DCMP 450/2021
(Formerly HCMP 502/2014)
[2022] HKDC 1347
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO 450 OF 2021
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BETWEEN
YAU KWOK YING
Applicant
and
The estate of SZETO PUI FAN, deceased
1st Defendant
SZETO WAI SHUN (the 1st and 2nd Defendants
2nd Defendant
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Before:
Deputy District Judge Rebecca Lee in Court
Dates of Hearing:
15-16 August and 13 September 2022
Date of Judgment:
1 December 2022
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JUDGMENT
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BACKGROUND
1. The plaintiff (“P”) is the wife of Mr SZETO William (“William”) who passed away on 4 June 2007 at the age of 49. They have a son SZETO Yu Long (“YL”) (now aged about 24).
2. William, the 1st defendant (“D1”) (who passed away on 2 December 2014), and the 2nd defendant (“D2”) were and are the children of Madam YU Chuk Yee, deceased (“the Deceased”).
3. This case concerns a property known as Flat A, 4th Floor, No 78 Un Chau Street, Kowloon (“the Property”). By a Deed of Gift dated 9 June 1978 and registered in the Land Registry by Memorial No UB1536964 (“1978 Deed of Gift”), the Property was assigned to the Deceased and William as joint tenants.
4. Upon the death of William, the Deceased was entitled to the entire interest, share, and right of and into the Property.
5. On 30 July 2008, the Deceased executed a deed of gift (“the 2008 Deed of Gift”), the subject matter of dispute, by which she assigned half of the interests in the Property to P. The Deceased and P then became tenants in common in equal shares of the Property.
6. The Deceased died intestate on 21 August 2010 at the age of 83.
7. On 19 November 2013, letters of administration in respect of the estate of the Deceased was issued to D1 and D2 as the administratrix and administrator. The only substantial estate of the Deceased is the Property. The beneficiaries entitled to share the Deceased’s estate are D1 (or her estate), D2, and YL.
8. On 3 March 2014, P issued an Originating Summons (as amended on 10 April 2014) under HCMP 502/2014 against D1 and D2 as administratrix and administrator of the Deceased’s Estate as well as in their personal capacities seeking the following reliefs:-
(a) A declaration that the Property is held by P and the estate of the Deceased as tenants in common in equal shares;
(b) An order that the Property be sold and P or some other fit and proper person be appointed to convey the interest of the Deceased’s Estate therein in such manner as the court deems fit;
(c) Ds having, without consent of the P, occupied the Property to the exclusion of the P, an Inquiry as to what sums are due from the Ds to the P in respect of occupation rent for the Property;
(d) An order that the Ds do account to the P for such sums as may be found to be due to her;
(e) All necessary and consequential Accounts, Inquiries and directions;
(f) Further or other relief; and
(g) Costs.
9. In support of the Originating Summons, P filed her 1st affirmation (“P’s 1st Affirmation”).
10. On 14 July 2014, D2’s affirmation was filed (“D2’s Affirmation”).
11. P filed her 2nd affirmation on 18 September 2014 (“P’s 2nd Affirmation”).
12. D1 passed away on 2 December 2014. On 25 June 2015, Master Lai ordered that D2 be appointed to represent the estate of D1, his late sister, to carry on with these proceedings.
13. By the Order of the Hon Mr Justice L Chan made on 13 October 2015, the above 3 affirmations stand as P’s Statement of Claim, Ds’ Defence and Counterclaim, and P’s Reply and Defence to Counterclaim respectively. The affirmations also stand as the witness statements of the deponents as to factual matters and shall stand as evidence-in-chief of those deponents.
14. In addition to her 2 affirmations, P has filed a supplemental witness statement and also filed one witness statement of 萬碧君 (“Ms Man”, the conveyancing clerk handling the 2008 Deed of Gift) on 21 March 2021.
THE PARTIES’ RESPECTIVE CASES
15. It is P’s case that it was the Deceased’s intention to gift half of the Property to her and thus the 2008 Deed of Gift was executed. P produced to her 1st Affirmation exhibit “YKY-1”, a true copy of the 2008 Deed of Gift (“YKY-1 Version”).
16. As contained in P’s 1st Affirmation:-
“7. My husband William Szeto and I had a very good and harmonious relationship with the Deceased. Before my husband passed away, he regularly paid a monthly contribution of around HK$5,000 to the Deceased.
8. Since the death of my husband William Szeto, the Deceased showed even greater love and affection over myself and my son Szeto Yu Long. I would go to the Property to have dinner gathering with the Deceased’s family 2 -3 times in a month. Despite that I only earned a very modest sum of income and had lost the financial support of my husband, I still did my best to maintain the said monthly contribution to the Deceased for around 6 months, until the Deceased urged me to stop the monthly payment and focus on taking care of my son Szeto Yu Long. I therefore stopped paying the said contribution thereafter because I had genuine difficulty to afford this regularly. That said, I would sometimes give “pocket money” in the range between a few hundreds and around one or two thousand Hong Kong dollars to the Deceased when we had gatherings. Further, the Deceased would occasionally stay in my then residence for one or two weeks so that she could spend more time with and help look after my son and this continued after the death of my husband. In short, both my husband and I had good terms with the Deceased and in my view, the Deceased had all along expressed her care and love towards us as well as my son.
10. In or around mid-2008, about one year after my husband passed away, the Deceased and I discussed whether she could transfer half of the Property to me . Out of her love and affection, she wished to take care of myself and Szeto Yu Long on behalf of my husband by gifting to us half of the Property, so that my son and I can have some comfort and security in our future living, especially since we were then without the financial support of my husband, who used to be the pillar of the family. The Deceased was also herself of the view that I, being the widow of my husband, was rightfully entitled to half of the Property, as my husband owned half of the Property and it was never expected that my husband will pass away before the Deceased .
11. With gratitude and understanding her wishes, arrangements were made with solicitors to prepare the legal documents for the same. On 30 July 2008, a Deed of Gift (“the Deed”) was executed by the Deceased, by which for the purpose of effectuating such desire and in consideration of the natural love and affection the Deceased bears for myself and for divers other good consideration, the Deceased as beneficial owner assigns and releases unto myself all that her one equal undivided moiety or half part or shares of and in the Property as tenants in common in equal shares. There is now produced and shown to me a true copy of the said Deed dated 30 July 2008 marked as Exhibit “YKY-1”. At the material time, both the Deceased and I had informed the 1st and 2nd Defendant of our intended arrangement of the Property and they had no objection thereto until very recently.
12. On 27 August 2008, the Deed was duly registered at the Land Registry by the solicitors. There is now produced and shown to me a true copy of the Land Register records of the Property as of 1 March 2014 marked as Exhibit “YKY-2”.”
