MAK MUI v. PANG KIT MAN

HCA 1125/2014

[2021] HKCFI 125

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1125 OF 2014

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J U D G M E N T

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1.  The plaintiff Madam Mak Mui (麥妹) (“Mother”) and the defendant Mr Pang Kit Man (彭傑文) (“Kit Man”) are mother and son. This action stemmed from their dispute over the beneficial ownership of Lot 5199 in Demarcation District 51[1] (“Lot 5199”) and the 3-storey house currently erected thereon (“New House 4”), of which Kit Man was and is the registered owner.

UNDISPUTED BACKGROUND

2.  The following matters were not controversial or disputable, based on a review of the pleadings and the evidence.  Where there were any disagreements, they tend to be immaterial, though I will for the sake of good order summarise the arguments.

3.  Madam Mak, who was 88 years old at the time of the trial, and her late husband Mr Pang Shui (彭水) (“Father”)[2] have 7 children (“Children”) in the following order of seniority:

(1)     Mr Pang Wai Man (彭偉文) (“Wai Man”);

(2)     Madam Pang Sheung Oi (彭嫦愛) (“Sheung Oi”);

(3)     Kit Man;

(4)     Mr Pang Chan Hung (彭震雄) (“Chan HungUmgHung”);

(5)     Mr Pang Chi Wai (彭志偉) (“Chi Wai”);

(6)     Mr Pang Chi Hung (彭志雄) (“Chi Hung”); and

(7)     Mr Pang Ka Hung (彭家雄) (“Ka Hung”).

4.  Father worked for the then Regional Council as a cleaning services foreman until his retirement in 1975.  After his retirement, he received his monthly pension from the Regional Council until his death on 20 March 2011.  On reaching 70 in 1990, Father started to collect his monthly old age allowance from the Social Welfare Department.  He also from time to time received for himself and members of his family distributions from various tsos/tongs to which they belonged.

5.  Mother was at all material times working as a cleaning worker also for the Regional Council until 1989 when she retired.  Before her job with the Regional Council, she had worked as a mason (泥工) at construction sites for 10 odd years.

6.  Kit Man started working for Hong Kong Telecom as an apprentice, and making contribution to the household expenses, in about 1977.  There is however a dispute as to how much and for how long Kit Man contributed.  On one hand, Kit Man claimed that he contributed to the household expenses regularly from 1977 until he got married in 1983.  On the other hand, Mother pleaded in reply that Kit Man only contributed $50 per month for just about a year, after which he stopped to save money to get married.

7.  Father had since 4 May 1953 been the registered owner of Lot 4374 (“Lot 4374”).  Although Father was entitled to erect a house on Lot 4374 under the Government lease, Lot 4374 was not inhabitable for the Pang family.  Quite apart from having a site area of just about 160 ft², its surrounding area was littered with rubbish and waste.  Lot 4373 was used as a pigsty for keeping 2 pigs.

8.  Since 1940, Father, Mother and the Children were allowed by Father’s elder brother Mr Pang Ngau Tsai (彭牛仔) (“Uncle”) to live, rent-free, in House 66A (“House 66A”) on Section B of Lot 73 (“Lot 73B”), of which Uncle was the owner.  However, House 66A, being a 1-storey house of a floor area of only 250 ft², was too small and crowded for the Pang family, even after Wai Man left Hong Kong to work in England in 1971 and after Sheung Oi moved out upon getting married in 1973.

9.  In 1972, the Government introduced the Small House Policy (“Policy”), under which an indigenous male villager of 18 years of age or above who can trace his ancestry to a resident of a recognised village in the New Territories on 1 July 1898 called ‘ding’ (丁) and who did not own any land in the village, was entitled to apply to the Government for a private grant of land at a concessionary premium once during his lifetime to build a village-type house for his own habitation (丁權) (“ding right”).

10.  By 1976/1977, Kit Man was the only male member of the Pang household in Hong Kong eligible as an indigenous villager under the Policy who was over 18 and who did not own any land in the village[3].

11.  In 1976/1977, in exercise of Kit Man’s ding right, application was made to the District Office, Tai Po (“TPDO”) in Kit Man’s name, with Father as trustee[4], for a private treaty grant under the Policy.  Kit Man was only 19 years old and still a minor under the then law of Hong Kong[5].   According to Kit Man, the application was made in 1976.  However, Mother recalled that 2 applications had to be submitted by Kit Man in July and December 1977 respectively because the TPDO had somehow not received the first application, which was entrusted to the village representative for submission.

12.  On 30 January 1978, by New Grant numbered 11326 (“Grant 11326”), Lot 5199 was granted at a concessionary premium of $4,000 (“Premium”) to Kit Man with Father as trustee under Kit Man’s application.  By about November 1978, in compliance with General Condition 4(a) of Grant 11326, a two-bedroom house of 1 storey of 700 ft² (“Old House 4”) was constructed on Lot 5199.  On 24 November 1978, the TPDO issued a letter of compliance in respect of Lot 5199 (“Letter of Compliance”) to Father as trustee for Kit Man. 

13.  Mother was at the time of the trial in possession of the original receipt for the Premium (“Premium Receipt”) whereas Kit Man held the originals of (1) the letter dated 27 January 1978 from TPDO to Father advising that Grant 11326 was ready for execution and that the Premium was payable in order to execute such grant; (2) Grant 11326 executed on 30 January 1978; (3) the letter dated 13 February 1978 issued by the TPDO to Father advising that possession of Lot 5199 was deemed to be given on 30 January 1978; (4) the Letter of Compliance, (5) Crown rent receipts for Lot 5199 totalling $388.34 from 1 July 1977 to 30 June 1997, and (6) receipted demand notes for Government rent for Lot 5199 totalling $400 from 1 July 1997 to 30 June 2012.  It appears from Kit Man’s possession of items (5) and (6) that he is the person who has been paying the Government rent for Lot 5199 (in the total amount of $788.34).

