SHIH MEI LING formerly known as SHIH MEI LING v. SHIH MEI KEI

HCA 797/2018

[2026] HKCFI 1311

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 797 OF 2018

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J U D G M E N T

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1.  Introduction

1.1  The Plaintiff is the Defendant’s elder sister and they previously enjoyed a close relationship. They have unfortunately fallen out because of a disagreement over the ownership of property known as Flat F, 10^th Floor, Block 1, Cayman Rise, 29 Ka Wai Man Road, Kennedy Town, Hong Kong (“Property”).

1.2  The following matters are common ground between the parties:

(1)  On 28 January 2008, the Plaintiff entered into an agreement with the former owner of the Property to purchase the Property at a consideration of HK$3,280,000. The Property was eventually assigned to the Plaintiff 12 March 2008;

(2)  The Plaintiff subsequently sold the Property to the Defendant at a consideration of HK$6,000,000, which price was lower than the then market value. There is dispute between the parties as to the reason for that arrangement; 

(3)  Respectively on 15 and 27 January 2015, the parties entered into a provisional (“PSPA”) and then a formal sale and purchase agreement (“SPA”). The Property was eventually assigned to the Defendant on 27 February 2015;

(4)  Following the assignment of the Property in February 2015, the Defendant became the sole legal and beneficial owner of the Property[1];

(5)  The purchase of the Property by the Defendant was financed by an installment loan (“Loan”) in the sum of HK$4,200,000 repayable by 360 monthly instalments (“Monthly Repayments”) obtained from OCBC Wing Hang Bank Ltd (“OCBC”), which loan was secured by the Property. A sister of the Plaintiff’s husband (“Sam’s Sister”) also acted as a guarantor of the Loan. At the material time, the Monthly Repayments were higher than HK$15,000 per month but never exceeded HK$16,000.

1.3  The Plaintiff’s case pursued at the trial is premised on the allegation that, on 9 April 2015, a post-acquisition common intention constructive trust (“PA CICT”) had arisen as a result of an oral agreement reached between the parties on 9 April 2015 (“Alleged 9/4/15 Agreement”). For present purposes, it is pertinent to note that the case pursued at the trial is at odds with how the Plaintiff’s claim was formulated at the time of the commencement of the present action, which feature was noted by Mr Recorder Jin Pao SC in his decision dated 11 October 2021 (“Decision”), by which the learned Recorder acceded to the Plaintiff’s applications made on 15 September 2020 to amend the Statement of Claim and to expunge her Voluntary Further and Better Particulars filed on 20 August 2018.

1.4  The Property was sold to a third-party purchaser in March 2018 at a consideration of HK$9,000,000 (“2018 Sale”) and the transaction was completed in June 2018. The Plaintiff commenced the present action in April 2018, prior to the completion of the 2018 Sale. Pursuant to an order dated 20 September 2018, the net proceeds from the 2018 Sale (“Net Proceeds”)[2] were paid into court pending the resolution of these proceedings.

1.5  In these proceedings, the Plaintiff claims a declaration that the Property was held by the Defendant on trust for the Plaintiff and an order that the Net Proceeds be paid to her. The Defendant denies the existence of the PA CICT and counterclaims for an order that the Net Proceeds be paid to her.

1.6  At the trial, Mr Bosco Cheng appeared for the Plaintiff and Mr Byron Chiu for the Defendant.

2.  The evidence

2.1  The present dispute has caused a divide amongst the family members, consisting of the parents (respectively “Father” and “Mother”), the eldest brother (“Brother”), the second sister (“Bo”), the Plaintiff (the third child) and the Defendant (the youngest). Whilst Mother and Bo side with the Plaintiff, Father and Brother have made witness statements to support the Defendant.

2.2  The Plaintiff herself gave evidence and called Mother, Bo and her husband (“Sam”). The Defendant herself gave evidence and called Brother and her friend Ms 吳念易 (“Nicole”). Father was not called, on the basis that a decision was made by Mr Chiu that his evidence was not required. There is no suggestion by Mr Cheng that any adverse inference should be drawn. The evidence of Nicole and Brother is peripheral, to which Mr Cheng has practically made no reference in his closing address.

2.3  In addition to the witness testimonies, there is a fair amount of documentary evidence in the form of WhatsApp records. At my request, counsel have provided an Agreed Chronology of the documentary evidence at the time of closing (“Agreed Chronology”).

3.  The pleaded case of the parties

3.1  The Plaintiff’s original case on her beneficial interest in the Property was pleaded in the Statement of Claim dated 20 June 2018 (“SOC”) to be as follows:

“[3] In the course of at least two discussions in about late November 2014 and early January 2015, the Plaintiff and the Defendant came to a common understanding, agreement or express arrangement to the effect that the Plaintiff would transfer the Property into the sole name of the Defendant so that:

(1) The Plaintiff would be the sole beneficial owner of the Property; and

(2) The Defendant would have no beneficial interest in the Property, ie she would be a mere nominee holding the Property for and on behalf of the Plaintiff.

[5] The assignment dated 27^th February 2015 stated that the Property was transferred into the Defendant's sole name in accordance with the said common understanding and/or express arrangement.

[6] In reliance upon the above common understanding or express arrangement, the Plaintiff at all material times solely contributed to the purchase of the Property; and the Defendant contributed nothing financially towards the same as she had no financial means to do so.” (emphasis added)

3.2  It may be seen from the above that the original pleaded case is entirely inconsistent with the present case based on PA CICT, as the original case asserted that the beneficial interest of the Property never passed to the Defendant at the time of the assignment of the Property in February 2015. In contrast, the current case pursued by the Plaintiff is that the legal and beneficial interest did pass at the time of the assignment of the Property but the beneficial interest by agreement reverted to the Plaintiff less than two months later by reason of the Alleged 9/4/15 Agreement.

