CHEUNG SAI LON v. CHEUNG SAI HA AND ANOTHER

HCA 2218/2019

[2026] HKCFI 1150

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2218 OF 2019

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JUDGMENT

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A. Introduction and Background Facts

1.  This action concerns the beneficial ownership of the various properties and the sales’ proceeds or rental income arising therefrom.

2.  The parties to this action are all family members.  Cheung Hung Kwong, (“Father”) was at all material times married to Chung Suk Yee (“Mother”) and together they had four children:

(1)     Cheung Sai Man (“Sai Man”), the eldest son, born on 18 August 1966;

(2)     Cheung Sai Lon (the Plaintiff, “P”), the second son, born on 6 May 1970; and

(3)     Cheung Sai Ha (the 1^st Defendant, “D1”) and Cheung Sai Kuen (“Sai Kuen”) (collectively, “Ds”), twin daughters, born on 10 December 1972.

3.  Father was a male indigenous villager and the village elder of Tai Shui Hang, Shatin, New Territories (“Tai Shui Hang Village”).  Naturally, his sons, Sai Man and P are also male indigenous villagers of Tai Shui Hang Village.

4.  Father had moved to the United Kingdom (“UK”) at the age of 22 in 1961 and worked as a cook in various Chinese restaurants and subsequently in his own takeaway shops. 

5.  In around 1987, Father acquired a Chinese takeaway shop in Kent (“Takeaway Shop”) and operated his own Chinese takeaway business. By then, the family had all moved to the UK and helped at the Takeaway Shop (save for Sai Man who had a job at another restaurant and only helped out at the Takeaway Shop for a few months in 1992) and lived at the flat above the Takeaway Shop. 

6.  Whilst initially, D1 and Sai Kuen helped out at the Takeaway Shop when they did not have school as kitchen assistants, upon their graduation from secondary school, they worked full-time there and were paid weekly by Father.  Their wages gradually increased to £200/week.  P, had dropped out of school around at age 17 in 1987 and worked full-time at the Takeaway Shop in the front at the counter.  According to D1, he was paid wages of £400/week by Father.  However, according to P, he was not paid a regular wage as Father and him had started the takeaway business together and they shared the profits (around £500-600/week).  P’s case is that he was not simply the counter cashier, as alleged by D1, but he was also responsible for assisting in the kitchen, inventory control, finances and accounts of the takeaway business.[1]

7.  In around 1992, Mother was diagnosed with cancer and it was decided that the family should return to Hong Kong.  Although the takeaway business was profitable, in around 1992-1993, the Takeaway Shop was sold.   

8.  According to P, upon the sale of the Takeaway Shop, Father shared the proceeds of the sale with P (of the amount £96,000 which he later corrected as £196,000 in his Supplemental Witness Statement (“P’s SWS”)) and gifted £24,000 each to D1 and Sai Kuen.[2]  This is denied by D1 and Sai Kuen.

9.  With his share of the sale proceeds, savings, cash gift from his grandfather, and profits from currency investment speculation in the GBP, at 22 years old, P claims that he had around HK$4.5M by the end of 1992-1993.

10.  In around 1992, Father, Mother, P, D1 and Sai Kuen relocated to Hong Kong.  Father retired to care for Mother.  Fortunately, Mother eventually recovered and Father remained in retirement.  They all lived at the ancestral home at House No. 35 in Tai Shui Hang Village (“House 35”).

11.  In around 1993, Shop Nos. 54 and 55 on 1^st Floor, Fu Fai Gardens, Shatin, New Territories (collectively, “FF Shops”) were acquired in the name of Father for the following consideration:

(1)     HK$2.5M for Shop No. 54; and

(2)     HK$1.97M for Shop No. 55.

12.  P claims that there was an agreement and/or common understanding between P and Father that each would contribute 50% of the costs, each shall have 50% interest in FF Shops and, notwithstanding Father shall be the registered owner, P’s 50% share would be held on trust by Father. P’s share of the rental income was to be used for maintenance of Father and Mother.[3] 

13.  It is P’s case that out of the total consideration of HK$4.47M for the purchase of FF Shops, he contributed HK$2,351,694, slightly more than 50% of the acquisition price.  The reason why FF Shops was held in Father’s sole name was because Father, who was then retired, would manage FF Shops.  P claims that he contributed to the purchase in the following manner:

