CHOW YUK TAI AND OTHERS v. CHOW YAT ON AND OTHERS

HCA 4067/2001 &
HCA 1260/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS. 4067 OF 2001 & 1260 OF 2002

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(Consolidated pursuant to the Order of Master C.B. Chan dated 13^th June 2002)

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J U D G M E N T

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1. This is a dispute among members of a family, surnamed Chow.  The late Mr. Chow Kam (鄒金) (“Father”) died on 5 June 1990.  He was survived by his wife, Madam Cheung (“Mother”) and 5 grown-up children who according to their order of seniority are Yuk Tai (玉娣) (1^st Plaintiff), Wing (榮) (5^th Defendant), Koon Tai (觀娣) (2^nd Plaintiff), Tai Tai (帶娣) (3^rd Plaintiff) and Yat On (日安) (1^st Defendant).  The siblings are the main protagonists in this Action.

2. Madam Lau Kam Ho, the 2^nd Defendant, was married to Yat On.  The 3^rd and 4^th Defendants are sons of Yat On from his first marriage.  Madam Lau indicated at the outset of the hearing that she was willing to abide by any decision of the Court and be content to leave the conduct of the case to Yat On.  The 3^rd and 4^th Defendants played no part in these proceedings at all.

Background

3. The relevant history of the dispute went back to 1979.  Father and his elder brother, Chow Shiu Kiu (鄒水橋), were involved in litigation over the ownership of the piece of land designated as Lot 1139 in Demarcation District No. 95 at Ku Tung Village in the New Territories.  The piece of land was irregular in shape and roughly divided into 3 portions.  Chow Shiu Kiu and Father each occupied one portion.

4. The litigation resulted in a settlement in 1980.  The settlement terms provided that Lot 1139 would thenceforth be held in common ownership between Father and his brother in the proportion of 60% and 40% respectively.  They also agreed to maintain the status quo in respect of the areas actually occupied by them at the time.  The effect of it was to recognise each other’s right to exclusion possession to the parts occupied by each of them.  In addition, the portion situated between their respective parts was treated as being held under common occupation (公地).  Annexed to the settlement agreement was a diagram depicting the 3 portions of land.

5. On the portion marked out for Father was a small house which at the time was occupied as his family home (“the Family House”).  His portion also included the land in front of and surrounding the house.  In the course of this hearing, there was evidence (which I accept) that Father’s portion was a “fenced area”.  

6. It was a further term of the settlement that Father was to pay a sum of $10,000 to Chow Shiu Kiu as costs.

7. In 1984, a part of Lot 1139 was resumed by the Government.  What remains of the lot was thenceforth designated as the Remaining Portion of Lot 1139.  The present dispute concerns this remaining portion.  It does not appear, however, that the resumption has any bearing on the issues I have to decide in these proceedings.

8. On 25 May 1990, 11 days before his death, Father conveyed all his interest in the property (that is, his three-fifths share in Lot 1139 RP) to Yat On by way of gift.  It is common ground that at the time of executing the deed of gift, Father was seriously ill.  He was physically so weak that he could only manage to put a mark in the form of a “+” as his signature on the document.  (For convenience, I will refer to Father’s three-fifths interest in Lot 1139 RP as “the Property” in this Judgment.) 

9. The circumstances leading to the execution of the deed of gift and the extent of Yat On’s interest in the Property are contentious issues in these proceedings.  On the one hand, the sisters maintained that the Property was all along “family property”, and it was always understood by all family members (meaning Father himself, Mother and the 5 siblings) that the property belonged to all of them beneficially.  The sisters’ case is that the deed of gift transferred only the legal title to Yat On and the family members remained beneficially entitled to the Property.  Wing and Yat On, on the other hand, denied that the Property was ever held or intended as “family property” as such.  Father had always been the sole legal and beneficial owner of the Property, whose interest was duly conveyed to Yat On by way of gift.  I will return presently to deal with these disputed issues.    

