CHOY PUI LAM v. THE PERSONAL REPRESENTATIVE OF THE ESTATE OF CHAN YIM MEI, DECEASED

HCMP 313/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 313 OF 2015

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JUDGMENT

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A.  Introduction

1.  This is the hearing of the originating summons taken out by the plaintiff on 6 February 2015 and amended on 18 March 2016 (“the Amended Originating Summons”) whereby he seeks, among other things, the following declarations:

(a) A declaration that Chan Yim Mei (“the Deceased”) held the property, namely, Flat A6, 14^th floor, Block A, Jade Court, Nos 48 and 49 Praya Kennedy Town, Hong Kong, (“the Property”) on trust for the plaintiff and herself as joint tenants;

(b) A declaration that the Property did not form part of the estate of the Deceased; and

(c) A declaration that the plaintiff has become the owner of the entire beneficial interest in the Property.

2.  The plaintiff and the Deceased were husband and wife. They got married on 11 January 1988.  This was the Deceased’s second marriage; her first marriage lasted between 15 May 1974 and 9 January 1982.  On 29 December 2000, the Deceased acquired the Property in her sole name. She passed away in Hong Kong intestate on 3 February 2013.

3.  Only after the death of the Deceased did the plaintiff come to know that, the Deceased had given birth to a daughter, namely, Chan Wai Man, on 9 June 1972.  The plaintiff does not know who her father is. Chan Wai Man claimed that she was entitled to claim half of the interest in the Property.  This led the plaintiff to commence these legal proceedings.

B.  The procedure

4.  The plaintiff initially named Chan Wai Man as the defendant.  On 20 May 2015, L Chan J held that this was a procedural irregularity and ordered that, first, Chan Wai Man shall cease to be the defendant; and second, the personal representative of the estate of the Deceased be substituted as the defendant.

5.  By letter dated 17 June 2015, Chan Wai Man notified the court and the plaintiff that she had decided not to be appointed as the personal representative of the Deceased’s estate.

6.  On 4 July 2016, Master S Lo ordered that the Official Solicitor be appointed to represent the estate of the Deceased for the limited purpose of accepting service of the Amended Originating Summons.  Such a limited appointment of the Official Solicitor lapsed as soon as he accepted service of the Amended Originating Summons, after which he became functus officio, and therefore there was no one capable of acknowledging service on behalf of the defendant (Hong Kong Civil Procedure 2017, vol 1, §15/6A/8, p 340).  Order 28, rule 6 of the Rules of the High Court (“the RHC”) provides that:

“ Where in a cause or matter begun by originating summons an application is made to the Court for an order affecting a party who has failed to acknowledge service of the summons, the Court hearing the application may require to be satisfied in such manner as it thinks fit that the party has so failed.”

I am satisfied that the defendant failed to acknowledged service of the Amended Originating Summons in the above-mentioned circumstances.  Accordingly, I shall treat the defendant as being absent.

7.  Ms Lan invited me to deal with the matter summarily.  It is clear that the court has power at the hearing of an originating summons under RHC, Order 28, rule 4 to dispose of the action summarily where there are no triable issues, and that such a summary judgment application may be heard in chambers (open to public) (Billion Wealth Group Ltd v Strategic Media International Ltd HCMP 2586/2009 (3 May 2010, unreported), §2; Hong Kong Civil Procedure 2017, vol 1, §28/9/2 at p 683).  The burden in summary judgment applications under the originating summons procedure is on the plaintiff to justify its entitlement to summary judgment (Wing Hang Bank Ltd v Liu Kam Ying & Ors [2002] 2 HKC 57, §10).  Hence, although the matter is uncontested, the burden remains on the plaintiff to satisfy me that he is entitled to summary judgment on the remedies sought in the Amended Originating Summons.

C.  The plaintiff’s evidence

8.  The plaintiff has made two affirmations dated 6 February 2015 and 16 March 2017 respectively.  His evidence may be summarized as follows:

(a) In or about 1981, he came to know the Deceased when they worked together in a department store in Hong Kong.

(b) In March 1982, they started dating after the Deceased divorced her first husband.

(c) In or about 1983, at the age of 20, he emigrated to the United States of America (USA) with his parents and started to work as a waiter earning about US$1,500 a month.  Once in a while, he would return to Hong Kong to visit the Deceased.  At that time, she worked as an operator in a taxi radio station called Wing Tai Car Owners and Drivers Associations Limited (“Wing Tai”) earning about HK$1,200 a month.

(d) In January 1988, they got married in Hong Kong.  After that, he returned and continued to work in the USA while the Deceased stayed and continued to work in Hong Kong.

(e) In about 1989, with funds provided by him, partly from his savings and partly from loans from his family, the Deceased acquired 25% shares in Wing Tai.

(f) Since they got married, the Deceased had resided with her aunt and Chan Wai Man in an apartment owned by her mother and elder brother.

(g) He always wanted to buy a matrimonial home.  Throughout the 1990s, he worked very hard in the USA and managed to make some savings.  On the other hand, the Deceased could only make ends meet as the business of Wing Tai was not good.  He had to give the Deceased cash in lump sum each time they visited each other.