3.3  An important (undisputed) background fact is that, prior to the execution of the PSPA, the Plaintiff had decided in December 2014 to purchase another property (“Upton Unit”). Connected to the purchase of the Upton Unit, on the same day as the Alleged 9/4/15 Agreement, the Plaintiff had made a statutory declaration (“SD”) to the Inland Revenue Department (“IRD”) to the effect that (1) she was the sole buyer of the Upton Unit and (2) she has disposed of the Property within 6 months from the date of the agreement for the sale and purchase of the Upton Unit (ie December 2014). The SD was made for the purpose of applying for partial refund of ad valorem stamp duty of the Upton Unit. The foregoing was already raised in the Defence dated 15 October 2018.

3.4  As stated above, the Plaintiff applied for leave to amend the SOC, which application was first refused by a Master but eventually acceded to by the learned Recorder. The Plaintiff’s case on PA CICT as pleaded in the Amended Statement of Claim (“ASOC”) is as follows (the following averments were all introduced by amendment):

(1)  On 16 December 2014, the Plaintiff was offered the opportunity to purchase the Upton Unit (ASOC §10);

(2)  On the same day, the Plaintiff informed Bo and the Defendant (who together with Bo’s husband (“Eric”) were at that time residing in the Property) that she had to sell the Property in order to have sufficient cash and to pass the pressure test of the mortgagee bank for the purchase of the Upton Unit. Bo offered to move out of the Property and the Defendant requested financial help from the Plaintiff to buy a small property for her to reside (ASOC §11);

(3)  On or about 13 January 2015, the Plaintiff acceded to the Defendant’s request and made an offer to sell the Property to the Defendant at below market price of HK$6,000,000 on the following conditions: (a) Condition 1: Part of the purchase price paid as deposits would be loans lent by the Plaintiff to the Defendant; (b) Condition 2: The Defendant must allow Bo and her husband to live in the Property at their wishes; (c) Condition 3: The Defendant would live in the Property to take care of Bo unless the Defendant got married; (d) Condition 4: The Defendant would be responsible for the payment of the Loan installments, the management fees and Government Rent of the Property; (e) Condition 5: The Defendant would not re-mortgage or charge the Property and (f) Condition 6: Sam’s sister would be the guarantor for the Loan and any rebate of the Loan would belong to Sam’s sister (ASOC §12);

(4)  Upon the Defendant orally agreeing to the above conditions, the Plaintiff agreed to sell the Property to the Defendant at HK$6,000,000 (“Alleged January 2015 Agreement”) (AOSC §13);

(5)  The PSPA was entered into pursuant to the Alleged January 2015 Agreement (ASOC §14);

(6)  On 19 February 2015 (before the assignment of the Property), Bo was shocked to discover that the Defendant had suddenly and secretively moved out of the Property. Upon pleas by the Defendant, the Plaintiff decided to waive the Defendant’s breach of Condition 3 (ASOC §16);

(7)  Sometime between 27 February and 3 March 2015, the Defendant orally pleaded with the Plaintiff that she had overspent on her move to a new premise and sought a one-off help from the Plaintiff to pay off the first Monthly Repayment. The Plaintiff acceded to the Defendant’s request and instructed Bo to pay HK$15,000 to the Defendant (ASOC §20);

(8)  On or about 2 April 2015 (a) the Defendant again requested the Plaintiff to pay the second Monthly Repayment, (b) the Plaintiff was upset by the “total lack of sense of responsibility on the part of the Defendant”, (c) the Plaintiff instructed Bo to pay HK$18,000 to the Defendant to discharge the Monthly Repayment, management fees and Government Rates of the Property while the Plaintiff was in the Mainland (ASOC §22);

(9)  On 9 April 2015, the Plaintiff had a meeting with the Defendant at which the Defendant admitted that she overestimated her ability to repay the Loan and requested the Plaintiff to continue paying the Monthly Repayments for her. In order not to jeopardize the position of Sam’s Sister and/or incur any encumbrance on the Property, the Plaintiff proposed and the Defendant orally agreed the following terms (ie the Alleged 9/4/15 Agreement): (a) the Defendant would not be the legal or beneficial owner of the Property; (b) the Defendant would only be a constructive trustee holding the Property on trust for the Plaintiff absolutely; and (c) the Plaintiff would be responsible to pay, inter alia, the Monthly Repayments, Government Rent and management fees. In the premises, since 9 April 2015, the PA CICT came into existence, in that it was the common intention of the Plaintiff and the Defendant that the Plaintiff would be the sole beneficial owner of the Property and the Defendant would hold the Property under the common intention constructive trust in favour of the Plaintiff absolutely (ASOC §§23-25);

(10)  In or about May 2015, the Plaintiff reached an agreement with Bo that Bo would pay a monthly rent of HK$18,000 to the Plaintiff for the occupation of the Property. The Plaintiff directed Bo to deposit the monthly rent to the Defendant’s account at OCBC from which the Loan installments would be debited (ASOC §26);

(11)  The Plaintiff’s sole beneficial interest in the Property was evidenced by (a) the Plaintiff’s payment of the Monthly Repayments, the management fees, Government Rent and utility bills at all material times (ASOC §27), (b) Sam’s involvement in the renting out of the Property after Bo moved out in November 2017 (ASOC §29) and (c) the Plaintiff’s control over the 2018 Sale (ASOC §31).