10. At this point, it suffices to note that in the ensuing few years, there were disputes among the siblings concerning the Property.  These disputes eventually led to the making of an agreement among the 5 siblings, together with Mother, in November 1995.  The agreement, described in the course of these proceedings as “the Family Arrangement” (a description which I would adopt), was embodied in a Chinese document entitled “土地業權分配協議書”.  It is this Family Arrangement which lies at the heart of the dispute in this Action. 

11. All the 5 siblings and Mother signed on the document constituting the Family Arrangement.  It is evident that the Family Arrangement was intended to have legal effect binding among the 6 signatories in respect of their rights over the land where the family home was situated.  However, there are now serious differences among the siblings as to what exactly had been agreed upon by way of this Family Arrangement. 

12. The primary case advanced by the sisters is that the Family Arrangement has given rise to a trust over the Property in 6 equal shares for the benefit of Mother and the 5 siblings.  Their case is that, first, the Family Arrangement should be construed as applying to the whole of Lot 1139 RP; and secondly, whatever might be the legal position before the Family Arrangement, Yat On would thenceforth be holding the interest in the Property in trust for those 6 family members. 

13. The case of Wing and Yat On is that ever since the transfer of the Property from Father to Yat On, the latter has been the sole legal and beneficial owner of the Property.  Their case is that the Family Arrangement was a compromise in relation only to a portion of Lot 1139 RP, that is, the portion designated as being occupied by Father in his settlement with his brother, or otherwise described as the “fenced area”.  According to Wing and Yat On, what the parties settled upon by way of the Family Arrangement was each other’s right to build upon the area of land specifically allotted to them in accordance with the diagram set out in the document.  Yat On’s legal and beneficial ownership of the Property was never the subject matter of the compromise nor was his interest in the Property affected in any way by the Family Arrangement.

14. In late 1998, notice was published in the Government Gazette for the resumption of Lot 1139 RP.  Subsequently in 2000, Yat On, being the registered owner, received substantial compensation for the resumption.  In September 2000, Yat On paid each of the 3 sisters a sum of $256,000.  Each of the 3 sisters had signed an acknowledgment of the receipt of their share of the resumption money.

15. The case of Wing and Yat On is that the payments to the sisters were made not pursuant to any legal obligations on their part, but purely out of their good heart considering that the sisters were, after all, members of the same family.  The payments to the sisters were calculated on the basis that each of them was to receive a one-ninth share of what Wing and Yat On had represented to them as being the aggregate of the resumption money in respect of the agricultural and building portions of the land.  According to the figures set out in calculations, compensation received for the agricultural portion was of a sum of just over $2,182,000, and for the building portion about $221,700, totalling about $2,403,700. 

16. Unknown to the 3 sisters at the time, but was later discovered by them, that the compensation received by Yat On from the Government in fact totalled $8,191,111.20.  They therefore demanded that they should each be paid a one-sixth share of that sum in accordance with the Family Arrangement.

Events leading to the Family Arrangement

17. I now return to the background events leading to the Family Arrangement.  I find the following facts established on the evidence.

18. I have previously referred to the Family House.  In the early 1960s, the Family House was occupied by Father, Mother and the 5 siblings (Yat On being born in 1962).  It is relevant to point out that the siblings are not by any means highly educated.  It would appear that Yuk Tai had received secondary education, Wing completed his primary education, and other siblings had only some education at primary level.

19. Yuk Tai was married in 1968, and since about 1970 had emigrated to Scotland.  At that time Wing was working as an apprentice in some garment factory and was living away from home.  From time to time, Mother had had arguments with Father and there had been occasions of Mother moving out of the Family House for periods of time.  In about early 1970s, Mother left the Family House to live in Tai Po, taking Koon Tai, Tai Tai and Yat On with her.  According to Mother (whose evidence I accept on this point), the main reason for moving out was because the Family House, being close to the river, had been threatened by regular floods during rainy seasons.  Father remained at the Family House.  The family (with the exception of Yuk Tai) regularly met for tea, especially when Wing was off duty.  Although different family members had left or stayed away from the Family House at different times, the place was by and large still regarded as the home for the family.

