AU HIN MAN v. AU YAT CHOR

HCA10353/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.10353 OF 2000

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J U D G M E N T

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1. This is essentially a family dispute concerning two properties, namely, (a) Flat B, 5th Floor, Tat Ming Building, 22 Tung Choi Street, Kowloon and (b) Portion C, Ground Floor, 250, 252 & 254, Reclamation Street, Kowloon ("the 1st Property" and "the 2nd Property" individually and "the Properties" collectively). Both of them were at all material times registered in the name of the defendant, Au Yat Chor and his younger brother, Au Yat Kong as tenants in common in equal shares. Au Yat Kong died on 5 April 1998. His son, Au Hin Man obtained letters of administration on 11 August 1989. Some 11 years later, Au Hin Man commenced the present proceedings against the defendant on 7 December 2000 in his capacity as the administrator of his late father's estate.

2. I will begin with a summary of the circumstances leading to the present proceedings. As will be seen in a moment, apart from the point which I will highlight in paragraph 4 below, the background facts are not seriously in dispute.

Background facts

3. The Au brothers were migrants from the Mainland. Before settling in Hong Kong, they used to work for a blind manufacturing business in the Mainland owned by their uncle, Au Chi Hon ("the Uncle"). The Uncle came to Hong Kong in about 1930. He started a business selling and manufacturing blinds at Soy Street, Kowloon, which was later moved to G/F, 336 Reclamation Street, Kowloon. The defendant came to Hong Kong in 1949, followed by Au Yat Kong in 1952. Both of them continued to work for the Uncle in the new business. At all material times, they slept at the shop premises until the 1st Property was acquired in April 1968. The Uncle had three daughters, Yuet Ngor, Yuet Mei and Yuet Sim. None of them took part in his business.

4. The parties' case on the role of the Au brothers in the Uncle's blind business differs dramatically. It is the defendant's case that the Uncle treated him as an adopted son. On or about 1 November 1963, the Uncle ceased to take part in the blind business because of poor health. At the Uncle's request, the defendant registered as an equal partner of the blind business in November 1963. In about 1966, the Uncle passed away whereupon the defendant succeeded the entire business and has since been running it as a sole proprietor. At all material times, Au Yat Kong was a mere employee. It is, however, the plaintiff's case that both his father and the defendant had been partners of the blind business since the Uncle's death. His father was accordingly entitled to share the business's profits.

5. The 1st Property was bought on 26 April 1968 at the price of $23,970 in the joint names of the Au brothers as tenants in common in equal shares. According to the assignment, both the Au brothers were described as "merchants". They both occupied the 1st Property thereafter. When the defendant married in 1970, Au Yat Kong moved out of the 1st Property and had since lived at the shop premises at 336 Reclamation Street.

6. The plaintiff was born in 1958. In 1982, he came to settle in Hong Kong and lived with his father at the shop premises.

7. On 17 July 1984, the 2nd Property was acquired at the price of $650,000 in the joint name of the Au brothers as tenants in common in equal shares absolutely. According to the assignment dated 17 July 1984, the defendant was the confirmor of the transaction and Au Yat Kong was described as "merchant". The purchase of the 2nd Property was financed by a mortgage of 18 July 1984 granted by Wing Ling Bank to the Au brothers. Au Yat Kong was again described as a merchant in the mortgage document. The blind business was then moved to the 2nd Property from 336 Reclamation Street. Au Yat Kong and the plaintiff also moved to live at the cockloft of the 2nd Property ("the Cockloft").

8. As noted above, Au Yat Kong died on 5 April 1988. Thereafter, the plaintiff continued to live at the Cockloft. The plaintiff was married in 1987 in Guangzhou. His wife did not come to settle in Hong Kong until 1996 and since then, the plaintiff's family has been living at the Cockloft up to now.

9. The plaintiff obtained letters of administration of his late father's estate on 11 August 1989. On 28 September 1989, the plaintiff (in his capacity as administrator) and the defendant as landlord entered into a lease with the latter trading as the Chui Hing Bamboo Blind MFR as tenant in respect of the 2nd Property for a term of 10 years from 1 October 1989 to 30 September 1999 ("the Lease"). No rent had however been paid by the defendant over the years.

Claims and counterclaims

10. On 7 December 2000, the plaintiff commenced the present proceedings against the defendant for :

(1)	A declaration that Au Yat Kong was a tenant in common owning 1/2 share of the Properties and an order for sale ("the Property Claim");
(2)	An order for taking of accounts of the profits of the blind business alleged carried on by the defendant and Au Yat Kong as partners during his life time and an order for payment of the sums found due ("the Business Claim"); and
(3)	An order for taking of accounts of the rent or mense profits payable to Au Yat Kong's estate under the Lease since 1 October 1989 and an order of payment ("the Tenancy Claim").

11. The defence raised by the defendant in his pleadings is in gist this :

(1)	In respect of the Property Claim, it was he who alone contributed financially to the acquisition of the Properties. Au Yat Kong agreed to and did hold the beneficial interests in them as bare trustee on trust of him.
(2)	In respect of the Business Claim, Au Yat Kong was but a mere employee. The defence of limitation is also relied on.
(3)	In respect of the Tenancy Claim, the Lease was made upon the advice of the defendant's nephew (a clerk of a solicitors' firm) to create a leasehold interest on the 2nd Property so that it would not be easily disposed of. It was meant to protect the defendant's interest and was not intended to create any legal relationships between the parties.

The defendant further counterclaimed for a declaration that Au Yat Kong held the Properties as his bare trustee or alternatively a declaration that he held interests in the them proportionate to his contribution to the price as the court shall determine; and an order that the plaintiff do transfer all legal interest in the Properties back to him. The defendant also alleged that the plaintiff was a bare licensee in respect of the Cockloft but had failed to vacate the same despite termination of the licence and repeated demands. He asked for an order that the plaintiff do give vacant possession of the Cockloft. Finally, the defendant alleged that he had made two personal loans to the plaintiff on or about 17 November 1995 for $80,000 and 26 March 1997 for $100,000 respectively. He claimed for repayment of the same.

