JONG LAN KIAUW v. JONG YANG HWA AND ANOTHER

DCMP 2540/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 2540 OF 2008

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J U D G M E N T

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Background

1.  The Plaintiff, Madam Jong, is the registered owner of Flat A, 17th floor, 52 Broadway, Mei Foo Sun Chuen ("Property").  She commenced these proceedings in August 2008 by way of Originating Summons to seek an order for possession of the Property under Order 113 of the Rules of the District Court.  She names as 1st Defendant her daughter, Jong Yang Hwa ("Daughter"), and as 2nd Defendant the Daughter's husband, Yeung Sai Kei ("Son-in-law").

2.  The Property was acquired by Madam Jong and her husband, Jong Liong Hien, in their joint names in November 1987.  It is not in dispute that there is no tenancy between Madam Jong, her husband and the Daughter.  Further, it is not in dispute that the Daughter, the Son-in-law and their children have been residing in the Property since 1987. 

3.  Madam Jong and the Daughter have each filed an affirmation in these proceedings.  An order was made by Master Lai on 3 October 2008, on the parties’ joint application, that Madam Jong and the Daughter should attend court for cross-examination on their affirmations.  At the hearing before me on 27 October 2008, the parties agreed that it should be treated as the trial of the action.

4.  It is Madam Jong's case that the Daughter and the Son-in-law are her licensees at will, and that by a letter dated 29 July 2008, Madam Jong had notified the Daughter and the Son-in-law of her revocation of the licence and had asked the Daughter and the Son-in-law to vacate the Property.  She claims that she is entitled to possession of the Property.

5.  In defence to Madam Jong's claim for possession, the Daughter claims that she, her husband and her family have the right to live in the flat "forever".  She argues that Madam Jong and her husband hold the Property under a constructive trust for the benefit of herself, her husband and the children.  She claims that when the Property was purchased by Madam Jong and her husband, their common intention was to permit the Daughter, the Son-in-law and their family to live in the Property, and that the Daughter and the Son-in-law had been treating the Property as their own flat.

6.  According to the Daughter's evidence, she was born in Indonesia and met the Son-in-law on a trip to Hong Kong in 1984.  They were married in February 1985.  She has a son from her first marriage.  The Daughter did not live with the Son-in-law immediately after their marriage, as they did not have a flat of their own in Hong Kong.  They lived with their respective relatives until 1985.  The Daughter claims that in September 1985, her father and Madam Jong came from Indonesia to visit her in Hong Kong.  She claims that at a gathering with their relatives, her father indicated that he would like to buy a home for the Daughter, her son, and the Son-in-law to live.  In October 1985, Flat C, 10th floor, 72 Broadway at Mei Foo Sun Chuen ("1st Flat") was purchased.  On the evidence, there is no dispute that the 1st Flat was purchased and registered in the joint names of Madam Jong and her husband.  The 1st Flat was 680 sq. ft. in size with two bedrooms.  The Daughter moved into the 1st Flat with her son and the Son-in-law in October 1985.  Madam Jong and her husband also stayed in the 1st Flat when they visited Hong Kong.

7.  On the Daughter's evidence, Madam Jong and her husband visited her again in Hong Kong in October 1987.  According to the Daughter, her father considered that the 1st Flat was too small, and told her that he would like to buy a larger flat for her and her family to live.  The Property was accordingly purchased in November 1987.  It was 1,300 sq. ft. with three bedrooms.  Again, it is clear from the evidence that the Property was purchased and registered in the joint names of Madam Jong and her husband in November 1987.  The Daughter and her family moved into the Property immediately, and the 1st Flat was sold.  The Daughter and her family, including her daughter born in 1990, lived in the Property since November 1987.  Again, it is not disputed that whenever Madam Jong and her husband came to Hong Kong to visit the Daughter, they also stayed at the Property.

8.  The Daughter claims that on one occasion when they were in the Property, Madam Jong had pointed to one of the bedrooms and told the Daughter that her son and his future wife would live in that bedroom after he was married.  The Daughter's son was five years old at the time.  On this basis, the daughter claims that it is her understanding that her father and Madam Jong had bought the Property for her and her family to live.

