NG JACK FONG v. NG CHAN NING

CACV 149/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 149 OF 2007

(ON APPEAL FROM DCCJ NO. 2830 OF 2005)

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REASONS FOR JUDGMENT

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Hon Tang VP (giving the reasons for judgment of the Court):

1.  The plaintiff is the father of the defendant.  He is also the sole executor of the estate of Ng Li Man Kuen, who was his wife and the mother of the defendant.

2.  This is the defendant’s appeal against the order of Deputy District Judge Thomas Au given on 3 October 2006 whereby he ordered:

“	(1)	summary judgment against the Defendant for the delivery up of vacant possession of the premises (‘the Premises’) known as Flat C, 14th Floor, Win Field Garden, nos. 34-40, Shan Kwong Road, Hong Kong;
	(2)	interlocutory judgment with damages to be assessed for the use of the Premises by the Defendant.”

3.  The damages were to be assessed as from 13 May 2004 until vacant possession was delivered up.

4.  At trial the defendant was legally represented at the hearing on 24 April 2006, and then subsequently, he was assisted by his wife as a McKenzie friend.  The defendant was also represented by his wife on appeal because he suffered from a speech impediment as a result of a stroke.  The plaintiff was absent.  We understand that he is in poor health and both his legs have been amputated.

5.  The premises were part of the estate of the mother, who passed away on 14 November 1995.  The premises was the subject of a mortgage in favour of the DBS Bank (Hong Kong) Ltd to secure the borrowing of Mi Fung Beads Co Ltd, a family company, in relation to which the defendant had made a winding-up petition.  The premises are also the subject of an injunction order obtained by the defendant restraining the plaintiff from selling the same.

6.  The defendant had been living in the premises with his family since 1967.  The plaintiff and his family (including the defendant and the mother) used to reside in the premises.  According to the Affirmation of the defendant dated 5 January 2006, his “siblings gradually moved out of (the premises) since 1982”.  The plaintiff moved out in 2003.

7.  On 17 July 1995, the father and the mother respectively executed a will under a mutual wills agreement.

8.  Under the mother’s will, the plaintiff was appointed as the sole executor and trustee.  The mother’s will provided:

“	2.	Whereas my husband [i.e., the Plaintiff] and I have agreed with one another to execute wills of even date and in similar terms and have further agreed that such respective will shall not hereafter be revoked or altered either during our joint lives or by the survivor after the death of one of us now in reliance upon such agreement.
		…..
	5.	If my said husband shall survive me for the period of one month I devise and bequeath all my real and personal property whatsoever and wheresoever (including any property over which I may have a general power of appointment or disposition by will) to my husband absolutely and without any sort of trust or obligation.”

9.  The will went on to provide that should the father not survive her for a period of one month, then her estate should go to the defendant absolutely.  Probate of the mother’s will was granted to the plaintiff on 23 September 1998.

10.  The father’s will was the mirror image of the mother’s will save that the beneficiary was the mother if she should survive the father  for not less than one month, failing which the sole beneficiary of his estate was the defendant.

11.  At the heart of this appeal is the question whether the defendant has the right to remain in the premises as a result of the mutual wills.

12.  The learned judge concluded after reviewing the authorities that:

“

30.

In light of the above principles of the doctrine of mutual wills, Mr. Ma for the Plaintiff submits that, taking the Defendant’s case to the highest, the Defendant’s interest, if any, in the Premises under the mutual wills agreement is residuary, which would only crystallize upon the death of the Plaintiff.  The Plaintiff during his lifetime is entitled to the absolute enjoyment of the Premises, subject to the caveat that the Plaintiff cannot dispose of the Premises in a manner calculated to defeat the intention under the mutual wills agreement.”

The learned judge also said:

“

28.

… Although the survivor is entitled to enjoy during his lifetime in absolute terms of the properties so passed to him, if he does anything inconsistent with the mutual wills agreement, equity will intervene and impose a constructive trust on his properties for the benefit of the originally named beneficiary in the mutual wills. …”

13.  The authorities relied on by him included Birmingham v Renfrew[1937] 57 CLR 666, a decision of the High Court of Australia, in particular the judgement of Dixon J.  The following passage in Dixon J’s judgment at page 689 is particularly apposite to the present case:

“

There is a third element which appears to me to be inherent in the nature of such a contract or agreement, although I do not think it has been expressly considered.  The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner with the property passing under the will of the party first dying.  That is to say, the object of transaction is to put the survivor in a position to enjoy for his own benefit the full ownership so that, for instance, he may convert it and expend the proceeds if he choose.  But when he dies he is to bequeath what is left in the manner agreed upon.  It is only by the special doctrines of equity that such a floating obligation, suspended, so to speak, during the lifetime of the survivor can descend upon the assets at his death and crystallise into a trust.   No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified.  But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor’s own benefit and advantage upon condition that at his death the residue shall pass as arranged. ”

14.  The defendant relied on the fact that he was the beneficiary under the mutual wills.

15.  Whether the defendant could claim any interest under the mutual wills agreement would depend on the validity of a Deed of Renunciation executed by the defendant in January 1999 whereby the defendant expressly declared and agreed to renounce all his interest in his father’s estate under the father’s will.  Following the Deed of Renunciation, by a Revocation Document dated 14 January 1999, the father revoked his will.  There was also a deed of acknowledgement and Irrevocable Deed of Disclaimer (“the 2000 Deed”) signed by the defendant on 21 August 2000 under which the defendant acknowledged and admitted that the Deed of Renunciation had full legal effect and was binding on him.  The 2000 Deed went on to provide that insofar as might be necessary, the defendant irrevocably renounced disclaimed or otherwise waived all his rights, powers, interests, benefits and entitlements whatsoever under the father’s will absolutely.  Under the 2000 Deed the defendant had also acknowledged and admitted the revocation of the father’s will by the father under the Revocation Document.