20. The land comprised the Family House, a pigsty and a shed for chickens.  The land surrounding the Family House was used for growing vegetables and some fruit trees.  In the late 1980s, the pigsty and the chicken shed were converted as residence for Yat On and Koon Tai respectively.

21. As already noted, in 1979 Father became involved in litigation with his brother over the ownership of Lot 1139.  Father had had difficulty to finance the litigation and he asked the family members to contribute towards the legal costs.  Eventually in addition to his own legal expenses, Father was required under the terms of settlement to pay costs of $10,000 to his brother.

22. The case of the sisters is that in persuading them to make contributions, Father represented that each of the family members would have a share in the property.  It is their pleaded case that Father had thereby declared himself to be holding the property for the benefit of himself, Mother and the 5 siblings.

23. In this connection, I would accept that eventually, in one way or another, each of the siblings had contributed his or her share of $2,000 towards Father’s litigation costs.  However, the evidence relating to Father’s supposed declaration of the trust over the property is far from clear.  According to Yuk Tai, there was an occasion when Father discussed the litigation with the 3 sisters, in the presence also of their aunt (Father’s sister, Madam Chow Yam).  On that occasion in order to impress upon the 3 sisters the importance of funding the litigation, Father allegedly stated that if the Property were eventually preserved each of the siblings would have a share in it.  Koon Tai, though agreeing with Yuk Tai’s evidence, made no reference to Father’s statement.  Similarly, although Tai Tai had given quite a full account of the events concerning Father’s request for contribution, she made no reference to the occasion mentioned by Yuk Tai.  Nor was it Tai Tai’s evidence that the sisters were persuaded to make contributions because of Father’s statement that they would each have a share in the property. 

24. In assessing the evidence, I am prepared to give allowance for the fact that a long time had elapsed since these events and it would be unrealistic to expect recollection of precise details.  I do not doubt that in the course of persuading the sisters to contribute towards the litigation expenses, it was probable that Father had told them that it would be in their interest to do so because they, being members of the family, would all benefit from defending the family property.  But I think the evidence adduced by the sisters lacked the clarity and consistency in material respects as to the context and occasion on which the statement was supposed to have been made, and also as to details of the statement relied upon.  The quality of the evidence fell short of that required to establish a trust over the Property on account of family members’ contributions towards the litigation expenses. 

25. That said, however, I do accept that from time to time after settlement of the litigation, Father had declined offers from developers to purchase his interest in the Property.  He had also refused requests from Yat On for transfer of the Property to his name.  I accept that Father had wanted that the Property should be retained for the benefit of the family as a whole.  In that very loose sense, I have little doubt that all members of the family had regarded themselves as having an interest in the Property, but I am equally sure that none of them had applied his mind to what that interest really was in legal terms. 

26. As noted earlier, Yat On returned to stay at the Property in about 1986 with his children and Madam Lau.  However, he did not have a job and he had to rely on others to make provisions for him from time to time.  Yat On was unhappy that Father had not acceded to his requests to have the Property transferred to his name.  I accept that he had on occasions even vented his discontent by resorting to abusive language and behaviour against Father.   

27. Yat On must have been aware that by refusing his requests for a conveyance of the Property, Father had intended the Property to be kept for the benefit of the whole family (the expression is here used in a loose and general sense).  Father’s refusal must have signified to Yat On (and I find that Yat On must have known) that Father had not intended him (Yat On) to be the sole beneficiary of the Property. 

28. Father was diagnosed to be suffering from lung cancer in 1990.  He was hospitalised and was very frail.  About a month before his death, he was discharged from hospital and was put up in an old people’s home. 

29. Yat On took the opportunity again to request Father to convey the Property to him.  I accept in this connection Koon Tai’s evidence that it was Yat On who took Father to the solicitors’ office with a view to procuring the transfer of the Property to him.  I reject the suggestion that it was Father’s initiative to do so.

30. On their first visit to the lawyers, no document was signed because seeing Father’s frailty Yat On was advised that it was necessary for medical evidence on Father’s mental capacity to be obtained before the transfer document could be executed.  It was as a result of such advice that Dr. To’s medical certificate (dated 3 May 1990) was procured. 

