LEE YUN SANG v. LI YUN YAU

HCA 1145/2014

[2018] HKCFI 1549

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1145 OF 2014

__________________

__________________

________________________

J U D G M E N T

________________________

The Claim

1.  The defendant, Li Yun Yau (also referred to below as “Yun Yau”) is the registered owner of the property situated at Flat No.2, 7/F Block D, Lok Nga Court, 50 Chun Wah Road, Kowloon (“the Property”).

2.  In this action, the eldest brother of the family, Lee Yun Sang, known also by the name of Raymond (hereafter referred to as either the plaintiff or “Raymond”), claims against Yun Yau for, inter alia, a declaration of beneficial ownership of the Property, an order for the transfer of the legal title, and delivery up of vacant possession of the Property.

3.  The plaintiff has registered a sealed copy of the writ of summons in this action against the Property on 16 July 2014.  The defendant in this action counterclaims for an order that the registration of the sealed copy writ of summons be vacated.

The Relevant Legal Principles

4.  The plaintiff relies on the facts of the case as alleged by him as giving rise to the existence of an agreement or a common intention between the parties that the beneficial interest in the Property was at all material times held by the defendant in favour of the plaintiff under a constructive trust.

5.  To establish a common intention constructive trust, the plaintiff is required to show an express agreement coupled with an appropriate form of detrimental reliance.[1] In the absence of an express agreement, there must be direct contributions to the payment of the purchase price (including on the mortgage instalment payments).  The plaintiff argues that the existence of the common intention is to be found in the alleged express agreement and/or to be inferred from the conduct of the parties.

6.  The plaintiff additionally relies on proprietary estoppel by representation.[2]  The plaintiff argues that either cause of action would entitle him to sole beneficial ownership of the Property.

7.  If the court should refuse to find any express agreement or common intention as aforesaid, the plaintiff would fall back on the contention that by virtue of the plaintiff’s alleged contribution to the purchase money (including part of the mortgage instalment payments) of the Property to the tune of $215,902 by June 1991, an implied intention is to be found that the defendant is to hold the Property on resulting trust for the sole benefit of the plaintiff.[3]

8.  It is to be noted that the plaintiff’s claim is mounted solely on the basis that he is the sole owner of the legal and beneficial interest in the Property.  Despite the citation of authorities[4] to the effect that contributions made towards the mortgage loan repayments of property purchased under the HOS scheme would create a new interest in the land without offending the non-alienation rule under the Housing Ordinance, the plaintiff makes no alternative claim of ownership in partial interest in the Property by reason of common intention constructive trust/ resulting trust.  The court is therefore not called upon to make any decision in that regard.

9.  The plaintiff bears the burden of proving on a balance of probabilities such facts that would support one or more of the alternative cases as pleaded.

10.  As will be seen in the undisputed part of the facts of this case, neither party paid the mortgage instalments throughout the entire term before the mortgage was discharged by early full payment.  The plaintiff took responsibility for the payments for over six years while residing in the Property, and the defendant carried on making the instalment payments for the rest of the term likewise for some 6 years until the mortgage was fully paid off.  With the existence of any express agreement or common intention as asserted by the plaintiff being hotly contested, evidence on the financial arrangements for payment of the purchase price and all expenses leading up to the occupation of the Property, the surrounding facts and circumstances of the occupation of the Property, and evidence on the conduct of the related parties throughout the period therefore assume considerable significance in ascertaining the true intention of the parties over ownership.

Decision to Purchase and Subsequent Occupation of the Property

11.  The Property was purchased from the Housing Authority under the Home Ownership Scheme (“HOS”) in the name of Yun Yau in 1983 for $226,700.   It is pertinent to note that the HOS limits the eligibility of those wishing to purchase a property to a certain level of income.  Properties purchased under the HOS are also subject to restrictions against resale within the first 10 years, and would not be eligible for the purchase of another property under HOS at least during the currency of his ownership of the HOS property.  A person who has purchased a property under the HOS loses his entitlement to apply for public housing.

12.  It is not disputed that the decision to purchase property under the HOS was a subject of discussion amongst the mother of Raymond and Yun Yau (“Mother”) and the children of the family, including Raymond, Yun Yau, Yun Cheung, Yun Keung and younger sister Yun Mui.

13.  It is common ground that at the time of the application for purchase under the HOS that led to the acquisition of the Property, Raymond was not eligible for such a purchase, as his income level exceeded the limit.  The defendant Yun Yau and Yun Cheung were eligible, but only Yun Yau succeeded in the draw.

14.  It is the claim of Raymond that there was an agreement, common intention or understanding between Yun Yau and him[5] (“the 1983 Agreement”) that upon the successful application to purchase a property under the HOS scheme,

(a)   Yun Yau was to purchase the property in his name and to hold it for the sole benefit of Raymond;

(b)   That Raymond will be solely responsible for paying for the entire purchase price, and all fees and expenses in the purchase;

(c)   That Raymond was to be entitled to exclusive physical use, occupation and enjoyment of the Property after the purchase; and

(d)   That Yun Yau would convey the legal ownership of the ownership of the Property to Raymond once it was legally and practically viable to do so in the future.

15.  The above alleged common intention is firmly denied by the defendant[6]. The defence case is that Mother had announced her suggestion or decision in the presence of Raymond, Yun Yau, and other siblings including Yun Cheung, Yun Keung and Yun Mui that the beneficial ownership of the property was to be vested in the sibling who succeeded in the application for the right to purchase property under the HOS, with the following arrangement for payment –

(a)   Mother would pay for the down payment and the cost of decoration of the Property.