(1)     On 27 May 1993, by a withdrawal of £20,000 from P’s sole name Yien Yieh Commercial Bank (“YY”) Multi Currency Account (“P’s YY Multicurrency A/C”) to Father;

(2)     On 7 June 1993, by a withdrawal of £20,000 from P’s YY Multicurrency A/C to a YY joint account of Father and Mother;

(3)     On 22 June 1993, by a withdrawal of £60,000 from P’s YY Multicurrency A/C to Father’s YY personal account (“Father’s YY A/C”); and

(4)     On 1 July 1993, by a withdrawal of £103,019.25 from P’s Kwangtung Provincial Bank account to Father’s YY A/C.[4]

14.  On the other hand, Ds’ case is that P was only 23 years old and did not make any monetary contribution as alleged or at all.  FF Shops were purchased in Father’s sole name using Father’s own money.  From 1987 to 1992, Father would time to time remit his earnings back to Hong Kong.  Since the business of the Takeaway Shop was lucrative and profit margins were high, for savings or to avoid investigation by the tax authority, Father would also remit money to P’s sole name bank account and/or the joint bank accounts between Father and P but the monies belonged to Father beneficially and P was holding them on trust for Father.[5]

15.  On 9 November 1995, Father and P were granted approval for construction of a small house at Tai Shui Hang Village on Lot No. 935 in D.D. 196 (“Lot 935”) and Lot No.936 in D.D. 196 (“Lot 936”) respectively.

16.  On 16 July 1996:

(1)     Father was granted permission to build on Lot 935 by New Grant No. 12763 upon which House No. 72 was built (“House 72”);

(2)     P was granted permission to build on Lot 936 by New Grant No. 12764 upon which House No. 71 was built (“House 71”); and

(3)     Sai Man was granted permission to build on Lot No. 937 in D.D. 196 by New Grant No. 12765 upon which House No. 70 was built (“House 70”).

17.  P claims that he and Father agreed or came to a common understanding that P would pay for the purchase and construction of House 71 and House 72, split into 3 units each.  It was agreed and the common intention of P and Father was that P would be the beneficial owner of both houses and although all rental income belonged to P, Father would be entitled to withdraw up to two units’ rental amount to be deposited into a joint account in the name of P and Father for his and Mother’s maintenance (“the Authorised Withdrawals”). Pursuant to and in reliance on the agreement and/or common understanding, P paid for the construction of both houses by transferring and paying a sum of at least HK$2,544,780.[6]

18.  On the other hand, Ds’ case is that Father paid for the construction of House 70, House 71 and House 72, and any transfer of monies by P to Father was not for the purpose of acquisition and construction of the three Houses.  It was the intention of Father and common understanding of all members of the family that Father would help to pay for the costs to acquire the land and construct a small house for each son.  Sai Man and P agreed to assign the rental income of one of the three flats in each House to Father as repayment by instalment of the lands and construction costs paid by Father.  Father intended to assign/transfer the beneficial interest to House 72 in equal shares to Sai Kuen, D1 and her two daughters as their home and the rental income generated therein for their maintenance after Father passed away.  Whilst it is admitted that Father and P agreed that the rental income would be deposited into a joint account in the name of P and Father, this was because the bank had started e-banking services in 2000 and Father can ask P to check the balances easily on the internet.[7]

19.  House 71 and House 72 were completed sometime in 1998.  After their completion, the whole family lived in House 72.  From 2009 to 2016, Father, Mother, P, D1 and Sai Kuen lived at House 35.  P and Mother moved to G/F of House 71 in 2016-2018.

20.  On 18 February 2008, Father executed a will naming D1, Sai Kuen and D1’s daughters as beneficiaries (“the Will”).

21.  On 13 November 2009, Shop No. 54 and Shop No. 55 were sold at the consideration of HK$2M and HK$1.8M respectively (collectively, “FF Shops’ Proceeds”).  P’s case is that FF Shops were sold in breach of trust and without P’s knowledge and authorisation[8].  