17. It is Ds’ case that D2 (who having resided with the Deceased in the Property since 1978) had never heard of the Deceased intending to give away any of her interest, right and entitlement in and of the Property to anyone else whether during her lifetime or upon her passing away. Ds put P to strict proof of the preparation and execution of the 2008 Deed of Gift.
18. In D2’s affirmation, D2 takes issue with the validity of the 2008 Deed of Gift:-
“9. Letters of Administration in respect of the Deceased’s estate was granted by the Probate Registry of the High Court on 19 November 2013. There is now produced and shown to me the exhibit marked “SWS-1” copy of the Letters of Administration. The 1st Defendant and I were the administrator and administratrix of the Deceased’s estate. It is not disputed that the beneficiaries entitled to share the Deceased’s estate are the 1st Defendant, myself, and Szeto Yu Long, the grandson of the Deceased and the son of the Plaintiff.
10. The only substantial estate of the Deceased is a property known as Flat A, 4th Floor, No. 78 Un Chau Street, Kowloon (“Subject Property”). The Subject Property was assigned to the Deceased and our Late Elder Brother by virtue of a Deed of Gift dated 9 June 1978 and registered in the Land Registry by Memorial No. UB1536964 who held as joint tenants. I understood that the Deceased was entitled to the entire interest and share and right of the Subject Property under the law upon the death of our Late Elder Brother on 4 June 2007.
11. I and my family (my wife and two daughters now aged 7 and 3 respectively) have all along been residing in the Subject Property occupying one of the bedrooms and sharing other areas with the Deceased (before she passed away) and the 1st Defendant. Each of the Deceased and the 1st Defendant was occupying one bedroom. We had been living and staying together as an extended family since 1978.
16. After my Late Elder Brother passed away in June 2007, the Deceased was the sole registered owner of the Subject Property. At all material times, I had no idea what document the Deceased had been requested to sign by the Plaintiff. During her lifetime, the Deceased had never mentioned that what document she had been demanded to execute by the Plaintiff.
19. By her affirmation filed on 10 October 2011 under HCEA 84/2011, the Plaintiff sought ex-parte application to compel the 1st Defendant and me to apply for letters of administration of the estate of the Deceased. She produced a copy of Deed of Gift as exhibit “YKY-1”. There is now produced and shown to me the exhibit marked “SWS-3” copy of that exhibit “YKY-1” referred thereto in Plaintiff’s Affirmation under HCEA 84/2011. I will refer this version of Deed of Gift as “YKY-1 Version”. Later, my solicitors retrieved from the Land Registry a certified true copy of the Deed of Gift which version I will refer to as “Land Search Version”. There is now produced and shown to me the exhibit marked “SWS-4.” copy of Deed of Gift retrieved from the Land Registry.
20. I am advised and verily believe that having inspected the aforesaid 2 versions with scrutiny, material and serious errors and irregularities were detected which cast doubt on the veracity of the 2 sets of documents . I am told that although my solicitors had by various letters drawn to the attention of the Plaintiff’s solicitors the errors and irregularities found from the 2 sets of documents, the Plaintiff’s solicitors failed and/or refused to answer those quires reasonably raised by the solicitors up to this stage. There is now produced and shown to me the exhibit marked “SWS-5” copies of two letters issued by my solicitors respectively dated the 10 July 2013 and 15 October 2013.
23. I understand that the purported Deed of Gift has been registered with the Land Registry by Memorial No. 08082700470010 on 27 August 2008 (see the back page of both versions), however, it is obvious that the version produced and relied upon by the Plaintiff exhibited as “YKY-1” was indeed a different document as now registered with and retrieved from the Land Registry by my solicitors herein called Land Registry Version. I am advised and verily belief that criminal offence may have been committed by someone, including but not limited to perjury or making/using/possessing false documents. I shall reserve my rights to report the matter to the police in due course if necessary or if so advised .
29. I am advised and verily believe that at all material times or at the alleged time when the purported Deed was executed, the Deceased was in a vulnerable position, that she could not have appreciated the nature of document she was asked, induced, or even pressed to execute (if the Deceased did execute, which is not admitted), she could not have fully aware of the legal effect and consequence after the execution of the document she was given, and that she could not have understand that some of her interest and benefit of and in the Property be given away. In any event, given such situation and the relationship between the Deceased and the Plaintiff, the Deceased should be separately represented and advised in the execution of the purported Deed . There was no suggestion that the Deceased had received any or proper legal advice and was separately prior to and in the cause of execution of the purported Deed on 30 July 2008 as alleged in paragraph 11 of Yau’s Affirmation. I shall leave the legal issues to my legal advisers to deal with.
31. I refer to paragraph 14 of Yau’s Affirmation. At that time, it came to my notice that the Plaintiff had been to the Subject Property together with some strangers and demanded the Deceased to sign some documents while I was away for work . After work, I asked the Deceased whether she had been requested to sign some documents by the Plaintiff and whether she understood the nature of documents she were asked to sign. The Deceased answered me in the negative . She also told me that she had no idea what was going on and did not know what she had signed. She further said that those documents had been taken away by the Plaintiff and/or the strangers after she signed on them. Therefore, all I could gather from the Deceased was that she did not know what she had been demanded to sign. Therefore, at that time, I did not know what document the Deceased had signed and the Plaintiff did not disclose to us what that document was.”
19. Under paragraph 38 of his affirmation, D2 seeks that the 2008 Deed of Gift be declared null and void.
20. Miss Lam (acting for Ds) in her opening submissions argued that the 2008 Deed of Gift should be declared null and void on the following grounds:-
(a) Material and/or serious alterations were made to the 2008 Deed of Gift after the Deceased was said to have executed the document in the presence of P and her agent Ms Man, a legal clerk engaged by P but not the Deceased in preparing and/or drafting the Deed. Such alterations were not made known, interpreted, or explained to the Deceased. The contents of the 2008 Deed of Gift, after alteration, were not aware of, understood, consented to, or approved by the Deceased.
(b) Misrepresentations were made by P and/or Ms Man to the Deceased before the alleged execution and before alteration, to induce the Deceased to enter into a contract.
(c) Lies or misinformation were supplied by P and/or Ms Man to the Deceased before the alleged execution and before alteration, to induce the Deceased to enter into a contract.
(d) The Deceased had not been advised and indeed did not understand the nature of the transaction and the legal consequences thereof before the alleged execution. As such, the Deceased had not been able to give an informed consent to the transaction.
(e) The Deceased had not been accurately and properly interpreted and explained and indeed did not understand the content of the 2008 Deed of Gift before the alleged execution. As such, the Deceased had not been able to give an informed consent to the transaction.
