LAM FUNG CHING ANNIE v. TSE KWOK WING JACKY AND ANOTHER

DCMP 1129/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1129 OF 2012

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JUDGMENT

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Introduction

1. This dispute concerns a property known as Flat B, 41^st Floor, Block 6, Libertè, No 833 Lai Chi Kok Road, Kowloon, Hong Kong (“Property”).

2. The Property was purchased at a consideration of HK$3,280,000 in 2004 and was registered in the name of the plaintiff (“Madam Lam”), the 1^st defendant (“Mr Tse”) and the 2^nd defendant (“Madam Tse”), (collectively referred as the “Parties”) as joint tenants.  Madam Lam is the ex-girl friend of Mr Tse (collectively referred as the “Couples”).  Mr Tse is the younger brother of Madam Tse (collectively referred as the “Siblings”). 

3. By Originating Summons issued on 11 May 2012, Madam Lam seeks an order for sale of the Property under section 6 of the Partition Ordinance (Cap 352) (“Ordinance”) with the net sale proceeds after paying off the mortgage loan and ancillary charges to be divided equally among the Parties.

4. By Order dated 14 November 2012, His Honour Judge Chow ordered these proceedings to be continued as if they had been commenced by writ and the affirmations already filed by the Parties were treated as pleadings.  Subsequently, witness statements were exchanged between the Parties.

5. Madam Lam’s claim is premised on her beneficial interest in the Property follows the legal title.  She and Mr Tse each owns one-third of the beneficial interest in the Property while Madam Tse holds the remaining one-third on trust for the father of the Siblings, Mr Tse Tin Sing (“Father”). The whole arrangement was intended by the Parties and the Father at the time of the acquisition of the Property. 

6. The Siblings deny Madam Lam having any beneficial interest in the Property.  They allege that the Father is the sole beneficial owner of it.  The Parties are mere trustees holding the Property on trust for him. 

7. There is no counterclaim in this case.

8. Neither of the parties intended to join the Father as a party to the present proceedings or to call him to give evidence at trial.  They agreed that Madam Tse is the trustee of the Father and there is no basis for the court to join the Father as a party to these proceedings under section 3(4) of the Ordinance in light of the implication of Order 15 rule 14 Rules of the District Court, Cap. 336H.  It is accepted by the Siblings, through Mr Ching, in effect that they shall be bound by the order to be made by this court which might affect any interest of the Father in the Property.

Background

9. In or about 1996, the Couples were around 18 or 19 years old.  They were classmates and became lovers.  They cohabited and occupied one room at the premises (“Old Premises”) owned by the Father where Madam Tse, her mother and the Father lived.  The Old Premises was in an old building without elevator.  The mother passed away because of illness in around July 1997.

10. Madam Lam graduated from university in around July 2000 and has been engaged in full time employment since then.  Mr Tse did not get into the university and started to be gainfully employed in late 2000.

11. In or about April 2004, the Father was aged 70.  He suffered from gout and was admitted to hospital.

12. The preliminary sale and purchase agreement of the Property was signed by the Parties as purchasers on or around 10 September 2004.  The formal sale and purchase agreement was signed by them as joint tenants on or around 23 September 2004.  The sale was completed on or around 20 October 2004. 

13. For the purchase of the Property, the Father paid HK$1,063,560 from his own savings for:-

(a) a sum of HK$80,000 for initial deposit;

(b) a sum of HK$248,000 for deposit;

(c) a sum of HK$73,210 for stamp duty and registration fees;

(d) a sum of HK$662,350 for down payment of HK$656,000 and legal costs of HK$6,350

14. The balance of the purchase price of HK$2,296,000 (“Loan”) was funded by a 25-year mortgage.  The mortgage deed was signed between the Parties as mortgagors and Bank of China (Hong Kong) Limited (“BOC”) as mortgagee on 20 October 2004. 

15. Even though the Parties were named as the mortgagors, it was agreed between them that all the mortgage repayments would be paid by the Couples without any monetary contributions from Madam Tse or the Father.  Funds were drawn from the bank account (“Joint Account”) jointly held by the Couples at HSBC (which was opened on 31 May 2014) to the account of Madam Tse at BOC (“Madam Tse’s Account”) by cheque for settlement of the mortgage installments until April 2010.  Madam Tse assisted the Couples to arrange mortgage repayments by notifying them the exact amounts of the mortgage repayments to be paid into Madam Tse’ Account.  Occasionally she paid the mortgage installments in advance and was reimbursed by the Couples subsequently.

