KO YIN FUN v. KO CHI HUNG AND ANOTHER

HCA 2269/2019

[2024] HKCFI 1608

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2269 OF 2019

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BETWEEN

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JUDGMENT

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Introduction

1.  This is the trial of the Action.

2.  This is another one of those cases in which the parties are siblings. The Plaintiff was born in 1954. The 4th Defendant was born in or about 1957 and the 1st Defendant was born in or about 1960. Their late father Mr Ko Choi (“Father”) passed away in 2004 at the age of 81.

3.  It may be important to note that while the Plaintiff is the elder sister of the 1st and 4th Defendants, the 1st Defendant is the only son of the family. It should also not escape one’s attention from the Revised Summary below that most of the Disputed Properties are registered in the name of the 1st Defendant alone, save for Property L which is registered in the joint names of the 1st and 4th Defendants.

4.  The Plaintiff’s claims in this Action originally involved 12 properties in Hong Kong ie Property A to L as defined in the Amended Statement of Claim (“Statement of Claim”).

5.  On Day 1 of trial, leave was granted to the Plaintiff to withdraw her claim against the 3rd Defendant involving Property J. Leave was also given to the Plaintiff to withdraw those parts of her claim against the 1st Defendant involving Properties G, H and I.

6.  What is left in the Action is the Plaintiff’s claim to 1/3 beneficial interests in Properties A to F and K to L (“Disputed Properties”) which were acquired between 1986 and 1991.

7.  The Plaintiff has prepared a Revised Summary of the Disputed Properties starting from Property A to L sequentially as follows.

8.  For ease of comprehension, this court has re-arranged them in chronological order of their acquisition as follows. 

9.  In the prayer for relief, the Plaintiff claims against the 1st Defendant a declaration that the 1st Defendant holds 33.33% of Properties A to F on constructive trust for the Plaintiff. The Plaintiff further claims:

a. A declaration that the 4th Defendant holds 33.33% of Property K on constructive trust for the Plaintiff.

b. A declaration that the 1st and 4th Defendants jointly hold 33.33% of Property L on constructive trust for the Plaintiff.

10.  As can be seen from the Revised Summary above, Property A to E are industrial properties located on the same floor of the same industrial building. Property F and K are car parking spaces located at the same estate of Property L which is a residential property.

The parties’ respective pleaded cases on constructive trust

The Plaintiff’s pleaded case

11.  According to the Statement of Claim, the Plaintiff’s case is rather simply pleaded. It can be summed up in a number of factual propositions.

12.  In 1981, the Father had set up a partnership selling imported cabinets with 2 others Lee Hin Lung (李顯龍) (“Lee”) and Wong Pui (黃沛) (“Wong”), the name of which the Plaintiff cannot even remember. For want of a better option, she calls it Dai Yat Furniture Design Decoration Engineering Company (第一傢俬設計裝飾工程公司) (“‘Dai Yat Furniture”)^[1].

13.  In 1984, the 2 other partners of Dai Yat Furniture left. In 1985, the Father invited the Plaintiff and her husband to operate the business and agreed to focus on the decoration business, after which the business of Dai Yat Furniture thrived and became profitable. Since 1985, the 1st Defendant also assisted Dai Yat Furniture whose duty was mainly as a delivery driver.

14.  As the name of Dai Yat Furniture was too long and Lee and Wong had already left, in 1990, a company with the name 第一設計中心 (Design No One Centre) (“Design One”) was formed instead. Design One was registered under the names of Ko Choi, the 1st and 4th Defendants for the sake of convenience as the latter two had more time on their hands. Since about 1991, the 4th Defendant worked in Design One and was mainly responsible for clerical matters. She was not a partner of Design One.

15.  Then comes the important paragraph 5.

“In or around 1986, it was expressly agreed between the Plaintiff, KCH[2] and Ko Choi as follows:

(1) The Family Company[3] was actively developing the decorating business. As the business of the Family Company was thriving, the Family Company would, from time to time, need to expand so that more space would be available either as a factory, warehouse or car parking space (for the Family Company’s vehicles).

(2) During that period, the Plaintiff and Ko Choi were heavily involved in the daily operation and running of the Family Company, while KCH, being the only son of the family, was relatively less busy, as he only occasionally helped as a delivery driver for the Family Company.

(3) As such, it was expressly and orally agreed between the Plaintiff, KCH and Ko Choi that, unless otherwise stated, as KCH had the most time on his hands, whenever the need arose, KCH would be responsible for the task of finding suitable properties for the Family Company’s use.

(4) It was also expressly and orally agreed between the Plaintiff, KCH and Ko Choi that the properties to be acquired would be for the Family Company’s use only.