Preliminary matters

12. At this juncture, I digress to deal with a number of preliminary matters.

13. The first matter concerns a typing error on the date of the letters of administration referred to in the Amended Statement of Claim. The date pleaded is 11 August 1998. It should be 11 August 1989. The application to amend the error was unopposed and was allowed accordingly.

14. The second matter is that at the end of his opening submission, Mr Wong, counsel for the plaintiff, abandoned the Business Claim. Be that as it may, the parties have adduced evidence on the disputes relating to this claim because they are to certain extent relevant to other claims.

15. The third matter arose out of the nature of the counterclaims and the effect of Order 15, rule 1, Rules of the High Court. The parties agreed that the counterclaim for a possession order of the Cockloft was made with reference to the estate of Au Yat Kong. Under the rules, leave was not required to raise the claim as it was made "with reference to the same estate" : see Order 15, rule 1(1)(b). However, the counterclaim for repayment of loans was made against the plaintiff personally. The defendant had not obtained leave to raise it : see Order 15, rule 1(1)(c). Mr Wong conceded, and rightly so in my view, that the irregularity has long been waived : see Hong Kong Civil Procedure 2002, Vol.1, para.15/1/6 at p.183. The absence of leave therefore does not present any procedural hurdle.

16. The fourth matter is this. As noted, the defendant raised the defence of limitation against the Business Claim. Although it was quite obvious, no similar defence had been raised against the Tenancy Claim. At the end of his closing submissions, Mr Lam, counsel for the defendant, sought to amend the pleadings to include such a defence. The application was naturally opposed. Having heard counsel, I reserved my ruling to be dealt with in this judgment. For the reasons set out in paragraph 58 below, I refuse the application.

17. Lastly, counsel agreed that the witness statements were to stand as the witnesses' evidence in chief and that oral evidence was to be given in Chinese while submissions would be in English. I write this judgment in English because it is easier to discuss the applicable legal principles in English. To maintain consistence, I will first deal with the evidence in English. But as will be seen in a moment, it is necessary to set out some of the evidence, which has a significant bearing on the issues, in Chinese.

18. I now return to the major disputes and start with the Property Claim.

The Property Claim

19. Au Yat Kong was one of the two registered owners of the Properties. The burden thus rests on the defendant to prove that Au Yat Kong was his trustee as alleged.

20. Before proceeding any further, I would like to make one observation, which relates to the form of the alleged trust that the defendant sought to raise. According to the Re-Amended Defence and Counterclaim, it seems that the defendant is raising a case of express trust : see paragraph 11(1) above. This is confirmed by paragraphs 28 and 36 of the defendant's witness statement filed on 16 March 2003 where he said in substance that Au Yat Kong knew and agreed that although the Properties were registered in their joint names, he had no interest in them at all. However, in his submissions, Mr Lam argued the defence on the basis that it was a resulting trust. He submitted that it was the defendant who alone advanced the purchase money for the Properties, the presumption of a resulting trust arose in his favour : Snell's Equity, 30th edn, paras.9-07 and 9-08 at pp.206-7. Although it is a presumption capable of being rebutted by evidence of the actual intention of the defendant, the plaintiff has failed to rebut it : Snell's Equity, para.9-15 at p.209.

21. Arguably, the case of resulting trust has not been expressly pleaded. But Mr Wong has not taken any objection to it. Indeed, he countered this line of defence vigorously, arguing that no resulting trust arose because the defendant had intended to and did give half of the interests in the Properties as gift to Au Yat Kong. In light of counsel's submissions, I do not see any technical objection to the defendant's raising the defence of resulting trust, despite the apparent deficiency in the pleadings. If need be, it is a mere formality of amending the Re-Amended Defence and Counterclaim.

22. The defendant's case on trust, whether express or otherwise, is premised on the assertion that it was he who alone paid for the Properties and Au Yat Kong had not made make any financial contribution at all. This brings me to examine the first major factual issue : who actually paid for the Properties?

Who paid for the Properties?

23. I first deal with the 1st Property. The defendant said that in 1968, he won several tens of thousands from horse racing. He then used the money to buy the 1st Property and paid all the price, legal fees, stamp duty and incidental expenses. No mortgage was required. The defendant's evidence in this respect was corroborated by one of the Uncle's daughters, Au Yuet Ngor.

24. The plaintiff alleged in paragraph 18 of his witness statement filed on 27 February 2002 that the 1st Property was acquired with the profits earned from the blind business to which both the defendant and his father contributed. But in his oral testimony, he was much less assertive. Under cross-examination, he admitted that he had no personal knowledge of the matters that happened between his father and the defendant before he came to Hong Kong in 1982. At best, he could only say that he learnt of those matters from other members of the family during conversations over meals. The thrust of his evidence, as I see it, is that he did not have any personal knowledge as to how the 1st Property was in fact paid for. At best, he could only cite vague and hearsay evidence in support. It is therefore hardly surprising that Mr Wong in his closing submissions did not press the plaintiff's case in this respect at all. In the circumstances, I find on a balance of probabilities that the defendant alone paid for 1st Property.