(f) The Deceased had not been advised to seek independent legal advice on the transaction and she did not seek independent legal advice before the alleged execution. As such, the Deceased had not been able to give an informed consent to the transaction.
(g) Due to the trust and confidence the Deceased have reposed on P as her daughter-in-law, the Deceased’s free will and judgment in relation to the misinformation or misrepresentation supplied or made to her by P and/or Ms Man independently or jointly in the Deceased’s house had been adversely and seriously affected.
(h) Given all the circumstances, the Deceased’s true knowledge and understanding about the nature and subject matter of the transaction and the legal consequences thereof was seriously affected or compromised.
(i) In any event, the Deceased was in such a vulnerable position that she could not have fully appreciated the nature of document she was asked or induced to execute, the nature of transaction she was asked to undertake, and the legal effect or consequence of the transaction that she was asked to undertake.
21. In a nutshell, D2 attacks the validity of the 2008 Deed of Gift on 2 grounds:-
(a) that the 2008 Deed of Gift was executed when the Deceased was in a vulnerable position and did not understand the nature of the Deed, that she was under undue influence/misrepresentation, and that she did not receive independent legal advice;
(b) that the 2008 Deed of Gift as executed by the Deceased was not the same as the one registered at the Lands Registry and material alterations were made after its execution.
THE ISSUES
22. The crux is the validity of the 2008 Deed of Gift.
23. The 2 main issues are:-
(a) under what circumstances the Deceased executed the 2008 Deed of Gift (was it a result of misrepresentation/undue influence etc as alleged by Ds); and
(b) whether there were “material alterations” after execution of the Deed.
24. For (a), Ds’ basis is that the Deceased was “in a vulnerable position” that she did not understand the effect and nature of the Deed, and P and/Ms Man has unduly influenced the Deceased or mispresented to her the effect/nature of the Deed.
25. For (b), Ds’ basis is that the “YKY-1” Version and the “SWS-4” Version are clearly different and it was not the same deed that the Deceased was asked to sign on 30 July 2008. Further, “material alterations” were made after execution of the Deed and the Deceased was never informed of nor acknowledged such alterations.
THE LAW
Execution of the Deed
26. Miss Lam refers to various authorities on misrepresentation, undue influence and unconscionable bargain.
27. Mr Cheung for P has no quarrels with those well-established principles. However, Mr Cheung submitted that the burden is on Ds to prove the existence of the alleged vitiating factors and it is not for P to prove the lack thereof. Miss Lam did not argue otherwise.
28. In this regard, Mr Cheung submitted that:-
(a) D’s allegations of misrepresentation, fraud, duress, undue influence, or lack of mental capacity are vague and unparticularized. They are liable to be rejected outright.
(b) The 2008 Deed of Gift reflects the intention the Deceased as Donor.
29. In support of his submission, Mr Cheung referred to Re Estate of Kwok Wing Fai, deceased [2016] 1 HKC 364 and Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334.
30. In Re Estate of Kwok Wing Fai, deceased [2016] 1 HKC 364, the court held that:-
“Test of testamentary intention
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34.3. Mr Liang submitted that passage showed first, that the judge had applied the traditional Barry v Butlin 2 Moo PC 480 two-stage test: ie (1) whether the party challenging the will had shown sufficient facts to “excite the suspicion of the court” and (2) if so, whether those supporting the will had allayed those suspicions.
34.4. Mr Liang submitted that the modern approach since Gill v Woodall [2011] Ch 380 is that the judge should ask himself a single question, ie whether the testator had understood (1) what was in the will when he signed it and (2) what its effect would be .
35. In my view, the modern approach is simpler to understand and apply, but that is not to say that applying the two-stage test was wrong or would lead to a different result. As Lord Neuberger said in Gill at para. 23:
“After all, whether one approaches the issue, as the judge did, in two stages, or whether one approaches it as a single question, as I would have thought was preferable, the answer should be the same”.
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38.1. Moreover, it is clear law that evidence of due execution raises a very strong presumption of knowledge and approval (which is simply traditional language meaning testamentary intention). As Lord Neuberger said in Gill at para. 14:
“As a matter of common sense and authority, the fact that a will has been properly executed, after being prepared by a solicitor and read over to the testatrix, raises a very strong presumption that it represents the testatrix’s intentions at the relevant time, namely the moment she executes the will ”. (Emphasis added).
38.2. As far as authority was concerned, his lordship referred to a number of cases (Fulton v Andrew (1875) LR 7 HL 448, Gregson v Taylor [1917] P 256, In re Morris, decd [1971] P 62 and Perrins v Holland [2011] Ch 270) where it was held that when it is proved that a will had been read over to a capable testator who then executes it, the “grave and strong presumption” of knowledge and approval “can be rebutted only by the clearest evidence ” (para. 15). (Emphasis added).
38.3. Lord Neuberger further said (para. 16):
“There is also a policy argument ... which reinforces the proposition that a court should be very cautious about accepting a contention that a will executed in such circumstances is open to challenge. Wills frequently give rise to feelings of disappointment or worse on the part of relatives or would-be beneficiaries. Human nature being what it is, such people will often be able to find evidence, or persuade themselves that evidence exists, which shows that the will did not, could not, or was unlikely to, represent the intention of the testatrix ... [I]f judges were too ready to accept such contentions, it would risk undermining what may be regarded as the fundamental principle of English law, namely that people should in general be free to leave their property as they choose ...”.
39.1. In Gill itself, the court found the presumption of due execution was rebutted by the “central feature” in that case, ie the expert medical evidence that the testatrix suffered from agoraphobia with panic disorder , such that when she was away from home and in the presence of strangers, her ability to concentrate and absorb information was inhibited.
39.2. In that case, under the will the testatrix purportedly left everything to a charity about which she had made derogatory remarks during her lifetime, and nothing to her only child who looked after her and with whom she had a close relationship. The evidence showed that the testatrix had not given instructions to the solicitor who had drafted mutual wills for her and her husband (since deceased) . The instructions had been given by the husband who was described as a “bully”. The testatrix had never met the solicitor before, and she executed the will in his office where (the judge found) with her medical condition, she would have been suffering severe anxiety at point 8 on a scale of 0-10, such that she would not have been able to follow or understand the solicitor’s explanation. In view of the “very unusual circumstances” of that case, the English Court of Appeal found that the will should have been held invalid for want of knowledge and approval (the court did not deal with the trial judge’s finding of undue influence by the husband).
40. …… the question remains whether the judge was right to find on the totality of the evidence that there was no or no sufficient evidence to rebut the “very strong presumption” that the Deceased understood the contents of the will and its effect.”
