YU CHUNG LEUNG ALAN v. The Intended Administrator of the estate of WONG CHEUK MING KENNETH, deceased

HCA 1436/2020

[2024] HKCFI 982

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1436 OF 2020

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BETWEEN

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J U D G M E N T

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1.  This is the trial of the action in which the Plaintiff (“P”) claims against the Estate of Wong Cheuk Ming Kenneth (黃焯明), Deceased (respectively “the Deceased” and “the Estate”) for declaratory relief and an order for the conveyance to P of the property known as “2/F including the Balcony and Open Space & Roof, Block 9 of Arts Garden, 55E Nga Yiu Tau, Yuen Long, Hong Kong” (“the Property”), which has been registered in the name of the Deceased, based on a common intention constructive trust, or alternatively, proprietary estoppel.

2.  Probate searches have been made by P’s solicitors, but to no avail. Despite various attempts and efforts having been made to contact the Deceased’s relatives whose identities were known to P, they either could not be reached or did not respond. As no next-of-kin of the Deceased or personal representative came forward, P

a. obtained an Order of the Master on 10 May 2021 whereby the Official Solicitor was appointed to represent the Estate for the limited purpose of accepting service of the Writ herein endorsed with the Statement of Claim, and P has pursuant thereto duly served the Writ to the Official Solicitor who thereafter became functus; and

b. was granted leave by an Order of another Master dated 29 March 2022 to proceed with this action in the absence of any person representing the Estate.

3.  In the circumstance, I proceeded with this trial in the absence of anyone appearing for the Estate.

4.  At the opening stage of the trial, it became apparent that the Property was on the date of the trial still subject to the Mortgage (defined and alluded to below) which remained undischarged save for the repayment of a minor sum, but the mortgagee bank has not been informed or made a party to this action. As P’s case was well supported by documentary evidence and was uncontested, and after discussion with Mr Wong, counsel for P, who indicated that P was ready and willing to pay off the Mortgage as soon as possible, this Court decided to manage the trial flexibly to implement the underlying objective by (a) hearing the trial up to the finish of P’s factual evidence, (b) then adjourning the trial, and (c) making various directions for P to report and prove that he has discharged the Mortgage, and then by letter to apply to formally close P’s case and to adopt his written opening submissions as his final submissions, thereby to conclude the trial.

5.  P has since paid off the Mortgage as evidenced by a Receipt issued by the mortgagee DBS Bank (Hong Kong) Limited (“DBS”) dated 12 March 2024. On 28 March 2024, this court acceded to P’s application by his solicitors’ letter of even date for the case management directions above-mentioned and thus treated the trial as concluded. This Court now renders its judgment.

The Facts

6.  As said, P’s case is well supported and corroborated by documents, which would be footnoted along the way of the following narrative.

7.  P himself, his wife Mak Lai Mee Candy (“Candy”), P’s sister Yu Chung Lai (“Chung Lai”) and 黃德賢 (“Wong”) filed their witness statements and gave oral evidence. Not only were their evidence uncontested, having heard and seen them gave evidence I find them honest and reliable witnesses. I accept their evidence in full and find for the facts as stated below.

8.  Since about 1996, Candy began working as a driving instructor at the Hong Kong Driving Academy where she befriended the Deceased, who was also a driving instructor there. Since then, P and Candy often visited the Diseased and had meals together. They had become close friends.

9.  In 1997, the Deceased purchased the Property, which was registered in his sole name. Since then, he lived alone there.

10.  In 1998, the Deceased retired. His friendship with P and Candy and their times together continued regardless.

11.  In about late 2005, the Deceased called Candy to ask if she was interested in purchasing the Property as the Deceased wanted to repay loans he owed to his relatives. The Deceased, however, also wished to be able to reside in the Property for the rest of his life rent-free. The Deceased proposed a price of HK$600,000 which he understood was the recent sale price of the flat on the ground floor of the same village house as the Property. Candy told the Deceased that she would have to discuss the matter with P.

12.  Candy subsequently learned that the Deceased had also approached Wong, an ex-colleague at the Hong Kong Driving Academy and a close friend of the Deceased, with a similar proposal. Wong at the time declined the proposal. I accept Wong’s evidence who spoke to this and corroborated what Candy said in this regard.

