FU LAM LAM v. FU TING TING

DCMP 3116/2021

[2025] HKDC 474

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 3116 OF 2021

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JUDGMENT

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Introduction

1.  This case involves a dispute between two sisters over the beneficial ownership of the property known as Suite 3007, 30^th Floor, Tower A, Galaxia, No 3 Lung Poon Street, Diamond Hill, Kowloon, Hong Kong (“the Property”).

2.  In short, it is the Plaintiff’s case that both she and the Defendant are entitled to the beneficial interest of the Property in equal shares. By her Statement of Claim, she now claims, inter alia, for declarative relief to that effect, as well as for an Order for sale of the Property pursuant to sections 2 and 6 of the Partition Ordinance, Cap.352.

3.  On the other hand, the Defendant’s case is that whilst the parties had initially contributed equally to the mortgage repayment and outgoings, there had been a common intention between them since around December 2002 or January 2003 that their ownership would be in proportion to their respective contributions to the mortgage payments and outgoings. According to their subsequent contributions, the Defendant now counterclaims, inter alia, that she is entitled to 79.6% of the beneficial interest in the Property, whilst the Plaintiff would own only 20.4%, and that the Property is now held on common intention constructive trust, or result trust, in that proportion.

The undisputed facts

4.  There is no dispute that the Property was acquired at the price of HK$2,815,000 by the Plaintiff and the Defendant as joint tenants on 23 November 1998, and that the purchase was funded in the following manner:

(i)  Each of them had contributed to the deposit and miscellaneous expenses in equal shares;

(ii)  Upon completion, a mortgage loan in the amount of HK$1,970,000 was obtained by both of them in joint names from CITIC Ka Wah Bank Limited (“the CITIC Mortgage”); and

(iii)  A mortgage loan of HK$600,000 was also taken out by them jointly from the Hong Kong Housing Society (“the HKHS Mortgage”).

5.  It is also not disputed that since their acquisition of the Property, the parties had been paying the mortgage instalments and other outgoings (eg management fees and utilities) related to the Property in equal shares for about 4 years until around December 2002.

6.  On 21 December 2001, the CITIC Mortgage was redeemed upon a re-mortgage of the Property by them jointly in favour of Wing Lung Bank Limited for a mortgage loan of HK$1,300,000 (“the Wing Lung Mortgage”), repayable by 180 instalments. The mortgage account was held in the joint names of the parties (“the Mortgage Account”).

7.  In December 2002, the Plaintiff married Mr Lee Ching Kit (“Mr Lee”), and the Plaintiff indicated to the Defendant that she would no longer reside at the Property. She moved out soon afterwards. There is no dispute that since then, the Defendant had solely effected payment of the mortgage instalments. The Wing Lung Mortgage was eventually fully repaid on 11 June 2007, and the HKHS Mortgage was fully repaid on 28 September 2009.

8.  The present dispute arises over how the mortgage repayments made by the Defendant were to be treated. In addition to that, given that at some point in time as will be discussed below, Mr Lee had contributed an amount of HK$730,000 to the Mortgage Account. How the parties treated this contribution to the Mortgage Account will also be discussed below.

9.  The facts leading up to the commencement of the present action were that in April 2019, after the father of the two sisters passed away, the Defendant had continued to reside at the Property and did not move to live with their mother, contrary to what had been allegedly agreed between her and the Plaintiff.

10.  Eventually, the Plaintiff registered a notice of severance of the joint tenancy at the Land Registry on 25 March 2021. The notice was subsequently served on the Defendant on 21 April 2021. On 14 May 2021, the Defendant’s solicitors sent a letter to the Plaintiff’s then solicitors, asserting that since the Defendant had paid 79.6% of the purchase price of the Property, and the Plaintiff had paid 20.4%, the Plaintiff only held an interest in the Property in that proportion.

11.  Subsequently on 12 August 2021, the Plaintiff commenced the present action against the Defendant, seeking an order for sale of the Property. On 15 June 2022, the court ordered that this action shall be continued as if it had been begun by writ, and pleadings were then filed by the parties.

The disputed issues

12.  It is the Plaintiff’s pleaded case that:

(i)  Although the Defendant would solely occupy the Property after the Plaintiff had moved out of the same upon her marriage, the parties had agreed that they would continue to be joint tenants;

(ii)  It was also agreed that the Defendant would be solely responsible for the repayment of the mortgage loans. However, half of the mortgage instalments so paid by her would be treated as rental or financial contribution from the Defendant on the Plaintiff’s behalf to reflect the Defendant’s sole occupation of the Property; and

(iii)  The Defendant would be solely responsible for all the outgoings of the Property such as management fees and utilities charges, in order to reflect her sole occupation of the Property (“collectively the Sole Occupancy Agreement”).

13.  On the other hand, according to the Defendant, the Plaintiff told her in around December 2002 that after her marriage, she had to contribute to the mortgage payments for her matrimonial home, and therefore chose to withdraw and cease to contribute further mortgage repayments and outgoings of the Property.

14.  However, as the property market had fallen and comparable units in Galaxia were sold at prices far below the purchase price of the Property, and the Plaintiff was unwilling to bear losses, the parties agreed not to sell the Property, the Defendant would contribute to the mortgage instalments and outgoings alone. There was a common intention between the parties that their shares of ownership of the Property would then be in the proportion of their respective contributions to the mortgage repayments and outgoings related to the Property. The Defendant’s case is that since then, she went on to pay all the mortgage instalments and outgoings on her own.

15.  It is also the Plaintiff’s pleaded case that the aforesaid HK$730,000 paid by Mr Lee in August 2005 was made on behalf of the Plaintiff as a one-off mortgage contribution for the early repayment of a substantial portion of the outstanding Wing Lung Mortgage, with a view to alleviating the burden of bank interest on the parties. This was an amount substantially more than the contribution by the Defendant in the amount of HK$250,000 at that time.

16.  In this regard, it is the Plaintiff’s case that she and the Defendant had orally agreed in 2005 (“the 2005 Agreement”) that the Defendant would repay sums (not identified at that time) of money to Mr Lee to off-set the one-off mortgage contribution so as to equalise their respective contributions to the Wing Lung Mortgage. The Defendant denies that the sum of HK$730,000 was paid by Mr Lee on behalf of the Plaintiff as a one-off mortgage repayment. Instead, the Defendant says this was a sum advanced by Mr Lee to her on around 11 August 2005 as a personal loan, which the Defendant had subsequently repaid in full as follows:

	Date of Repayment	Amount (HKD)
(i)	October 2005	130,000
(ii)	September 2006	200,000
(iii)	November 2007	300,000
(iv)	Shortly before Mid-Autumn Festival in 2008	100,000
	TOTAL	730,000

17.  The Plaintiff says that although Mr Lee had stopped receiving sums of money from the Defendant after she had made certain payments to him under the 2005 Agreement, since Mr Lee’s one-off mortgage contribution had already been equalised, it was the Defendant who insisted on making such payments to the Plaintiff to account for her continued sole occupation of the Property. Hence, the Plaintiff and the Defendant had agreed that the Defendant would make payments from time to time to account for her sole occupation of the Property.

18.  According to the Plaintiff, the Defendant had in fact passed the title deeds of the Property to her after all the mortgages had been discharged in September 2009. The Defendant denies having so passed the title deeds to the Plaintiff. Instead, according to the Defendant, after the mortgages over the Property were fully repaid, she believed the title deeds to the Property had been kept in their mother’s safe deposit box for safekeeping.

19.  She also claims that the Plaintiff had requested to maintain a “family home” (娘家) such that she has a place to stay in the event of any disputes with her husband. The Defendant says the Plaintiff had thus kept a number of her personal belongings at the Property, such as her clothes, books, sporting goods, etc, and she had continued to use the Property as her correspondence address, and had continued to visit, sometimes with her children, the Property, for meals and rest. The Plaintiff has continued to keep the keys to and the residence cards for the Property.

