CHAN SAU KWEI CHRISTOPHER v. KAN YAN TING EDWIN alias KAN CHI HUI

DCCJ 4437/2007

[2024] HKDC 52

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4437 OF 2007

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JUDGMENT

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Preliminary

1.  The trial of this action took place on 18 July 2023. The court proceeded in the defendant’s absence upon being satisfied that the defendant had been properly notified of the dates fixed for both the pre-trial review and the trial.

2.  Although the defendant has sought to counterclaim against the plaintiff for ownership of the subject property of this action, his counterclaim was provisionally struck out by Deputy District Judge Seto at the Pre-trial Review on 16 May 2023 under O 25, r 4(2) of the Rules of the District Court, Cap 336H (“the RDC”). Up to the time of the trial before me, the defendant has not applied to restore the counterclaim pursuant to O 25 r 4(3) of the RDC.

The plaintiff’s claim

3.  By his Statement of Claim, the plaintiff claims that the defendant has occupied his property at Unit No 7 on 24^th Floor of Block B Lok Sing Centre (“the Lok Sing Centre Unit”) as a trespasser since 25 August 2006, and claims for an order for delivery of possession of the property and damages for trespass.

4.  The Lok Sing Centre Unit was purchased in the names of the plaintiff and one Madam Chan Lin Chun (“Madam Chan”) as joint tenants under an assignment dated 12 September 1987 registered in the Land Registry by memorial No 3507676. Madam Chan passed away on 19 April 2006, and the plaintiff claims that thereafter, he had become the sole owner of the Property by his right of survivorship.

5.  Madam Chan was the mother of the defendant and sister of the plaintiff. It is the plaintiff’s case that the plaintiff and Madam Chan had previously given permission to the defendant to occupy the Lok Sing Centre Unit by way of a licence, for which the defendant had given no consideration. Subsequent to the death of Madam Chan, the plaintiff had in July 2006 given a notice to quit to the defendant to delivery up possession of that property on or before 24 August 2006, but the defendant had failed to do so. The plaintiff therefore claims that the defendant has been wrongfully occupying the Lok Sing Centre Unit without the plaintiff’s consent since 25 August 2006.

The defendant’s case

6.  By his Amended Defence and Counterclaim dated 14 July 2020, the defendant denies that the plaintiff is the owner of the Lok Sing Centre Unit, and asserts that the plaintiff had executed a document drafted by Madam Chan in 1987 (“the Purported Trust Document”) that stated the following:

“I, Chan Sau Kwei Christopher, agree to be a trustee to my nephew, Kan Yan Ting Edwin. By adding my name to the two properties Chan Lin Chun paid (B7, 24^th Floor, Lok Sing Centre Block B, 19-31 Yee Wo Street, Hong Kong and Flat C, 26^th Floor, Block 7, 25 Greig Crescent, Nan Fung Sun Chuen, Hong Kong). I promise I will secure Kan Yan Ting Edwin’s full ownership of the two properties.

I don’t have any actual rights and ownership over the two properties. If Chan Lin Chun pass away before I do, I will return the full ownership of the two properties back to Kan Yan Ting Edwin without any terms and conditions.

(signed)
Chan Sau Kwei Christopher
Hong Kong Identity Card
D272286(1)
1987- ”

7.  Relying on the above, the defendant claims that the plaintiff holds the Lok Sing Centre Unit on trust for his benefit. On the other hand, the plaintiff denies that he has ever executed the Purported Trust Document.

The evidence

8.  In his evidence, the plaintiff explained that in 1972, Madam Chan became the owner of Flat D504 on 5^th Floor of Block D at Westlands Gardens, No 4 Westlands Road, Hong Kong (“the Westlands Garden Unit”) with funds provided by their parents. It was the intention of their parents that the Westlands Garden Unit was to be held by Madam Chan for the benefit of the plaintiff. It is the plaintiff’s evidence that he had contributed part of his salary to the payment of the mortgage instalments of the Westlands Garden Unit from June 1975 onwards, whilst his parents had also remitted funds for payment of the instalments. Eventually, the Westlands Garden Unit was sold in 1987, and the proceeds were applied to the purchase of the Lok Sing Centre Unit as well as another property at Flat C, 26^th Floor, Block 7, No 25 Greig Crescent, Nan Fung Sun Chuen, Hong Kong (“the Nan Fung Sun Chuen Unit”) in September 1987. By an assignment dated 7 September 1987, the Nan Fung Sun Chuen Unit was also assigned to the plaintiff and Madam Chan as joint tenants.

