LIU KWOK CHUEN v. LIU KWOK CHUN

DCMP 1905/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1905 OF 2013

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JUDGMENT

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INTRODUCTION

1.  The plaintiff and the defendant are brothers.  There are seven siblings of the Liu’s family, the defendant is the eldest and the plaintiff the fourth.  At trial, the plaintiff and the defendant were aged 60 and 67 respectively.

2.  The two brothers’ core dispute is over the beneficial ownership of a premises situated at No 23, 2^nd Street, Section E, Fairview Park, New Territories (“the suit property”), which was put their names in joint tenancy.  It is a two-storey house with a garage and a backyard garden, of about 1,138 square feet.

3.  The plaintiff commenced this action to apply for an order for sale of the property pursuant to section 6 of the Partition Ordinance (Cap 352) and other incidental reliefs.  The defendant opposed and counterclaimed for a declaration that he is in fact the sole beneficial owner of the property and the plaintiff holds his legal title in the property on trust for him. 

4.  Apart from the ownership dispute, the defendant also claims mesne profit against the plaintiff alleging the latter had trespassed the property during a certain period of time between 2009 and 2011.  The defendant also alleges that during the plaintiff’s wrongful possession of the suit property, the plaintiff had converted some of his goods and chattels therein to the value of HK$158,150.  The defendant also claims repayment of certain loans which he had allegedly lent to the plaintiff.

The dispute over the beneficial ownership of the suit property

5.  In essence, the plaintiff contends that he and the defendant had verbally agreed to jointly purchase a residential property to provide a better and more tranquil environment for their elderly parents (ie Liu Sik Yam (“the father”) and Cheng Kam Yuk (“the mother”)) (“the parents”) to reside.  At that time, he also saw the purchase of such property as his long-term investment.

6.  It was the plaintiff’s pleaded case that the suit property was eventually purchased for such purpose at HK$377,000 (“the purchase price”), and prior to the signing of the sale and purchase agreement on 7 August 1986 (“the sale and purchase agreement”), he and the defendant had orally agreed that:-

a. half of the purchase price would be financed by mortgage of the property, and the remaining half in the sum of HK$188,500 would be raised by the plaintiff and the defendant in equal shares.

b. the defendant, as an unmarried person, would be allowed to reside, rent-free, in the property to take care of the parents.

c. in consideration of the defendant being allowed to reside in the property with the parents rent-free, the defendant would be responsible for repaying the mortgage loan as well as the management fees and other outgoings of the property;

d. they would jointly own the property as joint tenants and each own the same beneficial interests in the property.

(“the alleged oral agreement”)

7.  To perform his bargain, the plaintiff said he handed over or transferred to the defendant four sums totaling HK$100,479.18 (out of which HK$94,250 being his 25% share of the purchase price, and the remaining HK$6,229.18 being his share of the expenses incidental to the purchase) on various occasions from December 1986 to January 1987.

8.  On the other hand, the defendant denied ever entering into the alleged oral agreement with the plaintiff.  Rather, he intended to purchase a new property to treat it as a matrimonial home with his then girlfriend, and let his parents have a better living environment by residing together with him. It was he alone who had signed the preliminary sale and purchase agreement in respect of the suit property on 6 June 1986.  He himself had fully paid for the purchase price (including the deposit) and the plaintiff had not contributed to any of the purchase money whether as alleged or at all. 

9.  According to the defendant, half share of the property was put under the plaintiff’s name at the time because a few days before the signing of the sale and purchase agreement on 7 August 1986, the plaintiff invited him for dinner at a restaurant, during which, the plaintiff told him that his application for migration to the United Kingdom was not smooth and he was requested to show asset condition.  The plaintiff requested the defendant to name him as a joint tenant solely for the purpose of satisfying the migration requirement.  The plaintiff denies all these allegations.

Analysis of evidence

P’s alleged contribution to the purchase price

10.  First of all, it is observed that the defendant has a solid case and evidence that he had fully paid for the deposit and discharged all the subsequent mortgage repayments and outgoings of the property on his own.

11.  By the time of the signing of the formal sale and purchase agreement on 7 August 1986, the deposit of HK$94,250 was fully paid by the defendant himself.^[1] It is common ground the plaintiff made no contribute to the payment of such deposit at that time.  According to the plaintiff’s case, he only contributed to the purchase price by way of payments to the defendant made on various occasions in between December 1986 and January 1987.

12.  It is again undisputed that it was the defendant who arranged the mortgage loan of HK$250,000 and he himself discharged all the mortgage repayments in respect of such loan. 

13.  As for the balance of HK$32,750^[2], it was also within his financial capability to pay for the same.  The sale of Shanghai Street property was completed on 15 September 1986 when he received the balance of sale proceeds of HK293,380 (after the deducting the relevant legal costs and disbursement) from his solicitors for such conveyance.^[3]  The entire amount was deposited into the defendant’s account with Standard Chartered Bank on the same day.^[4]

14.  On the other hand, the plaintiff’s evidence on his alleged subsequent contribution to the purchase price is flimsy and unreliable.

15.  According to the plaintiff, he paid 4 sums to the defendant during the period between December 1986 and January 1987: HK$14,000 (by bank transfer on 02.12.1986), HK$50,000 (by cash after 02.12.1986), HK$12,500 (by cash after 13.12.19086) and HK$23,979.18 (by bank transfer on 27.01.1987) ^[5]. Although he produced his bank passbook^[6] showing the aforesaid four sums were withdrawn from his bank account on 02.12.1986, 02.12.1986, 13.12.1986, and 27.01.1987 respectively, the transaction reference codes in the bank passbook obviously cannot inform the reader to which account the monies were transferred on 02.12.1986 and 27.01.1987.  

16.  It is also the plaintiff’s pleaded case that although he said these two sums were transferred to the defendant’s account, he could no longer recall to which bank they were transferred or the account number.^[7] As for the two cash withdrawals made on 12.12.1986 and 13.12.1986, he could likewise no longer recall where and in whose presence these two sums of cash were handed over to the defendant^[8].  In my view, such evidence of the plaintiff that these four sums were indeed paid to the defendant are in a nutshell self-serving and effectively amount to no more than bare allegations.

17.  In fact, it is quite inconceivable that despite the plaintiff was a highly educated person (who obtained an honour degree in civil engineering in the United Kingdom back in 1979) and a chartered civil engineer by profession at the time, he would not even bother to ask the defendant to give written receipts for the alleged payments to acknowledge his contribution to the purchase of the suit property so as to avoid any dispute about such ‘payments’ in future.  Especially, the plaintiff said he also regarded the suit property as his long-term investment and he had invested so much money into the same.^[9]  There is nothing before this court to suggest why this could not be done.

18.  The plaintiff explained in Court that he had not thought of asking for written receipts for the payments of the alleged contribution because his relationship with his brother was very good back then, and he respected the defendant a lot.  I do not find such explanation convincing or credible in the circumstances of this case.

19.  First of all, such “carefree attitude” of the plaintiff in dealing with such an important investment is in stark contrast and incongruent with his meticulous and sophisticated character, which can be reflected from the ways of handling his affairs in other respects as revealed from the documents produced and my observation of how he gave evidence at trial.

20.  Just to name a few examples.  In 1994, the plaintiff would formally instruct a law firm to prepare a deed of revocation to revoke the power of attorney (previously executed by him on 17 December 1986 appointing the defendant as his lawful attorney) (“the PA”).^[10]  It was the plaintiff himself who later wrote to the defendant notifying him of the revocation.  The plaintiff sent such notice not just by fax at first, but also by a subsequent registered post.  He would type the ID Card number beside the plaintiff’s name in such correspondences.  The registered post would even enclose a copy of the earlier facsimile letter and he would keep the certificate of posting.^[11]

21.  In 2009, whilst the defendant was serving his sentence of imprisonment for being convicted of dangerous driving causing death, the plaintiff changed the lock of main door of the suit property, and took possession of the same without obtaining the defendant’s prior consent.  Since then, the plaintiff started paying for all the management fees and the government rents and rates.  For such purpose, he managed to keep quite a full record of copies of cheques issued by him for paying the government rents and rates^[12].  And, he would arrange autopay for settling the management fee and keep record of Fairview Park’s Management Office’s letter in response to his autopay request.^[13]

22.  Even when it came to the domestic affairs of paying pocket money of HK$1,500 each to his parents, the plaintiff would issue standing instructions to his bank for doing so in May 1994, and he would keep a complete set of copies of such standing instructions, and the bank’s corresponding printed confirmation. ^[14]

23.  Turning back to the alleged four payments, when one looks closer at the relevant banking transactions, it is also inexplicable why the plaintiff would make three different withdrawals (twice on 2 December 1986 and once on 13 December 1986) for paying the defendant as he alleged when he already had surplus fund of HK$81,154 in his account for his free disposal on 2 December 1986.  There is no evidence to suggest why he could not pay HK$76,500[15] to the defendant in one go on either 02.12.1986 or 13.12.1986.  It looks even more strange that he would choose to transfer HK$14,000 only to the defendant’s bank account on 2 December 1986, but withdrew cash of HK$50,000 on the same day but not paid to the defendant on the same day, but on a subsequent day in or around December 1986 to January 1987[16]. Again, no reasonable explanation was forthcoming from the plaintiff at trial to account for all these questionable phenomena. 

24.  The plaintiff testified at trial that out of the last sum of HK$23,979.18 he allegedly transferred to the defendant’s bank account, HK$6,229.18 was his share to the stamp duty, meal, taxi fare, costs for preparing legal charge.  This court would naturally be sceptical about the plaintiff’s ‘memory’ when he was not able to recall so many other material matters in relation to his alleged payments of contribution as pointed out earlier.  Yet, when he needs to reconcile his own evidence to account for eighteen cents ($0.18) for this last figure, his memory became so vivid that he could recall being told by the defendant that he needed to share such expenses and the defendant had also shown him a sheet setting out the calculation of his share.

25.  By looking at all the relevant evidence before me in the round (including also but not limited to the plaintiff’s evidence on the other aspects of his case as well as the evidence from his witness (Liu Wai Ling, his second sister) (“Wai Ling”) which shall be further discussed in details at appropriate juncture below), I am of the clear view that the plaintiff’s evidence on his alleged payments of contribution to the purchase price are unreliable and incredible.  On the other hand, the defendant’s evidence remained wholly unshaken after cross-examination that he had not received any of these alleged sums from the plaintiff.  In assessing the defendant’s evidence in this respect, I have also exercised due caution as regards to the defendant’s overall credibility, bearing fully in mind I have rejected his evidence in some other aspects of his case, and in some of his other counterclaims (which shall also be further discussed in details below).  However, it remains my view that it is inherently probable and credible that the defendant had not received any alleged payments of contribution from the plaintiff. 