22.  On the other hand, Ds’ case is that Father, as the sole legal and beneficial owner of FF Shops, was entitled to sell his property without the consent, authorisation and/or approval of P who has no beneficial interest therein.  Since there had been no appreciation in value of FF Shops over the years and rental income generated remained low, Father under the advice of estate agents put the shops on the market for sale for a long time before eventually deciding to sell them.[9]

23.  On 13 May 2011, the property known as Ground Floor of No. 93 Tai Shui Hang, Shatin, New Territories (“TSH Shop”) was purchased in the joint name of Father and D1 at a consideration of HK$4.78M.  P’s case is that TSH Shop was purchased with FF Shops’ Proceeds of which 51.65% were held on trust for P.[10]

24.  In particular, P claims that FF Shops’ Proceeds were wrongfully transferred to D1 for her to acquire TSH Shop.  P also claims that as P was the 51.65% or alternatively, 50% beneficial owner of FF Shops which Father was holding such interest on trust for P, Father as trustee owed various fiduciary duties to P (i.e. duty to act in good faith, duty of loyalty to act in the best interest of P, not to make any benefit or gain or secret profit and not to act for personal advantage and to avoid any conflict of interest).  However, wrongfully and in breach of trust, the sale of FF Shops and acquisition of TSH Shop were for the purpose of defeating the said trust and/or were in material breach of fiduciary duties owed to P.  The particulars of breach pleaded are:

(1)     P had not provided any consent, authorisation or approval to sell FF Shops at a loss or at all;

(2)     P was not informed FF Shops had been sold;

(3)     There was no reasonable or valid reason to sell FF Shops at a loss and at gross undervalue;

(4)     There was no reasonable or valid reason to hastily dispose of FF Shops by assigning the property to agents at an undervalue who were able to quickly sub-sell within weeks pocketing windfalls exceed usual 1-2% commission fee for real estate agents; and

(5)     FF Shops’ Proceeds were transferred to D1 and subsequently used by D1 to purchase TSH Shop in the joint names of Father and D1 as joint tenants.[11]

25.  P claims that D1 dishonestly assisted Father in the alleged breach of trust or alternatively, knowingly received the FF Shops’ Proceeds which were the proceeds or traceable fruits of FF Shops’ Proceeds carried out in breach of trust.  P seeks to trace and recover from Father and/or D1 the FF Shops’ Proceeds.[12]

26.  On the other hand, Ds’ case is that all payments for the purchase of TSH Shop were made from D1’s sole name bank account.[13] Furthermore, under the joint tenancy, TSH Shop vested on D1, as the surviving joint tenant, upon the death of Father and D1 is the 100% beneficial owner.[14]

27.  On 8 March 2018, Father passed away having been diagnosed with cancer in July 2016.

28.  On 11 May 2018, D1 and Sai Kuen obtained the grant of probate in their capacity as named executrixes in the Will.

29.  Furthermore, P claims upon the death of Father, P discovered HK$2.3M was withdrawn by Father, in breach of trust, from the joint rental account in the joint names of P and Father (“Joint Rental Account”) and deposited into D1’s account from 2013 to 2018 (“the Unauthorised Withdrawals”).  The Unauthorised Withdrawals were wrongful and in breach of Father’s fiduciary duties owed to P because:

(1)     The Unauthorised Withdrawals were made on top of and in addition to the Authorised Withdrawals;

(2)     There was no valid or reasonable explanation to withdraw the sums in such amounts and in such frequency and to benefit D1; and

(3)     There was no valid consideration by D1 to entitle her to receive such monies.[15]

30.  P claims inter alia that D1 knowingly received the Unauthorised Withdrawals and/or had constructive knowledge of the Unauthorised Withdrawals and hence is a constructive trustee for P or was unjustly enriched by the Unauthorised Withdrawals.[16]

31.  On the other hand, Ds’ case is that the alleged HK$2.3M withdrawal made by Father during October 2013 to February 2018 from the Joint Rental Account were in fact rental generated from 1/F and 2/F of House 72 which solely belonged to Father to which P, being co-signatory of that account was fully aware but never complained or raised query about them during Father’s lifetime.[17]

32.  After relocation to Hong Kong, Father earned passive income from the rental incomes of his properties including FF Shops, TSH Shop, House 35 and House 72 as well as rental income of one flat of House 70 and House 71.  On the other hand, P has been unemployed since 2000 and his only income is the rental from House 71.  The withdrawal of HK$26,000-30,000 from the Joint Rental Account was for P’s own maintenance and not the Authorised Amount as alleged.[18]

33.  Furthermore, P claims that HK$1.073M was missing from rental income that was not deposited into the Joint Rental Account (“Missing Rental”) in breach of Father’s fiduciary duties owed to P[19].  P claims that D1 knowingly received the Missing Rental and/or dishonestly assisted Father to breach his fiduciary duties and as such D1 and Father are constructive trustees for the Missing Rentals.  Alternatively, it was claimed D1 was unjustly enriched by the Missing Rental and should make restitution or pay damages in lieu.[20]