20.  The Plaintiff also alleges, which is denied by the Defendant, that there had been agreed between the two of them in 2009 that once either of their parents had passed away, the Defendant would move out of the Property and live with the surviving parent to take care of him or her, and the Property would be leased out or sold (“the Future Plan”).

21.  The Plaintiff also alleges that the Defendant had made a payment of HK$54,000 to her in around mid-2019 as the Plaintiff had proposed to her that she should either pay rent to the Plaintiff, or the two of them should sell the Property and share the proceeds in equal shares, in response to which the Defendant indicated that she would pay rent in the sum of HK$9,000 per month. The Defendant thus issued a cheque in the aforesaid sum of HK$54,000 in favour of the Plaintiff. In this regard, the Defendant’s case is that after their father had passed away in 2019, the Plaintiff began to seek to harass her into selling the Property or paying rent to the Plaintiff. According to the Defendant, the Plaintiff was in need for money at that time. Thus, the Defendant paid her HK$54,000 partly out of love for her sister, and partly in the hope of putting a stop to the Plaintiff’s acts of harassment. The payment was also made subject to the Plaintiff’s removal of her belongings from the Property, and returning the keys and residence cards, but this was never done. Thus, the Defendant now also counterclaims for restitution of the amount on the ground of unjust enrichment.

Main issues in dispute

22.  According to the Agreed List of Issues filed by the parties, and in light of the parties’ respective cases set out above, there are the following three major issues to be decided on by the court:

(i)  Whether the Plaintiff and the Defendant have beneficial ownership in the Property in equal shares or, as alleged by the Defendant, that she has 79.6% whilst the Plaintiff has 20.4% of the beneficial interest in the Property;

(ii)  Depending on the court’s findings on issue (i) above, the respective reliefs, if any, entitled to by the parties; and

(iii)  The issue concerning the dispute over the nature of the payment of HK$54,000 by the Defendant.

The applicable legal principles

23.  There is little dispute over the general principles that are applicable in this case.

Common intention constructive trust

24.  The law on common intention constructive trust is trite. In Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985, a leading case referred to by both parties, the Court of Appeal cited Jones v Kernott [2012] AC 776 with approval, and held, with regard to homes held in joint names, that (see para.5.16):

(i)  The starting point is there is a presumption that equity follows the law and they are joint tenants both in law and in equity;

(ii)  The presumption can be displaced by showing (a) that the parties had a different common intention at the time of acquisition, or (b) that they later formed the common intention that their respective shares would change;

(iii)  Their common intention is to be deduced objectively from the parties’ conduct;

(iv)  It is only in those cases where it is clear either (a) the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, then each party is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property;

(v)  Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended or fair.

25.  The onus of proof is upon the person seeking to show that the beneficial ownership is different from the legal ownership, and in what proportion. So, in joint-name cases, it is upon the joint owner who claims to have other than a joint beneficial interest to discharge such onerous burden: see Mo Ying at para.5.5. In this regard, the following observations made by Lady Hale in Stack v Dowden [2007] 2 AC 423 are instructive:

“68. The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual… It cannot be the case that all the hundreds of thousands, if not millions, of transfers into joint names using the old forms are vulnerable to challenge in the courts simply because it is likely that the owners contributed unequally to their purchase.

69. In law, "context is everything" and the domestic context is very different from the commercial world. Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties' true intentions. These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties’ relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses. When a couple are joint owners of the home and jointly liable for the mortgage, the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is owner of the home. The arithmetical calculation of how much was paid by each is also likely to be less important. It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally. The parties' individual characters and personalities may also be a factor in deciding where their true intentions lay. In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they always take pride of place over natural love and affection. At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.

70. This is not, of course, an exhaustive list. There may also be reason to conclude that, whatever the parties' intentions at the outset, these have now changed. An example might be where one party has financed (or constructed himself) an extension or substantial improvement to the property, so that what they have now is significantly different from what they had then.” (Underline added)

26.  Further, given the dispute in this case is purely a domestic one, it is instructive to note what Lord Walker said in Stack at para. 33 on such common intention:

“In the ordinary domestic case where there are joint legal owners there will be a heavy burden in establishing to the court’s satisfaction that an intention to keep a sort of balance-sheet of contributions actually existed, or should be inferred, or imputed to the parties. The presumption will be that equity follows the law…” (Underline added)

27.  Such a “balance-sheet” approach has also been commented on as “artificial” and disapproved by the Court of Appeal in Chen Lily v Yip Tsun Wah Alvan (CACV 4/2016, 28 October 2016) at para 24.4.

28.  As such, it is only in exceptional cases where the court may find, in an ordinary domestic case, that there was an actual common intention by mutual agreement that each party should have an interest in proportion to their respective contributions.

29.  More pertinently, there is a distinction between pre-acquisition common intention and post-acquisition common intention. For a party to establish post-acquisition common intention (ie the parties intending a change in the shares in which the beneficial ownership is held), compelling evidence is needed, and the court should be slow to infer from conduct alone that the parties intended to vary existing beneficial interests established at the time of acquisition (see: Stack at para. 138 and Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 at paras. 34-36).

30.  Upon establishing such a common intention, it will be necessary for the party asserting a claim to a beneficial interest against the party entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust (see Mo Ying, at para.5.8, referring to Lloyds Bank plc v Rosset and Another [1991] 1 AC 107, at p.132 per Lord Bridge of Harwich).

Resulting trust

31.  The legal principles are summarized by DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors (HCA 1734/2009, 8 April 2014) at para 58(1):

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

32.  However, the Plaintiff points out that when both parties are advancing positive cases on the parties’ intentions, it is instructive to note the following observations made by Godfrey Lam J (as Lam JA then was) in Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at para.45:

“45. The plaintiff seeks to achieve that by pleading both a resulting trust and a constructive trust. However, given that both parties allege there was express discussion and actual intention as to where the beneficial interest in the Property should lie, there is little scope for the operation of resulting trust: Re Superyield Holdings Ltd [2000] 2 HKC 90, 111. At the commencement of the trial, indeed, counsel agreed that constructive trust is the real issue, and that resulting is not relevant except perhaps if I should decide to reject both parties evidence on intention.” (Underline added)

33.  In particular, it may be pertinent to note at this stage the Plaintiff submits that the Defendant’s case on resulting trust cannot get off the ground for the following reasons:

(i)  Resulting trust arises at the time of acquisition, the time to take stock of the respective interest taken by the parties is at the time of acquisition (see Re Superyield Holdings Ltd [2000] 2 HKC 90 at 107E-F);

(ii)  Where some or all of the purchase price is borrowed (as in this case), the acceptance of a personal liability as against the lender to repay, for instance, by the execution of a mortgage containing a personal covenant to repay, constitutes a contribution to the purchase. Where the covenants to repay the lender is joint and several, each party to the covenant to repay is taken to have contributed half of the sum raised for the purchase (Re Superyield Holdings Ltd at 107G-I). The Plaintiff says that in the present case, the two mortgages funding the purchase price of the Property were taken out in joint names and the covenant to repay shall be taken as joint and several. It is said that even if one takes into account the Wing Lung Mortgage, the analysis is the same as such re-mortgage was also taken out in joint names and there were no contractual differences between the parties as to the responsibility to repay the loan taken;

(iii)  For post-completion unequal contributions to mortgage repayments, the court in Re Superyield Holdings Ltd observed at 108A-D that:

“The better view is that post-completion unequal contributions to mortgage repayments, whether by prior agreement or otherwise, cannot affect the quantum of interest taken by the respective parties at the date of acquisition under, I emphasise, a resulting trust. Such contributions may, however, have a bearing on the remedies which may be available under what is now usually referred to as a common intention constructive trust or under some form of proprietary estoppel … The fact that the mortgage debt was not repaid by the parties equally may, however, be relevant to an equitable accounting between the parties”

34.  Drawing from the above propositions as propounded by the Court in Re Superyield Holdings Ltd, the Plaintiff says that the Defendant’s case on resulting trust certainly fails since at the time when the Property was purchased, the parties were taken to have contributed the purchase price equally (ie by equal contribution of the deposits, by taking out the two mortgages funding the remainder of the purchase price in joint names and actually intended, at the time of acquisition, to repay the mortgages in equal shares).