26.  In these circumstances, I have no hesitation to reject the plaintiff’s evidence that he had paid the aforesaid four sums to the defendant as his contribution to the purchase price of the property.  I fully accept the defendant’s evidence that he had never received any payment from the plaintiff at any time as his alleged contribution to the purchase price of the suit property. I therefore find that the plaintiff has not made any monetary contribution to the purchase of the suit property whether as alleged or at all.

Purchase of Shanghai Street Property and its sale proceeds

27.  It is common ground before the suit property was purchased in 1987, the parents and some of the siblings were living in a premises at Shanghai Street (“Shanghai Street property”).  According to the defendant, it was purchased in 1979 by him at the consideration of HK$221,500 with the assistance of a mortgage loan of HK$100,000 borrowed from Chow Tai Fook Jewellery Co Ltd.  The defendant testified that he was solely responsible for paying all the purchase monies including all the subsequent mortgage repayments. Shanghai Street property was sold on 24 July 1986 at HK$327,000[17].  He also produced contemporaneous documents showing that he was fully responsible for the purchase of Shanghai Street property, arranging the mortgage loan, and its subsequent sale : the written receipt (in Chinese) dated 12 March 1979 of the deposit for purchase received the defendant, the solicitors’ fee note and receipt for conveyancing costs and disbursements both dated 24 March 1979  issued to him; the preliminary agreement in respect of its subsequent sale as signed by him, and the fee note for the legal costs and disbursements issued to him.[18]

28.  Although the plaintiff and Wai Ling gave counter-evidence by saying that it was the father who acquired Shanghai Street property with the compensation money obtained in exchange for their whole family moving out of the Temple Street apartment, and all family members had subsequently contributed to the repayments of the mortgage loan in respect of Shanghai Street property, both of their evidence are vague in this regard.  They could not tell how much such compensation money was, or the magnitude of the mortgage repayments as allegedly contributed by any or all of the other family members, not even a rough figure. 

29.  It is undisputed that Shanghai Street property was rather small (of about 230 sq ft) consisting of two bedrooms only: one was occupied by the defendant and another by the parents.  When it was purchased, the 3^rd brother already got married and moved elsewhere, and the plaintiff was still studying in the UK.  At first, the 5^th and 7^th brothers, and then the 2^nd and 6^th sisters resided in the dining room for a limited period of time.  After the plaintiff returned, he only lived in Shanghai Street property for a short period of time, and then lived in an apartment in Lam Tsuen as rented from his fiancée’s parents (who later become his parents-in-law).  Viewing from the perspective of such a setting, the chance of the other siblings making contribution to the mortgage repayment is also low.

30.  Most importantly, it is not the plaintiff’s pleaded case that his alleged beneficial interest in the suit property was sourced from any portion of the sales proceeds of Shanghai Street Property.  It was thus neither here nor there for the plaintiff and Wai Ling to testify that all family members (including themselves) contribute to the mortgage repayments for Shanghai Street Property.

31.  On the other hand, the defendant was able to give a concrete account as to how he was financially capable to buy Shanghai Street property on his own.  It is the unchallenged evidence that the defendant joined the labour force since he was very young (at about 13 years old) by working as an apprentice to help lessening his parents’ burden in discharging the family expenses.  He worked at daytime and self-supported his own study in the evening and eventually managed to obtain a Higher Diploma from the Textile and Technology of Polytechnic College (now known as Polytechnic University) in about 1970. 

32.  Since then, he devoted fully in his career, by working as a repair technician in the beginning, and then as a sales for selling printing inks from which he received income on commission basis.  At that time, he earned about HK$10,000 per month and he managed to save about HK$2,000 – HK$5,000 each month.  Such job gave him substantial exposure in the printing industry and allowing him to build up his client network which provided a good foundation for his own printing ink business subsequently formed in 1980 under the name of “Chun Yeung Screen Process Co”.

33.  Against such a background, it is plausible that by 1979 the defendant could amass sufficient wealth enabling him to purchase Shanghai Street property in particular light of his industrious working attitude.  Given his strong sense of responsibility towards the family and the good efforts he offered to the parents in maintaining the family, I would not be surprised if the parents would be willing to subsidize or otherwise assist the defendant (such as by lending him money) for the purchase of Shanghai Street property even assuming that they had any surplus fund for such use at the time.

34.  This court however need not speculate into such matter because there is simply no evidence to suggest that the parents had ever asserted any beneficial interest in Shanghai Street property on behalf of themselves or any other family member even assuming they did provide any financial help to the defendant for the purchase of Shanghai Street property. 

35.  Likewise, there is no or no credible evidence before me to suggest the parents or the defendant had ever at any time required the other siblings to make contribution to the mortgage repayments in respect of Shanghai Street property.  Although the plaintiff and Wai Ling did testify they had paid money to the mother at times, they agreed that these sums were pocket money given to the mother for her own disposal.  And, they did not know whether the mother would make use of such pocket money to contribute to the mortgage repayments of Shanghai Street property or not.

36.  Given such state and quality of evidence before me, I am satisfied that when the Shanghai Street Property was sold in 1986, all the sales proceeds belonged to the defendant.

37.  In the premises, I accept that the defendant would have more than sufficient financial capacity to purchase the suit property on his own with the assistance of the mortgage loan from Standard Chartered Bank.  In this light, I do not see the defendant had any need, in terms of finance, to seek contribution from the plaintiff to purchase the suit property.

The alleged oral agreement

38.  Turning to the alleged oral agreement, it is prima facie doubtful that the plaintiff would really want to buy a property in Hong Kong when he already had a settled intention by August 1986 to emigrate to the United Kingdom to reunite with his wife (who was a British citizen)[19] and his new born baby there.[20] It is the plaintiff’s evidence that he gained the right of abode in the UK by virtue of the marriage.  He made his application for settlement in the UK by submitting the relevant forms and documents to the Hong Kong Immigration Department as enclosed under his letter dated on 27 August 1986 (“the UK settlement application letter”).  His UK entry visa was subsequently approved in February 1987.

39.  Obviously, the plaintiff had to make available sufficient fund at the material times for the settlement application and for the later maintenance of himself and his family in the United Kingdom.  By August 1986, the plaintiff was just 30 years old, working with a consulting firm as a civil engineer in Hong Kong earning about HK$19,000 per month at that time.^[21] The plaintiff had produced letters issued by his former employer, Bennie Partners & International, showing that he joined that company in December 1980 and was promoted to the grade of Engineer on 1 April 1984[22].  Those letters also show that his emoluments (inclusive of allowances) was adjusted to HK$18,000 since 1 April 1986 and further increased to HK$19,000 on 1 July 1986.  However, the employment documents produced cannot tell us what had the plaintiff’s income position been before he was promoted to the grade of Engineer in 1984, and thereafter until March 1986.  It can only be discerned from a letter written by the plaintiff to his father dated 31 August 1982 that he said he was earning a salary of a few thousand odds dollars each month at that time[23].  Apart from his Engineer post, the plaintiff also said he worked as a part-time lecturer at the Hong Kong Polytechnic University from 1982 to 1987.  The Hong Kong IRD’s assessment notice for the tax year ended 31 March 1987 produced by the plaintiff shows that he earned HK$8,905 for that tax year from ‘other employment’ which may be related to such teaching post.  The plaintiff also said in his supplemental witness statement that his wife worked as a secretary between 1982 and 1987.  This Court’s attention was not drawn to any document as related to his wife’s income position.   However, the same tax assessment notice shows that his wife’s relevant annual income for that year was HK$5,106[24] only.

40.  In the UK settlement application letter, the plaintiff said he would bring about HK$150,000 along with him to the United Kingdom.  Though, the plaintiff testified that in the end he actually brought about HK$125,000 only.^[25] There is no evidence that he left behind any significant cash in Hong Kong after he had emigrated to the United Kingdom.

41.  Given the plaintiff’s then circumstances as highlighted above, I agree with the submission of Mr Hylas Chung, counsel representing the defendant, it is unlikely that the plaintiff would still intend to lock up such a substantial portion of his limited capital in a residential apartment in Hong Kong where he would virtually not reside there after he had gone to the United Kingdom for good. 

42.  Among other things, Mr. Chung pointed out that the plaintiff’s relationship with his father was rather bitter in 1982 as reflected from what was written by the plaintiff in the letter to his father dated 31 August 1982 (which was mentioned earlier above)[26]. In such letter, the plaintiff, in gist, expressed his strong disapproval of his father’s unjustified complaint of him paying too little to the family.  The plaintiff said in the letter that he already had substantial regular expenses to discharge (including paying a thousand odds dollars each month to his mother), leaving about a thousand odds dollars only for savings.  He had to save up enough reserve for his own use, and he was planning to marry at that time. The relevant extract from the letter is quoted below:-

“… 我亦要考慮我自己將來的需要，人不為己天誅地滅，我自己亦有自己的計劃你是知道的，何必[咄咄]逼人，每天都像唱歌仔啼笑我無用。我自問良心，是做得對，說話講一次就夠了。講得多就反感以致感情破碎。你可知道我一方面又要照顧你們，另方面要實行我結婚的計劃，我怎可能將所有錢給你們呢！怎麼也好，我是不會改變我的政策的。如果認為我真的不孝，那以後我大家最好少見面，以減少衝突。在我心目的，什麼所謂親情已經死了。我做人只有三個原則，良心，正義和努力。…”^[27]

43.  Although under re-examination, the plaintiff explained that his relationship with the father resumed to normal about one to two weeks after the father had seen the letter, I have reservation of the veracity of such evidence.  The plaintiff told this Court that his father was very touched after seeing the letter, whereas the defendant testified that his father was in fact very angry, the words (in Chinese) which he used to describe his father’s reaction after seeing the letter is: “父親當時激到幾乎吐血”.  But, the defendant frankly agreed that the plaintiff did ask for his father’s forgiveness when his father hosted the wedding banquet for his marriage in Hong Kong in 1984, and his father had also forgiven him by then.

44.  The plaintiff’s relationship with his father is however not the focal point for resolving the material issues here.  It was only one aspect of the circumstances that this court would pay heed to.  In my view, the plaintiff’s perceived priority as between providing better living accommodation for his parents in Hong Kong and making proper preparation for the settlement with his wife and new born baby in the United Kingdom at that time would be more fundamental matters that this court should look into in order to assess the inherent probability or improbability of the plaintiff’s case.  

45.  As said, the plaintiff was only at his early thirty in 1986. By viewing the evidence as a whole, I do not think he is such kind of person who would be prepared to lock up so much of his wealth in Hong Kong for the benefit of his parents’ better accommodation at the risk of not making sufficient reserve to meet with his own substantial family expenses in the United Kingdom.  Especially, he was facing with a rather precarious future before he could properly establish or re-establish his career to earn a stable and sufficient income in a new environment. 

