LAI HON TIM v. LAI TSZ NANG WILSON

CACV 637/2020

[2022] HKCA 382

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 637 OF 2020

(ON APPEAL FROM HCA NO 744 OF 2018)

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J U D G M E N T

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Hon G Lam JA (giving the Judgment of the Court):

1.  The plaintiff is the defendant’s father. In 1994, a residential property was purchased in their joint names. The initial payment as well as the repayment of the mortgage loan were entirely funded by the plaintiff. In late 2017 a dispute arose whether the defendant held the joint ownership beneficially or on trust for the plaintiff. After a trial over 4 days, Anthony Chan J (“the judge”) found in favour of the plaintiff, declared that he was the sole beneficial owner, and ordered the defendant to transfer his title to the plaintiff. From that decision the defendant now appeals to this court.

Background

2.  The plaintiff is an indigenous villager of Lamma Island, born in 1942.  He was a sergeant in the Hong Kong Police Force.  He and his wife, Madam Chow Wan Yee (“Mother”), have three children: Anna, the defendant, and Wallace.  The defendant was born in 1971.

3.  The whole family lived in the Police Married Quarters.  In 1994, the plaintiff was aged 52 and his wife 45.  Anna was working at a bank and lived with the parents.  The defendant had recently come back from his university studies abroad and started work as a sales executive in a Japanese company, and also lived with his parents.  Wallace had gone to the United Kingdom for education in 1993.

4.  As the family would have to move out from the Police Married Quarters when the plaintiff retired in 1997 upon reaching the retirement age of 55, he started to look for an apartment in 1994.  A flat in Cronin Garden (樂年花園), 2 Po On Road, Sham Shui Po, Kowloon (“Property”) was eventually chosen.  A provisional sale and purchase agreement was signed by the plaintiff and defendant to purchase the Property as joint tenants at the price of $2,084,000 on 24 June 1994.  The 5% deposit and stamp duty in the total sum of $153,300 were paid by the plaintiff.  A formal sale and purchase agreement was entered into on 4 July 1994, and the assignment of the Property to the plaintiff and defendant as joint tenants was executed on 13 July 1995.

5.  The balance of the price was paid with the help of a bank mortgage loan in the amount of $1.6 million borrowed in the parties’ joint names.  The monthly instalments were paid by the plaintiff, initially entirely from his own funds, and, from 30 August 1995 onwards, with the assistance of an allowance of $5,570 per month granted by the Government under a home purchase scheme for civil servants.  In around May 1997, the plaintiff repaid a substantial portion of the mortgage loan with a short-term loan of $1,378,000 from the Government shortly before the commencement of his pre-retirement leave.  The Government loan was in turn discharged in December 1997 with a lump sum payment of the plaintiff’s pension.  The entire mortgage loan had been repaid by March 1998 and the mortgage was discharged on 3 April 1998.

6.  The Property had become the family home to which they moved from Police Married Quarters.  Wallace returned to Hong Kong in 1998 after obtaining his university degree and began to work in an insurance company and to live in the Property.

7.  In 1999, at around the same time as his first marriage, the defendant acquired a flat in Graces Court, 298 Un Chau Street, Kowloon, and moved there.  The plaintiff had paid $400,000 to the defendant for the purpose of acquiring that flat.  The nature of this payment (and a number of subsequent payments mentioned below) was in dispute at trial.  The defendant said they were gifts; the plaintiff said they were loans.  The judge said he was inclined to accept the plaintiff’s evidence, although the plaintiff had not stipulated any repayment date or made any demand for repayment.  The judge did not, however, find these payments to be of assistance in resolving the dispute about the ownership of the Property.[1]

8.  In May 2004, the defendant started a pet shop in Sham Shui Po.  The plaintiff paid a sum of $200,000 to the defendant for this purpose.

9.  In May 2003, a plot of land that had been assigned by the plaintiff to the defendant in 1992 at a nominal consideration, namely, the Remaining Portion of Lot No. 1575 in D. D. 3, Lamma Island, was divided into two portions, namely, Section B and the new Remaining Portion.  In September 2004, Section B was exchanged in situ with the Government for the grant of a lot known as Lot No. 2216 of D. D. 3 of Lamma Island.  At around the same time, a small 3-storey house was built on it, which acquired the address of 43A Yung Shue Wan Back Street, Lamma Island (“House 43A”), using the defendant’s “ding right” as an indigenous villager under the Government’s Small House Policy.  The plaintiff paid for the construction costs but the defendant was the registered owner of Lot No. 2216 and House 43A.  The new Remaining Portion of Lot No. 1575 formed part of the garden of House 43A.

10.  In 2004, Wallace emigrated to the United States with his then girlfriend (who later became his first wife) and began to operate a restaurant business in New York.

