long-distance telephone call that (1) the plaintiff had limited means and could only come up with around HK$600,000, which should be enough to pay for the initial deposit and part payment, including the incidental expenses such as stamp duties and legal fees; (2) the 1st defendant needed to obtain a mortgage by himself to pay for the balance of the purchase price; (3) the monthly repayment of the mortgage loan by the 1st defendant would be treated as rental payment to the plaintiff for residing at the apartment; (4) the apartment would be, for convenience, registered in the 1st defendant’s name and held on trust for the plaintiff, but it must be transferred back to the plaintiff upon demand (“the 2002 Oral Agreement”) (para. 10 of the Statement of Claim).
19. In February 2003, the 1st defendant purchased the Property on the plaintiff’s behalf. Due to the SARS pandemic at the time, the plaintiff’s travelling to Hong Kong after the purchase had to delay for about one year. In early 2004 during the plaintiff family’s visit to Hong Kong, the plaintiff found out that the Property was being registered in the joint names of the 1st and 2nd defendants without his consent. The plaintiff said he had no choice but to accept, as he considered that adding the 2nd defendant’s name would assist the 1st defendant in obtaining some sort of subsidies from the Hong Kong Government.
20. In September 2005 (after their Guangzhou trip in February 2005), the plaintiff family came again to Hong Kong for holiday and they happened to have discussed the title of the Property with the 1st defendant. In the course of their discussion, the plaintiff remembered that the 1st defendant banged the door angrily and said to him “你放心! 我實俾番層樓你嘅!” (“Don’t worry, I will return the apartment to you!” – free translation) (“the 2005 Oral Acknowledgment”).
21. In December 2012 (that was about three months before Milton’s baby was born), the plaintiff, his wife and Milton came back to Hong Kong to discuss the issue of the Property with the 1st defendant again. The plaintiff said he wanted to make sure the Property would not fall into the hands of the Kwongs (ie the 2nd defendant’s family). The parties met in the plaintiff’s hotel room at Royal View Hotel in Ting Kau.
22. The plaintiff said the meeting ended uneventfully. The family went for dinner after the meeting but without the defendants. On the following day, they flew to Taiwan for one week, and upon returning to Hong Kong they received the letters (referred to below) from the 1st and 2nd defendants.
23. In June 2013, the plaintiff, with the assistance of Milton, issued a solicitors’ letter to the defendants asking for the return of the Property. The 1st defendant replied through solicitors that the HK$600,000 was a gift.
24. The matter stopped there until June 2017, when the 1st defendant wanted to refinance the mortgage of the Property, the issue of the Property was brought up again among the parties.
THE DEFENDANTS’ DEFENCE
25. On the other hand, the 1st defendant said that the HK$600,000 given by his father (the plaintiff) was a gift to him.
26. The defendants were living in public housing (with the 2nd defendant’s elder sister), paying HK$2,100 a month before the purchase of the Property in 2003. It is the defendants’ case that the parents always wanted the defendants to have babies (the children of the eldest son). According to the 1st defendant, it was the plaintiff who found that the living environment of the public housing was not ideal for the defendants to have children, so he urged the 1st defendant to purchase a more spacious apartment and promised to help him pay the down payment. Prior to the purchase, the plaintiff once said in one of their telephone conversations that given his old age, the 1st defendant could treat the purchase money as an early distribution of his assets, and part of those were the savings he kept for him over the years.
27. As a result of the plaintiff’s promise to help, the defendants began to look for a property in Lam Tin that was affordable in the light of their income and was near where they were then living. At the outset, the plaintiff did not mention any specific amount that he would help the 1st defendant in the purchase.
28. The defendants also applied successfully for the subsidy from the Hong Kong Government under the scheme named “Home Purchase Loan Scheme – 自置居所貸款計劃” which helped in paying HK$2,800 per month to their mortgage repayment for the first four years after the purchase. Before the purchase, the defendants informed the plaintiff that it would be a joint named property as they had applied for the said scheme.
29. At last, the defendants had chosen and decided to buy the Property. The 1st defendant proceeded to pay the initial deposit by himself and signed the preliminary agreement. He then informed the plaintiff about how much he needed for the down payment to complete the transaction. As the due date of the down payment (date of completion) was imminent, the plaintiff asked Milton to fly back to Hong Kong to bring a traveller’s cheque of a sum equivalent to HK$600,000 to the 1st defendant. The 1st defendant only knew of the amount his father was to give him when he received the traveller’s cheque from Milton.
30. Regarding the purchase of the Property, out of the HK$600,000 received from the plaintiff, the 1st defendant used HK$300,000 for the down payment and approximately HK$300,000 for the renovation of the Property. He also obtained a HK$700,000 mortgage loan from Standard Chartered Bank for paying the balance of the purchase price.
31. The 1st defendant denied that the plaintiff had ever asked him to purchase a retirement property for and on the plaintiff’s behalf. He said his parents had settled well in the States for a long time, and they always said they have grown used to the lifestyle in the States. The defendants denied that the plaintiff had ever planned to return to Hong Kong for retirement.
32. In February 2005, the 2nd defendant had suffered a miscarriage. It happened on their way back to Hong Kong from Guangzhou with the plaintiff’s family. It was a family trip to visit the Long Mu Temple (龍母廟) in Zhaoqing, for praying for the defendants to have babies. The 2nd defendant had vaginal bleeding, and the 1st defendant took her to the hospital immediately. The plaintiff’s family did not accompany the 2nd defendant to the hospital.
33. After having been released from the hospital, the melancholy of the 2nd defendant was magnified by the unfounded blame of the 1st defendant’s mother. Somehow both the 2nd defendant and the mother gave vent to their emotions upon the 1st defendant, who was also in deep grief for the loss. That lasted for two months. Eventually, in or about April 2005, the 1st defendant’s health broke down and he was diagnosed to have severe kidney disease (nephropathy and renal anaemia). He was admitted into the Intensive Care Unit of the hospital twice. The doctor once indicated that he might not be able to survive.
34. Shortly after learning the deteriorated health conditions of the 1st defendant in June 2005, the plaintiff (over the telephone) asked for the first time that the 1st defendant needed to transfer the Property to Milton or to add the plaintiff’s name to the Property, so that the Property would not go into the hands of the 2nd defendant or her family if the 1st defendant passes away. The plaintiff wanted to make sure the Property would remain in the Lai family, not benefitting the Kwongs. The plaintiff decided to come back immediately to discuss with the 1st defendant in person. That led to the family’s meeting at Royal View Hotel in September 2005.
35. In September 2005, the plaintiff family made a trip back to Hong Kong and during their stay, the parents made the same request to the 1st defendant again. However, the 1st defendant refused to pay heed to them as he found that it was utterly unfair for him and his wife when the Property was the only ‘protection’ (or asset) the defendants had. He denied the allegations made against him in respect of the 2005 Oral Acknowledge as suggested by the plaintiff.
36. Since then, the plaintiff and the mother had made the same request from time to time and the 1st defendant refused to listen to them. In December 2006, Milton had purchased a property at Metro Town (都會駅) in Tseung Kwan O (the TKO property) with HK$ 4 million. Since then, the plaintiff’s family would either stay at the hotel or the TKO property when they came back to visit Hong Kong. They no longer stayed at the Property with the defendants.
37. In 2009, Milton treated the whole family (including the defendants) for a holiday trip to Taiwan. The defendants joined the trip with a view that the plaintiff family was seeking to mend fences with them and to ease the misdeeds they had exerted on them. However, it turned out that it was another advance the family took to persuade the 1st defendant to give up the Property. The 1st defendant was very disappointed.
38. In December 2012, the parents and Milton made another trip back to Hong Kong and asked the defendants to meet at Royal View Hotel to discuss the issue of the Property again. During the meeting, the mother suddenly scolded the 2nd defendant that she was not surnamed Lai and was not able to bear any children for the family, and thus she was not entitled to own the Property. The 2nd defendant locked herself up in the bathroom and cried. The 1st defendant said they were totally heartbroken. When they left the hotel, they could not hold their emotions anymore and wept together at the hotel’s parking lot.
