CHEN LILY v. YIP TSUN WAH ALVAN

HCA 1695/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1695 OF 2013

____________

_______________

J U D G M E N T
_______________

1. This is an application by ex-lovers for a declaration as to their rights in a property held in joint names.

Undisputed facts

2. The Plaintiff (“Ms Chen”) and the Defendant (“Mr Yip”) had been lovers since late 2006.  They are the registered joint owners of the subject property at the Metropolis Residence (“Property”).

3. The purchase price of the Property was $3,400,000.  Mr Yip paid a total of $170,000 for the deposits, which amounted to 5% of the purchase price.  He also paid $33,500 commission to the estate agent.

4. The balance of the purchase price in the sum of $3.23 million was borrowed and one loan was rolled over by another:

(i) A short term interest-free loan in the sum of $400,000 from Madam Shiu Suet Kam (“Madam Shiu”), Ms. Chen’s mother, on 7 August 2007; it was paid off by the UA Loan below;

(ii) A loan in the sum of $3,168,630 by mortgaging the Property with GE Capital (HK) Ltd on 10 August 2007 (“GE Mortgage”); this was later taken over by a loan from Primecredit Limited on 29 June 2010 (“Primecredit Mortgage”);

(iii) A loan in the sum of $400,000 by mortgaging Ms Chen’s personal property in the same building with United Asia Finance Ltd on 15 August 2007 (“UA Loan”);

(iv) A loan in the sum of $260,000 from Public Bank (HK) Ltd in August 2007 (“PUB Loan”);

(v) A loan in the sum of $514,715 by secured by a 2^nd mortgage of the Property with Hitachi Capital (HK) Ltd on 24 April 2008 (“Hitachi Mortgage”);  this loan was used to settle the UA Loan ($378,770), and Mr Yip’s credit card debts of HSBC and Hang Seng ($47,592 and $88,353);

(vi) A loan in the sum of $700,000 secured by a 2^nd mortgage of the Property with SHK Finance Ltd on 10 January 2011 (“SHK Mortgage”); this was used to replace the Hitachi Mortgage and the balance of $261,863 was given to Ms Chen for her to settle her credit card debts;

(vii) The Primecredit Mortgage was subsequently taken over by the Bank of East Asia (“BEA”).

5. In simple terms, 95% of the Property price was effectively funded by a 1^st mortgage for a term of 30 years and a 2^nd mortgage. The monthly repayments for both were about $27,000 in total (collectively “the mortgage repayments”).

6. There is no dispute that the parties had intended, at the time of purchase, to use the Property as their matrimonial home.  It was agreed that Mr Yip would be solely responsible for the costs of acquiring and maintaining the Property and the living expenses of the couple (“Mr Yip’s promise”).

7. Since completion of the Property in August 2007, the parties have cohabited thereat for 4 years until 1 June 2011 when they separated. 

8. There is no dispute that at all times during their cohabitation, Mr Yip’s income (as proved by his tax returns and employment letters) was on average $50,000 per month, and Ms Chen about $20,000.  Mr Yip gave Ms Chen all his salary.  Ms Chen had been in charge of the finance of Mr Yip.

9. Mr Yip moved out on 1 June 2011.  Since then, the Property has been in the possession of Ms Chen.  Mr Yip’s offer on 22 July 2011 to bear half of the mortgage repayments was rejected by Ms Chen.  His suggestion, through his solicitors, on 6 March 2014, that the Property be leased out was also rejected by Ms Chen.

10. The writ was issued by Ms Chen on 6 September 2013. 

Parties’ cases

11. The core issue was the extent to which each party contributed towards the mortgage repayments.  Ms Chen claims not to have any idea of Mr Yip’s true financial situation and simply trusted him.  He gave her money on the express instructions that his credit card debts be settled first (“Mr Yip’s Instructions”) because of their high interest and that he, as a banker, had to maintain good financial records.  Ms Chen complied and used the balance of the money to settle her credit card debts, which represented their joint living expenses. As the money from Mr Yip was not enough, she used her personal resources and borrowings from her mother and friends to make the mortgage repayments. 