(b)   Mother told her children that the whole family would move into the Property after decoration was complete, whereupon she was to pay for the mortgage loan instalments out of contributions to be made to her by all the siblings for family expenses.

(c)   Yun Yau as the owner would be solely responsible for the remaining instalments of the mortgage repayment after all the other siblings have moved out.

16.  The purchase of the property was completed upon Yun Yau taking out a mortgage loan to the tune of HK$200,000 with Wing Lung Bank. The monthly instalment to be repaid to the bank amounted to around HK$2,200 per month.  While the repayment period would have lasted till 1999 for the 15-year term loan[7], the mortgage was discharged on about 18 July 1997 upon full early repayment. 

17.  Yun Yau gave evidence that in 1997, he realised that he could afford to pay off the mortgage early, and he did so in order to save some interest.  From that time, he had been in possession of the title documents of the Property.  On the other hand, Raymond made no claim and took no step to protect any interest he might have considered he had against any risk of disposal of the Property until after Mother passed away.

18.  It is not disputed that Raymond and his wife Law Miu Fun Sarah (“Sarah”) moved into the Property as a newly-wed couple in November 1984 as its first occupants.  According to Yun Yau, it was the decision of Mother, who had approached him to persuade him to accept her decision, to let Raymond have use of the Property, as he was about to get married, on condition that he would be responsible for paying the monthly mortgage loan repayments and all outgoings of the Property during the period of his occupation. 

19.  Yun Yau’s evidence was that Mother persuaded him that his interest would not be adversely affected by letting Raymond occupy the Property in the meantime, as Raymond will service the loan for as long as he was to live there.   However, according to Yun Yau there was no discussion, let alone any understanding or agreement that any such payment made by Raymond would in any way impact on the beneficial title of the Property.  This aspect of his evidence accords with the evidence of Sarah, who was later estranged from Raymond, but gave evidence at trial as a witness for the plaintiff.

20.  According to Raymond, the fact that he ended up moving into the Property was an implementation of the agreement and understanding he had with Yun Yau prior to the application under HOS that the application be made for his benefit.  However, the evidence of Sarah suggested otherwise.  She testified that when planning to get married with Raymond, she had intended to live in the flat she had already purchased for herself, for which she was paying mortgage loan instalments.  The couple could not agree on the issue, as Sarah had reservations about using Mother’s resources rather than their own, and living in a home of which they were not the owner.

21.  Her evidence was that Raymond told her prior to their getting married that Mother had used her own savings to buy the Property under the HOS. She was told that Mother was very upset that they were not prepared to go and live in the Property after their marriage.  Apparently, despite the down payment having been paid by her it would still be too heavy a financial burden for Mother even with the support of other children to keep up the instalment payments.  Mother would like Sarah and Raymond to live in the Property and pay the mortgage loan instalments in the meantime.  She succumbed to the plea of Mother, and reluctantly agreed.

22.  Raymond and Sarah lived in the Property and had three children before moving out in 1991 to a private property that he and his wife purchased.  During this period Yun Yau, Mother and other family members continued to reside in their old home, a rented property in Ta Kwu Ling.  After Raymond and his family of three children moved out of the Property in 1991, Mother, Yun Keung, Yun Mui and Yun Yau[8] moved in while other siblings resided elsewhere.  The tenancy of the Ta Kwu Ling flat was then terminated.

23.  The plaintiff’s case is that in about June 1991, there was an agreement between him and Yun Yau, who was about to get married, that he would let Yun Yau take over occupation of the Property on the following terms and conditions[9] (“the 1991 Agreement”)-

(a)   That Yun Yau must live there with Mother and take care of her;

(b)   That Yun Yau would pay a “licence fee” for the use of the Property by paying for the outstanding monthly mortgage instalment to the bank;

(c)   That Yun Yau was not to be entitled to any proprietary or beneficial interest by reason of the above month payments; and

(d)   That Yun Yau was to apply to Housing Authority for consent to adding Mother’s name as a joint owner of the Property.

The existence of the 1991 Agreement, based on the premise that Raymond was at all times the beneficial owner of the Property, is strongly denied by Yun Yau.

24.  After other family members moved in in 1991, Yun Yau began to take up the sole responsibility of paying off the mortgage. He also executed a deed of gift in favour of Mother and himself as joint tenants of the property.  There is some dispute as to who had requested that deed of gift to be executed.  Yun Yau said it was Mother who made the request, whereas Raymond maintained that it was he who made the request in order to protect Mother’s right to live at the premises.  Upon the passing of Mother in December 2013, by operation of law, Yun Yau became the sole legal owner of the Property.

Payments Made Towards the Property

25.  The plaintiff claimed that he had made the following payments towards the purchase of the Property, repayment of the mortgage loan and the outgoings[10] -

Nature of Payment	Amount HK$
Down payment	22,700.00
Stamp duty	2,750.00
Land registration fee	250.00
Administration fee	450.00
1st month’s outgoings	957.00
6.3.1984 - Part payment of purchase price	4,000.00
From 5.4.1984 - Monthly mortgage instalment	2,210.80
Interior decoration	Unspecified

26.  However, Raymond was unable to substantiate the allegation that he actually made these payments out of funds from his account, but merely relied on his possession of some early correspondence, a set of housing manual, a demand note, receipts and other legal documents generated by the application and the subsequent purchase of the Property between November 1983 to March 1984 as evidence of payments having been made by him.  He also relied on his bank account passbook and a series of documents showing his employment history to show that he had the financial ability to pay mortgage instalment repayments.  