35.  On the other hand, the Defendant says that Re Superyield Holdings Ltd does not give rise to a clear-cut principle of law whereby the presumption of resulting trust can never arise in respect of unequal mortgage contributions. In that case, Recorder Kotewell SC considered the facts at length and observed (at 116A-B) that where, on the face of it, both parties are legally liable under a mortgage arranged to purchase the property, that is likely (but not necessarily) a determinative factor which the courts consider in deciding in whom or in what proportion the beneficial interest in the property vests.

36.  In any event, the Defendant also says if it is possible to resolve the matter by reference to the actual intention or express agreement of the parties (based upon which a common intention constructive trust arises), there is no need to resort to the doctrine of resulting trust, which is a legal presumption: see Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at para 1.3, per Lam V‑P; Leung Siu Man & Ors v Leung Yiu Tai [2019] HKCFI 1971 at paras.25-27, per Peter Ng J.

Unjust enrichment

37.  The law in this regard is trite. In the often-cited decision in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, at para.67, the Court of Final Appeal asked the following four questions:

(i)  Was the defendant enriched?

(ii)  Was the enrichment at the plaintiff’s expense?

(iii)  Was the enrichment unjust?

(iv)  Are any of the defences (eg that of change of position) applicable?

38.  It is not disputed that the Plaintiff had received and banked in the Defendant’s cheque in the sum of HK$54,000 in March 2020. As the Defendant has pointed out, the question here is whether the Defendant is able to make out the unjust factor of “total failure of consideration” or “total failure of basis”. In this regard, the learned editor in Goff & Jones: the Law of Unjust Enrichment (10^th Ed) at para, 13-02 stated that:

“The basis of the transfer must be jointly understood as such by both parties. It must be ascertained objectively, and the parties’ uncommunicated subjective thoughts are irrelevant. Hence, if only one of the parties has a particular basis in mind, and that basis fails, no claim arises in unjust enrichment… The joint basis of the transfer should be assessed objectively – a purely subjective assessment would be both impractical and undermine the parties’ legitimate expectation…”

39.  Further, in Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149, the English Court of Appeal observed at paras.79-80 that:

“79. The core concept of ‘failure of basis’ is that a benefit has been conferred on a joint understanding that the recipient’s right to retain it is conditional. If the condition is not fulfilled, the recipient must return the benefit … Whilst failure of basis ranks alongside the unjust factors of mistake, duress, and undue influence as a factor negativing consent, it differs in that it is concerned with qualification of consent, as opposed to impaired or vitiated consent…

80. It is common ground that the meaning of failure of basis extends beyond failure of promissory consideration payable under a contract or a failure of contractual counter-performance … failure of consideration for a payment … means that the state of affairs contemplated as the basis or reason for the payment has failed to materialise or, if it did exist, has failed to sustain itself.”

Order for sale

40.  As for the court’s power to make an order for sale, the Partition Ordinance, Cap 352 provides as follows:

(a)  Section 2 – Where a property is held by two or more persons as joint tenants or tenants in common, the court may make an order for the partition of the property pursuant to section 4 or for the sale of the property pursuant to section 6 or refuse to make an order;

(b)  Section 6(1) – In any proceedings under the Ordinance, where it appears to the court that a partition of the property would not be beneficial to all the persons interested by reason of (a) the nature of the land to which the proceedings relate; (b) the number of the persons interested or presumptively interested; (c) the absence or disability of some of the persons interested; or (d) any other circumstances, the court may make an order for the sale of the property;

(c)  Section 6(3) – Without prejudice to section 6(1), if any person interested in the property applies to the court to make an order for the sale of the property instead of an order for partition, then, unless the other persons interested undertake to purchase the interest of the party applying for an order for sale, the court may, if it thinks fit, make an order for the sale of the property;

(d)  Section 6(4) – On making an order under section 6(1) or (3), the court may direct a distribution of the proceeds of the sale and give all other necessary or proper consequential directions.

(e)  Section 6(5) – On a sale under section 6, the court may allow any of the persons interested in the property to bid at the sale, on such terms as the Court deems reasonable as to (a) non-payment of deposit; or (b) setting off or accounting for the purchase money or any part thereof instead of paying the same; or (c) as to any other matters.

41.  The relevant principles have been set out in Wong Chun Kei v Poon Vai Chung [2007] 1 HKLRD 825 at paras.18-19 and 95 per Recorder Joseph Fok SC (as he then was) as follows:

(a)  A co-owner has a basic right to rid herself of the shackles of co-ownership, and if he has no other remedy, to ask for an order for partition or sale. The court should make an order unless the court is persuaded that a sale is objectively not beneficial to all co-owners or would result in very great hardship to one owner;

(b)  Where an unwilling co-owner can terminate his co-ownership otherwise than by way of partition or sale under the Ordinance, the court must give considerable weight to that factor.

42.  The Ordinance does not enable the court to oblige an owner to sell his share to the party giving an undertaking pursuant to section 6(3). Where the court declines to make an order for sale of the property, the party applying for such order may choose to accept the undertaking or to retain his ownership. Thus, if a party succeeds eventually, and in the event that the other party opts to accept the successful party’s undertaking and sell her share in the Property, she may apply to the court for directions regarding valuation pursuant to section 6(3) of the Ordinance (see Ma Wei Hua v Ngai Man (HCMP 172/1998, 14 March 1998) at pp 3-4 per Findlay J).

The common intention issue

43.  As the Plaintiff has submitted, she is entitled to rely on her legal title to the Property. However, the maxim that equity follows the law is only a starting point. Given the factual dispute over whether there had been a common intention established between the parties in late 2002, the proper approach for the court is to consider this issue first on the facts and evidence. In this regard, the Defendant has referred to the case of Gany Holdings (PTC) SA v Khan [2018] UKPC 21 per Lord Briggs at para.17:

(i)  First, the Court looks to see whether there is a written or oral declaration as to the beneficial interests in the property.

(ii)  Second, in default of any such declaration, the Court looks for evidence from which a common intention as to beneficial ownership may be inferred, which may include “evidence of statements made by either party before, at the time of or even after the relevant transfer, the parties’ conduct, and the factual context in which the transfer takes place”.

(iii)  Where there are several possible conclusions as to beneficial interest, “a choice…may properly be arrived at by a process of elimination, whereby the most unlikely conclusions are first removed, leaving the least unlikely as the correct one”.

44.  In the present case, a lot would depend on my assessment of the credibility of the witnesses, and in this regard I have been referred to the following general principles set out by DHCJ Eugene Fung SC in Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors (HCA 1734/2009, 8 April 2014) at paras. 77-80:

(a)  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;

(b)  In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(c)  Importance is attached 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;

(d)  The court ought to caution itself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses, or from the assessment of the witnesses’ character.

45.  The Plaintiff’s evidence basically covered her case as set out above. She said in around 2002, in anticipation of her marriage with Mr Lee, she and the Defendant had reviewed how the Property, the mortgage loan repayments, and the outgoings related to the Property should be dealt with. According to her, various options had been considered and discussed between them, such as to rent out the Property in return for income, or to let Mr Lee move into the Property and share the mortgage repayments, but the overarching principle underlying all such options was that the two of them would continue to enjoy equal interest in the Property. However, she said that the Defendant was only amendable to occupying the Property on her own and be solely responsible for the mortgage loan repayments and all the outgoings of the Property, to which she later agreed. This led to the Sole Occupancy Agreement, whereby they agreed that the Defendant would be solely responsible for all the mortgage repayments, half of which was to be treated as rent or financial contribution from the Defendant to solely occupy the Property. As for outgoings related to the Property, such would be fully covered by the Defendant in light of her sole occupation of the Property.