46.  In particular, the plaintiff would need to buy a matrimonial house for his family after he arrived in the United Kingdom.  At trial, he confirmed that he did subsequently buy a semi-detached house for such purpose in Leeds in August 1987 for £36,000 out of the money he brought along with him. Under cross-examination, he said he had paid 10% of the purchase price as down payment, and coupling with stamp duty and legal expenses, this cost him around HK$50,000 for the purchase of such house.

47.  By reading a series of letters he wrote to the defendant from August to November 1987, one can also fairly observe that the plaintiff earned just enough to make the ends meet after his arrival in the United Kingdom, and he was generally cautious about his own finance.  And it seems that he did not have much money left behind after the purchase of that house.  The extracts of the relevant parts of these letters are quoted as follows:-

Letter of 2 August 1986

“… Claire^[28] is now working as a cashier in a Chinese supermarket in Leeds. As far as my plan to open the shop is concerned, things are still being in the planning stage…

In the meantime, I have already applied for a few jobs to see what happen. I may have to take up a temporary full-time post in civil engineering before actually doing my own business. I don’t have plenty of money to waste…”^[29]

Letter of 23 September 1986

“… I have used almost all my money now. Every month I’ve to pay ￡240 (HK$2500) for the mortgage for the next 25 years.

I am now working for Yorkshire Water Authority (similar to HK’s Water Supplies Department). I earn considerably less than in Hong Kong. In the week-end, I also worked in Chinese take away which enable me to earn a bit more…”^[30]

Letter of 25 November 1986

“… 我兒家真係唔係好掂。成份身家差不多用來買這間屋，每個月供￡190 (HK$2470)，要供25年，到時56歲，死了都未定。你細[佬]環境現在真係麻麻，英國打鬼頭工人工又唔好，打稅（tax)打到飛起，又要養妻及Chloe^[31]，什麼都just enough。…＂^[32]

48.  On the other hand, if the plaintiff had really paid for about HK$100,000 to acquire half share in the property at the material times, aside the observation made in Paragraph 41 above, the property would unlikely be sold until the passing away of the parents which may happen many years later.  The plaintiff would receive no rents from the defendant under the alleged oral agreement.  Speaking in terms of any potential appreciation or depreciation in value of the property, nobody had a crystal ball at that time to tell how the Hong Kong property market trend would be heading towards in the long run.  At least, there is no evidence from the plaintiff to suggest why he considered worthwhile in financial terms to invest into the property as a long-term investment in his then circumstances.

49.  Given such a situation in which the plaintiff, his wife and child could not obtain any practical benefit out of the suit property, and the appreciation in value would appear to be an unknown to him at that time (as least in light of the available evidence), and the potential gain (if any) out of the investment may be realised many years later, it would then look even more inherently improbable that the plaintiff would agree in 1986 to co-own the suit property with the defendant under a joint tenancy rather than a tenancy in common.^[33] The implication of such arrangement is that in the event of his untimely demise, his wife and child would not be able to inherit his share in the suit property since it would by operation of law pass to the defendant instead upon the plaintiff’s death. 

50.  It appears that the plaintiff was trying to patch such ‘loophole’ of his case in court by testifying that he only found out the joint tenancy status of the suit property upon conducting a land search after he returned to Hong Kong in 1992.  I do not find such evidence credible, as it was directly contradicted by his own pleaded case and witness statement, where he clearly said it was one of terms of the alleged oral agreement that he and the defendant would jointly own the suit property as joint tenants, and such agreement according to him had been entered into before the sale and purchase agreement was signed in August 1986.^[34] (see also: paragraph 6(d) above)  I also see no evidence from the plaintiff to suggest that there had been any variation between himself and the defendant on such ‘agreed term of joint tenancy’ before he returned to Hong Kong in 1992.  The plaintiff only told this Court for the first time at trial that he did not know about the legal implication of joint tenancy until after he had conducted the land search in 1992 as aforesaid.  I also find such evidence difficult to accept.  For, if what the plaintiff said in court were true, it would then be nonsensical for him to agree with the defendant back in 1986 on something (ie. the joint tenancy arrangement) that he did not actually know about in the first place.  Especially, one should bear in mind his educational and professional background.  All these discrepant and incredible evidence of the plaintiff are indicia pointing to the non-existence of the alleged oral agreement.

51.  Further, I do not lose sight of the fact that the relationship of the two brothers was very good back in 1986-1987.  But, as discussed above, the plaintiff on the other hand had his own wife and child to take care of, and he had the responsibility to make proper financial provision for their maintenance.

52.  Besides, the defendant’s financial position at that period also appeared to be much better than the plaintiff, at least in the latter’s eyes. Apart from the fact that the defendant had ample fund to pay for the suit property on his own, it is also the unchallenged evidence of the defendant that he also held an industrial unit at On Fook Industrial Building for running his printing ink business (which he had purchased in September 1980 at a consideration of HK$219,414^[35]). The two brothers’ relative financial positions as perceived by the plaintiff are also to some extent reflected by the plaintiff’s letter to the defendant dated 25 November 1987^[36]. In this light, his eldest brother’s finance would unlikely to be a matter of the plaintiff’s concern at that time.

53.  In these circumstances, it is inconceivable that the plaintiff would still be prepared to let such a substantial part of his wealth (previously locked up in the suit property) to pass to his eldest brother rather than to his wife and child in the event of his untimely demise.

54.  Turning to the perspective of the defendant at the time of purchase of the suit property, financially speaking, it was unnecessary for him to seek any contribution from the plaintiff for the purchase as pointed out in Paragraph 37 above.  Neither is there any evidence of other financial incentive for him to do so.  To put the alleged oral agreement to the test from the financial perspective, the alleged terms of bargain of letting the plaintiff contribute 25% of the purchase price and yet he could own 50% of the suit property in the circumstances prima facie look unfavourable from the defendant’s point of view at all.  The alleged term of the defendant being ‘allowed’ to live in the suit property rent-free does not appear to be an extra benefit to him from the defendant’s perspective either in particular light that he was already fully capable to buy the suit property on his own.  Purely for the sake of argument in testing the plaintiff’s contention, from the defendant’s point of view, there was nothing to prevent the plaintiff from occupying the suit property.  It was only because the plaintiff chose to settle with his own family in the United Kingdom that he would not occupy the same.  Under the alleged oral agreement, the defendant would also be one solely responsible for repaying the mortgage loan, the full repayment of which in accordance with mortgage schedule would likely be much more than 50% of the purchase price.  In these circumstances, in my view, it is very unlikely that the defendant would accept the aforesaid disadvantageous terms when one was mindful of the fact the interest rate in Hong Kong was very expensive back in the late 80s.  According to some mortgage rate adjustment notices issued by the Standard Chartered Bank (the mortgage bank) during the period between 12 October 1987 and 30 November 1987, the mortgage interest rate varied between 7.5% per annum and 9.5% per annum.[37]  

55.  Speaking about the provision of accommodation to the parents, it is my finding that the defendant had purchased Shanghai Street property and provided the same as accommodation for his parents without seeking any contribution from any of his siblings for its purchase price or subsequent mortgage repayments in the past.  Against such a background, the purchase of the suit property would likely be a continuation of such prior arrangement by the defendant but this time with a better living environment for himself and the parents by reaping the fruit of wealth amassed through years of his hard working.  In this light, I see no convincing reason why the defendant would all of a sudden require the plaintiff to contribute for the purchase of the suit property in providing for a better living environment for the parents. Especially, given the good brotherhood at that time, the defendant would also naturally appreciate the substantial financial commitment taken up by the plaintiff for settling in the United Kingdom and establish his own family there.

Wai Ling’s evidence on the alleged oral agreement and P’s alleged contribution to the purchase price

56.  Wai Ling said in her witness statement that in or around mid 1986, she learnt from the plaintiff and the defendant that they were considering investing jointly in the suit property so that the parents could have a better home to live after the father’s retirement.  In late 1986 or early 1987, there was a clear understanding amongst the Liu’s family and some of the close relatives that the suit property was a joint investment between the plaintiff and the defendant on a 50/50 basis.  And, she also learnt from the defendant and the plaintiff that the plaintiff had paid some HK$100,000 for the acquisition of the property.  The defendant denied all these allegations of Wai Ling.

57.  To start with, I view Wai Ling’s evidence with a fair degree of circumspection with respect to her independency or neutrality as a witness for this litigation.  In 1994, the defendant commenced a prior litigation against her involving a dispute over the ownership of a car parking space in Belvedere Garden.  In that case, the defendant claimed full beneficial interest in the car paking space while Wai Ling’s case was that it was a 50:50 investment between herself and the defendant.  In the end, the Court ruled in her favour in that case. 

58.  In this trial, from the overall tenor of her answers given under cross-examination, I observe that her relationship with the defendant remains poor and she admitted that she had no conversation with the defendant since the earlier legal case.  In contrast, she appears to have a close affinity with the plaintiff.  Among other things, it is observed that the plaintiff was fully supporting Wai Ling in the earlier litigation against the defendant.  In a later episode after the plaintiff had changed the lock of the main door of the suit property and took possession of the same in September 2009, Wai Ling did assist the plaintiff in clearing away some of the things inside the suit property which they considered to be ‘rubbish’ or constitute fire hazards to the suit property.

59.  Most importantly, turning to the evidence itself, Wai Ling admitted at trial that she had no direct knowledge about the payment of alleged contribution to the purchase price of the suit property made by the plaintiff to the defendant.  She also shrank herself under cross-examination by saying that she knew the plaintiff had made the alleged contribution because she heard from the plaintiff that this was so (rather than from the plaintiff and the defendant as she had said earlier in her witness statement). She also testified that the plaintiff told her that he had paid for the contribution in about August 1986 when the suit property was purchased.^[38]  However, this is directly contradicted by the plaintiff’s own evidence that he paid such alleged contribution in December 1986 and January 1987 as discussed above. That aside, although she attempted to ‘corroborate’ the plaintiff’s case by saying in her witness statement that all members of the Liu’s family have contributed to the mortgage repayments in respect of the Shanghai Street property^[39], she admitted under cross-examination that she did not know how much the other siblings earned at the time, or how much they contributed to such mortgage repayments.  She said that they gave money to the mother, and it was entirely up to the mother to decide how to deal with the money.  In other words, this would tend to show that she was prepared to give evidence or otherwise interpret a state of affairs in such way to the plaintiff’s favour which subsequently turned out to be unjustified upon scrutiny.  

60.  Viewing thus, I do not find Wai Ling to be a credible or reliable witness.  I also reject all her evidence in relation to the alleged oral agreement and the plaintiff’s alleged contribution to the purchase price as being incredible and unreliable in light of all the available evidence before me.

61.  In the premises, after considering the evidence before me in their totality, I also find the plaintiff’s case and evidence on the alleged oral agreement incredible and reject the same.

