TANG KUN NIN TONY AND OTHERS v. THE PERSONAL REPRESENTATIVE OF CHENG WAI FONG, DECEASED AND OTHERS

DCCJ 1200/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1200 OF 2014

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JUDGMENT

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A. Introduction

1.  At the centre of this dispute is a temple in Fanling called “Hung Shing Temple” (洪聖宮). The temple is said to be built in 1763 by the villagers of four yeuk[1] (約)in the neighbourhood.  It has been classified as a privately-owned Grade II historic building by the Government and is open to the public.

2.  The temple is managed by a t’ong (堂) formed in accordance with Chinese custom also by the name of “Hung Shing Temple”.  To distinguish the t’ong from the building, I shall hereinafter call the t’ong “HST”.  The plaintiffs are the surviving managers (司理) of HST.

3.  In 2009, the Government made a grant for the renovation of the temple. When the contractors came to carry out the renovation in early 2011, they were obstructed by the defendants who own the neighbouring lands.

4.  The plaintiffs commenced HCA 87/2011 in the Court of First Instance and obtained an interim injunction to oblige the defendants to remove the obstructions and to restrain them from further interfering with the renovation.  On the return date, the defendants offered an undertaking in terms of the interim injunction and the injunction lapsed.  The renovation then went ahead. 

5.  HCA 87/2011 nevertheless continued.  It was later transferred to the District Court to become the present action.

6.  According to the latest pleadings:

(a) The plaintiffs allege that the defendants are “constructive trustees” holding their lands on trust for HST.  They ask for a declaration to that effect as well as consequential relief.

(b) The defendants deny that their lands are subject to any trust. They counterclaim for a declaration that they are the beneficial owners of their lands and ask for an order to vacate the registration of the writ.  Their further claim for injunctive relief and damages have been abandoned at the beginning of the trial.

B.  The dispute

7.  The temple is situated at Hung Ling Miu Lot No 1 (“HLM Lot”) in Demarcation District 76.

8.  The temple is surrounded by other lands, including:

(a) lands registered in the name of the defendants, ie Lot No 1468, Lot No 2105 and the Remaining Portion of Section B of Lot No 2106 (“Lot No 2106SBRP”); and

(b) other lands, eg Lot Nos 1475, 2107, 2256 and 2272.

9.  By an assignment dated 9 November 2007 (“the 2007 Assignment”), the 2^nd and 3^rd defendants (“D2” and “D3” respectively) acquired the defendants’ lands from the 1^st defendant (“D1”).

B1.  The plaintiffs’ case

10.  According to the plaintiffs: 

(a) In the very beginning, the villagers of the four yeuk formed themselves into a t’ong called On Leung Yeuk (安良約).  On Leung Yeuk obtained the lease of HLM Lot from the Crown and built the temple there.

(b) The temple was initially managed by On Leung Yeuk through its manager Tang Yui Shan (鄧銳臣). The villagers became dissatisfied with the way the temple was run and the four yeuk decided to each appoint a manager to form HST to jointly manage the temple.

(c) In early 1900s, a nun by the name of Leung A Chi (梁亞智) (“Leung”) came to the neighbourhood together with her children disciples to beg.  Amongst her disciples were Cheung Tsai (張齊) (“Cheung”), Tai Kam Chau (戴金就) (“Tai”) and D1.  The villagers took pity on them and allowed them to stay at the temple and beg in the neighbourhood.

(d) Gradually, Leung assumed the duties of looking after the temple.  As a result of improved management, the number of visitors increased and the four yeuk wanted to expand the operation of the temple.

(e) Through the arrangement of the villagers and the managers of HST, the owners of neighbouring lands (including Lot Nos 1468, 2105 and 2107 and Section B of Lot No 2106 (“Lot No 2106SB”)) either sold or donated their lands to Leung for her to hold on trust for HST.  According to the arrangement, Leung was allowed to keep the income generated from the lands to defray the costs of running the temple and for her upkeep.

(f) Upon the death of Leung, the managers of HST arranged D1 and Tai to succeed Leung in 1961 to jointly hold Lot Nos 1468, 2105 and 2107 on trust for HST.  Similar to the arrangement with Leung, they were allowed to keep the income generated from the lands.  When Tai left the temple in about 1970, the managers of HST arranged the lands to be held solely by D1 on trust for HST with the same financial arrangement as before.  Lot No 2107 was resumed by the Government in 1995.

(g) Regarding Lot No 2106SB, the managers of HST arranged Leung to transfer the land to Cheung in 1929 for Cheung to hold on trust for HST.  Cheung went missing after the Second World War and D1 represented to the managers that she would arrange the land to be registered under her name to hold it on trust for HST.  Unbeknown to the managers, D1 obtained an order dated 4 July 1997 from the High Court in HCA 2643/1997 declaring that she (in her personal capacity) had acquired a good possessory title to Lot No 2106SBRP[2] by adverse possession.

11.  By reason of the above (so the plaintiffs say), D1 was a trustee holding Lot Nos 1468, 2105 and 2106SBRP on trust for HST prior to the 2007 Assignment.