34.  Ds’ case is that, D1 has not deposited the Missing Rental into her personal account or D1 and Father’s joint account as alleged, and has no knowledge as to its whereabouts.[21]

35.  Ds therefore claim that by virtue of the Will, D1 and Sai Kuen are the legal and beneficial owners of all properties in the estate of Father including House 72 and are entitled to their rental income. They counterclaim:

(1)     An account and the amount of remaining balance of House 72’s rental income in the sum of HK$241,500 and Joint Rental Account; and

(2)     Damages and/or loss of rental income from 1 November 2020 (as the tenants of House 72 moved out from the rumour that Ds were trespassing or letting the flats illegally) to be assessed.[22]

B.     The Issues (broadly framed by P)

36.  As submitted in P’s Opening Submissions, the key factual issues in dispute between the parties are as follows:

(1)     Who is the true owner of the source of funds used to acquire the FF Shops and Houses 71 and 72?

(2)     Was there an arrangement or agreement between Father and P that P would be the 50% owner of FF Shops?

(3)     Was there an arrangement or agreement between Father and P that P would be the beneficial owner of House 72 and that Father was authorised to withdraw up to two rental units’ worth of rent per month from Father and P’s Joint Rental Account?

(4)     Whether Father was entitled in any event to withdraw HK$2,300,000 which represents his share of rental income from House 72?[23]

C.     Applicable Legal Principles

C1.     Common Intention Constructive Trust and Resulting Trust

37.  There is no dispute between parties on the applicable legal principles.  Counsel (Mr Deng for P and Mr Ko and Miss Lam for Ds) were agreed that the applicable principles were summarised by Coleman J in Lam Ka Kui v Choi Yuen Ling [2020] HKCFI 2647 and authorities cited therein.  I would gratefully adopt the principles as set out in §§8-13 & 15:

“8. Where a common intention constructive trust has arisen, ownership in the property is split into legal ownership and beneficial ownership. The trustee holds the legal title on trust for the beneficiary: see, for example, Luo Xing Juan Angela v Estate of Hui Shui See Willy, deceased [2009] 12 HKCFAR 1 at §38.

9. Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the claimant regarding their shared beneficial interests in the property that matters. The trust is constituted by the three elements of (1) the common intention, (2) the claimant’s detrimental reliance on their common intention, and (3) the unconscionability of the property owner departing from it.

10. The burden of proving each element of common intention, detrimental reliance and unconscionability is on the person seeking to show that the beneficial ownership is different from the legal ownership. The focus is on the intention of the parties at the time of acquisition of the asset. Contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event.

11. Common intention can be expressed or implied. It can be deduced or inferred objectively from the parties’ conduct. As a matter of common sense, it is easier to infer such an intention prior to the acquisition of property which results in an obvious change in legal ownership (rather than after such an acquisition where there is no change in legal ownership and a change in beneficial ownership is not otherwise apparent).

12. In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §§2.3-2.4, Cheung JA identified two situations where a common intention constructive trust may arise. The first is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially. The finding of such an agreement or arrangement can only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property, and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by mortgage instalment payments, will readily justify the inference necessary to the creation of a constructive trust.

13. A resulting trust arises by virtue of the plaintiff’s contribution in money or in some other way towards the property’s acquisition. Equity holds the legal owner to be a trustee of that property for the plaintiff in an appropriate share, giving effect to the parties presumed intention. Particularly in a domestic context, but also generally, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust.

…

15.      Reference can also be made to Stack v Dowden [2007] 2 AC 432, where at §§68-69 it was emphasised that an intention to have beneficial interest different from legal interest in property is unlikely, and the task of showing that should not be lightly embarked upon.  It was recognised that, in family disputes, strong feelings are aroused when couples split up which can often lead the parties, honestly but mistakenly, to reinterpret the past in self exculpatory or even vengeful terms.  If a difference is to be found between the beneficial and legal interest, clear evidence will be required.  Unequal contributions to the purchase price of property will not likely be enough to move away from the starting point that equity follows the law.”