12. Mr Yip, on the other hand, claims that he had paid for the mortgage and loans until he moved out.  He also claims that Ms Chen had access to his bank accounts using his ATM cards.

13. The current value of the Property is about $7.56m.  After deducting the first and second mortgages, the net worth is about $4.6m.

14. Ms Chen proposes that Mr Yip be given a 5% share in the Property whereas Mr Yip seeks 60%.

Credibility

15. As will be seen from the analyses below, Ms Chen is not a credible witness.  By way of examples:

(a) She tries to embellish her case by asserting, for the first time in the witness box, that Mr Yip had told her from time to time that the Property would be transferred to her sole name.  (See paragraphs 25-26 below.)

(b) She changes her evidence as to residence at the Property. (See paragraph 65 below.)

(c) Her assertion that Mr Yip deserted her until March 2013 was starkly contradicted by contemporaneous documents. (See paragraph 60(c) below.)

There are other examples.  Unless otherwise specified, I do not believe her.

16. Mr Yip is not an entirely credible witness either.  In answering questions under cross-examination and those from the court, he tends to give lengthy unfocussed answers that do not really answer the questions, for example, when he was asked about Ms Chen’s withdrawals using his ATM cards (paragraph 33 below).  However, overall, his case was consistent with the undisputed facts.  I prefer his evidence to that of Ms Chen.  Unless otherwise specified,  I accept his evidence.

Approach of the court

17. Firstly, the pleaded case should be borne in mind.  It is Ms Chen’s pleaded case that:

A. Mr Yip has failed and/or refused to make further contribution (apart from those in paragraph 3 above) for the acquisition of the Property, and Ms Chen had to make the monthly mortgage repayments out of her own resources; Ms Chen relies on the principles of equity and/or resulting trust (§§5(f) & 6 soc);

B. The mutual intention as to joint tenancy in law and in equity had changed by reason of the parties’ conduct (§3(d) reply);

C. Mr Yip has abandoned the Property (§5(g) reply).

18. Secondly, the court will first ascertain the true intention of the parties as to beneficial ownership and the share of it.  Where a property is held in joint names, the starting point is that equity follows the law and so beneficial interest follows the legal title.  All the more so when there was an agreement of the parties as to ownership.

19. In Jones v Kernott [2012] 1 AC 776, Lord Kerr states:-

“68 The following appear to be the areas of agreement. (i) In joint names’ cases, the starting point is that equity follows the law. One begins the search for the proper allocation of shares in the property with the presumption that the parties are joint tenants and are thus entitled to equal shares. (ii) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home or (b) that they later formed the common intention that their respective shares would change. (iii) The common intention, if it can be inferred, is to be deduced objectively from the parties’ conduct. (iv) Where the intention as to the division of the property cannot be inferred, each is entitled to that share which the court considers fair. In considering the question of what is fair the court should have regard to the whole course of dealing between the parties.”

20. Thirdly, the burden of proof rests on Ms Chen to demonstrate that the parties intended their beneficial interests to be different from their legal interests and in what way. This is an onerous burden.  In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual: Stack v Dowden [2007] 2 AC 432 at §§68-70.  Lady Hale explains the situation thus:

“68. The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual. … It cannot be the case that all the hundreds of thousands, if not millions, of transfers into joint names using the old forms are vulnerable to challenge in the courts simply because it is likely that the owners contributed unequally to their purchase. (Emphasis added)

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. (Emphasis added)

70. This is not, of course, an exhaustive list. There may also be reason to conclude that, whatever the parties' intentions at the outset, these have now changed. An example might be where one party has financed (or constructed himself) an extension or substantial improvement to the property, so that what they have now is significantly different from what they had then.”

21. Fourthly, the court should avoid using “the balance sheet approach” in determining the contribution of each party: Stack v Dowden, Lord Walker:

“33.  In the ordinary domestic case where there are joint legal owners there will be a heavy burden in establishing to the court's satisfaction that an intention to keep a sort of balance-sheet of contributions actually existed, or should be inferred, or imputed to the parties. The presumption will be that equity follows the law. In such cases the court should not readily embark on the sort of detailed examination of the parties' relationship and finances that was attempted (with limited success) in this case. I agree with Lady Hale that this is, on its facts, an exceptional case.”