25. I next turn to the 2nd Property. The plaintiff said at the material time, the owners of 336 Reclamation Street intended to emigrate and negotiations to acquire the property took place. At the end, the 2nd Property was acquired instead. He went on to say that his father asked him to make contribution for the purchase of the 2nd Property. Pursuant to his father's request, the plaintiff gave HK$15,000 to him. In paragraph 33 of his witness statement, the plaintiff said that the 2nd Property was acquired with the funds raised from the business of his father and the defendant. But in his oral testimony, the plaintiff has been unable to substantiate this point with concrete evidence. He further said that he did not know how much his father had actually contributed at the time. He only learnt from the defendant subsequently that his father had contributed HK$46,000. (In paragraph 32 of his witness statement, the plaintiff alleged that the defendant mentioned this to him when they were discussing the possibility of buying out the interest in the 2nd Property. In his oral testimony, the plaintiff said the defendant wrote out the amount of his father's contribution on a note ("the Note") after he had obtained the letters of administration. I will come back to the Note in a moment when I deal with the question whether the defendant had by virtue of the Note acknowledged Au Yat Kong's interest in the Properties.) He did not know how the mortgage was repaid.

26. The defendant explained that as the rent for the shop premises had become increasingly expensive, he decided to buy the 2nd Property for the business. He used his savings, borrowed money from relatives and raised the balance by mortgage to pay the price and incidental expenses. In paragraph 32 of his witness statement, he gave a breakdown of the loans from relatives, which included a sum of HK$46,000 from Au Yat Kong. He also relied on documentary evidence in support, namely, a cheque dated 5 July 1984 from Fan Lam Hing for the loan of HK$85,000 and a note issued by him dated 21 December 2000 confirming that loan; and a note issued by Lo Kowk Shin in about December 2000 confirming the loan of HK$25,000. The defendant's evidence is corroborated by Yuet Ngor, Fan Lam Hing and his wife, Fan Shui Ping. In his oral testimony, the defendant stressed that the sum of HK$46,000 was a loan from Au Yat Kong. But under cross-examination, he admitted that he had not repaid the alleged loan to his brother. Eventually, he was forced to admit that that sum was his brother's financial contribution to the purchase of the 2nd Property and he had interest in it to such an extent. The relevant part of the evidence is :

"問： 咁個舖[i.e. the 2nd Property]你即係承認囉喎？

答： 承認咩嘢？

問： 你個細佬有份，你認咗有46,000鈫。

答： 46,000鈫我大早講過喇，經已計咗數。

問： 但係買物業嘅時候佢有出過46,000鈫吖嘛。

答： 佢係有，......

問： 咁佢咪......

答： ......幾個人出過添。

問： 咁佢咪喺物業度有份囉？

答： 唔，$46,000係有，佢。

問： 佢喺物業 個舖嗰度佢咪有份囉？

答：係，我寫過有份。

問：咁得喇。

答：咁唔係淨係佢?嘛，好多人?嘛。"

27. In my view, the difference in the parties' case as to why the 2nd Property was purchased is immaterial. The defendant now accepts that his brother had contributed HK$46,000 towards the purchase price of the 2nd Property and had an interest in it to such an extent. I am unable to accept the plaintiff's bare assertion that the purchase price came partly from the business. The defendant's evidence in this respect, corroborated by other witnesses, is to be preferred. I therefore find that Au Yat Kong had contributed HK$46,000 towards the price of the 2nd Property and that the balance was paid by the defendant. Even if I were wrong to make such a finding, and it was the defendant who alone paid for the 2nd Property, it does not affect the outcome of the Property claim. The reasons will become apparent in a moment.

28. With these findings, I now turn to the defendant's case of express trust.

Express trust?

29. The burden is on the defendant to prove that Au Yat Kong had agreed to hold on trust the Properties for him. In his witness statement, the defendant had this to say on the 1st Property :

"28. I decided to put the 1st Property in the name of myself and Au Yat Kong, I did so with his consent and after discussion with him. As I was single at that time, I was afraid that should I pass away, the 1st Property would go to the Government. I therefore included my brother's name on the Assignment of the 1st Property with the intention that, should I pre-decease my late brother, he, instead of the Government, would be able to inherit it. I did not intend my brother to have any share in the beneficial ownership of the 1st Property during my lifetime. I did not take any specific legal advice and was quite ignorant about the legal niceties of having my brother's name on the conveyancing documents. However, my brother knew and agreed that although the 1st Property was registered in our names together, he had no interest in it."

30. The defendant's evidence on the alleged trust relating to the 1st Property does not stand up to close scrutiny. First, the alleged fear that upon his death, the 1st Property would go to the Government (as opposed to his estate) is entirely baseless. The defendant has been unable to explain satisfactorily why he laboured under such an obviously erroneous belief, which he held without consulting anybody. Secondly, the defendant admitted under cross-examination that he did not raise his fear with his lawyers (Messrs K.F. Wong & Co.) then handling the assignment for him. He said it did not occur to him the need to ask. If his fear was genuine, it defied common sense not to consult his lawyers and to seek legal advice on how to address his concern. Thirdly, the 1st Property was held by way of tenancy in common. Such a form of co-ownership, as opposed to joint tenancy, did not address his fear at all. For there is no doctrine of survivorship. Upon his death, his interest in the 1st Property would not be vested in Au Yat Kong. The defendant alleged that at the time Messrs K.F. Wong & Co. had not explained to him the difference between joint tenancy and tenancy in common. Later under cross-examination, he said he found out the difference in the 1970s. He was then aware that there was no doctrine of survivorship under a tenancy in common. By then he realised that the 1st Property was not registered by way of joint tenancy. But strangely enough, he did not do anything to rectify the title. He said he was simply not bothered. It is indeed incredible that he did not do anything to safeguard the 1st Property against his fear. I reject his evidence why Au Yat Kong was added as a tenant in common for the 1st Property.