14.  In the meantime, Father (also an indigenous villager) applied to the TPDO for a grant in exchange for Lot 4374.  On 15 June 1978, Father surrendered to the Government Lot 4374 which was credited with a value of $670.80.  In exchange, by virtue of New Grant numbered 11379 (“Grant 11379”), Lot 5205 (“Lot 5205”) was granted to Father at a net premium of $1,340.  After a modification of the building covenant under Grant 11379 (in the form of an extension of time for compliance) and after payment of a fine of $50, in about May 1982, Father completed the construction of a 3-storey village-type house on Lot 5205 numbered 110A (“House 110A”).  On 22 May 1982, the TPDO issued a letter of compliance in respect of Lot 5205 to Father.

15.  Uncle transferred Lot 73B together with House 66A thereon to Chan Hung at a stated consideration of $15,000 by a Conveyance on Sale dated 18 May 1983.

16.  Uncle passed away on 20 March 1985.  On 27 April 1988, Father became the owner of Lot 86, on which the then 1-storey House 91 (“House 91”) stood, and Lot 3838 (“Lot 86” and “Lot 3838” respectively) by virtue of succession to Uncle’s estate.  Lot 3838 was subsequently resumed by the Government and Father received compensation in the amount of $928,375.20 on 20 August 1989.  On 18 April 1996, by way of a deed of gift, Father assigned Lot 86 together with the rebuilt 3-storey House 91[6] to Wai Man.

17.  From about late 1989 to about 1990, the 1-storey Old House 4 was pulled down and, in its place, the 3-storey New House 4 was constructed on Lot 5199.  Each floor of New House 4 is a self-contained 700 ft² unit, complete with a living/dining room, kitchen, bathroom and bedrooms.

18.  As for the occupancy and use of the said various houses:

(1)     It will be recalled that Wai Man emigrated to England in 1971[7] and Sheung Oi got married and moved out of House 66A to live with her husband in 1973. 

(2)     Upon the completion of Old House 4, Kit Man and Chan Hung moved from House 66A to Old House 4. Mother recalled that Chi Wai also relocated to Old House 4 but Kit Man’s recollection was different.  The others stayed put at House 66A, though they would use Old House 4 as a family cooking, dining, living and gathering place during the day. 

(3)     After Father built the 3-storey House 110A on Lot 5205 in about May 1982, he moved from House 66A to House 110A together with Mother, Chi Hung and Ka Hung.  Chi Wai (if he had moved to Old House 4) also moved to House 110A upon Kit Man’s marriage in 1983.  Kit Man and, after he started his own family, his wife and daughter (who was borne at the end of 1983) stayed in Old House 4 together with Chan Hung.

(4)     In about 1985, Chan Hung moved from Old House 4 into House 110A at Kit Man’s request so as to give Kit Man and his family a better living environment.

(5)     During the construction of New House 4,

(a)      Father, Mother, Chi Hung and Ka Hung remained at House 110A.

(b)     Chan Hung and Chi Wai (if he had moved into Old House 4) moved to House 110A.

(c)      Kit Man and his family moved to the ground floor of House 91 on Lot 86.

(6)     After the completion of New House 4 in 1990, Kit Man and his family took up residence on the first floor.  About a year or two later, in about 1992, Father and Mother moved into the ground floor while Chan Hung, Chi Wai, Chi Hung and Ka Hung began to share the use of the second floor.  Each of the 3 floors has separate water and electricity meters from the other floors.  The residents of each floor would be responsible for the water and electricity charges incurred by their own floor.

(7)     Chi Wai ceased to live at New House 4 after his marriage in 2000.

(8)     Ka Hung moved out after he got married in September 2001.

(9)     Chan Hung left after receiving Kit Man’s solicitors’ letter (see [21] below).

(10)    After House 66A became vacant in 1982, it has been let for rental income which Mother collects and disburses notwithstanding that Chan Hung has been the owner of the house since May 1983.

(11)    After House 110A was vacated in 1992, it was also let for rental income, which Mother collects and applies toward the household expenses of the family members living on the ground and second floors of New House 4. 

(12)    Mother further collects rental income from House 91 (owned by Wai Man since April 1996).  She would expend part of such income on the household and pay over part thereof to Wai Man when he visits Hong Kong.

19.  On 20 March 2001, Father died intestate, survived by Mother and the Children.  According to the land search of Lot 5205 on which House 110A was built, such land and house (of which Father was the owner) was transferred to Chan Hung at a stated consideration of $500,000 by an assignment dated 18 March 2014, presumably executed by Mother as Father’s administratrix. 

20.  Disagreement arose within the Pang family since about 2007 over the seepage of water from the first floor of New House 4 (occupied by Kit Man and his family) to the ground floor (occupied by Mother).  The disharmony escalated after Kit Man refused to allow Mother’s contractors to access the first floor for an inspection.

21.  By a letter dated 31 December 2013 from his former solicitors Leung Kin & Co, Kit Man sought, as beneficial owner and licensor of Lot 5199, to give Chan Hung and Chi Hung[8] notice of termination of their licence to occupy the second floor of New House 4 with effect from 31 March 2014.

22.  In response, by a letter dated 21 February 2014 from their then solicitors Au & Associates, Mother, Chan Hung and Chi Hung denied Kit Man is the beneficial owner of Lot 5199.  By the same letter, Mother

(1)     claimed:

(a)      that she solely paid for the construction of Old House 4 in 1978 and New House 4 in 1989 and was therefore the beneficial owner of these dwellings;

(b)     that at the time of the reconstruction of the house, there was an agreement between all members of the family that

(i)      Father and Mother,

(ii)     Kit Man; and

(iii)    the other Children including Chan Hung and Chi Hung

shall respectively be entitled to have the use of the ground, first and second floors of New House 4 for life;

(c)      that Kit Man was holding Lot 5199 and New House 4 on trust for Mother; and

(2)     demanded Kit Man to transfer Lot 5199 to Mother and/or her nominee(s).

PARTIES’ RESPECTIVE PLEADED CASES

Mother’s claim

23.  Against the aforesaid background, Mother sought, inter alia[9]:

(1)     a declaration that Kit Man holds Lot 5199 and New House 4 for her benefit on a common intention constructive trust and/or resulting trust; 

(2)     an order that Kit Man should transfer the legal title to Lot 5199 and New House 4 to her; and

(3)     an order that Kit Man should deliver up to her all documents relating to and concerning the title of Lot 5199, including but not limited to Grant 11326 and the Letter of Compliance.