C2.   Assessment of witnesses

38.  The court’s approach in assessing the credibility of a witness’ evidence is also not disputed.  These were helpfully summarized in Hu Lan v David Golden [2023] HKCFI 873 by Deputy High Court Judge H Au-Yeung (as he then was) at §36:

“When I consider the credibility of various witnesses who had given evidence in court, I shall take the following matters into account:

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

D.     The Witnesses

 D1.    P’s witness

39.  Only P testified for himself at trial.

40.  Whilst his evidence will be further discussed when analyzing the issues later on, in this section I will give some examples of instances where his oral evidence was inconsistent with his pleaded case and/or his witness statements which undermined his credibility.  For example:

(1)     It is P’s pleaded case that P is and was the sole beneficial owner of House 72 and Father had held House 72 on trust for P[24].  However, in oral testimony his evidence was that he was the owner upon Father’s passing away[25];

(2)     P had stated in his 1^st Affirmation dated 28 November 2019 at §11[26] that when the Chinese Takeaway business was wound up, he and Father split the proceeds but cannot recall the exact amount of money given to him.  However, in the 2^nd Affirmation dated 2 February 2021 at §57[27] and P’s WS dated 6 June 2022, §30[28], he was able to recall that he received £96,000 of the proceeds of the sale of the Takeaway Shop.  In P’s SWS, §5(2)[29], he then stated that his share of the proceeds previously stated as £96,000 was a typographical error and the amount should be £196,000.  However, in his oral testimony, he further said that £196,000 comprised both his share of the sale proceeds and share of his profits from the Chinese Takeaway business[30];

(3)     As for the profit sharing ratio, in the 2^nd Affirmation at §55[31], and P’s WS at §15[32], he stated that the ratio was 2/3 for Father and 1/3 for him and Father would obviously take more than him.  In P’s SWS at §5(2)(a)[33], he then said that the £196,000 distributed to him by Father was equivalent to half of the Chinese Takeaway business.  In oral testimony, he said initially the sharing ratio was 1/3 for him but as the business picked up and he stated to take up more part in the business for the latter period Father said they would share the profits 50-50[34];

(4)     The first time the exact amount of the cash gift from his grandfather was mentioned was in P’s SWS at §5(3)(a) [35] to be HK$688,000 (which he said he had a very vivid recollection of the event but did not explain if so, why he did not mention this earlier) and that it had grown to £74,319.  In re-examination[36], he first mentioned the £74,519.21 deposit in P’s YY Multicurrency A/C was this gift from grandfather[37]; and

(5)     In respect of the land premiums for House 71 and House 72 in RASOC, §14(1)[38], P’s 1^st Affirmation, §35(1)[39] and P’s WS, §62(1)[40], he stated that he paid from his Hang Seng Bank Account but only in P’s SWS at §10[41] did he say that after seeking specific discovery against Ds it was disclosed that the bank account was a joint account between Father and him.  

41.  Apart from the internal inconsistency in P’s evidence, his evidence was also inconsistent with the contemporaneous documents or undisputed background facts.  For example, P’s case was that he was the true sole owner of House 72, and he was the 50% owner of FF Shops.  However, he was not the registered owner of these properties.  Whilst in cross-examination[42] he tried to explain why FF Shops were not put into his and Father’s name, to the effect that it was risky at his age when he was not married, and there were tax savings for Father etc., these were all never mentioned in his affirmations or witness statements.  It is also contrary to the tenancy agreement of Shop No. 55 where Father was named the Landlord[43].  Whilst P explained that he worked long hours between 1993 to 2000 as a foreign exchange dealer and could not devote time to manage the FF Shops, there is no reason why his father could not manage the shops or collect rent even with the addition of his name as Landlord.  Besides, by the time of that tenancy agreement of Shop No. 55 and the tenancy agreements of House 72, P was no longer working but in none of the tenancy agreements was P stated to be the landlord.  Rather, it was Father (save for one tenancy signed by D1) who was named the landlord[44]. Even if on P’s case he suffered from mental depression in 2008 (but this is unsupported by any medical certificate) there is no good reason why he did not take over tenancy matters between 2000 and 2008.

42.  Furthermore, whilst the rentals from both House 71 and House 72 were paid into the joint account in P and Father’s name, P’s evidence was that Father had kept the account’s passbook and he himself did not check the account regularly or often.[45]  The fact that Father was in control of the passbook and P hardly checked what would be substantial amounts of money said to belong to him and which was his only source of income is incompatible with P’s case.