(5) However, though the properties to be acquired would be solely for the Family Company’s use, for the following reasons, it was expressly and orally agreed between the Plaintiff, KCH and Ko Choi that the properties to be acquired would not form part of the partnership’s assets:

(i) Ever since the Plaintiff’s involvement in the Family Company in 1984, the Plaintiff and KCH had always treated the Family Company as “their own company” and, together with their father Ko Choi, had therefore continuously invested substantial personal funds therein.

(ii) In this regard, between l984 and 2005, the Plaintiff, KCH and Ko Choi (until he retired in 1997) had equally shared the capital and profits of the Family Company, and had contributed equally towards any losses sustained by the Family Company.

(iii) In the circumstances, it was expressly agreed between the Plaintiff, Ko Choi and KCH that the properties to be acquired would be funded entirely by the Family Company, including the initial down payments, the subsequent mortgage repayments, management fees and all other relevant expenses. The Plaintiff, Ko Choi and KCH saw this arrangement to mean that the Plaintiff, Ko Choi and KCH would, through the Family Company, effectively be personally funding the acquisition and subsequent expenses of the properties to be acquired.

(iv) As such, regardless of the legal ownership of the properties to be acquired, it was expressly agreed by all parties that the Plaintiff, Ko Choi and KCH would have equal beneficial ownership (i.e. 33.33%) in each of the properties to be acquired.” (“1986 Agreement”)

16.  For Properties A to F, the purchase was funded by the Family Company ie the business in which Ko Choi, the Plaintiff and the 1st Defendant were involved. However, according to the 1986 Agreement, they were subject to the common intention that Ko Choi, the Plaintiff and the 1st Defendant would respectively be entitled to 33.33% of the beneficial interests of the properties.

17.  For Property K, a car parking space, the Plaintiff claims she did not know why the 1st Defendant did not register it in his own name as in the case of Property F, also a car parking space in the same estate. Instead, he asked the 4th Defendant to register it in her name. However, its purchase was also funded by the Family Company and by reason of the 1986 Agreement, it had always been the common intention that Ko Choi, the Plaintiff and the 1st Defendant would respectively be entitled to 33.33% of the beneficial interests in Property K.

18.  Lastly, for Property L, it was purchased as the family home of Ko Choi, his wife, as well as the 1st and 4th Defendants[4] but registered in the joint names of the 1st and 4th Defendants. Its purchase was again funded by the Family Company. At the time of its acquisition, it was expressly agreed among the Plaintiff, the 1st Defendant and the Father that its beneficial owners were the 3 of them in equal shares i.e. 33.33% each (“Property L Agreement”).

The Plaintiff’s unpleaded case

19.  As submitted by the 1st Defendant in his Closing, the Plaintiff has introduced at para 15 of her Opening inter alia a new issue based on resulting trust which has not been pleaded. But there is more.

20.  In the Plaintiff’s Closing, the Plaintiff has made submissions regarding claims based on resulting trust (“Resulting Trust Claim”) and those non-domestic Disputed Properties being partnership property[5] (“Partnership Property Claim”):

a. At para 120, “if it is rejected that there is no [sic] common intention then, it is submitted that a resulting trust arises from operation of law.”

b. At paras 122 and 123, “it is submitted that if the Court finds no common intention agreement that the disputed properties were held by the 1st Defendant with one-third beneficial interest on trust, then the 1st and 4th Defendant [sic] will necessarily be holding partnership property on behalf of the other partners of Company A [ie Dai Yat Furniture] and DNOC [ie Design One].” This is because “the indisputable fact is that Properties A to F, and K were purchased and funded by partnership money of Company A and DNOC. It is submitted that the clear evidence shows that the true, substantive partners of Company A and DNOC were the Plaintiff, the Father and the 1st Defendant.”

21.  As shall be seen below, the Plaintiff has adduced no evidence, apart from a bare assertion, that the Disputed Properties were purchased with the funds of the 2 partnerships. But that is not the point here.

22.  The point here is that these unpleaded issues and claims are not just unpleaded, they are also contrary to what the Plaintiff has pleaded in the Statement of Claim. It is wholly inappropriate for this court to allow the Plaintiff to introduce these unpleaded issues and claims in this Action.

23.  The law in this respect is not controversial.

24.  A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken: Sinoearn International Limited v Hyundai CCECC Joint Venture (2013) 16 HKCFAR 632 at [30] per Ribeiro PJ.

25.  As far as resulting trust is concerned, the law requires an arithmetic quantification of the Plaintiff’s financial contribution towards the acquisition of the Disputed Properties. This, the Plaintiff, has utterly failed to plead in the Statement of Claim. Even if strictly speaking under the Rules of the High Court, as submitted in the Plaintiff’s Reply Submissions, conclusions of law may but need not be pleaded, the Plaintiff has still failed to plead the necessary material facts to establish her financial contributions for the purpose of an arithmetic quantification. On the contrary, in the prayer for relief, the Plaintiff only seeks declarations that the 1st Defendant, the 4th Defendant or the 1st Defendant and the 4th Defendant hold 1/3 of the Disputed Properties on constructive trust for her.