3.5  Apart from Condition 6 of the Alleged January 2015 Agreement, the Defendant denies practically each and every aspect of the Plaintiff's pleaded case. On a high level of generality, the Defendant’s pleaded case in the Amended Defence and Counterclaim (“AD&C”) is as follows:

(1)  In December 2014, by reason of the Plaintiff’s decision to purchase the Upton Unit, the Plaintiff approached the Defendant to sell the Property on an urgent basis (AD&C §9);

(2)  The Defendant made it clear to the Plaintiff that the Defendant would need to lease out the Property in order to generate rental income for the purpose of servicing the Monthly Repayments and other outgoings of the Property (AD&C §21A);

(3)  On 4 February 2015, the Defendant moved out of the Property in order to lease out the Property (AS&C §21B);

(4)  At that time, Bo and Eric informed the Defendant that they were considering whether to continue to live in the Property and they eventually decided in March 2015 that they would. The Defendant agreed on the condition that Bo should make monthly rental payments to the defendant in such amounts which could cover the Monthly Repayments. Accordingly, Bo paid monthly rent to the Defendant in the sum of HK$15,000 in March 2015 and then monthly rent of HK$18,000 during the period between April 2015 and November 2017, which payments were paid to the Defendant direct (AD&C §21C);

(5)  The Defendant had also discharged the outgoings of the Property including Government Rent, rates, and management fees during the period from around April 2015 to June 2018 (AD&C §23A);

(6)  Whilst Sam was involved in the renting out of the Property in November 2017, he only provided assistance to the Defendant (AD&C §§21D and 50);

(7)  Whilst the Plaintiff and the Defendant assisted in the 2018 Sale, the decision to sell was made by the Defendant as the sole legal and beneficial owner of the Property (AD&C §§23B, 24 and 31).

3.6  I should at this stage point out why some of the factual disputes as debated by the witnesses in evidence are irrelevant to the pleaded issues.

3.7  As pointed out above, the sale of the Property by the Plaintiff to the Defendant was financed by the Loan. There is a dispute as to the source of funds in respect of the remainder, namely HK$1,800,000 (“Remaining Purchase Price”) and the transactional expenses such as stamp duty and legal expenses (“Expenses”).  In this regard, there are cross-allegations that advanced by Plaintiff and the Defendant.

3.8  On the Plaintiff’s part, she says that she provided the funds to meet the Remaining Purchase Price and the Expenses and contends that the Defendant is indebted to her by not less than HK$1,800,000 for the purchase of the Property (ASOC §19).

3.9  On the Defendant’s part, she says the Remaining Purchase Price was met (1) in part by a setting off a loan granted to the Plaintiff in the sum of HK$1,000,000, (2) sale proceeds from the sale of another property jointly owned by them, (3) rebate allowance from the mortgagee bank in the sum of HK$42,000 paid by the Defendant to Sam (ie Condition 6) and (4) a waiver of the remainder.

3.10  The foregoing cross-allegations further involve a number of factual disputes on the nature of various gifts made by Father and the parties’ dealings in a company called Greenwalker Trading Limited (“GTL”).

3.11  At set out at §3.3(9) above, the Plaintiff’s pleaded case on PA CICT and the Alleged 9/4/15 Agreement does not refer to the Remaining Purchase Price or the Expenses. There is no claim made by the Plaintiff on the alleged indebtedness.

3.12  Very properly, Mr Cheng in his closing does not place any reliance on the disputes relating to the Remaining Purchase Price and the Expenses.

3.13  There is equally no claim by the Plaintiff on the difference between the then prevailing market value of the Property and price at which the Property was sold to the Defendant.

4.  The approach adopted in the resolution of the dispute

4.1  This is a credibility case. There is no dispute between counsel on the approach on fact-finding and assessment of credibility, namely that the credibility of a witness should be assessed by reference to contemporaneous documentation where it exists, as well as inherent probabilities having regard to all the facts that are known. It is also important to bear in mind the internal consistency of the evidence of a witness, which is often tested by a comparison between the oral testimony of the witness on the one hand and his witness statement and pleadings on the other. In addition, the court is also entitled to take into account the amendments of the pleadings, in particular on the explanation given if there is a significant change of case: Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 §135, Hui Cheung Fai v Daiwa Development Ltd, HCA 1734/2009, 8 April 2014 §§77-82, and Au Yeung Pui Chun v Cheng Wing Sang [2021] HKCFI 463 §28-29.

4.2  On the relevance of amendment to pleadings, Mr Chiu has in particular referred to Fordadoor Ltd v Wong Kwong Wing alias Edward Wong & Ors [2020] HKCFI 85:

“[4] Secondly, Mr Chong for the 1st Defendant submitted that once a pleading has been amended, what stood before the amendment is no longer material and cannot be relied upon. I am of the view that it is correct that after the amendment, the previous pleas are no longer parts of the 1st Defendant’s pleaded case. However, it does not mean that the other party cannot rely on the fact that the 1st Defendant had previously pleaded its case in a certain way. The fact that a party in a proceedings had previously made certain statements and pleas is a matter of history. It is up to any party to the proceedings to decide whether to rely on such historical facts to advance his or her pleaded case. I do not see any valid objections to the same.