16. Since completion of the Property, the Parties and the Father had lived therein until April 2010 when Madam Lam moved out from the Property for her relationship with Mr Tse turned sour.  There was reconciliation and she returned to live with him again for a few days.  The relationship however could not work out.  She moved out in May 2010.  Since then, the Siblings and the Father have had the exclusive possession and use of the Property.

17. Madam Lam had paid for half of the mortgage repayments until she moved out.  Her contribution towards the mortgage repayment was HK$382,750 in total.  The total mortgage repayment up to 15^th April 2010 was HK$746,070.95. 

18. On 8 July 2011, Madam Lam sent an email (“Lam’s Email”) to Mr Tse asking for payment of her contribution to the mortgage repayment and one-third of the difference between the then current market value of the Property and the purchase price of the Property.  Her request was rejected by Mr Tse by an email (“Tse’s Email”) dated 9 July 2011.  The two emails have been the only direct communications between the Couples since May 2010.

19. On 8 December 2011, Madam Lam, through a letter of her solicitors (“Lam’s Letter”), requested to sell the Property with its net sale proceeds after paying off the mortgage repayment and any ancillary charges to be divided among the Parties in equal shares, i.e. one-third for each person.  The request was again rejected by the Siblings through their solicitors’ letter dated 12 January 2012 (“Tse’s Letter”).

20. On 11 May 2012, the present action was commenced.

21. On 8 March 2013, Madam Lam served a notice of severance of the joint tenancy of the Property on the Siblings pursuant to Section 8 of the Conveyancing and Property Ordinance, Cap 219 (“CPO”). The notice was registered with the Land Registry.

Plaintiff’s case

22. Madam Lam’s case is that the Property was purchased pursuant to the common intention and arrangement of the Parties and the Father that the Father was to pay the down payment of the Property and the ancillary charges while the balance of 70% of the purchase price was to be paid by the Couples jointly through mortgage repayments, the three of them were to contribute more or less the same amount for the purchase of the Property and were accordingly entitled to the beneficial interest of the Property jointly and in equal shares.

23. It is on the advice of the younger sister of the Father, Madam Tse Kam Ying (“Aunt”), Madam Tse was arranged to hold one-third of the interest in the Property on trust for the Father.  It was to avoid the trouble and formality of inheriting the interest of the Father in the Property on his death. 

24. Madam Lam has acted in accordance with their common intention and arrangement and is accordingly entitled to one-third of the interest in the Property.

25. Her cessation of mortgage repayment after 15 April 2010 was a result of her moving out from the Property leaving it for exclusive use and enjoyment of the Tse’s family without rental payment to her.  That said, she confirms that she is prepared to give credit to half of the mortgage loan repayments from 16 April 2010 and such amount should be deducted from her claim.

Defence case

26. The defence case is that the Property was purchased by the Father and is wholly belonged to him.  He has never intended Madam Lam or the Siblings to have any interest in it and she knew this.  She was registered as co-owner with the Siblings solely for the purpose of enabling finance to be raised from the bank, but not to confer any beneficial interest on her.  That was a reluctant arrangement by the Father for resolving the problem that he could not meet the requirement of mortgage application because of his advanced age and unemployment.  It was Madam Lam’s own proposal to join as a co-mortgagor to resolve the problem for him.

27. It is said that Madam Lam’s contribution to the mortgage repayments were rent she offered to pay in return of the money and the free accommodation she received from Mr Tse and his family for the past 8 years.  It is argued that being a mere trustee of the Father, Madam Lam has no interest in the Property and has no right to make an application under the Ordinance.

Issues to be determined

28. The Parties agreed that the issues to be determined in this case are:-

(a) what was the common intention of the parties in terms of the legal and beneficial interests of the Property at the time of its acquisition ?

(b) who were and are the beneficial owners of the Property ?

(c) what was the contribution made by Madam Lam, Mr Tse and the Father to acquire the Property ?