The pleaded case

22. The statement of claim did not plead any change in common intention (§68(b) of Jones v Kernott) or “unusal facts” (§68 Stack v Dowden).  Ms Chen’s case rested solely on her money contribution and that is confirmed by Mr Yau in closing submission.  As a matter of law, Ms Chen must fail in seeking anything beyond a 50% share.

23. It was only in her reply that Ms Chen first mentioned a change in the parties’ intention, clearly an after-thought.  Even so, the evidence shows only a change in the sense that Ms Chen, who was not expected to contribute to the mortgage repayments or living expenses, had to contribute.  There was no suggestion that it was commonly intended that it should bring about a change over the beneficial ownership.

24. Similarly, when Mr Yip proposed, in less than 2 months after the separation, to bear $14,000 (half) of the mortgage repayments, that only indicated an intention to change the financial responsibility over the mortgage repayments but not the beneficial ownership.

25. In her oral evidence, Ms Chen asserts, for the first time, that Mr Yip had said time and again that he would transfer the full title to her (“Mr Yip’s suggestion”) but she asked that be done later.  This piece of evidence, if at all true, would have been the clearest evidence as to change of intention or abandonment of Mr Yip’s rights in the Property. 

26. However, Mr Yip’s suggestion was never mentioned in any of Ms Chen’s pleadings, witness statements, affirmation, solicitors’ correspondence and even in her meeting with Mr Yip when he demanded for a share in the Property.  She gave no particulars as to when and under what circumstances Mr Yip’s suggestion was made. She could not explain why it was not implemented. Mr Yip’s suggestion was also inconsistent with a message during the cohabitation.  In that message, Mr Yip told Ms Chen about a rise in property price and that “we have 6.51 million now”, to which  Ms Chen agreed. I find that Mr Yip had never made the alleged suggestion.  It was Ms Chen’s recent fabrication.

27. I find no evidence pointing to a change of intention as pleaded by Ms Chen.  This is enough to decide the question of beneficial ownership, namely 50:50.

28. If I am wrong in this finding, I have proceeded to analyse the rest of the matters occurring in the period of cohabitation.

Alleged failure of Mr Yip to contribute to mortgage repayments and conduct of the parties

29. Ms Chen’s case is that right from the word “go”, Mr Yip had defaulted in the mortgage repayments and from then on the common intention had changed. However, the evidence shows a different picture.

30. Firstly, Counsel have helpfully produced a table setting out the payments that Ms Chen had received from Mr Yip and their respective purposes as identified by Ms Chen (“the Table”).  The contents of the Table are agreed except for the purpose as purportedly put forth by Ms Chen. 

31. The Table shows that Mr Yip had paid Ms Chen a total of $1.7 million for 3 ½ years from January 2008 to July 2011.  Contrary to Ms Chen’s assertion that Mr Yip had only paid her $40,000 for some months, the Table shows an average of $40,000 per month for this period.  For 2009, although the monthly payments were not steady, there had been lump sum payments of well over $40,000 in some months.

32. Over the same period, a total of $1.44 million had been expended in respect of mortgage repayments and loans related to the Property.  All the credit card debts for the parties’ joint living expenses (as alleged by Ms Chen) as set out in column 6 of the Table added up to about $1m.  The “deficit” was about $700,000.  It cannot be said that Mr Yip had not made any mortgage repayments.

33. Secondly, there is an issue as to whether or not Mr Yip had given Ms Chen access to his accounts.  In this respect,

(a) Mr Yip has produced emails showing that he had given her the passwords for his bank accounts.  However, when cross-examined as to the Table and his BEA account , he could not explain certain anomalies.  In eg items 68 and 69 of the Table, it was stated that $47,000 and $32,000 respectively had been withdrawn from the BEA account and paid to Ms Chen for November and December 2009.  He also claims that most of the ATM withdrawals from that account were made by Ms Chen although some were made by him in Ms Chen’s presence.  He could not give any explanation to the court’s question as to why there were many other withdrawals of $4,000 on eg PTR/342 and 343 and yet he only attributed the sum of $20,000 as being paid to Ms Chen for each of the months of November and December 2009. 