46.  Nevertheless, during her evidence, she admitted that she cannot recall the details of the exchange or dealings between her and the Defendant some 20 years ago. For example, although she does not dispute that the Defendant has paid Mr Lee HK$730,000, she cannot now remember the exact amount of the first two payments made by the Defendant to Mr Lee, and the exact amount of the third payment made by the Defendant to him, but she does remember that she refused to accept the alleged last payment by the Defendant to account for her continued sole occupancy.

47.  The Defendant’s evidence covers her case as already set out above. She also said that at the time when they held discussions and reached a common intention in late 2002, the property market had fallen, and the parties agreed not to sell the Property, so that they would not suffer capital loss. In particular, the Plaintiff wished to treat her contributions to the Property from 1998 to 2002 as a long-term investment. In the circumstances, the parties agreed that the Defendant would be solely responsible for mortgage repayments and outgoings relating to the Property, and the parties’ respective beneficial interest in the Property would be in proportion to their respective contributions to the mortgage repayments and outgoings.

48.  The Defendant pointed out that at the time, the mortgage instalments amounted to approximately HK$15,000 to 16,000, while the market rent for the Property was approximately HK$7,000 to 8,000. As such, they could not have intended or agreed that the Defendant’s payment of the mortgage instalments would be treated as rent (“以租代供”) or as financial contribution on the Plaintiff’s behalf.

49.  The Defendant further said that in 2005, she intended to study in the UK, and approached the Plaintiff to ask if she would make further financial contributions to the Property, or alternatively whether she would agree to sell the Property. However, as the market price of the Property was still at a low level, the Plaintiff did not wish to sell the Property nor to inject further funds as her financial contributions, as the Property was a loss-making investment. Instead, it was agreed that Mr Lee would advance a personal loan of HK$730,000 to the Defendant (in addition to an amount of HK$250,000 to be funded by the Defendant from her own resources) for early repayment of a substantial part of the Wing Lung Mortgage. Such personal loan was unrelated to the Plaintiff and did not form part of her financial contributions to the Property. In reaching such an arrangement, the Plaintiff avoided suffering any loss from the fall in the property market. This, the Plaintiff denies. According to the Plaintiff, the parties had agreed that the HK$730,000 to be paid by Mr Lee would be treated as part of the Plaintiff’s contribution to the mortgage repayment.

50.  As aforesaid, the Defendant said she has subsequently repaid the sum in full to Mr Lee by way of four payments between 2005 and 2008.

51.  In 2009, when the title deeds to the Property were released after all the mortgages were discharged. The Plaintiff said the Defendant then passed over all title deeds to her for her safekeeping. On the other hand, the Defendant said she accepted the Plaintiff’s offer to place the title deeds in their mother’s safe deposit box (to which only their mother and the Plaintiff had access) for safekeeping. The Defendant said she never agreed to leave the title deeds in the Plaintiff’s possession.

52.  The Defendant said in 2019, the Plaintiff demanded for the first time that the Defendant pay rent for her occupation of the Property, contrary to their common intention. Due to continuous harassment by the Plaintiff, the Defendant said she then paid a sum of HK$54,000 to the Plaintiff, subject to the condition that the Plaintiff shall remove all her belongings from the Property and return the keys and residence cards, and the parties’ calculations of their respective share in the Property. However, this was not done by the Plaintiff.

53.  The Defendant also explained during cross-examination that she was happy for the parties to continue to be registered as joint tenants after the common intention was reached, as well as after 2009, when all the mortgages over the Property were discharged. She believed that if she died before the Plaintiff, she would be happy to leave the Property for the Plaintiff’s benefit in the long run, as her relationship with the Plaintiff had improved after her niece and nephew were born. She also said she trusted the Plaintiff and believed that as the Plaintiff was more well-off than her, she would not seek to deprive the Defendant of what belonged to her.

54.  When cross-examined as to whether the common intention included the payment of outgoings as well, she said that the common intention of the parties in late 2002 or early 2003 was simple, namely that the parties’ respective shares would depend on their payments (“供幾多就拿幾多”). At the time, the parties did not expressly list in detail all the items that would fall under the word “供” (which could mean “contribute”) or “供款” (which could mean “mortgage repayments”) as mentioned in her witness statement, but according to her, it was understood or intended to include all the expenses that a property owner should be responsible for (eg government rates and management fees).

55.  In her evidence, Defendant clarified that due to the complexity of calculating all relevant and continuing outgoings over the course of 2 decades, in the present proceedings and for purposes of her Defence and Counterclaim, the Defendant chose to simplify the calculations by only including the purchase price, mortgage payments and related legal expenses in the table set out in para.3(f) of the Defence and Counterclaim, thereby limiting her claim to the Property to a 79.6% share.

56.  The Defendant also accepted that in late 2002 or early 2003, the parties had not expressly fixed a “cut-off point” for when the calculations pursuant to the common intention would take place. She explained that at the time, neither party could be sure when either or both of them might want to withdraw their investment in the Property. For example, the parties might choose to sell the Property before the full mortgage terms were completed, or the Defendant, who was 29 years old at the time, might decide to marry and move away, or to pursue studies abroad. The “cut-off point” would therefore be at the time of such decision, and the parties would proceed to calculate their respective financial contributions up to that point in time.

57.  The Plaintiff has contended that it is unusual for two close family members, who have intended to hold the Property in the form of joint tenancy initially in equal shares, to have agreed, subsequently, to a plan that may reduce the beneficial ownership of either one of them substantially. I do not agree with such a contention. First of all, as mentioned above, it seems that the Property was already making a loss from 2002. Secondly, there is nothing unusual for the Plaintiff to agree to reduce her share when the fact was to be that the Defendant would continue residing at the Property and to serve the mortgage loan on her own without any contribution from her.

58.  The Plaintiff also submitted that in her Defence and Counterclaim, the Defendant has only pleaded that the alleged common intention was that the parties’ respective ownership would be in the proportion of their respective contributions to the mortgage payments, without any mention about outgoings, although in an affirmation, she has mentioned about outgoings when describing the common intention between the parties. The Defendant is also attacked on her lack of any mention of a “cut-off” point in her pleaded case or in her witness statements. I do not think that this would lead to a necessary conclusion that there was no common intention as now alleged by the Defendant. The amount of such outgoings to be ascertained is a separate matter for calculation. It was understandable that the Defendant had not taken a “balance-sheet” approach in ascertaining the exact amount of such outgoings. What is most important is whether the parties had a common intention to reflect their shares of contributions in the ownership at the end.

59.  On the other hand, I agree with the Defendant’s contentions that the Plaintiff’s case of the Sole Occupancy Agreement (“以租代供”) as referred to by both the Plaintiff and Mr Lee in their evidence is unlikely even from an objective point of view.

60.  It would be unusual for the Defendant to have agreed to the Sole Occupancy Agreement, given the huge difference between the total monthly mortgage payments of around HK$15,000 to HK$16,000, and the then market rent, which was around HK$7,000 to HK$8,000 in late 2002 or early 2003. If what the Plaintiff said was true, the Defendant would be agreeing to pay a sum much higher than the market rent, especially when half the amount of the market rent (allegedly to be accounted by her for her sole occupation) was an even smaller sum of HK$3,500 to HK$4,000 only.

61.  The Plaintiff asserted that because the mortgage terms of the Property were for approximately 15 years, and the mortgage instalments were “fixed” during this period, at the end of the 15-year term, the parties anticipated that the market rent for the Property would have increased such that the mortgage payments and the rent would be equivalent, or the two would “reach equilibrium”. This explanation is not reasonable. It is impossible and contrary to commercial sense that the parties would be able to predict the trend in the market rent for the Property for the coming 14 or 15 years. The Plaintiff has not put forward any concrete basis upon which the parties could plausibly have made the far-fetched prediction that the mortgage payments and rent would “reach equilibrium” at the end of the 15-year mortgage term, and simply asserted that the market rent “must increase” over the years.

