鄧永安 v. 鄧明珠, the administratrix of the estate of late Tang Shun Man, deceased, and in her personal capacity AND OTHERS

DCCJ 83/2018

[2021] HKDC 836

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 83 OF 2018

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BETWEEN

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JUDGMENT

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1.  This is the plaintiff’s claim for the beneficial ownership of a property known as Flat 13, 21/F, Hin Hing House (Block 4) (Including the Planter / Planter box appertaining thereto, if any), Hin Keng Estate, No. 69 Che Kung Miu Road, Shatin, New Territories, Hong Kong (the “Property”).

Background

2.  The parties involved are all siblings. In order of age, 1^st Defendant (“D1”) is the eldest (daughter), followed by 2^nd Defendant (“D2”) (son), 3^rd Defendant (“D3”) (daughter), 4^th Defendant (“D4”) (daughter), 5^th Defendant (“D5”) (daughter) and then Plaintiff (“P”) being the youngest son.

3.  Their late parents (and the siblings) have been residing in the Property, a public housing unit subject to the restriction of non-alienation, since 1980’s and they purchased it in 2000 as joint tenant subject to a 10-year mortgage.

4.  The mother passed away in January 2008 so the father became the sole owner.

5.  As the father was living alone and not well (amongst other reasons in dispute), D1 asked P to move into the Property. P and his family moved into the Property at same point (exact date also in dispute) around the time the father passed away in July 2008.

6.  In September 2008, P started paying a sum of HK$3,000 per month firstly to D2’s wife, Leung Siu Wai (“Leung”) and later into a bank account jointly held by D4 and D5. P and his family has been living in the Property since.

7.  Disputes started in around 2010 when the mortgage had been fully paid up and the issue of the administration of the father’s estate arose. D1 finally obtained the Letters of Administration and became the administratrix in 2017.

8.  According to the agreed valuation report dated 12 August 2019, the open market value of the Property was HK$5,430,000 after paying the premium of HK$2,895,000 for the release of the alienation restriction. The market value of the Property for sale to an eligible purchaser in the TPS Secondary Market of the Hong Kong Housing Authority (i.e. without the need to pay the premium) was HK$3,560,000.

9.  The only issue in this case is the nature of this payment.

10.  P’s case (as supported by D4) is that there was an oral agreement within the family in 2008 that he could purchase the Property at the price of HK$600,000 with each of the other 5 siblings receiving HK$100,000 as his or her share (totalling HK$500,000) by way of monthly payments of HK$3,000, and that the title would be transferred to P upon full payment (the “Agreement”).

11.  The case of D1, D2, D3, D5 (collectively referred to as “Ds”) is that these monthly payments were only in form of rent, and the agreement was that the rent received should simply be paid out to whichever siblings in need. In other words, Ds’ case was that this was a simple rental agreement all along.

12.  Counsels from both sides have already agreed on the consequence of the court’s findings:

a. if the Agreement was proven, then D1 shall assign all legal title and interest to P for the consideration of HK$500,000 less the total contribution made so far by P.

b. If not, P shall pay D1 mense profits (according to agreed monthly rents which the court need not specify here) up to the date of delivery of vacant possession which will within 3 months from the date of the judgment.

Consideration of the evidence

13.  The problem with this case is that this concerned an alleged oral agreement that occurred many years ago so for many disputes, it is a “he says, she says” scenario. There were also credibility issues with quite a few of the witnesses on both sides.

D4’s evidence

14.  D4 might have been considered a valuable witness for P (since she would stand to get more share of the money if the defence wins and the Property got sold now with the sale proceeds divided amongst the siblings).

15.  She appeared to be at pains to distance herself from P’s case but in fact she had been the channel of communication and was clearly main advocate for P with the rest of the family all along.

16.  Even with the simple question of “when were you aware of the Agreement?”, D4 was totally inconsistent: she initially claimed that she would not deal with “family matters” and did not know about the Agreement until she witnessed an occasion when she saw Leung paid D3 in cash. She then said that she was told about the Agreement by D2 after the death of the father. She later said she advocate on behalf of P to allow him to stay in the Property before D1. And when P was giving evidence, he claimed that he had discussed the Agreement with D4 when she came to visit him in the Property.

17.  D4 also claimed that she did not know the cause of all the anger and dispute and did not even know that D3 was trying to applying for Letters of Administration when requesting everyone to give her documents like copies of birth certificates, but she simply gave those to D3. This was clearly unbelievable.

18.  There were many other similar examples and one simply gets the impression that D4 was deliberately trying to appear to take the independent “bystander” role in order to help P’s case. She, in fact, appeared very evasive and did not assist P’s case at all.

P’s evidence

19.  P was another problematic witness.

20.  He would play down the extent of renovation work of the Property (only to “repair cracked floor tiles”) when the renovation receipts clearly showed much more substantial work (e.g. creating a room for his family). Evidence showed that the renovation of the Property was paid by money left by the mother.