27.  Raymond submitted in evidence a bank passbook of his account in Hang Seng Bank covering the period of 6 December 1983 to 1990.  However, it is not possible to trace any payments from that account that correlate to any of the payments above, and the plaintiff’s counsel makes no attempt to do so.  According to Raymond, the above payments, in so far as they are smaller sums (up to $10,000), would have been paid in cash into Yun Yau’s account in order to meet the various payments.  He accepted that larger payments above $10,000 would have been paid by cheque, but despite many other archived materials having been kept and relied on by him in this action, he was unable to produce any payment from his own funds.

28.  After vacant possession was obtained, the property was unoccupied for some months before decoration was complete, Raymond got married and the couple moved in.  Raymond agreed that he made no provision in the document titled “Raymond’s 1984 Budget”[11] for the payment of the 5 instalments of mortgage payments, but merely asserted that he had the financial ability to make those instalments and did make provisions for those instalments to be paid from his commission income.  According to Raymond, the “1984 Budget” was a budget he set out for convincing his then girlfriend that he had the financial ability to get married.

29.  Yun Yau, on the other hand, maintained that it was Mother who paid for the down payment and the cost of decoration of the Property, as she has undertaken to.  Mother told her children that the whole family would move into the Property after decoration was complete, whereupon she was to pay for the mortgage loan instalments out of contributions to be made to her by all the siblings for family expenses, and that Yun Yau as the owner would be solely responsible for paying the remaining instalments of the mortgage loan after all the other siblings have moved out.

30.  On the question of who had put up the funds to complete the purchase of the Property, the defence case was bolstered by the evidence of Lee Yun Mui (“Yun Mui”), a defence witness who had previously given a statement of her evidence to the defendant’s solicitor, but was unwilling to testify for either side.  She responded to a subpoena served upon her to attend trial to give oral evidence.  She testified on the third day of the trial after both parties to the action had completed their oral testimony.

31.  Her evidence on an important document[12], a handwritten note made by her, which was a record of Mother’s contribution towards the purchase of the Property shed light on Mother’s own version of events in this respect.  This record was made about half a year after vacant possession was obtained of the Property in 1984.  Yun Mui said Mother had asked her to record for her the items of monetary contributions she had made towards the purchase of the Property, in case her memory would fail her in future.  In so doing, she asked Yun Mui to look for relevant entries in her bank passbook for details, which Yun Mui did and confirmed with Mother any entry she identified.  The entries showed that it was Mother, not Raymond, who has paid for the items tabulated in paragraph 25 above, save that the mortgage instalments paid were limited to the period of 5 months prior to Raymond taking over the Property.

32.  The entries made by Yun Mui in the handwritten note are as follows -

Description	Amount $
裝修費	20,000.00
首期	22,7700.00
律師費	3,370.00
Hong Kong Government	3,450.00
HK Housing Authority	857.00
5個月管理費與租金	12,129.00

33.  The defendant also relies on, inter alia, the following original documents.  Like the handwritten note above, these were also preserved from Mother’s personal effects by Yun Yau after her passing and disclosed as documentary evidence in this action -

(a) an original but faded pay-in slip[13] showing transfer of sums from two accounts under the name of Mother to Yun Yau’s account in Dao Heng Bank amounting to $21,000, which was to meet the $22,700 down payment for the Property;

(b) the original receipt issued by Yung Yu Yuen, Solicitors, for the completion money, with $4,000 having been paid out of the Dao Heng Bank account of Yun Yau[14]; and

(c) the original bill and related receipt for legal fees paid to Yung Yu Yuen dated 6 March 1984[15].

Likewise, I do not regard possession of these documents, even original, as conclusive proof per se of the source of funds being from one party or another.

34.  On the second payment above, Raymond asserts under cross-examination that the $4,000 payment was funded by him.  Yun Yau’s evidence was that it was paid out of his own money in the Dao Heng bank account.  He was however unable to provide further documentary proof of the same.

Timing of Raymond’s Claim of Beneficial Ownership

35.  It is somewhat remarkable that at no time did Raymond raise any issue on the ownership of the Property until end of March in 2014, a few months after Mother passed away.  At a luncheon amongst the siblings held after visiting the urn of their late Mother, out of the blue, he asserted that he had one-third interest in the Property.   This was followed by a formal letter written in English from Raymond to Yun Yau dated 15 April 2014.  In the letter, Raymond claimed to be entitle to 50% of the interest in the Property, threatening legal action.  However, in the writ issued on 20 June 2014 endorsed with the statement of claim, Raymond claims to be the sole beneficial owner of the Property.

36.  Yun Yau contended that the Property had always been intended to remain in his legal and beneficial ownership, as he was the one who succeeded in the HOS application.  He claimed that Raymond occupied the Property as a mere licensee, paying a licensee fee that was used towards repayment of the housing loan instalments until he moved out.

37.  Raymond claimed that he requested Yun Yau to have Mother’s name registered as a joint tenant in order to ensure that Yun Yau would fulfil his promise to him to take care of Mother after he has moved out. He said in oral evidence that he meant it to be an act of kindness to Yun Yau in recognition of the fact that he had made sacrifices to him by applying to purchase the Property under HOS for his benefit.  However, under cross-examination, he was unable to explain how it was any act of kindness to Yun Yau since the latter was to shoulder the full mortgage payment as well as all household expenses, on top of having to take care of Mother, while he made no monthly contribution to the family.  When pressed for an answer, Raymond suggested, for the first time, that he thought he could help by paying the mortgage instalment in the event that Yun Yau default in the payment.  He however agreed that Yun Yau has in fact been a responsible brother, having discharged all the remaining mortgage payments and household expenses single-handedly.