D’s alleged reason for putting the suit property in joint name with P

62.  As for the defendant’s reason for putting the suit property in the joint names with the plaintiff was for the sole purpose of assisting the latter in his application of settlement in the UK (see: Paragraph 9 above), I have great reservation whether this was really the true cause as he alleged.

63.  First, the sale and purchase agreement was already signed in 7 August 1986, if the plaintiff’s asset condition in Hong Kong was relevant, prima facie, he would have mentioned this in the UK settlement application letter sent to the Hong Kong Immigration Department on 27 August 1986, but none was mentioned.  Second, according to the relevant immigration rules produced by the defendant in the trial bundle, it does not seem to be a requirement for the plaintiff to show his asset condition in Hong Kong for his settlement application in the United Kingdom.^[40] Although if what the defendant said in this respect were really true, there remains a possibility that the plaintiff might want to advantage of then situation to deceive the defendant into putting the suit property under joint names with him.  But, this would not be right or fair for this court to reason along that line.  Because such a case of the defendant would then be tantamount to making an allegation of fraud or serious impropriety on the plaintiff’s part.  Not only that pleading point that fraud needs to be sufficiently and unambiguously pleaded, such serious allegation also had to be supported by clear and cogent evidence, but I do not see how such evidential hurdle can be surmounted by the defendant in this case.  

64.  On balance of probabilities, I find that the defendant cannot discharge his burden to successfully prove his alleged reason for putting the suit property in joint names with the plaintiff.

The Court is not bound to choose from either party’s account to accept

65.  In these circumstances, this court is facing with two diametrically opposite accounts of the parties which it finds incredible or otherwise unsustainable.  Certainly, it would be absurd to suggest that this Court is bound to choose one out of these two rival accounts (which are both found to be unacceptable causes) to be the true reason for the suit property being put under the joint names of the two brothers.  Logically speaking, the incredibility of one party’s story does not necessarily make another party’s the truthful one.  Neither do I need to make a finding of fact which neither party contend as to why the suit property was put under their joint names before this court can determine in whom the subject beneficial interest should lie.

66.  With respect, Mr Lam in his written closing submission however in effect submits that this court is bound to choose from either one of the two parties’ accounts as being the true reason for the suit property being put under their joint names.  He refers to Jaci Matos Agarwala v Sunil Agarwala[2013] EWCA Civ 1763 in purported support of his argument. With respect, that English decision is wholly distinguishable from the present case.  In that case, the property was put under the sole name of Jaci, and Sunil and Jaci each claimed he or she was the sole beneficial owner.  It was the parties’ common ground in Jaci case that there was an agreement as to the terms on which the property was to be bought, and the parties only differed on the contents of the terms.  And, neither party contends either that there was no prior agreement between the parties as to the equity or that there was an agreement of some sort of joint venture which would give rise to a shared equity.  It was under such a special factual setting that the trial judge in Jaci case may for all practical purposes have to choose which party’s account to accept – in other words, either Jaci or Sunil was telling lie, if one is found to be telling lie, the other would be the 100% beneficial owner of the property. (see: Jaci case, para 4) 

67.  In contrast, the ‘agreements’ as respectively alleged by the plaintiff and the defendant here were entered on different occasions and for different purposes – one is for the purpose of joint investment and providing a better home for parents (according to the plaintiff), and another is for the sole purpose of assisting the younger brother to show his asset condition for his application of settlement in the UK (according to the defendant).  For reason as explained above, this court is therefore not obliged to choose one out of the two rival accounts to accept as in Jaci case.  It can be the case that both the plaintiff and the defendant here were not telling the truth about why the suit property was putting under their joint names.

68.  Sometimes a party who bears the burden to prove a certain fact or state of affairs may lose his case when the trier of fact cannot say which party’s version of events satisfy the balance of probabilities. (Phipson on Evidence (18^th ed), para 6-07) 

69.  However in this case, the defendant would not so lose even though he is unable to prove his own account as to why the suit property was put in joint names.  For, he could nonetheless rely on the fact of his full payment of the purchase price of the suit property without any monetary contribution from the plaintiff (and hence there was no consideration provided by the plaintiff in exchange for the legal title be vested in him) and the presumption of resulting trust to assert his full beneficial interest in the suit property.

Presumption of resulting trust

70.  Given my aforesaid findings of fact and in light of the remaining evidence and circumstances before me, it is observed that the defendant’s intention for putting the suit property under joint names with his brother remains unclear.

71.  However, the defendant can rely on the presumption (as recognised by well settled authorities) that he did not intend any of the beneficial interest in the suit property be passed to the plaintiff notwithstanding that he had put the same under their joint names. (Snell’s Equity (33^rd ed), paras 25-001 and 25-003)  The burden of proving resulting trust rests on the party who alleges that is so and this court is satisfied that the defendant has discharged such burden after carefully surveying the remaining evidence and circumstances.

72.  Certainly, the plaintiff is not advancing any case that the defendant had ever intended to pass any portion of beneficial interest in the suit property to him as a gift.  This is perfectly understandable because any such contention would be directly contradictory to his case on the alleged oral agreement.  Mr Kestrel Lam, counsel representing the plaintiff, also fairly confirmed with this court that the plaintiff has no such fall-back position.  Speaking more broadly, given the current factual setting and my aforesaid findings, I see no or no sufficient evidence before me out of the remaining materials to rebut the aforesaid presumption of resulting trust.

73.  Mr Lam made zealous effort to challenge the inherent incredibility of the defendant’s account as to why he put the suit property in joint names with his brother.  For instances, Mr Lam queried whether the defendant really had a girlfriend at the time.  Even if he had, Mr Lam submits that one would expect the defendant to look after his then girlfriend’s interest by making the plaintiff a tenant in common instead of a joint tenant if he had really contemplated to marry his then girlfriend.  Mr Lam further argues that the defendant should have asked the plaintiff to transfer the legal title back to him after the plaintiff had already settled in the United Kingdom in 1987.  He also submits that if the defendant is the full beneficial owner, he should have taken steps to protect his interests in the suit property after the plaintiff had revoked the PA in 1994.  There is all the more reason for the defendant to do so when according to him, the plaintiff also ‘blackmailed’ the defendant for HK$500,000 first in 1994 and then for HK$1 million in 1999 in order to have his name withdrawn from the suit property.  Mr Lam also argues that given the defendant was a man so meticulous and thorough in record-keeping, it is impossible that there was no documentary record or proof that the plaintiff is merely holding the property on trust for the defendant.

74.  Despite Mr Lam’s able submissions, these matters submitted for such purpose would pale into insignificance largely because I have already rejected the defendant’s account on why he put the suit property in joint names with the plaintiff.  But, as pointed out above, the incredibility of the defendant’s such account would not make the plaintiff’s account more credible in the circumstances of this case, whose version was likewise rejected by this court.

75.  With both parties’ relevant versions gone, for whatever “other possible reasons” the defendant might put the suit property in joint names with the plaintiff would strictly speaking be irrelevant so long as the presumption of resulting trust is not rebutted. 

76.  Mr Lam also fairly agreed at his closing submission that in the event this Court rejects both parties’ accounts as to why the suit property was put in their joint names but find that all the purchase money came from the defendant alone (as I did in this case), the presumption of resulting trust came into operation and he has made no submission basing on any materials or evidence for the rebuttal of such presumption.

77.  Thus, it is purely for the sake of completeness and the fair disposal of all the issues before this court that I should also speak a few words about some of the matters arising out of Mr Lam’s aforesaid submissions which may touch upon the resulting trust issue before I depart from this topic. 

78.  First, Mr Lam’s submission on the defendant’s failure to put the suit property in tenancy in common to cater for her girlfriend’s interest in fact cuts both ways because the plaintiff by August 1986 also got a wife and a baby daughter (to be born in a few months’ time) to take care of.  

79.  On the other hand, I do share with Mr Lam’s submission and am in doubts whether the defendant really had such a settled girlfriend whom he intended to marry and reside with in the suit property at the material time.  If he really had, he would likely have introduced her to his family members.  But both the plaintiff and Wai Ling said they were not aware of such person.  Not only the contemporaneous letters disclosed by both parties did not reveal such a person, it can also be seen that the plaintiff actually wrote in the aforesaid letter dated 25 November 1987 (as mentioned in paragraph 52 above) that - “How are you, have you got a girlfriend yet?  好心你快些找個女人。”[41] On balance, I find such an alleged girlfriend did not actually exist.

80.  Second, the non-existent of such an alleged girlfriend of the defendant at the material time can nonetheless in my view be consistent with the defendant not intending to pass any beneficial interest in the suit property to the plaintiff when the defendant put it under their joint names. 

81.  Given their then good brotherhood, it would not be surprising that the defendant (especially when he remained single at that time) might wish to let his younger brother inherit the suit property in the contingency of his untimely demise.  In this trial, there is also no evidence that the defendant has ever got married or has any children.  Thus, even in such a scenario, when he put the suit property in their joint names, the defendant could still intend the beneficial interest to pass only at the time of realization of such contingency, but not at any time before the happening of such event.  

82.  However, as explained above, this court needs not speculate into the actual cause for the defendant to put the suit property under the joint names.  Given my aforesaid findings, the remaining judicial task of this court is only to fairly check whether there still exists any other evidence or circumstances that can sufficiently rebut the presumption of resulting trust here.  And, I am not satisfied that the fact of the suit property being put in joint tenancy rather than tenancy in common in the circumstances can amount to such rebutting evidence.  

83.  Third, neither do I find the defendant’s inaction to take step until this litigation to assert his full beneficial interest amounts to any or sufficient rebutting evidence. 

84.  The defendant’s relationship with the plaintiff appeared to turn sour since the revocation of the PA and when the plaintiff assisted Wai Ling in defending the earlier litigation brought by the plaintiff against her in 1994.  In that year, the mother was also found to suffer from dementia.  The defendant testified that after the conclusion of that litigation with his younger sister in 1995, the mother’s health deteriorated further and she was diagnosed to suffer from many other conditions such as osteoporosis, diabetes, hypertension and hyperlipidemia.  All these matters were not in dispute. 

85.  I accept the defendant’s testimony that he would rather not to initiate another litigation with the plaintiff which may compromise the mother’s health.  Besides, the defendant said he was residing in the suit property all the time (save for the period of his imprisonment from February 2009 to March 2011)[42], so he also did not see any urgency in instituting legal proceedings against the plaintiff in respect of the suit property.  Pausing here, it is also the plaintiff’s testimony that the mother was the core person of the family, and it was also due to her mother’s poor health that he did not institute this action until after the mother passed away in 2012 at the age of 89.