12.  D2 and D3 are brothers.  Their grandmother was a close friend of D1 and frequently visited D1 at the temple.  It is the plaintiffs’ case that the grandmother had knowledge of the trust arrangement respecting the lands and D2 and D3 must have known about it too.  The plaintiffs argue that the 2007 Assignment was a sham (as the sale was grossly undervalued) and that the defendants had conspired together to misappropriate HST’s lands.

B2.  The defendants’ case

13.  The defendants deny that their lands are subject to any trust arrangement.

14.  According to them:

(a) Over the years, Leung acquired the ownership of Lot Nos 1468, 2105 and 2107 in her personal capacity without reference to any trust.  In 1961, D1 and Tai succeeded Leung to become the owners of those lands without reference to any trust.  When Tai left the temple and transferred her interests to D1 in 1970, D1 became the sole legal and beneficial owner of those lands, again without reference to any trust.

(b) Lot No 2106SB was transferred to Leung in her capacity as manager of a t’ong called “Hung Shing Kung”.  In 1929, Leung (as manager of Hung Shing Kung) transferred the land to Cheung in her personal capacity.  So when the High Court granted the order in 1997 vesting Lot No 2106SBRP in D1, the land was not subject to any trust.

15.  The defendants maintain that the 2007 Assignment was genuine and deny that the transaction was at an undervalue.  In other words, D2 and D3 have acquired the full legal and beneficial interest in Lot Nos 1468, 2105 and 2106SBRP from D1 without reference to any trust.

C.  The Trial

16.  The plaintiffs called Tang Chun Chi, Tony Tang, Yip Wah Ching and Ip Cheung Fung to testify at trial.  They are villagers of the four yeuk and Tony Tang is also one of the current managers of HST. 

17.  Only D2 gave evidence for the defence.

18.  There are a lot of documentary evidence in this case, consisting mostly of memorials respecting land transactions registered in the Land Registry (formerly, the District Land Offices).[3] In her opening, Ms Lau (the plaintiffs’ counsel) indicates that she is not taking issue with the documents although she would challenge the admissibility of D1’s witness statement.

19.  D1 passed away before the case was transferred to the District Court and the plaintiffs obtained an order to proceed with the action in the absence of anyone representing her estate.  Mr Ng (counsel for D2 and D3 at trial) wants to adduce D1’s witness statement as hearsay evidence.

20.  Given the plaintiffs’ objection, I have to determine whether to exclude the statement on the ground that it is hearsay.  According to section 47 of the Evidence Ordinance, Cap 8 (“EO”), I shall not exclude the statement unless I am satisfied having regard to the circumstances of this case that exclusion is not prejudicial to the interests of justice.

21.  In Cheung Wei Man Vivien v Centaline Property Agency Ltd,[4] Lam J (as he then was) said at para 12 that although section 49 of the EO deals primarily with the weight to be given to hearsay evidence, it does have an indirect bearing on the assessment as to whether the exclusion of a piece of hearsay evidence would be prejudicial to the interests of justice.  According to His Lordship, if the court finds it possible to conclude that irrespective of what shall happen at the trial, no weight could be attached to a piece of evidence after taking into account the matters set out in section 49, then its exclusion would not be prejudicial to the interests of justice.

22.  D1 did not choose to stay away from the trial but her untimely death was really forced upon the defendants.  Prior to her death, the defendants were represented by the same firm of solicitors and they had jointly given instructions for the defence.  Like those who have testified, D1 made her witness statement in anticipation of the trial.

23.  The history of this case went back as far as 1908 (when Leung acquired the first piece of land).  It was impossible for any witness to make his/her statement contemporaneously with the occurrence of the events. 

24.  Insofar as D1’s statement contains multiple hearsay, the same may be said of the statement of the plaintiffs’ witnesses and to a greater extent. There is no way I could exclude the possibility of D1 concealing or misrepresenting matters, but the same is also true with regard to the plaintiffs’ witnesses who must be eager to uphold what they perceive to be the interests of their t’ong.  

25.  Ms Lau has complained that the plaintiffs would be deprived of an opportunity to test the veracity of D1’s evidence if D1’s statement is not excluded.[5] Her complaint must be considered having regard to the incidence of proof in this case.  As I shall elaborate below, the burden is on the plaintiffs to establish that HST has a beneficial interest in the lands registered under the defendants.  Given the diametrically opposite stances taken by the parties, the focus of the trial is naturally on the plaintiffs’ evidence.  It has been said by the Court of Appeal that comparison with contemporaneous documents is an aid to the reliability of the witnesses’ testimony unless there is a reason to believe that the documentation is contrived or materially incomplete.[6]  In the present case, I am assisted by the extensive contemporaneous documentation available (which is not disputed) in assessing the evidence.  The significance of the inability of the plaintiffs to cross-examine D1 therefore falls away.

26.  Having regard to all the circumstances, I take the view that it would be prejudicial to the interests of justice to exclude D1’s statement.