[7] Mr Tai for the Plaintiff submitted that the question is whether the statement of truth verifying the deleted factual averments in the 1st Defendant’s previous pleadings can be regarded as if it had never been made after amendment of pleadings. In Man Lin Heung, the Administratrix of the Estate of Man Kwai Yin v 梁根林 & Others [2019] HKDC 544 (DCMP 1213/2014, unreported, 18 April 2019), HH Judge K W Wong at §§28 and 29 said:

‘28. Although the issue(s) raised before amendment is/are superseded and the newly pleaded case takes effect from the date of the original document, there is nothing stopping the Plaintiffs from testing the Defendant’s credibility by referring to his own inconsistent pleaded cases in cross-examination. It has to be remembered further and better particulars (‘FBP’) are part of pleadings. After the CJR, they have to be verified by a statement of truth: see O.41A, r.4(1) of RDC. Accordingly the primary facts set out in the FBP originally filed with the Court on 10 April 2015 are still ‘material facts’ which have been duly verified by the Defendant despite the amendment filed with Court on 16 March 2017 (the same for the 2 Actions).

29. Paragraph 2 of the Practice Direction 19.3 expressly requires that if a document verified by a statement of truth is amended, the previous statement of truth in respect thereof shall NOT be deleted. The reason is obvious. Verified factual matters cannot be lightly brushed aside as if it had never been said/happened. The Court is fully entitled to draw adverse conclusion against the maker of these inconsistent statements in the absence of a satisfactory explanation. It is exactly the case here’.” (original emphasis)

4.3  Mr Chiu has also reminded me of the observation made in Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312:

“… In this day and age where the use of emails, text messages and other forms of electronic communication is prevalent, it is rare that an oral agreement would leave no electronic footprint in the parties’ contemporaneous communications: cf Blue v Ashley [2017] EWHC 1928 at [65]. This is particularly the case here where Ms Lau and Mr Behringer were in the habit of communicating by email.”

4.4  It is further a common ground between counsel that the Plaintiff bears a rather heavy evidential burden to establish the alleged PA CICT. Both counsel have referred to Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 (citing Stack v Dowden [2007] 2 AC 432):

“[34] In Ip Man Shan Henry v Ching Hing Construction Co Ltd [2003] 1 HKC 256 at paras. 70 to 74, I referred to the conceptual distinction between pre-acquisition common intention and post-acquisition common intention. At para. 74, I said,

‘If the common understanding was arrived at prior to the acquisition of the property, the beneficial ownership had not yet been crystallized and one may infer a common intention more readily. On the other hand, if the common understanding were only formed after the acquisition of the property, this would imply a change in the beneficial ownership of the property. The evidence must support an inference that there was a fresh agreement as to beneficial ownership before the court can give effect to the common understanding. In other words in that situation, there must be some evidence to infer that the original beneficial owner has agreed to give up some of his interest in the property in favour of the other party.’

[35] I do not think Stack v Dowden and Abbott v Abbott bring about any changes in this regard. In James v Thomas [2007] 3 FCR 696, a Court of Appeal decision after Stack v Dowden, Chadwick LJ said at p.705,

‘More pertinently, if the circumstances so demand, a constructive trust can arise some years after the property has been acquired by, and registered in the sole name of, one party who (at the time of the acquisition) was, beyond dispute, the sole beneficial owner: Gissing v Gissing [1971] AC 886 at 901, Bernard v Josephs [1982] Ch 391 at 404. But, as those cases show, in the absence of an express post-acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition.’

[36] In the same vein, in his dissenting judgment [1]in Stack v Dowden, Lord Neuberger said at para. 138,

‘The fact that the ownership of the beneficial interest in a home is determined at the date of acquisition does not mean that it cannot alter thereafter. My noble and learned friend Lord Hoffmann suggested during argument that the trust which arises at the date of acquisition, whether resulting or constructive, is of an ambulatory nature. That elegant characterization does not justify a departure from the application of established legal principles any more than such a departure is justified at the time of acquisition. It seems to me that ‘compelling evidence’ … is required before one can infer that, subsequent to the acquisition of the home, the parties intended a change in the shares in which the beneficial ownership is held. Such evidence would normally involve discussions, statements or actions, subsequent to the acquisition, from which an agreement or common understanding as to such a change can properly be inferred.’” (emphasis added)

4.5  For the reasons set out below, I have no hesitation in coming to the conclusion that the Alleged 9/4/15 Agreement, and therefore the PA CICT, did not exist. What I propose to do is to make a number of overarching observations against the cogency of the Plaintiff’s case, and then provide a more detailed analysis of the evidence chronologically. It will be seen from the more detailed analysis that the Plaintiff’s evidence for each of the “components” is problematic and lacks cogency, amply justifying or complementing the overarching observations.

5.  Overarching observations

5.1  There are a number of overarching observations against the cogency of the Plaintiff’s case and evidence.

5.2  First, as noted above, although the learned Recorder acceded to the Plaintiff’s application to amend the SOC, he made a number of (provisional) observations which in my view remain pertinent:

“[9] The Draft ASOC contains very substantial amendments to the Plaintiff’s claim. The vast majority of the SOC has been re-written, and includes a significant amount of background facts which was not previously pleaded…

[31] The first matter to consider is the nature of the amendment put forward. I accept that the Draft ASOC involves a significant and fundamental change of the Plaintiff’s case. I do not agree that the change only involves a mere change of date on which the alleged trust arose. I specifically reject the submission that it was not inexcusable for the Plaintiff to ‘get the date wrong by a few weeks’. This was not, in my judgment, an inadvertent or minor mistake. I also reject Mr Chan SC’s submission that the cause of action remains unchanged because the set of facts giving rise to the alleged trust has been substantially changed.