86.  The mother’s health condition was the defendant’s prime concern at the material times was also consistent with the overall evidence of the defendant’s attitude towards his parents.  The defendant appears to be a caring son.  According to my findings, he bought the suit property and arranged his parents to reside with him providing them a better living environment.  It is also the unchallenged evidence that after the mother was diagnosed to suffer from dementia, he and the father were devoted to take care of the all-round living and treatments of the mother.  Due to a serious fall in 2001, the mother received a large-scale operation and the treating doctor recommended her to reside in elderly home for her better care, as he and the father were not suitable to take care of her who was of such level of health condition.  The documentary evidence produced by the defendant also tend to support the defendant’s evidence that he had been responsible for paying the mother’s living and medical expenses including her elderly home expenses at all material times.^[43]

87.  Lastly, although I agree that like the plaintiff, the defendant would also appear to be a meticulous person, it could on the other hand be due to a myriad of possibilities why he did not require the plaintiff to execute a declaration of trust for him in light of my aforesaid factual findings.  

88.  Perhaps, he did not see the need to do so given the fact that he was the one who had fully paid for the purchase price and he had kept good records of the payments.  He was residing at the suit property and was one solely occupying the suit property either himself or together with the parents at the material times (apart from the aforesaid period of imprisonment).

89.  Again, it cannot be emphasized enough that it is not for this court to speculate into the actual reason why the declaration of trust was not executed in this case.  But what matters here is that after taking a fair and balanced view of the whole evidence, the absence of such documents or like in this case would not constitute the sufficient rebutting evidence either.

90.  In the premises, the matters as referred to in Mr Lam’s aforesaid submissions (whether taken singly or in the sum) could not in my view amount to any or sufficient evidence to rebut the presumption of resulting trust here. 

The presumption of equality under Stack v Dowden does not apply here

91.  For completeness sake, I should also mention that Mr Lam resorts to Stack v Dowden[2007] 2 AC 432 and submits that it is for the party who contends the beneficial title does not follow the legal title to prove the common intention to that effect.  In other words, he was trying to invoke the starting presumption of equality as expounded by the majority of the House of Lords in Stack v Dowden.

92.  With respect, such presumption of equality would not automatically apply whenever a real property is put under joint names.   According to that majority’s decision, it appears that such presumption would, general speaking, be applicable to a property purchased as a home for the cohabiting couple where one or both of them are the legal owners.  In contrast, in arm’s length commercial cases of co-ownership, such presumption of equality would not appear to be appropriate, and the resulting trust presumption still appears to apply. (see: Laskar v Laskar [2008] 1 WLR 2695 per Lord Neuberger MR at paras 16 and 17; Chan Sang v Chan Kwok [2015] 3 HKLRD 131, per Anthony Chow J at para.36) 

93.  In light of the above evidential analysis, although relationship between the plaintiff and the defendant is a familial one, it is clear that even according to the plaintiff’s case, the purchase of the suit property is obviously not for the purpose of joint occupation as their home.  Further, the plaintiff also alleged that he also saw the purchase of the suit property as his long-term investment.  According to his case, the way as to how the alleged bargains (on contribution ratio to the purchase price and the respective parties’ share in the suit property) was arrived at was no different from what business people would conduct their deal in commercial context.  After carefully considering the circumstances of this case, I do not see how the rationale behind such presumption of equality expounded in Stack v Dawden can be applied here or otherwise extended to cover this case. (see : Stack case, per Lord Hope at paras.3-5, per Baroness Hale at paras.57 and 58)

94.  Apart from the aforesaid, I also think that fundamentally speaking if the court comes to its clear view that there is no “common intention” of the parties that can be deduced from any agreement, arrangement or understanding reached between the parties or otherwise inferred from their conducts^[44] with respect to the beneficial ownership of the property concerned, it would also appear that the essential factual basis as necessary for the invocation of common intention constructive trust would be absent.   

95.  For avoidance of doubts, since this court has rejected both parties’ respective cases and evidence on why the suit property was put under their joint names.  Given my aforesaid finding of facts and upon the survey of the remaining evidence and circumstances before me, I am satisfied that this is not a case of common intention constructive trust either.

96.  Lastly if, however, the presumption in Stack v Dowden would for whatever reason apply here, then I consider that it would still have been rebutted anyway, and I would still have reached the same factual findings as aforesaid.

Conclusion on the ownership dispute

97.  In the premises, this court holds that the defendant has been the full beneficial owner of the suit property since its purchase, and the plaintiff has been holding the legal title in the suit property only as a mere trustee for the defendant.

Trespass to the suit property

98.  In light of my aforesaid findings and analysis, I find the plaintiff’s intrusion into the defendant’s possession of the suit property unjustifiable.[45] His wrongful act clearly constituted trespass to the suit property. (Clerk & Lindsell on Torts (21^st ed), para.19-01)

99.  Mr Lam fairly agreed that in the event the plaintiff is held to be a mere trustee, the plaintiff would be liable in trespass for entering into the suit property and changing its lock in September 2009. (see: plaintiff’s written closing submission, para 80)

100.  On the evidence before me, I hold that the plaintiff is liable for the defendant for his trespass to the suit property during the period between mid September 2009 and 10 March 2011.  

101.  As regards to the damages for such trespass, I accept the prevailing monthly market rent of the suit property was HK$11,600 according to the expert report as prepared by Steven CW Law of CS Surveyors Ltd.^[46]  Mr Chung agreed to Mr Lam’s calculation of the mesne profit as payable by the plaintiff for the said trespass.  He also fairly agreed that the government rents and rates and management fee paid for the aforesaid period by the plaintiff be deducted from such mesne profit.  At the oral closing submission stage, Mr Chung agreed with Mr Lam that the net damages for the trespass payable by the plaintiff at HK$184,203. (see also: plaintiff’s written closing submission, paras 82 and 83).

Conversion by the plaintiff of any of the defendant’s goods and chattels inside the suit property?

102.  Conversion is a common law tort in Hong Kong.  In brief, it is an act of deliberate dealing with a chattel in a manner inconsistent with another’s right whereby that other is deprived of the use and possession of it. (Clerk & Lindsell on Torts (21^st ed), para.17-07 and fn.27 therein).

103.  Mr Lam did not quarrel with the above legal principles.  The dispute over this counterclaim of the defendant is largely factual.

104.  The plaintiff denies that he has taken or thrown away any valuable items inside the suit property belonging to the defendant.  Though, he admitted while giving evidence at trial that he has indeed disposed of certain things inside the suit property which he considered to be worthless or otherwise constitute fire hazards to the suit property or nuisance to the neighhours.  The defendant is also put to strict proof of his alleged damages.

105.  After going through the parties’ testimonies and other evidence in relation to this counterclaim, I am not satisfied that the defendant could successfully discharge his burden to prove on balance of probabilities that those items as enumerated under item # (1), (2), (5)-(8), (10)-(14) of Paragraph 20 of the Re-amended Defence and Counterclaim have been converted by the plaintiff.

106.  First, the plaintiff denied ever seeing these items of goods or chattels after he entered into the suit property, let alone taking or throwing them away, and his evidence remains intact after cross-examination.  

107.  Second, given the plaintiff’s stance with respect to the aforesaid alleged lost items, the defendant would bear the burden to prove the relevant items of goods and chattels in dispute had really existed inside the suit property in the first place.  However, according to a question put by Mr Chung to the defendant, a safe situated in the study room of the 2^nd floor (item # 8) [allegedly containing HK$50,000 cash (item # 1) and some old Hong Kong dollar notes which was allegedly worth HK$30,000 (item # 2)] was being prying away (撬走) from the study room.  The safe (if it had really been there) was supposed to be firmly fixed in the study room.  The defendant however did not bother to provide this court with any photo showing signs or marks left behind by such alleged removal.

108.  Third, the key objective of the plaintiff entering into the suit property was apparently to take possession and control of the suit property at the time, I discern no sound incentive for him to take away or otherwise dispose of the following alleged items (if they had really been there before he entered into suit property) either: two stainless water tanks in the backyard garden (item #5), two electric drills (items # 6 and 7) in the garage, a desk and a cabinet in the study room (items #10 and 11), and two trolley at the backyard (item #13).  As for the ginseng, bird’s nests and sea cucumbers allegedly placed in the kitchen refrigerator (item #12) and the two bottles of red wine allegedly left in the dining room (item #14), there is no evidence as to their state or condition (even assuming they had been there before), it is prima facie unsafe for someone to consume another’s food or drink without knowing their condition.  The plaintiff would unlikely take away or otherwise consume these alleged items.

109.  Fourth, according to the defendant, prior to serving the sentence of imprisonment in February 2009[47], he had given the key of the suit property to his friend, one Mr Chow, so that the latter could pay all utilities expenses, government rents and rates, management fee, etc on his behalf during his imprisonment.  It was also this Mr Chow who in about September or October 2009 informed the defendant (whilst he was in prison) that the door lock of the suit property was changed and he could not gain access to the same. [48] In these circumstances, logically speaking, Mr Chow could equally be a suspect who may have taken away or disposed of the aforesaid alleged items of goods or chattels during the interim period (even assuming these items had really been there before).

110.  As to the remaining four items, viz items # (3), (4), (9) and (15), the defendant did admit at trial and in his previous statement to the police (19 April 2011) [49] that he had disposed the air-conditioners found at the backyard and some tyres in the garage since these items according to him had already been broken.  He also thought that the broken tyres and other trash-papers inside the property would constitute fire hazards.  He admitted throwing away two mattresses in the guest bedroom which he said were smelly and worthless.  He also said that due to the neighbours’ complaint that the branches of some trees within the suit property had encroached into the neighbour’s premises, he completely chopped down two trees in the backyard garden.

111.  It is certainly wrong for the plaintiff to enter into another’s property and dispose things located therein even he genuinely considered them to be worthless, and cut down trees which he honestly thought to be a source of nuisance to the neighbours.  The plaintiff simply had no right to do so no matter what views he held about these properties as belonged to the defendant. All the reasons given by the plaintiff are not legitimate excuses for the commission of such torts.

112.  Pausing here, Mr Lam has not really challenged the defendant’s title to sue in conversion in respect of these four items of properties.  On the evidence before me, I am satisfied that the defendant does have the proper title to sue.  In particular, all these properties had been situated inside his own house and I see no contrary evidence that they belonged to anyone else.

113.  As regards to the number of items of these properties actually thrown away by the plaintiff, he could not recall how many air-conditioners he had disposed of.  Neither did Mr Lam challenge the defendant’s evidence during cross-examination on the number of air-conditioners and tyres disposed by the plaintiff.  I accept the defendant’s evidence and find the plaintiff had disposed of the 6 air-conditioners and the 7 tyres as claimed.  

114.  Concerning the trees, the defendant alleged that the plaintiff had cut down nine trees in the backyard garden.  At trial, the plaintiff however said he could not recall how many trees he had chopped down but I note that he admitted he chopping down only two of them in his earlier statement to the police[50]. In my view, the plaintiff could in fact have provided this court with photos showing the remnant of the trees as allegedly cut down by the plaintiff, but he has failed to do so.  In these circumstances, I would on balance find that the defendant had chopped down two trees in the backyard garden only.