62.  Similarly, when asked why the Defendant would agree to this arrangement, given the substantial difference at the time between the mortgage instalments and the market rent, Mr Lee only said that it was an “easy” and “fair” arrangement in the long run (“長遠公平”), and that it did not really matter as the parties were on good terms.

63.  The fact was that on the Plaintiff’s evidence, there was eventually a surge in the interest rates of the mortgage loans in 2005, which led to an increase in the monthly mortgage instalments. This consideration could hardly have been missed by the parties originally, especially with their financial training background or experience.

64.  The Plaintiff was evasive and gave answers that were incredible, to avoid admitting that the Property as an investment was suffering a loss during the period from 2002 to 2009. For example, when shown that the transaction price of a comparable unit in 2002 was HK$2.298 million, the Plaintiff said that there was “merely” a difference of HK$500,000 compared to the purchase price of HK$2.815 million, and “only” HK$250,000 would be attributable to her half share. When she was further shown that the transaction price of a comparable unit in 2003 had fallen further to HK$1.8 million, the Plaintiff claimed that the Property was not yet a “negative equity” (負資產). Given the Plaintiff’s background as a holder of a Diploma in Finance and being a Certified Financial Analyst, the Plaintiff stated during cross-examination that she understood “負資產” to be describing the situation where the market price is lower than the down payment of the Property (樓價的跌幅多於首期), contrary to the common understanding that this means the situation where the market price is lower than the outstanding mortgage instalments, which she only finally adopted when she was re-examined. However, when further shown that the transaction price of a comparable unit in 2009 was only HK$3.22 million and therefore remained lower than the parties’ total contributions, the Plaintiff reiterated that she did not consider the Property to be loss-making since the said transaction price was above the 1998 purchase price.

65.  Concerning whether the Plaintiff had continued to occupy, enjoy or use the Property after she has moved out, the evidence shows that there was indeed a certain amount of use and enjoyment by the Plaintiff, although she no longer resided at the Property. When she married Mr Lee and moved out, she had kept a set of keys to the Property, and left various belongings thereat, which she claims were left for the Defendant’s use or disposal. These included the Plaintiff’s photographs, school certificates, personal diaries and notebooks and old travel documents. The evidence also shows that she did continue to use the address of the Property as her correspondence address for receiving letters concerning dividends from MTR Corporation Ltd and her bank account. She, Mr Lee and their children also maintained residence cards and smart cards of the Property for using the facilities of the estate, and for entry to the Property.

66.  The Plaintiff also does not dispute that she and her children had often paid visits to the Defendant at the Property, having meals and using the place.

67.  Fu Tze Hung (“Albert”), the brother of the Plaintiff and Defendant, also testified that the Plaintiff all along had her own room at the Property, and that everyone in the Fu family knew about this. He also said when their mother had suggested that he should stay in the Plaintiff’s room at the Property during his visits to Hong Kong, the Plaintiff had objected, claiming that her room at the Property was smaller than the extra room at their parents’ property in Tai Wo.

68.  The Defendant also says her case is further supported by the “WhatsApp” message sent by the Defendant to the Plaintiff on 16 July 2020, in which the Defendant stated that the room had all along been there and the Defendant had not prevented her from occupying it (“房間一直都喺度，從來無阻止過你住”). The Plaintiff says that the Defendant said this in light of an earlier WhatsApp message sent by the Defendant on the same day in the family group, in which the Defendant stated that she had lent the Plaintiff HK$100,000 previously, with a view to being able to reside at the Property for a long period, but the Plaintiff had kept asking estate agents to arrange for the viewing and eventual sale of the Property, so that the Defendant said she had long cancelled the rental agreement (“上次我俾咗十萬你，原本打算可以長住，但是你又揾地產經紀找人上來睇樓，最后我亦同意買[賣]樓，所以租務協議一早已經取消”). The Plaintiff claimed that the reference to the rental agreement (“租務協議”) referred to the parties’ “以租代供” arrangement to treat the Defendant’s payment of the mortgage instalments as rental in 2002, and that as the Defendant stated that such arrangement was now “cancelled”, the Plaintiff was free to move back into the Property, and that was the meaning behind the Defendant’s later message. However, as the Defendant has pointed out, it is clear from a plain reading of the WhatsApp messages that the so-called rental agreement (“租務協議”) in fact referred to the 2019 discussions concerning the Defendant’s payment of rent, instead of what they had agreed in 2002. Further, Mr Lee (who is also a member of the family WhatsApp group) also stated firmly during cross-examination that the reference to the rental agreement (“租務協議”) in the Defendant’s WhatsApp message was not a reference to the 2002 arrangement for payment of mortgage installments as rental (“以租代供”).

69.  I accept that sometimes it is difficult to draw a definitive line in terms of credibility of witnesses regarding domestic or family arrangements, but on the whole, on the basis of the foregoing analysis, I do not accept the Plaintiff’s evidence concerning her alleged Sole Occupancy Agreement that the Defendant was to continue paying for the mortgage instalments and other outgoings on account of rent (or to be treated as partly constituting financial contribution on behalf of the Plaintiff) for her occupation of the Property. I say this notwithstanding my view of the evidence being that over the years since late 2002 or early 2003, the Plaintiff had only limited use of the Property. However, the evidence also shows that her room in the Property had been open for her use if and when she decided to occupy it over the years.

70.  On the other hand, I accept the Defendant’s evidence concerning the common intention between the parties that eventually the parties were to hold respective shares of interest in the Property in accordance with their respective contributions to the Property. As I have clarified with the Defendant during her evidence, she now limits her case to the mortgage repayments and the related legal fees in this regard.

71.  Although the Plaintiff has exerted tremendous efforts in seeking to discredit the Defendant’s evidence in every possible way, I do not think the Defendant’s evidence has been shaken. For example, the Plaintiff says the Defendant claimed to have told the Plaintiff in 2009 that the Plaintiff only had around 20 to 30 percent of the beneficial interest in the Property, but this was never put in the pleadings or her witness statement or affirmations filed in this case. Even though this may be the case, as the crux of the matter is whether the parties had already come to a common intention in late 2002 or early 2003, on which I have already found for the Defendant for the stated reasons, I do not think the Plaintiff’s contention in this regard has significant bearing to the extent that the court ought not to accept the Defendant’s evidence. In this regard, the Plaintiff also admits that the Defendant had indeed mentioned about their approximate 80:20 proportion amounts of respective interest in March 2021 during an oral conversation.

72.  The Plaintiff further contends that given the dispute in this case is purely a domestic one, unequal financial contribution is unlikely to support an inference of an intention to change the proportion of the beneficial interest in a property. The Plaintiff refers to what Au Yeung J said in Chen Lily v Yip Tsun Wah Alvan (HCA 1695/2013, 7 December 2015) at para, 52:

“In a matrimonial or family context, financial contributions of the joint owners may vary over the period of their relationship due to temporary inability (e.g. loss of job or personal accident) or ability (e.g. a spouse rejoining the workforce or receiving a bonus) One spouse/ cohabitee may support the other who is temporarily in financial difficulty. It is not something so unusual as would call for re-distribution of the beneficial ownership of a property…”

73.  The Plaintiff says give this is a post-acquisition case, the court should be slow, in the absence of compelling evidence, to infer from conduct alone that the parties intended to vary their existing shares of beneficial interest. However, in the present case, the parties had, according to the Defendant, expressly discussed the matter before reaching the common intention. Further, this is not a case as mentioned by the learned Judge in Chen Lily where one spouse or cohabitee was in some sort of temporary financial difficulty. According to the Defendant’s evidence, the two of them had discussed the situation of the Plaintiff when she was about to get married and cease to reside at the Property, and had decided to vary their shares of interest in the long run.

74.  Also, given the Defendant’s mortgage repayments, there is little dispute that the Defendant has acted to her detriment relying on the common intention reached with the Plaintiff.