9.  The plaintiff went on to say that his wife and daughter had been living in the Lok Sing Centre Unit from 1987 until 1995, when he and his family emigrated to the United States of America (“USA”). Thereafter, the Lok Sing Centre Unit was rented out, and Madam Chan would deposit the rent into the plaintiff’s bank account.

10.  Meanwhile, the Nan Fung Sun Chuen Unit was occupied by the plaintiff’s mother, his other sister and her two children. The plaintiff also says that he had been solely responsible for repaying the mortgage of the Nan Fung Sun Chuen Unit.

11.  In respect of the Lok Sing Centre Unit, the plaintiff pointed out that Madam Chan had requested him to pay the property tax pertaining to the Lok Sing Centre Unit. Further, he said that when Madam Chan fell sick in September 2000, she wrote to the plaintiff to remind him to handle the outgoing expenses related to the Lok Sing Centre Unit. In a letter dated 10 September 2000, Madam Chan wrote to the plaintiff reminding him to pay such expenses (“樂聲的管理費，差餉，電費，煤氣費（最低收費）等都有期限及付款，記得去理”).

12.  The plaintiff had also appointed an estate agency to let out the Lok Sing Centre Unit in September 2000 at a monthly rental of HK$11,000.

13.  Subsequently, according to the plaintiff, the defendant returned from his studies in the USA in around 2004 and needed a place to reside in. At that time, Madam Chan had enquired with the plaintiff to see if he could let the defendant stay in the Lok Sing Centre Unit temporarily, as the defendant was not on good terms with his father and did not want to live with him. Since the Lok Sing Centre Unit was vacant at that time, the plaintiff agreed with the arrangement. Meanwhile, Madam Chan also assured him that it would be a temporary arrangement.

14.  After Madam Chan passed away on 19 April 2006, the defendant had continued to occupy the Lok Sing Centre Unit. It is the plaintiff’s case that he has become the sole owner of the Lok Sing Centre Unit after the death of Madam Chan by his right of survivorship. In 2007, the plaintiff also sold the Nan Fung Sun Chuen Unit and obtained the proceeds.

15.  Subsequently, by a letter dated 25 July 2006 from his then solicitors, the plaintiff demanded the defendant to vacate the Lok Sing Centre Unit by 25 August 2006, but the defendant had failed to do so. This remained so despite a further demand by the plaintiff’s then solicitors in July 2007.

16.  The defendant was absent at the trial and did not testify. As can be discerned from his pleadings, it is his case that he was informed by Madam Chan shortly prior to her death that the plaintiff would arrange to transfer the ownership of the Lok Sing Centre Unit back to him, being the beneficiary of the property. It is his case that the Lok Sing Centre Unit has at all material times been his and Madam Chan’s residence, and Madam Chan had permitted him to reside at the property.

17.  He relies on the Purported Trust Document and asserts that the Lok Sing Centre Unit is held on trust by the plaintiff for his benefit. According to his witness statement dated 26 February 2020, the defendant found the Purported Trust Document at the Lok Sing Centre Unit after the death of Madam Chan. However, the defendant alleges that the document could no longer be found after an incident where the plaintiff had once entered the property without his knowledge in January 2019. Shortly after that incident, the defendant says that he had changed the door locks to the Lok Sing Centre Unit and continued residing there. As a result, only a photographic copy of the document said to have been previously taken by the defendant was disclosed by him, which was produced and made available by the plaintiff during the trial.

Discussion

18.  The plaintiff submitted, which I accept, that the plaintiff as the legal owner of the Lok Sing Centre Unit after the death of Madam Chan is prima facie the beneficial owner of that property, unless the defendant can prove the existence and validity of the Purported Trust Document.

19.  In Macau First Universal International Ltd v Ding Xiao Hong & Others, HCA 992 of 2010, 20 August 2014, Au Yeung J held at paragraphs 42 and 43 that:

“42. … Legal title carries with it all rights. Unless and until there is a separation of the legal and equitable estates, there is no separate equitable title: see Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 699 at 706F (per Lord Browne-Wilkinson).

43. The legal title will be the starting point. The onus is then on the party who contends that the beneficial interests are divided between them otherwise as the title shows to demonstrate this on the facts. See Stack v Dowden [2007] 2 AC 432, at §4-5 (per Lord Hope) and §68 (per Baroness Hale).”