(d) does it appear to the Court that a partition of the Property would not be beneficial to all ?

(e) whether the Court should order a sale of the Property under the Ordinance should the Court rules in favour of Madam Lam.

(f) If so, the directions for the sale of the Property and the distribution of the net proceeds of sale thereof.

Intention of the Parties and the Father

29. This Court will first ascertain the true intention of the parties as to beneficial ownership and the share of it.  The Parties have no disagreement on the legal principles. 

30. In joint names’ cases, the starting point is that equity follows the law and so beneficial interest follows the legal title.  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.  The presumption can be displaced by showing that the parties had a different common intention at the time when they acquired the home or that they later formed the common intention that their respective shares would change.  The common intention, if can be inferred, is to be deducted objectively from the parties’ conduct.  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.

31. The burden of proof rests on any party seeking to establish that equity should not follow the law to demonstrate that the beneficial interests to be different from the legal interest and in what way.  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.  Mo Ying v Brillex Development Limited and Anor [2015] 2 HKLRD 985

Burden of Proof

32. The Parties spent some time on the argument on who carried the burden of proof in this case.  I am not impressed by Mr Ching’s argument that as the Father, being a beneficial owner of the Property but was not registered as a legal owner of it, Madam Lam bears the burden of proof.  In my view, the Property is a domestic property which was conveyed into Madam Lam as a joint owner for joint occupation without any written declaration of trust as required under section 5 of the CPO, who was and is responsible for mortgage repayments, her claim is premised on equity follows the law and so her beneficial interest follows the legal title.  I fail to see how and why she should carry the burden of proof.

33. That said, I take the view that even if Madam Lam carries the burden of proof, I am satisfied that she has succeeded in proving that she has one-third beneficial interest in the Property.  This judgment proceeds on the basis that the burden of proof is on Madam Lam.

Issue 1: the common intention at the time of the acquisition of the Property

34. Madam Lam’s case is that the Property was purchased for the purpose of providing a home with elevator service for the Father as well as improving their living standard in contemplation of her marriage with Mr Tse.  Although the Couples had yet taken any actual steps for marriage, they did explore the prospect of marriage and acquiring a matrimonial home.  The plan flowed from their stable incomes which would enable them to purchase a small flat with the aid of a mortgage loan of 90% of the purchase price.  The Father’s offer to fund the purchase with his one million savings after his discharge from the hospital had expedited their plan as well as allowed them to purchase a bigger property. 

35. The Parties and the Father had a discussion among them.  It was agreed that the Father would pay for the 30% down payment and the ancillary charges with the balance of 70% of the purchase price be borne by the Couples jointly through mortgage.  Madam Tse was to take care of the Father on a full-time basis without any financial contribution to the purchase price of the property.  It was their common understanding that the Father and the Couples who actually contributed to the purchase price directly or through mortgage repayment in more or less the same amount would take the interest of the Property in equal share.  She was therefore registered as one of the legal owners and mortgagors of the Property. 

36. The Siblings alleged that Mr Tse had intended to rent a flat with elevator service for the benefit of the Father after the Father’s discharge from the hospital.  The Father however decided to purchase a property for his personal investment with his life-long savings of around one million dollars.  To show filial piety to the Father, Mr Tse committed to pay for all other payments as mortgage repayments and Madam Tse would take care of the Father on a full-time basis.  Madam Lam knew this.  It was indeed her own proposal to join herself as a co-mortgagor with the Siblings and to pay rent to the Father through mortgage repayments in appreciation of the cash and free accommodation received from the Tse’s family for the past years.

37. It is averred that the Father intended the Siblings to inherit the Property on his death and accordingly arranged them to be the legal owners to hold it on trust for him. e HeHeHfund  His decision to allow Madam Lam register as a co-owner was a reluctant one solely to meet the requirement of mortgage application which he could not meet because of his old age and unemployment.  His reluctance was due to the fact that she was just a girl friend of his son and it was too risky to have a non-family member holding the legal title of his property. 

Reason for the Purchase and actual contribution

38. I will first deal with the reason for the purchase.  It is agreed fact that the purchase was to provide the Father with a home with elevator service.  The dispute rests on whether the purchase of the Property was intended by the Father to keep the full interest of it for his personal investment or by the Couples for matrimonial home. 