31. In my view, the following exchange during cross-examination is telling :

答： 唔，唔，係。

答： 同意。

問： 亦即係話所以你喺之後發現到原來唔係生死契都唔重要。

答： 我唔知。

問： 你話你70年代發現到咩嘢叫做唔係生死契吖嘛？

答： 唔。

問： 你發現你通菜街嘅物業叫做唔係生死契吖嘛？

答： 我成日諗住我買嘅咪我個囉，咁樣，我唔知要做嗰啲咁嘅手續。

答： 係。

問： 係咪？所以加佢個名係因為理所當然，你係諗住畀佢，啱唔啱？

答： 係。

答： 我以前諗唔係咁諗，以前我即係掛住個細佬，我唔係掛住佢有個仔，咁喎。

答： 都同意，佢 因為佢要去分家，我哋咪提出嚟。

問：如果你細佬今日仲在生，你就唔會同你細佬講話呢個物業係屬於你，佢冇份嘅，係咪呢？

答： 細佬生我都有講。

答： 會，佢知道我畀錢?嘛，佢冇乜理由攞我啲嘢。

問： 但係你畀咗佢吖嘛？

答： 你畀咗佢啫，我當時口拏佢講過，寫佢個名啫。

問： 但係你頭先一路都講話畀佢，係畀你細佬喎？

答： 係。

問： 呢個係咪咁嘅情況？

答： 我即係冇人喺處咪信託住佢啫。

問： 點樣樣信託，最後嘅時候你都係畀佢個喎，個物業，替邊個信託？

答： 始終我冇噏過話畀佢。

問： 如果你唔响度，個物業就係佢個囉喎？

答： 咁我家下喺度。

問： 當時有邊個人信託？

答： 咁咪就信託佢囉。

問： 信託佢，佢點會係信託？係你畀嘢佢喎？

答： 我只有口拏佢簽佢個名，始終都係我嘅。

問： 你呢個信託嘅觀念幾時有？

答： 我自己諗出嚟係咁。

問： 冇問律師？

答： 冇。

問： 但係你就只知道要加細佬個名？

答： 係。

問： 你亦都知道加細佬個名嘅意思，個物業係要畀佢？

答： 我從來冇話畀佢。

問： 你加咗個名，佢有份喎？

答： 佢有份啫，佢臨到我結婚佢都即刻走，佢知道我畀錢買?嘛。

問： 但係佢冇轉番個名畀你？

答： 佢咪冇轉......

問： 你亦都冇要求去轉番個名畀佢？

答： 佢死咗喇，轉咩嘢？

問： 佢未死之前你結婚?嘛？

答： 我未諗得到嗰啲。

問： 你從來都冇，直至到區獻民同你講話要分家，你先至諗起，啱唔啱？

答： 啱。

問： 其實喺68年嘅時候你只有一個意圖，就係將呢個物業嘅一半畀你細佬，你同唔同意？

答： 我寫我個名，梗係同意。

問： 你聽清楚我頭先個問題嘛？

答： 聽清楚。

問： 你就答「係」，係咪呢？

答： 唔，係，係。"

32. It is clear from the above exchange that while the defendant tried his very best to maintain his story that he entrusted the 1st Property to Au Yat Kong as trustee, when subjected to cross-examination and repeated questions on the same topic, his answers somehow gave him away. He openly admitted more than once that he wanted to benefit his brother by adding him as a tenant in common in respect of the 1st Property. Mr Lam submitted that the defendant (aged 75) misunderstood the questions and became mixed up with events because of his age. I disagree. I have carefully considered his evidence and the way he gave evidence. I am not convinced that he was confused as argued by counsel. Indeed, the flow of the questions and answers quoted above do not admit of any room of misunderstanding or ambiguity. The defendant has failed to prove the alleged express trust over the 1st Property.

33. The defendant's evidence on the express trust relating to the 2nd Property is none the better, if not worse. In paragraph 36 of his witness statement, the defendant said :

"36. At the time of the acquisition of the 2nd Property, I had been suffering from tuberculosis for a period of time. My life was 20 odd years younger than I was. At that time my son was still a minor. I was worried that my wife would desert me if I registered the 2nd Property under her name. I was skeptical at that time and therefore I again caused the 2nd Property to be registered in the name of myself and my brother. Au Yat Kong was my only brother in Hong Kong. By then, he had been working for Chui Hing for over 30 years. I knew him to be honest and trustworthy, I thought 'blood is thicker than water' and knew that my brother could be trusted to have his name added as a legal holder of the 2nd Property for my family's benefit. I believed that by adding my brother's name to the 2nd Property, should anything happen to me, he would take care of my wife and child for me and would hold the 2nd Property for my family's benefit. Nevertheless, I believe that the 2nd Property belonged to me absolutely as I paid for the deposit and purchase price, mortgage loan repayments, legal fees and other expenses. I discussed with Yat Kong my intention and he knew and agreed that although the 2nd Property was put in our names, he had no interest in it."

34. However, under cross-examination, the follow points, which are detrimental to his case, emerged. First, the defendant added for the first time in these proceedings that there was an agreement with Au Yat Kong to transfer the 2nd Property to his child when the latter became an adult. It is, in my view, an attempt on the defendant's part to bolster his case, something that he made up as he went along. Second, back in the 1970s, he already knew the distinction between joint tenancy and tenancy in common. He was asked if he knew that in the event of his death, his share in the 2nd Property would go to his estate, which was likely to be succeeded by his wife. His fear would remain. The only answer that the defendant came up with was that he trusted his brother. But it is evident that the scheme of arrangement, in its form, would most probably fail to achieve his objective if he predeceased his brother. I see no justification at all not to create a joint tenancy in the first place. Third, The defendant was asked who would succeed to the blind business if he died. He said his wife would. His wife made the same point in her oral testimony. If the defendant's fear over his wife was genuine, why did he not do something to safeguard the business as well? After all, the entire family income was to be derived from the business. Fourth, it is the defendant's case that Au Yat Kong was a mere employee. He was not in a position to pay for the 2nd Property. If the defendant died, how would his brother, a mere employee with a modest income, be able to meet the obligations to take care of his family financially, including paying off the mortgage of the 2nd Property?

35. I reject the defendant's evidence as to why Au Yat Kong was added as a tenant in common for the 2nd Property. His case on the alleged express trust over the 2nd Property must fail.

Resulting trust or gift?