26.  As far as the Partnership Property Claim is concerned, this suffers from the same problem that it is not what the Plaintiff claims in the prayer for relief. Worse still, notwithstanding Counsel’s Reply Submissions, this court is not satisfied that she had pleaded she was a 1/3 partner of Dai Yat Furniture or Design One. Even worse still, the Plaintiff had pleaded in para 5(5) of the Statement of Claim that “it was expressly and orally agreed between the Plaintiff, the 1st Defendant and Ko Choi that the properties to be acquired would not form part of the partnership’s assets.”

The 1st Defendant’s case

27.  The following is taken from the 1st Defendant Defence and his Closing.

28.  In or about 1981, the Father set up a company selling inter alia furniture with Lee, Wong and Ko Shuk Ying[6] (“Shuk Ying”), the name of which the 1st Defendant also cannot recall. For want of a better description, he called it “Company A”. The 1st Defendant worked in this company as employee since its incorporation until 1990. As an employee, he assisted in all aspects of Company A’s business, not just delivery.

29.  In or about 1984/85, Lee, Wong and Shuk Ying left Company A to develop their own business. Since then, Company A was wholly owned by the Father.

30.  Later, the Plaintiff and her husband, Yan Ling Hing (“Yan”) resigned from their jobs and joined Company A to work as employees, and not as partners.

31.  In 1986, the 1st Defendant ventured into a business named Design No One Furniture Engineering Company第一設計傢俬工程公司 (“Design Furniture Engineering”), specializing in furniture and renovation. His business was growing and as a result, he purchased Property A, B, D and E to support his expanding business. He also used Property C for his business as factory and warehouse.

32.  In 1990, the Father solely decided to close down Company A and form Design One as a partnership to carry on the business of decoration and selling furniture. The partnership consisted of the Father, the 1st and 4th Defendants. The Plaintiff and Yan worked as employees, but not partners, of Design One since its formation.

33.  In September 1997, the Father resigned as a partner of Design One due to ill health. Save for the period between November 1997 and April 2005, the Plaintiff was not a partner of Design One.

34.  The 1st Defendant denies the existence of the common intention and more specifically the 1986 Agreement and the Property L Agreement. The 1st Defendant also denies the Plaintiff had equally shared the capital and profits of and/or contributed equally towards the losses sustained by Company A or Dai Yat Furniture, as well as Design One when the Plaintiff was not even its partner.

35.  The Disputed Properties were acquired and funded by the 1st Defendant himself.

a. For Property A, B, D and E, the 1st Defendant used his own funds to pay for the purchase price and expenses. The properties were used by the 1st Defendant for his own business.

b. For Property C, it was originally purchased by Ko Choi in 1989. All along, the property had been used by the 1st Defendant for his own business. In 1997, Ko Choi retired. In 1998, Ko Choi gifted Property C to the 1st Defendant.

c. For Property F, the 1st Defendant purchased it for his own use because it is a carparking space located at the same residential complex where he and his family resided.

d. As for Property L, the 1st Defendant used his own funds to pay for the purchase price and expenses. He purchased it as it was the residence for his family, which included the 1st Defendant, his wife, the 4th Defendant, the Father and the mother. It was his sole decision to register the 4th Defendant as one of the owners of Property L.

The 4th Defendant’s case

36.  The 4th Defendant is only concerned with (i) Property K of which she is the sole legal owner and (ii) Property L of which she is a joint owner with the 1st Defendant.

37.  In relation to Property K, the 4th Defendant’s principal case is one of denial of the Plaintiff’s alleged common intention among Ko Choi, the Plaintiff and the 1st Defendant that each of them beneficially owned 1/3 each of this property. Instead, it is her case that she purchased Property K with her own funds accumulated from monetary gifts from the Father.

38.  In relation to Property L, the 4th Defendant denies the Property L Agreement or the Plaintiff’s alleged common intention. Instead, it is her case that it was the 1st Defendant who purchased Property L with his own funds and it was his sole decision to register the 4th Defendant as one of the owners of Property L.

39.  The 4th Defendant also raises a legal point that the alleged common intention cannot affect her position as a legal owner of Property K or Property L as she is not a party to the 1986 Agreement or the Property L Agreement.