(b) On 20 October 2009, Mr Yip’s BEA account received a sum of $619,520 (about US$80,000).  There is no dispute that he had drawn 2 cheques for a total of $179,819.05 in favour of Ms Chen.  After that, there was still a 5-digit or 6-digit balance between November 2009 and early April 2010.  It is inconceivable that, if Ms Chen did have his ATM card, she would not have withdrawn that balance to meet some of the high interest credit card debts that she owed then.

34. Mr Yip may have at some stage given the passwords of his ATM cards to Ms Chen.  However, I am not satisfied that Ms Chen had withdrawn money with his ATM cards.  The parties are bound by the information in the Table, which was in turn based on a table prepared by Mr Yip himself.  Accordingly the money contributions of Mr Yip should be treated as being exhaustively set out in the Table, and I so find.

35. Thirdly, as to expenses, apart from mortgage repayments, there were credit card debts incurred by Mr Yip before commencement of the cohabitation and the parties’ respective credit card debts representing their joint expenses. 

36. Whilst Ms Chen admits that Mr Yip had given her his full salary each month, she asserts further that Mr Yip had from time to time asked her for money for his personal expenses or debts due to his friends.  Debts due to his friends were only first mentioned by her in the witness box and there were no particulars.  I disregard that aspect of her evidence.

37. On Ms Chen’s own case, her credit card debts were joint living expenses and Mr Yip does not really dispute that.  Ms Chen asserts that Mr Yip had not used his credit cards at all during the cohabitation but relied on Ms Chen’s. If that was the situation, her credit card debts had at least partly been settled by Mr Yip’s monies as shown in the Table.

38. Fourthly, Ms Chen was in full control of their finance.  The clear picture was that Mr Yip had no idea of the total expenses of the household.  He had trusted Ms  Chen to deal with them.  He paid her in 3 forms: cheques to her, cash cheques and cash. 

39. Ms Chen could decide where to deposit the money that he gave her.  She had 2 relevant bank accounts:

(a) A Standard Chartered Bank account (“SCB account”) which was used for the mortgage repayments;

(b) A Hang Seng Bank account (“HS account”) in the joint names of Ms Chen and her mother, and either of them could operate it.  This account was linked to PPS, which Ms Chen used to repay credit card debts and tax of Mr Yip and herself.

40. How Ms Chen used her accounts told a lot about her intentions.  The monies which she received from Mr Yip were all deposited into the SCB account (except for 2 cheques[1]). Her own earnings (apart from 2 cheques[2]) were deposited into her HS account.  She said she used to give all her salary cheques to her mother and she did not know why her mother chose to put her salary into the HS account.

41. She claims to have cross transfers of her own money from the HS account into the SCB account for the mortgage repayments but was reimbursed by Mr Yip’s money transferred from the SCB account into her HS account.

42. That arrangement was artificial and absurd.  Since she had full control of her accounts and in vew of Mr Yip’s instructions, why didn’t she reverse the deposits into the 2 accounts in the first place?  Her explanation was that SCB was near to her office and that was why she deposited Mr Yip’s money in the SCB account.  That begged the question why she chose to put her own earnings into the HS account and not the nearer SCB account.

43. Worse still, Ms Chen’s version is contradicted by documentary evidence. For February and April 2008 respectively.  Mr Yip’s cheque in the sum of $40,000 was deposited into the SCB account each month and was directly applied to repay the GE Mortgage, UA Loan and PUB loan by autopay.  In both months, there was no withdrawal of the $40,000 or any deposit by Ms Chen from her own source before those repayments were made. 

44. Fifthly, there was an issue as to whether or not Mr Yip’s Instructions were ever given.  Mr Yip’s Instructions never appeared in Ms Chen’s witness statements or affirmation.  However, it was pointedly clear from the PPS table that she had managed to clear the credit card debts of Mr Yip in the sum of about $135,000 at an early stage.  When the parties obtained the Hitachi Mortgage, they applied part of it to clear credit card debts of Mr Yip in the amount of about $135,000.  By the time of separation, Mr Yip no longer had credit card debts but Ms Chen had over $100,000 (which Mr Yip admits).  I find on balance of probabilities that Mr Yip’s Instructions had existed.