31. With the medical certificate, Yat On took Father to the solicitors again on 25 May 1990.  On this occasion, they were accompanied by Koon Tai.  Father signed on the deed of gift with a “+”.  I accept that when Father signed, he was mentally able to comprehend that he was transferring his interest in the Property to Yat On. 

32. I find that Father eventually agreed to execute the transfer mainly because Yat On had been pestering him to do so.  In this regard, I reject Yat On’s and Wing’s evidence that Father had wanted only his sons to “inherit” the Property and that Wing was happy for Father to put the Property into Yat On’s sole name because Yat On was already staying on the Property at the time.  I find it more probable that Father had eventually succumbed to Yat On’s demand because he no longer had the energy or physical strength to reason with him or resist. 

33. Koon Tai was present when Father signed the deed at the solicitors’ office.  She was subjected to extensive cross-examination on this question.  I do not accept her evidence insofar as she was saying that Father did not understand what he was signing.  I find it more likely that she had realised that the transfer was an act to mollify Yat On, and she did not prevent Father from doing so because it was clear that Yat On would not cease to pester Father especially when it was apparent that Father might not have long to live.  As already noted, Father died on 5 June 1990.

34. Although the above circumstances have raised questions whether in law the conveyance to Yat On was valid and also the extent of Yat On’s interest in the Property, it is unnecessary in the end to come to a view on these questions.  What is relevant and more important is that factually (and I accept) the sisters still believed that each of the family members retained an interest in the Property.  To them, Father had always considered the Property to be held for the benefit of all.  They did not think the transfer had in any way affected what they considered to be their legitimate claim to the interest in the Property, partly because they disapproved of the way Yat On had procured the transfer into his name and partly because they did not believe Father would have intended Yat On to be the sole beneficiary.

35. Yat On, on the other hand, must also have realised that his sisters did not accept him to be the sole owner of the Property despite the transfer.  I accept that it was in these circumstances that the sisters had, in about 1991 or 1992, intervened in Yat On’s attempt to sell the Property.  I reject Yat On’s evidence that he was persuaded and “half-forced” by Koon Tai and her boyfriend into signing a provisional agreement with the potential purchaser.  I find it more probable that Yat On sought to sell the Property without knowledge of the sisters, and later upon their discovery of his attempt he thought it better to abort it for fear that his sisters might well pursue him if he were to insist on the sale against their wishes.  

36. In the time ensuing, Yat On was keen to sell the Property and he had raised the matter with Mother, Koon Tai and Tai Tai at different times (also with Yuk Tai during one of her return visits) but nothing eventually came of any of the discussions because the sisters were opposed to a sale.

37. As earlier noted, Koon Tai returned to stay at the Property in about 1988.  She occupied what used to be the chicken shed with her boyfriend and their daughter.  Sometime in 1995, she wanted an extension to those premises.  Her desire for an extension was met with resistance from Yat On and they had arguments.  In their arguments, Koon Tai expressed her view in no uncertain terms that she did not regard Yat On as the sole owner of the Property, but that the Property should in fact belong to all family members.  Mother and Tai Tai were also drawn into dispute.  Koon Tai demanded a meeting of family members so that their long-standing differences over the Property could be thrashed out. 

38. It was in these circumstances that Koon Tai, Tai Tai, Wing, Yat On and Mother had had a meeting.  Koon Tai eventually agreed not to pursue any extension.  But she demanded that there should be a written document to confirm that each family member was to have a share in the interest of the Property so as to avoid any future arguments.  Wing suggested that Mother should also have a share in the Property and all agreed.  Wing was to prepare the document. 

The Family Arrangement

39. A few days later, the family members (except Yuk Tai) assembled again at the Family House.  Wing put before them the draft he had prepared. 

40. The Family Arrangement was entitled “土地業權分配協議書”.  The writing was divided into 3 sections.  The first section contained 2 paragraphs.  (For reference purpose, I will call them “the First Paragraph” and “the Second Paragraph”.)