39. I find Madam Lam’s case much more convincing than the Siblings’ case.  First, looking into the matter in light of the financial means of the Parties, it is clear that neither the Father nor the Siblings were able to purchase the Property with their own financial resources. On evidence, the Father was only prepared and able to fund the purchase with his life-long savings (“畢生積蓄”) of around one million dollars.  He was retired.  There is no evidence to suggest that he was willing, ready or able to pay for any mortgage repayment.  Madam Tse had been unemployed for some time and it is her evidence that her savings were limited to several ten thousands only.  She decided to take care of the Father on a full time basis.  Mr Tse’s monthly salary was around HK$10,850 by that time. 

40. Given that the monthly mortgage repayment was HK$10,099.06 by then which would have exhausted Mr Tse’s salary leaving him with almost no living expenses, the Tse’s family in fact could not afford the Property and the Father should not have formed the decision to buy it for his own.  The allegation that the Property was wholly purchased by the Father and Mr Tse undertook to be liable to all payments other than down payment and ancillary charges cannot be true.

41. I reject Mr Ching’s argument in his closing submissions that the Tse’s family would afford the purchase as the Father had other landed properties and Madam Tse had savings ,for the simple reason of lack of evidence.  There was indeed no evidence to suggest that the Father had ever thought of or prepared to sell his landed properties for the purchase, still less of Madam Tse having any plan to fund the purchase with her own savings by that time.

42. Mr Tse’s denial of ever thinking of getting married with Madam Lam and that the Joint Account was not related to any plan for marriage or purchase of property is defeated by his own witness statement and affirmation whereby he said that the Joint Account was opened for saving money for marriage where the Couples deposited more or less the same amount of fund and agreed to have the mortgage repayments been paid out from it.

43. The Parties’ conducts support Madam Lam’s case.  The fact that the Joint Account was opened (on 31^st May 2004) prior to the discharge of the Father from hospital supports Madam Lam’s case that the Joint Account was opened in the contemplation of purchasing a matrimonial home with Mr Tse together.  Undoubtedly, the fact that the mortgage repayments were actually paid out from the Joint Account until Madam Lam’s departure, that she was registered as one of the three owners and mortgagors of the Property, that she actually contributed to half of the fund of the Joint Account, that in all her communication with Mr Tse or the solicitors for the Siblings, as Lam’s Email and Lam’s Letter, and throughout these proceedings, she consistently asked for, in effect, one-third of the value of the beneficial interest in the Property, all lend support to Madam Lam’s case. 

44. Further, Madam Lam’s case sits comfortably with the background facts.  The Couples had stable income at the time of the acquisition of the Property.  She earned a monthly salary of HK$18,000 while Mr Tse earned HK$10,850.  They had cohabited for 8 years and romantically involved.  It was consistent with the normal course of events that they would have considered marriage as well as the prospect of acquisition of a more comfortable property for their matrimonial home.

45. I believe that other than providing a home with elevator service for the Father, the Couples also intended to purchase the Property for their matrimonial home so as to improve the living standard of the whole family. I do not believe that the Father would have intended to purchase the whole Property solely for his personal investment.

Reasons for contributions to mortgage repayments

46. I do not believe that Madam Lam’s contributions to the mortgage repayments were rent given to the Father.  The allegation of rent payment runs counter to the background facts, the relationships and conducts of the Parties.  I am not convinced that in appreciation of some cash from her boy friend, 8-year free accommodation and some free meals from his family, a young lady in her mid-twenties would have offered to pay “rent” to the father of her boyfriend, let alone to commit herself to a 25-year mortgage liability of a loan of HK$2,296,000 plus interest as well as to pay half of the mortgage repayments.  In particular, half of the monthly mortgage repayment would take up approximately one-third of her salary.  The fact that she came from a family where her parents were separated and some of her siblings had some unpleasant experience could not justify such allegation. 