45. Sixthly, it was quite clear that Mr Yip’s money was not enough to meet the mortgage repayments and credit card debts of both parties.  However, it must have been clear to Ms Chen right from the start.  As shown in §24 of her 1^st witness statement, Ms Chen said that Mr Yip had told her that his salary was about $40,000 in July 2007.  Just the mortgage repayments had amounted to about $27,000 per month.  She was told that more money would come in.  It did come in eg when Mr Yip received $619,520 in November 2009.

46. I accept, however, that Ms Chen had used her own resources for those expenses.  Although she claims it was to the extent of $30,000 to $40,000 per month, there was no documentary proof.

47. Apparently, Ms Chen was “reinterpreting the past in self-exculpatory or vengeful terms”: Stack v Dowden, at §68.  I find that Mr Yip had made substantial financial contributions during the cohabitation yet Ms Chen is seeking to down play it.  Subject to compliance with Mr Yip’s Instructions, she in fact had full control over his monies.

48. In his closing submission, Mr Yau even puts forth a set of calculations showing that Ms Chen had expended about $1.99m (being all her salary, bonus, long service pay, investment income and her mother’s loans).  There was no documentary evidence to enable this court to find the amount lent by the mother and Ms Chen’s friends. But even taking at the highest, the figure of $1.99m cannot undermine the fact that Mr Yip had contributed $1.9m.  The parties would have contributed equally.

49. With respect, Mr Yau’s approach is more appropriate for an accounting exercise between business partners or contracting parties.  It is contrary to the principle of avoiding the “balance sheet approach”. 

50. Further, Mr Yau’s approach is not even supported by Ms Chen’s own evidence.  The credit card expenses were for joint living expenses.  There was no evidence that Ms Chen and Mr Yip had intended each party to bear the interests for her/his own credit card debts.

51. Even if one were to take a balance sheet approach, it can be seen that Mr Yip had paid $1,903,500 (ie $170,000 + $1,700,000 + $33,500).  The total payments out were $2,803,500 made up of:

Downpayment & agency fees	$170,000
Agency commission	$33,500
Mortgage repayments	$1,440,000
Credit card debts before cohabitation paid off by the Hitachi loan	$130,000
Mr Yip’s credit card debts settled through Ms Chen’s PPS	$130,000
Joint living expenses paid through Ms Chen’s credit cards and then PPS	$800,000
Credit card expenses under Ms Chen’s name on separation	$100,000+

Even on such figures, Mr Yip had contributed to about 68% of all the expenses over the years.

52. No doubt Ms Chen had been promised 50% beneficial ownership in the Property for free but eventually had to exhaust her own resources.  However, in a matrimonial or family context, financial contributions of the joint owners may vary over the period of their relationship due to temporary inability (eg loss of job or personal accident) or ability (eg a spouse re-joining the workforce or receiving a bonus).  One spouse/cohabitee may support the other who is temporarily in financial difficulty.  It is not something so unusual as would call for re-distribution of the beneficial ownership of a property.  This is especially so where there is no allegation of bad conduct of Mr Yip (eg gambling or womanising) which depleted his wealth.  Resulting trust is inapplicable in the context of this case where there had been no change to the common intention.

53. In his closing submission, Mr Yau commented on Mr Yip’s conduct, such as over-estimation of his ability to make the mortgage repayments; his neglect of his spending habit and credit card debts when assessing his own ability to service the mortgage, lack of commitment in the purchase of the Property as he paid only 5%; telling Ms Chen that there would be more money coming in when he knew it was not true; knowing from the start that his promise would be breached, etc. 

54. These were at worst his error in judgments which do not affect my view of the case.  He had explained how he thought, with his salary and bonus, he would have been able to meet the mortgage repayments and other expenses.  I do not think Mr Yip made the promise with intention to mislead Ms Chen or without intention to honour it.  From the Table it could be seen that he had at times given Ms Chen well over $40,000, sometimes up to 6-digit figures when he had the ability to do so.  He also pre-paid the PUB loan on her instructions when he received the $621,000.