D.  Discussion

D1.  The relevant legal principles

27.  In her closing submissions, Ms Lau argues the plaintiffs’ case in terms of both resulting and constructive trust. 

28.  The relevant principles are not in dispute.  They have been summarised in Snell’s Equity, 33^rd Edition (2015) as follows:

(a) Burden of proof

“Where an express trust has not been declared, then the starting point is that equity follows the law, and the beneficial ownership of the property is held in the same way as the registered legal estate in the property. If the property is registered in the name of one party only, then they will be presumed to be the sole beneficial owner...

The effect of the presumption is to allocate the burden of proof. The party who alleges that this presumption does not reflect parties’ true intentions about the beneficial shares in the property bears the burden of proof. The usual civil standard of proof on the balance of probabilities applies. Where the legal estate is held in the name of one party only, then the other party bears the burden of proving whether he has any beneficial share at all and what the extent of it may be.” (at para 24-049)

(b) Resulting trust

“‘[W]here A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of joint purchase by A and B in shares proportionate to their contributions.’

In both kinds of transactions, the fact giving rise to the presumption of a resulting trust are that A transfers property to B for which B provides no consideration. The trust arises by operation of law to give effect to [the] presumption that A did not intend B to take the property beneficially.” (at para 25-003)

(c) Constructive trust

“A constructive trust may arise when land is purchased as a joint home but where the registered legal title does not reflect the beneficial shares which the proprietors intended for themselves. The common case is of cohabiting partners who buy a house to live in as their home. The legal estate may be registered in the name of only one of them, and the name of the other does not appear on the registered title. Alternatively, both may be registered as joint proprietors but they do not intend to hold for each other as joint beneficial proprietors. In each case, a constructive trust may arise which binds the legal estate and gives effect to the parties’ common intentions as to their beneficial shares in the property. Those intentions are usually inferred from the entire course of dealings between the parties, and go beyond financial contributions to the [purchase] or maintenance of the property. In sole proprietorship cases, the trust arises because it would be inequitable for the registered proprietor to hold the legal estate as sole beneficial owner given the contributions made by his partner in reliance on their shared understanding.” (at para 24-041)

D2.  The pertinent issues

29.  The trial focused on the defendants’ lands, ie Lot Nos 1468, 2105 and 2106SBRP.  Counsel have identified 22 issues relating to them at the beginning of the trial based on the pleadings. 

30.  D2 and D3 are the registered owners of the defendants’ lands.  Prior to that, the lands were registered under D1’s name. 

31.  Baroness Hale recently reiterated in Stark v Dowden [2007] 2 AC 432 (at para 56) that:

“... the starting point where there is sole legal ownership is sole beneficial ownership ... The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases it is upon the non-owner to show that he has any interest at all...”

It is therefore important for the plaintiffs to show that HST has some beneficial interest in the defendants’ lands.  It would be futile for the plaintiffs to attack the credibility of the defendants or dispute the genuineness of the 2007 Assignment if they are unable to establish HST’s interest.

32.  The plaintiffs attempt to establish HST’s interest by the following scheme:

(a) Their ancestors had solicited the original owners to sell or donate their lands to HST (paras 14-15 of the Amended Statement of Claim).  HST had either paid for the acquisitions or subsequently paid the Crown rent for the lands (paras 15 and 24).  The managers of HST had arranged Leung (or Cheung with respect to Lot No 2106SB) to hold the lands on trust for HSTfor easy management and to avoid possible conflicts amongst the four yeuk (paras 16, 24, 27 and 30). 

(b) Lot Nos 1468 and 2105 were passed down the line from Leung to D1 and Tai jointly, and then to D1.  The common intention of those involved at each stage was that HST would retain its beneficial interest in the lands (paras 20-23). 

(c) Regarding Lot No 2106SBRP, D1 represented to HST’s managers (when Cheung was found missing) that she would make arrangement for the land to be registered under her name on trust for HST for convenience and easy management (paras 31-33).  Unbeknown to HST and in breach of trust, D1 obtained a declaration from the High Court that she (in her personal capacity) had acquired a good possessory title to the land by means of adverse possession (para 34). 

(d) According to the plaintiffs’ witness Tang Chun Chi, the lands should revert back to HST upon D1’s death as D1 had no disciples of her own.[7]

33.  With the above in mind, I have reorganised the 22 issues identified by counsel into the following pertinent issues (in chronological order):

(a) Did Leung acquire Lot No 2105 on trust for HST in 1909?

(b) Did Leung acquire Lot No 1468 on trust for HST in April 1929?

(c) Did Cheung acquire Lot No 2106SB on trust for HST in July 1929?

(d) Did D1 and Tai jointly acquire Lot Nos 1468 and 2105 on trust for HST in 1961?

(e) Did D1 acquire Lot Nos 1468 and 2105 on trust for HST in 1970?

(f) Was D1 acting in breach of trust in obtaining the court order in 1997 vesting Lot No 2106SBRP in her personal capacity?

(g) Was D1 acting in breach of trust when she sold Lot Nos 1468, 2105 and 2106SBRP to D2 and D3 in 2007?

34.  Before I turn to these issues, I should make some general comments about the plaintiffs’ case.

D3.  Comment on the plaintiffs’ case

35.  In general, I find the plaintiffs’ case not substantiated by credible evidence, artificial and against the weight of evidence.