41. In the First Paragraph, it was stated that

“	下列地段DD1139 RP為一幅土地，現有業主姓名鄒日安，把下列有關土地平均分為六份，給所有兄、姊、妹、母親。”

42. The Second Paragraph stated

“	業權分配如下圖，A及B是祖屋不能郁動”

43. There was a diagram on the right (“the Diagram”) which marked out 6 portions A to F.  Each individual portion contained one name of the respective family members.  The Diagram is of significance and I will reproduce it as follows:

44. The next section (which I will call “the Third Paragraph”) stated

“	如任何人需要分割土地只能從E或F開始。而所有律師費和政府之費用，全由該人支付。”

45. The last section (which I would call “the Fourth Paragraph”) stated

“	另外一幅土地因為業權不清。只能等待政府收地或其它解決辦法，再另行分配，所有業權人必需尊守上項協議：”

46. All the family members signed as “業權人”.

47. In construing the written document, I bear fully in mind the circumstances leading to its creation.  It is important also to remember that all the parties who had subscribed their signatures to the document (including the draftsman himself) were not particularly well-educated or sophisticated people.  Certainly none of them had had any legal training or knowledge, or any legal assistance on this occasion.    

48. I will first discuss as a matter of fact, what the parties had intended to agree by way of the Family Arrangement.  I will then analyse the legal position and effect.    

49. To start with, the document was headed “土地業權分配協議書”.  The term “業權” appears 5 times in the document.  I have no difficulty in accepting that it is a term commonly used in connection with landed property and that it is commonly understood to refer to proprietary rights, or ownership, or titles over landed property.  In this connection, I have no hesitation to reject Wing’s evidence that the term was used to refer merely to “a right to construct building” on the land.  I do not believe that he would have used the term “業權”, if he were referring merely to some form of licence or right to build.

50. The context in which “業權” appears in the document makes it clear that the term was used as meaning proprietary right or ownership or title.  First, “土地業權” in the heading is plainly referable to proprietary right or ownership over land, and not some mere licence to build.  Secondly, in the Fourth Paragraph, the reference to “業權不清” in the context of “another piece of land” would only make sense if “業權” is understood in its ordinary meaning of proprietary right, ownership or title.  That other piece of land must be the “公地” (the area in common occupation) referred to in the settlement agreement between Father and Chow Shiu Kiu.  What was thought to be “unclear” must be its proprietary interest or ownership, and not some right or licence to build over that piece of land. 

51. My view is further reinforced by the sentence in the First Paragraph “把下列有關土地平均分為六份，給所有兄、姊、妹、母親”.  This sentence literally means that “the land was to be apportioned into 6 parts, to be given to the siblings and Mother”.  I believe it was intended to effect an apportionment in relation to the ownership or title over the relevant part of the land.  Invariably of course, any apportionment of ownership (if achieved) would affect the right to build.  But as a construction of the sentence I find it difficult, in the absence of any qualification, to come to the view that it was intended merely as a designation of building rights to respective family members in respect of various parts the land.    

52. The next question is to ascertain what was the portion or parcel of the land to which the apportionment was intended to refer.  Was the apportionment intended to have effect in respect only of the portion described as the “Father’s portion” or the “fenced area”, or was it intended to apply to some larger area and if so, what?

53. In my view, the references in the First Paragraph to “下列有關土地” and in the Second Paragraph to “業權分配如下圖” must be references to the land depicted in the Diagram.  The subject matter of the apportionment is plainly confined to that portion of the land so depicted and no other.  In this connection, I reject the sisters’ contrary contention that the opening phrase “下列地段DD 1139 RP” in the First Paragraph defined the subject matter as the whole of Lot 1139 RP.  It is clear to me the reference to “DD 1139 RP” in the opening paragraph is a mere preamble to describe the fact that the land concerned was held in the name of Yat On.  That reference was no more than an identification that the subject matter that comes to be dealt with later in the document (that is, the portion in the Diagram) falls within Lot 1139 RP.  In this connection, I accept the contention on behalf of Yat On and Wing that if the entire Lot 1139 RP were to be the subject of the apportionment, the Diagram would have been quite meaningless.