38.  On the other hand, Yun Yau’s case was that Mother requested for her name to be registered as a joint tenant when she moved into the premises with Yun Yau and other siblings to reflect her contribution to the purchase of the Property.  Her share of the interest was only to last in her lifetime and not beyond.

Analysis and Findings of facts

39.  In assessing the evidence, I have carefully considered all the documentary evidence put before the court. I have tested the oral testimony of all the witnesses against the documentary evidence, and weighed their testimony one against another. I have also refreshed my memory of the oral evidence and submissions by listening again to the complete audio recording of the proceedings. I have taken into account the demeanour of witnesses while bearing in mind that demeanour can sometimes be deceptive. The credibility of the respective witnesses' testimony is assessed against other available evidence to gauge inherent probabilities and improbabilities.

(1)      The decision to purchase the Property

40.  Judging from the demeanour of witnesses and the facts given of their respective backgrounds, Raymond was obviously more sophisticated, more articulate and better educated than his brothers Yun Yau and Yun Keung, both of whom gave evidence in court.  Raymond is well-spoken and has a good command of both Chinese and English, but his ability in this regard appears to have encouraged him to prevaricate and improvise when he gave evidence in court.  Raymond’s oral evidence and his testimony in his written statements leave the court with the strong impression that he was far from being an honest witness, but would often exaggerate on descriptions of his own merits while suppressing other facts and circumstances that might lead to the conclusion that he had his own hidden agenda to serve.

41.  Throughout his evidence, Raymond was at pains to have the court believe that that he was a responsible eldest brother and filial son who had, at least prior to the acquisition of the Property, been the main bread winner of the family shouldering all expenses of the household, and has won considerable respect as the main decision maker of the family alongside Mother.  This was to lay the background for Raymond’s theory that the intention to purchase an HOS Property was entirely driven by his personal need for a new home for his impending marriage, and that Yun Yau had only made the application according to his wish on the understanding and agreement that it was for his beneficial ownership.

42.  The evidence of Raymond on the intention surrounding the purchase of the Property is in fact not supported by the evidence of his ex-wife Sarah.  Sarah’s evidence of Raymond’s representation to her was that Mother wanted them to take benefit of the use of the Property in which she had invested her money for her son.  As Sarah was reluctant to do so given the legal title was in the name of Yun Yau, and she felt they should be financially self-reliant rather than to take advantage of his aged mother’s resources.

43.  Sarah is an intelligent, calm and articulate witness.  She claims to have a clear recollection of crucial incidents which she recounted clearly, and gave good reasons for being able to do so. She was modest and forthright when giving evidence.  She appeared to have no personal interest in the outcome, given she has since divorced the plaintiff.  I have no reason to doubt the truthfulness of her testimony on what she was told by Raymond and by Mother respectively.  

44.  At the request of Raymond, she went to visit Mother to nurse her syndrome from high blood pressure during a time when Raymond and her could not agree on whether to reside in the Property after their marriage. She was deeply perturbed to see that Mother was in a state of deep distress as she was anxious to have Raymond and Sarah move into the Property, because it would be too expensive for the unmarried children and her to live there right away.  Mother expressed fears that if they refused to move in and pay the mortgage loan instalments, the money she had invested into buying the Property would go down the drain.  The fears of Mother was understandable as the outgoings for living in the Property would amount to more than 3 times what she was paying for in the Ta Kwu Ling rented flat, and Raymond was not himself expecting to contribute further to family expenses after he got married.

45.  However, Sarah’s evidence of Raymond’s representation to her does not sit well with Raymond’s case that the application made for the purchase of the flat was driven by his plan to use it as his matrimonial home. Neither would it support the existence of the alleged 1983 Agreement with Yun Yau, that he was expecting to, and did pay for the down payment as well as all expenses for the acquisition of the Property.  Had his version to the Court been true, there would have been no conceivable reason why Raymond would not be eager to tell his fiancée that the Property was in fact purchased through Yun Yau and he had paid or was going to pay for the acquisition all with his own money.  He would have assured Sarah that there was an express agreement between Yun Yau and him regarding the beneficial ownership of the Property.  

46.  Sarah’s evidence, what is more probable, judging is that Raymond had never explained to her what he now tells this court was the true arrangement, namely the 1983 Agreement.  Instead, Sarah was left worrying about what it would mean if the owner of the Property with the legal title was not Raymond when they were expected to pay the mortgage instalments for a significant period of time.  Even after she succumbed to appeasing Mother by agreeing to move in to the Property, her evidence was that she had never had a proper explanation from Raymond or any family member on what the arrangement on ownership was, not even his version of it.  She only knew that they could live there provided they took responsibility for the mortgage payments.  Throughout the time, she felt unsettled by the uncertainty, with no discussion within the family that she knew of about the issue of beneficial ownership of the Property.

47.  On the other hand, I find the version of Yun Yau[16] more convincing in this respect, not least because it is corroborated by Sarah’s evidence.  The desire on the part of Mother for a home to be owned and used by family members is readily understandable, and was indeed the aspirations of most members of the Hong Kong community in those years as now.  Further, there is unchallenged evidence that there were other relatives of the family who had acquired HOS homes, and Mother would not want to see the family continue paying rental which did not go towards ownership of the home.

48.  I am prepared to accept that it was Mother’s desire for the family to own a home that she could use till her demise, rather than Raymond’s impending matrimony, that has driven the application under the HOS.  While I do not find it necessary to make any positive finding on whether Yun Yau was told by Mother that whoever who succeeds in the application under the HOS would hold the title of the Property, I prefer the version given by Yun Yau than that of Raymond for the reasons given above.