D3a.  Plaintiffs’ case is not substantiated by credible evidence

36.  In her closing submissions, Ms Lau repeated the plaintiffs’ aspirations that it made no sense for their ancestors to sell off the lands surrounding the temple and thereby creating difficulty to the villagers in accessing the temple.[8] It is one thing to argue the existence of a fact by logical reasoning and quite another to prove it by evidence.  In terms of evidence, the plaintiffs’ witnesses merely repeated their pleaded case without descending upon particulars.  According to them, their “understanding” was passed down from older generations (eg their parents) and they do not have personal knowledge about much of what had happened.  Whilst this is understandable given the long history of this case and their relatively junior age, this has put the plaintiffs in a disadvantaged position.

37.  For example, there is a sweeping reference in Tony Tang’s evidence that: “All the monies used to pay for the purchase of the 4 Lots and the payment of Crown rent for Lot 2105 were monies belonged to the Plaintiff.  Leung, or the 1^st Defendant, or other nuns mentioned in this proceedings have no monies.”[9]  This has prompted Ms Lau to argue in her closing submissions that:

(a) “... it is quite inconceivable for a female (who should be illiterate because she only put a cross as her signature on the document (C/38)) to be so sophisticated and wordly to make investment in this manner”[10]; and

(b) “Nuns are religious characters who worship the Buddha.  They gave people the impression that they are more trustworthy and less likely to save up properties for their own benefit or inheritance.”[11]

38.  The plaintiffs have only produced the more recent accounting records of HST covering the period from July 1991 to December 2010.[12]They carry entries regarding payment of property tax (物業稅) but bear no record of payment of any Government rent (地租).  As such, these records do not confirm: (i) that the consideration of $2 paid for the acquisition of Lot No 2107 in 1908 came from HST; (ii) that the consideration of $15 paid for the acquisition of Lot No 1468 in 1929 came from HST; or (iii) that HST has ever paid the Crown rent of the defendants’ lands. 

39.  Tang Chun Chi also alleges that D1 did receive compensation on behalf of HST when the Government resumed part of Lot No 2106SB in the 1990s.[13] From Memorial No 351398, one can appreciate that the resumption took place in about 1995/1996.  However, no corresponding entry can be found in the accounting records that is in evidence. 

40.  There was an entry dated 27 January 1997 in the accounting records for the receipt of $35,040 with particulars “坪輋路收地款項”.[14] The plaintiffs’ witnesses did not claim that that was related to that resumption.  In any event, one can appreciate from the documents filed under Memorial No 351398 that the Government was offering to pay compensation at $156.50 per square foot on that occasion.[15]  Given that the area of Lot No 2106SB resumed measured about 2,450 square feet,[16] the compensation received from the Government should be much more than that.

41.  The arguments advanced by Ms Lau to question the capability of Leung (financial or otherwise) in acquiring properties of her own are hardly convincing. She is obviously mistaken in submitting that Leung had signed Memorial No 69624 with a cross.  That cross was the signature of the vendor.  Leung in fact signed in the Chinese characters “梁智”.  Ms Lau’s bold supposition that females, illiterates or nuns are not sophisticated or worldly enough to own properties of their own is wholly without basis.  Whilst Leung might have been poverty-stricken when she first came to the four yeuk, she was given the means to accumulate wealth out of the generosity of the villagers.  It is the plaintiffs’ case that the operation of the temple had flourished under her care and she was allowed to keep the “worship monies”.[17]  Given the lax attitude adopted by HST managers regarding the financial aspect of the temple over the years (as testified by Tony Tang), it is plainly impossible for the plaintiffs to know if Leung (or D1) had any money. 

42.  The other documents in evidence do not support the plaintiffs’ case either.  For example:

(a) The written constitution that is in evidence belongs to On Leung Yeuk and was dated 1956.  The fact that one of the objects (宗旨) of On Leung Yeuk mentioned therein is to “preserve temple properties” (保存洪聖宮產業) does not, with respect to Ms Lau, make it “less likely [for the villagers] to sell or give away the Lots to a nun...” in 1909 (in respect of Lot No 2105) and in 1929 (in respect of Lot No 1468 and Lot No 2106SB).[18]

(b) Contrary to the suggestion of Tony Tang, it is not apparent from the letter issued by the Planning Department that HST had authorised D1 to apply for the change of the user of Lot No 2106SBRP in 1999.[19]

(c) Contrary to the suggestion of Tony Tang, it is not apparent from the minutes of the four yeuk in evidence that HST had done any works (eg “平整地台加以圍欄” or “在場地棟柱加帆擋風雨”) on the defendants’ lands.[20]

(d) There were references to (i) property/properties in D1’s name (ie “鄭維芳名下物業出租日後計算”) and (ii) property/lot let out by D1 (ie “跟進鄭維芳出租物業...” and “芳姑出租之地段...”) in the aforesaid minutes.  The plaintiffs’ witnesses did not say what these references mean.

One can appreciate from the memorials in evidence that D1 was the sole manager holding Lot No 2256 on trust for HST between 1986 and 2008.[21] As such, those references might not refer to Lot Nos 1468, 2105 or 2106SBRP and do not support the plaintiffs’ case that D1 was holding those lands on trust for HST.