39. In the following few days (during the parents and Milton continued their holiday trip to Taiwan), the 1st defendant said he and his wife were very much shattered because of the incident on that night. He could no longer bear the pressure from his parents, who kept forcing him to give up the Property, and their unfounded resentment towards his wife. He finally decided to write to the plaintiff to end the family relationship and put an end to the hurt (and unfairness) they had been inflicting on them. The 2nd defendant also wrote a letter to the plaintiff at the same time. These are the two letters (for convenience, I shall refer to these letters as the 1st defendant’s letter and the 2nd defendant’s letter, or the Two Letters):-
“當你們看到這封信的時候，我們的關係已經到此為止了。 恭喜你們成為真正的美國人（袛有利益，沒有感情），多謝你們送給我這樣一份禮物（催命符立遺囑），相信2012年12月27日晚發生的這一幕，我到死那一天都不能忘記，真是相煎何太急啊。 錢真是太可怕了，它的威力真的可以令人作出沒有理智的行為及虛偽的咀臉。 我身軀猶在，但心已死，真是寒天飲雪水，點滴在心頭。 [從]有千言萬語，已無力書寫。 細佬，（這是我最後一次這樣稱呼你了，相信以後也沒有機會見面了。）記得小時候婆婆責備亞媽說她太偏心了，將最好的都給你，真是旁觀者清啊。 我不知道當我的情況發生在你身上的時候，他們又會不會怕你的錢落到你老婆的兄弟姊妹身上，我相信一定不會吧。 因為他們不會對你老婆是外人，你真是幸福。 好了無謂說話不講了，都會駅的事你自己處理吧，還有以後信件不要寄來我這裡了，我不再代你們收信了。 別了
祝：健康，快樂
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一個比泥（黎）更濺（健）的人上 |
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2012年12月30日寒雨天 |
2012年12月真的是我的末日?”
“呀爸：對不起 請容許我在這裡同你說聲對不起。
爸： 我讀得書少或者很多錯字請見諒。 這封信是我地內心說話。
爸： 我15歲出社會做事，做過很多行業見盡人生百態什麼人是真什麼人是假我亦知。
爸： 我自問對你一家人佰份佰真心亦不知做錯什麼？ 我諗我最錯或者係無所出不能為你們黎家傳宗接代。 我曾經努力過或者係天意。
爸： 你記唔記得多年前我地一家人去德慶求龍母娘娘原來當時我已經有了BB但我唔知。 我仲同龍母娘娘講希望你賜個BB給我等我奶奶唔好對我禁差。 壓力好大。 朋友話唔可以有目的去求。 點知真係無咗。 我有努力去留住但醫生同我地講一係有你一係你要佢。 我話我要佢，但黎健說不（吳很），終於留咗我條命。
爸： 你又記唔記得你地返黎住我好似係奶奶嘅眼中釘，我做什麼她都不滿。 奶奶吳坐我都吳禁坐，...
...
爸： 今次我同你講清楚，我同黎健入院，唔係哮喘什麼腎病、高血壓，醫生問我什麼引發我答唔出。 嗰晚黎健抱住我沖入急症室。用高電壓電我唔醒要幫我打強心針，昏迷期間我聽到黎健大叫醫生你要救番佢，醫生話加多兩度都唔得就無辦法。 算喇都吳想再諗。 跟住到黎健入院。 我再也忍唔住喇爆發喇！
爸： 我地兩份報告係一種巨大外來嘅壓力引發。 呢種無影壓力威力好大，幾乎可以無命真可怕。
爸：我地唔想係你70大壽時敢做，我同黎健都知你錫我地㗎。 我仲記得你捉住我手同我講呀媽你下世都搵唔到禁好新抱，我眼淚係敢流。
爸：我知我點做奶奶都吳會喜歡我。 或者我無福份。
爸： 你知唔知黎健出院後日日坐係廁所問，佢究竟係未奶奶生佢話佢好痛眼淚由心裏流。
爸： 你地第一次返嚟攪到我無命，第二次返嚟攪到同（呀姨嗰次）黎健同BB冇命，我地用三條命，換來今日嘅果。
爸： 點解你地每次回來都要黎健寫遺囑。 佢有幾痛，我又有幾痛。 你地等同話佢就死冇分別！
爸： 果晚同你地食完飯落到樓下黎健拖我入停車場。攬住我問我，佢係未你地生，我不停流淚。佢話佢好痛。 呢晚佢亦返吳到工。 回到家晚晚我地瞓唔到。傾到天亮我叫佢入房休息吓。 佢嗑咗幾個鐘又走出來話瞓吳到，兩日喇！ 佢話一嗑埋眼就好多景像走出來！ 瞓吳到。你地嘅口面好恐怖！ 婆婆鬧得（奶奶）冇錯佢真係好偏心，婆婆好錫佢（雖然好嚴）。
爸： 我同黎健二十幾年喇！ 我地經歷好多，你地吳會知亦唔需要講。
爸： 每次同黎健過灣仔佢好自然就會講細個婆婆點點點呀爸又同佢點點點，你同佢係廣州又點點點。
爸: 黎健個人唔出聲唔代表佢冇感覺佢個心有擺你入去。佢話你仲係到一日你都會幫佢出聲！
爸： 到今天我地徹底失望我地再唔期望有一些家庭溫暖！（只不過是一個小小願望）到頭來被你們攪到（傷痕累累，體無完膚）！
爸： 黎健瞓醒喇！見到我寫信比你佢叫我唔好再寫。 佢地已被金錢蒙蔽，佢地已無人性、親情可言！
爸： 我最後一次叫你，我以後亦不會再見你地。
THE ISSUES
40. Mr Lam, counsel for the plaintiff, submits that the plaintiff would only rely on oral express trust based on the 2002 Oral Agreement. He says the plaintiff is not going to rely on any resulting trust or constructive trust. In fact, express trust is the only legal consequence pleaded by the plaintiff.
41. Ms Leung, counsel for the defendants, agrees with Mr Lam that in this trial, the court is only required to determine whether there was a trust or a gift. Although the presumption of advancement was pleaded, it was not pursued at trial. In view of recent authorities, the parties have confirmed not to embark on the question of whether the presumption of advancement would apply between a parent and an adult child (see Suen Shu Tai v Tam Fung Tai (No 2) (2015) 18 HKCFAR 491).
42. I gathered from the parties that the issues of this action should be:-
(1) Whether the HK$600,000 given by the plaintiff to the 1st defendant was for the purpose of purchasing the Property on behalf of the plaintiff (ie the 2002 Oral Agreement existed), or was an absolute gift for the 1st defendant to purchase the Property for his own.
To determine this issue, the court needs (as the parties agreed) first to decide on the following sub-issues:
(a) Whether it was improbable that the plaintiff would have made a gift of HK$600,000 to the 1st defendant? In terms of:
(i) The financial means of the plaintiff as of 2002 to 2003; and
(ii) The relationship between the plaintiff and the 1st and 2nd defendants.
(b) Whether it was inherently probable and as of fact that the plaintiff intended to retire in Hong Kong and had thus purchased the Property for his eventual retirement?
(2) If the above findings are in favour of the plaintiff, whether the 2nd defendant was bound by the 2002 Oral Agreement.
43. As to the issue of mesne profits claimed by the plaintiff, the parties agreed that, under RDC O 38, the Expert Report dated 30 December 2019 prepared by Mr Kwan Lok Ping Denys be admitted as agreed expert evidence without the need for the parties to call its maker. The market rental value was agreed to be ranged from HK$9,800 (as of 1 June 2013) to HK$12,600 (as of 1 June 2019).
BURDEN OF PROOF
44. Ms Leung submits that while there is no dispute that the Property was conveyed in the names of the 1st and 2nd defendants, it is well established that, prima facie, beneficial ownership of property follows the legal ownership. She refers to Stack v Dowden [2007] 2 AC 432 where Baroness Hale said (at 454A),
“56. Just as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is joint legal ownership is joint beneficial ownership. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases it is upon the non-owner to show that he has any interest at all. In joint ownership cases, it is upon the joint owner who claims to have other hand a joint beneficial interest.”
45. I agree with Ms Leung that the burden of proving that the 1st and 2nd defendants are not the beneficial owners of the Property falls squarely on the plaintiff. The plaintiff has to prove on the balance of probability that the defendants hold the Property on trust for him absolutely.
THE APPROACH IN ASSESSING THE EVIDENCE
46. Ms Leung submits that where reliance is placed on an express agreement, arrangement or understanding between the parties, their other conduct remains relevant as a matter by reference to which their assertions about the agreement or understanding must be gauged and tested (Liu Wai Keung v Liu Wai Ming [2013] 5 HKLRD 7, per Godfrey Lam J at §50).
47. There is no objection from the plaintiff’s counsel, and I agree with Ms Leung and that a holistic approach should be taken (Stack v Dowden, at §69). Although Liu Wai Keung was a case given in the context of constructive trust, I see there is no difference in the approach of ascertaining the common intention of a constructive trust and the oral agreement of an express trust as in our present case.
48. As a number of matters in dispute turn on the credibility of the witnesses, I shall put my assessment of their evidence in some detail.