16.  However, the defendant claimed that the Deed of Renunciation and the 2000 Deed were not binding on him because he signed them under the misrepresentation and / or undue inference of the father.

17.  Whether that was so remained to be tried presumably as part of the defendant’s counterclaim.  That being the case, the learned judge proceeded on the assumption in favour of the defendant that those documents were ineffective and that the defendant remained the beneficiary under the mutual wills agreement.

18.  Even so, the learned judge came to the conclusion that during the lifetime of the father, he was entitled to possession of the premises.  The learned judge said:

“	37.	However, even though I have come to the view that there is a triable issue that a constructive trust may be imposed on the Premises subject to the terms of the Father’s Will, given the reasons set out in paragraphs 27 to 33 above, I still cannot see any legitimate or legal basis to support the Defendant’s contention that he thus has a right to remain in possession of the Premises despite the Plaintiff’s demands.  This is so because, as I explained earlier, under the authorities, albeit the Premises is subject to the trust as imposed in the terms of the Father’s Will (i.e., upon his death, the Premises or any proceeds thereof would be devised and bequeathed to the Defendant), the Plaintiff is still entitled to the full use of the Premises during his lifetime.
	38.	For the same reasons, the fact that the Plaintiff has claimed for vacant possession of the Premises cannot be regarded as an act inconsistent with the mutual wills agreement.  It must be noted that under clause 5 of the Mother’s Will, the Premises is bequeathed to the Plaintiff ‘absolutely and without any sort of trust or obligation’.”

With respect, we agree.

19.  The learned judge gave leave to the defendant to appeal on 14 December 2006.  In his judgment granting leave the learned judge said he could not say that the defendant did not have at least an arguable case in the intended appeal.

20.  One of the arguments relied on being that there were unexplained doubts on the plaintiff’s case so that the summary judgment should not have been given.  Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262.  The doubt being that the eviction of the defendant was an act calculated to defeat the mutual wills.

21.  Earlier in the leave judgment, the learned judge quoted from the judgment of David Donaldson QC, sitting as a Deputy High Court Judge in the case of Healey v Brown, Chancery Division, 25 April 2002, at para. 14:

“

14.

I would, in line with the observations of Dixon J, have had little difficulty in concluding that a sale at arm’s length or market price by the survivor, Mr. Brown, to permit personal enjoyment of the proceeds was not precluded by the agreement of the parties.  But ‘gifts and settlements, inter vivos, if calculated to defeat the intention of the compact’ would plainly be in breach of it.  Had Mr. Brown sold the flat and used the proceeds to fund a place in a nursing home, there would have been no basis for complaint.  But to give away the flat to his son – with immediate effect as to a 50% undivided share, and with effect on death as to the remainder by operation of the doctrine of survivorship – could scarcely run more directly and fully counter to the intention of the mutual will compact that the flat would pass to his deceased’s wife niece on his own death.”

22.  Although the learned judge said that the defendant had an arguable ground of appeal, we must proceed on the basis since the learned judge felt able to give judgment against the defendant, he must have been satisfied that the claim for possession against the defendant was not an act which was calculated to defeat the mutual wills.

23.  In Billion Silver Development Ltd, the judge at first instance entertained suspicion about the plaintiff’s case, nevertheless, he gave summary judgment against the defendant.  It was in that context that Ribeiro J, as he then was, said at 268D:

“	… If possible genuine weaknesses were exposed in the plaintiff’s case, this casts doubt on the plaintiff’s right to invoke the summary procedure in the first place.”

This is not such a case.

24.  Moreover, it should be noted that on 7 February 2007, Judge Marlene Ng granted an injunction restraining the sale of the premises:

“	… until judgment in the defendant’s counterclaim or further order … .”

That being the case, eviction of the defendant should not defeat the mutual wills.  We express no view on the correctness of Judge Marlene Ng’s judgment which has not been the subject of any appeal.

25.  The defendant also complained that the letter revoking the license to occupy the premises dated 6 May 2004 only gave him 7 days’ notice.  In the defence filed on his behalf at trial, no point was taken about the shortness of the notice.

26.  The learned judge was of the view that it was arguable that the defendant was a licensee of the father and 7 days’ notice to terminate the license was too short.  However, the defendant did not vacate the premises until after the judgment in the present proceedings.  So this point should not affect the judgment on possession.  The significance of the 7 days’ notice is that the learned judge had ordered mesne profits to be assessed as from the expiration of the notice.

27.  Whether 7 days was sufficient would depend on all the circumstances.  Had the point been properly taken at first instance, evidence might have been provided.  We see no reason to disturb the judgment, particularly since as noted in the original defence filed on behalf of the defendant, no point was taken relating to the shortness of the notice.  Hence, the judgment made no mention of this point.  The point was taken on the application for leave to appeal, and in the amended defence and counterclaim, which was in Chinese, filed on 16 May 2007, long after the judgment.

28.  In all the circumstances, we do not believe this is a case where we should disturb the judgment relating to mesne profits.

29.  For the above reasons, we dismissed the appeal with costs to be taxed, if not agreed.