11.  The defendant had divorced and remarried.  In July 2008, his second wife gave birth to a son.

12.  In August 2008, the plaintiff made a will in which (i) Wallace was to be the executor; (ii) a property known as Ground Floor, Lot No. 2059 in D. D. No. 3, Lamma Island, was to be bequeathed to Mother and Wallace in equal shares; (iii) a property known as Lot No. 1935 in D. D. No. 3, Lamma Island, was to be bequeathed to Wallace; (iv) a property known as the Remaining Portion of Lot No. 415 in D. D. No. 3, Lamma Island, was to be bequeathed to Wallace; and (v) the residuary estate was to be bequeathed to Mother.

13.  In the late 2000s the defendant moved his pet shop, first, to Camp Street, and later, in 2009, to Castle Peak Road.  The plaintiff paid $50,000 and $100,000 to the defendant towards the expenses of opening these two shops respectively.

14.  Wallace had also divorced and remarried.  In April 2016, Wallace and his second wife, Kimberley, moved back to Hong Kong.

15.  In September 2016, at the request of the plaintiff, the defendant assigned the Ground Floor and First Floor of House 43A to Wallace and Anna respectively.  Although each transaction was in form a sale and purchase, the defendant never received the stated consideration of $2 million and $1.8 million respectively either from Wallace and Anna or otherwise.

16.  Also in September 2016, the plaintiff assigned Ground Floor of Lot No. 2059 (referred to in §12 above) to Wallace.

17.  In October 2016, the defendant, at the request of the plaintiff, further assigned the Garden of House 43A (i.e. the new Remaining Portion of Lot No. 1575) to Wallace, ostensibly for a stated consideration of $200,000, which the defendant again never received.

18.  In January 2017, the plaintiff assigned the Remaining Portion of Lot No. 415 (referred to in §12 above) to Wallace. 

19.  In February 2017, at the plaintiff’s request, Anna assigned the First Floor of House 43A to Wallace.  The transfer was on the documents for consideration but Anna never received the price of $1.8 million.  The undisputed evidence of the plaintiff was that he had an understanding with Anna that if she did not have any children then that property would be returned to a descendant of the family surnamed “Lai”.  After the assignment, in March 2017 Wallace and Kimberley started renovations of House 43A.  They moved into the Ground and First Floors in January 2018.  Anna later died from illness in October 2018.

20.  In June 2017, the plaintiff assigned Lot No. 1935 (referred to in §12 above) to Wallace although, it appears, the plaintiff continued to receive the rent after the assignment.

21.  It was not in dispute that on 29 August 2017, the plaintiff asked defendant to transfer the Second Floor of House 43A to Wallace, stating that, in exchange, he (the plaintiff) would transfer his title in the Property to the defendant.  The defendant agreed to this in the conversation, but failed to attend the solicitors’ office at an appointment on 6 September 2017 fixed by the plaintiff to execute the documents for the transfers.  According to the defendant, this was because he had in the meantime found from Anna that she had transferred the First Floor of House 43A to Wallace on the plaintiff’s demand and the defendant had also discovered from land searches that the plaintiff had transferred Lot No. 1935 (and perhaps also other properties) to Wallace.  As a result, the defendant wanted to speak to the plaintiff to find out what had happened, before executing the documents for the exchange.

22.  On 10 September 2017, the plaintiff and Mother went to the defendant’s pet shop in the morning to speak with the defendant. After lunch the plaintiff and Mother went to the pet shop again together with Wallace and Kimberley and spoke with the defendant in the afternoon.  These meetings (“Meetings”), which lasted for about four hours in total, were recorded on the CCTV at the pet shop.  The defendant had procured transcripts to be prepared of the entire recorded conversations, and placed considerable reliance on parts of them in his case.  Indeed, his witness statement took the form, quite undesirably in our view, of extensive and lengthy quotations from the transcript, instead of setting out the story from his point of view in his own words.

23.  On 21 September 2017, the plaintiff revoked his will made in 2008 and made a new will under which Wallace was to be appointed the executor and the estate was to be bequeathed to Mother.

Proceedings below

24.  The plaintiff instituted the action below on 3 April 2018.  His pleaded case was that at the time of the purchase of the Property in 1994, he informed the defendant that due to his forthcoming retirement, it would be difficult for the plaintiff to secure a mortgage and that the defendant’s name would therefore be added for the purchase of the Property (“因爲我就黎退休，銀行唔借錢，所以先加你個名落去”).  The defendant agreed.  There was a mutual understanding, intention and agreement that while the Property would be registered in their joint names, the plaintiff would provide the entire consideration for the purchase and the beneficial interest would be entirely the plaintiff’s.  We shall refer to this as the “Agreement”.  It was pleaded that the defendant held his title and interest in the Property on constructive trust, alternatively a resulting trust, for the plaintiff.

