LAM KWOK HING (as Administrator of the Estate of LAM PING SANG, deceased) v. LAU HA also known as LAU HA LILY AND OTHERS

HCA 2196/2020

[2025] HKCFI 2843

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2196 OF 2020

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BETWEEN

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D E C I S I O N

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Introduction

1.  On 11 April 2025, I handed down the judgment (the “Judgment”) in respect of the present action ([2025] HKCFI 1354. In this Decision on Costs, I adopt the definitions and nomenclatures used in the Judgment.

2.  For the reasons elaborated in the Judgment, I found that:-

(1) The Property in dispute was held on common intention constructive trust in favour of STWA and/or its members: see Judgment paras 46 to 115. The constructive trust was in favour of STWA and/or its members, not STRC and/or its members: see paras 135 to 137.

(2) The Plaintiff and/or Mr Lam Senior’s estate were estopped from asserting ownership over the Property against STWA and/or its members under the doctrine of estoppel by convention: see Judgment paras 116 to 124.

(3) Even if a common intention constructive trust had not arisen, the members of STWA still enjoyed a collective equitable right over the Property under the doctrine of proprietary estoppel, and the Plaintiff and/or the estate of Mr Lam Senior must be estopped from asserting ownership and/or title: see Judgment paras 125 to 128.

(4) In the alternative, the “contract holding theory” was applicable. It could be inferred there was an agreement that the Registered Owners were merely authorized to acquire the Property on behalf of the members of STWA in the capacity as their representatives and to hold the title of the Property on their behalf: see Judgment paras 129 to 134.

(5) There was no room for STWA and/or its members to invoke the doctrine of adverse possession as the possession of the Property throughout the years was not “adverse”: see Judgment paras 138 to 144.

3.  In the premises:-

(1) I dismissed the Plaintiff’s claims for possession of the Property.

(2) I declared that the Plaintiff was (i) a constructive trustee holding the Property for the members of STWA; and (ii) estopped from asserting title, interest and ownership over the Property.

(3) I ordered the Plaintiff to transfer the title and interests in the Property to Mr Mok (who was STWA’s representative): see Judgment, paras 150 to 151.

4.  I also made a costs order nisi that the Plaintiff should pay the costs of the 1^st, 3^rd and 4^th Defendants (who were represented by the same legal representatives): see Judgment, paras 156 to 157.

5.  This is the Plaintiff’s application by summons dated 24 April 2025 seeking to vary my costs order nisi.

6.  Whilst the Plaintiff accepted that he should pay the costs of the 1^st and 4^th Defendants, he proposed that there be no order as to costs as between himself and the 3^rd Defendant.

The Plaintiff’s Contention

7.  The Plaintiff’s contention can be summarized as follows.

8.  Upon Mr Mok’s application to join these proceedings, he was sued as:-

(1) the 3^rd Defendant in his own capacity and in the capacity as a representative of all the members of STRC; and

(2) the 4^th Defendant in his own capacity and in the capacity as a representative of all the members of STWA.

9.  Mr Tasman Tam (for the Plaintiff) sensibly accepted:-

(1) It was common ground that STWA had been managed and/or operated by STRC, and STWA was regarded as a branch or department of STRC: see Judgment, paras 3 to 5.

(2) Since I found that the Plaintiff and/or Mr Lam Senior’s estate did not have any beneficial interest in the Property, it cannot be said that the Plaintiff was a successful party viz-a-viz STRC.

10.  However, Mr Tam emphasized that:-

(1) Apart from pleading that STWA and/or its members was/were the beneficial owner(s) of the Property, the 1^st, 3^rd and 4^th Defendants also pleaded a conflicting case that STRC and/or its members was/were the beneficial owner(s) of the Property.

(2) I found that the beneficial ownership of the Property was vested in the members of STWA, not STRC and/or its members: see Judgment, paras 135 to 137.

11.  In the premises, Mr Tam suggested that both the Plaintiff and the 3^rd Defendant/STRC were unsuccessful parties. As such, it would be fair to make no order as to costs between the Plaintiff and the 3^rd Defendant/STRC.

Deliberation

12.  In my view, Mr Tam’s suggestion was artificial.

13.  I accept that the 1^st, 3^rd and 4^th Defendants’ defence and counterclaim contains pleas suggesting that the beneficial ownership of the Property was vested in STRC and/or its members.

14.  However, in considering whether the 3^rd Defendant/STRC was a successful party, it is important to consider the substance of the parties’ dispute as well as the reality.

15.  As mentioned, it is common ground that STWA had been managed by STRC and it was considered a branch or department of STRC: see Judgment, paras 3 to 4. This was why the rental income arising from the Property (which belonged to STWA) was utilized to support STRC’s operation: see Judgment, paras 92 to 94.

16.  In light of the dynamics of the parties’ dispute, I have no doubt that the foremost objective of STRC was to defeat the Plaintiff’s claim for possession and/or ownership of the Property, such that it could continue to control and manage the Property.

17.  Having engaged the same legal representatives, STRC/the 3^rd Defendant was fully supportive of the primary case that the members of STWA were the beneficial owners of the Property. Indeed, the 3^rd Defendant/STRC and the 4^th Defendant/STWA relied on the same factual matters, and they ran the same factual case all along. The 1^st, 2^nd and 4^th Defendants merely put forward an alternative legal conclusion that if the beneficial ownership of the Property were not vested with the 4^th Defendant/STWA, the same was vested with the 3^rd Defendant/STRC. The purpose was to ensure that if the court (for whatever reason) found the beneficial ownership of Property was not vested in STWA and/or its members, there would be a fall-back position.

18.  In the premises, I am not of the view that the 3^rd Defendant/STRC and 4^th Defendant/STWA, in reality, competed with each other for the beneficial ownership over the Property in a hostile manner. This was not the case.

19.  The reality was that the 3^rd Defendant/STRC and 4^th Defendant/STWA were on the same boat. They put forward two alternate legal analyses, both of which aimed at destroying the Plaintiff’s case. Their common objective was to curb the Plaintiff and/or Mr Lam Senior’s estate from taking over the Property.

20.  There is no question that this common objective was achieved. Since I found that the beneficial ownership of the Property was vested with STWA’s members, there is no question that STRC (which has been managing STWA) would continue to exercise control over the affairs of the Property.

21.  As mentioned in paragraphs 91 to 96 of the Judgment, throughout the years, the members of STWA did not object to the practice that the surplus of the rental income[1] arising from the Property be used to support STRC’s operation. Presumably, the practice will continue, and this will benefit both STRC and STWA[2].

22.  In the premises, I am of the view that both STWA and STRC are, in substance and in reality, the successful parties in this action, and their objective (i.e. to defeat the Plaintiff’s claim for possession and ownership of the Property) has been achieved.

23.  For completeness, it should be pointed out that at the trial, Mr Oh did not seriously pursue the contention that the beneficial ownership of the Property was vested with STRC and/or its members. As such, negligible additional costs were incurred by the parties.

Conclusion

24.  For the above reasons, I dismiss the Plaintiff’s summons dated 24 April 2025.

25.  Costs should follow the event.

26.  I make a costs order nisi that the Plaintiff do pay the 3^rd Defendant’s costs in respect of the summons dated 24 April 2025 to be taxed if not agreed (with certificate for counsel).

27.  I thank Mr Tam and Mr Oh for their helpful assistance.