49.  As regards the detail of whether another sibling Yun Cheung did or did not also put in an application, Yun Yau’s evidence was at variance with that of Raymond, but he confessed to having a clouded memory in this respect.  However, I do not find it important whether Yun Cheung also applied under the HOS at the same time, as it takes nothing away from the evidence on the purpose and reason for the application, and there is no dispute that Yun Yau’s application was the only application that succeeded.

(2)   Payment of Purchase Money and Related Expenses

50.  I turn to the financial position of Raymond and his alleged status as the main bread winner of the family, and whether it was more likely than not that Mother had the financial resources to make the initial payments that Raymond allegedly made towards the Property.

51.  Evidently, Raymond has always been careful with his money, and would make calculations down to the dollar in budgeting and managing his own financial affairs.  This is borne out by the document titled “Raymond’s 1984 Budget”[17] referred to above.  With the level of details shown in this document, I consider it fair to take the view that this document would have contained all the items of recurring expenses that Raymond expected he was to pay, and none other.

52.  The document shows that at least from 1984, Raymond was planning to fork out only around 10% of his monthly income at the time, which he accepted came to a handsome sum of $13,000 per month with commission included.  The rental expenses of the rented flat in Ta Kwu Ling that Raymond said he had been shouldering by himself only came to a meagre sum of $790 per month, as revealed under cross-examination.  This item was not even budgeted to be part of the recurring payments to be made to the family in 1984, but featured as a “balance carried forward”.  The budget provides for the sum of $794.50 and the sum for “support to family” to make up the sum of $2,095.50, nearly sufficient for paying the monthly instalment of the mortgage of the Property.  It is not the plaintiff’s case that any money paid to Mother by way of family support became contribution to any down payment to the Property as would give the plaintiff a legitimate claim of beneficial ownership.

53.  Raymond confirms that the plan was that from the time he was to move into the Property with his new wife, he would cease providing any regular financial support to the family altogether.  He explained that it was because he would be having his own family to take care of, but that was not convincing as Sarah was herself a nurse by profession, and appeared to be even better off than Raymond himself was, having already acquired property of her own by the time she was considering marriage with Raymond.  He gave evidence that he in fact paid Mother $1,000 per month for a further two years after moving into the Property, but not after.  He was only able to cite other occasional expenses on the family that was no more than contribution to birthday meals and the like. 

54.  I find that Raymond had exaggerated the amount of responsibility he had taken up with regard to family finances before his marriage, and had unduly minimised contributions made by other siblings to Mother and her ability to make financial contribution towards the purchase of the Property.  I also find that the representation he made to Sarah prior to the marriage to induce her to agree to live in the Property represent the true circumstances, that is, Mother had invested her savings into purchasing the Property, and would like the couple to reside in it and keep up the mortgage loan repayments in the meantime.

55.  For reasons already explained above, I also find that it is more likely than not that Raymond had only expressed an intention to Mother for him to take occupation of the Property after application by Yun Yau under the HOS was successful, and Mother had supported the idea on condition that he was to service the loan instalments for as long as he was to live in the Property.

56.  Even considering Raymond’s eagerness to demonstrate to his girlfriend that he could save money and afford to get married, and bearing in mind that his earning power at the time was way above other siblings in the family, I am unable to accept that he was as generous to the family, and the family was as dependent on his income as he would have this court believe.  I am only prepared to accept that Raymond was only making a modest contribution to the family, while other siblings such as Yun Keung[18] and Yun Yau[19] contributed nearly as much though they earned much less.  I also accept the evidence of Yun Yau that Mother has a certain amount of savings accumulated through the years from her own income diligently earned, and from contributions made by her many children, who have all been working for money since a young age and handing over a portion of their income to Mother.

57.  I accept Yun Yau’s evidence that Mother was the matriarch of the family, working very hard throughout the years to hold a large family together in a frugal existence, taking control of all income and expenses of the family in the absence of contribution from an irresponsible father, who had lived apart due to his gambling and drinking habits.  I find it more probable than not that she was able to put together the down payment and the initial expenses in order to contribute to buying the family’s first self-owned apartment.  This view is directly supported by the evidence of Sarah, who testified to the conversation she had with Mother on the occasion when she visited her to witness her feeling unwell and distressed.  Mother had expressed her deep concern that the hard-earned money she invested in the Property would be wasted if the family should fail to maintain the mortgage payments.  She was impressed by how Mother was longing to live in her own home eventually until she passes.  Sarah told the court it was a stunning but sad experience that left a deep impression on her mind.  She eventually agreed to moving there with Raymond so the family can afford to keep the Property until they move out and another sibling and Mother could carry on with paying the mortgage eventually.

58.  Further, the evidence of Yun Mui on the making of the hand-written payment record clearly and convincingly shows that significant sums had come out of Mother’s funds to buy the Property.  This was in direct contradiction with the evidence of Raymond.  I find Yun Mui a truthful witness and was able to give clear and fair evidence in respect of the record of expenses she said she was requested by Mother to make, despite the fact that she was rather emotional at the beginning stage in the witness box.  

59.  The record (Exhibit D3) was said to have been made with reference to the bank passbook that she was provided by Mother to cross-check for details against Mother’s recollection.  This took place only a few months after the expenses were incurred.  More importantly, the record was found and preserved together with the personal effects of Mother that were gathered by Yun Yau and preserved after her passing, together with documents relating to the expenses on the purchase of the Property that were found amongst Mother’s personal effects and relied on in this action.  There is no suggestion that there was any conspiracy on the part of the defence witnesses to fabricate this piece of evidence.