(h) In about 2000, he decided to buy the Property at the price of HK$885,000 which was intended to be used as their matrimonial home.  However, due to his job commitment in the USA, he could not stay in Hong Kong to complete the purchase.  Hence, he agreed that the Property should be acquired in the Deceased’s sole name with the common intention that the interest in the Property should belong to them jointly.

(i) With his entire savings, he paid the down payment and the renovation expenses of the Property.  Miscellaneous expenses including the purchase of furniture were settled by the supplementary credit card he gave to the Deceased.  On the other hand, the monthly mortgage repayments and other outgoings were paid by the Deceased with his financial support and her own earnings.

(j) Since about 2004, the Deceased suffered from severe diabetes and ceased to work in Wing Tai which was not making any profit at all.  He returned to Hong Kong for good to take care of the Deceased.  And they resided together at the Property.  He began to work as a taxi driver making about HK$15,000 to HK$20,000 a month.  He became responsible for paying the mortgage repayments, all household expenses and the medical expenses of the Deceased.

(k) In January 2011, in the course of arranging the discharge of the mortgage, they intended to transfer the legal title of the Property to their joint names.  They were advised by lawyers that they had to pay stamp duty and legal fees.  To save money, they were advised not to effect the title transfer but to make a will for the Deceased instead so that the Property would be inherited by him should the Deceased die before him.  They were also advised that, even without a will by the Deceased, the legal title of the Property would go to the surviving spouse anyway as they had no child. Upon such advices, they did not take any further action regarding the Property.

(l) In late January 2012, the Deceased’s condition deteriorated sharply.  He did not think about the transfer of the title of the Property or the making of a will by the Deceased any more.

(m) On 3 February 2013, the Deceased passed away.

(n) In or about October 2013, he instructed solicitors to apply for a grant of letters of administration in respect of the Deceased’s estate.  In the belief that he would be the sole beneficiary of the Deceased’s estate, he did not give any instructions to his solicitors in respect of his beneficial interest in the Property.  In the application for the grant, he simply regarded the Deceased to be the true owner of the Property without asserting his beneficial interest in it.

(o) Around the time when he applied for the grant of letters of administration of the Deceased’s estate, Chan Wai Man contacted his solicitors claiming that she was the natural daughter of the Deceased and she believed she was entitled to claim one half interest in the Property.  Before that, Chan Wai Man was known to him as the adopted grandchild of the Deceased’s mother; and Chan Wai Man always introduced herself as the Deceased’s niece.

9.  In support of his case, the plaintiff has produced various documents.  Among other things, there is a bank passbook for a US dollar savings account held in the joint names of the plaintiff and the Deceased at Hang Seng Bank.  It shows that there were regular remittances into the account before the plaintiff returned to settle in Hong Kong.  The plaintiff explained that they were monies he remitted for the purpose of paying the mortgage installments and providing financial support to the Deceased.  He referred specifically to a withdrawal of US$8,182.23 on 22 November 2000, and stated that it was used for paying the deposit for the purchase of the Property.  According to the land search record of the Property, the sale and purchase agreement was signed on 23 November 2000.  He also referred specifically to another withdrawal of US$22,790.29 on 29 December 2000, and stated that it was used to pay the balance of the purchase price on completion.  The sale and purchase of the Property was completed on 31 December 2000.  He also said that a number of withdrawals in mid-2001 were used to pay the renovation and miscellaneous expenses relating to the Property.

10.  The plaintiff has also produced copies of two bank passbooks for an account of the Deceased at the Standard Chartered Bank showing entries from June 2009.  He is unable to retrieve the previous records.  The Deceased used this bank account to make mortgage repayments.  The passbooks show regular cash deposits of various sums.  The plaintiff said that they represented his incomes as taxi driver after he returned to Hong Kong in 2004.  The passbooks also show that, at least since about August 2009, the Deceased received disabled social assistance from the Social Welfare Department.

D.  Analysis

11.  Ms Lan submitted that, in the light of the evidence given by the plaintiff, there was an express, or alternatively, inferred common intention construction trust and/or resulting trust in respect of the Property.  Since the plaintiff has given evidence on the actual intention of the relevant parties as to where the beneficial interest in the Property should lie, there is little scope for the operation of resulting trust (Liu Wai Keung v Liu Wai Man also known as Liu Hiu Nam Vikki [2013] 5 HKLRD 9, §45).  The real issue is whether the plaintiff and the Deceased held the Property on a construction trust for herself and the plaintiff in equal shares as joint tenants.

12.  The principles concerning constructive trust are well established.  In the context of this case, they may be briefly summarized as follows:

(a) Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the claimant regarding their shared beneficial interests in the property that matters.  The trust is constituted by the claimant’s detrimental reliance on their common intention and the unconscionability of the property owner departing thereform.  (Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 at 16, §38)

(b) Hence, the plaintiff must prove (i) there was a common intention between him and the Deceased that they were to be joint beneficial owners of the Property despite that it was acquired in the Deceased’s name; (ii) the plaintiff altered his position in detrimental reliance upon such common intention; and (iii) it was unconscionable for the Deceased to assert ownership in reliance on her legal title to the Property.