55. The parties were living as man and wife.  Whether his provision of living expenses was sufficient depended, as Mr Yip says, on the standard of living. Mr Yip may not have entirely lived up to his promise but he clearly had made substantial financial contributions for the benefit of both parties even if the $130,000 pre-cohabitation credit card debts were his sole responsibility. 

56. I reject Ms Chen’s case that Mr Yip had failed to make further contribution for the acquisition of the Property but I accept that she had contributed her own resources towards the mortgage repayments and credit card debts.

Change of mutual intention as to joint tenancy by reason of the parties’ conduct

57. The pleaded conduct was (i) failure to make contribution towards mortgage repayments, (ii) moving out of the Property, (iii) leaving the Plaintiff to assume sole responsibility over the mortgage repayments, outgoings and maintenance of the Property.

58. I have found against Ms Chen with regard to (i).  With regard to (ii) and (iii), it was a clear act on the part of Mr Yip to sever the joint tenancy when he offered to pay only half of the mortgage after moving out. 

Mr Yip’s abandonment of the Property

59. Given the property price in Hong Kong, it is hardly believable that a property owner who had contributed substantially to the deposit and mortgage would have abandoned it. 

60. For the following additional reasons, I reject Ms Chen’s plea of abandonment:

(a) One month after he left Ms Chen, Mr Yip offered to pay half of the mortgage repayments in the sum of $14,000 per month.  He clearly recognized a right and responsibility in the Property.  He only paid $14,000 once because Ms Chen said she would be angry if he continued to do so.  Given his intention to rekindle affection, that might have been the reason (though unwise) for his stopping the payment.

(b) Mr Yip nevertheless wrote to the mortgagees to explore the possibility of paying half of the mortgage repayments but that was refused by the mortgagees.

(c) Ms Chen’s pleadings were inconsistent.  In the statement of claim, she pleaded that Mr Yip deserted her, leaving no means of contact and reappeared only in March 2013 demanding for a share in the Property.  Yet in the reply, she pleaded that Mr Yip had tried to rekindle affection on her.  The plea of desertion was contradcited by contemporaneous emails and text messages from Mr Yip and the fact that they had met after the separation.  Ms Chen simply made up a case of abandonment. 

(d) On Ms Chen’s evidence under cross-examination, she explained that she did not sell the Property as she wanted to maintain the relationship.  When pressed by the court as to what relationship she wanted to maintain, she changed her evidence to say that she wanted to maintain the Property.  She also said that she was still expecting Mr Yip to return until about 2 months after the separation.

(e) Even on Ms Chen’s case, Mr Yip first demanded for his share of the Property in less than 2 years after the separation.  Any “inaction” by Mr Yip in the interval could not have amounted to abandonment of his interests.

(f) Ms Chen herself did not regard Mr Yip as having abandoned the Property.  To the contrary, in her statement of claim, she stated that Mr Yip should have a 5% share based on the $170,000 that he had paid for the Property.  It was only in the witness box that she said that he was not entitled to anything and that it was in recognition of their past friendship that she suggested giving him 5%.

(g) I repeat paragraphs 25-26 on my findings as to Mr Yip’s suggestion of transferring the full title to Ms Chen.

61. In summary, since there had been no change of common intention and no unusual facts in this case.  Resulting trust is not applicable as it is not in accordance with the parties’ express or implied intention from their conduct. The proper beneficial ownership of the parties should, in principle, be 50:50.

Events after the separation

62. The joint tenancy should have been viewed as severed (paragraph 58 above) since about 1 June 2011.  Each of the parties would have been obliged to bear half of the mortgage repayments.

63. Ms Chen has been in possession of the Property for 4 years since the separation but Mr Yip had to rent his own accommodation.  It mattered not who initiated the separation.  When cohabitees break up, one of them has to look for alternative accommodation anyway.

64. Ms Chen bore all the mortgage repayments after the separation.  However, that was clearly because she rejected Mr Yip’s offer to pay half in the amount of $14,000 per month. 