(e) The fact that D1 had received monthly allowances from HST between 1991 and 2009 (as per the entries in HST’s accounting records) does not make it more likely that the scheme argued by the plaintiffs exists.[22]

It should be remembered that D1 was tasked with managing the temple.  According to Tony Tang, the temple had failed to generate sufficient income to cover its expenditure since about mid-1991 and HST had to pay an allowance to D1 to help sustain the operation.[23]

43.  So, the plaintiffs’ case is rested on bare allegations only.

D3b. Plaintiffs’ case is artificial

44.  The plaintiffs’ scheme was premised on their allegation that by arranging their lands to be registered under someone else’s name, that would make it easier to manage and avoid conflict among the four yeuk.[24] None of the plaintiffs’ witnesses cared to explain how that was so.

45.  The plaintiffs’ allegation must be viewed against the background of their case as alleged by them and against the backdrop of section 15 of the New Territories Ordinance, Cap 97 (“NTO”). 

46.  What prompted all these, according to Tony Tang, was the mismanagement of the temple by Tang Yui Shan in the very beginning.[25] To resolve the problem, the four yeuk agreed to each nominate a representative to jointly manage the temple.  If the four yeuk were able to come to a consensus amicably, what was the conflict that they had wished to avoid?  Furthermore, if the four yeuk all knew about the scheme, how would the arrangement avoid conflict amongst them? 

47.  Land held by a tso or t’ong is generally inalienable, indivisible and perpetual for the benefit of existing and future members of the tso or t’ong.  Without the benefit of section 15, it was necessary for all the members of a tso or t’ong to execute the assignment to dispose of land held by a tso or t’ong.[26]

48.  Section 15 was enacted to facilitate transactions.  It materially provides that:

“Whenever any land is held from the Government under lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the Home Affairs Department, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong, which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong...”

Upon registration, managers act as trustees for sale and have “full power to dispose of or in any way deal with the land”.[27]

49.  If HST had wanted to find an easier way to manage their lands, it could have taken advantage of section 15 and registered Leung (or Cheung) as their manager in respect of those lands.  There is in fact evidence that the plaintiffs’ ancestors had done just that.  In 1928, the owner of Lot No 2106SB, Lot No 2256 and Section B of Lot No 2272 sold the lands to “Hung Shing Kung, (T) Leung Chi”.[28] It is the plaintiffs’ case that “Hung Shing Kung” was a reference to HST and “Leung Chi” referred to Leung.[29]  So, the plaintiffs’ ancestors or HST’s former managers knew how to make use of section 15.  Why did they abandon a simple and tested mechanism and opted for a convoluted and uncertain means to manage their lands?

50.  The plaintiffs’ scheme therefore sounds hollow and artificial.

D3c.  Plaintiffs’ case is against the weight of evidence

51.  Not only is the plaintiffs’ case unsubstantiated and artificial, it is actually contradicted by the documentary evidence.

52.  According to paragraph 16 of the Amended Statement of Claim, it was “the former Managers” of HST who “caused permitted and authorised Leung, a natural person, to hold these 4 Lots as legal owners on trust for the Temple.” The plaintiffs identified these former managers as Choi Cho Yau (蔡祖有), Tang Chong Tai (鄧創泰), Tang Tim Shui (鄧添瑞) and Ip Kat Ming (葉吉銘).[30]

53.  However, it is not apparent from the evidence that Choi Cho Yau had ever been appointed manager and the other three persons only became managers in 1958 according to Memorial No 138331.  In the premises, it was quite impossible for them to make arrangement as HST’s managers for Leung to acquire Lot No 2107 in 1908[31], Lot No 2105 in 1909[32], Lot No 2106SB in 1928[33] and Lot No 1468 in 1929[34].

54.  Moreover, HST has adopted two modes of land-holding according to Tony Tang:

(a) some lands are held by HST directly; and

(b) some lands are registered under someone else’s name on trust for HST.

55.  In relation to the first mode of land-holding, the managers of HST (including Tony Tang) made a statement to the District Officer (North) to confirm that, as at 10 May 1994, HST merely owned HLM Lot and the Remaining Portion of Lot 1475.[35]

56.  In relation to the second mode, there is a certificate signed by the District Officer of New Territories certifying that as at 28 January 1957, HST with Leung as manager was registered as the owner of Lot No 2256 and Section B of Lot No 2272 only.[36] There was no mentioning of the defendants’ lands. 

57.  In my view, the plaintiffs’ case is against the weight of the contemporaneous documents.

D4.  Did Leung acquire Lot No 2105 on trust for HST in 1909?

58.  According to Memorial No 9083, the lot was transferred from “Hung Shing Miu, trustee Tang Cheuk Chi” to “Leung A Chi” on 25 March 1909 “in consideration of paying Crown rent”.[37]

59.  The plaintiffs have sought to explain the transaction in this way:[38]

(a) The plaintiffs’ ancestors had solicited the original owner to donate the land to HST; and

(b) The plaintiffs’ ancestors had caused, permitted and/or authorised the land to be registered under Leung’s name on trust for HST for easy management.

