LEUNG CHUNG CHING EDWIN AND ANOTHER v. The Estate of LEUNG ON MEI AMY, deceased

HCMP 2033/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2033 OF 2012

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J U D G M E N T

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Introduction

1.  On 1 August 2010, Amy Leung On Mei (Amy) died tragically without leaving a will.  She was survived by her husband, Henry Sit Chai Yuen (Henry) and their young daughter, Angel and her parents, Edwin Leung Chung Ching (Mr Leung) and Hanny Wong Fung San (Mrs Leung), the 1^st and 2^nd plaintiffs respectively in this action.  The plaintiffs have brought an action against the estate of Amy for a declaration that a commercial property, located on the 17^th floor of Thyrse House, No 16 Pottinger Street, Hong Kong, registered in the name of Amy was in fact beneficially owned jointly by the plaintiffs; and a consequential order for the transfer of the property back to them.

2.  To understand the background to this action, it is necessary to delve into the emotional trauma that those close to Amy have suffered over the tragic and sad circumstances of her death.  She was suffering with severe depression and it led her to take her own life.  It is quite apparent that her parents loved her deeply, but relations with her husband became strained during the time Amy was suffering with ill health.  It is suggested by Henry that Mr and Mrs Leung hold him responsible for her death.  He claims that they are blaming him out of grief for the tragic loss of their daughter.  He says he also loved Amy and cared for her very much during her times of struggle.  This is the basis of the action and the position of the parties.  Against this background, I am asked to decide whether the commercial property was held by Amy as the trustee for the plaintiffs and therefore legal title of it should be transferred to them, or whether it was a gift to Amy from the plaintiffs which should form part of her estate.

Background facts

3.  Amy was 39 years of age when she died.  She got engaged to Henry in 1997 and they were married in November 1998.  Their daughter, Angel, was born 15 December 2003.  As Amy died intestate, Henry and Angel are the only persons entitled to the estate of Amy under the Intestates’ Estate Ordinance, Cap 73.  An application by Henry for the grant of letters of administration of Amy’s estate was opposed by the plaintiffs.  There being no personal representative appointed for the administration of Amy’s estate at the commencement of the action, it was agreed by consent that Henry be appointed as the representative for the limited purpose of conducting and defending the claim by the plaintiffs.

4.  Mr Leung is an architect by profession who was a partner of an architectural firm and a property investor.  Mrs Leung had previously worked as a nurse.  They had two daughters.  The eldest was Amy and the youngest was Violet. From all before me, it is quite apparent that they were a close and loving family.  The plaintiffs adored their children and gave them everything they possibly could by way of emotional and financial support.  They ensured that they had a good upbringing and a good education.  There is no question that they were totally devoted to their children and were wonderful parents.  Amy became a dentist and Violet a doctor.  Mr Leung had been very successful in his business and with his investments.  Over the years he had acquired a number of properties both in Australia and in Hong Kong.  On occasions, Mr and Mrs Leung purchased properties in the name of their daughters.  It is one of those properties purchased in the name of Amy that is the centre of this dispute.

Legal principles

5.  Before I describe and assess the evidence, I need to briefly mention certain fundamental legal principles applicable to this case. 

6.  When considering a claim against the estate of a deceased person which had not been put forward while they were still living, it is a matter of common sense that it should be scrutinised with considerable care in light of the fact that the deceased person cannot give evidence against the claim.  I have borne this in mind in my assessment of the evidence.

7.  Where a property is purchased in the name of one person but with funds of another person, the court must ascertain the true intention of the parties as to whether it is the former or the latter who should have the beneficial interest in the property.  For example, where one person transfers the legal title of a property that he owns or purchases to another, without receipt of any consideration, the effect will depend on his intention.  If he intends to transfer the beneficial interest in the property to the other, the transaction will take effect as a gift and he will lose all interest in the property.  If he intends to retain the beneficial interest for himself, the other will take the legal interest but will hold the property in trust for him. 

8.  The operation of the two presumptions was succinctly explained in Lavelle v Lavelle (2004) EWCA 2 FCR 418 which I summarise as follows.  As a matter of general principle where there is admissible evidence of the actual express intention of the parties, the court will have no difficulty acting on the intention as shown.  But where the intention is not expressed, the court must ascertain the intention of the parties objectively and in so doing by resorting to presumptions.  They are the presumption of resulting trust (a trust) and the presumption of advancement (a gift).  But these presumptions, however, are rebuttable and it is only after consideration of all the facts and circumstances that a court will be ultimately able to determine where the beneficial interest lies.  Normally there will be evidence of the intention with which a transfer is made but if there is not, the law applies presumptions. Where there is no close relationship between the transferor and the transferee, there will be a presumption that the transferor does not intend to part with the beneficial interest in the property and the transferee will take the legal title under a resultant trust for the transferor.  Where, however, there is a closes relationship between the transferor and the transferee, such as a father and child, a presumption of advancement will apply.  The implication will be that the transferor intended to give the beneficial interest in the property to the transferee and the transaction will take effect accordingly.

9.  Lewin on Trusts, 18^th Edition, Sweet & Maxwell at 9-03 provides the following statement of principles in relation to the two presumptions.

“Where there is a gratuitous transfer containing no express or inferred provisions determining beneficial ownership, then the starting point is that there is a rebuttable presumption of resulting trust that is that the transferor did not intend to make a gift.

…The presumption may be rebutted in two ways.  First, it may be rebutted by extraneous evidence that the transferor did intend to make a gift.  Secondly, it may be rebutted by a counter rebuttable presumption of advancement that is that the transferor did intend to make a gift.  There is a presumption of advancement if the transferor is the husband or father of the transferee, or in a similar relationship.  The presumption of advancement may itself be rebutted by extraneous evidence that the transferor did not intend a gift.  In a case where the presumption of advancement does not apply the transferee is (sometimes misleadingly) described as a stranger.” 

10.  Rather curiously the presumption does not apply between a mother and her child.  I see no reason why this distinction between a mother and a father should be maintained. 

11.  Also taken from Lewin on Trusts at 9-04 is the following statement of principles concerning the evidence required to establish the transferor’s intention. 

“If the evidence establishes that the transferor did not intend to make a gift, then effect will be given to that intention, so that there is a resulting trust in favour of the transferor. If this is so the evidence of the transferor’s actual intention precisely accords with what is presumed by the presumption of resulting trust, if applicable, and operates to rebut any presumption of advancement which applies by virtue of the relationship between the transferor and the transferee. On the other hand, if the evidence establishes that the transferor did intend to make a gift, the transfer takes effect as a gift. If this is so the evidence of the transferor’s actual intention precisely accords with what is presumed by the presumption of advancement should that presumption apply and at any event operates to rebut the presumption of resulting trust, if applicable. Thus in cases where the transferor’s actual intention is established there is no need to rely on the presumptions to show either that the transferor retains beneficial ownership or that the transfer takes effect as a gift: the resulting trust or the gift, as the case may be, is established by the evidence.”

12.  Finally from Lewin on Trusts at 9-05 on the issue of the presumption of resulting trust, the following needs to borne in mind.

“In a case where the relationship between the transferor and transferee is not such as to raise a presumption of advancement, the presumption of resulting trust, if applicable, will operate so that the transferor retains beneficial ownership if there is no evidence of the actual intention of the transferor, or no evidence which can be adduced because it would be tainted by an improper purpose. In such a case the presumption of resulting trust is crucial because, apart from the presumption, there would be no basis on which the transferor could claim to retain beneficial ownership against the person in whom the property is vested.”

The position of the parties

13.  The parties in this action are lined up as follows.  Mr and Mrs Leung together with their daughter, Violet, on one side.  According to their individual accounts of the various arrangements and events, they contend that Amy held the 17^th floor property on trust for Mr and Mrs Leung.  Henry, on the other side, contends that the property was a gift from Mr and Mrs Leung to Amy and the property should form part of Amy’s intestate estate. 