The critical issue and witnesses

40.  At trial, the Plaintiff called herself and Yan. The 1st Defendant and the 4th Defendant testified for themselves.

41.  It is undisputed, and in fact expressly accepted in the Plaintiff’s Closing that the common intention and agreement as to the acquisition of the Disputed Properties are not recorded in writing and that the Plaintiff bears the burden of proving that the beneficial ownership of the Disputed Properties is different from the legal ownership. Since this case concerns the existence of 2 alleged oral agreements, the adjudication of this case depends primarily on this court’s assessment of the credibility of the Plaintiff and the 1st Defendant and the 4th Defendant as there is a direct conflict of their testimony as to the existence or otherwise of the alleged common intention and oral agreements. In this regard, this court has carefully considered their testimony and assessed it in light of the relevant documentary evidence or its absence, the witnesses’ conduct at the material time and the known and undisputed circumstances of this case. This court has in particular considered the inherent probabilities or otherwise of their testimony, whether their testimony is coherent or self-contradictory and assessed their credibility accordingly: The World Food Fair Ltd v Hong Kong Island Development Ltd (2006) 9 HKCFAR 735 at [37]; Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at [54].

42.  This court has also taken into account inter alia the 2 observations by Recorder Yvonne Cheng SC (as she then was) in Joint and Several Trustees of the Property of Yeung Wing Sing v Yeung Wing Sing [2021] HKCFI 2018 at [26] as follows:

a. Care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.

b. Witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

43.  Lastly, this court has borne in mind that the burden of proof rests on the Plaintiff to establish the common intention especially the 2 alleged oral agreements on balance of probabilities. There is no burden on the 1st Defendant and the 4th Defendant to persuade the Court that their alternative version of events should be accepted. Hence, while it is true that the 1st and 4th Defendants have put forward positive cases that they had funded the purchase of the relevant properties for their own use, there is no burden on them to prove their positive cases. Once the critical issue identified below is resolved, the 1st and 4th Defendants’ positive cases become redundant.

44.  As this court sees it, the one critical issue the resolution of which will be dispositive of this case is this: whether the Plaintiff can prove the alleged common intention among the Father, the Plaintiff and the 1st Defendant that they would each be entitled to 33.33% of the beneficial interests of the properties in question, either by the alleged 1986 Agreement and the Property L Agreement or by conduct. Other subsidiary issues will fade in terms of importance.

Deliberation

The Law

45.  First, equity follows the law – that means the beneficial interests reflect the legal interests in the property. The burden is on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. This is elementary. If authorities are really required, see, for example, Stack v Dowden [2007] 2 AC 432 at [54], [56] and [68]; Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 (CA) at [5.5].

46.  Second, common intention constructive trust might arise in 2 situations:

a. The first situation is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially.

b. The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust.

Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at [2.3] – [2.4]

47.  Third, in ascertaining whether there was a common intention between a plaintiff and a defendant, which is the first and foremost requirement for the imposition of a constructive trust[7], it is the objective intention of each party which was reasonably understood by the other party to be manifested by that party’s words and conduct that one must examine. Further, it is the parties’ common intention at the time of the acquisition of the property that is relevant, if there is no suggestion from anyone that the intention had changed.

Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at [47] – [48]

48.  Such intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned based on evidence of express discussions. It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention.

Liu Wai Keung v Liu Wai Man supra at [49]

49.  Fourth, for the purpose of common intention constructive trust, the alleged common intention must be between the legal owner(s) and the supposed beneficial owner(s). In Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1, Ribeiro PJ observed at [39] that:

“…The fact that A and B might form a common intention that they should have shared beneficial interests in C’s property cannot in principle be sufficient to impose a constructive trust on C to hold C’s property on trust for A and B. C is not party to and does not unconscionably depart from any common intention, so there is nothing to constitute C a trustee for A and B. If B does not make good his promise, he might attract personal liability to A, but it does not mean that an equitable interest in C’s property is created in favour of A.”

The evidence

50.  The Plaintiff has filed 3 witness statements in this Action: “Plaintiff 1”, “Plaintiff 2” and “Plaintiff 3” dated February 2022, May 2022 and August 2023 respectively. Plaintiff 1 is the Plaintiff’s main witness statement. Plaintiff 2 does not add anything to Plaintiff 1 which is relevant to the Disputed Properties. As far as Plaintiff 3 is concerned, it only deals with the mortgages over Properties A to E and L and the fact that apparently the mortgagees had obtained possession of Properties D, E and L. There is nothing in Plaintiff 3 which sheds light on the issue in this Action.

51.  Yan has filed 1 short witness statement. Yan’s testimony does not add anything helpful to the Plaintiff’s case. The only thing worth mentioning about his witness statement is that at paras 12 to 14, he did not say he and the Plaintiff joined Dai Yat Furniture as partners – he simply says they joined Dai Yat Furniture in 1985.