60.  The plaintiffs have omitted to plead any contribution by HST towards the acquisition or payment of any Crown rent.  As we have seen above, there is really no credible evidence to show that HST had made any contribution or payment.  There is no basis to invoke the presumption of resulting trust.

61.  The Court of Final Appeal has pointed out in Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 that:

“37.  ... As Millett LJ pointed out in Paragon Finance Plc v DB Thakerar & Co:

‘A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of the property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another.’

38.  Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the claimant regarding their shared beneficial interests in the property that matters.  The trust is constituted by the claimant’s detrimental reliance on their common intention and the unconscionability of the property owner departing therefrom.”

62.  The paucity of evidence on the circumstances of the transaction (eg any discussion amongst those involved) has also meant that there is no basis to infer any common intention and nothing to show that it would be unconscionable for Leung to assert her own beneficial interest and deny the beneficial interest of HST.

63.  Not only have the plaintiffs failed to substantiate their case, their rendering of this issue also suffers an internal inconsistency making it unbelievable.

64.  It is the plaintiffs’ case that the temple was initially managed by On Leung Yeuk.  It was out of dissatisfaction in the way the temple was run that prompted the four yeuk to form HST to replace On Leung Yeuk and to arrange Leung to hold the lands on behalf of HST. 

65.  According to Memorial No 27762,[39] On Leung Yeuk transferred the ownership of HLM Lot to “Hung Shing Miu” in September 1914.  The transfer was said to be made “by order of Court” but the identity of the manager(s) of “Hung Shing Miu” was not stated in the document. 

66.  The next memorial respecting HLM Lot in evidence is Memorial No 138331.[40] It was concerned with the appointment of a new batch of managers to replace those deceased.  Two important points may be noted from this memorial:

(a) The t’ong that owned the land was stated as “Hung Shing Temple” (ie HST).  This is at variance with the earlier memorial which recorded the transferee as “Hung Shing Miu”.

The Chinese character for temple is “廟”, which can be transliterated as “Miu”.  No distinction was made in the Land Registry record and both “Hung Shing Temple” and “Hung Shing Miu” were recorded as the owner.[41] In my view, the difference in nomenclature is inconsequential.

(b) Memorial No 138331 was concerned not just with HLM Lot but with Lot No 1475 too.  According to the Schedule of Crown Lessees, Lot No 1475 was initially owned by “鄧洪聖約” with Tang Yui Shan as manager back in 1907.[42] There was then a memorial (Memorial No 27759) made “by order of Court” to record that as at 31 August 1914 “[t]he real owner is Hung Shing Miu, trustee Tang Yui Shan, Yip Shing Kiu, Tang Chung Fuk and Lo Shau”.[43]  These were the same four managers that were replaced as recorded in Memorial No 138331.[44] 

Thus, when HLM Lot was transferred from On Leung Yeuk to HST, HST should have four managers.  This is consistent with the plaintiffs’ case that the four yeuk had each nominated a manager to form HST to jointly manage the temple. 

67.  The long and short of all this is that the circumstances that prompted the establishment of HST (ie dissatisfaction with the management of the temple by On Leung Yeuk) existed in around 1914.  It was rather unlikely for the plaintiffs’ ancestors to have HST in contemplation when they (according to the plaintiffs’ case) negotiated with the owner of Lot No 2105 and arranged for Leung to acquire the land some 5 years ago in 1909.

68.  I therefore reject the plaintiffs’ case on this issue.

D5.  Did Leung acquire Lot No 1468 on trust for HST in April 1929?

69.  Lot No 1468 originally belonged to “鄧永盛堂, 鄧大章司理”.[45] On 12 April 1929, it was sold to Leung for $15.  The sale was evidenced by Memorial No 72785.[46]

70.  The plaintiffs allege that “Leung, on behalf of the Temple, used the income generated from the Temple and bought Lot No 1468 from Tang Tai Cheung, the trustee of Tang Wing Shing Tong.”[47]

71.  There is, however, no credible evidence to ground any resulting trust and no evidence on the circumstances of the transaction to infer a constructive trust.

72.  In fact, I would go further and find that the plaintiffs’ contention is against the weight of the available evidence. 

(a) About a year before this transaction (ie March 1928), the plaintiffs’ ancestors arranged some lands (namely, Lot No 2106SB, Lot No 2256 and Section B of Lot No 2272) to be sold to Leung on trust for HST.[48] The plaintiffs have not explained why (and I find it unlikely that) they adopted a different mechanism for Lot No 1468 if they had intended the same thing.

(b) Under section 15 of the NTO, every instrument relating to land held by a t’ong which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said t’ong.  It is the practice of the Secretary to only consent to such a transaction if it is made for an acceptable purpose and the transaction has been approved by all the members of the clan, family or t’ong.[49] The Secretary would post up notices at the property to ascertain if there is any objection. 

The notice dated 16 March 1929 in relation to this sale is in evidence.[50] The notice was endorsed with: “No objection rec’d”.