24.  The facts raised by Mother in support of such claim are:

(1)     Since Father’s retirement in 1975, she had become the sole breadwinner of the family, responsible for paying all expenses incurred by and for Father and the financially dependent Children.

(2)     Given the unsatisfactory living condition of House 66A, Father and Mother intended to devote all their financial resources to build a house for the whole family on a land to be granted by the Government under the Policy.

(3)     In about 1977, Father and Mother decided to fully utilise the ding rights of the eligible male members of the family by:

(a)      procuring Kit Man, then the only male member of the family eligible under the Policy, to apply for a private treaty grant under the Policy; and

(b)     having Father applied for an exchange grant under the Policy by surrendering Lot 4374 to the Government in exchange for a larger piece of land.

(4)     In about May 1977, Father and Mother discussed this matter with Kit Man.  During the discussion, they made known to Kit Man, and Kit Man became fully aware of, their said intention and clearly understood why they desired to make an application under the Policy for a private treaty grant in his name.

(5)     To give effect to their said intention and to implement their said decision, it was orally agreed between Father, Mother and Kit Man that:

(a)      an application for a small house grant under the Policy would be lodged with the TPDO in Kit Man’s name;

(b)     Father would be named as Kit Man’s trustee;

(c)      Father would handle the application;

(d)     Mother would pay the land premium for the grant and the construction costs of the house to be erected on the land as well as other related expenses;

(e)      Kit Man would hold all beneficial interest in the land to be granted and the house to be erected thereon on trust for the benefit of Mother; and

(f)       Father and/or Mother had absolute discretion to determine how and by whom the house to be erected would be used or occupied.  

(6)     In about July 1977, pursuant to such agreement, through the village representative, Father as trustee lodged with the TPDO an application for a small house grant under the Policy in Kit Man’s name.

(7)     About 6 months later, upon Mother’s enquiry, the TPDO informed Mother that it had not received any application from Kit Man and advised Mother to file another application.

(8)     As a result, in about December 1977, Father lodged with the TPDO another application in Kit Man’s name under the Policy.

(9)     On 30 January 1978, by Grant 11326, Lot 5199 was granted to Kit Man with Father as trustee pursuant to Kit Man’s application.

(10)    Although on 15 June 1978, by virtue of Grant 11379, Lot 5205 was granted to Father in exchange for Lot 4374, Father did not erect any house on Lot 5205 immediately due to lack of funds.

(11)    In performance of the said agreement with Father and Kit Man, Mother had paid the following expenses:

(a)     the Premium ($4,000) to the TPDO on 30 January 1978 through Kit Man; and

(b)     $42,000 for the construction costs of Old House 4 (which was completed in November 1978) paid directly to the contractor (whose name she had forgotten).

(12)    On 24 November 1978, the TPDO issued the Letter of Compliance to Father.

(13)    Since then, the originals of Grant 11326, the Premium Receipt and the Letter of Compliance and other papers relating to the title to Lot 5199 had been in Mother’s possession until Kit Man wrongfully seized them (except the Premium Receipt which Mother had kept separately) without Mother’s consent after Father’s death.

(14)    At all material times, it was the common understanding and intention of Father, Mother and Kit Man that Lot 5199 and Old House 4 would belong to Mother absolutely as she would be the only person responsible for settling all costs and expenses to be incurred for the acquisition of the land and the construction of the house thereon.

(15)    After Father succeeded to Lot 3838 from Uncle’s estate and received compensation for its resumption, he transferred $700,000 out of the compensation to Mother as an unconditional gift in the presence of Kit Man and Chi Hung in about September 1989.

(16)    Having had the said sum of $700,000 at her disposal, Mother became desirous of replacing Old House 4 with a 3-storey village house.

(17)    In about October 1989, Mother engaged a building contractor named Mak Kai (麥啟) to demolish Old House 4 and to build New House 4 and paid $610,000 for the reconstruction and other decorative works by milestone payments from 1989 to 1990 with Father’s said gift of $700,000. 

(18)    Father, Mother, and the Children (except Wai Man and Sheung Oi) all moved into New House 4 after its completion.  Upon Kit Man’s request, which she acceded to for her own convenience, Mother permitted Kit Man and his family to use and occupy the first floor.  Father and Mother lived on the ground floor whereas their 4 youngest sons shared the use of the second floor.  After the completion of New House 4, Mother has kept the keys of the ground floor and the second floor up to now.  She handed over the keys of the first floor to Kit Man.

(19)    Kit Man made no contribution whatsoever to any of the costs or expenses for the acquisition of Lot 5199 or the construction of either of the houses thereon.

(20)    Kit Man has only occupied and used such houses with Mother’s permission as a mere licensee.

Kit Man’s defence and counterclaim

25.  In defence, Kit Man denied:

(1)     that Mother was the sole breadwinner, or shouldered all expenses, of the family after Father’s retirement;

(2)     the alleged agreement mentioned in [24(5)] above;

(3)     the alleged common intention mentioned in [24(14)] above;

(4)     that Mother paid the Premium or for the construction of Old House 4;

(5)     that Father gifted $700,000 to Mother out of the compensation for Lot 3838;

(6)     that Mother shouldered the costs of rebuilding Old House 4 into New House 4, using the said alleged gift from Father;

(7)     that he did not pay for the acquisition of Lot 5199 or the construction of the houses thereon.

