SZETO YUK CHUN v. WONG KWOK LEUNG

DCCJ8068/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 8068 OF 2001

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JUDGMENT

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The Plaintiff's Claim

1. The Plaintiff claims against the Defendant for an order to rescind the assignment dated 31/8/91 and registered in the Land Registry as memorial No. 472150 affecting the land registered in the District Land Office of Yuen Long as Lot No. 1649 in Demarcation District No. 122 ("the said land"), an order for re-assignment of the legal title of the aforesaid land and for 2 sums $150,000 and of $274,000 respectively being the balance of 2 loans the Plaintiff advanced to the Defendant.

The Defence

2. The Defendant alleges that the said land was conveyed to the Defendant as a gift and that of the sums advanced by the Plaintiff to the Defendant a sum of $150,000 had been given by the Plaintiff to the Defendant as a gift and that there was no specific term of repayment in respect of a sum of $400,000 the Plaintiff advanced. Further the Defendant has repaid a sum of $234,000.

The Undisputed Facts

3. The Plaintiff inherited the said land from her deceased husband who died intestate in 1969. She is the administratrix and sole beneficiary of her late husband's estate.

4. In 1980 the Defendant was employed to carry out water piping and electrical wiring projects by the villagers. The Plaintiff was one of those villagers who employed the Defendant. Hence the Plaintiff became friendly with the Defendant and got on very well with the Defendant. Very often she would invite the Defendant for meals. Eventually the Defendant moved to live in the house erected on the said land ("the old house").

5. In 1986 the Defendant married Madam Lui Shuk Ying ("Lui"). He and his wife would go to eat with the Plaintiff in her house and very often they looked after the Plaintiff.

6. In 1988 the Defendant and Lui moved to Shatin and then Tuen Mun leaving behind furniture and some clothing. They had to move because Lui had to look after the 4 children of her brother and the old house was too small for them to live in.

7. In 1991 the Defendant wanted to move back to the old house as they had to pay a lot of money in respect of rent in Tuen Mun. The Defendant wanted to demolish the old house and erect a new house ("the new house") so that there is sufficient space for them to move in.

8. In August 1991 they went to solicitor Messrs. Arthur Au & Co. where it was alleged that the Plaintiff assigned the said land to the Defendant.

9. During the construction of the new house the Plaintiff advanced $150,000 to the Plaintiff to assist him to build the new house.

10. In 1993 the Defendant divorced Lui and asked the Plaintiff to lend him $400,000. Since October 1994 gave the Plaintiff $3,000 each month as repayment.

11. In 1995 the Defendant married again and the Plaintiff was invited to attend the wedding banquet. The Defendant and his new wife did kneel down and presented tea to the Plaintiff and also invited the Plaintiff to go around to greet all the guests and stood with the Defendant and his wife to bid farewell to the guests at the end of the banquet.

12. Eventually their relationship turned bad the Plaintiff asked for the return of the loan, the Defendant told her that he would sell the new house. She then went to Messrs. Arthur Au & Co. to enquire. It was then she found out what she signed in Messrs. Arthur Au's office was the conveyance of the land.

The Issues

13. (I) whether the Plaintiff intended just to give a licence to the Defendant to erect the new house as alleged by the Plaintiff or was it intended as a gift as alleged by the Defendant.

14. (II) whether the $150,000 advanced by the Plaintiff to the Defendant was a loan or a gift.

15. (III) whether the parties agreed that the Defendant needed to repay only $3,000 per month for the loan of $400,000.00.

Events leading to the signing of the assignment

16. According to the Plaintiff in 1991 she visited the Defendant and Lui his then wife in Tuen Mun, Lui told her that they had to pay about $7,000 per month as rent and the flat was very small they wanted to move back. The Defendant told her that there were 6 or 7 people in the house, the old house was not spacious enough and wanted to build a new house and would pay her rent. She told the Defendant that the land was a legacy left by her late husband, she would not give the land to the Defendant but she had no objection to the Defendant building a new house there.

17. In August 1991 she went with the Defendant to see solicitor Arthur Au ("Au"). She told Au to prepare a document so that the Defendant could erect a new house on the said land. She said she needed that document so as to prevent her relatives from trying to disrupt the construction of the new house.

18. Au did not explain that document nor did any one in his office explain the contents of that document to her. He only showed the Plaintiff a document in English and said the document was to let the Defendant have the full power to manage the erection of the new house and asked her to sign. She then signed. After she signed the Defendant in front of Au gave her a cheque in the sum of $250,000. Once they went out from Au's office the Defendant asked for the cheque back and the Plaintiff gave the cheque back to him. She re-iterated that she was with Mrs. Yip who was a friend of hers that at no time did the Defendant or Au told her she had sold the land, had she known she would not have signed on the document. It was only when their relationship turned sour after the Defendant's 2nd marriage when the Plaintiff asked for the loan of $400,000 back and the Defendant told her he would sell the house then she knew the document was to the effect that she had sold the said land to the Defendant.

19. The Defendant's version as to their relationship at the beginning is similar to what the Plaintiff said i.e. their relationship was a good one. The Defendant went further to say that he had looked after the Plaintiff who had been neglected by her relatives. He took her to hospital when she was sick, attended the Spring and Autumn worship ceremony with her. At one stage she tried to match make and she even suggested to hold a ceremony at the clan's temple to formalise their relationship as foster mother and son but he turned her down. He did not think he was entitled to her wealth as wealth was never the reason or foundation for building up their relationship.