25.  The defendant denied that there was the Agreement.  He denied that the plaintiff had told him that his name was to be added because of difficulty in securing a mortgage otherwise.  His pleaded case was that it had all along been a common intention and understanding of the parties that the defendant’s half share under the joint tenancy was a gift from father to son.  The plaintiff had told the defendant at the time that he was to be added as a co-owner because “it is going to be all yours eventually”.  The defendant’s understanding was that the plaintiff intended to make a gift of half of the Property to him outright, and the whole of it when the plaintiff passed away eventually.  The defendant did not admit that the plaintiff would have encountered any difficulty in obtaining mortgage financing without adding the defendant as a co-owner, and stated that the plaintiff had never told the defendant of any such perceived difficulty.  The defendant denied the common intention alleged by the plaintiff and denied that there was any trust arrangement in respect of his interest in the Property.  He also raised the pleas of estoppel by representation and lack of clean hands but they were abandoned at the trial.[2]

26.  At the trial, the plaintiff, Mother and Wallace gave evidence for the plaintiff.  The defendant alone gave evidence for the defence.

27.  The judge observed that the plaintiff was not a fit elderly man.  His movement was slow and he got tired and less focussed as the cross‑examination went on in the afternoon.  The judge found two areas in the plaintiff’s evidence unsatisfactory, including his evidence regarding the discussion with the defendant on the purchase of the Property.  But the judge was evidently prepared to make allowance because the plaintiff was visibly tired and was confused over the concept of trust, and there were a large number of questions asked over details of events that took place some 26 years ago. The judge noted that the plaintiff was firm on his evidence that he told the defendant that the Property was purchased as the retirement home for the plaintiff and Mother, that the defendant’s name was included because it was required for getting a bank mortgage loan, that the Property was not gifted to the defendant but held on behalf of the plaintiff, and that the plaintiff thought he could at any time asked the defendant to transfer it back to him.

28.  The judge found Mother’s evidence largely immaterial, except the part about the discussion between the plaintiff and the defendant on the purchase of the Property, at which (she said) she was present.  The judge evidently accepted her testimony insofar as relevant, observing that she made a “good impression” as a witness and that there was “no obvious fragility” in her evidence.

29.  The judge considered that Wallace’s evidence was of little relevance to the issues in the case.

30.  The judge found the defendant “a poor witness” and had “little confidence” in his evidence.[3]

31.  Having considered the witnesses’ evidence and the inherent probabilities which he considered to favour the plaintiff’s case, the judge found that the plaintiff did not have any intention of giving the defendant any beneficial interest in the Property and that the defendant knew, as he was told, that his name had to be added for the purchase due to the mortgage requirement and that the beneficial interest in the Property would belong to the plaintiff entirely.  The judge found no real assistance from what was said or not said during the Meetings by the family members, observing that they were unhappy incidents where heated exchanges were made.

32.  In the result the judge gave judgment in favour of the plaintiff, declaring that he is the sole beneficial owner of the Property and ordering the defendant to transfer his title to the plaintiff.

Appeal

33.  On this appeal, the defendant contends that his appeal should be allowed with an order that the plaintiff’s action be dismissed.  The arguments advanced by Mr Ken To and Ms Jolie Kung on the defendant’s behalf may be broadly summarised into three main points.  First, it is contended that the judge adopted an erroneous legal approach in treating as of little relevance or probative value two aspects of the parties’ words or conduct, namely, (i) the exchanges between the family members during the Meetings including admissions by the plaintiff and Wallace of the defendant’s interest in the Property, and (ii) the significant gifts given by the plaintiff to the defendant between 1992 and 2009.

34.  Secondly, it is said that the judge failed to analyse or discuss two crucial aspects of evidence which directly concern the ownership of the Property, namely: (i) the plaintiff’s and Mother’s evidence on why they say the defendant holds his joint title in the Property for the plaintiff; and (ii) their evidence on the formation of the Agreement.

35.  Thirdly, it is submitted that the Judgment fails to inform the parties how the court resolved the hotly disputed factual matters and understood them in the context of the background facts.

36.  For his part, the plaintiff has filed a respondent’s notice to contend that even if the judge’s factual findings in support of a common intention constructive trust are set aside, the ultimate judgment in favour of the plaintiff should still be upheld on the basis of resulting trust.

37.  We shall first deal with the three main contentions of the defendant in turn below.

The defendant’s first contention

38.  In the present case the judge came to his findings and conclusions after a 4-day trial in which he heard the evidence from four witnesses.  It is well established that the appellate court must have regard to the trial judge’s advantage of receiving the evidence at first hand, and will not interfere with his factual findings unless the appellant can demonstrate they are plainly wrong.  If the appellate court is not so satisfied, it should defer to the trial judge’s conclusion even if it is in some doubt as to its correctness: Ting Kwok Keung v Tam Dick Yuen & others (2002) 5 HKCFAR 336, §§41-42.  The question arising on an appeal is therefore not whether the appellate judges would themselves have made a different finding, but whether it was permissible for the trial judge to make the findings of fact which he did in the face of the evidence as a whole.  This Court may interfere with a finding which there was no evidence to support, which was based on a misunderstanding of the evidence, or which no reasonable judge could have reached: see China Gold Finance Ltd v CIL Holdings Ltd & others (CACV 11/2015, 27 November 2015), §§17-19.