The HK$730,000 issue

75.  There is no dispute between the parties that in August 2005, an early repayment was made towards the Wing Lung Mortgage in the sum of HK$980,000 (ie the alleged one-off mortgage contribution), HK$250,000 of which came from the Defendant, and HK$730,000 of which was paid by Mr Lee.

76.  When Mr Lee testified, he said although he could not now remember the exact amount of the cheque that he drew, he did remember the amount at the time. Such payment was effected by a cheque bearing that amount with the Plaintiff being the drawee of the cheque. The Plaintiff’s case is that the cheque was handed over to the Defendant, who possessed the passbook, to deposit the same into the joint account.

77.  The Plaintiff submitted that under cross-examination, the Defendant suddenly claimed that she had given the cheque for HK$250,000 to Mr Lee and allowed him to handle all the transactions and she had not seen the cheque for HK$730,000 and therefore was unable to confirm whether the Plaintiff’s or her name was written on that cheque. When her attention was drawn to her own witness statement where she stated that she had deposited the cheque for HK$250,000 into the joint account on 8 August 2005, and had made early settlement of the mortgage account with Wing Lung Bank on 20 August 2005, the Defendant suddenly said the version stated in her witness statement is incorrect, it should be Mr Lee who had handled the two cheques and the whole transaction on two different dates. The Plaintiff says this sudden correction does not tally with the documentary records. As seen from the relevant passbook, the entry of the deposit of HK$250,000 was earlier than the entry of the deposit of HK$730,000. The allegation that Mr Lee had deposited the two cheques and handled the whole transaction is strange as he could have deposited the two cheques on the same day at the same time. I do not think anything conclusive could be drawn from this discrepancy. Regardless of whether the cheque for HK$730,000 was written in the name of the Plaintiff or the Defendant, there is no dispute that it was deposited into their joint account for the purpose of early settlement of the mortgage loan. I do not think this point would detract from the overall credibility of the Defendant. The question remains as to how the payment of HK$730,000 was treated by them, rather than the mode and sequence of the deposits.

78.  In gist, the Defendant’s case concerning the HK$730,000 is that it was a personal loan made by Mr Lee to her, which she subsequently repaid in full, while the Plaintiff’s case is that the HK$730,000 in part constituted her contribution to the Property, which was eventually “equalised” such that the parties had made equal contributions to the alleged one-off mortgage contribution.

79.  It is contended by the Plaintiff that if the parties had the alleged common intention from late 2002, Mr Lee would not have lent to the Defendant a large sum of money in August 2005 to dilute his wife’s share in the Property. This is especially so as the Defendant has emphasised that Mr Lee is very calculative and money-conscious. I do not think this point can lead to a definitive conclusion as suggested by the Plaintiff, as this was after all a family arrangement, and the parties were still on good terms at the time. The Plaintiff obviously still treated this Property as her investment, such that the reduction of high rates of interest was also one of the factors taken into account by the two of them at the time. There is nothing absurd, to the extent that it was impossible, that Mr Lee would have agreed to lend to the Defendant that amount for settling the mortgage.

80.  Further, given the evidence and the analysis set out below, it is clear that the amount of HK$730,000 was intended to be repaid by the Defendant to Mr Lee.

81.  The Defendant submitted, which I accept, that her case in this regard is supported by the following contemporaneous written documents, the objective circumstances of the case, and the evidence of her brother, Albert.

82.  First, on 16 July 2020, the Plaintiff sent a WhatsApp message to the family group referring to a loan made by her or Mr Lee to the Defendant (“我兩公婆早年一筆過借你還清貸款”). When asked about this WhatsApp message during cross-examination, the Plaintiff claimed that the loan referred to here was the excess amounts she (through Mr Lee) had paid towards the one-off mortgage contribution, which the Defendant was to “equalise”. However, such explanation is inconsistent with Mr Lee’s evidence. When asked during cross-examination whether the excess contribution was considered a loan, Mr Lee answered firmly that it was not a loan but a mortgage contribution (“供款”). It is therefore plain that the Plaintiff and Mr Lee had never considered that only the excess contribution to be a “loan” to the Defendant. The discrepancy here between the evidence of the Plaintiff and Mr Lee is a clear reflection of a likely concoction by either or both of them. In fact, as the Defendant has pointed out, during Mr Lee’s cross-examination, he constantly used the phrase “借款” (ie loan amount) to describe the amount of HK$730,000, and had to correct himself by then saying “供款” (ie the mortgage repayments).

83.  Second, while it is the Defendant’s evidence that the repayment of the HK$730,000 was made by way of 4 cheques, copies of which are no longer available, the Defendant’s bank records for her account with Chiyu Bank nonetheless show the repayments made to Mr Lee. The bank records show 3 annual transfers on 21 October 2005, 9 September 2006 and 12 November 2007, each transfer being for a substantial amount as referred to above. According to the Defendant, these substantial transfers could only have been the repayments to Mr Lee as she had no other reason to make such large transfers or withdrawals. The payments were made annually as Mr Lee had so requested. She said she is able to recall the nature of these transfers as they were substantial sums. The dates of the 3 transfers shown in the bank records are also consistent with the Defendant’s handwritten note, being a contemporaneous record kept by her like an account book (賬簿) to record expenses relating to the Property. According to the note, each entry for the 4 transfers were recorded at the time of repayment. Although the Plaintiff has questioned the reliability of this handwritten note, there is on the other hand no particular reason pointed out that would lead one to disbelieve its source or how it came about. In fact, when shown the handwritten note, Mr Lee himself initially stated that the first 2 transfers shown therein (ie the amounts of HK$130,000 and HK$200,000) represented the sums paid by the Defendant to “equalise” the one-off mortgage contribution, and the latter 2 transfers were also received by the Plaintiff and Mr Lee (albeit that on their case, such sums represented “rent” from the Defendant).

84.  As for the missing bank records for the fourth and most recent transfer, the Defendant said she had through a lot of effort been able to locate the bank records for the first 3 transfers from her physical stack of statements and records, but the one pertaining to the last transfer simply could not be located. When asked why the Defendant only made an application to Chiyu Bank for documents in relation her cheque account and not for her monthly statements, the Defendant explained that she wished to obtain the cheque records to show the precise sums paid and to show that they were directly paid to Mr Lee, to remove any room for dispute. Unfortunately, the time limit had been exceeded by then and the bank had informed her that the records no longer existed. I do not see anything incredible in her explanation.

85.  For the last transfer, the Defendant’s evidence, which I accept, is that it took place at around Mid-Autumn Festival in 2008, notwithstanding that she no longer had any bank records, and the handwritten note did not record a date for such repayment. According to the handwritten record, HK$148,900, consisting of the final instalment of HK$100,000 and HK$48,900 tax, was to be paid the following year ie 2008, being the year after 2007. She recalled that lotus paste and oil from the salted egg yolk in the mooncakes had been accidentally dripped onto the passbook at the time, which she had taken out because she had just made the 4^th repayment. The repayments were all made by cheques and were passed on to Mr Lee in the presence of her father at family gatherings. On that occasion, it was during the Mid-Autumn Festival family meal.

86.  Her case is corroborated by Albert’s evidence that in 2005, Albert heard about the HK$730,000 loan from their father, who told him that she ought not to borrow money from outsiders (referring to Mr Lee) as this would not look good (“唔好同外姓人有錢銀瓜葛，唔好向佢哋借錢， 因爲比人追數好難睇”). In fact, everyone in the Fu family knew about the HK$730,000 loan. Although Albert did not know exactly how much of the HK$730,000 was repaid on each occasion, and when the repayments were made, he was able to recall that the repayments were made about once a year, and that during the 2007 Mid-Autumn family gathering, he had asked the Defendant how much of the loan was outstanding and she had said not much was left to be repaid and she could handle it. Albert further recalled that when he was visiting their father and taking him out for a walk in about 2010 or 2011, they had talked about how the relationship between the Plaintiff and the Defendant had improved, and their father had explained that it was because the HK$730,000 loan had been repaid in full already.

87.  On the other hand, I do not accept the Plaintiff’s and Mr Lee’s evidence in relation to this issue for the following reasons.