47. I also find it difficult to believe that the Father would have accepted her proposal to pay rent and to bear the mortgage liability.  She was not a stranger or an ordinary friend seeking shelter from the Tse’s family.  She was the cohabitee of Mr Tse.  They occupied one room and were romantically involved.  There was no evidence that anyone had ever thought of asking her for financial contributions or compensation to the costs of her cohabitation with Mr Tse before 2004.  Nor there any evidence that she had ever made such proposal for the 8 years prior to the purchase of the Property.  The alleged rent proposal was too much all of a sudden.

48. In my view, the Siblings’ case is self-contradictory.  On the one hand, it is said that the Father appreciated and accepted Madam Lam’s offer to pay rent through mortgage repayment of a 25-year mortgage.  On the other hand, he was unwilling to register her as one of the legal owners because she was not a member of his family.  It is difficult to reconcile the conflict that he would have accepted a non-family member whom he did not trust to contribute one-third of the purchase price of his personal property which was more than one million dollars but at the same time refused or was reluctant to appoint her as trustee for him.

49. It follows that if Madam Lam’s payment of rent was simply in return of the 8-year financial support and free accommodation for her as alleged (which I do not believe) and that the Father regarded the relationship between the Couples as unsecured, it is highly unlikely that the Tse’s family would have risked themselves of committing to a mortgage which far exceeded their financial means. 

50. Furthermore, the evidence given by Mr Tse in this matter is far from convincing.  He said that in the event that Madam Lam failed to keep her promise to make contributions to the mortgage repayment, he would suggest to the Father not to allow her to live with them.  When he was asked for the reasons for not making such suggestions even though she had made no financial contribution for the past years, he incredibly said that they were sympathetic towards her by that time. 

51. Plainly his evidence runs counter to their relationship at that time.  It also goes contrary to the earning power of Madam Lam which has been stronger than Mr Tse since 2000.  In all, he failed to reconcile his contradictory allegations: their sympathy for Madam Lam by allowing her to live with them but simultaneously accepting substantial rents from her.  Worse still, the sympathy would be withdrawn once she stopped making mortgage repayment.

52. When pressed further, he non-sensibly gave evidence that it was the Father who had the obligation to repay the mortgage.  This is no doubt contrary to the mortgage deed as well as his evidence that the Father would not be responsible for any payment other than down payment and the ancillary charges.

53. Being embarrassed by his own evidence aforesaid, he suddenly came up with a wholly new allegation that not only Madam Lam’s contribution to mortgage repayment was “rent”, his contribution to mortgage repayment as well as Madam Tse’s taking care of the Father and payment for management fees, utilities and other household payments were also “rent”.  Needless to say, he could not explain why such allegation has never been accounted for until cross-examination.  Obviously, such allegation is against commonsense.

Money from Mr Tse

54. Further, Mr Tse’s allegation of his financial support in a weekly sum of HK$200-500 to Madam Lam leading to her proposal of giving rent to the Father is unbelievable.  The cohabitation started not long before Madam Lam went into the university in late 1996 or 1997.  I have no reason not to believe Madam Lam’s evidence that before going to the university, she received living expenses from her father.  She then received full grants and full loans from the government and was in part-time employments when she was in university.  She has been engaged in full time employments after graduation from university since July 2000. 

55. Truly her father was unemployed. It is however natural that he would have received financial support from Madam Lam’s siblings who were gainfully employed and would have given some cash to Madam Lam for her living expenses.  It is also common in Hong Kong for students with limited financial resources to apply for and be granted loans and grants from the government.  I see no reason why Madam Lam would not have been one of them.

56. As to Mr Tse, he came from an ordinary family and had received pocket money from the Father until his full time employment which started half year later than Madam Lam.  His income has all along been much lesser than hers since then. 

57. Against this background, I find Mr Tse has exaggerated and inflated the money he has given to Madam Lam.  It is highly unlikely that being a student of no financial means other than receiving pocket money from his father from an ordinary family would be able to fund the living of Madam Lam to the extent as alleged. 

58. Mr Tse sought to rely on the wordings of a birthday card written by Madam Lam in 2003 in support of his allegation.  On a proper reading of the content as a whole, I accept Madam Lam’s case that the card was to express her appreciation of the love, care and mental support between the Couples and that the wordings of “spending money on me for years” (“多年花錢在我身上”) were only referred to the expenses ordinarily incurred by lovers for meals, gifts and entertainments as well as occasional petty cash for her.   