31. Mr Cheung emphasized that the standard of proof is a high one and the courts look for the “clearest evidence” in rebutting the presumption of knowledge and approval: Re Estate of Kwok Wing Fai, deceased at para 38.2.
32. Mr Cheung has summarized the findings of Ming Shiu Chung & Others v Ming Shiu Sum & Others (2006) 9 HKCFAR 334 as contained in the headnote of the judgment:-
“(1) The findings of forgery and of fraud were unjustified. As to drawing the inference that the disputed minutes were forgeries, this was plainly conjectural. Inferences of fraud or serious misconduct were not to be reached by conjecture nor on a mere balance of probabilities. They were to be plainly established as a matter of inference from proved fact . As to the fraud theory, this was not open to the Judge. It was nowhere pleaded. It was not explored in evidence and was never put to either D1 or X when they gave evidence at trial (See paras. 53-55.)
(2) Given that F signed all the documents, on the balance of probabilities, the evidence as a whole did not justify drawing the inference that F did not know what he was signing. The drawing of inferences must be properly grounded in the primary facts found. The court guarded against drawing an inference where the primary evidence did not logically and reasonably justify such inference; it was not entitled to merely choose between guesses on the ground that one seemed more likely than another. (See paras. 78-80.)
(3) Even if F had been unaware of the contents of the document, such fact, without more, did not invalidate them. Parties of full age and ordinary understanding would be held to documents which they had chosen to sign unless there was a recognised legal basis for concluding that their apparent consent had been vitiated; or that reliance on that document by some other person fell into some category of unconscionable conduct justifying relief in equity. That the person signing did not know its contents was wholly immaterial (See paras. 83-86.)
(4) The vitiating factors at common law included fraud, mistake, misrepresentation, non est factum , duress, undue influence and lack of mental capacity. However, to disown a signed legal document, facts constituting the particular vitiating factor relied on must be pleaded and established by the evidence . (See para. 87.)”
33. It is common ground that Ds have not adduced any medical evidence to show the Deceased’s mental state as at 30 July 2008 or any time prior to 30 July 2008.
34. It turns to the evidence of P and Ms Man who were present at the material time.
35. D1 (who was also present) did not file any affirmation or witness statement before her passing in December 2014.
MATERIAL ALTERATIONS
36. Miss Lam argued that “YKY-1” Version is different from “SWS-4” Version and thus it was not the same deed that the Deceased executed on 30 July 2008, that “material alterations” were made to render it invalid as the Deceased was never asked to countersign (let alone explained) after the amendments were made.
37. Miss Lam relied on South China Securities Ltd v Lam Kwen Yuen [2013] 1 HKC 295, where Deputy High Court Judge Lisa Wong SC (as she then was) held the following:-
“53. The principle that any material alteration of a contractual document, undertaken after its execution and without the approval of all the parties thereto, renders the document void can be traced back to Pigot’s Case (1614) 11 Co Rep 26b at 27a.
54. The question raised is whether the said additions by SCS to each of the Information Statement, the Margin Agreement and the Facility Letter without Mr Lam’s prior consent were material, thereby invalidating such document.
55. Two kinds of unilateral alteration are material for the purpose of the rule in Pigot’s Case :
(1) first, an alteration which affects the very nature and character of the document; and
(2) second, an alteration which is “potentially prejudicial” to the obligor’s legal rights or obligations.
See Raiffeisen Zentrabank Osterreich AG v Crossseas Shipping Limited [2000] 1 WLR 1135, paragraphs 23-28, per Potter LJ (with whom Thorpe and Henry LJJ agreed). See also Governor and Company of the Bank of Scotland v Henry Butcher & Co [2003] EWCA Civ 67, paragraphs 69-74, per Munby J.
56. Further, whether or not the obligor might or might not have assented to the alteration prior to affixing his signature, had he been requested to do so, is not a matter for investigation by the Court when applying the rule in Pigot’s Case: Raiffeisen Zentrabank Osterreich AG v Crossseas Shipping Limited , paragraph 33.
……
58. Focusing on the second category , Potter LJ further said at paragraph 27:
“to take advantage of the rule, the would-be avoider should be able to demonstrate that the alteration is one which, assuming the parties act in accordance with the other terms of the contract, is one which is potentially prejudicial to his legal rights or obligations under the instrument . I say “potentially prejudicial” because I do not think it necessary to show prejudice has in fact occurred.””
38. Mr Cheung agreed with the above principles and submitted that it is trite law that an alternation made in a deed that is not material, does not in any way affect the validity of the Deed. He refers to the following passage from Halsbury’s Laws of England §1383:-
“It is trite law that an alternation made in a deed, after its execution, in some particular which is not material will not in deed any way affect the validity of the Deed; and this is equally the case whether the alternation was made by a stranger or by a party to the deed. Thus the date of a deed may be filled in after execution; for a deed takes effect from the date of execution, and is quite good though it is undated. So, also, the names of the occupiers of land conveyed may be inserted in a deed after its execution, where the property assured was sufficiently ascertained without them. It appears that an alternation is not material which does not vary the legal effect of the deed in its original state, but merely expresses that which was implied by law in the deed as originally written, or which carries out the intention of the parties on the face of the deed, provided that the alternation does not otherwise prejudice the party liable under it. An alternation made in a deed may be material as against some party or parties thereto but immaterial as against the other or others, and where such an alternation has been made in a deed, any agreement contained in it may be enforced against the party or parties as to whom the alternation is immaterial (if originally liable thereunder) in the same manner as if the deed had remained unaltered.”
39. According to Mr Cheung, the amendments to the 2008 Deed of Gift were all bona fide amendments made to give effect to the intention of the Donor. There is no evidence that the Deed, which was duly accepted by the Land Registry for registration, was procured by fraud, misrepresentation, duress, undue influence, or otherwise tainted with illegality or other vitiating factors.
40. The amendments are thus not “material alterations” in the Pigot’s Case sense.
EVIDENCE
41. There are 2 witnesses on the P’s side, namely P herself and Ms Man (the law clerk responsible for handling the 2008 Deed of Gift).
42. D2 is the only witness for Ds. As said there was no medical evidence filed by Ds to show the mental state of the Deceased. D1 had never filed any affirmation or witness statement.
DISCUSSION
Execution of the 2008 Deed of Gift
43. There is no mention of how the execution took place in P’s 2 affirmations.
44. The evidence came from Ms Man, the conveyancing clerk in the employ of Messrs Wong and Chan at the material time. She was contacted by P and received instructions from P to prepare the Deed of Gift. Mr Ting was the handling solicitor from Messrs Wong and Chan but P has never met with Mr Ting prior to the execution of the Deed.