CREDIBILITY OF WITNESSES
49. All the parties gave evidence in court. Milton gave evidence in support of the plaintiff.
50. Witnesses of both sides were cross-examined extensively. I find that the 1st defendant is a credible witness who gave evidence in a straightforward and spontaneous manner. Conversely, I do not find the testimonies of the plaintiff and Milton to be reliable. The 2nd defendant’s witness statement was simply adopting the 1st defendant’s, but unlike the plaintiff and Milton, the 2nd defendant gave evidence in court in a fair and frank manner.
51. I accept the 1st and 2nd defendants’ evidence. I reject the evidence of the plaintiff and Milton whenever their evidence is in conflict with that of the 1st and 2nd defendants.
52. Overall, the plaintiff’s and the defendants’ evidence are at odds in numerous respects. I do not intend to set out all my analysis of each and every fact in dispute by the parties but only those that are of significance in determining the central issues of these proceedings. However, in assessing the evidence and the credibility of the witnesses, I have considered the evidence overall as a whole in evaluating it and making my findings.
FINDINGS OF FACT
Whether it was improbable for the plaintiff to have made a gift of HK$600,000 to the 1st defendant?
53. Mr Lam says that it is highly unlikely that the plaintiff would have made a gift of HK$600,000 to the 1st defendant due to the limited means the plaintiff had at the time and the bad relationship between the plaintiff and the 2nd defendant.
Financial means of the plaintiff
54. The plaintiff gives evidence that he was not from a wealthy family. He and his wife worked hard their whole life to provide for the family until retirement, and his wife, until stroke hit her in 2002.
55. He says that when the family immigrated to the States in 1989, the three of them only had US$18,000 in cash with no other assets. He says that making a living in the States was not easy. He, however, is very proud of that Milton got admitted to University of California, Berkeley, with scholarships, and he did not have to pay for any tuitions.
56. In 1993, the plaintiff purchased his first house in Garden Grove. It was a detached house with 3 bedrooms and 3 baths, 2 levels in total about 1,500 sq ft, plus backyard and garage. He said the purchase price was US$148,000. He had to borrow US$40,000 from his brother-in-law for the down payment, and he also had to obtain a mortgage from the bank.
57. In the States, the plaintiff worked for AT&T and his last post before he retired in 2013 was as a Graphic Designer. The plaintiff’s wife worked for the US Traffic Corporation. The plaintiff has produced their Tax Returns (1999-2002) showing that the average joint income of them was US$53,350 (around HK$416,130) per year, that is only US$4,446 (or HK$34,679) per month, in the four years preceding their purchase of the Property in Hong Kong in 2003.
58. As a result of the stroke in December 2001, the plaintiff’s wife was no longer able to work, although she had recovered later. Their family income had thus significantly dropped. They basically had no money to spare.
59. About six months later (June 2002), the plaintiff sold his house in Garden Grove, receiving net proceeds of sale in the sum of US$130,000. Plus the savings of US$50,000 from the plaintiff and his wife, and the non-liquid retirement savings plan worth around US$80,000, the total net worth of the plaintiff was only US$260,000 (ie around HK$2,028,000). And that they would have no more income after retirement.
60. After selling his house, the plaintiff’s family moved to a new house, which was purchased by Milton at US$410,000 also in 2002. It was a brand new house in Irvine of about 2,500 sq ft, 4 bedrooms, 3.5 baths, 3 levels, with front and backyards and garage. (Milton says he was responsible for the mortgage repayment, but the plaintiff had to pay for utilities such as electricity, etc.)
61. The plaintiff says, with such a poor or at most mediocre financial situation, it was impossible for him to have made a gift of HK$600,000 to the 1st defendant at that time.
62. I accept this is the financial background of the plaintiff. Although it is not admitted in the pleadings, it was not really challenged in the course of the trial.
63. However, I also find that the plaintiff’s financial condition, leading up to purchase of the Property, was not bad at all as depicted by the plaintiff. At that time, the plaintiff was living with Milton (the family always lived together as before) and he only needed to pay for the utilities. Taking into account the salary he was making at the time, he was still in positive cash flow every month. While I can accept the plaintiff’s financial means might be limited, I find that his outgoing expenses were also quite limited. I do not think that it was improbable for him to have made the gift of HK$600,000 to the 1st defendant.
64. After all, it is not a question of affordability, as it is common ground that the HK$600,000 had been paid out from the plaintiff’s fund for purchasing property. The question is whether the plaintiff was willing to make a gift of HK$600,000 (about one-third) out of his HK$2 million asset to the 1st defendant. I find that it was possible, having regard to the love he had for the 1st defendant and the extent he wanted the 1st defendant to give him a grandson, the evidence of which I would come to in more details later.
The relationship between the plaintiff and the 2nd defendant
65. Back to the days in or about April 1991, the 1st defendant wrote to the plaintiff introducing to his parents his girlfriend, the 2nd defendant, whom he had been dating for two years already. She was 21 years old (while the 1st defendant was 27). They met each other at a karaoke place, and the 2nd defendant was working at a telecommunication paging company. The 1st defendant enclosed a photo that they had taken together in the hope that his parents would like her. He described the 2nd defendant as having a very kind personality and virtue of frugality. Despite his filing of the US immigration re-application to the US Consulate, he expressed in his letter that he was struggling whether to leave the 2nd defendant in Hong Kong, worrying that he would lose his girlfriend.
66. However, according to the plaintiff’s witness statements and his evidence in court, the plaintiff was very unhappy about that. He said he did not like the 2nd defendant although he had never met her at that time. He considered that the 2nd defendant’s family was complicated, and the 2nd defendant did not have a good education (only completed Form 3). He was not able to explain why he said the 2nd defendant’s family was complicated. He just did not have a good impression of her. (The 1st defendant says the plaintiff did not like the 2nd defendant was from a low-income family background). During cross-examination, the plaintiff disagrees that the 2nd defendant was a frugal person at all. He says that from the photos the 1st denfenant sent to him, he could see the 2nd defendant was such a person that “住公屋、 養番狗、玩寵物，自己的經濟能力又如何?” (She lived in public housing but keeping poodles and pets. Had she ever considered her financial ability at all? – free translation).
67. The plaintiff says, more importantly, he disliked that the 1st defendant gave HK$3,000 to the 2nd defendant’s family every month as living expenses. He says the significance of that HK$3,000 was that the 2nd defendant and her mother did not have to work, whereas he and his wife had to work so hard with his wife suffering a stroke and he got a car accident. He described the $3,000 allowance as a chip on his shoulder even until now. In the letter dated 2 June 1991, the 1st defendant explained that the HK$3,000 was the 2nd defendant’s own money giving to her mother for living expenses. But the plaintiff did not accept the explanation. Instead, the plaintiff considered the 2nd defendant was a burden to his son.
68. The plaintiff further blamed the 2nd defendant for his son’s refusing to go to the States. The plaintiff and his wife were very upset about that. The plaintiff says, “it was definitely better in the States and his son must come.” He had applied for him to immigrate to the States three times, in which the first two applications were approved, but the 1st defendant refused to go on both occasions. Eventually, the third application was rejected, and the 1st defendant was being put on the blacklist for never having landed there.
69. On the other hand, the 2nd defendant says she did not know that the plaintiff disliked her so much before. She says her relationship with the plaintiff was not that bad before 2005 as she had always talked over the phone with the plaintiff.
70. I find that it is no doubt that the plaintiff and the mother did not like the 2nd defendant, but the degree of the dislike, in fact, varied in different time spans. I find that the relationship between the plaintiff’s family and the 2nd defendant was not too bad, as described by the 2nd defendant, from 1995 to 2003.
71. First, the parents were willing to come back for the tea ceremony in 1996. Secondly, it was the plaintiff’s evidence in court that he intended to move back to live with the defendants together after retirement and he did not mind living with the 2nd defendant in Hong Kong. He said no matter how much he and his wife disliked the 2nd defendant before, after all she was still his son’s wife. Therefore, I consider that it is still plausible for the plaintiff to have made a gift to the 1st defendant, despite his (their) dislike against the 2nd defendant. I find that the relationship between the plaintiff’s family and the defendants deteriorated only after the September 2005 visit.
72. For the above reasons, I do not agree with Mr Lam that it was unlikely that the plaintiff would have made a gift of HK$600,000 to the 1st defendant.
Whether the plaintiff intended to retire in Hong Kong and had thus purchased the Property for that purpose?
73. I find that the plaintiff’s evidence that he wanted to retire in Hong Kong is difficult to accept. The plaintiff gave the impression that he liked the United States a lot. It was his oral evidence that “it was definitely better in the States and his son must come.” Therefore, he had applied three times for his son to immigrate there. Although that was talking about in the context of the 1990s when the plaintiff wanted the 1st defendant to come to the States, I do not find any change of that preference. I bear in mind that the plaintiff family had settled down in the States from 1989 to 2003. No mention of any discussion within the family (or with the 1st defendant at least) about their change of plan to move back to Hong Kong could be found in the pleadings or witness statements, nor was there anything about that being mentioned in evidence in court. I accept the 1st defendant’s evidence that the plaintiff had never indicated that he intended to move back to Hong Kong. In the end, the plaintiff agreed that he could not pinpoint what other things might attract him to retire in Hong Kong rather than in the States. I reject the plaintiff’s evidence that he had the intention to retire in Hong Kong.