59. Besides, as the Parties and the Father had been in good relationship throughout the years until April 2010, I also believe that Madam Lam had from time to time bought food and groceries for the enjoyment of the Tse’s family and treated them to meals.

60. In any event, I take the view that, even if Mr Tse had given the money to Madam Lam as alleged, the money was plainly given to her as gifts from a boyfriend.  Absent any evidence that the money, free accommodation and free meals were given to her in contemplation of repayment or compensation by Madam Lam in future, it is outrageous that she would have proposed to pay rent to the Father and to shoulder the 25-year mortgage liability, not to mention that the Tse’s family would have accepted such proposal.

61. I believe that the allegation of Madam Lam’s proposal to pay “rent” is very much of an afterthought.  Her contributions to the mortgage repayments were clearly to discharge her liability under the mortgage and to pay off her share of the purchase price of the Property.  She has never offered or committed to pay any rent or financial contributions to the Tse’s family. I have no hesitation in rejecting the argument that her contributions to the mortgage repayments were rent.

Co-mortgagors

62. I also find it difficult to believe that Madam Lam was arranged to be one of the mortgagors because the Father could not meet the requirement of mortgage application.  There is simply no solid evidence that the Father had ever intended or prepared to shoulder the mortgage repayment.  With the evidence before me, I fail to see what purpose would be served for the Father to apply for mortgage as alleged by the Siblings. 

63. I agree with Madam Lam’s proposition that there were indeed numerous ways to protect the Father’s full interest in the Property if he were the sole owner of it.  In particular, it is alleged that the Father was unwilling to register her as a co-owner and that the Father and the Siblings were assisted by solicitors in the transaction. There was no reasonable explanation as to why they would not have asked for nor instructed their solicitors or the mortgage bank to advice on or prepare documents to protect the Father’s full interest in the Property by a trust documents or by arranging her to act as a borrower or guarantor for the loan instead of being a co-owner and mortgagor. 

Contribution to mortgage repayments

64. The untrustworthiness of Mr Tse was further demonstrated by his evidence in relation to his contributions and Madam Lam’s contributions towards the monthly mortgage repayment.  Despite his non-admission to Madam Lam’s contribution to the fund in the Joint Account and to the mortgage repayments, it is clear from the bank transaction records that she had actually contributed HK$382,750 for the mortgage repayment through the Joint Account. Such fact was actually admitted by Mr Ching.  Further, Mr Tse’s denial that the funds in the Joint Account other than the money deposited by Madam Lam were his money does not stand.  Not only that he could not account for the payers of those funds and the reasons for the deposits of them, he pocketed half of the fund withdrawn from the Joint Account when it was closed by Madam Lam in 2010.

65. In all, I find Mr Tse to be a dishonest witness.  The financial contributions to the purchase price of the Property by the Father and the Couples support Madam Lam’s case that they intended to contribute to the purchase price of the Property equally, ie more or less one-third of the purchase price of the Property.  Up to 15 April 2010, Madam Lam has paid mortgage repayment in the total sum of HK$382,750 out of the total mortgage loan repayment of HK$746,070.95 with the balance being paid by Mr Tse.

The Emails

66. Further, the exchange of the emails between the Couples in July 2011 is solid evidence in support of Madam Lam’s case.  In Lam’s Email, Madam Lam specifically requested payment of her contribution to the mortgage repayments and one-third of the difference between the then current market value of the Property and the purchase price of it.  In Tse’s Email, not a word about Madam Lam’s proposal or commitment to pay “rent” was mentioned, still less of the allegations of the Father being the sole beneficial owner of the Property and the trust.  Instead, Mr Tse’s reply to Madam Lam’s request rested on the criticism that she should not have expected to enjoy meals, accommodation and supply of utilities free of charge.

67. When asked to explain his complete silence on those matters which would amount to complete defence to Madam Lam’s claim, Mr Tse failed to give any reasonable explanation.  He first illogically said that it was because her request for payment was made to him but not his father.  He nevertheless did not explain why she had asked him for payment when she knew that the Father was the sole owner.  When pressed on, he contradicted himself by saying that he replied Lam’s Email for and on behalf of the Father. Finally, he resorted to a slip of mind saying that his email was written in a rush. 