[32] In my judgment, the essential facts giving rise to the alleged common intention constructive trust has been changed from two discussions which were said to take place in late November 2014 and early 2015 to now an oral agreement entered into in April 2015. The originally pleaded discussions took place before the provisional sale and purchase agreement dated 15 January 2015 was entered into. This stands in stark contrast to what is now pleaded, namely, an oral agreement after completion of the 2015 Transaction took place. There is also no mention of any conditional transfer or sale in the SOC, which is a prominent feature of the draft ASOC. Moreover, the two versions of events pleaded are necessarily inconsistent because the SOC suggests that the Defendant had never been the beneficial owner of the Property. However, the Draft ASOC is pleaded on the basis that the Defendant was the beneficial owner at least until April 2015.

[33] It is also important the Plaintiff has now deleted the two discussions in late November 2014 and early 2015 which were pleaded at SOC §3 as forming the basis of the common understanding that the Property would be held by the Defendant as nominee. At the hearing before me, Mr Chan SC confirmed that the Plaintiff would no longer rely on those discussions for the effect originally pleaded. There is no clear evidence as why it was deleted. In my judgment, the original Statement of Truth should never have been verified by the Plaintiff.

[34] I next turn to the explanation offered for the proposed amendments. I am not impressed by the explanation given by the Plaintiff for the change of case. As I have mentioned, one of the purposes of a Statement of Truth is ensure that a litigant assumes personal responsibility for the factual averments contained in a pleading. It will be a very rare case where a court will look behind a signed Statement of Truth to conclude that a party did not actually verify the contents of a pleading. In the absence of clear evidence, the court will be reluctant to shift responsibility for the factual correctness of a pleading to a party’s legal advisers. In this case, the circumstances fall short of such a situation. There is simply no evidence that the Plaintiff’s former legal advisers were ever informed of the April 2015 oral agreement and decided not to plead it despite express instructions from the Plaintiff. The Plaintiff’s evidence in this regard is vague and does not condescend on particulars. Moreover, I specifically reject the Plaintiff’s assertion that her evidence was “twisted” by her former counsel. This is a serious allegation to make and I am not satisfied that the evidence comes anywhere near showing that her former counsel did such a thing.

[35] On the evidence before me, it appears that her former solicitors did, in fact, seek such confirmation by way of e-mail. Moreover, the Plaintiff’s assertion that she was never explained the contents of the SOC by anyone is contrary to the signed certificate by Mr Cheung below the Statement of Truth. Further, and in any event, the SOC was filed in June 2018, and it was not until September 2020 that the present application was taken out. If there were truly such important ‘mistakes’ in the SOC, it is unclear to me why it has taken so long for an attempt to made to rectify them. Overall, this strikes me a case where the Plaintiff seeks to cast all the blame on her former legal advisers in order to distance herself from her own Statement of Truth.”

5.3  Related to the above, the Plaintiff’s case on the Alleged 9/4/15 Agreement changed again during the trial. At the trial, the Plaintiff referred to an email dated 17 August 2022 (“17/8/22 Email”) sent to her solicitors which detailed the events which allegedly transpired on 9 April 2015. Contrary to the pleaded case and her witness statements (dated 23 November 2022 and 28 June 2023) in which it is said that the Alleged 9/4/15 Agreement was formed as a result of an offer by the Plaintiff which was accepted by the Defendant, the 17/8/22 Email set out the contrary, ie the alleged agreement was reached as a result of an offer made by the Defendant which was accepted by the Plaintiff. The Plaintiff in her viva voce evidence again blamed her solicitors for not setting out her evidence accurately. I accept Mr Chiu’s submission that the Court should naturally be slow to infer that officers of the court would act contract to the instructions, especially when the case was approved in the ASOC and her two witness statements. In any event, even in the 17/8/22 Email, the Plaintiff was seeking to recollect from her memory an event which took place a long time ago. As will be seen below, there is no contemporaneous record of what transpired on 9 April 2015. The 17/8/22 Email cannot be regarded as a contemporaneous record and the oscillations in the Plaintiff’s case does not inspire any confidence.

5.4  Secondly, the foregoing filters through to the (lack of) cogency of the evidence of Bo and Mother. As set out in the Agreed Chronology, on 20 August 2019, Mother and Bo jointly signed a letter asserting matters which were consistent of the Plaintiff’s original pleaded case, namely that the beneficial interest in the Property never passed to the Defendant and a constructive trust had arisen in January 2015.  

5.5  Significantly, on 12 August 2020 (about one month before the Plaintiff took out her amendment application), Bo signed another document (“Bo’s Document”) for the purpose of setting out the matters relating to the present action which were within her knowledge (以下為本人陳述關於案件HCA 797/2018的所知事情) in which she inter alia still vouched for the Plaintiff’s original pleaded case and made no mention of the Alleged 9/4/15 Agreement. Bo’s Document is inconsistent with the content set out in Bo’s witness statement in which Bo said that the Plaintiff told her about the Alleged 9/4/15 Agreement the evening of 9 April 2015 (§§35 and 36).

5.6  Thirdly, there are no contemporaneous documents evidencing the Alleged January 2015 Agreement, the waiver of Condition 3, or the Alleged 9/4/15 Agreement. Importantly, during the relevant periods, there were WhatsApp messages exchanged between the parties and other family members yet there are hardly any trace or matters supportive of the foregoing allegations.