9.  Madam Jong's husband died on 29 January 1995.  The Daughter and her family continued to live in the Property after her father's death.  The Daughter claims that she and the Son-in-law have been paying all the management fees, utilities, rates and government rent for the Property since she had moved into the Property.  She also spent a sum of $275,500 to renovate the Property in about January 2008.  The Daughter claims that Madam Jong does not possess the keys to the Property, which were retained by the Daughter and her family.

The Issues

10.  The issue for determination by the court is whether the Daughter  has any interest in the Property, as she alleges.  This turns on the following issues :

(1)  Was there a common intention of Madam Jong and the Daughter, or an assurance from Madam Jong to the Daughter, that the Daughter would have a beneficial interest in the Property?

(2)  Did the Daughter suffer any detriment in reliance on the common understanding or assurance?

(3)  Would it be unconscionable for Madam Jong to insist on her strict legal rights or to deny the Daughter a beneficial interest in the Property?

Was there a common intention of Madam Jong and the Daughter, or an assurance from Madam Jong to the Daughter, that the Daughter would have a beneficial interest in the Property?

11.  I agree with Counsel for Madam Jong that it is immaterial what label is to be put to on the Defence put forward - be it constructive trust, or proprietary estoppel.  It makes no difference as the court will consider the same factors.  The applicable principles are conveniently set out in the judgments of Rogers VP and Cheung JA in HKCB Finance Ltd. v. Yuen Yi Wan, CACV 355/2005, where the judgment of Cooke P in the case of Gillies v. Keogh 2 NZLR 327 was quoted :

"Normally it makes no practical difference in the result whether one talks of constructive trust, unjust enrichment, imputed common intention or estoppel.  In deciding whether any of these are established it is necessary to take into account the same factors.”

12.    In his judgment in HKCB Finance, Cheung, JA summarized the following principles which are also relevant for this case :

" (1) When issues arise as to the existence and extent of joint interests in property or other assets, the principles are derived from the law of trusts and are to be applied regardless of whether the dispute arises between husband and wife, cohabitants or strangers, see Rayden and Jackson on Divorce and Family Matters 17^th Ed. Vol. 1 para. 30.2.

(2) The underlying question is one of intention.  Is there a common intention or design to share in the beneficial ownership of the property?  Such intention may be expressly declared on the documents relating to the property, arise by way of presumption under a resulting trust, or be established by way of common intention expressly agreed or inferred from the parties' conduct by way of a constructive trust : Pettitt v. Pettitt [1970] AC 777, Gissing v. Gissing [1971] AC 886.

(3) Where the legal estate is vested in one party only, the other will establish a beneficial interest, strictly classified as arising under a constructive trust, by showing that it would be inequitable for the legal owner to claim sole beneficial ownership.  The claimant will succeed where he or she can demonstrate two matters : (a) a common intention that both should have a beneficial interest; and (b) that the claimant has acted to his or her detriment on the basis of that common intention : Gissing, Lloyds Bank PLC v. Rosset [1991] 1 AC 107 and Grant v. Edwards [1986] Ch 638."

13.   The Property is and was at all material times held jointly in the names of Madam Jong and her husband.  I accept the submission of Counsel for Madam Jong that one joint tenant cannot deal with the Property without the authority of the other joint tenant.  Any transfer or lease of the Property must be by or under the authority of all the joint owners – in this case, both Madam Jong and her husband. 

14.  Even taking the evidence of the Daughter as true and correct in its entirety, her allegation is that it was her father who had told her that he would like to buy a large flat for the Daughter and her family to live.  There is no allegation that Madam Jong had made any such statement or assurance, or that the father had made the statement or assurance with the authority and on behalf of Madam Jong.  It is not even alleged that Madam Jong was present when her husband made the alleged statement or assurance.  In the absence of any evidence to show that the alleged statement or assurance made by the father was made with the authority of Madam Jong, any such alleged assurance or statement cannot be binding on Madam Jong.  I agree that the essential element of assurance from Madam Jong, to support any claim of proprietary estoppel, is absent.