88.  First, the Plaintiff and Mr Lee, who are both Certified Financial Analysts, claim that they were unable to recall the amount that had been advanced by Mr Lee in 2005, and were unable even to give even a ballpark figure. However, as the amount involved was not a small one, and according to the Plaintiff, she and her husband had discussed about the exact amount to be advanced, this is difficult to believe.

89.  Second, as the Defendant has pointed out, the Plaintiff’s evidence that the parties agreed to make early repayment of the Wing Lung Mortgage due to the alleged “unexpected surge in the interest rates” in the summer of 2005 also fails to accord with the contemporaneous records and objective circumstances. From the evidence, it appears that the alleged surge in the best lending rate at that time was merely from 5% pa in 2002 and 2004 to 6.67% in August 2005, which is reflected by a difference between HK$8,644 in April 2005 and HK$9,008 in July 2005 in terms of monthly mortgage repayment, ie a mere difference of HK$364 per month.

90.  Third, the Plaintiff and Mr Lee claim that the parties did not immediately agree that their respective contributions to the one-off mortgage contribution would be “equalised”, but that such agreement was only reached sometime after the contribution was made (on the Plaintiff’s evidence, after about 1 to 2 weeks, and on Mr Lee’s evidence, after about 1 month), when the time came for the Defendant to pay the mortgage instalment. It was said that the parties then suddenly realised for the first time that the monthly instalments had fallen drastically from HK$9,253.10 in August 2005 to HK$2,995.70 in September 2005. This is difficult to believe as the parties must have known that 95% of the Wing Lung Mortgage loan was to be repaid at that time.

91.  Fourth, the Plaintiff and Mr Lee claimed that Mr Lee received “about” 2 payments to “equalise” the one-off mortgage contribution, and thereafter, the Defendant continued to make payment as “rent” for her continued occupation of the Property. However, it defies common sense that the parties never calculated how much was to be repaid by the Defendant in order to “equalise” the one-off mortgage repayment on Mr Lee’s part, and the Defendant was simply left to contribute amounts decided by her. It was only after the Defendant had made 2 payments to Mr Lee that he did the calculations and decided that what had been paid had already been sufficient to equalise his contribution. His explanation for this rather absurd account of events was simply that there was no need to calculate when they had a good relationship (“關係好就唔洗計” ).

92.  When asked by the court why he did not find it strange that the Defendant had paid more than the required HK$240,000, Mr Lee answered that as he had helped the Defendant to save on mortgage interest, it was “reasonable” for the Defendant to pay more to him (“收多幾萬蚊都好合理”), as otherwise there would be no “return” (“回報”) to him and the Plaintiff. This, to me, in fact gives an impression of the amount being treated as a loan.

93.  Mr Lee’s evidence was evasive too during other parts of his evidence. When asked by the court what the Defendant had said to him when she tried to pay the third instalment, Mr Lee said he “guessed” that she “just wanted to continue paying”, but he nevertheless told her it was enough. When asked why the Defendant would seek to pay an extra HK$300,000 when she would have known that she had already paid enough, Mr Lee answered that he “guessed” that because the Wing Lung Mortgage was discharged in 2007, the rental payment by way of mortgage repayments (“以租代供”) arrangement had come to an end, but the Defendant wished to continue living in the Property and therefore continued to pay extra rent. Following from that, when the court further asked why, if the Defendant considered the HK$300,000 to be further “rent”, the Defendant did not issue the cheque to the Plaintiff instead, Mr Lee answered that he “had not thought about this” but speculated that it might be because the HK$730,000 originated from Mr Lee and therefore the Defendant might have considered Mr Lee a de facto owner (“無名嘅業主”) of the Property. He also initially said he was not sure if the further payments were not paid to him, but he thought the Defendant should have paid the Plaintiff, but shortly thereafter, he changed his answer and firmly asserted that the Defendant did pay the Plaintiff, and on occasions when he was present. One can therefore readily see that there has been a lot of guesswork involved in the case he is putting forward on behalf of the Plaintiff.

94.  In any event, as the Defendant has submitted, it is simply inconceivable that the Defendant would voluntarily pay a lump sum of HK$300,000, which on a calculation based on a monthly market rent of the Property of HK$5,000 at the time, meant that she had agreed to pay rent for 5 years in advance, especially given that the payment had resulted in her bank account balance falling to HK$32,672.97. When asked about the absurdity of such a payment, Mr Lee simply said that “it turned out this way”.

95.  Mr Lee’s evidence is made even harder to accept when he said initially that as the Wing Lung Mortgage had been discharged in 2007, the Defendant decided to pay “rent” for her continued occupation of the Property from 2007 to 2019, and did so by way of 1 to 2 payments of 6-figure sums (“十幾廿幾萬”). However, he later changed his answer and said that as the HKHS Mortgage was not discharged until 2009, the correct period during which the Defendant was to pay rent was 2009 to 2019, and that the payment made by the Defendant in 2007 was in fact a “prepayment” made 2 years in advance, for her future occupation of the Property when all the mortgages were discharged. This indicates to me that he was actually making up his evidence along the way to suit the details unveiled before him. In any event, it is highly unlikely that the Defendant would have agreed to be subjected to years of payment of such rent that was much higher than the market rent.

96.  By reason of the above, I therefore also do not accept the Plaintiff’s and Mr Lee’s evidence that the HK$730,000 was paid as a one-off mortgage contribution on their part for the Property, but rather, as the Defendant has described, that it was treated by all parties to be a personal loan lent by Mr Lee to her, which was independent from the mortgage payments, and which had already been fully repaid as described by the Defendant.

The payment by the Defendant of HK$54,000 to the Plaintiff

97.  Regarding this issue, the Plaintiff’s case is that the HK$54,000 represented 6 months’ rent paid by the Defendant to the Plaintiff for her half share in the Property, based on a monthly rental of HK$9,000.

98.  On the other hand, the Defendant’s case is that it was a deposit paid inter alia to put a stop to the acts of harassment and abuse from the Plaintiff, and was subject to the condition that the Plaintiff was to remove all her belongings from the Property and return the keys and residence cards and detailed calculations of the parties’ respective shares in the Property.

99.  The Plaintiff takes no issue that her calculation of such “rent” at the rate of HK$9,000 per month on the alleged market rent of HK$20,000, with a 90% discount, were bare assertions made through the WhatsApp messages exchanged between the parties without any basis being provided for such figures (“市值租金二萬蚊俾個九折一半九千蚊”).

100.  The Defendant said the payment was made after a series of harassments from the Plaintiff, with a view to stopping such harassment. In this regard, the Plaintiff said she deliberately made demands for rent from the Defendant in the family WhatsApp group, which included their mother, their sister Carmen, and their brother Albert. The Plaintiff claimed that she did so to “put things on record” and to “make things clear”.

101.  It is also the Defendant’s evidence that the Plaintiff was experiencing financial difficulties at the time, and therefore the Defendant also advanced this deposit partly out of love for the Plaintiff, in the hope of alleviating her burden. In this regard, the Plaintiff has criticised the Defendant for not having mentioned, until the trial when she testified, that she had also lent a sum of HK$40,000 to the Plaintiff after 2018. I do not think that this is a fatal omission, given that the focus was on the nature of the payment of HK$54,000, and the reason behind the payment. As such, I do not think that the fact that the Defendant did not mention about the sum of HK$40,000 being previously lent to the Plaintiff in her witness statements would lead the court to disbelieve her on the main issues in this case.

102.  Further, I also accept the Defendant’s evidence explaining her alleged deletion of other WhatsApp messages disputing or challenging the Plaintiff’s first message sent on 2 July 2019, demanding for her “half share” rent of the Property. During cross-examination, the Defendant indicated that she had in fact replied to the Plaintiff’s WhatsApp messages, to the effect that she was not obliged to pay the Plaintiff a half-rent as the Plaintiff did not hold a half share in the Property, that the Plaintiff as a minority shareholder in the Property did not have the right to compel or dictate a sale of the Property, and that the parties had already reached the common intention back in 2002. When asked by the court whether the Defendant was able to remember what was said at the time, the Defendant replied affirmatively, as the parties had been arguing a lot at that time.