52.  In the Plaintiff’s Closing at paras 20 and 22 to 25, her counsel quite candidly submits that:

“20. … Although the Plaintiff may at times, appear to be agitated or elaborated when simple yes or no answers suffices, it is submitted that this actually reflects her genuineness and truthfulness…

…

22. The Defendants’ cross-examination was ineffective in discrediting the Plaintiff and (with the greatest respect to counsel) was confusing to an unsophisticated lay person, largely consisting of bringing the Plaintiff to the indisputable records (i.e. land search records) and asking if the Plaintiff disputes them and putting their case.

23. The documentary and land search records indisputably list the legal owner of the disputed properties as the 1st and/or 4th Defendant. When put through questions such as whether the Plaintiff disputes the indisputable in the box, the Plaintiff matter of fact disputes what is shown on the land search or documentary record.

24. This is understandable because the Plaintiff’s entire case is that the documentary record does not reflect her beneficial ownership and the common intention agreement between the Father, the Plaintiff and the 1st Defendant. After all, the Plaintiff’s entire case is not an express trust which is registrable under the section 5 of the Conveyancing and Property Ordinance but a common intention constructive trust arising from an oral agreement made in the 1980s.

25. But upon prodding and clarification by the Court that these are public documents and upon understanding the distinction between the indisputable nature of what is recorded in a public record versus the actual beneficial interests in the disputed properties which are not so recorded, the Plaintiff honestly and candidly admits she does not dispute what is recorded, but only disputes that they accurately reflect the entire ownership interest in the relevant properties (i.e. they do not reflect her equitable ownership).” (emphasis added)

53.  Sophisticated or not, the Plaintiff should have known her case long before the trial began. Disputing the indisputable does not impress this court as reflecting her genuineness and truthfulness.

54.  On the whole, the Plaintiff’s Closing, which this court has considered thoroughly, is short on explaining why the Plaintiff’s case should be accepted but long on attacking the 1st Defendant and the 4th Defendant’s credibility. Attack may be the best defence in some sports. But it is misconceived to apply the same strategy in this Action when the Plaintiff clearly has the burden of proof.

55.  As a preliminary observation, the Father was a party to the pleaded 1986 Agreement and the Property L Agreement. He passed away in 2004. Yet the Plaintiff only commenced this Action in December 2019, 15 years after the Father had passed away. Thus, there is no one who can independently confirm or contradict the Plaintiff’s pleaded case about the 1986 Agreement and the Property L Agreement. There is no explanation in the 3 witness statements as to why the Plaintiff chose to wait for so long before asserting her beneficial interests.

56.  The only hint of some sort of explanation is at paras 46 and 47 of Plaintiff 1. Around the end of 2017, her relationship with the 1st Defendant had turned worse and the 4th Defendant always sided with the 1st Defendant. But at para 12(e) of Plaintiff 1, the Plaintiff claims she trusted and cherished her little brother ie the 1st Defendant very much. There is however no explanation as to why their relationship suddenly turned worse at the end of 2017. Further, the 1st and 4th Defendants had on various occasions denied the Plaintiff’s interests in Properties A to L. Again, no details were given as to the circumstances under which the Plaintiff asserted and the 1st and 4th Defendants denied her interests in the properties in question.

57.  Another preliminary observation is that the Plaintiff is not asserting beneficial interests to 1 property. Her originally claim was in respect of a total of 12 properties. One would have thought it would not have been too much trouble for the Plaintiff, who was about 31 years old in 1986[8], to record in writing the terms of the 1986 Agreement and the Property L Agreement, or at the very least the fact that she had some beneficial interests in the 12 properties that she claimed. But she had not done so.

58.  Since the Plaintiff is the main witness and Plaintiff 1 is her main witness statement, one naturally focus on her evidence.

59.  First, the Plaintiff purports to testify on what happened back in 1985/1986 ie at least over 36/37 years ago. Naturally, memory had faded after such a long period of time. In fact, the Plaintiff cannot even recall the name of the partnership the Father had formed with Lee and Wong.

60.  Second, and most importantly, the Plaintiff has not spelt out the terms of the 1986 Agreement or the Property L Agreement in Plaintiff 1 at all. This is extraordinary. The Plaintiff’s entire case of common intention constructive trust rests on the existence of the 2 agreements.

61.  On the other hand, extraordinarily, the Plaintiff, in the Statement of Claim, had pleaded in details the terms of the 2 agreements in paras 5 and 24G, giving the impression that the Plaintiff actually had a clear memory of them. This is already dubious as it is, given the substantial lapse of time involved. It is doubly dubious that the Plaintiff does not see fit to set them out in her main witness statement.