When the notice was first made out, the purchaser was stated to be “洪聖宮梁智司理”.  Then the name of the t’ong (ie 洪聖宮) and Leung’s capacity as manager (ie 司理) were crossed out leaving just Leung’s name. 

The plaintiffs’ witnesses were unable to explain the deletion satisfactorily.  Ms Lau argues in her closing submissions that there could be some inaccuracy in the records or that Leung might have forgotten to inform the District Land Office correctly of her capacity in taking the land.[51] In my view, this is rather unlikely.  The deletion would have alerted the villagers to the fact that Leung was acquiring the land in her personal capacity and not as a manager of HST.  No one raised any objection at the time. 

73.  All in all, the plaintiffs have failed to prove that HST had any beneficial interest in Lot No 1468 when the land was transferred to Leung in 1929.

D6.  Did Cheung acquire Lot No 2106SB on trust for HST in July 1929?

74.  As we have seen (from Memorial No 69624), HST bought Lot Nos 2016SB, 2256 and Section B of Lot No 2272 in 1928 and arranged the lands to be registered under Leung’s name. 

75.  It is the plaintiffs’ contention that regarding Lot No 2106SB: “With the Manager’s permission, consent and authority, Leung caused the Lot to be registered under the name of her disciple, Cheung on 6^th of June 1929, on trust for the Temple.”[52]

76.  In her closing submissions, Ms Lau merely repeated the contention without reference to any evidence or argument in support.  The memorial in evidence only recorded that fact that Leung (in her capacity as HST’s manager) transferred Lot No 2016SB to Cheung in July 1929.[53] There is in fact no evidential basis to invoke the presumption of resulting or constructive trust.

77.  More importantly, the plaintiffs’ contention is inconsistent with the available evidence. 

78.  First, it must be remembered that Lot No 2106SB had already been registered under a HST manager (ie Leung).  No mileage was gained by arranging it to be registered under another manager (ie Cheung).  This is all the more so when Leung continued to hold the other two lots (ie Lot No 2256 and Section B of Lot No 2272) as HST’s manager.  The plaintiffs’ witnesses were unable to enlighten the court on this.

79.  Secondly, the transaction (as we have seen) required the approval of the Secretary for Home Affairs.  It is clear from the terms of the related notice that the land would be transferred out of the t’ong.[54] No one raised any objection and the notice was endorsed with “No objection rec’d”.  It is unlikely that the Secretary would make such misrepresentation to the villagers if Cheung had meant to hold the land on trust for HST after the transfer. 

D7.  Did D1 and Tai jointly acquire Lot Nos 1468 and 2105 on trust for HST in 1961?

80.  The plaintiffs allege in paragraph 20 of the Amended Statement of Claim that:

“In or about 1960s, after Leung passed away, with the consent, authority, and permission of the Managers:–

(a) Tai and the 1^st Defendant succeeded from Leung and continued to be the caretaker managing the Temple;”

81.  The plaintiffs’ case remains unsubstantiated and there is no basis to infer any constructive trust.

82.  Furthermore, it should be remembered that three lots of land were put under Leung’s name as manager of HST in 1928.  One of them (ie Lot No 2106SB) was sold to Cheung in 1929 but the remaining 2 lots (ie Lot No 2256 and Section B of Lot No 2272) remained registered under Leung’s name on trust for HST.

83.  Then on 22 June 1961, two sets of memorials were executed on the same day following Leung’s death:

(a) It was recorded in Memorial No 144447 that D1 and Tai had succeeded Leung to become the owners of Lot Nos 2107, 2105 and 1468.[55] There was no mentioning of any trust arrangement.

(b) However, Memorial No 144448 in relation to Lot No 2256 and Section B of Lot No 2272 recorded that D1 and Tai “are hereby appointed as new manager for Hung Shing Kung in place of the Deceased.”[56] As a result, the District Office, New Territories amended the certificate previously issued to Leung as manager of HST to reflect that HST with D1 and Tai as managers had been registered as the owner.[57]

84.  There was clearly a distinction in the way the plaintiffs’ ancestors, HST’s managers and the Government handled the above transactions.  If those involved had intended to appoint D1 and Tai as managers to hold Lot No 1468 and Lot No 2105 on trust for HST, they could have adopted the wording of Memorial No 144448.  I therefore reject the plaintiffs’ case.

D8.  Did D1 acquire Lot Nos 1468 and 2105 on trust for HST in 1970?

85.  The plaintiffs have similarly pleaded that:

“21. In or about early 1970s, Tai left the temple.

22. With the consent, authority and permission of the Managers:–

(a)  the 1^st Defendant became the caretaker solely managing the Temple until now;”

86.  There is no evidence of any consent, authority or permission given in relation to this transaction.

87.  What is in evidence is Memorial No 166160, which recorded the conveyance of Tai’s half-undivided-share of and in Lot Nos 1468, 2105 and 2107 to D1 as a gift in 1970.[58] This memorial was witnessed by Tang Tim Shui (鄧添瑞), one of the then managers of HST.  There is no mentioning of Tai or D1 holding these lands on trust for HST. 