43.  Overall, I did not find P a reliable and credible witness.

D2.   Ds’ witnesses

44.  D1 and Sai Kuen were the only two witnesses for Ds.

45.  I did not find their evidence to be hugely shaken by cross-examination save that they maintained that they did not notice that P had become withdrawn in around 1999 or 2000 and suffered from mental depression in 2009[46] which was inconsistent with D1’s 1^st Affirmation where it was said P suffered from serious mental depression and began to hide himself inside his bedroom after his girlfriend from Mainland China left him[47]. 

46.  Furthermore, as both D1 and Sai Kuen frankly admitted, Father did not discuss finances or investment plans with them and as to source of funds for the various acquisitions, they had no direct knowledge but only drew their conclusion from the documents and what they observed[48], I would place more reliance on the contemporaneous documents and undisputed background.

E.      The Issues (as formulated by this court having regard to the Agreed Joint Statement of Issues in Dispute and the Closing Submissions) and My Findings

E1.    Whether P had around HK$4.5M by the end of 1992-1993 from which he was contributed HK$2,351,694 (just over half of the purchase price) to acquire FF Shops

47.  As already mentioned, P’s case in this aspect of the case had transformed over time and was internally inconsistent which undermined his credibility.

48.  Inherently, as a matter of common sense, it is improbable at such a young age, being a college drop-out and having worked at the Takeaway Shop for only about a year (on P’s case) without having contributed to the capital, Father would agree to share profits with him as opposed to paying him wages.  This is so even bearing in mind that he worked full-time and was the son whereas D1 and Sai Kuen started off working part-time and were daughters who did not need to save as much money.  However, this was already reflected in the large discrepancy in their weekly wages.  Moreover, given that the Takeaway Shop was sold following Mother’s diagnosis and the decision to relocate to and retire in Hong Kong when Father was relatively not elderly, it is inherently improbable that Father would not have kept for himself the proceeds and profits for his own livelihood and Mother’s medical expenses.

49.  Furthermore, P’s case on profit sharing is not supported by any contemporaneous document even though he allegedly was responsible for accounting matters.  The passbook of P’s accounts showed entries from 1992 but not before.  To the extent that P relies on his oral assertion, I found him to be not a reliable and credible witness. 

50.  As for the entries in P’s passbooks showing deposits of HK$421,764.25 and HK$836,126.45 in P’s YY HKD A/C[49] together with the brought down balance of £74,519.21 in P’s YY Multicurrency A/C[50] in January and February 1992, and by end of December 1992 (as P relied in P’s Closing Submissions) totaling HK$4.8M odd, the source of those sums is not known and most of those sums were transferred out of those accounts, again to unknown whereabouts. 

51.  Most of the opening balance on 20 January 1992 was withdrawn on 7 February 1992 leaving only £0.21 in P’s YY Multicurrency A/C until a sum of £15,000 was deposited on 13 May 1992 and interest of £761.64 on 30 June 1992.  Again, the balance did not remain in the account for long and was withdrawn on 27 October 1992 leaving a balance of £1.85.  In December 1992, two further sums of £60,000 and £136,306 were deposited but with the withdrawals of £96,000, £20,000, £20,000 and §60,000 on 21 December 1992, 27 May 1993, 7 June 1993 and 22 June 1993 respectively most of it was withdrawn leaving a balance of £1,113.  These deposits followed by withdrawals soon after do not suggest this account was intended to be a savings accounts. In oral evidence, P suggested that large sums of withdrawals were for timed deposits but this was unsupported by any contemporaneous document.  It is more likely to be, as Ds’ submitted, that this account was used for channeling funds from the profits of the Takeaway Shop back to Father.

52.  Besides, even if P, as he claims had at his disposal approximately HK$4.5M, there is simply no documentary evidence to prove that he had contributed to HK$2,351,694 to the acquisition of FF Shops.

53.  According to the Provisional Sale and Purchase agreement of Shop No.55, a provisional deposit had to be paid upon signing of that agreement (30 May 1993), a further deposit shall be paid upon the signing of a formal sale and purchase agreement (on or before 7 June 1993) and the balance paid upon completion which was to take place on or before 28 June 1993.[51] The provisional sale and purchase agreement and formal sale and purchase agreement for Shop No. 54 was not before me but from the Land Search[52], the agreement for sale and purchase was dated 28 May 1993 and assignment was dated 25 June 1993 so similar time for payments is likely.  P relied on the proximity of the transfer of various sums from P’s accounts on 27 May 1993, 7 June 1993, 22 June 1993 and 1 July 1993 as demonstrating that he had contributed his monies to the acquisition of the FF Shops.  However, even if that was the case, there is no evidence that these amounts transferred to Father or Father and Mother’s accounts were for the acquisition of FF Shops.  The odd amounts, the total sums allegedly transferred to Father not being exactly 50% of the total purchase price and the last transfer being after the completion date all goes against P’s case.