62.  Third, at paras 7 to 9 of the Statement of Claim, the Plaintiff says in about 1985, the Father invited the Plaintiff and Yan to join Dai Yat Furniture. Since then, the business of the “Family Company” grew rapidly and continuously under their leadership. The use of the term “Family Company” is curious. On the evidence before this court, there are only 2 relevant partnerships in this Action ie Dai Yat Furniture before 1990 and Design One after 1990. It is unclear why the Plaintiff chose to use the term “Family Company” to vaguely refer to the business in which the Father, the Plaintiff and the 1st Defendant were involved in, without explaining what that is supposed to mean. On the one hand, the Plaintiff claims she (as well as her husband) was heavily involved in the running of Dai Yat Furniture, leading to its rapid expansion and growth in profits. On the other hand, the Plaintiff claims the 1st Defendant was a mere delivery driver.

63.  Dubiously, in the Agreed Table, the Plaintiff claims she joined Dai Yat Furniture as a partner in 1985 and her income was derived from the profits of Dai Yat Furniture to which she was entitled to 1/3. However, there is in fact no documentary proof whatsoever that she was a partner of Dai Yat Furniture.

64.  Moreover, in Plaintiff 1, the Plaintiff never said she was invited to join Dai Yat Furniture as a partner[9] and never disclosed the accounts of Dai Yat Furniture to show the amount of profits Dai Yat Furniture had made since she had started working in Dai Yat Furniture. In these circumstances, the Plaintiff cannot begin to argue that she was a partner of Dai Yat Furniture and because of that the Father accepted the 1986 Agreement under which she was entitled to 1/3 beneficial interests of all properties acquired by Dai Yat Furniture between 1986 and 1989[10]. That is even assuming, as to which there is also no documentary proof[11], that the properties were purchased with Dai Yat Furniture’s monies.

65.  Fourth, the explanation in Plaintiff 1 that because the 1st Defendant, being a delivery driver had more spare time, the Father and the Plaintiff agreed to entrust him to (i) look for properties for the use of the “Family Company”, presumably Dai Yat Furniture, and (ii) to hold the properties on behalf of the “Family Company”, does not make much sense. At paras 12(f) and (g) of Plaintiff 1, the Plaintiff mocks the 1st Defendant as having failed to run his own business, as he had no business acumen, no experience in decoration or experience in management. In this court’s view, the Plaintiff’s allegation that he was merely a delivery driver [12], if true, hardly made him a suitable person to be given the task of looking for properties for the use of the “Family Company”, or a fortiori, to hold the properties in his own name.

66.  If, as the Plaintiff alleges, the properties were purchased with Dai Yat Furniture’s monies, her superficial explanation cannot reasonably justify the properties being assigned to and held in the 1st Defendant’s own name. Busy or not, the Father and the Plaintiff, together with the 1st Defendant, could easily have been assigned the properties jointly or as tenants-in-common. The case of Property C, purchased in 1989, is in point. According to Plaintiff 1, it was found by the Father and was purchased by him and held in his own name for his convenience but it remained the assets of the Family Company. Apparently, there was no inconvenience for the Father to hold Property C in his own name.

67.  Further, there is also no explanation in Plaintiff 1, whether by reason of convenience or otherwise, why not just 1 property but all the Disputed Properties were assigned into the sole name of the 1st Defendant or the joint names of the 1st Defendant and the 4th Defendant, if the Plaintiff indeed had 1/3 interests in all of them.

68.  Fifth, in Plaintiff 1 at paras 15, 37 to 39, 42 and 45, the Plaintiff suggests Properties A to F, K and L were all acquired with monies of the Family Company, presumably Dai Yat Furniture[13], and are its assets. In this respect, the Plaintiff has contradicted her own pleaded case. At para 5(5) of the Statement of Claim, as a term of the 1986 Agreement, it was categorically pleaded that:

“(5) However, though the properties to be acquired would be solely for the Family Company’s use, for the following reasons, it was expressly and orally agreed between the Plaintiff, KCH and Ko Choi that the properties to be acquired would not form part of the partnership’s assets:

(i) Ever since the Plaintiff’s involvement in the Family Company in 1984, the Plaintiff and KCH had always treated the Family Company as “their own company” and, together with their father Ko Choi, had therefore continuously invested substantial personal funds therein.

…

(iv) As such, regardless of the legal ownership of the properties to be acquired, it was expressly agreed by all parties that the Plaintiff, Ko Choi and KCH would have equal beneficial ownership (i.e. 33.33%) in each of the properties to be acquired.” (emphasis added)

69.  Sixth, in relation to Property L, the Plaintiff asserts in paras 41 to 45 of Plaintiff 1 that it was held in the names of the 1st Defendant and the 4th Defendant on behalf of the “Family Company” which paid for it. There is no explanation at all why that was the case when the property was supposed be the Ko family home and belong beneficially to the Father, the Plaintiff and the 1st Defendant. There was no reason why, for instance, Property L could not have been held in the joint names of the Father and her mother. After all, it was their residence and eventually, when the 4th Defendant and then the 1st Defendant got married, they moved out of it. Even if only 2 persons were to be nominated to be the registered owners of Property L, logically, the nominated persons should be the Father and/or the Plaintiff and/or the 1st Defendant. But that did not happen.