Plaintiff’s statement

14.  Mr and Mrs Leung claim that Amy was holding the property as trustee on a resulting and/or constructive trust for their benefit.

15.  They explain that between 1987 and 1990,  within two years of migration to Australia, they acquired three adjoining properties on Edinburgh Road, Castlecrag, Sydney, Australia.  Of the three adjoining Australian properties, one was the family home and the other two were investment properties in the name of Amy and Violet which they held on trust for Mr and Mrs Leung. 

16.  Mr and Mrs Leung explain that similar to the arrangement in Australia, Amy and Violet held the Hong Kong properties in their name as trustee on a resulting and/or constructive trust for their benefit.  They did this because by purchasing the properties in Australia under their daughters’ names, they derived a benefit under the tax regime there.  Amy and Violet were, at that time, students with no source of income and could not have reasonably acquired such properties themselves.  Mr and Mrs Leung located, financed and repaid the mortgage loans using the rents generated from the properties, and managed them without the need to consult their daughters. 

17.  Throughout this time, their daughters were fully aware that they were trustees holding the properties for their parents and that they complied with every instruction they gave them regarding the leasing, mortgaging, repaying, selling or any other matter relating to the properties.  This was shown on countless occasions.  First, in 1993, when in accordance of their instructions, Amy as the legal owner and trustee of one of the Castlecrag properties executed a mortgage over the property in favour of HSBC, Australia.  Similarly, in 2000, Violet as the legal owner and trustee of one of the other Castlecrag properties complied with their instructions and executed a mortgage over the property in favour of HSBC, Australia.  In May 2003 and February 2004, Amy and Violet, again on instructions from their parents, executed documents for the sale of the respective properties and arranged for the entire proceeds to be transmitted to the joint account of their parents.  Mr and Mrs Leung had leased the properties to third parties without the need to consult their daughters.  In dealing with or disposing of the properties, Amy and Violet knew full well that they did not have ownership or control of the properties and accepted the instructions given to them by their parents.  The net sale of proceeds of these properties were kept and used by Mr and Mrs Leung for their own purposes. 

18.  Upon moving back to Hong Kong, the plaintiffs saw a benefit in setting up and using Jonnex International Limited (Jonnex), a company in which the Mr and Mrs Leung were each 50% shareholders, to acquire and hold properties.  The plaintiffs arranged Jonnex to acquire investment properties, in particular, a property in Lai Chi Kok (the LCK property) in May of 1996, the 17^th floor and the 12^th floor properties in Thyrse House (the 17^th floor property and the 12^th floor property) in June of 1996 and a property in Leighton Road (the Leighton property) in 2002. 

19.  When Jonnex purchased the two properties in Thyrse House, Amy had just started her career as a dentist and was employed, whereas Violet was still at school.  Mr and Mr Leung claim that they did not purchase the Thyrse House properties in contemplation that their daughters would use these as future clinics.  Instead, Jonnex had leased the 12^th floor property to Mr Leung’s architectural company, some 7 or 8 months after acquisition. 

20.  Mr and Mrs Leung state that the transfer of the 17^th floor property to Amy was done because holding properties under their company Jonnex was no longer cost effective.  It is claimed that this is consistent with the fact that the 12^th floor property was transferred to Violet on the same day and that the remaining two properties were sold in subsequent years.  Upon completion, Jonnex became dormant from January until March 2006 when the plaintiffs reactivated it for other purposes. 

21.  To support their claim that it was their intention to be the beneficial owners of the 17^th floor property and similarly of the 12^th floor property, Mr and Mrs Leung point out that they paid the consideration and all the expenses incurred for both properties, that is, the consideration of HK $1,880,000 for the 17^th floor property and HK $1,800,000, for the 12^th floor property, together with all the conveyancing costs. 

22.  Later Mr and Mrs Leung assisted Amy in establishing a dental clinic at the 17^th floor property.  It was always intended that she be a tenant of the property and pay rent.  Even though Amy ceased to pay rent and became responsible for the miscellaneous expenses of the property, such as management fees, rates and utilities, Mr and Mrs Leung continued to pay for the maintenance and upkeep of the property, in particular they paid for the repairs of the building’s water pipes when the building went under renovation in 2010.  Mr and Mrs Leung argue that payment of rent was relieved when Amy became the registered owner of the property and could not have any rent expense entries in the books of her dental practice.  In addition, it would also alleviate her financial pressures.  According to Mr and Mrs Leung, Amy, acknowledging that she was only holding the property on trust, similar to the arrangement in Australia, had to seek their consent before she could deal with the property in any manner.  Furthermore, even when Amy was in need of money when she purchased her second matrimonial home and in the few months before her death, she did not raise funds by using the property as security. 

23.  Mr and Mrs Leung also point out that they retained the title deeds of the property.  Henry alleged that this was because Mr Leung had a fireproof safe at home specifically for the purpose of keeping title deeds. In response, Mr and Mrs Leung point out that Amy had her own fireproof safe at home in which she kept her own title deeds for her matrimonial home.  She also had a safe deposit box with the bank.  The direct effect of Mr and Mrs Leung keeping the title deeds to the property was that Amy would not be able to exercise any right as an owner to dispose of or deal with the property without first consulting Mr and Mrs Leung. 

24.  Mr and Mrs Leung claim that they never consulted or required lawyers to arrange a declaration of trust because they were a close family and that a similar arrangement was made between them in Australia.  Both Amy and Violet, at all times, were fully aware of the arrangement and knew that the properties belonged to Mr and Mrs Leung.

25.  According to Mr and Mrs Leung, Amy was under severe financial and emotional strain since her marriage with Henry.  The mortgage of their first matrimonial home, which was solely in Henry’s name, was paid off using his home finance allowance (mortgage) from the government.  Henry who was also a dentist was employed by the government but he had been on sick leave for a long period of time due to an injury to his neck.  He was eventually pensioned off on medical grounds.  It was argued that when faced with down payment difficulties, Amy borrowed approximately $200,000 from Mr Leung, which she subsequently paid back.  She had been responsible for all household expenses, except for the mortgage repayments.  In financing and reducing the size of the mortgage loan for the second matrimonial home, Amy and Henry agreed to sell certain investments and used the proceeds of their first matrimonial home.  They claim that Henry refused to do the same and make contributions to the payment of the second matrimonial home.  Nor did he contribute to the payment of the utility bills, wages of the domestic helper or other household expenses after Angel’s birth.  They further claim that he continued his expensive hobbies in hi-fi systems, sports cars and motorcycles.  In fact, Henry ceased working around 2008 and only started to help at Amy’s clinic when Amy’s depression started to manifest itself in 2010: Mr and Mrs Leung claim that it was their position that they would support Amy financially until her full recovery, which was evident by Mr Leung depositing $50,000 into Amy’s account.  When Henry found out about this, he demanded Amy to return the money because he was unhappy with Mr and Mrs Leung.  After that incident, Mrs Leung opened an integrated bank account with $36,000, from which Amy had, on four occasions, drawn money. Mr and Mrs Leung provided financial support whenever there was a need. 

26.  They claim that in the course of the marriage, Amy was unhappy with Henry’s lack of financial contribution to the household, his dislike for children and his strained relationship with Mr and Mrs Leung.  For nearly one year, they helped look after Amy and Angel in their home immediately after Amy was discharged from hospital.  In respect of Amy’s mental health problems, Mr and Mrs Leung disclosed that she did have a depression problem dating back to her high school years and admit that her depression symptoms in early 2010 included sleep disturbance, inability to concentrate at work and loss of confidence in treating patients.  However they dispute that she had compulsive shopping disorder and compulsive behaviour as claimed by Henry.  Nor do they agree that she had hallucinations or complained of harassment and/or made things up.  In respect of treatment, Mrs Leung, who was a nurse by profession, persuaded Amy to seek psychiatric assistance and Violet, who is a practising doctor, suggested Amy to consult a psychiatrist in a public hospital.  Mr and Mrs Leung assert that after Henry had suggested that Amy seek help from a private psychiatrist and after the first visit, he refused to accompany her.  When Amy’s health rendered her unable to work in 2010, Henry started to take up treating some of her patients.  Mr and Mrs Leung argued that at no time did Henry discuss with them regarding the hospitalization of Amy nor did they ever have an argument with him about him staying at home to look after Amy. 

