THEE NING KHONG v. THE KWEN YUEN AND OTHERS

HCA 1307/2018

[2018] HKCFI 2356

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1307 OF 2018

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REASONS FOR DECISION

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1.  Upon conclusion of the hearing on 16 October 2018 of the Consent Summons dated 8 October 2018 taken out by the plaintiff (the “Consent Summons”), I (save some minor amendments) granted the Order sought (which included a Declaration). Below are my reasons.

2.  The plaintiff and the 1^stdefendant are father and son.  On 6 June 2018, the plaintiff took out a specifically indorsed Writ.  The Statement of Claim was subsequently amended on 10 August 2018.  The plaintiff claims that the 1^stdefendant has misappropriated certain funds which the plaintiff has entrusted upon him as trustee.  He claims an account, inquiry and return of the funds.  The relief sought includes a Declaration (the “Declaration”) to the effect that the 1^stdefendant has been holding as trustee for him House No 12, Greenery Gardens, Remaining Portion of Lot No 4767 in DemarcationDistrict No 104, Yuen Long (the “Property”).  The pleaded basis of the trust is that it was the plaintiff who had provided the full price for the purchase of the Property.

3.  On 6 June 2018, and upon the plaintiff’s application, L Chan J granted a Mareva Injunction against the defendants (the “Injunction Order”).

4.  On 18 July 2018, the 1^stdefendant filed his Defence.  Therein, he admits that he has been holding the Property as trustee for the plaintiff.     

5.  On 4 September 2018, the plaintiff took out a summons before Master Lai for inter alia (1) the Declaration; and (2) consequential orders for the execution by the 1^st defendant of a conveyance of the Property in the plaintiff’s favour and delivery of all related title deeds to him.  Despite the consent of the 1^st defendant, Master Lai refused to grant the Order sought due to the existence of the Injunction Order.  Directions were given that the application be heard by a Judge.

6.  On 8 October 2018, the plaintiff took out the Consent Summons pursuant to Order 27, rule 3 and Order 42, rule 5 of the Rules of the High Court.  It has been consented to by the 1^stdefendant.  The plaintiff seeks thereby (1) a variation of the Injunction Order, to the effect that the Property be excluded from the operation of that Injunction Order; and (2) the same Order which they sought from Master Lai.

7.  When the Consent Summons was first placed before me, I refused to grant the Declaration sought on paper, but on 9 October 2018 issued the following directions:

“‘A declaration can only be made after proper argument and cannotbe made merely on admissions by the parties whether in pleadings or otherwise’—see paragraph 15/16/2 of White Book. Parties are required to address the issue as to why the court should exercise its discretion in granting the declaration sought.”

8.  On 11 October 2018, the plaintiff filed an affirmation (his 4^thone) in support of the Consent Summons.  He confirms what he has pleaded in his Amended Statement of Claim, to the effect that whilst the Property was purchased and registered in the 1^stdefendant’s name, he (the plaintiff) was the one who provided the full purchase money.  He points to the 1^st defendant’s admission in his Defence.  He also produces documents andbanking records which support quite clearly the existence of a resulting trust.   

9.  Ms Lam, counsel for the plaintiff, submits that as no third party interest is affected, and in the light of the clear evidence, the Court should exercise its discretion and grant the Order sought.  Mr Tam, solicitorappearing for the 1^st defendant, confirms that the 1^st defendant has consentedto the application so as to accommodate the plaintiff.  Whilst the 1^st defendant is not keen to obtain the Declaration sought, he does not object to the same.

10.  I refer to the discussion on the law at paragraph 15/16/2 of Hong Kong Civil Procedure 2019:

“ The power to make binding declaration of right is a discretionary power …. If relief is to be granted without trial or evidence, the right course for the court is not to make a declaration but to state on what footing the relief is to be granted …. A declaration can only be made after proper argument and cannot be made merely on admissions by the parties whether in pleadings or otherwise … nor in default of compliance with rules of court.

On the other hand, the rule of the court that a declaration will not be granted when giving judgment by consent or in default without a trial is a rule of practice and not of law and will give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he is entitled;”

I apply those principles.

11.  Having heard Ms Lam, I am persuaded that this is an appropriate case to grant the Declaration sought:

(a)   The 1^st defendant has in his Defence made a clear admission that the Property was purchased with funds provided by the plaintiff, and he has been holding the same as his trustee;

(b)   The Declaration is not being sought on the strength of the 1^stdefendant’s admission only, but is supported by the 4^th affirmation of the plaintiff.  Documents and banking records have been produced which support the existence of the trust;

(c)   I accept Ms Lam’s submissions that even if the matter were to proceed to trial, it is unlikely that the plaintiff would be able to adduce more evidence (which is already sufficient) in support of the Declaration.  It is in the circumstances unfair to force him to go through a trial in that regard;

(d)   No third party interest is involved.  In this regard, I note the existence of a “Notice of intention to proceed with an application for ancillary relief” that is pending registration against the Property.  Ms Lam has clarified that the Notice was filed by the plaintiff’s wife as petitioner against the plaintiff as respondent.  Her interest is not likely to be prejudiced by the Declaration (because its effect is favourable to the plaintiff).  Ms Lam further informs me that the plaintiff has in any event in the relevant matrimonial proceedings given an undertaking that if the plaintiff is to proceed to sell the Property, half of the sales proceeds would be stakeheld for the purpose of satisfying any claim by his wife;

(e)   I also accept Ms Lam’s submissions that in the absence of the Declaration, the plaintiff may have to pay a substantial sum as stamp duty when the 1^stdefendant transfers the Property back to him.  That would be unfair to him.

12.  For the reasons above, save some minor amendments, I grant the Order sought via the Consent Summons, including the Declaration.

13.  Having heard the parties, I order further that the plaintiff do bear the 1^st defendant’s costs occasioned by the Consent Summons, which I summarily assessed at HK$8,000.