(c) It is the parties’ common intention at the time of the acquisition of the Property that is relevant.

(d) Such intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned based on evidence of express discussions.  It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention (Lloyd Bank v Rosset [1991] 1 AC 107, 132 – 133).

(e) Where reliance is placed on an express agreement, arrangement or understanding between the parties, their other conduct remains relevant as a matter of reference to which their assertions about the agreement or understanding must be gauged and tested.

13.  In this case, the plaintiff is relying on an express agreement to support the existence of a common intention between him and the Deceased concerning the beneficial ownership in the Property.  He stated that, because he could not stay in Hong Kong to complete the conveyancing procedure regarding the purchase of the Property, he agreed to acquire the Property under the sole name of the Deceased with the common intention of the Deceased and him that the Property, being the matrimonial home, belonged to the Deceased and him jointly.

14.  I am satisfied that there was such a common intention as claimed by the plaintiff on the following grounds:

(a) By the time the Property was purchased, the plaintiff and the Deceased had been married for over 12 years.  Although the plaintiff stayed most of the time in the USA, he would return to Hong Kong from time to time.  It was natural and plausible that he would like to buy a matrimonial home.

(b) The plaintiff and the Deceased had held properties in joint names before the Property was acquired, including the above-mentioned bank account at Hang Seng Bank (which the plaintiff cannot recall when it was opened), and a joint account at the New York branch of Hongkong Bank closed in 1994 (attached to plaintiff’s income tax return filed to the USA tax authority).

(c) He gave a plausible explanation why he could not sign the relevant documents in order to become one of the legal co-owners of the Property, namely, that he had to return to USA to work.

(d) The timing and amount of remittances made by the plaintiff are consistent with his evidence that he was responsible for paying the down payment, the balance of the purchase price for completion and the subsequent mortgage instalments.  These payments are in turn consistent with the existence of the common intention claimed by the plaintiff.

(e) He also gave credible explanations why he had not procured the Deceased to transfer one-half interest in the Property to him after he returned to settle in Hong Kong during the lifetime of the Deceased and did not raise this issue when he applied for a grant of letters of administration for the Deceased’s estate.

(f) There is no suggestion or evidence from anyone that the plaintiff’s evidence is untrue.  In particular, although Chan Wai Man claimed that she is entitled to one half interest in the Property and she was, at one stage, a defendant in these proceedings, she had never asserted in any correspondence or affirmation that the plaintiff’s evidence is untrue.

15.  The financial contributions made by the plaintiff towards the acquisition of the Property including, in particular, the down payment, balance of the price for completion and mortgage instalments, which are supported by documents, constituted detrimental reliance on the part of the plaintiff on the said common intention.

16.  In the circumstances, I am also satisfied that it would be unconscionable for the Deceased to assert that she was the sole beneficial owner of the Property.

17.  Accordingly, I am satisfied that, during the lifetime of the Deceased, she held the Property on constructive trust for herself and the plaintiff in equal shares as beneficial joint tenants.  I agree that, upon her death, her beneficial interest in the Property passed automatically to the plaintiff by virtue of the operation of the principle of survivorship.  As held in Tan Cheng Gay v Tan Choo Suan (2015) 18 HKCFAR 430 at 449, §62:

“ The effect of a joint tenancy in such a context is noted in Williams on Wills as follows:

Before speaking of joint wills it is perhaps necessary to say that so far as English law is concerned, they have nothing whatsoever to do with joint property, ie property held by beneficial joint tenants.  Such property (provided always that the joint tenancy is subsisting at death and has not been severed) cannot be subject to any will but passes automatically to the survivor or surviving joint tenants.”

Although the Deceased had not made any will, the principle must apply equally in the present context.  As the authors of Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (20^th edn., 2013) state in §46-15 at p 722:

“ As has already been seen, if land is held by two or more persons as joint tenants beneficially and one of the joint tenants dies, his interest accrues to the survivors, and his personal representatives take no interest …”

E.  Conclusion and orders

18.  For these reasons, I shall make the declarations sought by the plaintiff in paragraphs 1 to 3 of the prayer for relief in the Amended Originating Summons, which have been set out in paragraph 1 of this judgment above.

19.  The plaintiff asks for costs.  In practice, since it appears that the plaintiff and Chan Wai Man are the only two beneficiaries of the Deceased’s estate, the plaintiff wants Chan Wai Man to bear half of the costs of these proceedings.  I note that L Chan J has already ordered on 20 May 2015 that there be no order as to costs between the plaintiff and Chan Wai Man.  After that, Chan Wai Man decided not to be appointed as the personal representation of the Deceased’s estate and ceased to take part in these proceedings.  Notwithstanding that, in order to perfect the plaintiff’s title to the Property, he would have to seek the court’s assistance in any event.  It appears to me that the costs that he has incurred (apart from those which have been covered by the said order of L Chan J) are unavoidable.  In the circumstances, as a matter of discretion, I shall make no order as to costs.