70.  Seven, in relation to Property K, it was acquired in 1991 after Design One had been formed on 1 November 1990. According to the BR record dated 1 November 1990, Design One had 3 partners to start with ie the Father, the 1st Defendant and the 4th Defendant. It is not pleaded in the Statement of Claim or stated in Plaintiff 1 and there is no documentary proof that the Plaintiff was a partner of Design One in 1991. At para 3A(i) of the Statement of Claim, the Plaintiff only pleaded “第一設計中心 (Design No One Centre) was registered under the names of Ko Choi, KCH[14] and YL[15] for the sake of convenience as KCH and YL had more time on their hands.”

71.  On the 1st Defendant’s case, he accepted that the Plaintiff became a partner of Design One in 1997. Even so, on what basis does the Plaintiff claim a 1/3 beneficial interests in Property K? At para 35 of Plaintiff 1, the Plaintiff says Property K was held by the 4th Defendant on behalf of the “Family Company”. At para 37 of Plaintiff 1, the Plaintiff says Property K was acquired with the monies of the “Family Company”. If the “Family Company” is not a reference to Design One, then which entity is the Plaintiff actually referring to? Plaintiff 1 is silent on this.

72.  In the 1st Defendant’s Closing, he has made a number of points to challenge the credibility of the Plaintiff’s case. Not all of them are worth reciting here but suffice it to mention the following.

73.  First, according to a letter issued by the Inland Revenue Department dated 30 March 2021 (“IRD Letter”)[16], the business address of Design Furniture Engineering was Rooms 7, 10, 15 and 16 on 9/F, Wah Luen Industrial Centre, 15-21 Wong Chuk Yeung Street, Fotan, Shatin. These are the address of Property A (Room 7), Property B (Room 10), Property D (Room 15) and Property E (Room 16). The letter stated the 1st Defendant was the owner of Design Furniture Engineering and the commencement and cessation dates of that business were 1 May 1986 and 1 February 1998 respectively.

74.  The 1st Defendant submits that the IRD Letter serves as cogent evidence that Property A, B, D and E were indeed occupied and used by his business. In this court’s view, this piece of evidence is important in 3 respects:

a. It demonstrates the Plaintiff’s assertion that inter alia Property A, B, D and E were used and occupied by the Family Company is likely to be false, or at the very least does not give the full picture.

b. It undermines the credibility of the 1986 Agreement since it was an express term of that agreement that these properties were to be used solely by the Family Company.

c. It significantly undermines the Plaintiff’s credibility. In the Plaintiff’s 3 witness statements, she did not even try to contest, explain or otherwise deal with the IRD Letter. The IRD Letter was disclosed by the 1st Defendant and highlighted in Chi Shing 1.

75.  Second, it is part of the Plaintiff’s case that the purchase of the Disputed Properties, including mortgage repayments, was funded by monies of the “Family Company”.

76.  The 1st Defendant submits that there is no documentary evidence from the Plaintiff that the “Family Company” was the borrower from the bank and made the monthly mortgage repayments. Moreover, there are contemporaneous documents ie the Mortgage dated 15 August 1986 in respect of Property D and E and Legal Charge dated 13 August 1987 in respect of Property A which recorded it was the 1st Defendant’s own company ie Design Furniture Engineering which was the named borrower.

77.  This begs the question: why was Design Furniture Engineering the named borrower in the mortgage documents and thereby rendering itself legally responsible for repayment of the mortgage loans when it was the “Family Company”, according to the Plaintiff’s case, which made the monthly repayments? It also begs the question: why should Design Furniture Engineering take up the responsibility of being legally the borrower in the mortgage documents if it had nothing to do with the acquisition of Property A, D and E?

78.  Again, in this court’s view, this piece of evidence significantly undermines the Plaintiff’s credibility since in none of her 3 witness statements does she even try to explain or otherwise deal with it. The mortgage documents were disclosed by the 1st Defendant and highlighted in Chi Shing 1.

79.  Third, Property B and C, which adjourned one another, were acquired by the Father and the 1st Defendant separately from the same vendor. The documents show that the 2 Agreements for sale and purchase dated 3 April 1989, the 2 Assignments and the 2 Mortgages obtained from the same bank both dated 25 April 1989 were all executed by the Father and the 1st Defendant individually on the same occasions, using the same solicitors MK Lam & Co.

80.  The 1st Defendant submits that if both Property B and Property C were intended to be held on trust for the Plaintiff, the Father and the 1st Defendant as alleged, there would have been no need for both the 1st Defendant and the Father to execute separate conveyancing documents in this way. To have done so would have been completely redundant, as only one of them, presumably the less busy one ie the 1st Defendant, would have achieved the same purpose. Such redundancy is particularly evident given the same solicitors were instructed to handle the conveyance of the 2 properties and the same bank was the mortgagee of them.