Defendant’s statement

27.  Henry claimed that the 17^th floor property was a gift from the plaintiffs in celebration of the birth of Angel. 

28.  Henry alleged that the two Australian properties purchased in the respective names of Amy and Violet were gifts by the plaintiffs to them as their matrimonial homes when they got married.  In the course of cross- examination, Henry stated that he knew of this because of the rumours he heard from Amy’s previous boyfriend and her friends in Australia.  He also alleged that Mr Leung had advised Amy to dispose of the property because of the burgeoning housing market in Sydney. 

29.  Henry further alleged that the plaintiffs had similarly gifted the 12^th floor property to Violet and that Mr Leung had to pay a monthly rental of $20,000 as used it for his office, after Violet decided not to commence private practice. 

30.  Henry argued that after the transfer, Amy had ceased paying rent and became responsible for payment of the miscellaneous expenses of the property such as management fees, rates and utilities.  In relation to the plaintiffs’ retention of the title deeds, he argued that Amy had deposited the title deeds with the plaintiffs because they had a fire-proof safe at home.

31.  It was acknowledged that the relationship between Amy and her family was exceptionally close.  They met frequently for dinner, lunch and special occasions.  She was very close to her mother and they would see each other regularly.  She respected her father and consulted him on important matters; in particular, she sought his opinion when acquiring her first matrimonial home and employed his architectural firm for renovation work.  Similarly, Mr Leung was very fond of Amy and he would constantly help her financially and give her gifts.  The membership fees and the annual subscriptions of Chinese Recreation Club and Hong Kong Jockey Club were paid by him for her.  In support of her decision to turn to private practice in January 1998, Mr Leung spent $1,000,000 refurbishing the property for Amy as a gift.  To further minimise her financial burden, the plaintiffs had caused Jonnex to charge Amy a reduced monthly rental of $13,000, which was further reduced to $10,000 during the period of 1999 to 2004, when the prevailing market rate of $17,000.  This rent was completely discharged after the transfer. 

32.  The relationship between Henry and the Leung family had deteriorated over some time.  Upon Amy’s deteriorating health condition in June of 2010, Mr and Mrs Leung demanded that Henry cease work and take care of Amy who had become totally dysfunctional and had stopped working.  When Henry refused and continued to run the clinic, his relationship with the Leung family broke down and they pressed Amy to divorce him. 

33.  On 1 August 2010, Amy committed suicide. It is claimed that at the funeral, Mr Leung had a heated argument with Henry and told him that he would take revenge on him.  Henry alleged that since the transfer in March 2004, Mr and Mrs Leung accepted Amy as the sole legal and beneficial owner of the property, and have only raised the alleged trust arrangement with Amy in their favour for the first time subsequent to her death. 

Plaintiff’s case

(a) Mr Edwin Leung

34.  Mr Leung testified at length and was subject to extensive cross-examination.  He explained that in 1985, the family migrated to Australia. He and his wife purchased a family home there and over time they purchased the two adjoining properties.  The first was purchased in the name of Amy and the second was purchased in the name of Violet.  At the time of the purchases, both Amy and Violet were students with no income.  Later the properties were sold by Mr and Mrs Leung and the proceeds were used by them to invest in the purchase of other properties in Hong Kong.

35.  Mr Leung helped out Amy establish her clinic at Thyrse House.  He assisted in drawing up plans for the layout of the clinic and paid for the refurbishment and equipment.  He said he spent some $900,000.  He testified that he did this to help Amy and it was his gift to her.  He said he would have done so, wherever Amy had decided to commence practice as a dentist.  The property was under the control of Mr and Mrs Leung through Jonnex end and they levied a rent of $13,000 per month on the property although the market rent was about $17,000 per month.

36.  At the time, Amy was going out with Henry.  Mr Leung was asked about Amy’s wish to have children and how he felt about her giving birth to a child.  He responded that Amy wanted children and that an addition to the family was a welcome wish by all of them.  The purpose of the questioning was to show that the birth of Angel in December 2012 was a celebrated occasion and that as a result Mr and Mrs Leung transferred the property to Amy as a gift.  He denied that he had gifted the property to Amy.

37.  After March 2004, Amy stopped paying rent to Jonnex.  Mr Leung explained that he and his wife wanted to wind up Jonnex and wanted to transfer the property to Amy, for her to hold it on trust for them like they did with the property in Australia.  He said he explained this arrangement to Amy in simple terms.  It was put to him that his evidence was inconsistent with his witness statement.  He was challenged about what he had stated in his statement but he pointed out that in the relevant passages he was explaining the arrangement with Amy for the payment of the rent.

38.  He acknowledged that when he made his statement, he was aware that Henry claimed that the property was transferred to Amy as a gift.  Under cross-examination he disagreed that it was a gift made in celebration of the birth of Angel and explained that the transfer took place because he and his wife did not wish to keep Jonnex but wanted to keep the property.  They transferred the two properties to their two daughters.

39.  It was put to Mr Leung that after the transfer of the property to Amy, she paid miscellaneous expenses.  He was taken to telephone bills but as he explained, this was a normal expense borne by the tenant and was borne by Amy before as well as after the transfer.  He said it was usual for a tenant to pay the rates and management fees which included the services for telephone, water and electricity.

40.  He said that management fees were paid by Amy when the property was held by Jonnex.  He was taken to Amy’s income statement for 31 March 2002 and 2003. It was put to him that there was no reference to management fees but he noted listed as operating expenses included “rent and rates” and “utilities expenses”. In the income statement for 2005, the item “building management fee” was included.

41.  He said that the arrangement after the transfer was that Amy should pay rent to him and it was to be $10,000 each time.  She gave it to her mother. 

42.  He explained that he and his wife continued to be responsible for any structural renovation to the property but as it was new, the need did not arise except for the replacement of water pipes in 2010.  He paid for the works.  It was put to him that Amy was very ill and unable to work at the time.  The suggestion being that he made the payment for that reason.  He explained that he paid for the repairs of both the 12^th and 17^th floor properties. 

43.  He explained that he had a fireproof cabinet at his home in which he stored valuable items, including title deeds of properties he and his wife owned.  He kept the title deeds of both the 12^th and 17^th floor properties in his cabinet.  He held the deeds because the properties were his and his wife.  He further explained that Jonnex had held four properties but he sold two at Lai Chi Kok and Leighton.  However, he and his wife wanted to keep the two commercial properties at Thyrse House and put them in the names of their daughters to maintain control of the properties.

44.  He closed down Jonnex to save costs and the trouble it caused in filing tax returns for the two properties it was going to hold.  It was pointed out to him that he continued to use the company soon after he claimed that it would not be cost efficient to maintain Jonnex for a small property portfolio of two properties.  He said it would be more cost efficient to use the company for a larger property portfolio.  Jonnex was dormant from January to March 2004, and after that he decided to invest in property in Sai Ying Pun and he had acquired over time about 10 properties under the name of Jonnex.

45.  It was put to him he could have easily transferred the 17^th floor property to his name.  He said he did not think to do so.  He felt it would be easier for it to be put in Amy’s name which would provide a more flexible arrangement with his daughter as to the rent.  He said if it remain in the name of Jonnex a stricter arrangement of rent was necessary.

46.  It was noted that he testified that two of the properties held by Jonnex were disposed of for commercial reasons.  It was put to him it was not for the reason of closing down Jonnex.  He explained that that was part and parcel of closing down Jonnex.