15.  Madam Jong denies that her husband had ever made the statement alleged by the Daughter, that he would buy a larger flat for the Daughter and her family to live.  She claims that when the Property was purchased, the intention of her husband and herself was that the Daughter and her family would reside there on a temporary basis.  Madam Jong's evidence is that the Property was purchased for her husband and herself to spend their elderly years without the need to depend on their children, and for them to stay in when they visit Hong Kong, where she has many relatives.  Her evidence is that she comes to Hong Kong at least once a year, accompanied by her husband during his life, and that they stayed in the Property during such visits.  Her annual visits lasted about 2 to 3 months on the average, and she stayed in the Property each time since it was hers.  According to Madam Jong, her husband had told her that in the event of his death, the Property was hers to deal with, and that if she should decide to sell the Property, she could do so as the Property was in her name and the proceeds would be entirely hers. 

16.  Even on the Daughter's evidence alone, I cannot find that any common intention can be inferred from the conduct on the part of Madam Jong that she and her husband were to share the beneficial ownership of the Property with the Daughter.  When the Property was eventually purchased after the father had made the alleged statement, it was acquired and registered in the joint names of the father and his wife, Madam Jong.  Any presumption of advancement or otherwise, and any imputed common intention to share the beneficial ownership with the Daughter and her family, was rebutted by the evidence of the Property being registered in the joint names of Madam Jong and her husband at the time of the acquisition of the Property.  Madam Jong's evidence is that her husband had, before his death in 1995, asked the Daughter on a number of occasions to move out of the Property.

17.  The only evidence adduced by the Daughter which relates to Madam Jong is that one day after the Property had been purchased and when the Daughter and Madam Jong were in the Property, Madam Jong had pointed to one of the bedrooms and told the Daughter that her son (who was then aged 5) and his future wife would live in that bedroom after he got married.  I am not persuaded that this is sufficient to constitute any actionable assurance or evidence of any alleged common intention on Madam Jong's part that she was to share the beneficial interest in the Property with the Daughter and her family.  It was a casual statement made in what appears to be an informal exchange between mother and daughter in the presence of an infant child.  Moreover, for there to be any estoppel, there must be a clear and unequivocal assurance made by the promisor.  The meaning of the words or conduct constituting the alleged assurance has to be clear and unequivocal.  I am not satisfied that the statement allegedly made by Madam Jong can reasonably be understood by the Daughter to mean that she, her son and her family would have a beneficial interest in the Property, or that they could live in the Property forever, indefinitely.  The alleged statement that Madam Jong's grandson and his wife could live in one of the bedrooms is too equivocal to constitute an assurance that the Daughter, the Son-in-law, or the grandson, would have a beneficial or any interest in the Property.  The evidence is that the Daughter's son and the Daughter's daughter are now grown up.  There is no evidence that the Daughter's son is now married and is in need of a place to live with his wife.

18.  In any event, the statement allegedly made by Madam Jong was made after the purchase of the Property.  I accept the submission of Counsel for Madam Jong that it is only in exceptional circumstances that the court would take into account any agreement, arrangement or understanding reached between the parties some time later than the acquisition of the Property (see judgment of Lord Bridge of Harwich in Lloyds Bank plc v. Rosset [1990] 1 All ER 193, cited with approval by Ribeiro PJ in Luo Xing Juan Angela v. The Estate of Hui Shui See, Willy, Deceased & Ors., FACV No. 32 of 2007, at paras 28-30). Counsel for the Daughter has not referred to any justification for the Court to refer to this statement or act on Madam Jong's part at some unspecified time after the purchase of the Property.  I see no good reason why it should be considered, but in any event find that it adds nothing to the Daughter's case.

Did the Daughter suffer any detriment in reliance on the common understanding or assurance?

19.  Whether she seeks to rely on the doctrine of proprietary estoppel, or common intention as the basis of a constructive trust, the Daughter and the Son-in-law must be able to establish that they have acted to their detriment on the basis of the alleged assurance or common intention that they would have some interest in the Property.

20.  The only alleged detriment claimed to have been suffered by the Daughter and the Son-in-law are that they had moved into the Property since October 1987, that they had paid all the utility fees, management fees, rates and government rent in respect of the Property, and had spent $275,500 for renovating the Property in January 2008.