5.7  Fourthly, the existence of the PA CICT is inconsistent with the representations made by the Plaintiff in the SD. It was not until 25 September 2020 (10 days after making the amendment application) that the Plaintiff reported the matter to the IRD. As submitted by Mr Chiu, it is inherently improbable for P to have (1) made the SD just before reaching the Alleged 9/4/15 Agreement (in the same afternoon and/or within an hour or so); (2) made the Alleged 9/4/15 Agreement with the effect of the Plaintiff becoming the beneficial owner but (3) forgotten she had just sworn that she had disposed of the Property within 6 months of her execution of the preliminary sale and purchase agreement of the Upton Unit and (4) did nothing about it for the next 5 years.

5.8  In closing, Mr Cheng was not able to explain or explain adequately away the above overarching (adverse) observations.

5.9  I now turn to the details.

6.  The Alleged January 2015 Agreement

6.1  On the evidence, there can be no dispute that the Monthly Repayments were in fact met by the “rent” paid by Bo. The question is therefore whether the payments by Bo were made to the Plaintiff or the Defendant.

6.2  The significance of the Alleged January 2015 Agreement is that, if existed it would have (1) prevented the Defendant from leasing out the Property as long as Bo and Eric decided to live in the Property (Condition 2) and (2) enjoined the Defendant to continue to reside in the Property to take care of Bo (Condition 3). This, in turn, would bolster the Plaintiff’s case that the “rent” paid by Bo would not be payments made to the Defendant. Indeed, this is the effect of the Alleged January 2015 Agreement pleaded at Amended Reply and Defence to Counterclaim §64.

6.3  In my view, the Alleged January 2015 Agreement has a number of evidential difficulties. Mr Chiu has made a wide-ranging attack on the existence of the Alleged January 2015 Agreement. I will focus those which I consider determinative.

6.4  First, on the Plaintiff’s case, the Defendant was in breach of Condition 3 but there was a subsequent waiver of that breach (§3.3(6) above). Where it is the Plaintiff’s pleaded case that Bo was shocked to discover that the Defendant had suddenly and secretively moved out of the Property (on or around 4 February 2015), Bo accepted in cross-examination that (1) she made no attempt to contact the Defendant and (2) when she met the Defendant the following day, Bo admitted that she did not ask why the Defendant moved out.

6.5  Secondly, the existence of the Alleged January 2015 Agreement is not inherently likely. On the Plaintiff’s own viva voce evidence, the Defendant was earning around HK$15,000 a month and the Plaintiff accepted that the effect of the alleged agreement would be such that the Defendant’s salary would not even cover the Monthly Repayments and the Defendant had to dip into her savings which was estimated to be HK$600,000. The Plaintiff explained that the Alleged January 2015 Agreement had the effect of forcing the Defendant to save money. The Defendant was born in 1984 and was aged 30 at the time of the alleged agreement. In my view, it is inherently unlikely that the Defendant would have agreed to the alleged agreement.

6.6  Thirdly (and conversely) the documentary evidence supports the Defendant’s case that she had always intended to lease out the Property to generate rental income to meet the Monthly Repayments and such intention was known to the family. As pointed out by Mr Chiu, contemporaneously, on 14 January 2015 (one day before the execution of the PSPA), Sam and the Defendant discussed on WhatsApp about leasing out the Property. Even in early March 2015, Sam mentioned to the Defendant in a WhatsApp message that he would help the Defendant find a tenant if Bo decided to move out, which is consistent with the Defendant’s pleaded case (§§3.5(3) and (4) above).

6.7  For the above reasons, and consistent with the overarching observations, I find as a fact that the Alleged January 2015 Agreement did not exist.

7.  Payment of the first two Monthly Repayments

7.1  The contest between the parties is the payments made by Bo were (1) on the Plaintiff’s case payments directed by the Plaintiff to meet the first two Monthly Repayments at the request of the Defendant or (2) on the Defendants’ case rent paid by Bo to the Defendant for occupation of the Property.

7.2  The two payments made by Bo were by cheques dated 2 March 2015 and 8 April 2015 payable to the Defendant.

7.3  As pointed out above, the assignment of the Property took place on 27 February 2015. The first Monthly Repayment was therefore not due until 27 March 2015.

7.4  There is a chronological difficulty in the Plaintiff’s case. As the first Monthly Repayment was due only on 27 March 2015, there is no apparent reason why the Defendant had to seek assistance from the Plaintiff “sometime between 27 February and 3 March 2015” (§3.3(7) above). There is an additional evidential difficulty. The Plaintiff was in Hong Kong between 24 February and 4 March 2015. There is no reason why the Plaintiff had to trouble Bo to issue a cheque on 2 March 2015.

7.5  The same difficulties apply in respect of the cheque dated 8 April 2015 mutadis mutandis. The Plaintiff was in Hong Kong between 8 and 16 April 2015. There was ample time for the Plaintiff to issue a cheque to meet the second Monthly Payment which was only due at the end of April 2015.

7.6  Another evidential difficulty is that it is the Plaintiff’s evidence that Bo handled the Plaintiff financial affairs and Bo had in her possession cheques pre-signed by the Plaintiff. At the time of the two payments (ie HK$15,000 on 2 March 2015 and HKS18,000 on 8 April 2015), contrary to the Plaintiff’s and Bo’s speculation in the witness box that maybe the Plaintiff’s accounts did not have sufficient cash, such speculation is contradicted by the bank statements. The bank statement dated 14 March 2015 shows that there was more than HK$19,000 in the current account (and more than HK$56,000 in the savings account). Although the bank statement for April 2015 was not in evidence, the bank statement dated 14 May 2015 also shows a balance in excess of HK$26,000.