81.  Further, according to the Plaintiff, the 1st Defendant was tasked with looking for suitable properties for use by the “Family Company” because the Father and her were busy running the Family Company’s business. If the 1st Defendant was able to find Property B to be fit for the purpose, and Property C was just next door, why did the Father bother to look for Property C himself[17] and why could the 1st Defendant not be tasked to hold Property C as well?

82.  The 1st Defendant submits that the logical answer is that Father intended to purchase Property C for himself, and the 1st Defendant intended to purchase Property B for himself – neither of them intended to holding Property B and Property C on trust for the Plaintiff, Father and the 1st Defendant. There is force in this submission.

83.  In the 4th Defendant’s Closing, she has also made a number of points to challenge the Plaintiff’s case. Suffice it to mention the following which this court agrees with.

84.  First, on the authority of Luo Xing Juan v Estate of Hui Shui See at [39] cited above, the mere fact that the Father, the Plaintiff and the 1st Defendant had formed a common intention (which is denied) that they would share equally the beneficial interests in the 4th Defendant’s properties cannot impose a constructive trust on the 4th Defendant to hold Properties K (100%) and Property L (50%) on trust for the Plaintiff. The 4th Defendant is not party to such alleged common intention and there is nothing unconscionable for her to depart from any common intention among the Father, the Plaintiff and the 1st Defendant. The Plaintiff’s case fails on both limbs of proving common intention and unconscionability.

85.  In this court’s view, the Plaintiff has no real answer to this point.

86.  Second, aside from the Plaintiff’s self-serving bare assertions, there is a lack of contemporaneous documentary evidence to support a number of fundamental elements of the Plaintiff’s case in relation to:

a. The Plaintiff’s alleged partnership in Company A or her stake in Design One prior to her being made Design One’s partner in 1997.[18]

b. The Plaintiff’s monetary contributions (if any) made to Company A or Design One prior to 1997.

c. From exactly which business(es) the funding for the purchase of Property K and Property L originated from.

87.  Third, in the Original Statement of Claim dated 29 June 2020, the 1986 Agreement was already pleaded there at para 5. There was no plea that the common intention or the 1986 Agreement applied to Property K, purchased only in 1991. There was also no plea that the common intention or the Property L Agreement applied to Property L purchased in 1987.

88.  It was only in the Amended Statement of Claim filed on 6 January 2022 that by reason of the common intention formed in 1986 that the Plaintiff claimed a 1/3 beneficial interests in Property K and Property L. In this court’s view, this also undermines the credibility of the Plaintiff’s case.

89.  Fourth, as far as affordability is concerned, Property K, being a car parking space was purchased by the 4th Defendant for the modest sum of HK$150,000 without mortgage. Based on the combined monetary gifts from the Father and her own savings from years of employment, her evidence that she paid for the HK$150,000 is entirely plausible and reasonable. This court agrees.

90.  Fifth, it is not in dispute that Property L was purchased and used a family home for the Father, the mother, the 1st Defendant and the 4th Defendant who were unmarried at the time of purchase ie 1987. There is no suggestion that the Plaintiff intended to live or actually lived in Property L. Being a family home, it had nothing to do with the “Family Company”. There is no logical explanation as to why it would be purchased with funds of the “Family Company” or for the Plaintiff to claim a 1/3 beneficial interests in it.

91.  To conclude, for all the reasons set out above, the Plaintiff’s entire case of common intention, the 1986 Agreement and the Property L Agreement is wholly unbelievable and legally unsound. This court must therefore decide the critical core issue in favour of the 1st Defendant and the 4th Defendant. That is sufficient to dispose of the Action.

92.  It is academic and wholly unnecessary for this court to make any findings as to the 1st Defendant’s and the 4th Defendant’s positive case.

Resulting Trust and Partnership Claims

93.  In addition to the pleading points mentioned above, the Plaintiff has utterly failed to prove she or the “Family Company” had provided 1/3 funding for the purchase of the Disputed Properties. On this ground as well, any purported claims based on resulting trust or the Disputed Properties being partnership assets must be rejected.

Ouster from the Disputed Properties

94.  In view of this court’s conclusion above, this issue does not arise. The 1st and 4th Defendants were right in denying the Plaintiff’s claims to any beneficial interests in the Disputed Properties.

Disposition and costs order nisi

95.  The Action is hereby dismissed.

96.  There shall be an Order nisi that costs of the Action, including all costs reserved, if any, be to the 1st Defendant and 4th Defendant, to be taxed if not agreed, and paid by the Plaintiff forthwith, certificate for counsel.