54.  I am not satisfied on a balance of probabilities that P has proved his case on resulting trust such that the beneficial title of FF Shops is different from the legal title.

E2.    Whether there was an arrangement or agreement between Father and P that P would be the 50% owner of FF Shops and Father acted in breach of trust in selling the FF Shops

55.  As for P’s case that there was a common agreement or understanding that Father and him that they would be joint owners of FF Shops to give rise to a common intention constructive trust, I am of the view that it is inherently unlikely Father would need to purchase FF Shops with the assistance of P and intended the purchase to be a joint investment. 

56.  If P had amassed HK$4.5M by the time of his return to Hong Kong in 1992, Father no doubt would have the same if not more.  Initially, P himself accepted that Father no doubt would be entitled to a larger share of the profits. 

57.  The excuse of putting FF Shops in Father’s name because P was too busy to manage the shops does not make sense for the reasons already explained.  On the other hand, Father was retired and it made total sense for him to acquire FF Shops by himself as his own investment. 

58.  The parties’ subsequent conduct is also not consistent with P’s case of the common agreement or understanding.  Whilst P relied on the fact that rental proceeds of FF Shops were paid into a joint account held by Father and P, the only documentary evidence was a tenancy agreement dated 29 January 2005 which provided payment to an account number which was the Hang Seng Bank account belonging to P and Father, yet above the account number was written Father’s name.  There is no evidence of any rental from FF Shops actually being paid into Father and P’s joint account. Considered together with Father being named the landlord, it is more consistent with Ds’ case and inconsistent with P’s case. 

59.  There is not one contemporaneous document of the alleged agreement or understanding with Father.  Insofar as P’s case rest on his testimony, I have found him to be an unreliable witness.

60.  Overall, I do not find that P has established on a balance of probabilities that there was a common agreement, intention or understanding between him and Father that he is the 50% beneficial owner of FF Shops. 

61.  It follows that it is not necessary to further consider the sale of FF Shops (which Father was entitled to sell whenever he liked) and the acquisition of TSH Shop as the FF Shops’ Proceeds belonged to Father solely and he did not owe any fiduciary duties to P.  In any event, P’s case is bound to fail as there is simply no evidence to prove FF Shops’ Proceeds was subsequently used to purchase TSH Shop given the lapse of time between the sale of FF Shops in November 2009 and purchase of TSH Shop in May 2011[53] and any monies claimed to belong to P is not traceable to D1’s Hang Seng Bank account from which the entire purchase price of TSH Shop was paid[54].  The claim against D1 for knowing receipt is therefore also doomed to fail.

E3. Who is the true source of funds for the acquisition of House 71 and House 72

62.  For the acquisition of House 71 and House 72:

(1)     On 23 November 1995, a total of HK$504,780 (two sums of HK$252,390) were paid to the Hong Kong Government from the joint Hang Seng Bank account of P and Father (No. 259-4-033306) for the acquisition of Lots 935 and 936[55];

(2)     Pursuant to the construction contract entered into with Sun Wing Construction & Decoration Design (“Sun Wing”) dated 22 July 1996 of HK$860,000 for each House 71 and House 72[56], an initial deposit of HK$43,000 was paid but there is no documentary proof who paid this amount;

(3)     4 cheques were issued by Father to Sun Wing in the amounts of HK$129,000, HK$1M, HK$250,000 and HK$414,000 on 17 September 1996, 7 April 1997, 30 July 1997 and 26 February 1998 respectively.

63.  On 16 September 1998, additional construction costs of HK$24,695.64 were incurred to Sun Wing by Father.  Whilst the invoice stated the owner was Father and the additional costs were for House 72, HK$15,000 was stated to be for the aluminum sliding doors for the three floors of each of the buildings.

64.  The above all contradicts P’s case that he had paid for the full costs of acquisition costs of both House 71 and House 72. Rather, it supports Ds’ case that Father paid for the construction of all three Houses.