47.  In 2010, relations within the family were cordial and normal and it was at that stage that Amy commenced to show signs of her mental illness.  Amy’s condition deteriorated from March 2010 onwards.  She consulted a psychiatrist. His wife was a nurse, his other daughter a doctor and her husband a professor of medicine and he turn to them as to how to help Amy. 

48.  In mid April 2010, an incident took place that caused friction within the family.  It involved Amy telling his wife that Henry did not contribute financially and that as she was not maintaining her practice, she needed financial assistance.  They transferred $50,000 into her account.  His wife had gone to see Amy but there were bad words spoken to her by Henry and he ordered her to leave.  She was really upset.  He felt Henry was wrong in that he did not make any financial contribution to the household and did not help his daughter. He was upset with Henry because he yelled at his wife and told her to leave as it was not her home.  After this incident, he and his wife had little contact with Henry.  I should note that Henry gave an entirely different account of the incident.  As I note later, Henry gave conflicting accounts as to what happened and I do not accept his evidence on this matter.

49.  He explained that Henry did not attend the birthday party for his wife because of the friction between them.  It was on that occasion that Amy committed suicide. 

50.  On Amy’s death, there were arrangements with Henry over Amy’s body and arranging her funeral.  He believed Amy’s illness was due to her marital breakdown and financial difficulties.  He believed Henry did not treat her well or support her financially.  He explained that he did not have any direct friction with Henry; it was his daughter he felt had suffered.  He said Henry had treated her badly and because of her illness she was extremely vulnerable.

51.  He said that Henry refused to allow Angel to meet the family.  He said that Henry and his mother had cut off Angel from them. 

52.  He explained that the transfer of 17^th floor property to Amy was effected by him and his wife transferring $1,880,000 to Amy to purchase the property from Jonnex according to market value of the property.  It was necessary to do so in order to comply with legal requirements.  It was put to him that as he had gone to the trouble to do everything properly and formally why had he not arranged a declaration of trust.  He said they were a close family and he did not see it was necessary.  In any event they had done the same thing before in Australia without the need to get something done in “black and white”.

53.  It was put to him that when the writ of summons was taken out on 20 September 2012, it was the first time that a claim had been made that Amy held the property on trust for him and his wife.  But he has said he had made it clear to Amy that the arrangement was similar to that with the Australian properties.

54.  He explained that he held the matrimonial home in joint names with his wife while other investment properties were held through Jonnex.  He denied that because of the friction and hostility between his family and Henry that he made the claim that the property was held by Amy on trust for them so Henry would not get it.

(b) Mrs Hanny Leung

55.  Mrs Leung in her witness statement adopted what had been stated by her husband in his two witness statements. 

56.  She explained that the two Australian properties purchased in the names of Amy and Violet were extensively renovated for investment and rental.  She supervised the renovations of the properties.  She was also involved in the purchase of the properties.  The opportunity to purchase the two properties arose because the owners on either side were elderly and given the close proximity of the properties it was considered that it would be easier to supervise any renovation work that was required. 

57.  She confirmed that she and her husband purchased the two properties in Australia in the name of their daughters on trust for them and did the same with the transfer of the commercial properties to her two daughters.  It was put to her that the two Australian properties were transferred to her daughters for them to have as their own.  She disagreed.

58.  At the time of the purchase of the 17^th floor property in June 1996, Amy was working as a dentist in Australia.  Amy was not aware of the purchase.  Amy came back to Hong Kong and worked as a dentist from August 1996. She worked at a dental practice where she worked unreasonable hours.  She left and took up employment with another dentist in February 1997.  She had a similar experience with that dental practice and left in September 1997.

59.  There was difficulty renting the commercial properties because it was a newly constructed building and a lot of units were for lease.  The 17^th floor property was leased by Jonnex to Amy.  A reduced rental was levied to assist her and to lessen the financial burden on her.  She explained that rent had to be paid because the property was owned by Jonnex.  After she became the owner, she did not have to pay rent.  There were one or two cash payments of rent.

60.  She was taken to her husband's statement where he said he thought that it was no longer cost efficient to maintain Jonnex and so he decided to gradually transfer out or sell the other properties held by Jonnex and then close down the company.  She explained that they discussed everything as husband and wife. They had discussed closing down Jonnex.  She also discussed the sale of the LCK and the Leighton properties and it was agreed they should do it for commercial reasons.

61.  Henry and Amy were engaged in 1997 and just prior to their marriage in November 1998, they purchased their first matrimonial home.  They did some minor renovations.  After the birth of Angel in December 2003, she recalled that they did further renovations.  The unit had two bedrooms and they could have used the second bedroom for a newborn baby.  Amy explained to her that Henry objected to having a child.  She sought help from the pastor of the church to help persuade him otherwise.  Amy very much wanted to have a child and Angel was the first grandchild.  The family was very happy over the birth of Angel. 

62.  She was taken to photographs of Amy when she was pregnant and at the birth of the Angel.  They were typical family shots, depicting the birth of Angel.  She explained that usually a person in front of a camera smiles but what was in a person’s heart was another matter.

63.  After the birth of Angel, Amy stayed with them for about one month but Angel and the maid stayed on far about a year until the end of 2004.  At that time, she and her husband went on a long trip and Amy took Angel back to her home.  Amy had one month off work to covalence at their home, afterwards she then returned to work.  Thereafter, she looked after the baby with Amy coming there after work to see her.

64.  She claimed that Henry was rough with the baby.  But she was taken to photographs that showed that relationship between them was cordial.  The photographs were taken on the occasion of celebrating Angel’s first birthday, where they were all appeared together and happy.

65.  It was put to her that her husband told Amy that she could continue to practice at the 17^th floor property and anger that she could treat it as her own.  She said it was not said.  She said that it was said that she would continue to practice there but not that the property was hers.

66.  After it was put into Amy’s name, she was supposed to pay them rent as the property was still theirs.  When the property was in Jonnex’s name Amy paid rent, but after it was put in her name she paid rent by cash.  She was told by Amy that Henry did not provide financial support and she was under financial pressure.  They waived the rent.  She mentioned Amy offered $20,000 cash but she did not accept it because of her financial situation.

67.  The transfer of the property to Amy took place on 3 March 2004 when it was decided to sell the other two properties and close down the company.  It was a process that took some time.

68.  They told Amy and Violet about the transfer of the properties beforehand and the arrangement was just like they did with the Properties in Australia.  At the time the rent to Jonnex was $10,000 per month and it was explained to Amy that she had to continue to pay rent.  However she told her to put off paying rent until she was in a better financial position.  She explained that usually the user of a commercial property has to pay the management fees.  It was put to her that prior to the transfer to Amy; she did not pay the management fees. She was taken to the operating expenses of Amy’s practice for the year end 31 March 2001, 2002 and 2003 and she agreed that they did not list the payment of management fees as operating expenses.  As for the year ended 31 March 2005, 2010 and 2011, she acknowledged that it listed that she paid management fees.  However, it should be noted that the balance sheet of Amy as at 31March 2005 included as fixed assets, land and building at a cost of $1,880,000 which was the transfer of the property from Jonnex to Amy.

69.  She acknowledged that Amy was in financial difficulties in March 2004 but the reason to transfer the property to her was to close down Jonnex but as the property was in her name the obligation to pay rent was not as strict as before but this was not the reason for the transfer according to her.  Both properties were transferred and both daughters paid rent but in Amy’s case because of her financial difficulties, rent was waived.  According to her, the obligation to pay rent was not the reason for the transfer to Amy.

70.  When the transfer was made she and her husband sought legal advice on the matter.  When asked why they did not obtain advice to draw up a trust document, she said that they were a close family and there was no need.  She was asked why the property was not transferred to her or her husband or both.  She said that usually when they purchased an investment property, they would hold it in a company.  She said with only two small properties, it would be troublesome to maintain the properties under a corporate vehicle.  It was not put in her or her husband’s name or both names, as they did the same thing in Australia, it was their practice.  It was done also for tax reasons.  Also they were old and they trusted their daughters to keep the property for them just in case.