45. Ms Man attended the Deceased at the Property on 30 July 2008. P and D1 were present. D1 was sitting near them and according to both P and Ms Man, should be able to listen to their conversation.
46. According to Ms Man she drafted the Deed by copying from a precedent document. The Deed she brought along on 30 July 2008 did not contain any amendments as in the “SWS-4” Version. The “SWS-4” Version came about when the Lands Registry raised queries regarding some “mistakes” on the Deed which her colleagues had filed with the Registry.
47. Ms Man’s evidence is that she ascertained from the Deceased that her intention was to give half share of the Property to YL, but since YL was still a minor, the half share would go to P.
48. Ms Man frankly admitted that she merely explained to the Deceased the meaning and nature of the Deed by telling the Deceased that she (the Deceased) was “giving half share of the Property to P”, and she had never interpreted the content of the Deed to the Deceased word by word or paragraph by paragraph.
49. She also advised the Deceased that she could execute a will to deal with the remaining half share of the Property, to which the Deceased replied that she would arrange it herself.
50. The whole process took 15 to 20 minutes.
51. Under cross-examination by Miss Lam, it was revealed that Ms Man has been under the employ of P’s current solicitors, Messrs Chiu, Szeto and Cheng, since 2014. It was never disclosed before Ms Man took the stand.
52. Miss Lam in her written closing submitted that Ms Man should not be regarded as an independent and impartial factual witness and the court should cast doubt on Ms Man credibility or should be very careful in accessing Mr Man’s overall credibility as she may concoct her evidence to fit P’s case.
53. Mr Cheung pointed out that the suggestion of Ms Man not being an independent and impartial witness was not put to Ms Man and is just a speculation.
54. Miss Lam’s cross-examination focused on why Ms Man did not remind the Deceased to seek independent legal advice and why she did not explain or interpret the Deed in detail.
55. It is true that Ms Man was careless or sloppy in preparation and interpretation of the Deed but she did not attempt to hide her mistakes. If she was to concoct evidence, she could have said that she interpreted the Deed in greater details. In fact, she agreed that had she explained the Deed “word by word” or “paragraph by paragraph” she would have noticed the “mistakes”.
56. Although it is appropriate for P to disclose the fact that Ms Man is under the employment of her solicitors prior to trial, I do not find Ms Man has “concocted evidence to fit P’s case” as suggested by Miss Lam. I have no reason to doubt her credibility. Her testimony does not go beyond what could be discerned from reading the “YKY-1” and “SWS-4” Versions. In fact Ms Man said she only told the Deceased that she was giving half of the share in the Property to P, which is whole point of the Deed.
57. Ms Man said the most important part was to ascertain the Deceased’s intention. I accept that she did tell the Deceased that she was giving half of the share in the Property to P at the time.
58. I also accept her explanation regarding the “mistakes” and the subsequent corrections.
59. Miss Lam further submitted that there was nothing to suggest that the Deceased had ever received any legal advice or advised to seek the same (which is accepted by P and Ms Man) so that she could form an “informed” decision to agree to the transfer of her half interest in the Property to P or YL at nil consideration. It is said that the Deceased had been deprived of her fair chance to have the benefit of legal advice before she was asked to sign.
60. While it might be a good practice to advise a donor to seek independent legal advice, it is not a prerequisite to uphold the validity of a deed.
61. Miss Lam invited the court to consider the following factors:-
(a) The Deceased was about 81 at the time;
(b) She received informal education in the Mainland China only up to Primary level 2;
(c) She could not read, write and understand English and she must have relied on someone to interpret the meaning and explain the content of any English document;
(d) She sometimes had difficulty in understanding a topic or issue if she did not familiar with that topic or issue though she could understand something that happened in her daily life; she was not familiar with the conveyancing matter as the last time she became one of the donees (the other being William) of the Property was back in 1978;
(e) Lack of assistance from D1 and D2 which she had trust and confidence when she was asked by P and Man to sign document (it was never explained by P why she could not have arranged the execution of the document in the presence of D1 and D2 with their full knowledge if it was her case that D1 and D2 were agreeable to the arrangement and had indeed urged her to handle);
(f) The Property was the only substantial asset of the Deceased and more importantly was the permanent home for herself, D1, D2 and his family at that time;
(g) The Deceased was to give away valuable assets (ie half of her interest in the Property) for nothing to P who, on the other hand, had a self-owned property in her sole name free from encumbrance. It is submitted that the Deceased was at a serious disadvantage or that the conduct of P was morally culpable;
(h) As admitted by Ms Man, it was not usual to go to a dwelling instead of the office of a law firm to handle the execution of a deed by a lay client. If the Deceased instead attended the law firm, the Deceased should be and could be able to see a lawyer who should have reminded the Deceased that she could have sought legal advice of her own on the legal document is she so wished;
(i) Given all the circumstances as stated above, P was aware of an opportunity for exploitation ie the Deceased not being able to see a lawyer before execution of a legal document in English and not being advised by the lawyer that she could at least seek independent legal advice for the transaction and has taken advantage of such opportunity.
62. With respect, most of Miss Lam’s submissions is unsupported by evidence, eg what was the alleged misrepresentation by P or Ms Man; or how the Deceased was unduly influenced by P.
63. The fact that the Deceased was 81 and did not understand English does not automatically mean that she did not know what she was signing at the time. The fact that no independent legal advice was offered to her does not automatically means that she has entered an unconscionable bargain.
64. There is no medical or other evidence (eg as in Gill v Woodall cited by the court in Re Estate of Kwok Wing Fai, Deceased ) whatsoever to show that the Deceased was susceptible to be influenced or to be “exploited”.
65. There is also no evidence of actual “perjury or making/using/possessing false instrument” as alleged under D2’s affirmation.
66. The criticisms on Ms Man (that she did not interpret the document word by word and did not remind the Deceased of independent legal advice), though justified in the circumstances, cannot be equated as proof of vitiating factors in declaring the deed null and void.
67. Despite Miss Lam’s admirable efforts, Ds simply did not come up with evidence to support the various heads of vitiating factors advanced by Miss Lam.
68. As the CFA in Ming Shiu Chung held:-
“84. With respect, that approach is contrary to principle. It is in law highly material to ask how or why the father nevertheless signed the documents. Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity .
85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:
“We find in many of the authorities statements that a man's deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the man had taken no precautions at all, and there was no ground for his belief that he was signing something different from that which in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.”
86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan (2002) 5 HKCFAR 515 at 533, Litton NPJ acknowledged:
“......the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature : As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood .”