13.  P and Candy decided that they would like to help out the Deceased, but since they had to finance the matter by a mortgage and no income from the Property could be fetched during the Deceased’s lifetime, they told the Deceased that they would be agreeable if there was a 20% discount in the price, namely, at HK$480,000.

14.  The Deceased called a few days later to further discuss with P. I accept P and Candy’s evidence that they had reached an agreement orally with the Deceased in that telephone conversation (“the Agreement”) that (a) P would purchase the Property at HK$480,000, (b) HK$350,000 would be paid to the Deceased upfront to be financed through the mortgage of the Property, (c) the remainder would be paid to the Deceased by monthly instalments, (d) the Deceased would have the right to live in the Property rent-free until his death, and (e) the Property would be conveyed to P upon the death of the Deceased.

15.  Pursuant to the Agreement, P and Candy made many enquiries with different banks concerning mortgaging the Property. As P and Candy both did not have sufficient steady monthly income to satisfy the bank for taking out a mortgage, they obtained the agreement of Chung Lai, who had a steady income, to assist. Eventually, P, the Deceased and Chung Lai together as co-borrowers obtained a loan of HK$550,000 from DBS with the Property mortgaged as security (“the Loan” and “the Mortgage”). This is evidenced by DBS’s facility letter dated 5 January 2006[1].

16.  I accept the evidence of Chung Lai that she had been asked by P to so assist and she was willing to help because she trusted P, and that she had in fact met the Deceased for the first time in the bank when they executed the relevant documents relating to the Loan and the Mortgage and that since then she had never met with the Deceased again.

17.  Pursuant to the Agreement, P expressly assured the Deceased that P would be responsible for the repayment of the Loan. The Loan was drawn down on 12 January 2006, and HK$546,100 (the Loan less solicitors’ fee of HK$3,900) was credited to P’s bank account with DBS number 3107XXXX (“P’s DBS Account”)[2].

18.  On the same day, P gave a standing instruction to HSBC[3] to transfer monthly a sum of HK$4,000 from his HSBC account number 495-9-0XXXXX (“P’s HSBC Account”) to P’s DBS Account for monthly repayment of the Loan. P also signed an “Auto-Debit Authorization For Instalment Loan” to DBS[4] authorizing the same to debit from P’s DBS Account for any sum which might be required to meet the instalment repayment of the Loan.

19.  On 18 January 2006, in accordance with the Agreement, P by 2 cashier orders - one in the sum of HK$300,000 in favour of Lai Sik Fan and Wong Sun Kan[5], the other HK$50,000 in favour of Katy Lai Wan Chee[6] – paid the Deceased the promised HK$350,000 by repaying his relatives direct through the said 2 cashier orders. Wong Sun Kan (now deceased) was the Deceased’s sister and Lai Sik Fan was her husband and the Deceased’s brother-in-law, and Katy Lai Wan Chee was their daughter.

20.  Pursuant to the Agreement, the remaining HK$130,000 had been paid to the Deceased by various monthly instalments paid by transfers from P’s HSBC Account through ATM machines (a) in February to April 2006, by 3 monthly instalments of HK$1,500 each totalling HK$4,500 and (b) from May 2006 to 7 October 2011, by 66 monthly instalments of HK$2,000 each totalling HK$132,000. Thus, P made such monthly payments to the Deceased consistently for about 5.5 years. These monthly instalment payments to the Deceased were evidenced by the bank passbook records[7] save a number of periods as listed in the table at paragraph 18 of his witness statement during which P did not update the passbook. During those periods, the bank passbook did not record the transactions but only showed the current balance after these “Net back items”. I specifically accept P’s evidence that though the monthly transfers during those periods were not shown in the passbook, he continued to and did make those monthly transfers to the Deceased.

21.  I accept and find that the amount so paid by monthly instalments in fact totalled to HK$136,500, which was HK$6,500 more than the outstanding balance of HK$130,000. I accept P’s evidence that at the time he did not pay attention and continued to transfer the sum each month until he realized it in October 2011, and that out of friendship he did not even mention the overpayment to the Deceased but simply told the Deceased that the remainder HK$130,000 had been completely paid off, and whereupon the Deceased thanked him.