39.  Mr To submits that the judge adopted an approach that evidence outside the oral agreement between the parties in 1994 was “at best, of questionable relevance and/or probative value”, and that this is contrary to the established proper approach in determining whether there is a common intention constructive trust, which regards the parties’ conduct other than in relation to the agreement itself as relevant for gauging and testing their allegations about the agreement: WML v LCK (CACV 82/2014, 27 February 2015), §41.

40.  We do not think that the judge made this error. There is no new principle of law peculiar to constructive trust set out in WML v LCK or Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §§46-50. It is common sense that a witness’s other conduct can be relevant for evaluating his evidence about an alleged agreement or understanding.  The judge did not say that as a matter of law, any evidence other than what the parties said in 1994 was irrelevant.  In the passage in question the judge was discussing the evidence of Mother and Wallace and, in that context, said: “The evidence outside the agreement reached between the Plaintiff and Wilson back in 1994 is, at best, of questionable relevance and/or probative value.”[4]  The word “The” and the sentence immediately following, namely “This reservation applies to much of the mother’s evidence and the entirety of Wallace’s evidence”, show that the judge reached his view with reference to the contents of their evidence, not because of the alleged error of law or any categorical principle.  In fact, the defendant complains not so much of the judge’s treatment of Mother’s and Wallace’s evidence as about his treatment of the Meetings and the alleged gifts. In relation to those two areas of evidence, it is plain from the Judgment that the judge did not exclude them by reason of some legal principle such as the alleged erroneous approach, but gave them little weight because of the facts and circumstances of this case.

41.  In relation to the Meetings, the Judgment stated:

“ 61. Equally, I find no real assistance in respect of what was or was not said during the Meetings by the family members. It is plain from the transcript that they were unhappy incidents where heated exchanges were made. There was an undercurrent of tension between the 2 brothers due to the discovery by Wilson that much of his father’s assets had been transferred to Wallace. I am unable to understand why things said in such circumstances can shed any light on an event which took place 23 years ago.

62. For completeness, firstly, the high watermark of this part of Wilson’s case is the reference by his father to a choice given to him, ie, he could choose between the 2/F of 43A and half of the interest in the Property. Thus, implying that Wilson already owned half of the interest in the Property. In this regard, the Plaintiff’s explanation was that he intended to pass the entire interest in the Property to Wilson for the exchange but given that his son already held 50%, he only needed to pass the remaining 50% to him. Such explanation, in the context of the Meetings, is neither inherently improbable nor unreasonable.

63. Secondly, it should be mentioned that the evidence of what was said during the Meetings is a double-edged sword.  If it were relevant to evaluate what was said by the Plaintiff, the court would have to do likewise in respect of what was said by Wilson, which the Plaintiff contends to be inconsistent with Wilson’s case.”

42.  Plainly the judge considered the evidence, but, having regard to its contents and the circumstances, concluded that it was of no real assistance on the issue before him.  Ordinarily, of course, the question of what weight to place on a piece of evidence is a matter for the trial judge, with which an appellate court cannot interfere.  Mr To submits, however, relying on Bright Gold Ltd v Mega Well Development Ltd [2020] 4 HKLRD 26 at §§47-48 and Yap Sui Fong v Yip Fong Tim [2018] 4 HKLRD 791 at §§65-71, that the judge’s view was based on a failure to appreciate the significance of the evidence in the context of the central dispute, and that this amounts to a misunderstanding of the evidence warranting intervention by this court.

43.  This necessitates a closer examination of the evidence of the Meetings.  In doing so it is important to bear in mind the context:

(1)             Both parties’ cases were that there was an express agreement or mutual understanding about the beneficial ownership of the Property.  The plaintiff’s case was that it was agreed that the Property was solely owned by him despite that the conveyancing documents gave a joint title to both.  The defendant’s case was that the plaintiff told him at the time that the Property was going to be all his eventually.

(2)             The Meetings were triggered by the plaintiff’s proposal for him to transfer his title in the Property to the defendant and for the defendant to transfer the Second Floor of House 43A to Wallace.  Documents for this “exchange” had been prepared but the defendant failed to attend the appointment at the solicitors’ office on 6 September 2017 arranged by the plaintiff, and failed to respond to calls and messages afterwards.  The plaintiff and Mother therefore went to the defendant’s shop on 10 September 2017 demanding an explanation.

(3)             At the time the defendant had already discovered the transfers of various other properties by the plaintiff to Wallace and was clearly concerned and wanted an explanation from the plaintiff.

(4)             Wallace and Kimberley had begun renovating House 43A and had apparently also been taking steps to deal with encroachments by neighbours or strangers on the surrounding land, and had incurred substantial expenses for these purposes.

(5)             There were heated exchanges at the Meetings. The afternoon Meeting, which was attended in addition by Wallace and Kimberley, was tumultuous.  Mother was throughout the Meetings critical of the defendant, particularly for not having been a filial son and for failing to show up on 6 September without notice and respond to them afterwards.  Wallace broke into raining scurrilous insults and expletives on the defendant soon after the afternoon Meeting began, while Kimberley kept asking the defendant for financial contribution towards the expenses incurred in relation to House 43A. The plaintiff evidently wanted peace.  Eventually a report was made and police came on the scene.