87. The vitiating factors at common law include fraud, mistake, misrepresentation, non est factum , duress, undue influence and lack of mental capacity: see, for instance, Blay v Pollard and Morris [1930] 1 KB 628; and Gillman v Gillman (1946) 174 LT 272. To disown a signed legal document, facts constituting the particular vitiating factor relied on must be pleaded and established by the evidence . Some authorities illustrating this are as follows:
(g) In Parker v South Eastern Railway (1877) 2 CPD 416, Mellish LJ stressed that in the absence of a vitiating factor (his Lordship specified fraud in this case), the contention that the person signing does not know its contents is “wholly immaterial”:
“In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents .” (421)
(h) That judgment was applied by the English Court of Appeal in the well-known case of L’Estrange v F Graucob Ltd [1934] 2 KB 394 where Scrutton LJ stated:
“When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.” (at 403)
(i) In The Luna (1920) P 22, the court was concerned with a Dutch master of a fishing vessel who had verbally agreed certain terms for towage of his vessel by a tug. He then signed a contract in English, it being found that he knew he was signing a contract but that he “understood very little spoken English, and could speak English very little, and could not read English at all”. That contract contained terms not mentioned verbally and which he therefore did not know formed part of its contents. Hill J held that this was irrelevant:
“Here I am dealing with a document admitted to be a contract, and signed by the party who says that a part of its contents is to be rejected as not forming part of the contract. There is no suggestion or ground for suggestion of any deceit. The master was not trapped into signing one thing, thinking it to be something quite different . There was no common mistake on which the contract, if it had not been performed, could be rectified. The document was signed, and signed with the intention of its being a contract. The master, in my view, is bound by the contract, whether he read it or not, and, therefore, the owners of the Luna, whose agent he was, are bound, too.” (at 28)
(j) To like effect is the judgment of Kerr J in The Polyduke [1978] 1 Lloyd’s Rep 211, where, citing cases including the foregoing, his Lordship stated:
“If, as here, the document purports to have contractual effect and is signed, then, in the absence of any suggestion of fraud or misrepresentation, the signature binds and signifies knowledge of, and assent to, the contents of the document.” (at 215-216)
88. Equity may intervene in certain circumstances to relieve a person of a bargain, a disposition of property or some other legal obligation embodied in a document signed by that person. It will do so in circumstances involving fraud, not only in the sense used at common law (and in respect of which the courts of equity have always had a concurrent jurisdiction) but also in the broader sense used in the exclusive equitable jurisdiction, as explained by Viscount Haldane LC in Nocton v Lord Ashburton [1914] AC 932:
“It must now be taken to be settled that nothing short of proof of a fraudulent intention in the strict sense will suffice for an action of deceit. This is so whether a Court of Law or a Court of Equity, in the exercise of concurrent jurisdiction, is dealing with the claim, ...... But when fraud is referred to in the wider sense in which the books are full of the expression, used in Chancery in describing cases which were within its exclusive jurisdiction, it is a mistake to suppose that an actual intention to cheat must always be proved. A man may misconceive the extent of the obligation which a Court of Equity imposes on him. His fault is that he has violated, however innocently because of his ignorance, an obligation which he must be taken by the Court to have known, and his conduct has in that sense always been called fraudulent, even in such a case as a technical fraud on a power. It was thus that the expression ‘constructive fraud’ came into existence. The trustee who purchases the trust estate, the solicitor who makes a bargain with his client that cannot stand, have all for several centuries run the risk of the word fraudulent being applied to them. What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court that from the beginning regarded itself as a Court of conscience.” (at 953-954)
89. Various categories of cases, such as those involving breaches of trust or fiduciary duty or other conduct which equity impugns as a species of fraud in equity, have been held to justify such equitable intervention. However, the courts have emphasised that the doctrine does not involve some vague notion of unconscionability but requires the establishment of specific grounds for relief, with proof of the necessary elements . As the learned authors of Meagher, Gummow and Lehane, Equity – Doctrines and Remedies (3rd Edition, Butterworths) state: “...... until there is a clear change in direction by the courts, protection in equity will continue usually to depend upon finding an established head of the jurisdiction” [1209]. This is echoed in McGhee, Snell’s Equity (31st Edition, Thomson Sweet & Maxwell) at 227, as follows:
“It remains the case that there is no general jurisdiction to set aside transactions either because of inequality of bargaining power between the parties or because the transaction was improvident . In order to obtain relief, therefore, a complainant must bring himself or herself within one of the discrete doctrines of ‘constructive fraud’ ......”
90. Thus, in Bridge v Campbell Discount Co Ltd [1962] AC 600, a case concerning a hire-purchase contract, Viscount Simonds stated:
“I must dissent, as Harman LJ did, from the suggestion that there is a general principle of equity which justifies the court in relieving a party to any bargain if in the event it operates hardly against him. In particular cases, for example, of expectant heirs or of fiduciary relationship, a court of equity (and now any court) will if the circumstances justify it, grant relief. So also if there is duress or fraud ‘which unravels all.’ In the present case there is nothing which would justify the court in granting relief to a hirer who exercised his rights under clause 6.” (at 614)
And, as Lord Radcliffe warned:
“Unconscionable” must not be taken to be a panacea for adjusting any contract between competent persons when it shows a rough edge to one side or the other, and equity lawyers are, I notice, sometimes both surprised and discomfited by the plenitude of jurisdiction, and the imprecision of rules that are attributed to ‘equity’ by their more enthusiastic colleagues . Since the courts of equity never undertook to serve as a general adjuster of men’s bargains, it was inevitable that they should in course of time evolve definite rules as to the circumstances in which, and the conditions under which, relief would be given, and I do not think that it would be at all an easy task, and I am not certain that it would be a desirable achievement to try to reconcile all the rules under some simple general formula. Even such masters of equity as Lord Eldon and Sir George Jessel, it must be remembered, were highly sceptical of the court's duty to apply the epithet ‘unconscionable’ or its consequences to contracts made between persons of full age in circumstances that did not fall within the familiar categories of fraud, surprise, accident, etc, even though such contracts involved the payment of a larger sum of money on breach of an obligation to pay a smaller sum......” (at 626)
……
100. Plainly, no case based on unconscientious dealing is open to the plaintiffs. There is no pleading, nor any evidence, nor any case put to Lawrence relating to the elements necessary to such a plea: No suggestion that the father was under a “special disability” which seriously affected his ability to make a judgment as to his own best interests; nor that Lawrence knew or ought to have known of the existence of such condition; and no suggestion that he had taken unfair or unconscientious advantage of that condition.”
69. As held by the CFA in Ming Shiu Chung , inferences of fraud or serious misconduct were not to be reached by conjecture or mere balance of probabilities. No evidence was adduced by Ds to show any unconscionable conduct nor fraud/deceit. Inequality of bargaining power or an improvident transaction alone would not suffice.