20.  The plaintiff further submitted that even if he has not made any contribution to the purchase price of the Lok Sing Centre Unit as alleged by the defendant, the fact remains that he has the legal title to the Lok Sing Centre Unit and therefore must have a better title than the defendant: see Chan Hau Ling v 劉西 & Another, HCA 1286 of 2012, 22 April 2015, at paragraphs 29 to 32, per Peter Ng J. The plaintiff is therefore entitled to possession of the Lok Sing Centre Unit, and to damages of trespass from the defendant regardless of whether the plaintiff had made any contribution to the purchase price of that property.

21.  I agree with the plaintiff that the crucial issue is whether the plaintiff had executed the Purported Trust Document, the effect of which would be that he holds the Lok Sing Centre Unit on trust for the benefit of the defendant.

22.  First of all, however, the original of the Purported Trust Document has not been produced or made available by the defendant as evidence. Secondly, even if on the strength of the photographic copy produced to the court, it is remarkable that such document was not referred to in the defendant’s pleadings when he instructed his legal representatives to prepare his Defence in December 2007, and he only sought to plead the same in his Amended Defence and Counterclaim in July 2020. Further, it is difficult to understand that no claim or counterclaim has been issued by the defendant in respect of the Nan Fung Sun Chuen Unit, despite it being also one of the subject properties referred to in the Purported Trust Document. In view of the above, it is difficult to accept the defendant’s case, especially in the absence of his testimony at trial.

23.  Also, in a police statement made by the defendant on 31 January 2019 complaining about the possibility of the plaintiff having stolen certain items from the Lok Sing Centre Unit during the incidence when the plaintiff was found by the defendant inside the premises mentioned above, the defendant had not mentioned anything about that property being held on trust for his benefit pursuant to the Purported Trust Document, but merely referred to his entitlement to the estate of his mother, that is Madam Chan, upon her death.

24.  On the other hand, I do not find that the plaintiff is in any way dishonest in his evidence, whether in respect of this issue or the background and circumstances leading up to the commencement of the action.

25.  The plaintiff has further submitted that in any event, the Purported Trust Document could not have served the intention on the part of Madam Chan as alleged by the defendant of enabling the plaintiff to become the trustee of the property. If it was true that the Purported Trust Document had indeed been executed, it would have had the effect of severing the joint tenancy between the plaintiff and Madam Chan – see Versaci v Rechichi [2019] VSC 747, McMillan J at paragraphs 109 and 110:

“109 The principal features of a joint tenancy are the right of survivorship and the ‘four unities’ being the unities of title, possession, interest and time. A joint tenancy may be severed in a number of ways. In Australian Real Property Law, the authors refers to the following position:

[W]here a joint tenant declares himself or herself a trustee of the interest for another, equity will enforce the trust providing there has been compliance with the statutory requirements in relation to declarations of trust. The declaration of trust severs the joint tenancy in equity.

110 In the Canadian decision of Re Sorenson and Sorenson cited therein, the Appellate Division of the Alberta Supreme Court held a declaration of trust by a wife to her son severed the joint tenancy as between the husband and wife.”

26.  It is submitted that the plaintiff would thus have no entitlement to the half share of interest in the Lok Sing Centre Unit held by Madam Chan, and the plaintiff could not have held Madam Chan’s half share of interest in that property on trust for the defendant in any event. This would have defeated the purpose for which the Purported Trust Document was said to be executed. Whilst I note the plaintiff’s arguments in this respect when considering the evidence before me, I also consider that the Purported Trust Document was said to have been presented by Madam Chan without any indication that it was prepared by a lawyer. As such, it appears to me that it would not be fair to assume that Madam Chan would have had knowledge of such legal analysis at the time. However, I accept the plaintiff’s submission that although it appears that the assignment dated 12 September 1987 was prepared by solicitors, it is difficult to understand why Madam Chan did not similarly appoint a solicitor to prepare the Purported Trust Document for the plaintiff’s execution, which is said to have taken place in the same year.

27.  Further, although the defendant has not testified at the trial, and his witness statement made in the action has not been adopted as part of the evidence in this case, it is noted that the defendant claims in his witness statement that someone named “Johnny” had witnessed the plaintiff execute the Purported Trust Document. However, the defendant has neither testified at the trial nor procured the said “Johnny” as a witness.