60.  Yun Mui was cross-examined on the purpose of making the note.  In her account of facts recorded by the defendant’s solicitors, it was stated as follows -

“母親向潤梅說她年紀大，驚會忘記事情，要潤梅寫低她曾支付購買該物業的各項款項，這樣她會較為安心”。

Yun Mui explained that Mother wanted her to set out a list of expenses so she has a clear idea of all the items she has paid for the Property for her own record.  There is one item in the note compiled by Yun Mui that was worth some attention.  The items that Mother recalled having paid for included one which is made up of 5 months of instalment payments and outgoings of the Property, amounting to $12,129, relevant to the 5-month period from the taking over of vacant possession and the time when Raymond began to assume responsibility of mortgage payments and outgoings.  Yun Mui explained that when Mother asked her to write down “租金”, a term suggested by Mother, she was in fact recording the amount of mortgage instalments paid by referring to the records. Therefore it ought to have been more accurately expressed as “供款”.  

61.  I accept the evidence of Yun Mui that Mother had made the payments recorded by her.  Yun Mui was not a witness who willingly agreed to give evidence for either party.  She was emotional from the start of her oral testimony, making strong accusations against both parties on the way they behaved as sons to their Mother.  She accused both the parties of having been unkind to Mother during her old age, for which she believed they ought to have felt ashamed of themselves.  To her, neither of them deserves to own the Property and she was not prepared to assist either in their quest.  In my view her attitude towards the parties only makes her evidence even more impartial and credible.

62.  Be that as it may, she was able to confirm the truth of the record of Mother’s alleged payments towards the Property, and of the outline of her account given to the defendant’s solicitor.  As regards the truthfulness of Mother’s account to Yun Mui, given the timing and circumstances in which she requested Yun Mui to set out the payments, and the fact that they were each supported by records from which the figures were verified and calculated, I can find no reason to doubt its veracity

63.  On the other hand, in the document titled “Raymond’s 1984 Budget” [20], Raymond was questioned and accepted that there was no provision for the payment of those 5 instalments.  In cross-examination he did not suggest that there was an omission in the budget, but merely asserted that he was financially able to pay for the instalments.  Having considered the above evidence, I am convinced that it was Mother, not Raymond, who had paid for the mortgage instalments and the outgoings during the months when the Property was left vacant.  I also consider that it was more probable that Mother had requested for her name to be added as a joint tenant so that her contribution was recognised.  I reject the allegation of Raymond that he had made Yun Yau agree to adding Mother’s name to share the title in order to protect Mother’s interest.

64.  My findings of facts in the above paragraph are in turn consistent with Yun Yau’s version that the decision to purchase the Property was not driven by Raymond’s intention to use the Property as his future matrimonial home.  Had there been a common intention prior to the application for HOS that the Property was for the benefit of Raymond’s use as a matrimonial home, it would have made no sense for anyone other than Raymond himself to set aside funds for those 5 instalment payments and the outgoings.  There is no suggestion in the evidence that Raymond had borrowed any money from Mother to make those payments.

65.  Raymond was also at pains to emphasize that he was well able financially to afford buying the Property, while none of the other siblings was.  However, he was ineligible for the HOS in 1983, as his income level was above the maximum level that would qualify him as an applicant. Yun Yau therefore stepped up as the dutiful and compliant brother to assist him without any intention to be the true owner of the Property.

66.  Against that evidence, I should bear in mind that if Yun Yau as a younger brother applies personally to purchase a property under HOS not for his own benefit but for the benefit of Raymond, it would disqualify him for a similar application for his own benefit at least for the next 10 years if not beyond.  It would further disqualify him for public housing.

67.  On the premises that the Property was purchased by Yun Yau for the benefit of Raymond, even Raymond himself accepts that Yun Yau’s application would represent a major sacrifice on the part of Yun Yau, for which he had allegedly intended to compensate him by letting him occupy the Property with Mother after he moved out.  When asked how it would translate into any “help” to Yun Yau when the latter would have to pay the mortgage instalments while living there on top of taking care of Mother, he was unable to answer in any straightforward manner, but suggested that he thought it would be helpful to Yun Yau because he would pay for any mortgage instalment should Yun Yau default on it.  He gave no evidence on whether this good intention was ever communicated to Yun Yau, and if not why not.  

68.  As I do not accept that the alleged 1983 Agreement with Yun Yau exists, it follows that the alleged 1991 Agreement most probably did not either.  The alleged act of magnanimity to Yun Yau was again exaggeration on the part of Raymond in an attempt to inject some reasonableness into what would otherwise made no sense as an agreement  even between brothers in the circumstances of this case.  This aspect of Raymond’s evidence again fortifies my view that he is an unreliable witness who would improvise in the witness box as and when he finds it necessary to make his story stand up, to no avail.

69.  The conspicuous absence of any evidence of the source of funds of the alleged payments made by Raymond is perhaps the most damaging factor of the plaintiff’s case.  The only basis upon which Raymond purports to prove his having made the payments referred to above was that he was in possession of a number documents relating to the purchase of the Property.  The defendant was in possession of other documents that proved the payment of mortgage instalments since 1991 and its subsequent discharge by early payment.  I am unable to accept the plaintiff’s case that the possession of some documents evidencing the disputed payments having been made would in any way prove the source of funds as being from the plaintiff.  I accept that Raymond would have had easy access to the documents that were sent by mail to the address of the Property, as Raymond was residing in the Property until 1991 while Yun Yau was not.  Other documents such as receipts of the outgoings, and the information manual of the Property would most sensibly have been kept at that address from the time of occupation, and would easily have been kept by Raymond.  They do not assist Raymond in displacing the strong evidence against his case that it was Mother who used her savings to pay for the initial down payments as well as other expenses and 5 months of mortgage loan repayments and outgoings.