70. Further, I find it more probable than not that the 2008 Deed of Gift reflects the Deceased’s intention.
71. I note that:-
(a) The Property was originally held by the Deceased and William under the 1978 Deed of Gift as joint tenants;
(b) D2 himself heard from the Deceased that the original plan was for William and D2 to jointly hold the Property;
(c) As D2 was a minor at that time, the Property was therefore held by William and the Deceased as joint tenants.
72. As noted by Mr Cheung during the cross-examination of D2, the Deceased favoured YL (being her only grandson) to D2’s daughter.
73. There was an incident when YL was offered soup by the Deceased and not the daughter of D2. D2 attempted to downplay the seriousness by saying that it is only “trivial”. P, too, agreed that it was a minor matter.
74. Mr Cheung suggested that D2’s wife was not happy with the way their daughter was being “snubbed” and she left for the Mainland with the daughter and in fact it happened several times.
75. While it might be something “trivial” in the eyes of D2 and P (but not D2’s wife as it appears), but it does show the Deceased favoured YL (being the son of her eldest son) over D2’s daughter.
76. Mr Cheung said that this is an example of the Deceased favouring male descendent than female descendent. As in the 1978 Deed of Gift, D1, being a daughter, was never mentioned by the Deceased.
77. The arrangement under the 2008 Deed of Gift is consistent with the Deceased’s favourable treatment of male descendants all along.
78. This is irrespective of the apparent disparity of financial status between P and D2 as noted by Miss Lam. The fact that P was residing in privately-owned housing (and received some $500,000 insurance payout upon the death of William) does not affect the Deceased’s favourable treatment of YL as the only son of her eldest son. The Deceased’s intention was to give half of the share in the Property to the son of William.
79. I find it is more probable than not that the Deceased intended to “pass back” half shares of the Property to YL after the death of William as it was originally intended to be held by William who unfortunately passed away before the Deceased.
80. And, as YL was still a minor at the material time, half of the Property was intended to pass to P as mother of YL (and wife of William).
81. The remaining half could be disposed of by the Deceased by way of will (which she had failed to do so).
82. I note that P, when being questioned repeatedly by Miss Lam as to whether D1/D2 was informed of the existence of the 2008 Deed of Gift, was not very forthcoming.
83. However, whether D1/D2 were informed of the Deceased’s intention prior to her death is neither here nor there. The evidence shows that it is more probable than not that the Deceased intended to pass half of the shares of the Property to YL, her only grandson, via P, his mother.
84. Even if I were to accept D2’s evidence in its entirety, Ds are unable to discharge the burden of proving the existence of the alleged vitiating factors.
MATERIAL ALTERATIONS
85. According to Miss Lam, there are a number of mistakes in the 2008 Deed of Gift on the “YKY-1” Version which were corrected and then registered at the Lands Registry (ie the “SWS-4” Version). The amendments/corrections were made without the Deceased’s knowledge or consent.
86. It was admitted by Ms Man in that she did not inform the Deceased nor ask for her consent to the amendments made subsequent to the execution of the Deed.
87. Miss Lam argued that the deed which the Deceased executed on 30 July 2008 was not the same deed which P now seeks to reply upon, as “substantial and material alterations” were made subsequent to the execution.
88. Miss Lam has helpfully listed out the 2 versions of the 2008 Deed of Gift:-
“YKY-1” Version “SWS-4” Version
- There are altogether 6 sheets of paper paginated at the bottom of each page as 1, 2, 3, 4, and 6, together with the back page (not paginated).
- There are altogether 8 sheets of paper paginated at the bottom as 1, 2, 2, 3, 4, 5, and 6, together with the back page (not paginated).B2/266-7 B2/266 B2/116 B2/267
Recital (A) states that: By a Deed of Gift dated 9 June 1978 and registered in the Land Registry by Memorial No UB1536964 the Property became and is now vested in the Deceased and the P “as tenants in common in equal shares ”
Recital (A) states that: By a Deed of Gift dated 9 June 1978 and registered in the Land Registry by Memorial No UB1536964 the Property became and is now vested in the Deceased and the P “as joint tenants ”
Recital (C) states that: The Donor (the Deceased) is desirous of assigning unto the Donee (P) by way of gift All That the estate right title benefit and interest of the Donor of and in the Property as one of the two tenants in common in equal shares in the manner hereinafter appearing
Recital (C) states that: The Donor (the Deceased) is desirous of assigning unto the Donee (P) by way of gift All That her one equal undivided moiety or half part or shares of and in the Property and in the Property
Paragraph 1 states: For the purpose of effectuating such desire and in consideration of the natural love and affection the Donor (the Deceased) bears for the Donee (P) and for divers other good consideration the Donor (the Deceased) as Beneficial Owner ASSIGNS and RELEASES unto the Donee (P) ALL THAT the estate right title benefit and interest of the Donor of and in the Property as one of the two tenants in common in equal shares TO HOLD the same unto the Donee for the residue of the term of years created by the Government Lease TO THE INTENT that the Property shall henceforth be vested in its entirety in the Donee as the sole owner thereof free from any estate title interest and benefit of the Donor therein and thereto [followed by page 2 of 2 different versions]
Paragraph 1 states: For the purpose of effectuating such desire and in consideration of the natural love and affection the Donor (the Deceased) bears for the Donee (P) and for divers other good consideration the Donor (the Deceased) as Beneficial Owner ASSIGNS and RELEASES unto the Donee (P) ALL THAT her one equal undivided moiety or half part of shares of and in the Property TO HOLD the same unto the Donee for the residue of the term of years created by the Government Lease TO THE INTENT [followed by page 2 of 2 different versions] that the Donor and the Donee shall henceforth hold and stand possessed of the entirely of the Property as tenants in common in equal shares SUBJECT to ….
89. Ms Man explained that the differences in page numbers (and actual pages) are due to clerical errors by her colleagues who was responsible for photocopying the Deed to be filed at the Lands Registry.
90. Mr Cheung noted that in Recital (A), P is described as the “donee” under the 1978 Deed of Gift (and it should have been William). This mistake was missed by both Ms Man, Mr Ting and the Land Registry. It is common ground that the same mistake remains in the “SWS-4” Version.
91. Recital (A) then describes the manner in which the donees under the 1978 Deed of Gift became owners of the Property. It should have been joint tenants but “tenants in common” was stated instead.
92. I agree with Mr Cheung that these 2 mistakes in Recital (A) refer only to the 1978 Deed of Gift. The mistakes do not affect the validity of the 2008 Deed of Gift.
93. The above mistakes and the subsequent amendments are not “material” in a sense that they do not change the nature of the document (being a deed of gift) nor is “potentially prejudicial” to the Deceased.