36. The defendant's main contention as advanced by Mr Lam is that subject to Au Yat Kong's interest in the 2nd Property as represented by any financial contribution that he made towards the 2nd Property, a rebuttable presumption of resulting trust in respect of the Properties arose in the defendant's favour, and that the plaintiff has failed to rebut the presumption : see paragraph 20 above. This brings me to the next major factual issue: whether the defendant intended to benefit Au Yat Kong. In other words, did he intend to give half of the interests in the Properties to his brother as a gift?

37. I have already dealt with the defendant's admissions under cross-examination in relation to the 1st Property in paragraphs 31 and 32 above. To recap, the gist of his evidence is that he intended to and did benefit Au Yat Kong by way of gift when adding him as a tenant in common for the 1st Property. There are other pointers showing that it was indeed the case for both Properties. I will deal with them in turn below.

38. First, the case of gift is consistent with the defendant's own evidence. In paragraph 38 of his witness statement, he referred to his very good and close relationship with Au Yat Kong. As his eldest brother, he did form time to time help Au Yat Kong financially. He cited this as example. Au Yat Kong enjoyed driving. The defendant bought him an Austin 1300 Salon (Registration No.AL5920) in the late 1960s and traded in the same for a new Austin Maxi 1750 cc Salon (Registration No.AW8969) in 1971. Given his love and care towards his brother, it is hardly surprising that the defendant would also want to benefit him in respect of the Properties.

39. Second, as noted above, the plaintiff obtained letters of administration for his late father's estate in August 1989. The letters clearly showed that Au Yat Kong had half the interest in the Properties. It is common ground that the plaintiff's application was handled by Messrs M.K. Lam & Co. The plaintiff said in paragraph 46 of his witness statement that it was the defendant who introduced him to Messrs M.K. Lam & Co. to prepare for the papers in connection with the application. In his oral testimony, the plaintiff went further than his witness statement and said that shortly after the probate had been obtained, the defendant told him that his father's estate included half share in the Properties and that profits of the business would be distributed to him as well. Given the importance of what he said in his oral testimony, I see no reason why the same was not included in his witness statement. I reject it as an exaggeration of the plaintiff's part. The defendant had little to say in his witness about how the letters of administration was taken out. I note that according to his case, his nephew, Leung Siu Wah at that time worked as a clerk in Messrs M.K. Lam & Co. There is no evidence to suggest that the plaintiff knew this firm or Leung beforehand. The parties' relationship at the time was harmonious. It is the defendant's case that he treated the plaintiff as his own son. The plaintiff also said he respected the defendant as the senior member in the family. In the circumstances, it is probable that the defendant was helping the plaintiff to apply for the letters of administration and introduced the plaintiff to the solicitors firm for that purpose. Under cross-examination, the defendant admitted that he was present at the solicitors' firm when the plaintiff attended there for the purpose of taking out of the letters of administration. He first denied that the probate application included the Properties. But he later admitted that he attended the firm of solicitors to execute papers relating to the Properties to enable the plaintiff to apply for the probate. He then admitted that the probate included the Properties.

40. Having considered the evidence in the round, I find on balance (1) that the defendant introduced the plaintiff to Messrs M.K. Lam & Co. for the purposes of taking out the letters of administration of Au Yat Kong's estate; (2) that the defendant together with the plaintiff attended the solicitors' firm for those purposes; and (3) that the defendant knew that the estate of his brother included the Properties. The defendant had not raised any objection, which is a clear acknowledgement of his brother's interest in the Properties. This strongly supports the case of gift. Further, it is the defendant's case that Au Yat Kong was added as a tenant in common for the Properties so that he could take care of the defendant's family if the defendant predeceased him. Now that Au Yat Kong predeceased him instead, the entire purpose of naming him as a tenant in common must have lapsed. I see no reason why the defendant would allow the Properties to be vested in his brother's estate (to be administrated by the plaintiff).

41. Third, the parties entered into the Lease shortly after the plaintiff obtained the probate. The defendant's case is that the Lease was made to protect his interest in the 2nd Property as a means to prevent the plaintiff from disposing of it. It was not intended to be binding on the parties legally. Thus no rent was paid and the plaintiff had not taken out any action to recover the rent over the years. It was not even mentioned in the letter before action dated 23 August 2000.

42. In my view, the contention that no legal relation was intended is fundamentally flawed. The parties' intention, according to the defendant's case, was to create a leasehold interest in the 2nd Property by virtue of the Lease. It is not opened to him to then argue that no legal relation was intended. Otherwise, the primary objective of the Lease would be defeated. Mr Lam next submitted that if the Lease was intended to be legally binding, it is inconceivable that the plaintiff had not taken any action to recover the rent. The plaintiff's explanation is that he respected the defendant and there was nothing he could do about it. It should be remembered that the plaintiff's family has all along been residing at the Cockloft (part of the 2nd Property where the defendant ran the blind business). The parties' relationship did not turn sour until sometime in 2000. The defendant, it is common ground, is the head of the family. In such circumstances, it is probable that the plaintiff simply let the sleeping dogs lie over the years until the present dispute arose. I note the omission in the letter before action but I do not think much arose out of there. In the end, Mr Lam abandoned this line of submission.

43. Mr Lam also took the point that there was no consideration for the Lease. However, he readily accepted that the defendant had enjoyed the benefit of the Lease and had made use of the Lease to claim tax reduction for the blind business. Mr Lam eventually abandoned this point as well.

44. Leaving aside all the technical arguments for the time being and applying common sense, one can readily see that the defendant's case on the Lease does not hold water. On its face, the Lease recognized that Au Yat Kong's interest in the 2nd Property became vested in his estate. The defendant was no doubt aware of that when he entered into the Lease. As I have noted in paragraph 40 above, it did not make any sense to allow Au Yat Kong's alleged interest in the 2nd Property to be vested in his estate. It made no sense either to enter into the Lease with the plaintiff in his capacity as the administrator. If the defendant really wished to protest his interests in the 2nd Property, the easiest way was obviously to ask the plaintiff to transfer Au Yat Kong's interests back to him. In my view, creating the Lease is an unequivocal acknowledgment on the part of the defendant of Au Yat Kong's interests in the 2nd Property.