70.  Raymond admitted to having had serious financial difficulties between 2012-2013 after he got divorced.  The documentary evidence shows that he had had to repeatedly write to Yun Yau by email pleading for loans even for pitifully small sums.  It was also the evidence of Yun Yau that between 2003-2012, Raymond had borrowed money from him multiple times every few months but have never paid the money back.  The loans allegedly amounted to some $60,000.  The defendant accepts he had borrowed money from Yun Yau but denies the aggregate amount was as high as that suggested.  It is unnecessary for me to make any findings on these disputed facts, except to note that Raymond was admittedly in serious financial difficulties in about 2003 to a degree that had threatened the very means of his subsistence.

71.  When the plaintiff faced question by counsel for the defendant on why he did not request Yun Yau to pay rental to him for the continued use of the Property after he had paid off the mortgage in June 1997, he was unable to give any coherent answer.  Given the serious financial difficulties he was apparently suffering from in 2012, and the humiliation he was putting himself through by begging for loans of even a few hundred dollars, it is inexplicable why he did not think of asking Yun Yau to pay him some fair rental of the Property if indeed he believed he was the beneficial owner.

72.  When challenged in cross-examination on the lack of evidence of payments made by him from his own money, Raymond after some prevarication told this court that he had regularly drawn cash from his bank account and paid money into Yun Yau’s bank account in order to enable him to make the necessary payments for the purchase of the Property.  He said in cross-examination that he would only issue cheque payments for larger amounts such as those exceeding $10,000.  I am unable to accept the explanation, which never featured in his two witness statements.  If the Property was indeed purchased for Raymond and for him alone through Yun Yau, he could well have issued cheques in his own name to have the payments made directly to the recipient.  Given the lack of evidence on source of funds was a feature crying out for proof in his evidence, I do not accept that it was credible evidence in the circumstances.

73.  Given Raymond’s admitted personal traits as a careful man, and his notorious care relating to money matters, exacerbated by an inherent sense of insecurity due to the legal title of the Property not being with him, the least that he would be expected to do would be to retain in his safe custody evidence of all payments made in order to protect his own interest.  It is telling that while he had carefully preserved the evidence of payment, which are of no conceivable importance, he was unable to produce even one piece of evidence to support payment having come from his funds rather than from Mother’s funds.

74.  I am driven by my assessment of the evidence to the conclusion that Raymond did not make the payments he claimed he did towards the purchase of the Property and its outgoings.  Except for the mortgage repayment instalments and outgoings that he paid for during his occupancy of the Property between November 1984 and June 1991, he was unable to show that he made any other significant payment towards the Property.  

75.  Whether the parties had considered these payments “rental”, “licence fee” or “mortgage payments” would not be of any moment in my view.  In respect of the instalment payments and outgoings only that were paid by Raymond, it is not the plaintiff’s case that these alone were the basis of any agreement, common intention or understanding between Yun Yau and him of his sole or partial ownership of the Property.

(3)      Other points making plaintiff’s version improbable

76.  The above points should have been more than sufficient to justify the rejection of the plaintiff’s causes of action out of hand.  For the sake of completeness, I would deal with other points in evidence that were deserving of attention.

77.  There is no dispute in pleadings and witness statements as to when Raymond first took issue on the beneficial ownership of the Property.  By 2013 when Mother passed away, the Property had been purchased in Yun Yau’s name for nearly 30 years.  The mortgage has been paid off some two years ahead of schedule in July 1997.  Yun Yau has long since been able to dispose of the Property as he pleases, and has stopped having to pay any mortgage instalment on the Property.  

78.  Yet it was not until Mother passed away that the family heard any claim from Raymond. There was no good explanation tendered by Raymond whether in cross-examination or elsewhere on why he did not make a claim earlier if he believed he was so entitled.  It is worthy of note that the alleged 1983 Agreement with Yun Yau provided that he should “convey the legal ownership of the Property to him once it was legally and practically viable to do so”[21].  There is no suggestion that there was any legal or practical obstacle to the conveyance of title back to Raymond from the time of the redemption of the Property in 1997.

79.  Raymond argues that since the passing of Mother, he had made repeated requests and demand against Yun Yau for the recognition of his sole and beneficial ownership of the Property to no avail.  The first demand that was in evidence and not disputed was made in 2014 shortly after the cremation of Mother’s body, when the family gathered together to pay her respects at the repository of the urn containing her remains.  The demand was made after a lunch gathering by Raymond saying that he was entitled to one-third of the interest of the Property, which was ignored.  Yun Yau explained that Raymond’s demand was not verbally resisted at the time as there were young family members around the table and it would have been inappropriate to create a scene and openly rebuke a senior member of the family.  According to Yun Yau, Raymond was looked upon by other siblings as erratic at times and they did not pay attention to his outbreak.

80.  This was followed by a formal letter written in English from Raymond to Yun Yau dated 15 April 2014.  In the letter, Raymond claimed to be entitled to 50% of the interest in the Property, threatening legal action.  However, in the writ issued on 20 June 2014 endorsed with the statement of claim, Raymond claims to be the sole beneficial owner of the Property.