88.  On the other hand, Tai executed a memorial in 1988 to tender her resignation as one of the two managers of HST in relation to Lot No 2256 and Section B of Lot No 2272.[59] As a result of Tai’s resignation, the District Office amended the certificate again to record the fact that HST with D1 as manager had become the owner of those lands.[60]

89.  Looking at these transactions side-by-side, it is clear that D1 had only acted as manager of HST in respect of Lot No 2256 and Section B of Lot No 2272.  There is no evidence that she had held Lot Nos 1468 and 2105 on trust for HST.  I therefore reject the plaintiffs’ case.

D9.  Was D1 acting in breach of trust in obtaining the court order in 1997 vesting Lot No 2106SBRP in her personal capacity?

90.  D1 commenced HCA 2643/1997 in the Court of First Instance against Cheung.  That action culminated in the order dated 4 July 1997 declaring, inter alia, that Cheung’s title had extinguished and that D1 had acquired a good possessory title to the land.

91.  Given my findings in Section D6 above, there is no basis for the plaintiffs to allege that D1 had been in possession of the land on a trust capacity.

92.  It is Tony Tang’s evidence that:

“29. In the 90s, the Government resumed a portion of Section B of Lot 2106 to build public roads. It seems more convenient to cause the Remaining Portion of Section B of Lot 2106 to be registered under the name of the 1^st Defendant on trust for the Temple. After discussion with us, with our permission, consent and authority, the 1^st Defendant said she had friends or remote relatives who could help her to get the said Lot be transferred to her. As we place a lot of trust on the 1^st Defendant and she has helped us managing the Temple and the 4 Lots for such a long time, we always allowed her free hand to do whatever necessary for and/or beneficial to the Temple...

30. The 1^st Defendant told us she has obtained title of the Remaining Portion of Section B of Lot 2106. Because of the said proceedings, our solicitors searched the record of the said piece of land and found out that the 1^st Defendant has applied to the Court for adverse possession and has been granted holding title for the Remaining Portion of Section B of Lot 2106 thereafter...

31. This is the first time we saw the Order.  From the Order, we noticed that the 1^st Defendant has told the Court that she has since 1^st January 1965 been adversely possessed the remaining Portion of Section B of Lot 2106, which is utterly and shockingly untrue...”

93.  It is incredible that the plaintiffs only learnt about D1’s claim of adverse possession in HCA 2643/1997 in the course of the present proceedings.  Under Order 10, rule 4(2) of the Rules of the High Court, Cap 4A, (“RHC”), D1 had to post up a copy of the writ in HCA 2643/1997 in a conspicuous place or at the entrance to the land by way of service.  The writ had to be indorsed with a statement of claim or, if the statement of claim was not indorsed on the writ, with a concise statement of the nature of the claim made or the relief or remedy required.[61]  According to the court order, Cheung was absent when the order was made on 4 July 1997.[62]  The court would have ensured that the writ had been properly served before granting the order.  It is more likely than not that D1 had complied with the posting up requirement, thus giving notice to everyone in the vicinity of her claim of adverse possession in relation to Lot No 2106SBRP.  I therefore reject Tony Tang’s evidence.

D10.  Was D1 acting in breach of trust when she sold Lot Nos 1468, 2105 and 2106SBRP to D2 and D3 in 2007?

94.  As the plaintiffs have failed to establish that HST has any beneficial interest, it cannot be said that D1 was acting in breach of trust when she sold the lands to D2 and D3.

95.  Ms Lau has attempted to cast doubt on the sale by arguing that the sale was at an undervalue.  She pointed to the fact that the Collector of Stamp Revenue had registered a charge against the lands for payment of $44,900 plus additional stamp.[63]

96.  There could be many reasons why the defendants had not (according to D2 at trial) sought professional valuation before the sale.  In any event, the mere fact that the transaction was undervalued does not mean that the plaintiffs had any beneficial interest in the lands.

E.  Conclusion and disposition

97.  For the above reasons, I do not accept the plaintiffs’ case that HST has any beneficial interest in the defendants’ lands.  Their claim herein is dismissed.

98.  Turning to the counterclaim, Mr Ng has not explained why it is necessary for D2 and D3 to obtain the declarative relief claimed.  It is trite law that the power to make a binding declaration of right is a discretionary power.[64] The Court of Appeal has said before that: “... the Court will certainly not make a declaration unless it is satisfied that the making of that declaration will serve some useful purpose.”[65]  D2 and D3’s beneficial interests in their lands derive from the 2007 Assignment.  The plaintiffs have failed to establish any beneficial interest and they (ie D2 and D3) remain the registered owners of their lands.  It is unnecessary for me to make any findings on the validity of the 2007 Assignment for the purposes of this case.

99.  Given that the sale might have been at an undervalue and that there was no one representing D1’s estate at trial, it would be inappropriate for me to make any binding declaration respecting D2 and D3’s beneficial interest in the lands.  I would therefore only order the lis pendens to be discharged and the registration vacated.

100.  As to costs, I make an order nisi that the plaintiffs are to pay the defendants’ costs of both the action and the counterclaim including the costs of HCA 87/2011 to be taxed if not agreed with certificate for counsel.

Appendix A

Relevant memorials respecting the defendants’ lands