44.  Out of the almost 100 pages of closely typed transcript of the Meetings, counsel for the defendant rely on the following:

Item	Speaker	Content
404	Plaintiff	如果你要南丫島嘅，佢嗰處，嗰一半就俾呀子峰㗎啦。
406	Wallace	你……（聽不清）。咁啫係你要43我要，得、得得得，43號A八十萬吖嘛。但係樂年花園呢唔係你㗎喎，你得五十個percent咋喎。到嗰陣時呢，慢慢搞喎之後。八十萬即刻開cheque。係。好呀。係呀。
440	Plaintiff	咁樂年花園呀，俾一半佢㗎啦喎?
491	Wallace	Okay。咁你啫係唔要樂年花園嗰一半啦？
592	Plaintiff	你咪話，浄返嗰層，俾哂佢囉。南丫島俾佢搞。係咁多嘢囉。咁啲錢俾佢，俾哂佢。你一半，有一半俾埋佢囉。即刻簽。我簽落去。咁你南丫島呀唔洗出八十萬，亦都唔洗繼續……（聽不清）。反正係咪呢處都值錢過南丫島。
668	Wallace	誒誒誒，得得得，等陣，誒誒，等陣，誒誒，噓、噓、噓，誒。嗱，你而家唔轉43號A你要43號A吖嘛。嗰度啦，樂年花園啦，浄係得一半㗎咋。係咪咁樣呀？就係咁咋嘛。但係你43號A呢有咩嘢你要參與有咩俾錢，跟住我哋呢俾單你，你自動俾錢找數。
764	Plaintiff	(聽不清) 佢出錢，樂年一半，佢嘅。...(聽不清)。唔係，佢肯出。
940	Plaintiff	嗱，兩樣嘢囉，即係講咗啦，一係南丫島，一係樂年花園俾你一半…

45.  In our view, these selective passages do not amount to clear admissions that the defendant had an existing 50% beneficial interest in the Property.  The object of the proposed exchange was to achieve the result that Wallace held the Second Floor of House 43A while the defendant held the Property.  Since the title to the Property was already held as to one half by the defendant, to implement the exchange it was only necessary for the plaintiff to transfer his 50% title to the defendant.  At least this was the plaintiff’s understanding so far as the conveyancing procedures were concerned, as the judge apparently accepted (see §62 of the Judgment quoted above).  Presumably the documents already prepared by the solicitors proceeded on that basis.  References in the Meetings to the plaintiff transferring 50% of the Property to the defendant upon the exchange are not therefore unequivocal admissions that the defendant already had a 50% beneficial interest in the Property.

46.  Mr To argues that this cannot explain those passages in the transcript that suggest that even if the defendant did not agree to the proposal, and the exchange did not proceed, the defendant would still have 50% of the Property.  He refers in particular to items 404, 406, 668 and 764 of the transcript.  But quite apart from the fact that not everything said was audible and transcribed, what was transcribed has to be read in the context of the entire Meeting.  It appears from other parts of the transcript that the defendant was being asked to choose one or the other of the two properties.  Thus, at an earlier stage, Wallace had said:[5] “43 號A 、樂年花園。你諗住點呀？二揀一。” and “老竇嘅意思呢，就係呢，一係43 號A ，一係樂年花園，兩個俾你揀一個。”  This militates against the suggestion that there was a clear admission that the defendant already and in any event beneficially owned half of the Property.  Further, the judge was entitled to place little weight on what Wallace thought and said, for he was not present when the Property was purchased in 1994.  As shown by his exchange with the defendant’s counsel during Wallace’s cross‑examination, the judge did not think that the plaintiff could be expected to intervene during the Meeting whenever Wallace said something that might not strictly speaking be correct.[6]  There is nothing wrong in principle for the judge to take this view.

47.  In other parts of the conversation the plaintiff had also said that what was for the defendant to choose was one or the other of the two properties:[7] “後街俾佢，我嗰處呢，全部俾哂你。樂年花園嗰啲俾哂你。”; “如果你係，放棄南丫島嗰處，錢呢啲我以前用嗰啲錢全部唔好理啦。咁你要樂年花園好啦。樂年花園亦都值錢嘅，唔係唔值錢嘅。”; “而家兩樣嘢，你揀，樂年花園囉”; and “樂年花園，同埋，南丫島，兩樣嘢選擇。一係南丫島， … 一係樂年花園。”  In the parts relied upon by Mr To, there was no clear admission by the plaintiff that if the exchange did not proceed, the defendant would have 50% beneficial ownership of the Property.  During cross-examination, the plaintiff acknowledged that, without the property exchange proceeding, the defendant would continue to have 50% title of the Property, but the plaintiff also clarified that, even so, the Property still entirely belonged to himself. 