115.  I also find the plaintiff had thrown away the two mattresses in the guestroom on his own admission given in earlier police statement.

116.  As such, I hold the plaintiff had converted the defendant’s 6 air-conditioners, 7 tyres, and 2 mattresses by intentionally disposing of the same without obtaining the defendant’s permission. (Clerk & Lindsell (21^st ed), paras. 17-02, 17-08)

117.  Under common law, a tree growing on a piece of land is not regarded as a chattel, but a fixture to the land. (Re Ainslie (1885) 30 Ch D 485; Wong Sui Yeung v Chiu Kwong Wing & Ors [2005] 3 HKLRD 495, per Lam J (as His Lordship then was) at para.7).  In bringing an action for conversion of the trees in this case, the defendant cannot recover the value of the trees in the affixed state, and he should be entitled to recover value of those portions of trees chopped down as chattels only, that is to say, the sheer logs which does not appear to be of any significant worth on the evidence before me.  To say the least, no documents have been related to this court by Mr Chung proving its worth apart from the defendant’s bare allegation, just like the situation of the other converted items. (Clarke v Holford (1848) 2 Car & Kir 540, at 544; see also: Clerk & Lindsell (21^st ed), para.19-68).  Any damage to the realty owing to the chopping down of the two trees would be out of the scope of the defendant’s conversion claim here.

118.  I also find more likely than not that the plaintiff had also disposed of the logs chopped down as trashes while he was tidying up the garden as he said in his witness statement[51] and his earlier statement to the police[52].   In these circumstances, I also hold that the defendant has also converted the two trees chopped down as chattels.

119.  However, the defendant bears the burden to provide the necessary evidence to substantiate the alleged value of these items at the time of conversion (Clerk & Lindsell (21^st ed), para. 17-94; see also: Chan Yin v Chan Yee Mei (DCCJ 8506 of 2001, 14 April 2002), at para.72).  I accept Mr Lam’s submission that apart from the defendant’s bare allegations – whereby he claimed HK$36,000 for the 6 air-conditioners, HK$3,500 for the 7 tyres, HK$4,500 for the 9 trees at the backyard (which I found two were converted only), and HK$5,000 for the 2 mattresses in two bedrooms – there is really no objective evidence for this court to properly assess the values of these converted items.  In fact, my observation on the absence of the necessary corroborating evidence on value of the goods and chattels here also apply to those items # (2), (5)-(8), (10)-(14) as discussed above. 

120.  In these circumstances, it would not be proper for this court to take the defendant’s allegations just on their face value.  Especially, if the defendant is really serious in pursing his conversion claim, he could have gathered and produced corroborating documentary evidence such as price lists or quotations to show the value of the items allegedly converted.  The defendant likewise adduced no evidence to inform this court for how long the air-conditioners, tyres, mattress in question have been purchased or otherwise acquired by him.  There is also nothing here to suggest the defendant was in any way handicapped from providing aforesaid corroborating evidence or information owing to the conversion.  In this light, any award of substantial damages for these converted items would be highly arbitrary and not in accordance with the principles for assessment of damages.

121.  With specific reference to the air-conditioners, this court is not told for what purpose the air-conditioners had been placed in the backyard.  It is also highly doubtful whether they could still properly function before they were disposed of as the backyard is an open area subject to attack by weathering.  This court also heard evidence from the plaintiff that after entering into the suit property, he found the condition of the garage and the backyard garden were in rather untidy condition, and chattels of different kind were piling in heaps and they appeared to be there for quite some time,[53] and he found the air-conditioners in question to be broken ones.  His evidence was to a certain extent corroborated by Wai Ling who helped him tidy up the suit property some time after the plaintiff had entered into the suit property.  She said that she saw there were air-conditioners installed at the premises, but find no air-conditioners placed in the backyard. 

122.  On balance, I find that the air-conditioners thrown away by the plaintiff were not of any significant residual worth.

123.  For completeness, I am aware that Mr Chung put his client’s case to the plaintiff during cross-examination that the plaintiff has dismantled the air-conditioners previously installed at the premises and disposed them thereafter. This amounted to a drastic change of the defendant’s case because in both his pleadings and witness statement, he stated in clear terms that the air-conditioners in question converted by the plaintiff had been placed at the backyard[54]. I see no credibility in such eleventh hour change of case and reject the same. I accept the plaintiff’s evidence that he has not dismantled the air-conditioners from the premises. 

Nominal damages for the conversion claim

124.  In light of the aforesaid, there is no proper evidential basis for this Court to award substantial damages for the items of goods or chattels as found to be converted by the plaintiff.  This court would only award nominal damages against the plaintiff for such converted items. (see: paragraphs 116 and 118 above)

125.  Nominal damages may be awarded where the fact of a loss is shown but the necessary evidence as to its amount is not adduced or sufficiently proven. (McGregor on Damages (19^th ed), para. 12-004; see also: Chan Yin, supra, para.72)

126.  In awarding the nominal damages, I did not award a token sum for each individual item of good or chattel converted in this case.  As I see it, nominal damages is essentially symbolic and means a sum of money that may be spoken of but has no existence in point of quantity.  (Beaumont v Greathead (1846) 2 C.B. 494, per Manule J at 499)  In my view, in reflecting the fact that the defendant has failed in his proof of damages, it does not seem particularly meaningful to award a separate token sum of nominal damages for each converted item.  Otherwise, the more items of claim that he could have but fails to provide the necessary proof, the more token sums of nominal damages would be obtained by him irrespective of the actual worth of each converted item.

127.  Speaking in terms of vindicating the claimant’s property right being infracted, I think so long as the court make clear what items of goods or chattels converted are covered by the award of the nominal damages in question, the purpose of awarding nominal damages can also be served without the need to award a separate token sum for each individual converted item.

128.  In the premises, the plaintiff should pay nominal damages of HK$100 to the defendant in respect of the plaintiff’s conversion of the 6 air-conditioners, the 7 tyres, the 2 mattresses and the two chopped down trees (as chattels).

Dispute over the alleged loans

129.  The defendant alleges that he lent 3 tranches of loans to the plaintiff over three different periods of time:-

a.   The first tranche of five loans in the total of £2,430, lent between 30 August 1978 and 14 August 1979 (“the 1^st tranche”).

b.   The second tranche of three loans in the total of £380, lent between 15 February 1988 and 25 December 1989 (“the 2^nd tranche”).

c.   The third tranche of two loans of HK$6,000 and HK$5,000 lent on 25 May 1992 and 25 June 1992 respectively (“the 3^rd tranche”).

130.  The plaintiff denied ever borrowing these alleged loans from the defendant save for the sum of £80 (being one of the five alleged loans in the 1st tranche) which he admitted borrowing from the defendant on 14 August 1979.  However, according to the plaintiff, he had already repaid such loan to the defendant when he returned to Hong Kong in 1979.

131.  Leaving aside the question as to whether the other various sums of money were indeed lent to the plaintiff for the moment, all these alleged loans were apparently time-barred as the 6-year limitation period for their recovery has well expired under the Limitation Ordinance (Cap 347) when the defendant filed his original counterclaim on 10 July 2014.  By that time, the oldest loan (allegedly lent on 30.08.1978) would have been time-barred about 29 years ago, and the latest one (allegedly lent on 25 June 1992) about 16 years ago.

132.  It was only after plaintiff has filed his Reply and Defence to Counterclaim by pleading the limitation defence, then the defendant sought leave from Master Ho on 17 October 2014 to amend his counterclaim by pleading for the first time that all these loans were agreed between the parties to be “repayable on demand”.  This court have grave doubts whether there was indeed such an agreement because this important matter if true should have naturally been pleaded in the first place. 

133.  Especially, the original pleadings was drafted by his solicitor, and the time-bar issue of these loans would unlikely escape his solicitor’s eyes.  In the normal course of things, the defendant would naturally be asked by his solicitor about the repayment terms of such loans. The defendant gave evidence at trial that he did tell his solicitor that the alleged loans were agreed to be repayable on demand but his lawyer failed to include that in the original pleadings.  This does not sound credible.

134.  Further, after going through all the relevant evidence on the head of claim of the alleged loans, I do not find there is any credible factual basis for such alleged agreement on the repayment terms for reasons I shall explain below.

The Law

135.  Under common law, where a loan had been made without any provision as to the time for repayment, the obligation on the borrower is to repay immediately after the loan was made.  If the parties have agreed that a demand for repayment must first be made then the cause of action does not accrue until the demand is made. (Re Leco Watch Case Manufactory Ltd [2015] 2 HKLRD 87, per Harris J at para.10)

The 1^st tranche

136.  The defendant said that the plaintiff borrowed the alleged loans while he was studying in the United Kingdom.  The plaintiff testified that he was fully supported by his parents for his studies, and there was no need for him to borrow from the defendant.[55]  In response to the remittance notices produced by the defendant in respect of the sums claimed to be the alleged loans[56], the plaintiff said they were in fact money remitted by the defendant for him to purchase silk screen products and printing inks in the UK on the defendant’s behalf.[57]  On the other hand, although the plaintiff in his witness statement denied that he ever demanded any financial assistance from the plaintiff, the defendant managed to produce contemporaneous letters written by the plaintiff showing that he had indeed borrowed from him on several occasions.[58]

137.  To start with, the plaintiff denied borrowing the alleged loans, and the mere fact of money advanced by the defendant here does not import a prima facie obligation to repay on the part of the recipient.  The onus of proving payment of money was loan remains falling fairly and squarely on the defendant’s shoulders. (Big Island Construction (HK) Ltd v Wu Yi Development Ltd (2015) 18 HKCFAR 364, at paras.104-108.)

138.  As observed above, the relationship between the two brothers were very good back in 1978-1979 and the defendant had already been in gainful employment for quite some years by then, it is likely that the defendant would be willing and prepared to assist the plaintiff when his brother had any genuine financial needs at that period of time.  This can be corroborated by those letters mentioned in paragraph 136 above (and footnote 58). 

139.  However, apart from the sum of £80 which the plaintiff had admitted borrowing from the defendant on 14.08.79 as evidenced by the letter of 18.07.79 and 07.08.79, the defendant had not explained how the other letters produced by him could relate to the other alleged loans under the 1^st tranche.  On the other hand, I find the plaintiff’s evidence that he had purchased the aforesaid goods in the UK on the defendant’s behalf for the latters’ printing business in Hong Kong plausible.  Such evidence is to a certain extent corroborated by the letter he wrote to his parents on 6 September 1978[59].  So, in the dearth of contemporaneous documents to shed light on the nature or purpose of the other four remitted sums (viz £500, £1,500, £250, £100 remitted to the plaintiff on 30.08.78, 02.11.78, 07.11.78, 25.01.79 respectively), it is plausible that these four sums were related to such purchases. 