26.  Kit Man averred:

(1)     that after his retirement, other than his pension from the then Regional Council, Father also collected his share of distribution as a member of various tso(s)/tong(s);

(2)     that Wai Man was adopted by Uncle[10] as his son (過繼仔) under Chinese customary law in about 1970 and inherited from Uncle’s estate House 91 on Lot 86 after Uncle’s death;

(3)     that after Wai Man’s adoption by Uncle, Father treated and regarded Kit Man as the eldest son of the family, paying him particular attention, love and care, and they shared the common intention and/or understanding that Kit Man would inherit most of Father's assets after his death;

(4)     that in about 1976, Father informed Kit Man that he, as an indigenous villager, was entitled to the ding right to build a house in the village, which led to Kit Man lodging his application with the TPDO for a grant of land for the purpose of building his own house;

(5)     that Father acted as trustee in Kit Man’s application because Kit Man was then not of age;

(6)     that having paid the Premium, Kit Man was issued with the original Premium Receipt and Grant 11326, which title deeds Kit Man has all along been keeping;

(7)     that at about the same time, Father also made an application for exchanging Lot 4374 for Lot 5205 for the purpose of building House 110A thereon;

(8)     that the construction costs of Old House 4 (about $40,000 according to Father) were settled by Father for Kit Man with relevant third parties as a loan from Father to Kit Man, which Kit Man had fully repaid by monthly instalments of $300 from January 1979 to December 1985 and of $600 from January 1986 to June 1991;

(9)     that in about 1989, Kit Man wanted to re-build Old House 4 into a 3-storey village house by borrowing the reconstruction costs from Father;

(10)    that when Kit Man raised the matter with Father, Father informed Kit Man that he had received for Kit Man from the tsos/tongs of which Kit Man was a member, distributions which were more than sufficient for rebuilding Old House 4;

(11)    that consequently, Father used Kit Man’s part of the tso/tong money held by Father to pay for the costs of building New House 4 on behalf of Kit Man;

(12)    that if, which is denied, such costs were settled by the compensation for the resumption of Lot 3838, in view of the father-son relationship between Father and Kit Man and/or in view of Father’s representation to Kit Man concerning the nature of fund to be used, the payments were intended as advances to Kit Man who was intended to have the sole legal and beneficial ownership of New House 4;

(13)    that if, which is denied, Mother did pay for the Premium, the costs of construction of Old House 4 or New House 4 or other expenses of such property from her own funds, the payments were intended as advances by Mother to Kit Man with the intention that Kit Man should have the sole legal and beneficial ownership of the property;

(14)    that upon the completion of New House 4, only Kit Man and his family moved to live there;

(15)    that at a later time, in or about 1991, in order to take care of the aged Father and Mother, Kit Man asked them to live with him on the ground floor of New House 4;

(16)    that in about the end of 1992, upon Mother’s request, Kit Man agreed to allow his 4 younger brothers to live on the second floor of New House 4;

(17)    that Father, Mother and Kit Man's younger brothers took up residence at New House 4 as Kit Man’s bare licensees and they kept the keys to their respective floors with the permission and/or consent of Kit Man; and

(18)    that such licences had been terminated before the action by Kit Man’s said former solicitors’ said letter or were terminated by the service of the defence and counterclaim.

27.  Kit Man counterclaimed for a declaration that he was and is the beneficial owner of Lot 5199, Old House 4 and New House 4 and an order that Mother shall deliver up to him vacant possession of Lot 5199 and the ground floor of New House 4 forthwith.

28.  For the sake of completeness, Kit Man abandoned the contentions in paragraphs 67 to 69 of the amended defence and counterclaim that the agreement relied upon by Mother, not being in writing, fell foul of ss 3 and 5 of the Conveyancing and Property Ordinance (Cap 219) and that its implementation was contrary to public policy and hence void for illegality.

29.  It is to be noted that both Mother and Kit Man asserted full beneficial interest in the subject property.  Neither party left open the possibility of a shared beneficial ownership.  I should for the sake of completeness mention that at the beginning of the first day of this trial, I raised with the parties whether (and if so, to what extent) the court should take into account the exhaustion of Kit Man’s ding right in the course of his application under the Policy which resulted in the grant of Lot 5199, should the court be satisfied that Mother has a beneficial interest.  I accept the submission by Mr Val Chow, counsel for Mother, that the court should not venture into a consideration of such quantification issue at a late stage in the absence of pleading by either party and without any evidence as to the valuation of Kit Man’s ding right.

BROAD ISSUES

30.  Based on the parties’ pleadings as summarised above, the broad issues for the court’s determination are:

(1)     Who paid for the acquisition of Lot 5199 and the construction of the houses thereon?

(2)     Did Father, Mother and Kit Man share any common intention or understanding in so acquiring Lot 5199 and constructing the houses thereon?  If so, what was that common intention or understanding?

(3)     Do the facts found in answer to these questions give rise to a constructive or resulting trust, or an outright gift, of Lot 5199 and the houses thereon?

THE KEY WITNESSES

31.  The key witnesses were Mother and Kit Man. They contradicted each other on numerous points on pleadings and in their written witness statements.  Much would depend on my assessment of their credibility.  Generally, in assessing a witness’ evidence on any issue, in addition to observing his/her demeanour in the witness stand, I would, as much as possible, test the testimony by asking whether it is inherently plausible/implausible and whether it is, in a material way, contradicted by other evidence that is undisputed or indisputable, if any.[11]  In this case, while I could still perform the first test, much of the undisputed or indisputable evidence is at first glance neutral in character or could be deployed to fit either party’s case.  In such circumstance, to enable the court to better and more closely scrutinise the veracity of Mother and Kit Man’s respective cases, I directed them to give evidence-in-chief in the old fashioned manner, i.e. viva voce.

General observations regarding Mother’s credibility

32.  Despite her advanced age, the time lapsed since the events that she was asked to recall and the understandable relatively insignificant imperfections in her recollection of say the precise timing and details of some such remote events, Mother’s evidence was generally in harmony with her pleaded case.  She spoke of material events (i.e. the grant of Lot 5199 to Kit Man and the circumstances leading to Kit Man’s applications therefor, how she kept the original title deeds and other documents relating to the lot, how she scraped together just enough funds to build the 1-storey Old House 4, how she came up with the idea of expanding that house to 3-storeys after Father shared the bulk of the compensation for Lot 3838 with her, how she oversaw the building projects, how the 3 floors of New House 4 were allocated among members of the family etc) consistently in a clear and forthright manner.

33.  From such evidence, I get the impression of an enterprising and independent woman with a strong will who had worked hard all her life to put food on the table for her family especially after her husband’s retirement (regardless of whether she was the sole bread winner or not); who had the welfare of her entire family at her heart; and who had her husband’s trust and respect, certainly in matters affecting the financial wellbeing of the family.  Her status as the matriarch of the family, not to be trifled with, and, as such, her control of the deployment of the financial resources of the family vividly came across in the course of her evidence.