20. After the Defendant moved to Tuen Mun the Plaintiff still went to visit his family. The Plaintiff asked him to go back to live in the old house as out of his income of $8,000 the Defendant had to pay $5,000 per month as rent. The Defendant told her the old house was too small for them (a family of 7) to live in. The Plaintiff thought for a while and suggested he could demolish the old house and build a new one on the said land. He discussed with his then wife Lui who could put up $300,000 and he had the whole saving of $250,000. The Plaintiff also offered $150,000 to help him. The Plaintiff also suggested to have the old house rebuilt and offered to have the old house assigned to him so that he could take possession.

21. On or about 24/8/91 he received a phone call from the Plaintiff asking him to attend her lawyer's office for the purpose of assigning the old house to him. On 31/8/91 at Au's office Au told them since the Plaintiff derived her title under Grant of Letters of Administration, the transfer must be completed in the form of a sale and purchase instead of a gift. He did not ask why. Au asked them to work out a figure for documentation. The figure of $250,000 was arrived after he and the Plaintiff discussed and based on the transaction of a house similar to the size of the old house. Au then asked him to make out a cheque for $250,000 in favour of the Plaintiff in order to complete the transfer. He drew the cheque and handed it to Au who in turn gave it to the Plaintiff and asked them to sign on the document. After that Au said the transaction had been completed and the title of the old house had been transferred to him.

22. On the way back the Plaintiff returned to him the cheque without saying a word.

23. He then used his own saving and that of his then wife and asked Chun Hing Construction and Decoration Company to carry out the work for $368,000.

24. In July 1993 he divorced his wife. The Defendant asked the Plaintiff to lend him $400,000 to settle the financial arrangement with his ex-wife. He got married again in July 1995 in the United States. After the marriage their relationship turned sour. The Plaintiff asked for the return of that sum. The Defendant said he was going to sell the house to get the money. It was then the Plaintiff started the present proceedings.

Licence or Gift

25. I have observed the demeanour of the Plaintiff and the Defendant when they gave evidence. Although the Plaintiff is now 84 years old she is still very alert. I find them both evasive in giving answers touching the said land.

26. Au would be the best witness to say what happened and was the only person who could say what instructions he got. Unfortunately neither the Plaintiff nor the Defendant called Au as a witness.

27. What they have said in Court is only oral evidence in which each of them tried to vary or contradict the terms stated in the agreement.

28. Had it been a gift Au, being a lawyer having a conveyance practice, would have no difficulty in conveying the said land to the Defendant as a gift. I find it difficult to believe that since the Plaintiff derived her title under a Grant of Letters of Administration, the transfer had to be by way of sale and purchase as stated by the Defendant.

29. I also find the Plaintiff's version difficult to accept. Who would spend a lot of money to demolish the old house and construction a new house on the said land without knowing for how long one could stay there. If it were just a licence, the Plaintiff, according to her, had not indicated to the Defendant for how long the licence would be.

30. I find on balance that it was a sale and purchase of the said land. The consideration was as stated i.e. $250,000.00 and the transaction had been completed when Au handed the cheque, the Defendant drew, to the Plaintiff.

31. What happened afterwards when the Plaintiff handed the cheque back to the Defendant was just a loan by the Plaintiff to the Defendant.

Was the $150,000 a loan or gift

32. According to the Defendant, the Plaintiff "assured me that she would help me for another $150,000" (Para 22 of his statement). The Plaintiff did not indicate specifically it was a gift. No doubt their relationship at that time was good. Be that as it may, had it been the intention of the Plaintiff to make that as a gift the Plaintiff would have said that she would give him $150,000.

33. The demolition of the old house and construction of the new house was only $368,000. According to the Defendant he together with his wife had more than sufficient means to meet that amount. He and his then wife together had $300,000 + $250,000 available for the construction. The Defendant played on the good relationship with the Plaintiff and tried to use her money interest free rather that digging into their own savings.

34. There were no circumstances as to give rise to a presumption of advancement. There was no evidence to show that it was not repayable.

35. On balance I accept the Plaintiff's version and find that the $150,000 was a loan.

The Loan of $400,000

36. There is no dispute that the Plaintiff had lent $400,000 to the Defendant. According to the Defendant he repaid $3,000 a month. The Defence is that since October 1994 the parties had agreed that the Defendant would repay by instalments of $3,000 and that the Plaintiff is not entitled to vary that agreement.

37. According to the Plaintiff she out of good heart lent the Defendant that amount to the Defendant for his divorce. She just accepted what was given to her by the Defendant when their relationship was good. There was no agreement as to how it was to be repaid. The repayment was less than 1% without taking into consideration interest. This is unreasonable and unconscionable. In the absence of any agreement the repayment is immediate upon demand.

Conclusion

38. Although the Defendant in his statement said, "I do not think myself entitled to her wealth and her wealth was never the reason or foundation which built up our family-like relationship ........." and according to him he turned down the Plaintiff's suggestion to formalise their relationship by holding a ceremony at the "clans temple" to formally declare him as the Plaintiff's foster son yet time and again he played on their "mother and son" relationship or their good relationship to obtain financial help in the sum of $150,000 and $400,000 from the Plaintiff notwithstanding the fact that he had sufficient money to build a new house and money to spend for a wedding in the United States and to hold a banquet after they returned to Hong Kong.

39. I find on balance that the Defendant owed the Plaintiff

(i) $250,000 being the purchase price in respect of the sale of the said land

(ii) $150,000 being the money advanced by the Plaintiff for the construction of the new house and

(iii) $124,000 being the balance of the loan of $400,000.00

40. In the premise there be judgment for the Plaintiff

(i) in the sum of $250,000 with interests from 31 August 1991 to date of judgment

(ii) in the sum of $150,000 with interests from 31 August 1991 to date of judgment

(iii) in the sum of $124,000 with interests from October 1994 to date of judgment

Order nisi: costs to the Plaintiff.