140.  On balance of probabilities, I find the defendant cannot discharge his burden to prove that these other four sums remitted by him to the plaintiff were loans.  In particular, had they really been loans, the defendant should have demanded for their repayment much earlier.  Yet I do not find there is any credible evidence before me that he had done so.  At para.12 of his witness statement, the defendant said that on each and every occasion when the plaintiff borrowed the aforesaid sums from him, the plaintiff told him that he would repay him when he was able to do so, or when the defendant demands him for the return[60].  I find such evidence artificial and incredible in the circumstances, and reject the same.  Given their good brotherhood at the time, it looks odd that the plaintiff would initiate such repayment terms in the way as the defendant said.  There is no evidence that the defendant was urging the plaintiff for repayment at that time.  Such allegation was also contradicted by those letters written by the plaintiff for borrowing money from the defendant which was totally silent about such alleged repayment terms. (see: footnote 58 above)

141.  In these circumstances, I find on balance of probabilities that the defendant cannot prove that the first four sums (under the 1^st tranche) remitted to the plaintiff were loans.  The fifth sum of £80 was a loan, but I accept the plaintiff’s evidence that he had already repaid the same.  It is just a relatively small sum (even according to its worth in late 70s).  In my view, the defendant would likely demand for its repayment after the plaintiff returned to Hong Kong and engaged in gainful employment in 1979.  The plaintiff would have no problem to repay the same by then.

142.  In case I am wrong, and if all the five sums under the 1^st tranche were loans and any one of them had not yet been repaid by the plaintiff, I would nonetheless hold that the 6-year limitation period for the recovery of any of such loans has well expired by the time of the issuance of the defendant’s counterclaim.  I also reject the defendant’s case and evidence that the parties agreed that the alleged loans were repayable on demand[61] for reasons as explained above. (see: paragraphs 131-134, and 140 above)

The 2^nd tranche

143.  According to the defendant, after the plaintiff had emigrated to the UK, the plaintiff borrowed £100, £80, and £200 from him on 15.02.1988, 29.04.1988 and 25.12.1989 respectively.  Though at trial, the defendant retracted himself and admitted that the last sum of £200 was in fact given by him as gifts to her two nieces (the plaintiffs’ daughters)[62]. The plaintiff denied the remaining two sums were loans.  I accept his evidence. 

144.  First, there are no contemporaneous documents evidencing the remittance of these two sums of £100 and £80[63] were for the purpose of loans to the plaintiff, or the defendant’s subsequent demands for their repayment.

145.  Second, although I observe that the plaintiff’s finance was rather tight during the early period after he arrived in the UK in mid 1987, he managed to get a job of engineer with Yorkshire Authority by August 1987 with an annual salary of £11,940.  The defendant could not satisfactorily account why the plaintiff would need to borrow these two rather small sums of money from him when he was already in gainful employment by then.  Third, the correspondences produced by the plaintiff[64] show that he was also running a small business of selling or trading Chinese paper fans in the UK apart from being an engineer at that time.  And, the defendant had offered his assistance to buy these paper fans for plaintiff in Hong Kong.  These correspondences suggested that there were monetary transactions going in between the two brothers in relation to such business dealings.  If due to long lapse of time, the defendant mistook the gifts to his nieces as loans to the plaintiff, it is equally possible he may get mixed up in relation to these other two sums as loans when in fact they are related to other monetary transactions in other dealings between himself and the plaintiff at the time.

146.  In these circumstances, I likewise find the defendant cannot successfully discharge his burden to prove that the two sums remitted by him to the plaintiff on 15.02.1988 and 29.04.1988 were loans to the plaintiff.   If, however, they were loans, I consider that the limitation defence would equally apply to them, and hence the defendant would be precluded from recovering the same from the plaintiff.

The 3^rd tranche

147.  The defendant testified that after the plaintiff had emigrated to the United Kingdom for some years, he returned to Hong Kong in April 1992 alone to look for job opportunities.  He had acceded to the plaintiff’s request to let him reside rent-free in the suit property for about a week or two before he subsequently rented a flat in Belvedere Garden for his family.  These evidence are not really contested by the plaintiff.  

148.  Against such a background, I find it credible that the plaintiff may need to borrow the two sums of HK$6,000 and HK$5,000 on 25 May 1992 and 25 June 1992 respectively from the defendant to temporarily ease his cashflow whilst he was not receiving any income during the transition period.  The plaintiff only secured a job offer for the post of senior engineer from Binnie Hong Kong Ltd on 19 June 1992[65] and that job only commenced on 1 July 1992.  In other words, the plaintiff should receive his first month salary by the end of July 1992.

149.  Copies of the cheques for these two sums as deposited into the plaintiff’s bank account are also produced at trial.[66]  In my view, it is likely that the defendant would be prepared to assist his brother at that time. Their relationship only turned sour in 1994.

150.  On the plaintiff’s part, he testified that the HK$11,000 paid to him was in fact the defendant’s repayment to him, being the defendant’s half share of his earlier payment of the parents’ expenses spent in a summer trip to the United Kingdom to visit their family in 1990.  In that trip, the parents had stayed with his family for 3 months.  According to him, the parents’ living expenses (including their expenses on a trip to France) cost him around HK$22,000. [67]  

151.  It is observed that the plaintiff did not provide any breakdown for such figure, and nowhere was such figure being mentioned in any contemporaneous documents.  There is no evidence from the plaintiff (be it from his witness statements or in his testimony) that he had ever proposed to the defendant or the other siblings about the sharing of the parents’ holiday expenses beforehand, notwithstanding that the defendant had raised this point in his witness statement[68]. Neither was there any evidence that the plaintiff ever made any request for repayment of such ‘agreed share’ of expenses from the defendant.

152.  In response, the defendant said in his supplemental witness statement that he was responsible for buying the air-tickets in Hong Kong for the parents’ trip which expenses by itself already exceeded HK$22,000.[69]  On the other hand, in a letter dated 19 November 1990 (as produced by the plaintiff) which was written by the defendant to him and his wife, the defendant said he was sorry that he had forgot to send to the plaintiff the parents’ ‘daily using cash during the journey, especially the vacation to France for a week’.[70]   But in my view a fair reading of the letter does not necessarily suggest a prior agreement between the two brothers in respect of the parents’ living expenses for such holiday trip.  Such statement may well be a kind of indirect expression to tell his younger brother in a courteous way that he should not expect him to contribute further to the parents’ living expenses in the United Kingdom. Because immediately after the above statement, the defendant further wrote that ‘I HOPE you would forgive this tiny money.’.  The defendant might think it was fair him to say so when he had already bought the air-tickets in Hong Kong for the parents’ UK trip (which evidence was in fact unchallenged by the plaintiff).

153.  In these circumstances, I accept the defendant’s evidence that the two sums in question were indeed loans to the plaintiff, and rejected the plaintiff’s version that those two sums represent the defendant’s repayment to him pursuant to their prior agreement in sharing the parents’ holiday expenses.

154.  The remaining issue in respect of these two loans is whether they are subject to the parties’ agreement that they are repayable on demand as the defendant contends.  The defendant testified (at day 3 of the trial) that when he lent the second sum of HK$6,000 to the plaintiff on 25 June 1992, the plaintiff told him that he would repay the money to him when his economic condition is good. (我經濟環境好，還返俾你。)[71] whereas the version as given under para 46 of the defendant’s witness statement was: ‘He said that he would repay the rest of the money to me after he earned money in Hong Kong.’ [72] And, the defendant’s response (according to his answer given during cross-examination) was that “you repay as soon as possible, and there is still a lot of money you have not repaid me yet”.  (你盡快還，你仲有好多錢未還俾我。)[73] (“testimony 1”)  However, in the later part of his cross-examination, the defendant said something different for the first time  that “if my finance is not good, when I ask you to repay, you have to repay me quick.”  (我如果唔掂嗰時，我要你還，你就要快啲還。)[74] (“testimony 2”)  In relation to testimony 1, the defendant further told this court that those “lots of money not yet repaid by the plaintiff” meant to include all those previous loans allegedly lent by him to the plaintiff before he made such a statement to the plaintiff on 25 June 1992.

155.  I find the defendant’s evidence on these alleged exchanges about the repayment of loans incredible. 

156.  First of all, the defendant’s statements allegedly spoken to the plaintiff on 25 June 1992 (be it testimony 1 or testimony 2) are just his bare allegations.  They are not evidenced by a single contemporaneous document produced in this trial.  It is telling that such statements allegedly made the defendant to the plaintiff was not even mentioned in the defendant’s own witness statement or supplemental witness statement.

157.  Second, it is also undisputed that by mid-1992, the defendant was quite well off.  He was keen on buying and selling real properties. Leaving aside the suit property and the On Fook Unit, he had quite a number of other residential properties and carparking spaces in hands when he lent the two sums to the plaintiff.[75] The alleged two loans do not appear to be significant amounts to the defendant at the time, his statements allegedly spoken to the plaintiff (be it testimony 1 or testimony 2) was quite incompatible with the overall background picture.  Particularly, they were in good relationship with each other, and by 25 June 1992 the defendant would likely know of the plaintiff’s job offer from Binnie Hong Kong Ltd, and that the plaintiff should be able to repay him soon with a monthly salary of HK$53,000.

158.  Third, my observation stated at the outset for this topic of disputed loans (see: paragraphs 131-133 above) also justify my doubts that all these alleged exchanges are afterthought of the defendant which is merely devised to fit with the ‘repayable on demand’ condition to avoid the time-bar issue.

159.  Re Leco Watch case (supra) is in fact the authority relied on by Mr Chung to argue on the non-accrual of the cause of action of loan until the ‘repayable on demand’ condition is being triggered. 

160.  At page 91 of the report, Harris J quoted the Liquidator’s affirmation in that case which in turn recited the creditor’s evidence at para.8 of such affirmation:-

“… 8. In the Applicant's Affirmation, he alleged that from time to time YAU promised the Applicant that Leco Watch would pay the Said Sum to him when Leco Watch's business improves and the Applicant's allegation is wholly false and untrue because Leco Watch had done quite well in its business in the years of 2010 and 2011…”

161.  Further, His Lordship went on to say at para.10 of the judgment:-

“10. … Mr Lau argues that if one accepts the Applicant’s version of the circumstances in which the loan came to be made, which I do, it must follow that it was understood that if the Applicant wanted the loan repaid he would first make a demand. It cannot sensibly be suggested that either party envisaged the Applicant issuing proceedings without first requesting repayment. I think that must be correct …”

(See also: paras. 13 and 14 of the judgment)

162.  In light of the aforesaid, as I see it, the significance of the defendant giving testimony 2 for the first time at trial is that without which, the statements as allegedly made by the plaintiff (as referred to in paragraph 154 above) might at best be interpreted as his ‘promise’ to repay the loans at a later time when he was financially capable to do so.  But there is no evidence that the defendant has accepted such ‘promise’ according to his witness statements.  Thus, any argument on the alleged agreement on the ‘repayable on demand’ condition just cannot get off the ground.   