21.  Household expenses incurred by the Daughter and the Son-in-law whilst they were in occupation of the Property do not amount to detriment (Bostock v. Bryant (1990) 61 P & CR 23).  The Daughter, the Son-in-law and their family have been residing at the Property, rent free, for 21 years.  The Property is, on the evidence, currently worth approximately $5,000,000.  The renovation expenses of $275,500 and any other expenses incurred by the Daughter and the Son-in-law are sufficiently offset and outweighed by the benefits which the Daughter, the Son-in-law and their family have received by their occupation of the Property since 1987.

22.  Further, as revealed from the evidence of Madam Jong in the course of her cross-examination, she had made substantial gifts in cash and in kind to the Daughter and her children throughout the years, including a gift of US$450,000 to the Daughter in 2004 and US$100,000 to the Daughter's children when she came to Hong Kong.  She also paid for the meals, and a lot of the expenses of the Daughter and her family during her visits to Hong Kong and her stay at the Property.

23.  I accept, on the authorities cited by Counsel for Madam Jong (The Law of Real Property by Megarry & Wade 2008 Ed. para 16-016; E & L Berg Homes Ltd. v. Grey (1980) 253 EGLR 473; Appleby v. Cowley & Ors. (1982) Times (14 April 1982); Sledmore v. Dalby (1996) 72 P & CR 196; Watts v. Storey (1984) 134 NLJ 631), that taking into account the countervailing benefits that the Daughter and her family have received from Madam Jong, including their enjoyment of the Property rent free for 21 years and their receipt of cash payments from Madam Jong during her stay with them in Hong Kong, any alleged detriment suffered by the Daughter and her family in paying for the expenses which they claimed have been incurred have all been outweighed.  There is no detriment suffered by them in reliance on any alleged assurance or common understanding.

Would it be unconscionable for Madam Jong to insist on her strict legal rights or to deny the Daughter a beneficial interest in the Property?

24.  There is no evidence before the Court whatsoever of any hardship or unconscionability that may be suffered by the Daughter, the Son-in-law or their children, should they be required to move out of the Property.  They are all adults, and there is no evidence that they cannot afford to find alternative accommodation, or to work and support themselves.  Further, there is evidence that they have all along received generous gifts and payments from Madam Jong, including the cash payment of US$450,000 made by Madam Jong to the Daughter in 2004, and the US$100,000 made by Madam Jong to the Daughter's children.  Whenever Madam Jong was in Hong Kong, she paid for the meals, living and household expenses of the Daughter and her family.  In other words, the Daughter and her family, all capable adults, have been adequately looked after by Madam Jong.

25.  Madam Jong herself is in her 80s, and feeble.  She regarded the Property in Hong Kong as her home and resort should she fail to find support from her children in Indonesia and in Hong Kong.  She said that the Property was purchased by her husband and herself, with the intention that after the husband's death, she would be free either to retain the Property to spend her elderly years, or to sell the Property and keep the sale proceeds for herself.  She wishes now to sell the Property.

26.  On the evidence, I cannot see how it would be unconscionable to allow Madam Jong to insist on her legal rights to sell the Property.  Accordingly, I will grant to Madam Jong the orders which she seeks, in terms of paragraphs 1 and 2 of the Originating Summons issued on 12 August 2008, with an order nisi for the costs of the action including certificate for counsel, to be taxed if not agreed.  These costs include the costs in HCMP 1511/2008 prior to the transfer to this Court, on the District Court scale.

Postscript

27.  In the course of her cross-examination, Madam Jong had at one stage denied that the signature on her affirmation was hers.  Counsel for the Daughter attacks her credibility and the reliability of her evidence as a result.  Despite the confusion raised in the course of Madam Jong's evidence, she did effectively confirm to the Court the essential matters which are required to support her claims in these proceedings : that she was at all material times one of the registered joint owners of the Property, that the Property is now occupied by the Daughter, the Son-in-law and other persons without her valid licence, and that no tenancy existed between herself and her husband on the one hand, and the Daughter and her family the other.  I am able to make such findings and orders as are appropriate on the evidence which I have heard.  Further, as I have endeavored to make clear, even taking the case on the strength of the Daughter's evidence alone, and even if Madam Jong's evidence is to be ignored altogether, the Daughter fails in her Defence.