WONG WING TAO v. WONG WAI KEUNG

HCA1213/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1213 OF 2002

---------------------

----------------------

----------------------

J U D G M E N T

----------------------

1. The plaintiff is appealing the decision of the Master in:

(a) striking out the plaintiff's claim in respect of the First Property as being frivolous, vexatious or an abuse of process of the court;

(b) grating leave to the defendant to apply for summary judgment on the counterclaim for delivery up of the title deeds of the First Property by the plaintiff to the defendant; and

(c) entering judgment for the defendant in respect of the First Property.

Background

2. The plaintiff is the father of the defendant. The plaintiff has provided the purchase price of four properties, the First to Fourth Properties, which are registered in the sole names of the defendant. The plaintiff claimed, inter alia, for the declaration that he is the sole beneficial owner of the four properties, and for an order that the defendant do assign and vest the four properties in him. The defendant counterclaimed, inter alia, the delivery of the title deeds of the First Property. The present application is concerned only with the First Property.

3. In 1972, the plaintiff purchased the First Property in the names of himself and his deceased wife as joint tenants. On 15 January 1977, the plaintiff executed a Deed of Gift and assigned all his share and interest in the First Property to the deceased. On 22 June 1978, the deceased made a will and left the First Property together with some cash and shares to the defendant. On 3 January 1999, the deceased passed away. Estate duty was paid in respect of the First Property. On 27 April 2001, the plaintiff as joint executor of the deceased's will assented the First Property to the defendant.

4. The defendant submitted that the plaintiff's claim in respect of the First Property was frivolous, vexatious or an abuse of process because the plaintiff is estopped by the Deed of Gift from going behind it and adducing parol evidence of his intention. Further, even if extraneous evidence of intention is admissible, they do not support the claim of sole beneficial ownership.

Principles for Order 14 and Order 18, rule 19

5. Striking out under Order 18, rule 19 of the Rules of the High Court, Cap.4A should only be done in plain and obvious cases, there should be no trial on affidavit, and disputed facts are to be taken in favour of the party sought to be struck out (see Ha Francesca v. Tsai Kut Kan (No.1) [1982] HKC 382, 392G per Silke JA).

6. In an application under Order 14 of the Rules of the High Court, it is not a proper course for the court to embark on a mini-trial of the action on affidavit evidence. The issue is not whether the defendant's assertions are to be believed, it is whether those assertions are believable (see Ng Shou Chun v. Hung Chun San [1994] 1 HKC 155, 158G per Godfrey JA). The same principle applies to a plaintiff defending a counterclaim (see Mass International Ltd v. Hillis Industries Ltd & anor [1996] 1 HKC 434, 440C per Patrick Chan J).

Plaintiff's case

7. The plaintiff alleged that notwithstanding the Deed of Gift, it was the mutual understanding between the deceased and him that until his death, the First Property belonged to him beneficially. His intention to retain beneficial ownership in the First Property is common knowledge between the members of his family including the defendant. In executing the Assent, he was simply discharging his duty as executor in transferring whatever interest the deceased had in the First Property to the defendant.

8. The plaintiff relied on the following facts :

(1) the First Property was solely financed by him;

(2) the deceased was a housewife without any earning capacity and always had a sense of insecurity;

(3) he executed the Deed of Gift because he felt he should give the deceased some comfort by assigning the matrimonial home to her;

(4) he retained the title deeds of the First Property and the deceased did not ask to see them;

(5) he discharged all the household expenses of the First Property;

(6) in early 1990's and in the presence of the whole family, he asked the deceased whether she would sell the First Property without his knowledge and disappear with the sale proceeds, and the deceased replied she had always regarded the First Property as a family home and she had no right to expel the plaintiff;

(7) he did not know about the deceased's will until her death;

(8) he said the defendant knew very well that the First Property belonged to him;

(9) in February 2001, the defendant suggested selling the First Property and his daughter rebuked the defendant of daring to sell the family home if the plaintiff would not sell it and the defendant did not dare to reply;

(10) the plaintiff was prepared to argue with the Estate Duty Office but eventually, he paid the estate duty of the First Property out of his own pocket;

(11) the defendant did not take the original nor a copy of the Assent after the defendant had signed it and left it with the solicitors;

(12) the title deeds of his three Hong Kong properties were placed in the First Property; and

(13) in April 2001, a dispute arose between him and the defendant and the defendant took the title deeds of the Third Property but left behind the title deeds of the First Property.