54. Further, the Diagram is clearly referable to the physical location of the land comprising the Family House (portions A and B) and the area in front of and surrounding it.  The area depicted in the Diagram is clearly to be distinguished from “the other piece of land” mentioned in the Fourth Paragraph which, I find, must be a reference to the “公地” (area under common occupation).  I have accordingly no difficulty in accepting that the Diagram related only to that area of the land described as the “Father’s portion” or the “fenced area”, and that area was the only subject matter of the apportionment under the Family Arrangement. 

55. In this connection, I should also mention that at the time of entering into the Family Arrangement, I believe that it had not occurred to any of the parties that the title to this “fenced area” was not solely vested in Yat On.  I do not believe any of the parties appreciated or was aware of the co-ownership between Yat On and Chow Shiu Kiu (or his successor-in-title).  I find it much more probable that they had all along been labouring under the misconception that the effect of Father’s settlement with Chow Shiu Kiu was to give Father sole ownership to “Father’s portion” and Chow Shiu Kiu to Chow’s own portion.  This misconception explains the reference in the Fourth Paragraph that the title to the “公地” (area in common occupation) remained unclear.

56. I also believe that despite having provided for apportionment into 6 parts, at the time of entering into the Family Arrangement none of the parties contemplated an immediate alienation of his or her portion of the land.  I think that is implicit in the Third Paragraph of the Family Arrangement.  In fact I find it more likely that the parties had wanted the land (the “fenced area”) to remain as one piece so long as there was proper recognition of each member’s specific interest in it (perhaps realising that it would not have been of much benefit or prospect for small parcels to be sold on their own). 

57. That brings me to the next question: did the parties intend by the apportionment to designate a specific part of the relevant area to a specified individual, or was it their intention simply to provide for each family member to have a one-sixth share in the interest over the “fenced area”? 

58. To answer this question, I think it is important to have regard to the dispute which brought about the Family Arrangement.  While the Family Arrangement no doubt serves as a written confirmation of family members’ entitlement to the land, it was brought into existence partly also because of Koon Tai’s attempt to extend her premises which eventually brought her into direct conflict with Yat On.  There was a purpose therefore in having a demarcation of each member’s territory by designating the respective portions to named individuals.  I find that that was indeed the purpose of having the Diagram in the Family Arrangement.  In this connection, I do not accept Koon Tai’s evidence that her understanding was that she would still be entitled to build on any part of the land even after the Family Arrangement.  I think she must have accepted that she would thenceforth be allowed only to build on Portion D which had been allotted to her.   

59. In addition it is no coincidence that Mother was allotted Portion A, Yat On Portion B, and Koon Tai Portion D.  Portions B and D in fact represented the locations of Yat On and Koon Tai’s homes at the time (see the diagram in Koon Tai’s supplemental witness statement for comparison).  As for Portion A, it must have been considered by all concerned that it would be most natural and obvious for that portion (on which the Family House was standing) to be allotted to Mother.

60. In this connection, I do not think that the possible differences in the value of the various portions (for instance, some might be building land and others agricultural) were a matter that occurred to the parties when they entered into the Family Arrangement.  At the time, the main concern was to have it set out that each of the parties was to have an equal interest (in terms of area) over the “fenced area”.  As I have found earlier, it was not within the contemplation of the family members that they would physically divide up the land.  Nor was there any suggestion that the prospect of land resumption was ever in their mind at the time.

61. In coming to the conclusion that each of the family members was allotted a specific part of the relevant area, I have not overlooked the Third Paragraph which provided that “anyone who needs to carve out any part of the land, he/she must do so only from Portions E and F”.  I do not think this paragraph undermines the conclusion I have reached.  I think the Third Paragraph should be read to mean if there ever is to be an alienation of the land, it can only begin with Portions E and F.    It must have been obvious to the parties that any attempt to do otherwise by seeking to carve out a portion in the middle would be most undesirable.  The Third Paragraph did no more than make clear the parties’ desire to preserve the integrity of the land as a whole. Also insofar as it makes reference to “anyone”, I think it simply contemplates the possibility of the event of those allotted with Portions A, B, C or D wanting an alienation of their part in future, and that there is tacit agreement that they should first make arrangement with Yuk Tai or Tai Tai to effect a swap.