103.  As for the reason why such messages had been deleted, the Defendant explained that the messages from the Plaintiff demanding rent came shortly after their father passed away in April 2019. At the time, their mother was extremely unhappy, and was constantly crying, and she became very upset when she saw the arguments in the WhatsApp family group between them. Apart from the WhatsApp messages, the Defendant also recalled receiving calls from the Plaintiff at work, as well as calls from their mother and their brother Albert, the latter trying to mediate between them, asking the Defendant not to argue with the Plaintiff anymore (“阿B你唔好再同佢閙啦”). It was against such context that Albert told both the Plaintiff and the Defendant that they should not trigger (“刺激”) their mother anymore, and asked that both of them delete the messages in the family group, which the Defendant hurriedly did as she recalled that she was scheduled to have a meeting at 11 am on that day. However, the Plaintiff did not accede to such request. All this is corroborated by Albert’s evidence during cross-examination. Thus, that was the reason why the Defendant no longer has any record of the WhatsApp messages that she sent in reply, save that there was a record showing that messages had been deleted.

104.  The Defendant also explained that the specific contents of the deleted WhatsApp messages were not discussed in her witness statement because she had already clearly set out what had happened in 2002 with regard to the common intention reached, and so she considered that her stance was already well reflected. In this regard, the Plaintiff has contended that what the Defendant has claimed she has mentioned in the WhatsApp messages had not been put to the Plaintiff, and therefore the Defendant’s version must be a recent invention during her cross-examination. Whilst it is true that the Defendant has not put to the Plaintiff her version of what had been mentioned in the above WhatsApp messages, the fact remains that the issue concerning such messages were raised and put to the Defendant during cross-examination. I do not find anything that would discredit the Defendant in this regard. I accept the Defendant’s explanation aforesaid.

105.  For the reasons set forth above, I accept the evidence of the Defendant relating to this issue. The payment by her of the HK$54,000 was not intended to be payment for rental for 6 months as alleged by the Plaintiff, but was merely as a tentative measure to stop the Plaintiff from harassing her. In this regard, I also do not accept that there had been any solid agreement to the effect of the so-called Future Plan as alleged by the Plaintiff, and which allegedly triggered off her demands for payment of rent.

The title deeds

106.  The Defendant’s case on why the title deeds were in the Plaintiff’s possession is that when the title deeds were released after all the mortgages over the Property were discharged, the Plaintiff had offered to place the title deeds in their mother’s safe deposit box, which had all along been used by their family to store valuable items for safekeeping. The Plaintiff’s case on the other hand is that the title deeds were given by the Defendant to the Plaintiff to “secure” the latter’s interest in the Property, and that as a matter of fact, the safe deposit box was not large enough to fit the title deeds.

107.  I also accept the Defendant’s evidence in this regard.

108.  It is undisputed that there are only 2 keys to the safe deposit box, and that they were in the possession of the Plaintiff and their mother respectively. This accords with the Defendant’s evidence that she had never seen the safe deposit box and was not aware of its size. According to the Defendant, the Plaintiff, who had seen and had access to the safe deposit box, offered to place the title deeds there, after learning that the title deeds were being stored by the Defendant on a shelf in the living room of the Property, without more secure measures being put in place. Given the Plaintiff’s offer, the Defendant naturally assumed that the title deeds would be able to fit into the safe deposit box. It is also the Defendant’s evidence that she had asked their mother about putting the title deeds to the Property in her safe deposit box, and their mother had consented, without indicating that such arrangement was not physically possible. In any event, this occurred in 2009, when the parties’ relations were still amicable, and the Defendant trusted the Plaintiff. On the other hand, I do not think it was likely that the Defendant would have taken such an unnecessary extra step at that time to put the Plaintiff’s mind at ease by so “securing” her interest in the Property by passing the title deeds to her, as alleged by the Plaintiff.

Conclusion

109.  By reason of the above analysis, I do not accept the Plaintiff’s case. I accept the evidence of the Defendant that there had been a common intention reached between the parties at the time in late 2002 or early 2003 that the interest in the Property was to be held in proportion to their respective contributions to the mortgage payments and outgoings since then. I find for the Defendant in her counterclaim that there is a common intention constructive trust to that effect, with the Defendant now holding 79.6% of the beneficial interest in the Property, and the Plaintiff holding the remaining 20.4%. Given my finding on constructive trust, it is not necessary for me to consider the Defendant’s case on resulting trust.

110.  Pausing here, it must be mentioned that in reaching my decision, I have given no weight to certain evidence that may be privileged. Such evidence has somehow found its way into the witness statements[1]. Although the parties may be treated as having waived any such privilege, it is fair in my view that no weight should be given to such evidence.

111.  As to the other outgoings relating to the Property, namely the government rates and management fees, the Defendant proposes that they be separately calculated and shared between the Plaintiff and the Defendant in proportion to their respective shares in the beneficial interest in the Property. However, given that the pleaded case of the Defendant only took into account the mortgage repayments, and that the Defendant has herself confirmed during her evidence that the calculation of the parties’ shares for these proceedings were to be based on the mortgage instalments, it is only fair that this should be the basis upon which the court is to decide on their respective shares in the interest in the Property.

112.  The Defendant is of the view that an order for public sale would not be beneficial to all co-owners, and undertakes to buy-out the Plaintiff’s 20.4% share at the prevailing market price. The Plaintiff has not objected to the undertaking or opposed the option of a buy-out.

113.  As for the sum of HK$54,000, I am not with the Defendant. As part of the reason for the Defendant giving that sum to the Plaintiff was out of her love for her sibling, and to alleviate her financial problem, I do not think it is equitable to treat it as the subject of a restitution claim based on unjust enrichment. I therefore disallow this part of the counterclaim.

114.  I therefore dismiss the Plaintiff’s claim and give judgment for the Defendant in her counterclaim (save for the part concerning the amount of HK$54,000), and order as follows:

(1)  A declaration that 79.6% of the beneficial interest, rights and title in relation to the Property are held on trust for the Defendant;

(2)  Upon the acceptance of the Defendant’s undertaking, an order that:

(i)  The Plaintiff do take all necessary steps to convey, transfer and/or assign the 20.4% of the interest, rights and title in relation to the Property held by her to the Defendant at the prevailing market value;

(ii)  The Plaintiff shall sign and execute all necessary instruments and do all acts as are necessary to effect the sale of the 20.4% interest, rights and title in relation to Property to the Defendant within 7 days of any request made by the Defendant, failing which Ms Cheng Mi Kuen of Messrs L&L Lawyers be appointed pursuant to section 8 of the Partition Ordinance (Cap. 352) and section 51 of the Trustee Ordinance (Cap. 29) to execute, on behalf of the Plaintiff, the necessary agreement, conveyance, assignment, and all other necessary documents (if any) to give effect to this order and/or to convey the Property and all interest therein to the Defendant;

(iii)  All reasonable costs and expenses, including legal costs, payable or incurred for the purpose of the sale be shared equally between the Plaintiff and the Defendant;

(3)  A declaration that the Notice of Severance dated 20 March 2021 (Memorial No.21032502360012) is of no effect and its registration in the Land Registry should be vacated;

(4)  There be liberty to apply for directions in respect of paragraph (2) above; and

115.  As the Defendant has largely succeeded in her counterclaim, I also make an order nisi that the Plaintiff shall pay the costs of this action, with Certificate for Counsel for the trial, to the Defendant, to be taxed if not agreed.

116.  Lastly, I would like to thank counsel on both sides for their invaluable assistance offered. As for the parties, I extend my sincere hope that they, being sisters, will be able to amend their relationship in the near future. One may say there are things in life one cannot avoid, but what lies ahead is very much a matter of choice.