71.  The title deeds of the two properties were kept in the fireproof cabinet. It was not because they were holding them for Amy.  They did not have the title deeds of matrimonial properties of their daughters.  Amy and Henry had a cabinet to hold valuable items if they wanted to.  It was put to her that if the family was close and she trusted her two daughters, why did they hold the title deeds? She said that it was their property and they wished to keep control.

72.  It was put to her that she and her husband were loving and supporting parents and that they gifted the two properties to their daughters.  She said that they made sure their daughters got a good education but did not spoil them. They treated their two daughters equally.

73.  She insisted that the two properties were transferred to the two daughters because they wanted to close down the company.  They were old and they were young, and if they passed away it would go to them, but during their lifetime their daughters held the properties on trust.

74.  It seems to me that Mr and Mrs Leung had very much intended to keep control of the properties even though they put them in their daughters’ names. It was theirs during their lifetime and in the event they passed away the property would go to them but in the meantime they held the properties on trust.

75.  She also confirmed her husband’s evidence that they told their daughters of that transfer of the properties to them and that they would hold them on trust. 

76.  After the transfer of the 12^th floor property, her husband continued to occupy the premises with his partner with whom he was in an equal partnership.  The payment of rent continued because he was in partnership with another.  The rent was paid to Violet but it was paid back to her.  She was taken to her husband's statement where he stated that his architectural firm always paid rent of $17,000 per month to Jonnex and later to Violet.  Sometimes the rent paid to Violet was paid back to them or sometimes it was kept by her as pocket money.  She was also taken to another passage of her husband's statement where he said that apart from Amy needing the money to pay for the upkeep of her family, she could not have paid rent to them as she was the owner of the property.  But she explained the rental was not insisted upon because of Amy’s situation.

77.  She said that the Castlecrag properties were never purchased for the two daughters to have as family homes.  They were purchased for investment.  One was purchased in October 1989 and the other in October 1990.  They were an investment and to secure certain tax benefits.  There were income tax implications in Australia and as the daughters had no income the rental income from the properties would be distributed to them by having the properties in their names.  They put the two properties in the names of their two daughters to minimize their tax liability in Australia.

78.  Her relationship with Henry was nothing special in the first three years but soon after they got married her daughter complained about Henry and then she told her that she was having problems with him.  For the sake of her daughter, she maintained a polite manner.  She said that Amy started to display signs of stress and depression before 2010 but it got more serious.  She bottled up her emotions and was unhappy at home and at work.  She was very unhappy and developed manic depression.  It was put to her that the family photographs show the converse to be true.  She disagreed and said Amy was very tolerant and did not reveal what was really going on.

79.  She recounted the incident in April 2010 when $50,000 was paid into Amy’s account.  She made the payment because she was worried about her and she was unable to work.  She went to see her at her home and told her that she paid money into her account.  She told her not to worry about money and to take good care of her health.  When Henry saw her, he told her to leave.  She was upset.  Her husband told her to calm down and put up with it for the sake of their daughter. Since that occasion, she had not seen Henry.  She broke off links with Henry.

80.  There was never any dispute over medical treatment for Amy.  The dental clinic was a strain on Amy and her parents suggested to her not to work and to take time off and recuperate.  Even when she was unable to work, she still continued to work. 

81.  She said there was no dispute over the funeral arrangements.  She did not blame Henry for Amy’s death as she took her own life.  She blamed her depression which was due to her unhappy family life and financial pressure.

82.  It was put to her that the first time they mention anything about a trust was in the court papers in September 2004.  The property transfer was a gift to Amy and they had no intention to retain an interest in the property.  The title deeds of the property were kept at their home because it was simply safe to do so – it was not to retain any beneficial interest in the property.  Treating their daughters equally they transferred the other property to Violet.  The properties in Australia in the names of Amy and Violet were gifted to them for good but the return to Hong Kong changed that.  It was also put to her that she took the view that Henry caused Amy’s depression and was responsible for her death and that was why they were claiming the property was on trust.  She denied all of this.

83.  In relation to the transfer of the properties at Thyrse House to Amy and Violet, she said she discussed it with her husband and it was their intention to wind up Jonnex and transfer the properties to their daughters to hold on trust for them.  It was not a gift to them.

84.  She explained that the main purpose for the transfer was the closing down of Jonnex and over time it was apparent that Amy’s business was not doing well and that she was experiencing financial difficulties.  She further explained that the properties were long term investments and upon their death they would be passed on to them.  They were elderly and the arrangement would avoid any estate duty later on.

(c) Violet

85.  At the end of 1999 or early 2000, Violet completed her medical internship and was contemplating whether or not to go back to Hong Kong.  She eventually got a job in Hong Kong in April 2000 and decided to try it out.  She was unsure about Hong Kong initially but by early 2001 she decided to make Hong Kong home. She got married in Hong Kong in 2003.  She and her husband rented their first home and eventually purchased a home.  Her parents did not make any financial contribution toward the purchase.

86.  She said she was generally aware about matters relating to the 17^th floor property but not necessarily the specifics.  In her statement, she stated that her parents told her and her sister that they would transfer the properties to them to hold on trust for them.  She understood it to mean that they trusted her to hold the properties for them, that is, the property was owned by them but the properties would be in their names for them.  She could not remember the exact wording but that was her understanding.

87.  Her father paid rent to her after the transfer of the 12^th floor property to her.  This was due because the architect firm was using the property but even though he was the owner he had a partner.  It was also required for tax purposes.  Rent was paid by transfer to her account.  After deducting amounts for tax, she would give the monies to her father; by the payment back was mentioned by her father in his statement.  She paid him by cash in hand or withdrawing the cash from her bank account.  She was challenged as to why she did not state this in her statement.  She explained she had adopted her father said on this in his statement.  She would pay back about $14,000 but not every month – sometimes because she was very busy or it was to cover expenses or gifts between them.  She has no records of the payments. 

88.  The withdrawals from her bank account would be recorded but relevant bank records had not been disclosed.  She had a joint account and there were many withdrawals.  She did not keep records.  Her father in his statement said that Violet sometimes paid back the rent after deduction of property tax and other times allow her to keep the rent as pocket money.

89.  She could not recall everything that was said but the key part was set out in paragraph 13 of her statement.

90.  She did not pay particular attention to the arrangement between her parents and Amy as to the payment of rent for the 17^th floor property. She was not aware that Amy had not paid rent or that she paid the management fees for the 17^th floor property.  She did not have her father’s knowledge about property.

91.  She went to Amy’s home.  She was not aware of any renovation work.  She did not go up to her sister’s house often but would drive her home or meet up with her regularly.  She married in March 2003 and had her first child in 2004.

92.  When the property was transferred, she asked her parents why they were doing it.  They said they wanted to close down the company and as they were told it was better for them to be in their names as they wished to retain them as long term investments.

93.  When the Castlecrag property was purchased in Amy’s name, it was discussed between them.  She recalls that it was certainly discussed on more than one occasion.  At that time, she and Amy were secondary school students.  Her mother did not say that if she ever got married she could use the property as her home.  It was an investment.  The tax system in Australia suited putting the Australian properties in their names.

94.  She was pressed as to whether in discussions with her father he used the word “trust”.  She said he made this reference most of the time.  He did refer often to the tax arrangement as well.

95.  They discussed the purchase of the Castlecrag property in Violet’s name. It was understood that the property was that of her parents.

96.  The relationship between Henry and her parents deteriorated progressively after his marriage to Amy.  Their expectation of Henry became lower and lower.  He shunned the family and family gatherings.  After January 2010, Amy became ill and in May 2010 she consulted a psychiatrist.  There was never any disagreement with Henry over Amy’s treatment.  Her parents were not knowledgeable about such matters.  Violet and her husband were doctors and matters of this nature were within their field of expertise and there was no argument with Henry about Amy’s treatment.