General observations regarding Kit Man’s credibility

34.  In contrast, as will be seen below, Kit Man had, in the course of his testimony, departed from his own pleaded case or witness statement dated 15 December 2016 (which, he confirmed at the beginning of his testimony, remained correct) and shifted grounds in fundamental aspects of his case.  When confronted, he was often unable to give any or any satisfactory explanations.

35.  On the whole, I prefer Mother’s evidence to that of Kit Man.

36.  I will elaborate on the findings that I make from Mother and Kit Man’s testimonies under the next heading.  In this connection, I am indebted to Mr Chow for his meticulous and careful analysis of the evidence in his closing submission, which I found most helpful when I revisited and assessed the oral testimonies against the pleadings and other materials in the trial bundles.

FINDINGS

Mother’s status and role in the Pang family

37.  Kit Man sought to portray that Mother had no or little role to play in the acquisition of Lot 5199 and the construction of the two houses thereon.

38.  I have already mentioned that Mother struck me as the matriarch of the Pang family and was, as such, entrusted with the deployment of its financial resources.  Apart from Father’s transfer of $700,000[12] out of the compensation for the resumption of Lot 3838, which was corroborated by Chi Hung (whose evidence on the point I have no reason to question), Kit Man himself volunteered in paragraph 27 of his witness statement that Mother collects and uses at her discretion the rent received under the leases of Houses 66A, 91 and 110A, regardless of who the legal owners of those houses are.

39.  Given such dominant status and role of Mother in the family and Kit Man’s very young age[13] and obvious lack of means at the material times[14], it is to my mind inherently improbable that Mother was not involved in the decisions for the acquisition of Lot 5199 or the construction of the houses thereon or the execution of such decisions.

Kit Man’s status and role in the Pang family

40.  Kit Man claimed in paragraph 12 of his witness statement that Father highly valued the traditional concept of “長子嫡孫”, and made arrangements for the lands he owned in accordance with this concept.  Kit Man further claimed in paragraphs 4, 10 and 12 that he was regarded as the “長子嫡孫” (eldest son) by Father who always discussed with him and asked him to act on behalf of the family in all kinds of matters, including matters concerning tsos/tongs.[15]

41.  In this regard, it will be recalled that it was Kit Man’s pleaded case that that he was accorded the status of the “eldest son” of the family following Uncle’s adoption of his elder brother Wai Man as his son under Chinese customary law in the 1970.

42.  As I understand it, Kit Man asserted Wai Man’s adoption by Uncle to promote himself to the status of the “eldest son” of the family in Father’s eyes, which status was then used by Kit Man to explain and justify his allegations that, of all sons, Father chose to financially support him to acquire, and build on, Lot 5199.

43.  However, on the material presently available to me, I can make no finding of Uncle’s adoption of Wai Man as his son under Chinese customary law.

(1)     When asked by the court as to why he did not contact Wai Man to give evidence, Kit Man simply said that he had not been in touch with Wai Man for a long time.  However, as disclosed towards the end of Kit Man’s cross-examination, the true reason appeared to be that Wai Man had taken side with Mother and all his other siblings against Kit Man in these proceedings[16].

(2)     Even then, if, as claimed by Kit Man, Wai Man’s alleged adoption by Uncle was “well known” to all members of the village, Kit Man could have, but had not, proffered any live witness from the village to speak of the alleged adoption.

(3)     Instead, he performed a search of the relevant tso/tong records. Despite his claim that Wai Man’s alleged adoption had taken place in 1970, i.e. almost half a century, the only piece of tso/tong record that Kit Man was able to produce which purportedly shows that Wai Man was adopted by Uncle is a record of distribution by Cheung Sau Tong (長壽堂) on 16 June 2015 (i.e. about 1 year after the Mother commenced this action) (“Cheung Sau Tong 2015 record”). This is to my mind surprising, given that Uncle had passed away for more than 30 years by the time of the trial of this action.  On Kit Man’s case, a number of distributions had been made by the various tsos/tongs since Uncle’s death which would have covered Uncle.

(4)     In fact, under cross-examination, Kit Man admitted that he was the one who registered Wai Man as Uncle’s adopted son (which fact was annotated in the Cheung Sau Tong 2015 record).  Cheung Sau Tong apparently did not perform any independent checking of such information.

(5)     I agree with Mr Chow that the Cheung Sau Tong 2015 record is “in fact no more than the result of a self-serving exercise conducted by Kit Man to boost his case in these proceedings”.

(6)     In both his answers dated 17 June 2015 to Mother’s request for further and better particulars of his defence and counterclaim and paragraph 5 of his witness statement, Kit Man claimed that Wai Man, being Uncle’s adopted son, made a special effort to return to Hong Kong to attend Uncle’s funeral in 1985 in order to perform the traditional ritual of “擔幡買水” in that capacity.  However, under cross-examination, Kit Man turned around and said that he had no recollection as to whether Wai Man had returned for Uncle’s funeral and performed the “擔幡買水” ritual.

(7)     Father’s succession to Uncle’s estate (Lots 86 and 3838) in 1988 also does not sit well with the alleged adoption of Wai Man by Uncle. 

(8)     Further, if Father’s gift of Lot 86 to Wai Man in April 1996 (about 11 years after the Uncle passed away) were to honour the alleged adoption, then Father should and would have gifted Lot 3838 (or the compensation paid for its resumption) to Wai Man as well but he did not.

44.  Nor do I detect any preferential treatment by Father of Kit Man or special reliance by Father on Kit Man whether as the “eldest son” of the family or otherwise concerning the management and distribution of Father’s assets.

(1)     Kit Man accepted that when Father was still alive, he had never received a larger share of the tso/tong distributions than his siblings.

(2)     In 1989, Father received compensation for the resumption of Lot 3838, which he chose to share with Mother (see [67]-[69] below).

(3)     In 1996, the Father gifted Lot 86 (with House 91) to Wai Man.

(4)     Father held onto Lot 5205 (on which House 110A stands) until his death in 2001.