68. None of his explanations is acceptable.  The purpose of his email was to defend Madam Lam’s claim.  He had no reason not to put forward his strongest defence, bearing in mind that any slip of mind could have been remedied or clarified by subsequent emails.  There was none.

69. I note that in Tse’s Email, it is stated that Madam Lam promised not to ask money from Mr Tse.  It is nevertheless just a general statement and could not in any way be interpreted to have referred to any interests or payments relating to the Property.

70. Madam Lam was challenged to have been silence on her alleged one-third beneficial interest in the Property in Lam’s Email.  Such challenge simply ignores her demand for one-third of the difference between the current market value and the purchase price of the Property plus her contributions to the mortgage repayment. I accept Madam Lam’s explanation that she was in effect asking for one-third of the beneficial interest of the Property and that the formula was devoid of technicality and precision because she was not legally advised by that time.

The Letters

71. The evidence shows that the allegation of Madam Lam being a trustee of the Father has never been raised by the Siblings until Tse’s Letter.  Worse still, the basis upon which the trust was alleged to have been formed was said to be the Father’s contribution of HK$1,063,560 to the purchase price.  Not a word about the allegations of discussions between the Father and the Parties leading to the set up of trust, Madam Lam’s rental payments, or her joining as a co-mortgagor to resolve the Father’s difficulty in applying for mortgage was mentioned therein.  Further, Tse’s Letter met with immediate denial from Madam Lam through her solicitors’ letter.  She reiterated her demand for one-third of the net sale proceeds of the Property and expressed that she did not care who would get the remaining two-third.

72. Mr Ching criticized Madam Lam to have concealed the fact that the Father has funded part of the purchase price and that Madam Tse was his trustee in Lam’s Email and her solicitor’s letters. I find this criticism to be groundless.  It is apparent from those correspondences that Madam Lam did not care about whoever would finally get the two-third of the net sale proceeds so long as she could get back her one-third interest.  I fail to see why she must state all those details relating to the interest of others bearing in mind that the purpose of those correspondences was strictly to get back her own interest.  Logically the interests of the other parties did not concern her that she would not bother to account for.

Madam Tse’s contribution

73. The other argument of the Siblings is that as the total amount of Madam Tse’s monthly payment for management fees, rates, utilities and other household expenses (“Expenses”) was close to the amount of the monthly mortgage repayment paid by Madam Lam but Madam Tse had no beneficial interest in the Property, Madam Lam’s claim of having beneficial interest in the Property is not true.  I do not agree.

74. The Sibling’s evidence in this matter is shadowy.  The exact amount that Madam Tse had actually paid for the Expenses was ever-changing and lack of sufficient particulars or adequate documentary evidence in support.  Moreover, there is no solid evidence to suggest that the Parties and/or the Father had ever discussed on the actual payment arrangement of the Expenses in details, as the items of the Expenses, the actual amount of each of the items, the date and content of the discussion. 

75. On balance, I find Madam Lam’s evidence more convincing.  I believe that the payment arrangement for the Expenses has never been discussed in details among the four of them. In light of the unchallenged evidence that Madam Tse had been used to pay off all the Expenses when living at the Old Premises, Madam Lam’s allegation that Madam Tse just continued and adopted her usual practice and accordingly paid off all the Expenses when living at the Property is consistent with the background facts. It is believable that on that basis such payments had never been regarded as financial contribution to the purchase price of the Property by the Parties and the Father. 

76. In any event, I do not find the Siblings’ argument carries any logic at all.  It is apparent that the nature and the amount of the Expenses are not comparable to mortgage repayments.  Some of the Expenses were incurred for the personal use and enjoyment of food, groceries, services for any of or all four persons.  The amount of some of the expenses fluctuated according to the use of the users.  Different from mortgage repayments, Madam Tse was not legally liable or duty-bound to pay for the Expenses, let alone to pay them for 25 years.

77. Further, the argument simply ignores the fact that Madam Lam had from time to time spent her own money on similar expenses as foods, groceries and services to be used and enjoyed by the Tse’s family.