45. These pointers show clearly that the defendant intend to and did give half of the interests in the Properties to Au Yat Kong by way of gift. I am satisfied that the plaintiff has discharged the burden of rebutting the presumption of resulting trust. Mr Lam submitted that even if it was a gift, if the court found that the gift was not to take effect until after the defendant's death, then the condition failed and the gift was not completed. A resulting trust would arise : Halsbury's Laws of England, Vol.48, para.609. I do not agree. The evidence before me clearly establishes that it was an outright gift without any condition.

46. I have thus far disposed of the major disputes arising from the Property Claim. For completeness, I now come back to the Note. Mr Wong submitted that the defendant had by virtue of the Note acknowledged Au Yat Kong's interest in the Properties. A copy of the Note can be found at page 27 of the Agreed Bundle of Documents. The certified English translation appeared at page 28 of the same bundle, which read :

"	1.	Purchase of shop, each party
		contribute cash,Yat Kong	$46,000
	2.	Yat Chor contribute each	$150,000
	3.	Shui Ping, Koon Man,
		2 shares in cash	$38,000
	4.	Paid Yat Kong's medical fees and
		hospital, funeral expenses	$41,000
	5.	Paid Hin Man, wedding party
		fees total $32,000
		less cash presents of $16,500,
		thus total paid is	$15,500
	6.	Auntie No.2 took cash twice	$20,000	Total:$218,500
	7.	Yat Chor resided in house for 18 years at		deduct
		$10,000 per annum, each being $5,000
		Total 18 years and rental fee being		$90,000
	8.
	9.	Thus, the balance payable by Hin Man		$128,500	"

47. In paragraphs 41 to 42 of his witness statement, the defendant dealt with the Note in these terms :

"41. At the end of August 1989, the Plaintiff, after obtaining Letters of Administration of the estate of his late father, approached me and asked when the Properties would be sold and the proceeds be divided. I was so angry that I reminded him that his late father did not have any share in the Properties or the business of Chui Hing. I told the Plaintiff that even if he or Yat Kong had any interest in the Properties, if the Plaintiff had to calculate everything strictly, he and his father in fact would still owe me much money exceeding one hundred thousand dollars. At that time, I wrote the [Note] to show the Plaintiff a rough calculation on that hypothesis...

42.		In his note, I recorded that:-
	(1)	item (1)	I had borrowed a loan of HK$46,000.00 from my brother, Yat Kong, for the purchase of the 2nd Property.
	(2)	item (2)	I myself took HK$150,000.00 from my own money for the acquisition of the 2nd Property.
	(3)	item (3)	My wife (Shui Ping) and my son (Kwun Man) together gave HK$38,000.00 for the purchase of the 2nd Property.
	(4)	item (4)	I spent HK$41,000.00 on medical and hospital expenses for and on behalf of my brother, Yat Kong.
	(5)	item (5)	I paid HK$15,500.00 (HK$32,000.00 less HK$16,500.00 as gift monies received) on behalf of the Plaintiff for his wedding banquet in 1987.
	(6)	item (6)	I paid HK$20,000.00 to the Plaintiff's mother on two occasions when she came to Hong Kong temporarily in about 1988.
	(7)	item (7)	HK$90,000.00 was the hypothetical rental that I was to pay for occupation of the 1st Property had my late brother really been a co-owner of the same. It was stated on the basis of an annual rent of HK$10,000.00 (a half share being HK$5,000.00) averaged over 18 years.

At that time, I explained to the Plaintiff that after deducting items (1) and (7) from the sum of items (2) to (6), the Plaintiff would still owe me HK$128,500.00. After hearing what I said, the Plaintiff did not pursue the matter any further. Indeed, for 10 years after that note was written, the Plaintiff did not bring or issue any demand or proceedings in that regard."

48. The defendant's evidence is not without difficulty. If the plaintiff did ask for a division of the Properties as alleged, there is no reason for the defendant to produce the Note. After all, he said the plaintiff had no interest in it whatsoever. Further, if the plaintiff was bold enough to ask for a division, why would be stopped by the Note from pursuing the matter? He thought the estate of his late father was entitled to half of the interest in the Properties. He would not have accepted or be deterred by the calculation in the Note.

49. In his witness statement, the plaintiff described the circumstances under which the Note came into existence thus. On or about 28 June 2000, a relatively minor dispute arose between the defendant and his family on one part and the plaintiff and his family on the other, which turned the relationship sour. Eventually, the plaintiff and the defendant began to explore the possibility of dividing the Properties. Certain discussions ensued. The plaintiff went on to say :

"59. Subsequently, the Defendant and I discussed the matter at the 2nd Property, the Defendant took out a piece of paper and ask me to repay the said HK$120,000 odd. This is the handwritten document dated September 1989. In the said document, the Defendant acknowledged that [Au Yat Kong] contributed HK$46,000 and I contributed HK$15,000 towards acquisition of the 2nd Property. However, the Defendant claimed that I owed him the amount of HK$128,000.

60. I then realised that it was impossible for the Defendant and I to discuss the matter any further because it was obvious that the Defendant was under an impression that he will have to give up the share of the [Properties] and the income or capital of the business which belonged to [Au Yat Kong]."

50. The effect of the plaintiff's witness statement is that the defendant first showed the Note to him sometime in 2000. However, in his oral testimony, the plaintiff gave a different version. He said the defendant showed him on his own accord the Note after he had obtained the letters of administration in 1989. At the same time, the defendant acknowledged Au Yat Kong's half share in the Properties. The plaintiff was not convinced about the correctness of the calculations on the Note and asked the defendant to re-consider. He denied the defendant's allegation that he asked for the sale of the Properties and to spilt the sale proceeds. I have difficulty to accept that the defendant would on his own motion show the Note to the plaintiff. Further, the calculation in the Note is also inconsistent with the defendant's alleged acknowledgement of Au Yat Kong's half share in the 2nd Property.