(5)     When questioned about his role in managing the Pang family’s affairs, Kit Man admitted that his involvement was actually limited to taking care of his younger siblings, participating in spring/autumn rituals (春秋二祭) and attending some village meetings.  He played no role in the distribution of tso/tong monies received by Father.

(6)     Kit Man was also asked during cross-examination as to whether Father had represented to him that he intended to pass to him all or most of his properties when Father passed away. His answer was that no such representation was made.

(7)     As it turned out, Father died intestate.  Hence there was no special testamentary gift made to Kit Man.

(8)     As accepted by Kit Man, House 110A has been managed by Mother (by latest) since Father’s death and she signed the lease and received rent from House 110A for her own benefit.

45.  I rule that Kit Man enjoyed no special treatment and did not play any particularly significant role as just one of 7 sons of the Pang family.

Payment of the Premium

46.  Both Mother and Kit Man claim to be the sole contributor of the Premium.  I favour Mother’s version that she paid the Premium from her own savings.

47.  First,

(1)     Having been working since the 1950’s, it is more likely that Mother would have been able to afford the Premium.  

(2)     In contrast, by early 1978, Kit Man either had just started to be gainfully employed or had worked for a couple of years only.[17]  It is less likely that he would have the financial resources to fund such payment.

48.  Second, Kit Man actually had no idea when the Premium was paid.  His assertion in paragraph 17 of his witness statement that he paid the Premium when he first lodged the application with the TPDO in 1976 before it was even known which piece of land would be granted to him does not make sense.  It is also contradicted by contemporaneous documents, which show that the Premium was paid on the same date as the execution of Grant 11326, i.e. 30 January 1978.  See TPDO’s letter dated 27 January 1978 to Father informing him that the draft Grant 11326 was ready for execution and that he should attend the District Land Registry to execute Grant 11326 and to bring together a sum of $4,000 for the Premium.  See also Grant 11326, which was executed on 30 January 1978 and which contained a reference to the Premium Receipt, which was numbered 938307.  While accepting that he had made a mistake after the error was pointed out to him, Kit Man offered no explanation as to why he erred in the first place.  Indeed, Kit Man struck me as having little clue as to how his application was made.  In paragraphs 27 to 28 of the amended defence and counterclaim, Kit Man denied that two applications were made for Lot 5199.  In his witness statement, he did not mention at all that two applications were made.  It was only after hearing Mother’s oral evidence that he admitted in cross-examination that two applications had to be made.

49.  Third,

(1)     Mother has held onto the original Premium Receipt all these years.  She explained how she had kept the Premium Receipt separately from the title documents of Lot 5199 and how Kit Man had taken from her the title documents, but not the Premium Receipt, after Father’s death.

(2)     On the other hand, in his answers to the Mother’s request for further and better particulars dated 5 August 2015, Kit Man’s solicitors confirmed on his behalf that he possessed the original of the Premium Receipt.  Yet, such document was never disclosed.  And Kit Man was together silent in his witness statement as to the whereabouts of the Premium Receipt.  He was unable to answer my question as to why he did not mention the whereabouts of the Premium Receipt in his witness statement.

(3)     It is plain that Kit Man did not have the original Premium Receipt.  When questioned why the Premium Receipt was not in his possession, Kit Man purportedly explained that Grant 11326 and the Premium Receipt were not issued on the same date.  Further, the Premium Receipt could not be issued in his name even though he, and not Father, paid the Premium.  Hence, the Premium Receipt was given to Father who had kept it. 

(4)     I have reservation about such account because the record, as described in [48] above, is unambiguously clear that the Premium Receipt was issued on the same date as Grant 11326 was executed.  That being the case, there was no reason why Father should choose to retain just the Premium Receipt even if it was technically issued to him as the paying party as Kit Man was not of age. 

(5)     When he was confronted with the discrepancies between his version of events and what the title documents show, Kit Man then claimed to have forgotten about the events due to the lapse of time.

50.  For these reasons, it is more probable that Mother paid the Premium from her own funds.

51.  While we are on the subject of the title documents of Lot 5199, I am inclined to agree with Mr Chow that the abovementioned evidence points to Kit Man having taken such documents (including the original Grant 11326 and the Letter of Compliance) from Mother.  Therefore Kit Man’s possession of the title documents now does not assist him in his claim to the beneficial ownership of Lot 5199.

Source of funds for the construction of Old House 4

52.  Dealing first with Kit Man’s case, I am afraid Kit Man’s contention that the construction expenses of Old House 4 of about $40,000 were funded by a loan from Father to him, which he later repaid in full does not add up and I do not accept the same.

53.  As stated in [26(8)] above, Kit Man claimed to have repaid Father by monthly instalments of (1) $300 from January 1979 to December 1985 and (2) $600 from January 1986 to June 1991.  He further confirmed in court that Father’s loan to him did not carry any interest.  Yet, based on the said repayment sums and periods, the total amount repaid would amount to a total of $64,800, which was over 60% more than the construction costs of about $40,000.  When confronted with the discrepancy, Kit Man then changed tack to say that the sums paid each month would differ from time to time and that part of the sums paid was actually paid to support Father rather than to repay the loan.

54.  Turning to Mother’s case, which I find credible and accept, she clarified in evidence in chief that in addition to her own savings, she had (1) received $20,000 odd from Father out of the lump sum payment of his pension; (2) raised about $5,000 by selling several pieces of gold jewellery in Sheung Oi’s dowry loaned to her by Sheung Oi; and (3) borrowed $2,000 from a friend called Ng Pak Cheung (“Mr Ng”).

55.  Such evidence was corroborated by Sheung Oi’s evidence, which I can find no reason to question.

56.  Mother’s evidence of obtaining a loan of $2,000 From Mr Ng was supported by Mr Ng’s witness statement dated 30 November 2015, which is verified by a statement of truth signed by the witness accompanied by a certification by a solicitor that he had explained to Mr Ng the contents of his witness statement which Mr Ng accepted as accurate; and the contents of the statement of truth and the consequences of making a false statement.

57.  Mr Ng did not attend court.  According to Chi Hung who was responsible for liaising with Mr Ng, about one month before the trial, Chi Hung tried to contact Mr Ng again but Mr Ng refused to attend trial on account of his advanced age and health.  Kit Man opposed the admission of Mr Ng’s witness statement as hearsay evidence.