22.  Concerning the continuous repayment of the Loan by P, (a) the available passbooks of P’s HSBC Account[8] show that the above monthly transfer by standing instruction has been continuing from February 2006 to October 2011, (b) the available passbooks[9] and monthly statements[10] of P’s DBS Account show that the above-mentioned monthly repayment of the Loan by auto-debit has been continuing since February 2006 to April 2022, (c) P has produced various Repayment Schedules of the Loan issued by DBS addressed to P and Candy covering the years between 2006 to 2019[11], and (d) P has produced the yearly Instalment Loan Statements from 2006 to 2022[12].

23.  Pursuant to the Agreement, the Deceased lived in the Property until in July 2015, it was discovered that he passed away in the Property. I accept P and Candy’s evidence that the Deceased lived there rent-free since January 2006 until his passing, as they had agreed under the Agreement.

24.  Since then, P had approached some of the relatives of the Deceased whose contacts he had to seek the performance of the Agreement by conveying the Property to him, but none has agreed to be involved.

25.  In August 2020, P commenced this action.

Discussion

26.  P now pursues two causes of action in the alternative. The first is common intention constructive trust. The second is proprietary estoppel.

27.  Conventionally and often times, the principles of common intention constructive trust are sought to be applied when at the time of the purchase of a property there is a common intention held by a person and other(s) that the beneficial ownership is to be different to the legal ownership and that there has been such detrimental reliance on the common intention that equity finds it unconscionable for that person to assert ownership in reliance of the legal title, and thus imposes a constructive trust.

28.  At trial, I have not been shown any authority that apply a common intention constructive trust over a property that has been owned hitherto by the person against whom the constructive trust is now sought to be imposed. Typically, if that had been the unequivocal intention of such person to create a trust, he could do so by a declaration of trust. Without clear authorities substantiating, I am not prepared in this uncontested trial to apply a common intention constructive trust to such a scenario, especially when, it seems to me, that proprietary estoppel is the more appropriate cause of action.

29.  The relevant principles on proprietary estoppel are trite. As succinctly stated by Ribeiro PJ and Gummow NPJ in Cheung Lai Mui v Cheung Wai Shing (2021) 24 HKCFAR 116 at 129 :

“23. Put shortly, the requirements of equity to recognize and give relief based on proprietary estoppel are : (a) a representation or assurance made to the claimant; (b) reliance thereon by the claimant; and (c) detriment to the claimant in the consequence of that reliance”.

30.  By agreeing to the arrangement as per the Agreement, the Deceased clearly had made a representation and assurance to P (and Candy) that upon P performing the Agreement, the Property would be conveyed to P upon the Deceased’s passing. P had clearly relied on the Deceased’s such representation and assurance (a) in enlisting Chung Lai’s help to take out the Loan, (b) in taking out the Loan as a co-borrower with the Deceased and Chung Lai, (c) in repaying DBS the Loan, (d) in paying the Deceased upfront the total sum of HK$350,000 and the subsequent monthly payments, and (e) in promising and letting the Deceased to continue to live in the Property rent-free until his passing. In consequence of such reliance, P clearly suffered detriment in paying all these sums to the Deceased, repaying the Loan and its interest throughout these years, and letting the Deceased live in the Property rent-free. I so hold.

31.  In my judgment, it is abundantly clear that P has met the requirements for equity to recognize and give relief based on proprietary estoppel.

32.  It is also abundantly clear, in my judgment, that it would be unconscionable for the Estate to resile from the Agreement, and that such unconscionability could only be appropriately and properly negated or remedied, and P’s equity be satisfied, by the performance of the Deceased’s part of the Agreement, namely, by conveying the full interest and title to the Property to P. I so hold.

Disposal

33.  In the premises, I give judgment to P and make the following order :

(1) There be a declaration that the Property, namely the property known as 2/F including the Balcony and Open Space & Roof, Block 9 of Arts Garden, 55E Nga Yiu Tau, Yuen Long, Hong Kong is being held by the Defendant/the Deceased’s Estate on trust in favour of the Plaintiff; and

(2) The Defendant/the Deceased’s Estate do within 14 days execute all documents and do all acts necessary to convey the Property to the Plaintiff, failing which a partner of the Plaintiff’s solicitors (to be named in the sealed order) be authorized to execute the said documents and do such acts on behalf of the Defendant/the Deceased’s Estate to carry this order into effect.

34.  As asked by the Plaintiff, there be no order as to the costs of this action.

35.  Lastly, this court thanks Mr Wong for his able assistance.