48.  We do not think that the judge misunderstood the evidence in the sense that he failed to appreciate the use that the defendant sought to make of the selected passages in the transcript of the Meetings.  He was entitled to disagree with the defendant with regard to the weight that should be put on them.

49.  Mr To argues that the fact that there were heated arguments at the Meetings did not affect the plaintiff’s “admissions”. However, when a part of the transcript was put to the defendant, where he had apparently said he did not know the Property was registered in part in his name until he conducted some checks subsequently, he explained that because there was an argument at the time, what was said did not reflect what he really wanted to say.[8]

50.  Mr To argues that if the agreement alleged by the plaintiff did exist, it was improbable that no one mentioned it during the Meetings.  But it should be noted that the plaintiff (as well as Wallace) wanted the defendant to take the Property and give up the Second Floor of House 43A, and the defendant had orally agreed to the exchange in a telephone conversation with the plaintiff.  Wallace already held the Ground and First Floors of House 43A.  So the focus of the discussions was what the defendant would have on the basis of the exchange.  The question of the plaintiff getting back the half share of the Property from the defendant or, in other words, the removal of the defendant as a 50% legal title holder, was not the subject matter of the Meetings.  If the exchange did not proceed, the status quo would simply remain.  In fact, during the Meetings the defendant himself likewise never mentioned the mutual understanding he alleges, even though according to that understanding he would eventually have the entire Property in any event.

51.  Further, at the time of the Meetings no dispute had yet arisen about the Property.  No one had called into question its beneficial ownership.  Both the defendant and Anna had readily, at the plaintiff’s request, assigned away parts of House 43A registered in their names.  There was no reason or occasion for the plaintiff, during the 23 years since its purchase in 1994, to try to recall what arrangements were made with the defendant in relation to the Property. 

52.  Mr To argues that the judge paid no regard to the inherent improbability of the plaintiff using his alleged interest in the Property in an exchange for another of his property, namely, the Second Floor of House 43A (since the plaintiff appears to have suggested that the three floors of House 43A remained in his beneficial ownership).  In our view this point does not assist the defendant, for even on the defendant’s own case, the plaintiff had offered his half interest in the Property (which indisputably belonged to the plaintiff) to the defendant in return for the Second Floor of House 43A.  The real problem here lies with the lack of clarity in relation to the beneficial ownership of House 43A.  Despite all three floors were originally held in the defendant’s name, he voluntarily transferred two floors away without receiving any consideration.  For his part, the plaintiff’s evidence on this area was also found by the judge to be unsatisfactory.[9]  What distinguished House 43A from the Property, however, is that House 43A was built utilising the defendant’s ding right, thus possibly giving the defendant some right to the Second Floor in the plaintiff’s conception.  There is no inherent improbability as submitted.

53.  Relying on the transfer of the Remaining Portion of Lot No. 1575 to the defendant in 1992 and the four cash payments from 1999 to 2009 referred to above, Mr To submits that the judge erred in law in refusing to take into account the “ongoing gifts … over a period of 17 years from 1992 to 2009”.  It is submitted that they demonstrated a consistent pattern of gifts made by the plaintiff to the defendant over a course of 17 years. But the first thing to note is that there was no finding that the alleged gifts were actually gifts.  The Remaining Portion of Lot No. 1575 was admittedly transferred to the defendant for a nominal consideration, but the rent from House 43A, which was built on the land using the defendant’s ding right, was all received by the plaintiff (until late 2017 when the defendant began to take the rent of the Second Floor).  Moreover, at the instruction of the plaintiff, the defendant transferred the Ground Floor and First Floor to Wallace and Anna respectively, without payment.  In these circumstances the land cannot simply be treated as having been gifted to the defendant in the first place.

54.  As regards the cash payments made by the plaintiff to the defendant (in the sums of $400,000, $200,000, $50,000 and $100,000 respectively), in his evidence the plaintiff said the sums were lent, but accepted that there was no mention of when and to what extent they had to be repaid. The judge said he was inclined to accept that evidence.  Even if these payments were gifts, however, the judge did not disregard them because of the alleged erroneous approach of excluding all evidence not directly concerned with the agreement in 1994.  Instead, the judge placed no weight on them because he did not find that they rendered it more likely that the plaintiff had gifted half of the Property to the defendant in 1994.[10] We do not think the judge’s conclusion can be faulted.  Even if the payments were gifts, they were each accounted for by the special occasion for which it was made – the purchase of a matrimonial home in 1999 upon the defendant’s marriage, the first opening of a pet shop in 2004, and when the shop moved twice subsequently.  It was entirely open to the judge to place no weight on these payments.

The defendant’s second contention

55.  By its second main contention the defendant submits that the judge’s finding of the existence of the Agreement is plainly wrong.  It is said that the judge failed to deal properly with two crucial aspects of evidence: (a) the plaintiff’s and Mother’s evidence on why they say the defendant holds the joint title in the Property for the plaintiff; and (b) their evidence on the formation of the Agreement.