74. The plaintiff says he asked Milton to bring back the HK$600,000 (USD Equiv) to Hong Kong to the 1st defendant pursuant to the 2002 Oral Agreement. He says he only mentioned he wanted to buy a HK$1 million property. The plaintiff’s evidence is that he had no discussion with the 1st defendant as to other details in respect of the choice of property, such as location, type, size and terms of mortgage etc. He let the 1st defendant decide all other matters related to the acquisition of the Property and he was only responsible for paying the down payment. Under cross-examination, the plaintiff explains that “it was because if the apartment were convenient, they (the plaintiff and his wife) would move in to stay there. If they found it was not suitable for them, then they would sell it right away.”
75. I find that the plaintiff’s evidence is totally inconsistent with his case of purchasing a retirement property for himself. First, I find it hard to believe that he gave no thought at all to all the details that a reasonable purchaser would have considered when choosing a property, e.g. location, size, etc., let alone the property was for his retirement’s use. He later changed his evidence that he did concern one matter, that was his suggestion to the 1st defendant to buy a two-bedroom apartment, one for the 1st defendant couple and the other one for themselves. Ironically, the Property was subsequently turned into a one-bedroom apartment. The plaintiff said he would not mind sleeping in the living room. I find it hard to believe if that was indeed ‘his’ retirement property.
76. Further, it was also the plaintiff’s evidence that they would just sell the Property if they did not like it by retirement. While it was the plaintiff’s case (and I have already found above) that he had only limited means to purchase an apartment for retirement, I do not believe that he would be willing or able to buy and sell frequently until he found the suitable apartment. There would be issues of stamp duties and legal fees for each transaction as well. I must say that his evidence in this regard is just too far-fetched and inconsistent with his claim of buying his own retirement property.
77. I also find that the plaintiff’s above evidence is contradicted by his own witness statement. In his witness statement, he said that he asked the 1st defendant to find him an apartment he would use as his ‘fixed and permanent’ residence for his retirement in Hong Kong. Such an apartment was never intended to be bought and sold so quickly or without careful consideration, as the plaintiff suggested in court. Therefore, I do not find the plaintiff’s evidence was credible in either course of events, and I reject his evidence entirely in this regard.
78. In the premises, I do not believe that plaintiff was planning to retire in Hong Kong, and I do not accept that the Property was his retirement home.
Whether the Property was purchased on the plaintiff’s behalf?
The plaintiff’s version
79. The plaintiff says the HK$600,000 was intended for the down payment, including the stamp duties and legal fees. But again, he did not know that HK$300,000 of which was used for renovation and that it was only HK$300,000 being paid for the down payment. He also knew nothing about the mortgage in 2003 or the re-mortgage in 2008.
80. He says that the balance of the purchase price was to be taken care of by the 1st defendant, and thus the 1st defendant was responsible for the mortgage repayment, which would be treated as rent paid to him (the ‘rent for mortgage’ arrangement). However, the plaintiff knew nothing about the mortgage loan amount, the amount of the monthly repayment, or the terms of the mortgage. When he was cross-examined on these matters, he said he would not know and did not care. It appears to me that the plaintiff did not know any details as to the purchase of the Property. I find that his evidence in this regard strongly indicates this ‘rent for mortgage’ arrangement was a mere fabrication. It seems to me all these issues only come to the plaintiff’s mind for the first time at the time of the trial.
81. The plaintiff also says he did not know earlier that the defendants had applied for the Home Purchase Loan Scheme to subsidize the mortgage repayments. But he says the 1st defendant told him that he would transfer the title back to him after the expiry of the scheme in four years (but it is pointed out by the defence counsel that it was not pleaded or mentioned anywhere before). I will deal with this part of the evidence below.
Milton’s version
82. Milton gave evidence for the plaintiff. As Milton said he did provide financial advice to the plaintiff in relation to the purchase of the Property and the mortgage, I think it is appropriate to set out briefly his personal background here.
83. Milton immigrated with the parents to the United States at 18 years old (1989). He received scholarships and graduated from UC Berkeley with a bachelor’s degree in Business Administration. After graduated, he worked at a bank, and after some years, he was promoted as Vice President at the bank. In 2002, his salary was about US$5,000 plus commissions a month, ie US$60,000 plus commissions a year. His wife also worked at the bank. They got married in 2007. In 2009, he left the bank to become a self-employed financial consultant, providing advice on financing to his clients. His current income increased to around US$10,000 a month, ie US$120,000 per year. He also works part-time as a real estate agent in the States.
84. Milton says he always lived with his parents, except those years he was studying in Berkeley. Therefore, he says he knows about the family’s matters. Every time when his parents travelled to Hong Kong, he would accompany them.
85. Milton gives evidence in respect of the 2002 Oral Agreement made between the plaintiff and the 1st defendant over the phone as he was next to the plaintiff listening at the time of the telephone conversation. Bearing in mind that the parties might have talked over the phone on several occasions before reaching the 2002 Oral Agreement, Milton says that he heard the complete conversations in this regard. This is what he heard:-
“(退休)番香港有得住，
不過唔能夠一次過俾晒，
叫哥哥去借錢，
反正佢都要俾租，
叫佢睇住間屋，
番嚟就過番俾佢。”
86. Milton says the plaintiff had a sum of money after selling the house, so he asked the 1st defendant to look for a HK$1 million apartment in Hong Kong for him. But the plaintiff said he could not make full payment for the acquisition. Since the 1st defendant had to pay for public housing, the plaintiff asked the 1st defendant to rent his apartment.
87. Milton’s evidence on this part does not lend any help to the plaintiff’s case. The salient point is that he said the plaintiff said “叫哥哥去借錢,反正佢都要俾租.” This is quite different from what the plaintiff said for his case. What Milton’s saying is that in any event the 1st defendant had to pay rent to others, he might as well borrow a mortgage loan for the balance of the purchase price and his mortgage repayment would be treated as rental payment to the plaintiff. However, the 1st defendant was only paying HK$2,100 per month for the public housing. The monthly mortgage repayment of the Property would certainly exceed his then rental for the public housing. This does not sit well with “反正佢都要俾租,” which was HK$2,100 only. I do not believe his evidence.
88. Milton further says he discussed with the plaintiff that the plaintiff might need to borrow a mortgage because the plaintiff’s US income would not be recognized in Hong Kong. Therefore he suggested the plaintiff should add the 1st defendant’s name to the property to obtain mortgage. He says the plaintiff agreed with him. (Actually, it is the plaintiff’s evidence that the 1st defendant’s name was used for convenience purposes in signing the conveyancing documents.) Again, this is another new material. I cannot accept this part of Milton’s evidence which is in total contradiction to the plaintiff’s evidence. The plaintiff clearly said that he did not care anything about the mortgage, and nothing about mortgage was discussed.
89. Milton tried to explain that those were discussed with the plaintiff before and after the purchase of the Property. I again do not believe this evidence. If there were indeed any discussion of the mortgage between the plaintiff and Milton, Milton must have given some sort of risk analysis to the plaintiff as to the monthly rent the 1st defendant was then paying for his public housing and how much he could afford for the Property’s mortgage repayment. Obviously there was none. Neither the plaintiff nor Milton had this sort of information in hand. Further, it is surprising that both Milton and the plaintiff did not bother to find out the amount of the mortgage loan when Milton said the plaintiff intended to pay off the mortgage after several years. The problem is how the plaintiff could know the amount of the mortgage he would have to pay off, $700,000 or $400,000? They were not concerned with the shortfall of the down payment either.
90. I find that Milton was fabricating his evidence in court. It seems to me that Milton was trying to salvage the weakness in the plaintiff’s case where the plaintiff cared nothing about the mortgage. I reject Milton’s evidence entirely in relation to the purchase of the Property or any discussion about the mortgage. I did not believe a financial consultant could have advised his father when acquiring a property without any of the above-mentioned essential information.
The 1st defendant’s version
91. Both the defendants gave evidence for the defence case. The 1st defendant produced a repayment schedule from the first mortgage he obtained from Standard Chartered Bank. The loan date was 10 February 2003 and the loan amount was HK$700,000. The monthly repayment was about HK$4,000 per month. The 1st defendant said his monthly income was HK$12,000 and the 2nd defendant had no income at the time.
92. He also produced bank documents showing that the first mortgage was transferred to DBS Bank for HK$900,000 in 2008. After paying off the first mortgage by DBS bank, HK$338,002 was left to the 1st defendant for renovation.