9. Mr Chan for the plaintiff referred to Lewins on Trust, (17th Edition, 2000, paras.9-03 to 9-07) and submitted that where there is a gratuitous transfer containing no express or inferred provisions determining beneficial ownership, then the starting point is that there is a rebuttable presumption of resulting trust, i.e. the transferor did not intend to make a gift. The presumption can be rebutted in two ways : (1) by extraneous evidence that the transferor did intend to make a gift; (2) by a counter rebuttable presumption of advancement as in the case of a husband transferring property to a wife. The presumption of advancement may itself be rebutted by extraneous evidence that the transferor did not intend a gift. In cases where the transferor's actual intention is established there is no need to rely on the presumptions of resulting trust or advancement. The presumption of resulting trust is a fall back when the evidence of the transferor's actual intention does not establish whether he did not intend to make a gift or whether he did intend to make a gift. There is no requirement for the transferee to share or participate in the intention of the transferor.

10. Mr Chan submitted that it is a well established principle that extrinsic evidence is always admissible of the true nature of any transaction (see Hodgson v. Marks [1971] 1 Ch 893, 909D per Ungoed-Thomas J). And a party's intention may be proved by his own testimony, or by proof of his declarations made out of court at the time when the intention was material (see Halsbury's Law of England (4th Edition, 1976), Vol.17, para.45).

11. Mr Chan submitted that the court has not allowed the Statute of Frauds to be used as "an engine of fraud". He referred to Rochefoucauld v. Boustead [1897] 1 Ch 196 per Lindley LJ at p.206 :

"It is further established by a series of cases, the propriety of which cannot now be questioned, that the Statute of Frauds does not prevent proof of a fraud; and it is a fraud on the part of a person to whom land is conveyed as a trustee, and who knows it was so conveyed, to deny the trust and claim the land himself. Consequently, notwithstanding the statute, it is competent for a person claiming land conveyed to another to prove by parol evidence that it was so conveyed upon trust for the claimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and the statute, in order to keep the land himself."

12. And a party who has actual or constructive notice of the beneficial unwritten interest of the beneficial owner cannot rely on the doctrine of estoppel against the beneficial owner (see Wong Chim-ying v. Cheng Kam-wing [1991] 2 HKLR 252, 276F per Clough JA).

13. Mr Chan also submitted that the parties instructed solicitors to draft the agreement in no way precluded either of the parties from challenging its true nature (see Joseph CT Lee & Co. v. Chan Suk Ching & ors [1987] 1 HKC 492 per Saied J).

14. Mr Chan submitted that the intention of the plaintiff in making the purchase in joint names and in executing the Deed of Gift was that the deceased would outlive him, and upon his death, the deceased would get the First Property, but during his life time, he was the beneficial owner. Upon the deceased's death, he was the beneficial owner. The Assent was a matter of formalities. Even if the plaintiff intended to give the First Property to the deceased upon his death, it was subject to him remaining the beneficial owner until then. Since the defendant had full knowledge of his beneficial interest, the defendant could not raise any estoppel against him. It is neither plain and obvious that the plaintiff is bound to fail, nor that such evidence of intention is unbelievable.

Defendant's case

15. Apart from the plaintiff's alleged intention to remain as the beneficial owner until his death, and the acknowledgment as such by the deceased and the defendant, the facts are not in dispute for the present purpose.

16. Mr Fung for the defendant submitted that under the terms of the Deed of Gift, there is an express intention of gift :

"AND WHEREAS the Donor (i.e. the plaintiff) is desirous of assigning his share and interest of and in the said premises to the Donee (i.e. the deceased) by way of gift NOW THIS INDENTURE WITNESSETH that in consideration of his natural love and affection for the Donee the Donor doth hereby assign unto the Donee (the First Property)."