56.  First, the defendant submits that the plaintiff repeatedly confirmed that the true reason for him to say that the defendant holds the interest in the Property for him was because he (the plaintiff) was the one who paid for it, and that Mother gave evidence to the same effect.  Neither of them suggested that the plaintiff was entitled to recover the defendant’s interest in the Property by reference to any specific arrangement between them.

57.  It is true that when it was put to the plaintiff in cross‑examination that in his conception, he could get back at any time any property that he had given to his children, he agreed.  When it was suggested to him that the reason was because the construction or acquisition of the properties was funded by him, he also agreed.[11] The judge noted that this may suggest that the plaintiff might not have a clear distinction in his mind between an outright gift and a property held on his behalf even though it was transferred to another person.[12]  There is nothing to suggest that the judge ignored this when he came to make his findings.  These answers in cross-examination do not in our view weigh against the Agreement alleged by the plaintiff.  For the plaintiff, a non‑lawyer, to think that he could recover the defendant’s title in the Property because he funded its purchase, is not evidence against the existence of the Agreement and indeed may well have been the very basis of the Agreement.  The plaintiff did not say the source of funds would be the only reason or basis why he was entitled to recover properties held in the children’s names.  In relation to the Property, the plaintiff’s and Mother’s evidence, both in chief and in cross-examination, gave support to the Agreement.  The judge noted:[13]

“ … the Plaintiff maintained firm in cross-examination that he told Wilson that the Property was purchased as the retirement home for him and his wife. Due to the bank’s refusal to grant a mortgage for the purchase, Wilson’s name would be included for the purchase as it was required by the bank. The Property was not gifted to Wilson. It was held by him on behalf of the Plaintiff. The Plaintiff thought that he could at any time ask Wilson to transfer the Property back to him.”

Mother, on whose evidence the judge had no reservation, gave evidence to the same effect.[14]

58.  Secondly, the defendant says there were unsatisfactory features in the plaintiff’s evidence on how the Agreement was formed, namely: (a) it was said in oral evidence at trial for the first time that Mother was present at the discussion; (b) the plaintiff’s oral evidence of the words actually said differed from his pleading; (c) the plaintiff could not remember where the Agreement was formed; (d) the plaintiff said he did not know if the proposed trust arrangement would work and decided to “give it a try”; and (e) it was inherently improbable that the plaintiff did not recover the defendant’s legal title after the mortgage was discharged, if he had wanted to pass the Property to Mother by his will as he alleged.

59.  It cannot be said that the judge failed to discuss or take account of these matters.  The judge himself pointed out that he found the plaintiff’s evidence regarding the Agreement unsatisfactory in four respects:

“ (a) such evidence is not entirely consistent with his pleading; (b) when he was asked how he told his son to hold the Property on trust for him, he started the answer with “I can’t remember …”; (c) there was no mention in his witness statements of the presence of his wife; and (d) his evidence did not come out in a simple answer.”[15]

60.  The judge, however, noted that that part of the cross‑examination took place in the afternoon when the plaintiff was visibly tired with the large number of questions over details of events which took place many years ago.  The plaintiff was confused over the concept of “trust” which was used in some of the questions.  The judge also thought it was understandable that the plaintiff had difficulty recalling the details, given that the discussion took place 26 years before.[16]

61.  Mr To argues that the judge gave too much allowance to the plaintiff.  He submits that there is no evidence to suggest that the plaintiff was not a fit elderly man, that there were questions asked based not on “trust” but on the concept of “holding on behalf of” (代持) with which the plaintiff was conversant.

62.  With respect, none of these arguments shows that the judge was plainly wrong in accepting the crucial part of the plaintiff’s evidence.  The judge, presiding at the trial, was best placed to assess the difficulties faced by a witness and to decide the impact of those difficulties on the credibility and reliability of his evidence.  Questions such as these are par excellence matters for the trial judge in respect of which the appellate court’s disadvantage is most pronounced. 

63.  Moreover, the judge needs to take a view at the end based not only on the plaintiff’s oral evidence but on the totality of the evidence, which includes the defendant’s evidence and Mother’s evidence.  The judge rejected the defendant’s evidence but he was impressed by Mother as a witness.  In respect of the parts of the plaintiff’s evidence criticised by the defendant above, Mother confirmed that she was present at the discussion; her account of what was said was consistent with the plaintiff’s pleading;[17] and she recalled that the discussion took place at home.  Mother, like the plaintiff, did not understand the question when asked whether the “trust” arrangement would work.[18]

The defendant’s third contention

64.  Lastly, the defendant submits that the analysis section of the Judgment does not contain any analysis of the four aspects of evidence which the defendant considers to be crucial, as mentioned above, namely: (a) how the Agreement was formed; (b) the basis for the plaintiff’s belief that he could recover the defendant’s interest in the Property; (c) the admissions made by the plaintiff and Wallace at the Meetings; and (d) the plaintiff’s ongoing gifts to the defendant over a course of 17 years.  It does not inform the parties how the court dealt with the hotly disputed factual matters and how it reached the conclusion that “the inherent probabilities are plainly in favour of the Plaintiff’s case”.  The reasons given are inadequate.