93. He also produced the Hang Seng Bank letter, which he applied for HK$1,000,000 re-mortgage in 2017. The application was approved. But it was cancelled due to the registration of the plaintiff’s 2013 solicitors’ letter in the Land Registry.
94. Under cross-examination, the 1st defendant was asked to quote the exact wordings with the precise tone of what the plaintiff said to him over the phone in late 2002. He said “阿健呀，爸爸年紀都大啦，身體又唔好，我想早啲安排你同細佬啲嘢。 咁呢，你以前就擺咗啲錢喺我度，即係畀家用嗰度，佢就幫我儲起咗。 佢就話，你、而家啲樓，你去買樓啦，咁樣，首期我畀啦，之後你就自己負責啦。” I can see that the 1st defendant gave evidence in a firm and straightforward manner. His evidence in this regard seems fluid and natural.
95. In a nutshell, upon his father’s suggestion to purchase a property and by reason of his father’s promise to provide him the down payment, the 1st defendant went on to acquire the Property. The 1st defendant was not surprised that his father would give him such a large sum of money in the amount of $600,000 because his father had repeatedly mentioned he would save the money given to him so that the 1st defendant could use them to buy property in his getting married. However, he reckoned the savings should be much less than that amount. The 1st defendant explained under cross-examination that his only concern was the mortgage repayment while not knowing the actual amount his father would give him.
96. The line of questions put to the 1st defendant by the plaintiff’s counsel was as follows:-
“PC: In respect of the down payment, had the plaintiff ever mentioned whether it would be 30%, 50%, or 70% of the purchase price?
D1: He said nothing about that. He only said he would give back to me a sum of money, which would be sufficient for me to pay for the down payment.
PC: Then I don’t understand. If he had never mentioned how many percentages, how could you know whether you have sufficient means to complete the transaction? That would be quite different if he only meant 5% or 10% as compared to 70%. Had you ever thought about that?
D1: At that time, I didn’t think about that question. The first thing I thought about was that whether I would be qualified to pay for the mortgage for this property. Therefore, I first went to apply for the Government Scheme and see whether the Government would approve our application for the subsidy.
PC: Therefore, you decided to get the sum of money first.
D1: No. At that time, I did not receive any money. It was all procedural matters for the application of the Government Scheme at that time.
PC: When did you get approval from the Government for that scheme?
D1: About July or August or September. Only after approval, then we went to look for property.
PC: When did you know your dad meant the down payment would be HK$600,000?
D1: Only when Milton brought over then I know.
PC: Then, when Milton brought over the money, had you chosen the Property yet?
D1: Already decided. I already paid for the initial deposit and signed the preliminary agreement. The initial deposit was paid by us.
PC: How could it be possible that you first decided on the Property, then later found out that it was HK$600,000 from your dad?
D1: It was because after we got the approval for our application for the Government Scheme, we already informed our dad about that. And after we had chosen the Property, we informed him that we would sign the agreement with the vendor on the following day. He said go ahead and don’t worry. So, we paid for the initial deposit and signed the agreement. We informed him how much the payment is going to be required, and then he asked Milton to bring over the money. Therefore, before that, that was no particular amount. Even the price of HK$1 million for the property was decided by me. It was never their request for HK$1 million property.
PC: My question is if you only found out that the sum was HK$600,000 when Milton bought over to you in Hong Kong, how could you decide on buying a property worth HK$1 million beforehand? Why not decided to buy a property at HK$800,000 or HK$10 million? How to decide on HK$1 million?
D1: It was because HK$1 million property was what I calculated I could afford to pay for the mortgage, based on my personal income.
PC: When you did not know how much your father was going to give you, how could you decide how much you need to pay for the mortgage, and you had to know how much for the down payment first, right?
D1: I went to ask the bank. I asked, ‘if I make a down payment of HK$300,000, and borrow $700,000, then roughly about how much per month I need to pay for the mortgage?’ The bank said it would be about $4,000 to $5,000 per month. Then I did my calculation based on my monthly salary and the approval from the Government subsidy scheme, and I worked out that was how much I could afford, and only after all these then I proceeded to buy a property at HK$1 million.
PC: Then I don’t understand again. How could you know the down payment would be HK$300,000 and went to ask the bank?
D1: It was the requirement of the Government that the down payment must be 30% of the purchase price. The most important thing that I was concerned about was whether the remaining 70% of the purchase price I could afford for that mortgage payment. That 30% was the requirement of the Government Home Purchase Loan Scheme. I would not simply go ahead to buy a property without checking about that requirement.
PC: But at the time when you asked the bank, you had not yet known your father was going to give you HKK$600,000. If your father was only minded to provide you with HK$100,000, then you would have not enough money to pay for the down payment, right?
D1: He said, ‘don’t worry, dad will make sure you have sufficient money to pay for that.’ It was very normal for a son to believe his father. Further, it was him who asked me to find a property for my family, not that I initiated it.”
97. The 1st defendant’s answers were spontaneous and consistent throughout. I find the 1st defendant to be a witness of truth. Even where there were additions to the content of his witness statements, those additions, in my view, came across as genuine further details.
98. I now assess the plaintiff’s version against the 1st defendant’s version. In my view, the plaintiff’s version of accounts in relation to the purchase of the Property makes no logical sense and does not sit well with the other evidence of his case. The plaintiff’s case of ‘rent for mortgage’ would create a burden on the 1st defendant to take up a mortgage but remain as a tenant for the rest of his life without any beneficial interest to the Property. The 1st defendant’s version that the father is paying for the down payment for his son, in any event, sounds more logical to me as it is common in Chinese culture for the parents to help the son to buy his own property.
99. There are other matters which the plaintiff could not explain or give an answer. For instance, the plaintiff was asked why the plaintiff did not put his name or his wife’s name directly for the purchase, he could not explain it and he only said it was a ‘temporary measure.’ When he came back, it would be changed back to his name. I find that his ‘temporary measure’ averment is difficult to accept. It, again, failed to take into account that it would incur the liabilities of paying the stamp duties and legal fees twice.
100. I also reject the plaintiff’s evidence that the 1st defendant told him the title would be transferred back to him after the expiry of the scheme in four years’ time (ie 2007), bearing in mind that it was not pleaded or mentioned in witness statements. ‘The expiry in four years’ was only mentioned in the 2013 solicitors’ letter, but it was not the plaintiff’s case. I find that this is a material fact as to the credibility of the plaintiff. If the plaintiff reluctantly accepted the defendants to transfer the title back to him in four years, he would not have kept on requesting (as I will find below) the 1st defendant to add Milton’s name or his name to the Property before then (such as in 2005).
101. In fact, for the whole part of evidence in relation to the purchase of the Property, the way the plaintiff answering questions was obviously quite different from the way he answered about the background of the family. Here, most of the questions he could not respond with a simple yes or no. Instead, he would ask counsel to repeat the questions. When he noticed he could not answer all those questions directly, he uttered that he was an open-minded person and he had left all matters to the 1st defendant to decide. I find that the plaintiff was not telling the truth when giving this part of evidence.
102. On the contrary, I find that the 1st defendant’s case was consistent throughout and his version of events accords with inherent probabilities. His evidence was unsaken under cross-examination.
103. I completely accept the 1st defendant’s explanation how he worked out for the purchase of a property costing HK$1 million, with a down payment of HK$300,000. The way he worked backward to see carefully how much he could afford for the mortgage payment under cross-examination was sensible and logical, bearing in mind that the 1st defendant has never had the yellow brick road like Milton had, and he had no experience in purchasing property before.
104. Another point that goes against the plaintiff’s case is that, as Ms Leung rightly pointed out, once the defendants took up the Government scheme, they can no longer entitle to public housing or any other government subsidies anymore. It would not make sense if they gave up their eligibility for public housing for merely being a paper owner of the Property for an uncertain number of years.
105. I conclude that there was no 2002 Oral Agreement and that the Property was not purchased on behalf of the plaintiff.
106. It is not necessary for me to deal with the issue of whether the 2nd defendant was bound by the agreement.
Whether the HK$600,000 was a gift?
107. While I have found the HK$600,000 was possible to be a gift in the earlier part of my judgment, it may be necessary, as a matter of completeness, for me to decide whether it was a gift.
108. Ms Leung says that the HK$600,000 amounted to only one-third of the plaintiff’s asset. The 1st defendant is the elder son that the plaintiff always loves. The plaintiff raised him alone until the son reached 10 years old. In the Chinese context, the son is more important, let alone he was the eldest son of the family.