62. In short, I am of the view that by the Family Arrangement the family members had agreed among themselves that the portion of the land corresponding to the “fenced area” should be apportioned into 6 equal parts (in terms of area) with each of them being entitled to a specific portion as indicated on the Diagram. 

63. I will now turn to the legal implications based on the above findings.  The first point to note is that Yat On and Chow Shiu Kiu (or his successor-in-title) remain at all times co-owners over the entire interest in Lot 1139 RP.  It will be remembered that Lot 1139 RP covers not only the “fenced area”, but also the area in common occupation and the Chow’s portion.  There was never a partition of the proprietary interest (as distinct from marking out areas of exclusive possession) into what would have corresponded to the “fenced area” as against the other areas in Lot 1139 RP.  Of course, conceptually, there is no objection for the whole of Yat On’s three-fifths interest in Lot 1139 RP to be further sub-divided.  But that was not what the parties had agreed under the Family Arrangement.  The parties, as I have found, had only wished to effect an apportionment of the “fenced area”, and indeed the Fourth Paragraph made it clear that the apportionment did not apply to the “common portion”.  In the absence of a partition aforesaid, it is impossible to identify what part of the proprietary interest held by Yat On had been further divided up.  In other words, it is impossible to specify what shares in the proprietary interest each of the family members is beneficially entitled to in respect of Lot 1139 RP or the three-fifths interest held under Yat On’s name therein.  It follows, therefore, that the sisters’ claim that they each have a beneficial interest to the extent of one-sixth share in Yat On’s three-fifths interest in Lot 1139 RP cannot stand.

64. That said, however, it is clear from the findings above that Yat On was not the sole beneficial owner of the entire three-fifths interest in Lot 1139 RP.  By the Family Arrangement, each of the family members was to be treated as the beneficial owner of the portion allotted to him/her within the “fenced area”.  Had there been a proper partition of the proprietary interest in relation to the “fenced area” and the rest of Lot 1139 RP, there would have been no doubt that Yat On would be holding the interest corresponding to the respective portions on trust for the benefit of the family members in accordance with the Diagram. 

65. In this regard, I do not think the absence of a partition of Lot 1139 RP into the “fenced area” and other parts is fatal to the sisters’ claim.  Despite the absence of a formal partition, the Family Arrangement can still take effect by constituting Yat On as trustee of the interest corresponding to the “fenced area” for the benefit of each of the family members according to their several allotments.  The intention of the parties in entering into the Family Arrangement was clearly to enable each family member to enjoy the benefit of the part allotted to him/her.  The effect of it would be that, for example, in the event of a resumption, the compensation payable in respect of a particular part will be paid to he/she who has been allotted that part.  The Court will give effect to that intention by upholding the trust as explained.

Resumption of the Property

66. Lot 1139 RP was subsequently resumed by the Government.  By two agreements both dated 4 September 2000, Yat On and the Government reached agreement as to the compensation receivable in respect of the Property.  Eventually, Yat On received two sums from the Government, one of $6,009,000 for the building portion of the Property and the other $2,182,111.20 for the agricultural portion.

67. As noted in the earlier part of this Judgment, Yat On then paid a sum of $256,400 to his 3 sisters purporting to be their respective entitlement to the compensation. 

68. In this connection, I accept the sisters’ evidence that at the time of distribution of the compensation, neither Yat On nor Wing had disclosed the actual amount of compensation received by Yat On.  It is clear that Yat On tried to conceal the actual amount from the sisters.  The sisters’ shares of the compensation were worked out ostensibly by reference to the figures set out in a calculation table (Bundle at p. 59).  In the calculation table, reference was made not only to compensation having been received for the agricultural portion, but also for the building portion and the rate for the latter was purportedly $275 per square foot.  But as the evidence now shows, that figure bears no relation to the truth.  Also the reference in the table to Yat On and Wing each getting about $150,000 is plainly untrue.