28.  The plaintiff denies that the Purported Trust Document was signed by him. The court noted that the document bears the signature “Christopher Chan”, whereas the other contemporaneous documents, that is the assignment of the Lok Sing Centre Unit dated 12 September 1987, the assignment of the Nan Fung Sun Chuen Unit dated 7 September 1987, and the mortgage of the Nan Fung Sun Chuen Unit also dated 7 September 1987 all bear the signature of the plaintiff as “Chris”, which were substantially different from the one appearing on the Purported Trust Document.

29.  Having considered the available evidence on the whole, I accept the plaintiff’s case that the Purported Trust Document was not executed by him. In the premises, I find that the plaintiff has successfully established his case against the defendant, and is entitled to vacant possession of the Lok Sing Centre Unit, with damages for trespass.

Damages

30.  As the plaintiff submitted, it is trite that where a person wrongfully occupies land, the owner will be entitled to claim mesne profits, and the normal measure of damages is the market rental value of the land being trespassed upon for the period of wrongful occupation: see paragraphs 39-047 – 39-049 of McGregor on Damages (21^st Ed).

31.  This action was commenced in October 2007, but the proceedings took exceptionally long, and the trial did not take place until July 2023. In his evidence, the plaintiff has sought to explain the length of the proceedings. He stated that he had a car accident in the USA (where he had emigrated to since 1995) and thereafter he had become weak and had to stay at home. He did come to Hong Kong to visit his elder sister in 2012, but thereafter he had to return to the USA due to poor health. During the time when he was staying in the USA, it was not easy to communicate with his solicitors in Hong Kong. According to him, that was the reason why the proceedings had been left pending for a long time. He further explained that in 2018, he had another car accident and was unable to attend to this action for some time. He has produced the relevant accident reports related to the two accidents he had, which I accept. In any event, the plaintiff says that he has eventually proceeded with the action.

32.  On the other hand, the fact is that in the meantime, the defendant has also filed his Amended Defence and Counterclaim on 27 August 2020. In his pleaded case[1], he does not admit that he has remained in the Lok Sing Centre Unit after 25 August 2006. However, in his witness statement dated 26 February 2020 that has been filed with the court, the defendant admitted that he had continued to occupy and reside at the property since the death of Madam Chan. He also stated that he had changed the locks to the unit in around the end of January 2019 and had continued to reside at the unit. Further, in his Notice to Act in Person dated 7 June 2021, the defendant stated the Lok Sing Centre Unit as his address.

33.  As it recently appears that the defendant is still residing at or otherwise occupying the Lok Sing Centre Unit, it is submitted by the plaintiff that there is no prejudice to the defendant if the court takes into account all the circumstances, and the development of the proceedings as aforesaid, and determine the damages for the full period of the wrongful occupation since August 2006. Having considered the above circumstances, I agree with the plaintiff’s submissions, and would proceed to assess the damages in that light.

34.  In relation to the assessment of damages, the plaintiff submitted that although expert evidence on market rental value of a property is commonly adduced for the purpose of quantifying mesne profits, such value need not be proven by expert evidence. Mr. Ho for the plaintiff referred me to Chiyu Banking Corporation Ltd v Champion Harvest Enterprises Ltd t/a Koon Wan Motors Co, HCA 1449 of 2004, 14 April 2005, where Deputy High Court Judge Fung (as his Lordship then was) ruled that as the tenant agreed to tender HK$20,000 per month for continuation or renewal of the tenancy agreement, and the landlord did not claim a higher amount, the tender was the best evidence and could be accepted as evidence of the market rent.

35.  In this case, the plaintiff relies on the fact that the Lok Sing Centre Unit had been let out at a monthly rental of HK$11,000 in 2000, and submitted that although the monthly market rent of the property must have increased since 2006, the plaintiff will nevertheless rely on this value and invite the court to assess damages at HK$11,000 per month from 25 August 2006 onwards.

36.  Having considered the submissions of the plaintiff, I agree that it is fair to assess damages in terms of mesne profits on the above basis from 25 August 2006 onwards until the date of this judgment. In the circumstances, the amount of damages for trespass is calculated as follows:

HK$11,000 x 208 months = HK$2,288,000

Judgment

37.  I therefore give judgment in favour of the plaintiff for the sum of HK$2,288,000, and also make an order that the defendant shall forthwith deliver vacant possession of the Lok Sing Centre Unit to the plaintiff.

38.  Costs should follow the event in this case. I make an order that the defendant shall pay the plaintiff’s costs of this action, including the costs of the trial, to be taxed if not agreed. The plaintiff’s own costs shall be taxed in accordance with the Legal Aid Regulations.

39.  Lastly, I thank counsel for his helpful assistance.