94. In Recital (C), it wrongly describes the Deceased (as donor) as a tenant in common. Paragraph 1 contains the same mistake.
95. However, as pointed out by Mr Cheung, it does not deviates from the fact that the Deceased intended to make P an owner of half of the Property.
96. The amendments in the later part of paragraph 1 are necessary to reflect the intention of the Deceased that she is giving half of the share of the Property to P instead of the Property in its entirety.
97. As I have found that it was the Deceased’s intention to give half of the share in the Property to P, the amendments were necessary in order to reflect the Deceased’s intention.
98. The amendments do not change the nature of the document nor are they “potentially prejudicial” to the Deceased. On the contrary, as submitted by Mr Cheung, the Deceased’s interest was better protected by the amendments (that she was giving away half of the share and not the entire share of the Property).
99. In the premises, I do not agree with Miss Lam that they were “material alterations” (as defined in South China Securities cf the Pigot’s Case ) to the 2008 Deed of Gift.
100. Miss Lam also points out that in both versions, the address of P is said to be the address of Property (ie Flat A, 4th Floor, No 78 Un Chau Street, Kowloon”) but P had never resided in the Property. Ms Man explained that since P would be getting half share in the Property, it is not wrong to say so. Further, Miss Lam noted that the Deceased’s ID card was wrongly referred to as “his ” ID card instead of “her ” ID card in both versions.
101. Although they are not the accurate or correct descriptions, I do not find such “mistakes” affect the nature of the Deed. As said, Ms Man had been careless or sloppy in preparation of the Deed. However, it does not mean that the document was purporting to be something other than disposing half share of the Property. The amendments are not “material alterations” but served to clarify the mistakes.
102. D2 failed to produce any evidence to show “SWS-4” Version was of a different nature than the Deed signed by the Deceased on 30 July 2008 and that the subsequent amendments were potentially prejudicial to the Deceased.
103. D2 simply has no evidence to show that the 2008 Deed of Gift was a false document as alleged in his affirmation and understandably he has not made any report to the police nor, as suggested by Mr Cheung, lodged a complaint (against Mr Ting and/or Ms Man) to the Law Society.
104. I find that Ds has failed on the ground of “material alterations”.
CONCLUSION
105. For the above reasons, I give judgment in favour of P and grant a declaration that the Property is held by P and the estate of the Deceased as tenants in common in equal shares.
ORDERS
106. D2 did not produce bank accounts record or employment records to show that he is unable to afford alternative accommodation. If D2 was in genuine financial difficulty, he could have applied for public housing (which he has never done so). Mr Cheung also noted that D2 is not being funded by the DLA in this litigation.
107. D2 is unable to produce any concrete evidence to show “serious hardship” as discussed in Ngai Few Fung v Cheung Kwai Heung HCMP 1186/2006 and Cheung Wing Keung Samuel v Ip Chau Sum [2021] HKCFI 2535 .
108. I agree with Mr Cheung that it is appropriate to make an order for sale of the Property.
109. D2 should also pay the occupation rent for his occupation of the Property to the exclusion of P: Cheung Lai Mui v Cheung Wai Shing [2021] HKCFA 19 .
110. Mr Cheung in his opening indicated that P would forego the rent incurred by Ds prior to March 2011.
111. The parties have filed a joint valuation report of the Property to show the estimated value of the Property and the prevailing market rent of the Property for the relevant period.
112. The parties have agreed the following consequential orders in case I find for P:-
(1) The Property be sold pursuant to section 6 of the Partition Ordinance (Cap 352) in the manner set out below.
(2) D2 do deliver up vacant possession of the Property within 45 days from the day of service of this Order.
(3) P’s solicitors Messrs Chiu Szeto and Cheng be entrusted with the conduct of the sale of the Property.
(4) The Property shall be sold with vacant possession at first attempt by private treaty at a price of not less than HK$4,432,000, being 80% of the estimated value of the Property. The formal sale and purchase agreement for such sale shall be executed within 2 months from the date of this Order and the date of completion shall be within 2 months from the date of the formal sale and purchase agreement, subject to any time extension as the parties may agree in writing.
(5) If the Property cannot be sold in the manner as stated in the preceding paragraph, the Property shall be sold by public auction with a reserve price of HK$4,432,000.
(6) If the Property shall be sold by public auction as aforesaid, the first public auction shall be held within 1 month from the expiry of the time limit for the execution of the sale and purchase agreement for private treaty sale. In the event that the reserve price is not met at the first auction, the parties be at liberty to agree on a new reserve price, or to seek directions from the Court as for a new reserve price.
(7) P and D2 do put up in equal shares any reasonable deposit required to defray the fees and disbursements incidental to the sale of the Property whether by private treaty or public auction.
(8) The proceeds of sale of the Property be applied in the following order or priority:-
(a) First, in the discharge of government rent, taxes, rates and/or other outgoings due and outstanding affecting the Property;
(b) Second, in the discharge of any prior encumbrances affecting the Property;
(c) Third, in payment of the estate agent’s commission, conveyancing costs, legal costs and disbursements and all other reasonable expenses payable or incurred in connection with the sale, provided that such estate agent’s commission and/or auctioneer’s remuneration shall not exceed 1.5% of the sale price, and the legal costs shall not exceed the sum of $17,500;
(d) Subject to the following, the net proceeds be divided between P and the estate of the Deceased equally:-
(i) A sum up to HK$1,025,950.00 be deducted from the net proceeds of sale payable to the estate of the Deceased, and be added to the proceeds payable to P;
(ii) Such further sum be deducted from the proceeds of sale payable to the estate of the Deceased and be added to the proceeds payable to P should D2 and his family fail to deliver up vacant possession of the Property by 31 December 2022 at the rate of HK$17,000 per month.
(e) Subject to the discharge of the Legal Aid’s first charge, the net proceeds payable to P (including the adjustments made under sub-paragraph (4) above) be released to her.
(9) D2 be at liberty to purchase the Property, or to participate in the auction of the Property;
(10) There be liberty to apply for further directions, if necessary, as to the manner of sale of the Property and generally.
113. I shall make the above orders accordingly.
114. I also make the following costs order nisi:-
(a) Ds do pay P’s costs of the action, with certificate for counsel, to be taxed if not agreed;
(b) P’s own costs be taxed in accordance with Legal Aid Regulations.
115. The above costs order shall become absolute within 14 days unless the parties apply to vary in writing.
116. I am grateful for counsel’s valuable assistance.
( Rebecca Lee )
Deputy District Judge
Mr Kam KL Cheung, instructed by Chiu, Szeto & Cheng Solicitors, for the plaintiff
Ms Yanky Lam, instructed by Yeung & Chan, for the defendants