58.  Under s 47 of the Evidence Ordinance (Cap 8) (“EO”), hearsay evidence shall not be excluded unless (1) the party against whom the evidence is adduced objects to its admission; and (2) the court is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interest of justice.

59.  The primary question is whether the court finds it possible to conclude that irrespective of what shall happen at the trial, no weight could be attached to the evidence such that the exclusion is not prejudicial to the interest of justice.  In making that determination, the court would take into account the factors affecting weight as set out in s 49 of the EO.  See: Cheung Wei Man Vivien v Centaline Property Agency Ltd [2004] 1 HKC 692 at [12]-[13] per Johnson Lam J (as Lam VP then was).

60.  In exercising its discretion whether to admit a hearsay statement, the court would also take into account whether the other party could apply to cross-examine the maker of the statement (Re Wing Fai Construction Company Limited (In Compulsory Liquidation), HCCW 735/2002, unreported, 11 January 2017, at [5] per G Lam J.

61.  Applying the aforesaid principles, I admit Mr Ng’s witness statement as hearsay and give it weight. 

(1) Kit Man admittedly knew Mr Ng.  Mr Ng had also given the address of his shop in his witness statement.  Kit Man himself could have contacted Mr Ng to persuade him to testify in court, failing which he could compel his attendance for cross-examination under Order 38 rule 21 of the Rules of the High Court (Cap 4A).

(2) Kit Man did not adduce any evidence that cast doubt on the reliability of Mr Ng’s evidence under s 48 of the EO.  In fact, Kit Man fairly acknowledged in cross-examination that he had no knowledge as to whether Mr Ng in fact made the $2,000 loan to the Mother.

(3) Lastly, I see no basis to think that Mr Ng’s evidence is not reliable.  He has no personal interest in the outcome of this action.  And his statement is not contradicted by any other evidence before the court.  

62.  I hold that Mother raised and paid the costs of construction of Old House 4, as she described.

Construction of New House 4

63.  Again, I shall consider Kit Man’s case first.  According to his amended defence and counterclaim and witness statement, Father represented to Kit Man that Kit Man’s own share from the tso/tong distributions would be sufficient to fund the reconstruction of Old House 4.

64.  In support, Kit Man adduced his own written notes on tso/tong distributions, which however show that the amount of tso/tong distributions to Kit Man and his family (i.e. his wife and his daughter) is far less than the amount required for the reconstruction on Lot 5199.  According to such notes, up to the end of 1990, there had only been 4 tso/tong distributions to the Pang family.  Out of those 4 distributions, Kit Man’s family shared in the 3 distributions from Tsui O Tso (瑞鰲祖) on 7 November 1989 ($25,000 x 3 = $75,000), 4 June 1990 ($3,000 x 3 = $9,000) and 16 December 1990 ($600 x 3 = $1,800).  The total amount of these distributions to Kit Man’s family is only $85,800.

65.  In cross-examination, Kit Man accepted that part of the funds for the reconstruction might have come from the land resumption compensation.

66.  Apart from the financial aspect, Kit Man’s evidence about his precise involvement in the reconstruction process was very vague, which is puzzling given that what was rebuilt was supposed to be Kit Man’s house.

67.  In contrast, Mother’s evidence that as a result of the compensation paid on the resumption of Lot 3838, Father transferred to her $700,000 for her own use in September 1989 in the presence of Chi Hung and Kit Man and that she used the bulk of the money to rebuild the house on Lot 5199 was thorough, unwavering and resolute.  According to her, Chi Hung happened to be at home at the time as the Polytechnic (where Chi Hung was studying) did not begin its term until October.  Father and Mother told Chi Hung that Father wanted to give some money to Mother.  They asked Chi Hung to accompany them to the Sheung Shui branch of The Hongkong and Shanghai Banking Corporation to effect the transfer.  Father then picked up Kit Man at Old House 4 on their way to the bank.  After the transfer, the Father left with Kit Man. With the sum of $700,00 at her disposal, Mother, who wanted to improve the living conditions of the Pang family, came up with the idea of rebuilding Old House 4 into 3 storeys.  Out of the $700,000, $610,000 was used to fund the reconstruction.  She personally liaised with Mak Kai, the contractor she engaged to perform the reconstruction works.

68.  Chi Hung corroborated Mother’s said evidence.  Chi Hung’s recollection of the transfer that took place in September 1989 was not challenged during cross-examination.

69.  I accept that Mother received $700,000 from Father in September 1989 out of the compensation for the resumption of Lot 3838; that such payment was intended by Father as a gift to Mother who was free to spend the monies at her discretion; that out of the $700,000, Mother applied $610,000 to rebuild Old House 4 into New House 4; and that New House 4 had been completed without any financial contribution from Kit Man.

Common intention regarding beneficial ownership

70.  As stated by Baroness Hale in Stack v Dowden [2007] 2 AC 432 at [60], “[t]he search is to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in light of their whole course of conduct in relation to it”.

71.  Each case turns on its own facts and context.  A non-exhaustive list of factors relevant in the domestic context can be found in Stack v Dowden at [69]:

“In law, “context is everything” and the domestic context is very different from the commercial world.  Each case will turn on its own facts.  Many more factors than financial contributions may be relevant to divining the parties’ true intentions.  These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties’ relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses.  When a couple are joint owners of the home and jointly liable for the mortgage, the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is owner of the home.  The arithmetical calculation of how much was paid by each is also likely to be less important. It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally.  The parties’ individual characters and personalities may also be a factor in deciding where their true intentions lay.  In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they always take pride of place over natural love and affection.  At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.”

72.  Stack v Dowden was a joint name case.  However, the same factors are equally material to a sole name case: Mo Ying v Brillex Development Limited [2015] 2 HKLRD 965 at [6.2], per Cheung JA.

73.  Taking such a “holistic approach”, having regard to the following facts, I can readily believe that there was a common intention between Father, Mother and Kit Man, communicated Kit Man, to benefit Mother who could, in turn, be depended upon to act in the interest of the Pang family as a whole.