7.7  There is no documentary evidence to support the alleged requests made by the Defendant. In particular, where it is P’s pleaded case that, on 2 April 2015, the Plaintiff was upset by the total lack of sense of responsibility on the part of the Defendant (§3.3(8) above), the Plaintiff is unable to identify a single WhatsApp message which evidences the foregoing.

7.8  I reject the Plaintiff’s evidence that the two payments made by Bo to the Defendant in March and April 2015 were as a result of directions given by Plaintiff to Bo at the requests of the Defendant.

8.  The Alleged 9/4/15 Agreement

8.1  There is no dispute that the Plaintiff and the Defendant met at GMT’s office on 9 April 2015. The contemporaneous WhatsApp records show that the Plaintiff first attend a solicitor firm to sign the SD and then returned to GMT’s office. The WhatsApp messages exchange between the Plaintiff and the Defendant between 8 and 10 April 2015 were very short and made no reference to the Alleged 9/4/15 Agreement.

8.2  Given my factual findings above, the entire basis for the genesis of the Alleged 9/4/15 Agreement, namely that the Defendant had overestimated her ability to repay the Loan and requested the Plaintiff to continue paying the Loan for her (§3.3(9)), collapses.

8.3  Given the overarching observations set out above, Mr Cheng in his written closing submission made no real attempt to vouch for the Plaintiff’s credibility but asserted (without any real analysis) that the Court should accept the Plaintiff’s evidence on the Alleged 9/4/15 Agreement. He instead focused mainly on Bo’s evidence on the nature of payments made by her. I have already dealt with the payments made in March and April 2015. I will deal with the further payments below.

8.4  In addition to or consistent with the overarching observations, I accept Mr Chiu’s submissions that the Plaintiff’s case on the Alleged 9/4/15 Agreement suffers the following (insurmountable) evidential difficulties:

(1)  There are no contemporaneous records of this important event which had allegedly caused the Plaintiff’s great grievance, especially when messages were exchanged at the material time. For example, the messages exchanged between the Plaintiff and the Defendant shows that, at 7:13 pm on 9 April 2015, the Defendant sent a map to the Plaintiff to which the Plaintiff replied thanking the Defendant with a kiss emoji;

(2)  Importantly, in cross-examination, the Plaintiff initially said that she did not immediately accept the Defendant’s suggestion but only did so 2 to 3 days later after Bo promised to assist her by paying rent to her but later changed her evidence again to say that a common understanding was reached before she left the office;

(3)  Bo’s viva voce evidence was that on 9 April 2015, the Plaintiff called her about the Alleged 9/4/15 Agreement. She then discussed the matter with Eric and informed the Plaintiff the same night or the day after that they would pay rent to the Plaintiff to alleviate the Plaintiff’s burden of meeting the Monthly Repayments. This is inconsistent with the pleaded case that an agreement with only reached between Bo and the Plaintiff in May 2015 (§3.3(10) above);

(4)  Sam’s viva voce evidence was that the Plaintiff only told him about Bo paying rent to her one or two weeks after 9 April 2015. This is contrary to the Plaintiff’s evidence in the witness box, that once the Plaintiff agreed with Bo as to the rental arrangement, the Plaintiff immediately told Sam.

8.5  Taking all the above matters into account, I find as a fact that the Alleged 9/4/15 Agreement has never come into existence.

9.  Post Alleged 9/4/15 Agreement conduct

9.1  I now deal with the post-agreement conduct relied on by Mr Cheng. The starting point is that, as pointed out at §4.4 above, in the absence of an express post-acquisition agreement, the court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition. As will be seen below, the matters relied on by Mr Cheng in fact supports the Defendant’s case or are at best equivocal.

(i)   Payments made by Bo between May 2015 and November 2017

9.2  It is common ground that the payments made by Bo in the identified period (HK$18,000 per month) were rent for the occupation of the Property (§§3.3(10) and 3.4(4) above). The question is whether the landlord was the Plaintiff and the Defendant. I have no hesitation that finding that the payments made by Bo were rent paid to the Defendant.

9.3  First, the manner in which the payments were made by Bo was contrary to the Plaintiff’s pleaded case. As stated at §3.3(10), the Plaintiff’s pleaded case was that she had directed Bo to deposit the monthly rent to the Defendant’s account at OCBC from which the Monthly Repayments would be debited. As a matter of fact, apart from three instances (April, May and June 2015), all the rental payments made by Bo were not deposited in the Defendant’s OCBC account.  Bo explained that she did not follow the Plaintiff’s direction because she considered the nearest OCBC branch was still too far away and she decided just to give a cheque of HK$18,000 to the Defendant every month. However, Bo accepted in cross-examination that she never told the Plaintiff that she did not follow her direction. I do not accept Bo’s evidence.

9.4  As pointed out by Mr Chiu, there was no guarantee that the Defendant would deposit Bo’s payment into the OCBC mortgage account. This lack of guarantee is significant, because on the Plaintiff’s case, the Defendant was irresponsible and at risk of losing all her money. The Plaintiff (and Sam’s Sister as guarantor) were shouldering the risk of default on the Mortgage Repayments. It is in their interest (as per the pleaded case) to ensure that the rent was paid directly into the OCBC account.

9.5  Instead, what in fact transpired is consistent with a tenant paying rent to a landlord, and it would be up to the landlord to decide how to use the paid rent (whether in discharge of mortgage repayments or other expenses).