65.  In our view, the defendant’s argument is unsound.  First, it focuses too narrowly on the section of the Judgment headed “Analysis”.  As is evident from the Judgment itself, the judge’s reasoning and analysis are not contained exclusively in that section, but also in the earlier parts, especially the section headed “Credibility of the witnesses”.[19]  In particular, the judge highlighted there the reservations he had with regard to certain aspects of the plaintiff’s evidence, including the plaintiff’s confusion between an outright gift and property held on his behalf.  The judge pointed out that the plaintiff remained firm in the core part of his evidence (see §57 above) and also made known that the court was impressed by Mother’s evidence.

66.  In the “Analysis” section, the judge referred to the undisputed fact that the plaintiff, at 52 in 1994, together with his wife, aged 45, were looking at many years ahead of them.  The judge did not think it likely that a person in the plaintiff’s position would be thinking about the distribution of his assets when he passed away.  The judge inferred the plaintiff was looking forward to a leisurely retirement for many years to come and was looking for a retirement home for themselves when the children gradually left and set up families of their own.  The defendant admitted that the plaintiff told him about obtaining a mortgage.  The judge considered it inherently probable, given the plaintiff was about to retire, that the bank required him to procure one of his children to be a co-owner and a co‑mortgagor. The judge was entitled to think that this supported the plaintiff’s case that the defendant’s name was added in the purchase of the Property because of the bank’s requirement and that the defendant was so informed.

67.  As explained above, the judge did deal with the cash payments to the defendant between 1999 and 2009 and gave a perfectly valid reason for not placing weight on them.  The judge also dealt with the transcript of the Meetings and explained why he did not find it to be of real assistance (see above).

68.  We do not consider the Judge’s reasons were inadequate as alleged.  It is not necessary for a judgment to deal with each and every point taken by the parties: Welltus Ltd v Fornton Knitting Co Ltd [2013] 5 HKC 106, §§22-25.  It will be apparent from the discussions above that the judge had covered the main points traversed before him.  It seems to us that the reasons given did inform the parties of the basis on which the Judge reached the conclusions he did in the context of the issues at hand.

Respondent’s notice

69.  There is no appeal by the defendant against the rejection of his evidence.  Even if the plaintiff’s case of an express agreement that the defendant would hold his interest in the Property on trust for him was rejected, the defendant’s case of a common intention of gift would not thereby be resurrected.  There would simply be no finding of any express agreement or mutual understanding.  Leaving aside the question of inferred or imputed common intention (because the plaintiff did not plead one), there would still be the presumption of resulting trust arising from the undisputed fact that the plaintiff provided all the funding for the purchase of the Property and the repayment of the mortgage loan.

70.  It is common ground that a mortgage loan was obtained, and the defendant admitted the plaintiff told him about obtaining a mortgage.  The judge found it inherently probable that the bank would have required the addition of one of the plaintiff’s children as a mortgagor.  Both the plaintiff and Mother were very firm and clear in their evidence that because of his impending retirement, the bank refused to grant a mortgage to the plaintiff unless one of the children was included as a purchaser, and that was the reason why the defendant’s name was added as a joint tenant.  This would in our opinion have been sufficient to rebut any presumption of advancement in favour of the defendant, which would be a rather weak presumption given that the defendant was a working adult at the time: Suen Shu Tai v Tam Fung Tai [2014] 4 HKLRD 436, §§10.17-10.19.

Conclusion

71.  For the above reasons, the defendant’s appeal is dismissed.  There will be an order nisi that the plaintiff is to have his costs of the appeal, to be taxed if not agreed, with a certificate for two counsel.

72.  We should mention that despite that the CCTV recording and the transcript of the Meetings were obviously available to the defendant before the exchange of witness statements, they were not disclosed in the defendant’s list of documents filed on 10 October 2018 and only disclosed on 22 February 2019, the day after witness statements were exchanged.  The defendant’s solicitors’ response to our enquiry has since revealed that they were aware in mid-2018 of the existence of the recording and the fact that the defendant had procured transcript to be prepared, and had received from the defendant a full copy of the draft transcript by 14 August 2018.  It is said that revisions were made to the draft transcript in the next few months up until 21 February 2019, but even assuming the transcript was not finalised, there was no apparent reason for not disclosing the recording to the plaintiff earlier.  It is the duty of solicitors, as officers of the court, carefully to go through their client’s discovery to make sure there are no omissions: Guess? Inc & others v Lee Seck Mon & others [1989] 1 HKLR 399, 404E; Re Step By Step Ltd & others (HCMP 838/2007, 20 February 2009) at §91.  We are left in serious doubt whether that duty was discharged by the defendant’s solicitors in this case.  Solicitors should beware that dereliction of this duty is both a matter of professional conduct and a matter that can be visited with costs sanctions.