21.  Similarly, he also denied that D1 suggested that he should move in to the Property partly to help him to pay a lower sum of money for accommodation and to have better arrangement for schools with his children.

22.  P was also inconsistent about the mortgage on the Property: he alleged in his witness statement that D1 took the mortgage and “took away the purchase price” because she was “at the time looking for cash flow” (Page 64 paragraph 3 of the Trial Bundle) and that he had told D1 that he should “not be liable to pay for the outstanding mortgage” and that D1 agreed as part of the Agreement (Page 69 paragraph 22 of the Trial Bundle).

23.  Yet, on the witness stand, P said that the only time he heard about the mortgage was from his mother in 2002 regarding D1’s son needing to study overseas. None of these were mentioned in his witness statement.

24.  Of course, all these may have little to do with proving the crux of the case (i.e. was the Property for rent or for purchase?), but it was perhaps an illustration of his mindset to downplay any suggested generosity and to create unfavourable impressions of some of his siblings.

D3’s evidence

25.  D3’s evidence is also problematic.

26.  D3 clearly did not like P. When questioned why she wrote the email to P (Page 317 of the Trial Bundle) (as translated) “…you don’t have to pay me the remaining balance of HK$10,000. My original intention is to transfer title to you for HK$100,000…”, she claimed that she all along was receiving “rent” from P (totally HK$90,000 at that time) and this was only her “unilateral intention” that came to her on the day.

27.  If so, why would she suddenly come up with the figure of $100,000 (and not HK$90,000 that she had received so far) as the price of her share? There was no mention of this email in D3’s email and in fact, she only stated that she was angry with P and told the other Ds that she “would not receive any further monthly rent anymore” from P (Page 87 paragraph 28 of the Trial Bundle).

28.  According to Ds’ case, the agreement was simply to transfer the “rental income” to whichever siblings in need. If so, why would D3 tell P: “you don’t have to pay the remaining balance of HK$10,000”? D3 simply failed provide a reasonable explanation.

29.  D3 did eventually received a further HK$10,000 later that year after opening of the joint account. The email from D5 to her when arranging for the transfer stated (as translated):

“Please provide your account so as to deposit the remaining balance of HK$10,000…”

30.  D3 again failed to provide any reasonable explanation when asked why this would not be the remaining balance of her share under the Agreement.

31.  Of course, this must also show that D5 also acknowledged the Agreement.

Leung’s evidence

32.  P’s email dated 10 February 2011 (Page 322 of the Trial Bundle) drew a parallel between two incidents: the incident concerning a dispute in a property in Shenzhen (the “SZ Property”) and the incident concerning the dispute in Property.

33.  P mentioned that when he was 30 years old, he paid money on the SZ Property but got “nothing”, and now when he was 40 years old, he “also do the same thing” and question “how about the result”.

34.  The SZ Property incident was not in dispute: in around 2001, P and D2 decided to jointly pay for the mortgage of the SZ Property (which was registered under Leung’s name). The mortgage arrangement was such that there were payments to be made in Hong Kong as well in Shenzhen. The agreement was that D2 would pay the “Hong Kong mortgage” and P would pay the “Shenzhen mortgage”.

35.  The SZ Property was sold in around 2006 but P only got about HK$30,000 which he thought was unfair to him.

36.  In Leung’s reply email dated 12 February 2011, she began by stating (as translated), “Regarding the problem with the Property, you should resolve with amongst the 6 sibling”. She then admitted that the original intention for the SZ Property was for D2 and P to share the ownership but then went to stated many reasons why the payment to P after the sale of the SZ Property was fair and, in fact, a generous gesture. I need not recite the details but the argument was one of unequal monetary contribution (Page 325 of the Trial Bundle).

37.  The nature of the SZ Property agreement was very different from a simple rental agreement (which was Ds’ case). So it would have been clear to Ds’ and Leung that P was not “doing the same thing” here.  

38.  If it was in Leung’s mind that the agreement on the Property was all along since 2008 nothing but a simple rental agreement, one would reasonably expect that she would immediately point this out, perhaps like:

“The original intention of the SZ Property was shared ownership but the case here was a rental agreement so you did not “do the same thing”. There was never any agreement to give you ownership, so of course you will get “nothing”!”

39.  This would have been the strongest and most obvious rebuttal. The fact that Leung never stated this but instead avoided the issue concerning the Property to the siblings was perhaps telling.

40.  The fact that there was no reference to any rental agreement in any of the emails by the other siblings all along was even more telling, suggesting that there was never a rental agreement and this might likely be a later “invention” for defence.

Evidence of valuation of the Property and payment-outs not in dispute

41.  It is not disputed that, around August 2008, D3 sought information on the value of the Property and told the siblings that it was HK$600,000.

42.  D3 received HK$90,000 when she wrote the above mentioned email. Despite what she stated, she did receive the “remaining balance” of HK$10,000 later in October 2011. If the criteria for receiving rent was according to needs, it would be surprising that D3 did not ask for more money given that it was not disputed that her financial situation was worst amongst the siblings.