51. Given the poor quality of the parties' evidence, I am of the view that neither of them was telling the whole truth about the Note. Making any findings on such poor evidence is undesirable. I do not propose to place any weight on the Note.

Order for sale

52. Having found that Au Yat Kong has half of the beneficial interest in the Properties, I will make the declaratory order as sought by the plaintiff and dismiss the defendant's counterclaim in relation to the Properties, including the claim for an order of possession of the Cockloft.

53. The next question is whether I should make an order for sale of the Properties. Section 2 of the Partition Ordinance, Cap.352 provides that where any property in land is held by two or more persons, whether as joint tenants or as tenants in common, the court may make an order for sale. Pursuant to section 3 of Cap.352 and the Partition Rules, papers in these proceedings were served on the Director of Lands on 24 June 2003. By letter dated 11 August 2003, the Director advised that he has no objection to the sale of the Properties. I am satisfied that given the circumstances of the present case, the rent in the family is so wide that there is no alternative means to resolve the difference over the Properties other than an order for sale. As to the terms of the order, it is obviously in the interest of the parties to work them out by agreement. I will therefore invite them to submit a draft consent order for approval within 28 days from the handing down of this judgment. If, however, no agreement can be reached, they are at liberty to apply.

Tenancy Claim

54. I now come to the Tenancy Claim. I have already disposed of some of the defendant's objections to the Lease in paragraphs 41 to 44 above. Mr Lam also countered this claim on some other grounds. They are discussed below.

55. Mr Lam submitted that at common law, one tenant in common is not entitled to rent from another tenant in common, even though that other occupies the whole; no tenancy can be created by a tenant in common with himself : Jones (A.E.) v. Jones (F.W.) 1 [1977] WLR 438; Rye v. Rye [1962] AC 496. Mr Wong accepted that that is the position under common law. However, he argued that the defendant entered into the Lease in a different capacity, that is, as the sole proprietor of his business, than his personal capacity. By virtue of section 25 of the Conveyancing and Property Ordinance, Cap.219, the Lease is enforceable against the defendant. See also Rowley Holmes & Co. v. Barber [1977] 1 WLR 371.

56. Section 25 of Cap.219 provides :

"(1) A person may, in one legal capacity, assign to, or agree or covenant with, himself in another legal capacity.

(2) An assignment, agreement or covenant-

(a) by a person to, or with, himself and another or others; or

(b) by a person and another or others to, or with, himself,

shall, unless the contrary intention is expressed and otherwise without prejudice to its effect in law, be enforceable between the parties as if that assignment, agreement or covenant were made -

(i) in the case of paragraph (a), to, or with, the other or others alone; or

(ii) in the case of paragraph (b), by the other or others alone.

...

(5) This section shall apply to assignments, agreements and covenants relating to land and other property."

57. The Lease explicitly provided that the defendant as tenant entered into it in his capacity as the sole proprietor of his business. This is distinct from his personal capacity as one of the tenants in common. I therefore accept Mr Wong's submission.

58. Mr Lam next sought to amend the pleadings and raise the defence of limitation at the end of his closing submissions. He submitted that it was inadvertence on this part to have omitted the plea. He thought paragraph 19 of the Re-amended Defence and Counterclaim had already covered the plea. It is evident that paragraph 19 in its present form is simply not sufficient to raise the plea of limitation. Order 18, rule 8, Rules of the High Court, requires the defence of limitation to be raised by an express plea. I find it rather surprising that with his experience, Mr Lam would have missed this point. In any event, I am not convinced that I should exercise my discretion to allow the defendant to raise the limitation defence at the very end of the trial. It should be noted the limitation defence, if raised, does not extinguish the cause of action. It operates as a bar to remedy. If the defendant fails to plead the limitation defence expressly and the plaintiff's right of action still survives, there will be nothing to prevent the court from adjudicating on the matter : see Oughton , Lowry & Merkin on Limitation of Actions, at pp.48-49. In the absence of an express plea, the plaintiff was entitled to pursue the Tenancy Claim on the legitimate assumption that the defendant did not wish to rely on the defence of limitation. The trial proceeded and concluded on that very basis. It is far too late to raise the defence now. The prejudice suffered by the plaintiff by reason of such amendment cannot be properly compensated by costs or adjournment. The application to amend is accordingly refused.

59. Mr Lam finally submitted that the plaintiff cannot be entitled any mense profit after the expiry of the Lease on 1 October 1999 : Jones (A.E.) v. Jones (F.W.), supra. I agree. The plaintiff is only entitled to half of the rent for the duration of the Lease. The quantum is thus HK$7,500 x 1/2 x 12 x 10 = HK$450,000. I will enter judgment in favour of the plaintiff in this sum. As to interest, I will ask the parties to make written submissions within 28 days from the date of handing down of this judgment. If the question cannot be resolved on paper, I will ask the parties to address me orally.

Counterclaim for the personal loans

60. The defendant pleaded in paragraph 33 of the Re-amended Defence and Counterclaim that on or about 17 November 1995, he lent HK$80,000 to the plaintiff and that on or about 26 March 1997, he again lent HK$100,000 to the plaintiff for his alleged purpose of acquiring a flat as his residence. The plaintiff admitted that he had received a total of HK$470,000 between 1989 and 1997. They were however distributions of profits from the blind business and not loans. In his oral testimony, he said he simply did not know what the alleged loans of HK$180,000 were. I do not accept his allegation that the payments were distributions of profits from the business. Even assuming that the blind business was a partnership of the Au brothers as alleged, the partnership dissolved upon Au Yat Kong's death. Thereafter, there is no obligation on the defendant's part to distribute any profits to the plaintiff. I see no reason why the defendant would agree to do so.