97.  She recalls an incident between Henry and her mother when her parents transferred $50,000 to Amy’s account.  She was asked if Amy mentioned that Henry was embarrassed and humiliated over the payment.  She said Amy was trapped between the two.  She was in a difficult position. 

98.  After the incident, the relationship between them was poor and they did not speak to each other.  Her parents were concerned about their daughter’s state of health. 

99.  Amy saw a psychiatrist on 6 June 2010 and asked Violet to accompany her. She denied her sister did not want her to go with her.

100.  Henry worked as a dentist with the government but as a result of sustaining a neck injury he was on sick leave for some time.

101.  The 12^th and 17^th floor properties were not a gift to Amy and herself.  Nor were the Castlecrag properties a gift to them.  There was never any arrangement or understanding that the Castlecrag properties would be for them to have as their matrimonial homes.

102.  There were no hostilities or any incidents between her and Henry.  After Amy had passed away she tried her best to maintain a neutral position as she did not want to lose contact with Angel.  He told her of the funeral arrangements. 

103.  She said that Henry asked her where the title deeds of the 17^th floor property were.  She told him that that was her parents’ property and he should speak to them.  He mentioned this again.  This occurred in August and September 2010.  He later got angry with her and told her that he got on well with Amy and that her parents caused Amy to commit suicide.  She tried to make contact with Angel but he prevented her from meeting her and the family.

104.  Prior to September 2011, Henry had not taken any action in relation to the estate of Amy.  She was unable to say what he did or had not done but as far as she was aware nothing formally.  She was shown legal correspondence that had been exchanged between her parents and Henry.  The parents sought to act as the executors of Amy’s interstate estate on the basis that there had been inaction by Henry and that he was unable to fulfill the requirements for a grant of administration.  This was rejected by Henry.  It was put to Violet that this was when Henry asked about the title deeds but she strongly denied this and said it was at the time of Amy’s death.

105.  She denied that Henry confronted her at the funeral and blamed her and her family for the death of Amy.  It was put to her that Henry said that she knew Amy had psychiatric problems and suicidal tendencies and she should have looked after her on the day she committed suicide.  It was also put to her that this confrontation arose because Violet and her husband sat behind and not alongside at Henry at the funeral.  She denied this.  It was noted in Henry’s statement that he said that it was Mr Leung and he who had a heated argument.

Defendant’s case

(a) Henry Sit

106.  Henry’s case is that Mr and Mrs Leung loved their daughters and supported them financially.  He highlighted this by noting that they paid for club memberships and the establishment costs of the dental clinic for Amy.  Consistent with the financial support that Mr and Mrs Leung gave to their daughters, Henry claimed that they gifted to Amy the property in Australia as a future matrimonial home and later the 17^th floor property from which she could operate a dental clinic. 

107.  I will address the various matters that were raised with Henry in his testimony that sought to challenge his evidence and the claim that Mr and Mrs Leung had transferred the 17^th floor property to Amy as a gift.

108.  He testified that he and Amy purchased their first home just prior to their marriage.  They purchased their second home in 2007 and paid off the mortgage by 2009.  He confirmed that they kept the title deeds at home.  They had a safe at home to keep valuables but he said it was small. 

109.  He explained that they did some minor renovations to their first home when they purchased it and further renovations after the birth of Angel in mid July 2004.  He confirmed that it was agreed for Mr and Mrs Leung to look after Angel at their home because they had hired a new domestic helper.  He said it was not because he did not care for Angel.

110.  He explained that he commenced working as a government dentist in 1995 and started to have physical ailments in 2005 which caused severe limitations to his right arm in 2007.  He was diagnosed as having two prolapsed discs.  He went on sick leave and was pensioned out of the service in 2008 on medical grounds.  He stayed home to recover and later helped out at Amy’s clinic doing administrative duties and much later doing occasional work as a dentist.

111.  He said he and Amy had paid off their first home but it had been financed by a government down payment loan and a bank loan.  The government loan was paid off but the bank loan was discharged when the property was sold for about $4 million.  A second home was purchased in March 2007 for over $8 million which with renovations and charges cost about $10 million.  The mortgage was paid off in December 2009.

112.  He said that his wife had a luxurious life in that she had everything she wanted.  He was challenged about this remark and later said that she had a good life.  By these comments, he was trying to depict Amy as not having any financial stress as claimed by Mr and Mrs Leung.  He said that from 2000, he earned about $100,000 per month and he bore most of the expenses.  He claimed that their expenses were not that much and they were not experiencing financial difficulties.  He said that even when their daughter was born the expenses were low. 

113.  They sold their first home in September 2007 for $4,750,000.  The second home was purchased in April 2007 for $8,680,000.  They borrowed about $7,500,000 and they later used the proceeds of the sale of the first home to reduce this loan.

114.  When he left government, he was not working up to mid 2008.  He was on sick leave and earning a monthly income of $100,000.  He was pensioned out and from mid 2008 he received a pension of $35,000 per month and made an extra $50,000 per month from trading in audio equipment which was a hobby that he had.

115.  In early 2010, Amy had reduced her work load and by May 2010 she was not working at all.  From the income statement of Amy’s dental surgery her operating expenses were about $700,000.  He was taken to this and eventually he agreed that from January 2010 she was worried about her finances but he claimed she worried about everything.  He opposed closing the clinic and for the month of May 2010 when Amy was not working, he went into the clinic and worked.

116.  In making the point that Amy was under financial stress, it was put to him that she was obtaining funds from an integrated account from her mother.  He said that he was not aware that Amy was obtaining these funds. 

117.  He was pressed about his account of the incident in April 2010 about the $50,000.  His evidence differed with that of Mr and Mrs Leung, in that he said both of them were there when they said it was only Mrs Leung who was present.  He said they squeezed $50,000 cash into Amy’s pocket brutally.  When further pressed about this, he said he was told this later by Amy.  I do not believe his account of this incident.  It was recounted in extreme language and an attempt by him to depict Mr and Mrs Leung in an unfavorable light.  Even Henry acknowledged that Mr and Mrs Leung were loving parents and to suggest as he does that they “brutally” forced money into Amy’s pocket at this critical time of her illness is simply not believable. 

118.  At one stage he said that Amy was delusional about her financial difficulties.  He claimed that Amy suffered with hallucinations and disagreed that he had not told the Leung family about it. 

119.  His finances and expenses were canvassed with him.  He explained he has an interest in hi-fi equipment which he has had for 35 years.  He has a sound system at home which costs about $1 million brand new.  From 2010 onwards, he owned BMW vehicles (a motor vehicle and a motor cycle).  He claimed he had fairly minimal expenses to maintain the vehicles. 

120.  It was put to him that if the Australian property was a gift to Amy as he claimed, why he had not included it as part of the property of her estate? He claimed that he did not want to bother about it. 

121.  He claimed he heard from all the friends of Amy and Violet that they owned the two adjoining properties at Castlecrag which were for them to live in when they got married.  He said that Mr Leung had kept the sale proceeds for Amy for investment purpose.  He claimed he did not include it in the list of property of Amy’s estate and he deliberately did not do so because he did not want to upset the Leungs.  When pressed on this, he said he was not 100% sure.  Eventually, he conceded that he had no evidence to counter Mr and Mrs Leung’s claim that the properties belong to them.

122.  He said Amy’s friends told him, and Amy also told him about 1 or 2 years ago, that the Australian property in Amy’s name belongs to her.  I do not believe his evidence on this matter as the property in question was sold and the proceeds of which went to Mr and Mrs Leung who dealt with it as they wished.

123.  He acknowledged that the Leungs did not make any contribution or offer to do so for the renovations or purchase of the matrimonial homes. 

124.  In his statement he said that he was told by Mr Leung that the properties in Thryse House were for his daughters to set up private practice.  He was challenged about this.  He said that when he started dating Amy at the end of 1996, he often went to their home and he was told by Mr Leung that he bought the property for Amy to work as a dentist in Hong Kong in the hope that she would leave her Vietnamese boyfriend.  He claimed that Mr Leung mentioned the properties were for Amy and Violet to set up private practice on numerous occasions.  I also do not accept his evidence on this matter.