109. On the evidence before me, it is obvious that the plaintiff’s family is one of the traditional Chinese family and the importance of having a lineal descendant does play a role in this family. In Chinese culture, families have a strong preference for sons, least to say the 1st defendant was the firstborn son of the family. Contrary to the contents in the Two Letters, the plaintiff repeatedly said in court that he was an open-minded person, meaning that he was not the traditional Chinese who thinks that children should get married and produce children. The problem is that whenever he described himself as open-minded, he was not answering the question directly. His evidence appears to be evasive and not easy to reconcile with other evidence. I find that whenever he said he was very open-minded, he was seeking to lessen the image that he and his wife always urged the defendants to have children before the 2005 incidents.
110. I also give considerable weight to the plaintiff’s 2017 WeChat messages that he said “如果你不離開養和, 你和那個護士結婚, 我早有長子嫡孫啦!” (If you did not quit your job at the Sanatorium and did marry ‘the nurse’ there, I would have been able to have a grandchild from my eldest/elder son already!) Under cross-examination, the plaintiff confirmed that there was never such a nurse existed. The plaintiff said he just made that up by himself (even in 2017). He said it was because he wanted to have a grandchild from the 1st defendant so much, therefore he always dreamed about the 1st defendant could marry a nurse from the Sanitorium Hospital (where the 1st defendant worked in the 1990s). I find that to have children of the eldest son is of great importance in the plaintiff’s mind, or at least that was so before the medical incident of the 1st defendant in 2005.
111. Due to the paternal love the plaintiff had for the 1st defendant and the eagerness the plaintiff wanted to have a grandson from the 1st defendant, I find that the HK$600,000 was a gift by the plaintiff to the 1st defendant for the purpose of helping the 1st defendant to purchase his family or matrimonial house.
Post-purchase events and conduct of the parties
112. Although I have already made my findings above, I shall also test and gauge the events and other conduct of the parties for the period after the purchase of the Property.
February 2005 visit
113. In February 2005, the plaintiff family including the defendants had a trip to Guangzhou and the Long Mu Temple (龍母廟) in Zhaoqing, China. The plaintiff denied that the purpose of the trip was to pray for the defendants to have offspring, but I accept the defendants’ evidence on this part as it was obvious and it was supported by the 2nd defendant’s letter (see below for my finding in accepting the Two Letters).
114. There is no dispute that the 2nd defendant had a miscarriage during the trip. The plaintiff claimed that he and his wife could not care less about the miscarriage (唔上心, 完全無感覺). In this regard, Milton said he went to play mahjong with friends and had not visited the 2nd defendant either. He further said that his parents did not care and it was not a matter of their concerns. He also described them as treating this as normal “平常心” to them. Despite that Milton attempted to explain their indifferent attitudes towards the miscarriage of the 2nd defendant, no sense can be made out of his evidence on this part. Although the plaintiff used the term “唔上心” (did not pay much attention) several times to describe his feelings towards the miscarriage, I do not believe that was what he genuinely meant. They must have been sad and disappointed.
115. From April to June 2005, the 1st defendant’s health broke down. According to the 1st defendant, he was seriously ill, having been admitted into hospital twice, brushing with death. Despite surviving over, the 1st defendant unfortunately became sterile. The plaintiff denies the seriousness of his elder son’s health conditions. He says he was only told that the 1st defendant had some medical problems with kidneys, heart, and high blood pressure, and that he would have to take medication for the long term with some side effects. He denies the 1st defendant was at death’s door on that occasion. All in all, the plaintiff blamed the 2nd defendant for not cooking at home and the defendants had to dine out all the time, which led to the poor health condition of his son. In the end, he even changed his evidence by saying that he was not sure whether the 1st defendant had been seriously ill or not. But Milton’s evidence contradicts that the plaintiff once considered donating his kidney to the 1st defendant.
116. I accept the defendants’ version of accounts which is consistent with the contents in the Two Letters. I find that the plaintiff and Milton were merely trying to cover up the reason behind the making of the gift.
The Tai Koo Shing property
117. The plaintiff says he suggested the defendants to sell the Property due to bad feng shui and buy another one in Tai Koo Shing (it should be between June to September 2005). He suggested the 1st defendant to find a 3-bedroom apartment in Tai Koo Shing, and the defendants need not put their name on the property so they would not be required to make any mortgage payment. The mortgage would be taken care of by Milton. He said the 1st defendant originally agreed to such arrangement, but later refused. In the end, the plan for moving to Tai Koo Shing did not materialize.
118. I find that the significance of Tai Koo Shing property is that it actually shows the Property was not under the plaintiff’s control. He had to ask the 1st defendant’s consent to sell the Property and had to give an incentive (ie no mortgage liability) to persuade the 1st defendant to sell it. I find that both the plaintiff and Milton’s evidence on this part throws insight as to who the true owner of the Property really is. It supports my findings above.
September 2005 visit
119. In September 2005, the plaintiff family came back to deal with the Property. Although the plaintiff said it was a holiday trip, Milton confirmed that the purpose of the trip was to discuss the Property. Milton corroborated the plaintiff that they did not know the seriousness of the 1st defendant’s illness. But they could not explain why they would come back again just six months after their last visit. If they were not concerned, as they said, the miscarriage suffered by the 2nd defendant and the medical conditions of the 1st defendant, what could be the urgency for them to fly back to discuss the Property? They said it was the plaintiff’s concern that the Property would be passed to the Kwongs. Milton also tried to explain that the plaintiff might have other concerns apart from the health condition of the 1st defendant, for example, if the 2nd defendant asked for a divorce after knowing the 1st defendant’s frail health.
120. I again prefer the defendants’ evidence over the plaintiff’s where they are in conflict here. I do not find that the reasons given by the plaintiff and Milton are convincing. I do not see why the miscarriage of the 2nd defendant and the frail health of the 1st defendant would be (or should be) matters in dispute. If the plaintiff was the true owner of the Property, he could have just said explicitly that he would like to have the transfer of the title back immediately because of the 1st defendant’s frail health. But very strangely, that was never the plaintiff’s case. I find the only logical conclusion is that they knew the HK$600,000 was a gift, and it was given on the premise that the defendants would hopefully bear the plaintiff’s grandchild soon. When that hope could never be materialized, the plaintiff wanted to retract the gift and not to benefit the 2nd defendant or the Kwong family if the 1st defendant would pass away.
The 2005 Oral Acknowledgment
121. The plaintiff says he remembered clearly that the 2005 Oral Acknowledgment was said in September 2005 (as that was his birthday on 15 September 2005). He says the 1st defendant said loudly in rage that he would give back the Property to him.
122. Milton corroborated the plaintiff’s evidence that he heard the 1st defendant said the 2005 Oral Acknowledgment. But he also agrees that the 1st defendant might have been saying those words out of anger.
123. By reason of my finding that the plaintiff and Milton were not telling the truth in relation to the September 2005 visit, I prefer the 1st defendant’s evidence that he did not say or make any oral acknowledge. Hence, I find that there was no such acknowledgment as alleged by the plaintiff.
The TKO property
124. Not long after the suggestion of purchasing Tai Koo Shing property failed, Milton bought the TKO property in 2006.
125. The plaintiff mentioned that Milton purchased the TKO property because Milton wanted the plaintiff and the 1st defendant to live there and also for investment. This again does not sit well with the plaintiff’s case when the plaintiff already had the Property for retirement, especially at the time in 2006 the plaintiff had not retired yet. In any event, the issue of TKO property is not of significance to the issues of the present case but further shows that the plaintiff and Milton are not credible witnesses.
December 2012 meeting at Royal View Hotel
126. At the end of December 2012, the plaintiff family came back to Hong Kong again. This time the plaintiff and Milton admitted that trip was to ask the 1st defendant to deal with the Property and the parties met at Royal View Hotel. The plaintiff has tried to downplay what had happened in the meeting at the hotel. He says he did not ask the 1st defendant to transfer the Property to Milton, but just asked the 1st defendant to make a will in favour of Milton. He admits that he got emotional and spoke to the 1st defendant that the Property must not fall into the hands of the Kwongs (“不要落在姓鄺的手上”).
127. The plaintiff admits that he asked the 1st defendant “我有叫佢落番個名落佢度, 留番俾我, 不要俾個姓鄺嘅” (I did ask him to add a name to the Property and save it for me. Don’t leave it the Kwongs). From what the plaintiff said, it shows the plaintiff knowing full well that the actual owner was the 1st defendant who had control of the Property. This supports my finding that the Property does not belong to the plaintiff.
128. The plaintiff gives a blanket denial to the allegation that his wife pointed at the 2nd defendant and scolded her that she was not a member of the Lai family and was not able to bear any children for the family. He maintains that the family went to have dinner peacefully and that there were no heated discussions. However, the plaintiff could not explain why the defendants would have written the Two Letters to him if nothing had ever happened at the hotel.