61. But that does not follow that the defendant's case succeeds. The burden rests squarely on the defendant to prove the alleged loans. In his witness statement, the defendant had this to say :

"48. After Yat Kong had died, the Plaintiff had asked me to lend him money on quite a number of occasions; I acceded to his request almost every time and lent him a lot of money.

49. In particular, on about 24th April 1995, I advanced a sum of HK$80,000.00 by way of loan to the Plaintiff at his request. In about March 1996, the Plaintiff's family migrated from China to Hong Kong. On about 13th March 1997, I advanced a further sum of HK$100,000.00 by way of loan to the Plaintiff at his request for the alleged purpose of acquiring a flat as his residence. I have retrieved from the bank copies of the cheques representing the sum of HK$80,000.00 and HK$100,000.00 issued to the Plaintiff. I also refer to the Hang Seng Bank statements of Chui Hing Blinds Co. which show the payment out of the sum of HK$80,000.00 on 24th April 1995 and the sum of HK$100,000.00 on 13th March 1997 (see Defendant's Documents Nos.19 and 20).

50. Despite all that I had done for him and his father, the Plaintiff instructed solicitors to make demands against me by letter of 29th August 2000. I had no choice but to instruct solicitors to defend myself. In particular, in my solicitors' letter dated 4th October 2000 to the Plaintiff's solicitors, I pointed out that I had paid the Plaintiff HK$530,000.00 (which included the two sums of HK$80,000.00 and HK$100,000.00 referred to above).

51. Further, because of the Plaintiff's unreasonable and ungrateful conduct, I decided to be strict in calculating what I regarded he owed me and should repay me. In my solicitors' letter dated 21st November 2000, I demanded the Plaintiff to pay back a total sum of HK$838,000.00.

52. Part of that sum of HK$838,000.00 was the living expenses of the Plaintiff from1982 to 1996 when he lived in the shop premises and the living expenses of the Plaintiff's family from 1996 to 2000. I have since decided that although the Plaintiff has been ungrateful I will not make a claim for these amounts.

53. Another part of that sum of $838,000.00 was other money (HK$350,000.00) that I reckoned had been advanced by me to the Plaintiff from 1989 mostly by way of cash and some by way of cheques the copies of which cannot now be located or retrieved from the bank. As far as I can ascertain such sums were paid to the Plaintiff on various dates as follows -

Date	Amount (HK$)
24th May 1989	$30,000.00
30th August 1989	$90,000.00
12th October 1990	$50,000.00
24th July 1991	$30,000.00
16th November 1992	$70,000.00
28th April 1993	$60,000.00
18th March 1994	$20,000.00

54. As there was no written tenancy agreement signed between the Plaintiff and myself, despite that the Plaintiff has been ungrateful, I have decided not to proceed with the claim against the Plaintiff for the outstanding rent from 1996 to 2000 for their family's occupation of the 2nd Property.

55. That leaves the sum of HK$180,000.00 still outstanding from the Plaintiff to me. Despite repeated requests and demands, the Plaintiff has refused to make any repayment of the sum of HK$180,000.00 advanced to him by me as described above. Instead, the Plaintiff issued a Writ against me on 7th December 2000."

62. A number of points arose from the defendant's evidence. First, the alleged loans of HK$180,000 were part of a larger loan of HK$530,000. The defendant had not satisfactorily explained why he now pursues HK$180,000 and not the entire sum. Second, in his solicitors' letter dated 4 October 2000, the sum of HK$530,000 was referred to. But it was not put as a loan. It was said to be payment to the plaintiff to enable him to buy a flat. The case of a loan was raised for the first time in the defendant's subsequent letter of 21 November 2000. Third, under cross-examination, the defendant to certain extent retracted from his witness statement and said that the plaintiff had not told him that he wanted the money to buy a flat. Fourth, the defendant did not take any action to recover the loan over the years. It did not seem to bother him. He said :

"問： 區先生，你當時嘅律師樓就話$530,000，你有冇印象去追過佢$530,000呢？

答： 冇追過，我畀咗佢算數，冇問過佢攞過，冇問佢攞返過。

問： 你好肯定？

答： 肯定，我都冇 - - 我自己我經手嘅，我冇問過佢，咁點問佢攞返佢呢？畀咗佢。

問： $530,000冇再問佢攞返？

答： 冇。

問： 你知道你自己講緊乜？

答： 咁我咪冇攞返過囉，畀咗佢囉，我冇問過佢攞返。"

63. I find the defendant's evidence, as demonstrated by the points above, highly unsatisfactory. Having considered the evidence in the round, I am of the view that the payments made to the plaintiff over the years were neither distributions of profits nor loans. The defendant, as the head of the family and out of love for his brother, continued to take care of his nephew after his brother's death. That included financial assistance from time to time. When the plaintiff asked him to divide the assets and threatened him with legal action, he was upset. In his eyes, the plaintiff was extremely disrespectful and ungrateful. In his words, he decided "to be strict in calculating what he regarded [the plaintiff] owed him". He therefore treated the payments in the past as loans and made up the counterclaim in this respect. This can be exemplified by his claim for payments of the living expenses of the plaintiff's family, which are most likely financial assistance and not loans. (This perhaps also explains why the defendant chose to defend the Property claim. He wanted to retrieve the gift so that his ungrateful nephew would not benefit from it.)

64. For these reasons, the defendant has failed to prove the alleged loans. The corresponding counterclaim must fail and is dismissed accordingly.

Costs

65. The plaintiff has succeeded substantially on his claim and the counterclaim fails in its entirety. In the circumstances, I will make an order nisi that the plaintiff will have the costs of the action, including the costs of the counterclaim and any costs reserved, to be taxed if not agreed.