17. The intention of gift was clearly expressed as opposed to being silent and the plaintiff is estopped from adducing parol evidence to vary the terms of the Deed of Gift. Mr Fung referred by way of example to Sidney Bolsom Investment Trust Ltd v. E. Karmios & Co. (London) Ltd [1956] 1 QB 529 where the tenants had intended to ask for a new tenancy of 14 years, but by reason of a bona fide mistake, the notice of request was by implication a request for a new lease of seven years' duration. The tenants sought to introduce parol evidence to show mistake in the notice of request. Denning LJ held at p.539 :

"I do not think that that evidence was admissible. This case falls, to my mind, within the general principle that parol evidence cannot be admitted to add to, vary, or contract the terms of a written document. Once a tenant, whatever his inmost state of mind, has to all outward appearances made a valid request in the prescribed form setting out his proposals, he cannot thereafter rely on his own mistake to say that it was a nullity or invalid, no matter how important the mistake was."

18. Mr Fung submitted that the Deed of Gift was a formal document. The plaintiff clearly represented it was a gift to the deceased and it is expected that the world would so act on it. In fact, the plaintiff and the co-executor acted on it, and so did the Estate Duty Office acted. The plaintiff was estopped from saying that it was in fact a deed of trust.

19. Mr Fung referred to Shephard & anr v. Cartwright & ors [1955] AC 431, 445 per Viscount Simonds :

"It must then be asked by what evidence can the presumption be rebutted, and it would, I think, be very unfortunate if any doubt were cast (as I think it has been by certain passages in the judgments under review) upon the well-settled law on this subject. It is, I think, correctly stated in substantially the same terms in every textbook that I have consulted and supported by authority extending over a long period of time. I will take, as an example, a passage from Snell's Equity, 24th ed., p. 153, which is as follows :

'The acts and declarations of the parties before or at 'the time of the purchase, or so immediately after it as to 'constitute a part of the transaction, are admissible in 'evidence either for or against the party who did the act or 'made the declaration ... But subsequent declarations are 'admissible as evidence only against the party who made them, and not in his favour.'"

20. Mr Fung pointed out that the plaintiff said he had to execute the Assent to complete the formalities and as he had then intended to give the First Property to the defendant upon his death, the assent merely brought forward the vesting of the First Property in his name.

21. It was submitted that the deceased's acknowledgement that the First Property was the family home and she had no right to sell the property without the plaintiff's knowledge and/or to expel the plaintiff did not support the claim of sole beneficial ownership. At most it was a licence to occupy the First Property during the plaintiff's life. Even if the defendant had knowledge of such interest, it only meant he could not sell the First Property or evict the plaintiff. The defendant's counterclaim is only for the title deeds. There is nothing inconsistent with the plaintiff's licence to occupy the First Property.

22. Mr Fung submitted that the retention of the title deeds by the plaintiff is not conclusive. In Wong Chim-ying, the husband allowed the wife to retain the title deeds. Notwithstanding that, the Court of Appeal held that the wife was a trustee and the husband the beneficial owner of the property.

Estoppel by Deed

23. According to Halsbury's (4th Edition Reissue), Vol.16 at para.1018 :

"In general. Estoppel by deed is based on the principle that, when a person has entered into a solemn engagement by deed as to certain facts, he will not be permitted to deny any matter which he has so asserted. It is a rule of evidence according to which certain evidence is taken to be of so high and conclusive a nature as to admit of no contradictory proof. The averment relied upon to work an estoppel must be 'certain to every intent' without any ambiguity, but may be contained in the recital or in any part of the deed. A mere mistake in a deed, on account of which no one has acted to his detriment, will not give rise to an estoppel but may give grounds for rectification."