65. Ms Chen also rejected his suggestion (on 6 March 2014) of leasing out the Property to reduce the mortgage repayments.  Leasing would not have caused her inconvenience as it transpired from her evidence (again mentioned for the first time in the witness box and inconsistent with her pleadings and witness statements) that she had not been living at the Property after she got married in 2013.  She was under the notion that as owner, she could deal with the Property according to her wish.  She has to bear the consequences of this wrong notion. 

66. Likewise, resulting trust is not applicable as it was not in accordance with the intention expressed through Mr Yip’s conduct.

67. On the other hand, Ms Chen had over $100,000 credit card debts at the time of separation, as acknowledged by Mr Yip.  They were for joint living expenses.

68. Both parties do not oppose a sale and the court has power to order a sale pursuant to Order 31, Rules of the High Court.

69. After separation, Ms Chen has been paying all mortgage repayments for the period from June 2011 to November 2015.  Such principal amounted to $731,425.69. The interest portion for the same period shall be treated as the costs of her occupation of the Property.

70. Mr Yip would have been liable for half of the principal anyway, ie $365,712.85.  He should also bear the outstanding credit card debts as at the time of separation in accordance with his promise at the time of purchase of the Property.  I round up the figure to $500,000 in total.

71. In other words, there shall be deducted from the gross proceeds of sale of the Property all the costs pertaining to the sale and conveyancing and incidental expenses.  The net proceeds shall be divided between the parties in the ratio of 50:50.  Mr Yip shall, out of his share, give $500,000 to Ms Chen.  On a broad calculation, based on the net sale value of $4.5m (after redemption of mortgage, expenses and conveyancing costs), Mr Yip shall get $1,750,000 (about 61%) and Ms Chen $2,750,000 (about 39%) of the net proceeds.

Findings

72. There was a common intention for the beneficial ownership to be 50:50.  Mr Yip never told Ms Chen that he would tranfer the full title to her.  I accept the contents of the Table.  I am not satifised that Ms Chen had withdrawn money from Mr Yip’s bank accounts using his ATM cards.  Ms Chen had full control of Mr Yip’s finance and could decide how to use his money.  Mr Yip’s Instructions had been given and Ms Chen had complied with them.  Ms Chen had used her own resources to contribute to part of the mortgage repayments and credit card debts.  Though Mr Yip has failed to fully live up to his promise of providing for the mortgage repayments and living expenses, he had made substantial financial contributions during the 4 years of cohabitation.  It was not as if he lacked the intention to honour his promise.  He had not abandoned the Property.  There was no evidence of a change in common intention or any unusual facts to justify a departure from the 50:50 ratio as to beneficial ownership.  After the separation, Ms Chen declined Mr Yip’s offer to bear half of the mortgage repayments or to lease out the Property.  The principal portion of the mortgage repayments amounted to $731.425.69.  She should be entitled to recover half of the principal portion and credit card expenses outstanding at the time of separation from Mr Yip’s portion of the proceeds of sale of the Property.

Order

73. I order as follows:

(1) There be a declaration that the Property is beneficially owned by the plaintiff and defendant in the respective shares of 50% to 50%;

(2) There be a sale of the Property at open market value;

(3) The defendant shall have charge of the sale;

(4) Both parties shall be at liberty to bid at an auction for the sale of the Property or offer to purchase it in a private sale;

(5) The balance of the sale price of the Property (ie proceeds of sale less mortgage, commission for estate agent, conveyancing costs and incidental expenses) shall be distributed between the parties in the ratio of 50:50.

(6) The plaintiff shall recover from the defendant’s portion of the net proceeds of sale the sum of $500,000;

(7) There be stay of the sale for 42 days pending the parties’ discussion as to one of them buying out the other’s share;

(8) Liberty to apply to implement the terms of this order.

74. It appears that the defendant is the true winner in this case as I have rejected the plaintiff’s pleaded case.  On a nisi basis, costs of the action and any costs reserved shall be paid by the plaintiff.  There shall be summary assessment of costs on the papers on 13 January 2016, without the need for attendance.  The defendant shall file and serve a costs statement by 28 December 2015.  The plaintiff shall file and serve her grounds in opposition within 14 days thereafter.

75. I thank counsel for their assistance.