129. As Ms Leung submitted, it would take a lot of courage for a person to stand against his parents and to sequester with them. I agree that something devastating to the defendants must have happened in the hotel’s meeting leading to the writing of the Two Letters. I find that the plaintiff was simply trying to understate the December 2012 Hotel meeting as a mere uneventful discussion.
130. The plaintiff later confirmed that he had never seen the 2nd defendant coming to join the family again since receiving the Two Letters. After that, when he came back to visit Hong Kong, he had only seen the 1st defendant sometimes, but the 2nd defendant had never joined since then.
The Two Letters
131. In assessing the evidence, I have taken into account the demeanour of the witnesses overall in the whole of the evidence. But more importantly, I have tested and weighed the witnesses’ evidence against the totality of the materials and in particular the contemporaneous documents available. I find that the Two Letters speak for themselves. They are contemporaneous documents before litigation. The contents of which were not challenged at trial. The plaintiff admitted the contents were not lies but just exaggerated. Hence, I accept what the defendants said in the Two Letters are true. They have accounted for the past events.
132. I find that the Two Letters accounted for the significant events that happened before and showed the conduct between the parties. For instance, it mentioned the plaintiff kept on asking the 1st defendant to make a will. This is admitted by the plaintiff. In this regard, I find that if the plaintiff were indeed the true beneficial owner, he would not have to rely on having the 1st defendant’s will (a will of the trustee) to get the Property back. What the plaintiff trying to do is inconsistent with his alleged ownership.
133. But what is more important of all is that one must not lose sight of the requests made by the plaintiff in respect of the title of the Property throughout the years. I particularly note that the plaintiff has never raised straightly, as a legal owner would have asked, for a direct transfer or return of the Property to himself (except mentioned once in the 2013 solicitors’ letter). Ever since his first request made over the phone in June 2005 and up to the moment he was giving oral evidence in court (except the 2013 solicitors’ letter), he only asked 1st defendant to add Milton’s name or his name to the Property, or as the evidence revealed, to make a will.
134. In my view, this is what happened between the parties. Out of love and the parents’ wish to have offspring from the elder son of the family, the father offered to help the elder son in acquiring the Property despite the couples’ rejection towards the 2nd defendant. Unfortunately, their wishes were later frustrated when the elder son was found infertile. I believe also that there could be some misunderstandings leading to the building up of acrimonies of the parents towards the 2nd defendant over the years. The parents were so concerned that their son’s Property, partly purchased with their hard earned monies, would go into the hands of the 2nd defendant or her family. Hence, they wanted to get back what they believed should belong to the Lai family by various means, such as pressing the elder son to make wills in favour of them, adding names to the Property, the Tai Koo Shing property, etc. In spite of that, I also particularly note that the plaintiff only sought after the 1st defendant’s half interest of the Property. The parents must have been aware that (1) the 1st defendant only has half of the interest in the Property, and (2) the other half of the interest in the Property belongs to the 2nd defendant. I hold that the plaintiff knew he himself did not have any interest in the Property.
Wife 2.0
135. The plaintiff says that the Property was purchased with his hard earned money and just cannot let it go to the Kwongs. Under cross-examination, the plaintiff once described the 2nd defendant as “老婆2.0” (Wife 2.0) by saying “分分鐘你個老婆2.0呀! 我就唔到佢喇.” He was asked to clarify what Wife 2.0 meant? The plaintiff said, “Nothing, nothing, I want to withdraw it.” He kept silent for a moment and said he was not sure which movie mentioned that term before. When he was referred to an email where Milton said the plaintiff did not want the family to be a replica of Nina Wang’s case, he denied he had ever said that.
136. According to Milton’s email, it was the plaintiff who said he did not want the Lai family to be a replica of the case of Nina Wang. It was put to Milton whether it was what the plaintiff meant for ‘Wife 2.0’. Milton said the term ‘replica of Nina Wang’s case’ was just an analogy he chose to use and the plaintiff might not know about Nina Wang’s case. But he said it was certainly what the plaintiff was concerned about. Milton explained in detail that Nina Wang’s case was that Nina Wang’s money originally belonged to his husband, and she had taken all the money when her husband passed away, and the end result was that all Mr Wang’s assets were passed on to the Kung family. He said that was exactly what his and the plaintiff’s concern were. (I shall note here this does not represent any interpretation of the late Nina Wang’s case by this court). He said unless the 1st defendant had a will; otherwise, all would be passed on to the Kwongs. (This echoes with the Two Letters that the plaintiff was chasing the 1st defendant so hard to make a will).
137. In fact this is exactly how the defendants felt towards the parents’ excessive and ruthless demands. This is shown in the 1st defendant’s letter where the 1st defendant sarcastically asked Milton if their parents would also have the same worries that his monies would all go to Milton’s wife’s hands. I find what Milton said about their concern of the late Nina Wang’s replica must be the motive behind all the plaintiff’s allegations and alleged claim. It certainly goes to explain why the plaintiff wanted to retract the gift and make sure his son’s asset would not be passed on to the Kwongs.
2017 WeChat messages
138. In 2017 when the 1st defendant wanted to change his mortgage to another bank for refinancing, he found out that the 2013 solicitors’ letter was registered (a pending registration) into the Land Registry against the Property. The plaintiff said he did not know anything about that, as it should have been done by Milton. He said he did not know the 1st defendant was trying to refinance the mortgage to get money out for renovation before then.
139. In the WeChat messages, the 1st defendant said “我簽果時唔知你hold住咗. 係律師通知我先知.” (I didn’t know you put a hold [to the Property] when I sign [the re-mortgage agreement]. I only noticed it when my solicitors informed me). The plaintiff replied in the WeChat “你加按你的事, 我hold你甚麼, 莫名其妙.” (It is none of my business if you want to have a re-mortgage. Why would I put a hold there? I’m clueless!). I find this indicates that the Property does not belong to the plaintiff. The re-mortgage was not of the plaintiff’s business because he is not the Property’s owner.
140. The 1st defendant forwarded the above messages to Milton and asked him why he registered the solicitors’ letter against the Property. In the WeChat messages, the 1st defendant said “而家点攪, 唔係傾好咗咩” (What should I do? Wasn’t it all resolved?) then Milton said “等我瞭解一下攪乜先” (Let me find out what happened first). I find this evidence also shows that the dispute might have been resolved as even Milton was not sure why the Property’s matter would have been raised again.
141. Then Milton, in the WeChat messages, said the plaintiff suggested adding either the plaintiff’s name or Milton’s name to the Property. Milton typed “現在只想加名保存給黎家, 在你有生之年我都唔會碰你間屋, 可以找律師立約作見證, 請你老婆放心. 若然將來你想賣屋退休, 那所得一半的錢需還給姓黎的.” (We now just want to preserve the Property for the Lai Family, I would not touch your house in your lifetime. We can get a lawyer as a witness for this, please tell your wife to rest assured. If you want to sell the house when retiring, half of the sale proceeds will have to be returned to Lai Family). I find this is another persuasive piece of evidence against the plaintiff’s case, indicating that Milton and the plaintiff both knew very well the Property belonged to the 1st and 2nd defendants. My attention is drawn to Milton’s reply in the message that he said he was not going to touch the 1st defendant’s house as opposed to his father’s property. Further, Milton was being cross-examined why he said only one-half of the proceeds need to be returned to the plaintiff when the plaintiff always said the Property belong to him. Milton could not explain, but he said he would not believe the 2nd defendant would be willing to give up the Property. I do not accept his explanation. I find that this evidence confirms that the plaintiff and Milton knew half of the interest in the Property belongs to the 1st defendant and half belongs to the 2nd defendant as they were joint tenants.
142. On the other hand, the 1st defendant explains that the plaintiff promised in 2013 that he would not disturb his title anymore. The 1st defendant also explains why he once mentioned ‘adding name’ to the Property in the WeChat messages. He said it was because the plaintiff and Milton threatened not to remove the 2013 solicitors’ letter from the Registry if he refused to add their names. He feared that there would be legal consequences from Hang Seng Bank as he had already signed to accept the re-mortgage. Plaintiff’s counsel asks him why he did not deny anything if that was not true. The 1st defendant explains that he did deny over the phone. He says that there were other things communicated over the phone. He points out that those messages were separated and not connected. They were of various dates and were not a complete record of the exchange of their conversations on this subject as they had telephone calls in between.
143. All in all, after hearing the 1st defendant evidence in court and I did pay extra attention to this part of evidence, his demeanour and the way he responded to the questions from the counsel and the court, I find that the 1st defendant’s explanation is acceptable. I accept all the 1st defendant’s evidence regarding the WeChat messages. And as rightly pointed out by the defence counsel that in those messages, the 1st defendant had never promised the plaintiff or Milton that he would ‘add a name’ to the Property. I agree.