9.6  Secondly, Mr Cheng relies heavily on three WhatsApp messages dated 9 March, 5 April and 6 April 2016 which show:

(1)  Eric had offered to reimburse the Defendant for the purchase of a tube (水喉) and filter (濾芯) in the sum of HK$1,800;

(2)  On 6 April 2016, the Defendant’s offer to reduce the rental to HK$15,500 (sufficient to meet the Monthly Repayments) so that Eric and Bo could have more cash reserve as Bo might have to undergo kidney operation (…交租都唔使甘跟市價，之前同大寶講過 .. 其實$15500 得啦 (夠供樓得啦) 你哋留返d銀 預大寶遲d可能在換腎好過啦);

(3)  Despite the Defendant’s generous offer, Bo continued to pay HK$18,000 a month.

9.7  Mr Cheng’s arguments run as follows.

9.8  In relation to the reimbursement for the tube and filter, Mr Cheng relies on the Defendant’s viva voce evidence that the costs of the tube and filter should be borne by the landlord. If Eric regarded the Defendant as the landlord, he would not have attempted to reimburse the Defendant.

9.9  I am unable to accept Mr Cheng’s submissions. First, this is not a tenancy arrangement arranged at arm’s length but between family members. It has not been suggested that there was any specific discussion between Bo, Eric and the Defendant as to who was responsible for general wear and tear and I am unable to place any significant weight on the Defendant’s evidence that she was responsible for the costs of the tube and filter. Secondly, the incident involved only a negligible sum. Thirdly, if Bo and Eric treated the Plaintiff as the owner and therefore responsible for the costs of the tube and filter, what Eric should have done was to ask the Plaintiff to reimburse the Defendant.

9.10  In relation to the Defendant’s offer of rent reduction, Mr Cheng argues that if Bo and Eric regarded the Defendant as the landlord, and the agreed rent was HK$18,000, there was no reason for them not to accept Defendant’s offer to pay less. He reasons therefore that the only reasonable inference to be drawn from the insistence on the part of Bo and Eric was that they never considered the Defendant as their landlord, and thus they simply ignored the offered rent reduction.

9.11  I am unable to accept Mr Cheng’s submission. As pointed out by Mr Chiu, there are many reasons why Bo and Eric did not accept the rent reduction, one of which was, according to the Defendant, Bo was a person who needed to save face.  This is supported by the fact that in a WhatsApp message sent on 12 June 2017, the Defendant had told Eric that there was no need to feel embarrassed if Bo needed financial assistance (唔使唔好意思喎，需要幫忙出聲). What is more important is that, again as pointed out by Mr Chiu, is the fact that against the Defendant’s offer of rent reduction, Eric could have questioned, but did not question, how could the Defendant offer a rent reduction when the Defendant was not the true landlord without the Plaintiff’s approval.

9.12  For the above reasons (and those set out in section 7 above), I find that all the payments made by Bo to the Defendant (from March 2015 to November 2017) were rental payments paid to the Defendant as landlord.

10.  Temporary lease in November 2017 and the 2018 Sale

10.1  Although Mr Cheng relies on the involvement of Sam and/or the Plaintiff in these matters, there is no real analysis proffered in his submissions. Conversely, I accept Mr Chiu’s following submissions:

(1)  As the Defendant explained, she was not working around the vicinity at the material time (she was working in San Po Kong), and hence she did not personally deal with the agents etc. The Plaintiff and Sam therefore assisted in the process;

(2)  The documentary evidence shows how the Defendant insisted on dealing with matters within the ambit of a landlord/owner of the Property;

(a)  She insisted on negotiating the terms of the short-term tenancy in November 2017. She would have no interest in doing so if she were not the beneficial owner of the Property;

(b)  She insisted on attending the Property to collect keys from the short term tenant when the tenancy ended;

(c)  There was a debate as to who insisted on the Property being sold at HK$ 9 million instead of HK$ 8.9 million. It is the Defendant’s case that she did. There is no contemporaneous WhatsApp communications which show that the Plaintiff or Sam did (despite the alleged involvement of Sam with the agents etc). To the contrary, the Plaintiff’s WhatsApp messages to the Defendant on 18 March 2018 show that the Property had been sold, and the bottom price is HK$ 8.9 million. A reasonable inference is that it was the Defendant who negotiated it up to HK$ 9 million when she saw the agent in person.

11.  Conclusion

11.1  In the light of the above findings, there is no compelling evidence to support or infer the existence of the PA CICT. I therefore dismiss the Plaintiff’s claim and allow the Defendant’s counterclaim for:

(1)  a declaration that the Defendant was at all material times the sole beneficial owner of the Property;

(2)  an order that the Net Proceeds (together with interests accrued thereon) be paid to the Defendant.

11.2  The Defendant has further asked for interest pursuant to sections 48 and 49 of the High Court Ordinance Cap 4 without setting out the rates sought and for which period. Given that the Defendant is entitled to interest accrued on the Net Proceeds paid into court, the Defendant is to clarify within 7 days hereof the order she seeks in respect of interest, if any (limited to 2 pages). The Plaintiff is to lodge and serve submissions in reply (limited to 2 pages) within 7 days thereafter.

11.3  I also make a costs order nisi that (1) the Plaintiff is to pay to the Defendant the costs of the action and the costs of the counterclaim (including any costs reserved) on an indemnity to be taxed if not agreed and (2) the Defendant’s own costs to be taxed in accordance with the Legal Aid Regulations. I (provisionally) agree with the submissions set out at Mr Chiu’s closing §37 that the Plaintiff’s unexplained change of case and the lack of merits of the case as pursued are features that warrant a costs order on a more generous basis.