81.  Raymond’s explanation for his amoebic claim of interest in the Property was that he initially wanted to be kind to his brothers and sisters, so he only offered to take only one-third of interest, with one-third to be divided by other siblings, but they declined.  He therefore excluded the other siblings in his written letter of 15 April 2014.

82.  There is no satisfactory explanation tendered as to how the proportion of the claim of Raymond evolved from a one-third share into a half share, and then into one for sole beneficial ownership.  The timing of the demand strongly points to an intention to avoid Mother defeating any claim of interest  Raymond may make with her version of the facts supported by evidence of payments she made from her own savings.

83.  For completeness I should mention that Lai Chi Tong, business partner and close friend of Raymond, was called by the plaintiff as a witness apparently in an attempt to show that Yun Yau was landed a job as an accounts clerk at an organisation where Lai was the person in charge.  His testimony has no significance in these proceedings except to corroborate the fact that Raymond did go through a rough patch in his marital life at least from 2010, which probably contributed to his financial ruin in the years to follow.

84.  I should also mention that Yun Yau’s wife also gave evidence for the defence, but her evidence adds nothing further to the evidence of other witness as a whole.  Lee Yun Keung, another brother in the family testified on the second day of the trial.  Again his evidence was not significant except to demonstrate that he was paying for the support of the family in amounts no lower than Raymond, despite his income was much lower and he himself was also married and had a separate household to support in the New Territories. He did mention that Raymond did borrow money from him before but had repaid his loans with interest.  I have taken that into account as evidence that goes towards balancing out the evidence of Yun Yau regarding non-payment of loans.  However, the impact of his evidence is very limited in the light of other convincing evidence that sheds light on Raymond’s credibility.

Conclusion on the plaintiff’s claim

85.  Given, my findings of facts above, I have no hesitation in ruling that the plaintiff has failed to establish the necessary factual basis to support any of the alternative causes of action relied on.

86.  I find that on a balance probabilities,  the alleged 1983 Agreement did not exist, nor did any common intention or understanding exist between the parties to this action in the terms and effect of the alleged 1983 Agreement.

87.  I am also satisfied that the alleged existence of the 1991 Agreement, or any common intention or understand to that effect, did not exist.

88.  I conclude that no agreement, whether express or implied, nor any common intention or understanding, for the plaintiff to retain beneficial ownership of the Property was made out on the evidence before the court on a balance of probabilities.  There is no factual basis for any of the different types of alleged trust or estoppel to arise.

89.  The plaintiff’s claim falls to be dismissed.

The defendant’s counterclaim

90.  The defendant claims that the writ of summons in this action has been wrongfully registered against the property and pray for an order vacating the registration, as well as for damages and costs.  No particulars of any damage have been pleaded.

91.  The plaintiff argues that the registration of the writ was proper and cannot be faulted, as it amounted only to a notice of pending litigation relating to land.  The writ is therefore registrable in law upon the commencement of the action under the writ.  On the basis of the allegation of “wrongful registration”, the plaintiff argues that the cause of action has not accrued at the time of the issue of the counterclaim.

92.  The plaintiff further argues that if the defendant had intended to rely on section 19 of the Land Registration Ordinance Cap 128 (“the Ordinance”) to vacate the registration upon determination of the lis pendens, it will still have to satisfy the court that the action under the writ is not pursued in good faith, or for other good cause shown.  The plaintiff argues that the defendant has not so pleaded nor advanced a case of bad faith, and has failed to show any good cause.

93.  I take the view that the plaintiff’s reading of the section is in error.  The requirement of showing lack of good faith or other good cause only applies to the situation where the lis pendens is not yet determined. Where the action is dismissed and the lis no longer pending, such an additional requirement makes no sense at all.

94.  The relief asked for by the defendant is clear.  The reliance on section 19 of the Ordinance is made clear in submissions though not in pleadings.  On the other hand, the plaintiff’s stance is that the defendant is not entitled to claim any relief as alleged or at all.[22]

95.  In my view, section 19 gives the judge deciding the action on the title to the property the power to vacate a registration of the writ upon the dismissal of the action.  An action which has been determined is no longer “pendens”, and it follows that the registration of it against the title of the property should be be vacated without further ado.  The section also gives a statutory discretion to the court to vacate the registration upon other good cause being shown.  The fact that the action the subject of the registration has already failed or otherwise been withdrawn must be a “good cause” that would entitle the court to exercise discretion in favour of ordering vacation of registration.  The court also has inherent jurisdiction to the same effect, co-extensive with that of the High Court of Justice in England: Crowning Success Ltd v Brightland Corporation Ltd [2008] 4 HKC 305 at 309A-C.

96.  I do not accept the submission of plaintiff’s counsel that the defendant’s claim for relief on the pleaded allegation of “wrongful registration” alone would preclude the court from exercising discretion in its application of section 19 in the manner set out in the preceding paragraph upon dismissing the plaintiff’s claim.

97.  In the premises, in the light of my order to dismiss the action of the plaintiff, I also make an order under the counterclaim that the registration of the sealed copy writ of summons of this action against the Property by Memorial No. 14071602090067 be vacated. I make no order for damages as none has been particularised or proven.

Costs

98.  I make an order nisi that the plaintiff do pay the defendant the costs of the action and of the counterclaim to be taxed if not agreed.

99.  It remains for me to thank both counsel for their able assistance, and the parties for their patience in awaiting my decision that has taken much longer than it should have, for which I offer my sincere apology.  Be that as it may, I do hope that this long-awaited decision will see the two brothers put aside issues on their strict legal entitlement and make attempts to rebuild a cordial relationship as part of a family.