144. To conclude, I find that the HK$600,000 was an absolute gift made by the plaintiff to the 1st defendant.
LEGAL POINTS
The pleading point
145. Ms Leung submits in closing that the plaintiff opened its case as one of an express trust, but the way the facts are pleaded and the evidence transpired at trial appear to support a common intention constructive trust. She seeks clarification from the plaintiff’s counsel that whether the plaintiff would rely on constructive trust or she needs to reserve her submissions. She refers to the obiter dictum of Yuen JA in Mui So Bing v Wan Chi Shing [2019] HKCA 1341 for the modern way of conducting litigation in terms of pleadings:-
“23.3 … As the court’s primary aim in exercising its powers is to secure the just resolution of disputes in accordance with the substantive right of the parties, and to further these objectives by actively managing cases, it seems to me to be high time that consideration should be given to requiring legal representatives to plead not only material facts, but also all the legal consequences to which those facts validly lead, with the effect that the parties would be barred from contending different legal consequences on appeal.”
146. On the contrary, Mr Lam submits that Mui So Bing was not a rigid requirement and has been recently addressed by the Court of Final Appeal in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd (2020) 23 HKCFAR 138 per Fok PJ at 142:-
“9. … The rules of pleading are set out in the Rules of the High Court and parties are protected against being taken by surprise on appeal by points of law not raised below by the well-established practice laid down in Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356. There is no requirement in the RHC for party to plead the legal consequences of particular facts and the rules are permissive as to the raising of points of law in pleadings. That this represents the present position is confirmed by its endorsement by the Chief Justice’s Working Party on Civil Justice Reform.
10. As regards the applicant’s reliance on the obiter dictum of Yuen JA in Mui So Bing v Wan Chi Shing, this was not, as we read it, suggesting a rigid requirement to plead legal consequences flowing from the pleaded facts. Instead, that dictum is to be understood in the context of that particular case where the plaintiff had pleaded a specific legal consequence (resulting trust) “and nothing else”, so that when, on appeal, the plaintiff then sought to assert an alternative legal consequence (and therefore one inconsistent with the only consequence pleaded), it necessarily took the other side, and the court, by surprise.”
147. I agree with both authorities. It is no doubt that, as the CFA stated, the parties are protected against being taken by surprise on appeal by points of law not raised below (Flywin). Nevertheless, it is also important that there is no requirement in the RHC for party to plead the legal consequences of particular facts and the rules are permissive as to the raising of points of law in pleadings. However, I also agree with Mui So Bing (which has force although obiter)that, in some particular cases, especially where they are fact-sensitive, if the party has confined its case to one specific legal consequence and nothing else, the trial will be conducted on that basis and examination of evidence would be focused on the then relevant issues only. If that party later asserts some new legal consequences at the closing of the trial, it would be very unfair to the opposing party as some of the factual issues could have been explored, but did not. In my view, it should be disallowed.
148. Mr Lam expressly disclaims any reliance on resulting trust or constructive trust.
Express trust
149. The plaintiff relies on oral express trust only. Mr Lam submits that the trust is based on the 2002 Oral Agreement only and there are no documents. He says there is no written declaration of trust and no deed.
150. It is trite that an express trust is declared by a settlor. To create an express trust, the “three certainties” of a trust must be present, ie imperative words, certainty of the subject matter, and certainty of objects (Megarry & Wade: The Law of Real Property, 9th ed. (2019), at para 10-005). It is a trust created by the actual intention of the person in whom the property is vested, as where A declares himself a trustee of Whiteacre for B, or conveys it to C on trust for B (Snell’s Equity, 34th ed. (2020), at para 21-019).
151. At first sight of the plaintiff’s oral express trust, the plaintiff’s trust arrangement seems attractive from the financial point of view. However, when we put it right into the legal context, a problem arises, namely uncertainty as to when and how the trust (if any) was created.
152. First, only HK$300,000 of the plaintiff’s money was contributed to the purchase price of the Property (ie 30% only). It is difficult to support the plaintiff’s pleaded position to claim 100% rent of the Property as a sole beneficial owner. In other words, the plaintiff does not have the entire interest of the Property and would not be in a position to declare a trust over the Property in the first place if he was the settlor of the trust. The plaintiff has never pleaded that the 1st defendant was obtaining the mortgage on his behalf to cover the remaining 70% of the purchase price. That daunting task (the mortgage) was left for the 1st defendant to decide and to undertake. The 1st defendant remains as the real mortgagor of the Property. Put to the highest for the plaintiff, if he was the settlor, he could only declare a trust in respect of his HK$300,000 purchase money of the Property. But again, this goes back to the same question that his HK$300,000 was insufficient in acquiring the Property in the first place. And he had abandoned any claim for resulting trust or constructive trust.
153. Second, if the plaintiff’s case is that the 1st defendant was the settlor and he declared a trust of the Property at the time of the acquisition (irrespective of the actual contribution to the purchase price of the Property, ie 30% by the plaintiff and 70% by the mortgage taken out by the 1st defendant), there still remains a problem that the 1st defendant’s declaration of trust was not evidenced in writing, which was prevented by the statutory provision s 5(1)(b) of the Conveyancing and Property Ordinance (Cap 219). There are distinctions between express trusts on the one hand, and resulting trusts and constructive trusts on the other. The formal requirement that a trust of an interest in land must be evidenced by signed writing applies to express trust, whereas resulting and constructive trusts may be enforced in the absence of writing as they arise by operation of law (Snell’s Equity, 34th ed. (2020), at para 21-022).
154. Thirdly, at the time of the 2002 Oral Agreement, the 1st defendant had not purchased the Property yet. If the plaintiff’s case was that there was an oral declaration of trust at the time of the agreement, it would be lack of certainty of the subject matter as the Property had not yet been acquired. Therefore, it seems to me that the plaintiff’s case would be a trust created at the time of the purchase of the Property pursuant to the 2002 Oral Agreement, which is the second scenario I mentioned above. Again, that would fail in the absence of evidence in writing.
155. In my view, notwithstanding Mr Lam’s persuasive submissions, the plaintiff’s case is still not maintainable. Simple proof of the oral or inferred agreement between the parties or an unwritten declaration of trust would not be enough to entitle the claimant to an enforceable interest in the property under a trust. Such an arrangement could only take effect as an express trust. It would be unenforceable since it would not be evidenced by writing signed by the party declaring the trust. (Snell’s Equity, para 24-056).
156. In the premises, I find that the plaintiff’s ‘rent for mortgage’ arrangement is not sustainable in law for an express trust (save for any common intention constructive trust).
Mesne Profits
157. Lastly, also for completeness, I shall give my observation on the plaintiff’s claim for mesne profits.
158. The plaintiff fails to see the fallacy in the so-called ‘rent for mortgage’ arrangement when the plaintiff’s claim for mesne profits from 2013 or the date of the Writ (2018) was pleaded. It was the plaintiff’s case that the defendants were still paying rent from 2013 up to the present moment as the mortgage is still subsisting. It therefore seems to me that the defendants were not in wrongful possession of the Property (ie not liable for mesne profits) if it was the plaintiff’s case that the 1st defendant continued in making mortgage repayment which was treated as rent paid to the plaintiff. There was no notice of termination of the rental agreement, if it ever existed. There is no suggestion that the plaintiff would take over to pay for the existing mortgage or would pay off the outstanding balance of the mortgage. It appears to me that the burden of the mortgage has never crossed the plaintiff’s mind. Had it been necessary, I would hold that the plaintiff is not entitled to any mesne profits while he was relying on the defendants to make the mortgage repayment under the so-called ‘rent for mortgage’ arrangement (which I have already rejected).
159. Counsel for the plaintiff rightly conceded that any mesne profits, in this particular case, should be counted from the date of judgment and if there was any wrongful occupation after the court order (if any).
160. In this action, I dismiss the plaintiff’s claim for mesne profits.
CONCLUSION
161. For the above reasons, I find that the HK$600,000 was a gift. There was no trust arrangement or any 2002 Oral Agreement. I find that the defendants are the legal and beneficial owners of the Property. The plaintiff’s claim is dismissed.
162. There will be a costs order nisi that the plaintiff do pay the defendants’ costs of the action, and such costs to be taxed if not agreed with certificate for counsel. The defendants’ own costs be taxed in accordance with the Legal Aid Regulations. In absence of any application for variation, this costs order shall be made absolute in 14 days from the date hereof.
163. I thank both counsel for their assistance.
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(George Lam)
Deputy District Judge |
Mr Kenneth K Y Lam, instructed by Fan & Fan, for the plaintiff
Ms Pauline Leung, instructed by Yu Sun Yau Mak & Lawyers, assigned by the Director of Legal Aid, for the 1st and 2nd defendants
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