And further at para.1022 :

"No estoppel in favour of person knowing the circumstances. A person who knows the truth of the circumstances under which a deed has been executed, whether he has acquired that knowledge personally or through his agent, cannot set up an estoppel in his own favour if the circumstances were such as to make the deed invalid between the original parties."

24. In view of the allegation that the deceased and the defendant knew that the plaintiff intended to retain beneficial ownership of the First Property notwithstanding the Deed of Gift, the evidence of the plaintiff must be looked at to see whether he is estopped by the deed.

Plaintiff's intention

25. Before I look at the evidence of the plaintiff's intention, I shall first deal with Mr Chan's submission that Shephard v. Cartwright only applies where the donor is deceased. With respect, I disagree. It is an authority of broad principle and is not subject to the qualification suggested.

26. Be that as it may, the plaintiff's contemporaneous intention is prima facie admissible. So are evidence of subsequent admissions against interest on the part of the deceased and the defendant.

27. The plaintiff said it was his contemporaneous intention at the time of the Deed of Gift to remain the true owner until his death, and it was known to both the deceased and the defendant. It must be looked at in the light of all the circumstances.

28. The plaintiff said that when the First Property was purchased in the joint names of the deceased and himself, as he was some 10 years older than the deceased, it had always been his intention to devise the First Property to her if he were to pass away before her. There is no evidence that the plaintiff had otherwise devised the First Property to the deceased by will. Given that the plaintiff did intend the deceased to have the First Property upon his death, the deceased must hold as beneficial owner under the joint tenancy for the right of survivorship to take effect. If the deceased were to have no interest until the plaintiff passed away, there would not be a joint tenacy, no survivorship would arise upon his death, and the deceased would hold whatever interest she had on trust for the estate of the plaintiff. That could not be the case because the plaintiff intended the deceased to have the First Property upon his death. Hence, the plaintiff must have intended the joint tenancy to take effect in substance and not just in name. To hold otherwise would be to deny the plaintiff's stated intention to benefit the deceased upon his death. Of course, before executing the Deed of Gift, survivorship would operate in favour of the plaintiff in the event of the deceased's earlier death.

29. Granted that was the true basis of the joint tenancy, what then was the purpose of the Deed of Gift? A Deed of Gift would be otiose in the event the plaintiff were to pass away before the deceased, because that eventuality was covered by survivorship under joint tenancy. Hence, the only possible intention of the Deed of Gift must have been to sever the joint tenancy and confer sole beneficial ownership upon the deceased absolutely. Further, it would confer no additional comfort for the deceased, who had no earning capacity, unless she was to receive beneficial ownership of the First Property as opposed to trusteeship. To hold otherwise would be to deny any purpose of the Deed of Gift beyond the joint tenancy. Hence, even on the plaintiff's own evidence, the plaintiff's contention that after the Deed of Gift the deceased would have no beneficial interest is wholly untenable.

30. The fact that the deceased acknowledged that she would not sell the First Property without the plaintiff's knowledge nor to expel him is not inconsistent with beneficial ownership in the deceased. The plaintiff's claim is for sole beneficial ownership of the First Property. If the plaintiff were suing for a declaration of a life interest in the First Property or an injunction to restrain the sale thereof or eviction by the defendant, the consideration might be different.

31. The retention of the title deeds is not conclusive. It is only one of the factors to be considered. In view of the above analysis, retention of the title deeds and the other factors relied on by the plaintiff are equally consistent with a limited interest of the plaintiff.

32. I find that it is plain and obvious that the plaintiff's claim of sole beneficial ownership is bound to fail at trial, and his evidence of the intention to retain beneficial ownership until his death is contradicted by his own evidence and as such unbelievable (as opposed to not believed) and there is no bona fide defence to the counterclaim.

33. The analysis of the plaintiff's state of mind in executing the Assent is not necessary as the plaintiff had intended the benefit the deceased by the Deed of Gift, his assent could be taken as merely in performance of his duty as an executor.

Conclusion

34. I shall dismiss the appeal and affirm the decision of the Master.

Costs

35. I shall order costs of the appeal be paid by the plaintiff to the defendant.