69. I have little doubt that the inclusion of figures for the building portion in the table was to induce the sisters into believing that the money distributed to them already represented their share of the entire compensation received by Yat On from the Government, and also that they (the sisters) were already getting larger shares than their brothers.  I think it is for that reason also that despite the manner of allotment in the Diagram, Yat On and Wing were prepared ostensibly to give a share of the compensation for the building portion to the sisters.  Indeed, Yat On admitted under cross-examination that the inclusion of the figures for the building portion was to pacify the sisters to keep them quiet.  I believe it was also for the same reason that reference was made to compensation for the building portion in the sisters’ acknowledgment receipts (Bundle pp. 138 to 140).

70. As to the calculations, the fact that the sisters were willing for the compensation to be divided into 9 shares to include their nieces and nephews has not changed my views expressed above.  I believe the sisters had raised no objections because these additional recipients were also members within the same family. 

71. The acceptance by the sisters of the distribution in these circumstances obviously did not relieve Yat On of his duty as trustee to fully account to the sisters of the share of the compensation properly due to them.

72. In this connection, Yat On argued that as a condition for receiving the compensation for the building portion, he had to surrender his and his descendants’ entitlement similar to that for indigenous villagers to concessionary small house grants.  Thus, he argued, he should be entitled to the part of the compensation attributable to the building portion.

73. It is clear from an examination of the agreement (relating to compensation for building portion) that clause 1(i)(a) merely provides that if the recipient was an indigenous villager, such right to concessionary small house grants would have to be given up.  But as a matter of fact, as the evidence now shows Yat On was never an indigenous villager.

74. It was then argued that Yat On had given up the public housing in Tin Shui Wai in order to comply with the requirement for compensation under clause 1(i)(b).  I find this argument equally without merit.  As a matter of law, as Yat On was constituted a trustee for the sisters in respect of their corresponding allotments under the Family Arrangement, the sisters’ beneficial entitlement must extend equally to the proceeds when their portions of land were resumed.  I fail to see any basis for the argument that the sisters’ beneficial entitlement should somehow be extinguished or overridden because the compensation money was received in exchange for the trustee’s (Yat On) giving up certain of his personal rights.  In any event, I also having difficulty understanding how Yat On’s surrendering of his rights could relieve him from his duty as trustee to give a proper account to the sisters in relation to the sums received. 

Relief

75. The evidence available does not identify the precise location of the building portion of the area in respect of which compensation was received.  Nor is there any evidence to show the connection between the position of the various portion allotted to the sisters and the said building portion.  It is not possible, therefore, to tell what part of the compensation should be attributable to the sisters’ portions.

76. One thing is clear, however, which is that Yat On as trustee has never given a proper account to the sisters of the compensation money he had received for the resumption which indisputably included the sisters’ portions of the land.  I have no doubt that such an account should be taken, and I will so order.

77. As Lot 1139 RP has already been reverted to the Government, I do not underestimate the practical difficulties in working out the precise areas for the purpose of calculating the sums due to the sisters in the taking of the account.  However, I do not think the Court is precluded from ordering an account just because the accounting party may find it difficult to do so.  The position is no different from that of a trustee mixing his own funds with those of the beneficiaries.  But it is to be hoped that any difficulties in accounting can be resolved by some sensible arrangements among the parties who are after all members of the same family.

78. For the foregoing reasons, I would make the following orders:

(1)	Yat On do give an account of the following:
	(a)	each of the sisters’ share in the compensation which he has received from the Government that corresponds to the portion of land in the “fenced area” to which she was allotted under the Family Arrangement;
	(b)	all profits that he has made, or is continuing to make by using or investing the respective share of the compensation so ascertained;
(2)	Yat On do pay over any amount found to be due to the sisters upon taking of the said account;
(3)	There be liberty to apply for further or consequential directions, and also generally;
(4)	There be the following order nisi as to costs:
	(a)	Yat On shall pay half of the sisters’ costs;
	(b)	No order as to costs in respect of the other Defendants.

79. I make no order in respect of the other relief sought.