43.  D2 also received exactly HK$100,000 in April 2014 when that sum has just been accumulated in the joint account from P’s payment (in March 2014). His explanation was that his father-in-law had just passed away and he needed that money. It would be a strange coincidence that D2’s financial needs for the funeral was exactly HK$100,000.

44.  D4 also received exactly HK$100,000 in late 2016 and early 2017. This may be considered a self-serving gesture given D4’s support for P. However, she did not seek prior approval from the siblings that she was in need of money. If that was the criteria for receiving the rent payment from P, one would expect the other siblings to chase D4. There was no evidence of such.

45.  In short, the Property was valued at HK$600,000, and 3 out of the 6 siblings have taken exactly HK$100,000 in turn just as P’s payments accumulated to around that particular sum. This is highly unlikely to happen if the agreement, according to Ds’ case, was simply “anyone in need can take P’s monthly rental payment”.

46.  Of course, I note that “100,000” is not even divisible by “3,000” so I see no reasonable explanation how this “coincidence” could have come about without the Agreement.

Conclusion

47.  After considering all the evidence, I think the following was, on balance of probability, the likely sequence of events in this case:

a. The mother passed away in January 2008 and D1 asked P to move into the Property to look after the father. It was agreed that this would be rent free given P’s financial situation.

b. Renovation was done using fund from the estate of the mother and at some point P and his family moved in. Unfortunately, the father passed away (either before or soon after P moved in).

c. There were discussions amongst the siblings after the father’s death. Some felt that P and his family should not be living there rent free from then on.

d. D3 obtained a valuation of HK$600,000 and some siblings wanted P and his family to move out and to sell the Property.

e. P had just settled his children at local schools and (with possible help of D4) made the case that if the siblings wanted to sell, they should sell to him instead.

f. D1 was involved in this discussion and agreed the terms of the Agreement on behalf of all the other siblings.

g. D3 was the first to receive the payments because her financial situation was worst amongst the siblings. At that point, the payment was rather informal in that P paid Leung in cash every month which Leung would then pass to D3.

h. However, at some later point, some siblings became aware that the Property has appreciated in value a lot more than the agreed HK$600,000.

i. It would be likely that there were discussions and possibly agreement amongst Ds (except D4) that they should ask P to “let go” of the Property so it could be sold, and for the sales proceeds to be “re-distributed” amongst the siblings.

j. P was clearly in the minority in this discussion and was concerned that he and his family would be asked to leave the Property and he would be left without any ownership and just a small sum of money, just like the incident of the SZ Property. Given that he had already paid D3 HK$90,000 in cash, he stopped further payments to Leung and demanded proof of his payments.

k. The dispute was made worst because the mortgage of the Property was, by then, fully paid and D3 (whom P did not get along with) started asking everyone for copies of their birth certificates etc. in order to apply for the Letters of Administration. The intended administrator was D2 so P was concerned that this would be a repeat of the SZ Property incident, so he refused to give his birth certificates and other documents to D3.

l. Ds and Leung, on the other hand, might have thought that they had supported P all along that he should not be so ungrateful in taking all the advantage of the appreciation in value of the Property without sharing.

m. Thus, this was the background of P’s email as mentioned above and the reason for the dispute and anger amongst the siblings. D2 was so frustrated that he gave D4 the documents for the application for Letters of Administration. D4 simply shelved the plan in support of P.

n. In any case, P’s concern for documentation of his payments was solved when D1 asked D4 and D5 to open a joint bank account to receive P’s payments.

o. D3 received the remaining balance of her share from the joint account. D2 and then D4 received their share of P’s payment in accordance with the Agreement once the sum amounting to their agreed share had accumulated in the joint account. As such, there is no doubt that they have all confirmed the existence of Agreement by their conduct.

p. In 2017, D1 managed to obtain the Letters of Administration even without the co-operation of P. P therefore took out the current proceedings.

48.  The above scenario might provide a logical explanation of the evidence before the court, but whether it is entirely accurate or not may not be entirely relevant. There are clearly overwhelming evidence in support of P’s case as far as the existence of the Agreement is concerned.

49.  I am therefore satisfied that, on balance of probability, the Agreement did exist. I would therefore find for P and dismiss Ds’ counterclaim.

Order

50.  I would therefore grant the following orders:

a. Within 28 days hereof, the plaintiff do pay the remaining balance of the HK$500,000 payable under the Agreement as agreed by the parties;

b. Upon the abovementioned payment, subject to the consent of the Housing Authority if so required, the 1^st defendant do assign all legal title and interests in the property to the plaintiff at nil consideration within 56 days thereafter, failing which all such conveyance, conduct or other necessary document shall be executed by a person to be appointed by this court pursuant to section 38A of the District Court Ordinance, Cap 336;

c. The plaintiff shall be responsible for the transaction costs, fees and stamp duty (if any) in respect of the transfer referred to in paragraph 50(b) above;

d. The 1^st, 2^nd, 3^rd and 5^th defendants do pay the costs of this action to the plaintiff, with certificate for counsel, to be taxed if not agreed.