125.  It was put to him that if the 17^th floor property was to belong to Amy, why was it not put in Amy’s name at the outset?  He acknowledged that Mr Leung did not tell him that the property was a gift or belonged to Amy. Violet never used the 12^th floor to practice as a doctor.

126.  It was put to him that if Amy had accepted to commence practice in January 1998 he was not aware of any reason why Mr Leung gave a gift of the renovation of the dental clinic but not of the property.  He then answered that it was being done step by step after 1997.  He said he was told this by Mr Leung in March 2004 prior to the transfer.  He said this about a hundred times at various gatherings with family and friends.  It was put to him that it was not as he stated that the property was given to celebrate the birth of Angel.  He said it was given for that reason too.

127.  He said that Mr Leung suggested to Amy that the title deeds of the 17^th floor property be kept in a fireproof cabinet for safekeeping at the time he said he was gifting the property to Amy.  I find that this was inconsistent with his evidence that Mr Leung did not mention that he had gifted the 17^th floor property to Amy.  In any event, it was noted that he kept the title deeds for the second matrimonial home in December 2008 in his safe at home.  He did not inquire why Amy had not put the title deeds of the 17^th floor property in their safe.

128.  He repeated that Mr Leung gifted the property to Amy in celebration of the birth of Angel.  This was inconsistent with what he said about Mr Leung saying “a hundred times” that he transferred the property to Amy as part of a step by step plan.

129.  Violet gave evidence that Henry had contacted her in August or September 2010 seeking the title deeds of the 17^th floor property.  He denied that he made the request at that time and explained that he left the affairs of Amy’s estate with his lawyers and that it was a year later when he received a letter about the grant of letters of administration for Amy’s estate that he contacted Violet.  He said he noticed that he did not have the title deeds and that was why he contacted Violet.  I do not accept his evidence on this matter.  I prefer Violet’s evidence as she was certain as to the time when he contacted her.  I assessed that Henry was trying to show that he did not have an interest in the property by claiming that he contacted Violet a year later.

130.  There was the incident at the funeral of Amy where Henry had words with members of the Leung family.  On one occasion he said he argued with Violet. He said that it was the second day of the funeral and he was in an angry and distressed state because the Leung family was not sitting with him but behind him.  He felt they were partly responsible for Amy’s death.  They were aware that she had suicidal tendencies and had to keep an eye on her.  She went to her parents’ home to celebrate her mother’s birthday and it was there that she took her life.  I felt that he was raising this matter to depict Violet in a bad light but I find no credence in what he said. 

131.  He said about the incident at Amy’s funeral he was quite emotional that day and he was angry with Violet because she and her husband did not sit in the front.  He said that it was the second day of the funeral.  On the first day of the funeral he said that Mr Leung came and was yelling because he was dissatisfied with the funeral arrangements.  He said it occurred in the afternoon before the first night of the funeral.  He was taken to his statement where he said that it was on the first night of the funeral and Mr Leung shouted at guests.  He corrected the statement by testifying that it was in the afternoon before the evening service and the people who he yelled at were helpers who he said were also guests.

132.  He was taken to his statement where he accused Mr Leung of organizing a birthday party for Angel without him.  It was put to him that the party had been arranged by a friend of Amy’s who submitted a letter contradicting what was said by Henry.  The friend explained in her letter that she was told never to contact Angel again.  Henry denied this but he confirmed that after this incident the friend has not made contact with Angel.

133.  He was taken to his statement where he accused Mr Leung of inciting his neighbours to complain to the management office about the noise of renovation works he was doing at the 17^th floor property.  He said this was what he was told by the watchman.

134.  Two anonymous letters making derogatory statements were received at the end of 2010.  He said he believed that they came from Mr Leung.

135.  He disagreed that the 17^th floor property was not a gift to Amy.

136.  He also disagreed that he and Amy were under financial pressure.  He explained that in March 2004 when the property was transferred to Amy, he was gainfully employed and earning around $100,000 per month and this included a housing allowance.

(b) Ms Lam Sze Nga

137.  Lam Sze Nga is a dental surgery assistant.  She commenced working in Amy’s dental clinic in September 2008.  She has remained there since and now works for Henry who runs the clinic.

138.  She never heard about the incident involving Amy’s parents in April 2010. She was not aware of any financial difficulties that Amy had with the clinic.  She claimed that they talked to one and other and she confided in her.  She said that after Amy got ill she changed into another person and she spoke to her less.  She said that Amy would talk to her about difficulties involving dental cases but she did not tell her about any difficulties concerning her daughter, husband or parents.  Amy appeared happy and she would share happy experiences with her.

139.  She said that Henry took up the clinic completely from June 2010.  From 2009, he handled administrative work.  In June 2010, it was confusing but he did not come in every day.  All the patients of the clinic were taken care of by Henry.  The clinic would open from 9:30 am to 6:30 pm Monday to Friday and half day on Saturday.  She was the only employee.

140.  She said the clinic was busy and Amy worked every day except for Wednesday.  Prior to June 2010, there was another dental nurse.

141.  During 2009, Amy would go to the clinic every day.  She attended patients one after the other and the clinic had been busy since 2008.  She said that January and February 2010 were normal and that Amy was looking after the clinic herself.

142.  She initially said Amy did not appear to be a person having difficulties. When it was pointed out that she was unwell, she acknowledged she had difficulties and became a different person starting from March 2010.

143.  Henry had other things to attend to in June 2010.  He went back to take care of this wife and daughter.  Henry was also working at the clinic when she joined in September 2008.  He dealt with the paper work most of the time and may have treated a patient one in several months.

144.  I found that Ms Lam was not being frank and her evidence was inconsistent in that she claimed that Amy was not showing signs of any difficulties when she was clearing unwell at the time.  Even on her account, Amy had changed and was not confiding in her. 

Assessment of the witnesses

145.  I found Mr and Mrs Leung to be devoted parents who cared very much for their two daughters.  They were a close-knit family.  Both Mr and Mrs Leung came across as intelligent and caring individuals who are decent and honest.  Throughout the years they had worked hard and through wise investment they had acquired a number of properties.  They had built up the family fortune which they maintained and controlled ultimately for the benefit of their two children.  I found them both to be honest and frank when giving evidence even though it was difficult at times for them to recount events surrounding Amy’s death.  I also found Violet to be honest and sincere who gave considered and truthful evidence. She impressed me as a witness.  On the other hand, Henry tended to exaggerate or embellish his evidence and there were times when I did not believe him.  I have elaborated on these matters in my summary of his evidence before me.

Analysis of evidence

146.  Where there is sufficient evidence of actual intention there is no need for the court to resort to the presumption of resulting trust or the presumption of advancement.  I accept the evidence of Mr and Mrs Leung that their intention at the time of the transfer of the 17^th floor property from Jonnex to Amy was that they retain beneficial ownership of the property.  Their evidence was supported by their daughter Violet.  It was also supported by the fact that previously in Australia, Mr and Mrs Leung had entered into the same arrangement with their daughters in relation to two properties in which they retained beneficial ownership. 

147.  I reject the evidence of Henry concerning comments and conversations pertaining to Amy’s ownership of the property in Australia and in Hong Kong.  He said that he heard from Amy and her friends that the property in Australia in her name would be her matrimonial home.  There is simply no support for this and contrary to what he claimed, the Australian property was sold by Mr and Mrs Leung who used the proceeds to invest in financial packages and later in other real estate in the name of Jonnex which was beneficially owned by them.  He said that the Hong Kong property was a gift to Amy in celebration of Angel’s birth but at the same time Mr and Mrs Leung transferred the 12^th floor property to their other daughter Violet.