(1)     I have already found that (with Father’s assistance) Mother financed the acquisition of Lot 5199 and the construction of Old House 4 and New House 4, without any monetary contribution from Kit Man.

(2)     The Pang family was not by any standard well off or even comfortable financially.  Indeed, the impression that I gained from the evidence is that in the late 1970’s, even without having to pay rent for House 66A, the family could just make ends meet. 

(3)     Acquiring a piece of land to build a house, even if it be for the benefit of the whole family, was a luxury that the Pang family could ill afford.  I have already set out above how Mother described her efforts (including using Sheung Oi’s dowry and borrowing from Mr Ng) to scrape together just enough money to fund the building of Old House 4.  It appeared to me that the project had exhausted the family’s financial resources.

(4)     Leaving aside Wai Man and Sheung Oi (who had left the family to live independently), by 1977/1978, the Pang family had 5 underage sons.  Apart from Kit Man, there was no evidence that any of the other sons in Hong Kong were in gainful employment.  Focusing on Kit Man whose position in the family I have already addressed, neither Father nor Mother had, on the evidence, shown any or any sign of favouritism towards Kit Man or any tendency to prefer him over the other sons.  He is just one of a number of children.  It is to my mind inherently implausible that Father and/or Mother would embark on a course that would deplete all the resources of the family with the intention just to enable Kit Man, only one of their many sons, to own, and build, his own residence.

(5)     There was indeed a good reason why Lot 5199 was acquired in Kit Man’s name.  Kit Man was the only male indigenous villager of the family in Hong Kong who did not already own a piece of land and hence eligible to apply for a fresh private treat grant under the Policy. 

(6)     Given the need for Kit Man’s co-operation, it is in my opinion inconceivable that Father and Mother had not had an express discussion with Kit Man about their intention regarding the application to be made in Kit Man’s name under the Policy.   In this regard, Kit Man criticised that Mother’s evidence on the exchange with him was vague.  In finding an express common intention, the court does not require precise and unequivocal representations by the parties akin to the terms of a contract.  In this context, the Court recognises the reality that such discussions in a domestic setting may be vague, imperfectly remembered and imprecise (Lloyds Bank Plc v Rosset [1991] 1 AC 107 at 132 per Lord Bridge, referred to in Mo Ying, supra, at §5.8.  Even in the absence of any explicit discussions as to property rights, it is open to the court to infer a common intention from the parties’ conduct which would justify such inferred intention.

(7)     Mother has kept the originals of the Premium Receipt and the title documents of Lot 5199 until Kit Man removed the latter papers from her.

(8)     On Kit Man’s own evidence, his involvement in the construction of Old House 4 and New House 4 was far too scanty and vague if it were his own house that was being built.

(9)     After the completion of Old House 4, as set out in [18(2)] above, other than Kit Man, Chan Hung and possibly Chi Wai also moved into Old House 4.  Chan Hung stayed at Old House 4 for 2 more years after Kit Man’s marriage and the birth of Kit Man’s daughter in 1983.  In addition, all family members used Old House 4 as a family cooking, dining, living and gathering place during the day.  Kit Man agreed that all members of the Pang family (excluding Wai Man and Sheung Oi) were given keys to the house.  This is consistent with Mother’s case that Lot 5199 was acquired and Old House 4 was built for family use rather than for the sole enjoyment of Kit Man.

(10)    There is no evidence indicating a change of intention to benefit Kit Man solely when Mother poured her newly acquired substantial resources ($610,000) into the demolition of Old House 4 and the construction of New House 4.

(11)    New House 4 was and has been used by the whole Pang family.  Kit Man only has the keys to the floor that his family occupies but not the ground and second floors.  The evidence of the occupation and enjoyment of New House 4 is more consistent with Mother’s case that the house was always intended to be used for the enjoyment of the Pang family (i.e. also for Father, Mother and Kit Man’s siblings) and not just for improving the living condition of Kit Man’s family. 

(12)    In fact, Kit Man and his family (i.e. his wife and his daughter) only took up residence of the first floor.  The reconstruction therefore did not result in any particular improvement in the size of the living space for Kit Man’s family.

(13)    The fact that Kit Man’s family only occupied the first floor demonstrates that when Kit Man moved into New House 4 after the reconstruction was completed, he did so with the expectation that other members of the Pang family would move into the other floors at a later stage, which they did.

(14)    Kit Man initially claimed in paragraph 63(i) of the amended defence and counterclaim that he has all along been responsible for the maintenance expenses of New House 4 save and except those expenses incurred by the “licensees” by reason of their residing at the house.  However, under cross-examination, he admitted that Chi Hung was responsible for replacing the exterior water supply pipes for all 3 storeys; and that Mother had paid for repair works on the air conditioners for the entire house. For his own part, Kit Man could not identify any particular piece of maintenance work that he was responsible for, which weakens his case that he is the sole beneficial owner of the property. 

(15)    The position taken by Kit Man in the water seepage incident is hard to understand if he really believes that he is the sole owner of New House 4.  I agree with Mr Chow that it is inconceivable that Kit Man would not wish to thoroughly investigate the water seepage, which could potentially cause damage to the house.

74.  To conclude, Mother has rebutted the presumption that beneficial ownership follows legal ownership. There was an express common intention between Father, Mother and Kit Man that Kit Man would hold Lot 5199 and the house built thereon on (constructive) trust for Mother’s benefit.

75.  In the presence of evidence as to the parties’ actual intention, there is no need to resort to the presumption of resulting trust which applies only where there is no evidence at to what the parties intended.

DISPOSITIONS

76.  For these reasons, I allow Mother’s claim and make

(1) a declaration that Kit Man holds Lot 5199 and New House 4 for her benefit on a common intention constructive trust;

(2) an order that Kit Man should transfer the legal title to Lot 5199 and New House 4 to Mother; and

(3) an order that Kit Man should deliver up to Mother all documents relating to and concerning the title of Lot 5199, including but not limited to Grant 11326 and the Letter of Compliance.

77.  I dismiss Kit Man’s counterclaim.

78.  I also make an order nisi that Kit Man should pay Mother the costs of this action, to be taxed on a party and party basis if not agreed.