163.  Without prejudice to anything aforesaid, testimony 1 would appear to be the defendant’s request or demand upon the plaintiff for repayment as soon as possible, and I would not consider it as the defendant’s acceptance of the plaintiff’s ‘promise’ (even assuming such alleged ‘promise’ was indeed made by the plaintiff).  Testimony 2 is apparently an attempt of rescue from the defendant made at trial but in my view came too late.  It just adds to the incredibility of the defendant’s case.

164.  For completeness sake, I wish to add that no case of estoppel (which may prevent a limitation defence from being taken) basing on any ‘assurance’ by the plaintiff was pleaded in the defendant’s Re-amended Counterclaim either.  Harris J has considered the effect of such doctrine of estoppel on the limitation defence at paras. 13 and 14 of his judgment.

165.  Evidently, each case has to be decided on its own merits. The context of Leco is very different from the present one.  In that case, the loan in question was lent by one businessman to another’s company whereas in the present, the plaintiff and the defendant are brothers in good relationship at the time.  Purely for the sake of argument, even leaving aside the requirement of a clear and unequivocal representation for estoppel for the moment, there is simply no evidence that the defendant has ever relied on the alleged ‘promise’ made by the plaintiff to his detriment or any alteration of position on his part which make it inequitable for the plaintiff to raise the limitation defence here.

166.  In light of the aforesaid, I find the defendant’s testimony on these alleged exchanges between himself and plaintiff on the repayment of loans as referred to in paragraph 154 above (ie both the statement(s) allegedly spoken by the plaintiff and the statements allegedly spoken by him to the plaintiff on 25 June 1992) incredible and reject the same.

167.  In the premises, I find the defendant lent the two sums of HK$5,000 and HK$6,000 to the plaintiff on 25 May 1992 and 25 June 1992 respectively.  However, I do not find there was any agreement reached between the parties that these two loans (or any other alleged loans) were repayable on demand as the defendant contends.  Given the aforesaid findings and on the evidence before me, I find these two loans were made without any provision as to the time for repayment.  In law, the plaintiff was thus obliged to repay these two loans immediately after they had been lent to him.  

168.  In these circumstances, I hold that these two loans under the 3^rd tranche are time-barred and the defendant cannot recover the same from the plaintiff by virtue of the Limitation Ordinance.

Disposition

169.  Due to the above reasons, I enter judgment in the defendant’s favour in respect of the relief nos (1), (2) and (3) as prayed under the Re-amended Counterclaim (“the Counterclaim”) as per the following orders:-

a.   a declaration that the defendant is the sole beneficial owner of the suit property and the plaintiff holds his legal title of the suit property as mere trustee for the defendant;

b.   the plaintiff shall convey and transfer all his title, interests and rights of the suit property to the defendant;

c.   there be liberty to apply in relation to matters arising out of the execution of the conveyance and transfer as mentioned in b. above in the event that the parties cannot agree on such matters;

d.   the plaintiff shall pay the sum of HK$184,203 to the defendant as the agreed damages for the former’s trespass to the suit property (as referred to in Paragraph 101 above) together with interest accrued thereon at prevailing HSBC best lending rate + 1% per annum from 11 March 2011 until the date of judgment and thereafter at the judgment rate until payment.

170.  As to relief no (4) as prayed under the Counterclaim:-

a.   judgment was entered in the defendant’s favour only in respect of the plaintiff’s conversion of the 6 air-conditioners, the 7 tyres, the 2 mattresses and the two trees chopped down (as chattels) as referred to in paragraphs 116 and 118 above, and this court orders the plaintiff to pay nominal damages of HK$100 to the defendant in respect of the plaintiff’s conversion of all such items of goods and chattels;

b.   the remaining part of the defendant’s conversion claim, ie in respect of those alleged goods, chattels and personal properties as referred to in items # (1), (2), (5)-(8), (10)-(14) of paragraph 20 of the Counterclaim, and the remaining alleged 7 trees as referred to under item # (9) thereof, is dismissed in its entirety.

171.  Relief no (5) as prayed under the Counterclaim, ie in relation to the defendant’s claim for the repayment of the loans of £2,430, £380 and HK$11,000, is dismissed in its entirety.

172.  In respect of the plaintiff’s claim under this action, it is this court’s finding that the plaintiff is a mere trustee and he has no beneficial interest in the suit property.  And, this Court has made the above declaration and order directing him to transfer his title, rights and interest in the suit property back to the defendant.  In these circumstances, he has no real right or interest to apply for any order of sale pursuant to the Partition Ordinance. 

173.  Accordingly, judgment was entered against the plaintiff in respect of his claim under this action and I order it be dismissed in its entirety.

Costs

174.  Costs should normally follow the event.  I see no reason why the plaintiff should not pay for the defendant’s costs in defending the plaintiff’s claim which wholly fails, as well as the defendant’s costs in proving his counterclaim for the full beneficial ownership in the suit property and the incidental reliefs, and his claim for trespass.

175.  On the other hand, the defendant fails in his claim on the recovery of the alleged loans.

176.  In relation to his conversion claim, the defendant could only establish liability in respect of 4 out of 15 items of his conversion claim pleaded under paragraph 20 of the Counterclaim (see: paragraph 170a and b above).  For all those items found to be converted by the plaintiff, they are largely the same as those as admitted by him earlier in his statement to the police before this action commenced.  The defendant could only obtain nominal damages for all these converted items.

177.  I consider that the defendant recovers nominal damages in such circumstances is effectively the loser in his conversion claim and should pay the plaintiff’s costs incurred in defending such claim.  (Hong Kong Civil Procedure 2017, v1, para.62/3/4; Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, per Devlin J at 874C-H, 876A-C; Elpe International (Far East) Ltd v Hewlett Packard Hong Kong Limited (CACV 58 of 1993, 30 June 1993), per Bokhary JA (as His Lordship then was), at para.32).

178.  However, since this Court have not heard the parties’ submission on costs in relation to my rulings over the defendant’s claim on the alleged loans and his conversion claim, I think it would be fair and appropriate for me to make order nisi on costs.

Scale of Costs

179.  The defendant seeks costs in defending the plaintiff’s claim on indemnity basis. 

180.  Costs is a matter of unfettered discretion of the court to be exercised judicially.  An indemnity costs order can be made if it is appropriate to do so, but special or unusual features justifying such order should be shown. (Town Planning Board v Society for Protection of the Harbour Ltd (No.2) (2004) 7 HKCFAR 114, at paras 15 and 17).

181.  Mr Chung refers this court to the commentary at Hong Kong Civil Procedure 2017, v1, para.62/App/12 for those specific instances where indemnity costs orders were made in proceedings which had been initiated or prosecuted maliciously, or for an ulterior motive, or in an oppressive manner, so as to constitute an affront to the court. 

182.  He submits that the plaintiff in this case dishonestly or maliciously initiated the present proceedings while knowing that the defendant had full beneficial interest in the suit property, and an indemnity costs order would thus be appropriate.

183.  This court has rejected the plaintiff’s evidence on his alleged contribution to the purchase price as being flimsy, unreliable and incredible. (see: paragraphs 14 and 25 above).   

184.  In my view, Mr Lam also rightly and fairly agreed that even if his client can establish the alleged oral agreement (though I have also found against the plaintiff on such aspect of his case), the plaintiff’s claim would still fail if this court found that the plaintiff had not paid for any contribution to the purchase price of the suit property.   

185.  When a party knowingly instituted proceedings with such shaky evidential base for his or her claim as in the present case, I think the court may in appropriate circumstances impose indemnity costs order against such party if this matter would form the decisive or dominant consideration when deliberating on the question of costs.

186.  However, after taking into account the defendant’s conducts in this case, I do not see it appropriate to impose indemnity costs order against the plaintiff.

187.  While criticising the plaintiff’s claim in such way as submitted Mr Chung, the defendant in opposition also introduced his conversion claim and claim on the alleged loans which are in my view premised on equally if not more flimsy and incredible evidence and certainly could not make him the effective winning party of such counterclaims.  All the asserted values of the alleged converted items are just basing on the defendant’s bare allegations. All the alleged loans (be they accepted by this court or not) are lent decades ago, and the alleged agreement that these loans are ‘repayable on demand’ are again basing on the defendant’s bare allegations which are found by this court to be artificial, incredible and devised to avoid the limitation defence.

188.  The way these counterclaims had been handled and presented at trial make this court highly sceptical about whether they had been initiated or prosecuted with good faith, or were just being used as unfair or oppressive tactics as part of its counterattack to its opponent’s claim.  To answer these two counterclaims on loan and conversion, the plaintiff was compelled to incur substantial costs on the pleadings and witness statements and at the trial hearing to defend the same.

189.  The immediate adverse consequence of such moves of the defendant is that they would doubtless add very substantially but unconstructively to the costs and length of the proceedings.  They also distracted the Court’s focus, and valuable judicial time and resources are certainly wasted as a result.  In these circumstances, I think this court is entitled to and should make its costs order in such way to reflect its strong disapproval of these conducts of the defendant and to deter introduction or maintaining of such kind of unmeritorious counterclaims to accord with the CJR objectives as enshrined under Order 1A, rule 1(a), (b) and (d) of the Rules of District Court (Cap 336H) (“the RDC”).

190.  In light of the aforesaid, I do not think an indemnity costs order should be made against the plaintiff having due regard to the conducts of both parties and the CJR objectives under the circumstances of this case. (see also: Order 1A, rule 2(1)(a) of RDC).  Such view is also reflected in the costs order nisi below.  However, I must emphasise that the fact that costs order nisi is made due to the reason as explained in paragraph 175 above, and the defendant should not treat such order nisi as an invitation to him to re-argue on the indemnity costs issue.

191.  In the premises, I make the costs order nisi that:-

a.   in respect of the costs incurred by the defendant in defending the plaintiff’s claim under this action and in proving the counterclaims to seek for relief nos (1), (2) and (3) as prayed in the Counterclaim, the plaintiff shall pay the defendant’s costs of this action together with certificate for counsel, to be taxed if not agreed;

b.   in respect of the defendant’s counterclaims seeking for relief nos (4) and (5) as prayed in the Counterclaim, the defendant shall pay the plaintiff’s costs of this action in defending such counterclaims together with certificate for counsel, to be taxed if not agreed;

192.  The above costs order nisi shall become absolute in the absence of application to vary the same within the next 14 days. 

193.  Lastly, it remains for me to thank counsel on both sides for their able assistance.