148.  I also reject the evidence of Henry that the 17^th floor property and the 12^th floor property were intended to be used by Amy and Violet respectively as their future clinics.  Whilst it is true that Amy established her dental clinic at the 17^th floor property, it was in 1998 which was much later after it had been acquired in 1996 and even then it was held in the name of Jonnex for which Amy paid a reduced rental.  The other property on the 12^th floor was used by Mr Leung’s architectural firm which also paid rent to Jonnex.

149.  I accept the evidence of Mr and Mrs Leung that they decided to close down Jonnex and dispose of the properties it held.  They explained that this was because of the cost and effort involved in maintaining the properties through the company.  Two of the properties appear to have been troublesome and it was an opportunity to off load them.  The LCK property was sold in December of 2003 and the Leighton property was eventually sold in November 2005.  The latter property taking longer to be sold than they expected.  They decided to keep the two properties in Thyrse House which were transferred to Amy and Violet on 31 March 2004.  Mr Leung was questioned at length about the fact that from 2006 to 2014 he had used Jonnex to invest in a number of properties in Sai Ying Pun.  He explained that there arose a business opportunity to acquire certain properties in Sai Ying Pun which was unforeseen and for this purpose he reactivated Jonnex.  I accept his evidence.  Mr Leung is an astute property investor as evidenced by his past property transactions and I believe him when he said that an opportunity arose to invest in other real estate and he utilised Jonnex for this purpose as it was dormant at the time.  It is argued by the defendant that this is not credible.  I disagree.  When it was decided to close down Jonnex, it held four properties.  Two were sold for commercial reasons as explained by Mr Leung and the other two were kept and transferred to Amy and Violet.  It was later that the company was activated when Mr Leung saw an investment opportunity in real estate in Sai Ying Pun.  It is perfectly understandable that he and his wife would transfer the two properties to their daughters given that they had entered into a similar arrangement with respect to the properties in Australia and that they were elderly and eventually upon their death the properties would go to their daughters.  It is argued by the defendant that there were alternative ways of retaining the properties and that the trust arrangement could have been formalised through a solicitor.  I see no substance in these arguments.  As explained by Mr Leung he had previously entered into this arrangement with his daughters and there was no need to put it in “black and white” as it was within the family.

150.  I accept that when the decision was made by Mr and Mrs Leung to transfer the two properties in Thyrse House, they discussed this with their daughters and explained that they would enter into the same arrangement as they did with the two Australian properties in that Amy and Violet would hold the properties on trust for their parents.  Violet confirmed that her parents explained this to her and her sister.  I also accept that as the arrangement was within the family there was a degree of flexibility as the rental payments on the properties.  In the case of Amy, as she was experiencing financial difficulties and ill-health, her parents would not insist on the rent.  In the case of Violet, she would pass on the rental payments to her parents but sometimes they would tell her to use the money for herself.  This is not surprising within a close-knit family.  I have no doubt from my assessment of the evidence that Mr and Mrs Leung transferred the two properties into their daughters names also because they were elderly and in the event of their death the properties would go directly to them while in the meantime retaining the beneficial ownership in them.

151.  It is significant that Mr and Mrs Leung retained the title deeds of the two properties in Thyrse House and this in my view evidenced their beneficial ownership and control of the properties.  It is also significant that the title deeds of the property that Amy and Henry owned were held by them.  If Mr and Mrs Leung were holding the title deeds of the 17^th floor property for safekeeping for Amy because they have a fireproof safe, as asserted by Henry, why were they not holding the title deeds of the other property as well?

152.  I reject the suggestion that Mr and Mrs Leung are making this claim out of spite against Henry.  It may be that if relations between them were better they may not have pressed their claim but I am satisfied to the requisite standard that the arrangement existed with their daughters as they claim and that Amy and Violet held the respective properties on trust for their parents. I am satisfied that Mr and Mrs Leung all along retained beneficial ownership in the two properties and that their daughters would act on the instructions of their parents in dealing with or disposing of the properties as their trustees.

153.  I agree with the submissions of Ms Winnie Chan for the plaintiffs about Henry’s behaviour and the incidences that have occurred between Henry and the Leung family.  He gave in my view unsatisfactory evidence about the $50,000 incident for which he gave various conflicting accounts, the claim that Amy lived a luxurious life which was contrary to the financial difficulties that she was experiencing with her dental clinic due to her illness, the confrontation he claimed took place between him and Violet at Amy’s funeral over seating which I do not accept at all and the claim that Mr Leung told friends and relatives more than 100 times his step-by-step plan to make a gift of the 17^th floor property to Amy which I also do not accept.

Findings

154.  Upon consideration of all the evidence and the submissions advanced on behalf of the parties, I make the following findings:

(1) The Leung family migrated to Australia in 1985.  Mr and Mrs Leung purchased three properties in Australia, two of which were respectively purchased in the name of their daughters, Amy and Violet.  Both Amy and Violet were students and impecunious at the time of the purchases of the properties.  The properties were purchased in the names of Amy and Violet to take advantage of the tax regime in Australia.  Amy and Violet held the properties on trust for their parents, and Mr and Mrs Leung maintained the properties and incurred all the necessary costs and expenses in relation to them.

(2) Mr and Mrs Leung sold the properties in Australia and dealt with the proceeds of the sales as they wished by making further investments in real estate in Hong Kong.

(3) Mr and Mrs Leung invested in and purchased real estate in Hong Kong through the corporate vehicle, Jonnex.  They purchased four properties including the properties on the 17^th floor and 12^th floor of Thryse House in 1996.

(4) Later in March 2004, Mr and Mrs Leung decided to close down Jonnex and transfer the 17^th floor property to Amy and the 12^th floor property to Violet.  It was Mr and Mrs Leung’s intention that they retain the beneficial interest of the properties even though they were in the names of their daughters.  Amy and Violet respectively held the properties on trust for their parents.  Mr and Mrs Leung held the title deeds of the properties and had control and responsibility of the properties.

(5) Mr and Mrs Leung assisted Amy financially to establish a dental clinic at the 17^th floor property.  It was arranged for Amy to pay rent but given her health and financial circumstances, Mr and Mrs Leung were flexible as to the payment of rent.

(6) The 17^th floor property was not gifted by Mr and Mrs Leung to Amy, and not in celebration of Angel’s birth.

(7) At all material times, Amy held the 17^th floor property on trust for Mr and Mrs Leung.

Conclusion

155.  It became apparent during the proceedings that the relationship between the Leung family and Henry had deteriorated significantly and it would appear that this has distanced Angel from her grandparents and the rest of the Leung family.  I trust for Angel’s sake, and out of respect for Amy’s memory, that the relationship between the Leung family and Henry will improve so that Angel will have the benefit of the care and support that Amy would have wanted for her from her family. 

156.  In light of my reasons, I make a declaration that the 17^th floor property in the name of Amy was held on trust for Mr and Mrs Leung and accordingly I order the 17^th floor property be transferred to them.  I make an order nisi that each party bear their own costs.  I do so, on the basis that the issue of the ownership of the property needed to be determined by a court and the estate of Amy had to address the issue in these proceedings.  I also bear in mind that Angel is one of two beneficiaries of the estate of Amy and I would not wish to put the financial burden of the plaintiffs’ costs on the estate in the circumstances of this case.

157.  The formal orders are as follows:

(1) I make a declaration that Amy Leung On Mei was at all material times since the purchase of the 17^th floor property on 31 March 2004 from Jonnex, holding the property on trust for the joint benefit of the plaintiffs.

(2) I order that all legal rights and interest in the 17^th floor property be vested in the plaintiffs under s 45 of the Trustee Ordinance, Cap 29.

(3) I order under s 51 of the Trustee Ordinance and s 25A of the High Court Ordinance, Cap 4 that the Registrar of the High Court or such person as shall be appointed by the Court shall execute the conveyance of the 17^th floor property to the plaintiffs as joint tenants.

(4) I make an order nisi that each party bear their own costs.

158.  Finally, I wish to acknowledge the excellent assistance I received from both counsel in this case who each advanced their client’s case with skill and commitment.