65.  On the other hand, P’s case on various payments to reimburse Father is convoluted[57].  In respect of the construction costs:

(1)     P said that he paid HK$43,000 in cash to Father for the initial deposit for the construction contracts with Sun Wing for both houses[58]. However, there is no documentary evidence to support this and besides, the initial deposit is HK$43,000 for each of the houses;

(2)     On 16 September 1996, HK$130,000 was transferred from P’s YY HKD A/C[59]. However, this amount does not match with the cheque Father issued in the sum of HK$129,000 and in any event, it is not apparent from the passbook that this sum was transferred to Father;

(3)     On 25 September 1996 from the matured fixed deposit he transferred HK$356,310.57 from P’s YY HKD A/C[60].  However, the passbook does not show this odd amount was transferred.  P says it is “inferred” from the fixed deposit amount reduction. In any event, it does not show this amount was transferred to Father;

(4)     On 13 December 1996, he transferred HK$260,000 from P’s YY HKD A/C[61] but again this amount does not match Father’s cheques and from the passbook it cannot be seen that this amount was transferred to Father;

(5)     On 7 April 1997, he transferred HK$1M from P’s YY HKD A/C derived again from the reduction in the fixed deposit sum[62].  However, the passbook cannot show this amount was transferred to Father; and

(6)     On 31 July 1997, he transferred HK$250,000 from P’s YY HKD A/C[63] but the passbook cannot show this amount was transferred to Father.

66.  Given the amounts allegedly transferred do not match in both the amount and timing, and the lack of documentary records to demonstrate monies were transferred to Father, I am not satisfied that it has been proved on a balance of probabilities that P contributed to the acquisition and construction costs of both House 71 and House 72.

E4.    Whether P and Father had an agreement and/or common understanding as pleaded in paragraph 13 of RASOC (summarised in paragraph 17 above)

67.  I have already mentioned above how P’s case that he was the beneficial owner of both House 71 and House 72 is inconsistent with the contemporaneous documents, undisputed background and subsequent conduct of the parties.

68.  Moreover, I do not find it inherently probable that Father would agree with P for P to take up the acquisition and construction costs for both House 71 and House 72, the latter where the whole family resided for a considerable period of time[64].  As already mentioned, in terms of financial abilities, Father’s means should not be any less than P’s and it is unlikely he would agree to P to pay for the construction of his own house.

69.  On the other hand, it is not disputed that at around the time of the construction of House 71 and House 72, P was employed earning around HK$10,000/month and needed Sai Kuen’s help to obtain a mortgage loan for purchase of a Shenzhen flat in September 1997 for the consideration of HK$1,215,696.  If he had as alleged the financial means to pay in cash the total acquisition and construction costs of House 71 and House 72 (over HK$2.48M) there is no credible explanation for taking out a mortgage loan of HK$850,987.20 with Sai Kuen[65] and incurring interest charges.  Whilst P explained his cash was tied up in FF Shops and building House 71 and House 72, it did not make sense he would not use his cash to purchase his intended matrimonial home with his long-term girlfriend living in Shenzhen but rather use his cash on investments.

70.  As for P’s reliance on his alleged contribution to the acquisition and construction costs, I have rejected this above.

71.  In all, I do not find that P has satisfied his burden to prove that there was an agreement or common understanding with Father that he would be the sole beneficial owner of House 72 and Father would be entitled to withdraw up to two units’ rental.  Furthermore, not having satisfied that P paid for the acquisition and construction of House 72, this is also fatal to making out a case of detrimental reliance and unconscionability for P’s claim based on constructive trust.

E5.    Whether Father acted in breach of trust and/or D1 knowingly received or dishonestly assisted Father in breach of his fiduciary duties owed to P in respect of the Unauthorised Withdrawals and/or the Missing Rental

72.  As P acknowledged that the claim for Missing Rental and Unauthorised Withdrawals will not succeed if P does not succeed on his claims on establishing a trust[66], it is not necessary to further consider this issue.

E6.    Mense profits?

73.  In light of my findings that no constructive and resulting trust arises in favour of P in respect of House 72 which belonged solely to Father, this issue does not arise.  However, for completeness, I will make the following findings.

74.  From the expert report, the market value rent for all three flats of House 72 is HK$48,200 per month.  This has not been challenged and accordingly I so assess the mense profits for House 72 to be calculated from May 2018.

F.      Conclusion and Orders

75.  Accordingly, I will order P’s claims against Ds be dismissed.  Ds’ counterclaim is also dismissed.

76.  I make a costs order nisi that P pays the costs of this action to Ds, to be taxed, if not agreed.  Any application to vary the costs order nisi should be made by application within 14 days from the handing down of this Judgment.