78. For reasons aforesaid, I believe that Madam Tse’s payments for the Expenses were just a continuance of her usual practice at the Old Premises.  Plainly those payments were not comparable to the mortgage repayments of Madam Lam and her liability under the mortgage.  I am not impressed by the Siblings’ argument that as Madam Tse had spent money on the Expenses but not taking any beneficial interest in the Property, the Parties and the Father would not have intended and arranged Madam Lam sharing one-third of the beneficial interest of the Property.  I accept Madam Lam’s evidence that she did not find it unusual that Madam Tse was not to take any beneficial interest in the Property on her understanding that only those who contributed to the purchase price would have a share in it.

79. I am bound to reject Mr Ching’s argument in his closing submissions that Madam Tse should be given some interest in the Property.  This is obviously not their pleaded case.  At any rates, it is established law that mere payment of household expenses is not an expenditure referable to the acquisition of the property.  In this case, there is no evidence to suggest that Madam Tse’s payments of the Expenses were required to enable the others to pay for the purchase price or mortgage installments.  Absent sufficient evidence to establish an indirect contribution to the Property and intention as required in law, Mr Ching’s argument is bound to fail.

80. The Siblings also seek to argue that as Madam Tse was also liable to the mortgage liability and that she had occasionally settled the mortgage installments leaving the Couples reimbursed her subsequently, there was no reason that Madam Lam took interests in the Property while Madam Tse did not.  I see no force in this argument.  Suffice it to say that the Parties had agreed that the Couples would be fully responsible for the mortgage repayment without any contribution from Madam Tse.  This was the expressed agreement made prior to and at the time of the purchase of the Property.  In reality, the mortgage repayments were actually funded by the Couples without contribution from Madam Tse.

81. Madam Tse’s allegation that they allowed Madam Lam to live in the Property together with them because of their sympathy for her undoubtedly mirrored Mr Tse’s lie as elaborated above.  She gave no persuasive reason as to how and why Madam Lam had earned their sympathy by the time Madam Lam was a university graduate with a stable income.

82. Worse still, Madam Tse’s evidence on the date of the Father’s decision to purchase the Property in the name of the Parties runs counter to Mr Tse’s evidence.  She said that she was present when the Father made the said decision in the solicitors firm.  She supplemented that he had not made such decision before attending the solicitors firm which took place long after the signing of the Preliminary Sales and Purchase Agreement.  On the contrary, it is Mr Tse’s evidence that after making enquiry with the bank, the Father had already made the said decision in the presence of the Siblings.  Mr Tse then proceeded to look for an appropriate property.  That is, the decision was made long before the parties attending the solicitors firm. 

Joint owners

83. In respect of the argument on the circumstances under which the Parties were registered as the joint owners of the Property with Madam Tse holding the interest of it for and on behalf of the Father.  It is Madam Lam’s case that the decision was made on the day of signing of the preliminary sale and purchase agreement of the Property, on or around 10 September 2004.  On that day, after the Parties, the Father, the Aunt and Madam Lam’s sister had viewed the Property, all of them went to the clubhouse.  The Aunt proposed that the Parties should hold the Property as joint tenants.  She said that the arrangement to have Madam Tse holding the Father’s interest in the Property was to avoid the formality and troubles of inheriting the Father’s interest on his death as well as to make Madam Tse feel secure when taking care of the Father on a full-time basis as the Siblings would in any event inherit his interest on his death.

84. Madam Lam had no objection to that for it was her understanding that the Father, Mr Tse and herself who had contributed to the purchase price would share the Property jointly and equally.  So long as she had secured her one-third interest in the Property, she did not care about the actual arrangement between the Father and Madam Tse.  She also found it natural for a father to arrange his daughter to hold the property on trust for him particularly Madam Tse was to take care of him on a full time basis. 

85. At trial, Mr Tse had no disagreement on the account of the events on that day but denied the Aunt had made the proposal.  He said that the Aunt had left without going to the clubhouse together with the others.  He averred that the decision to register the Parties as joint tenants was indeed made at the solicitors’ firm on the day the down payment was made.  The Father made the decision after the implication and legal effect of joint tenants and tenants-in-common had been explained to him by the solicitors.  That was to avoid any disputes on the ownership of the Property arisen from the title deeds and documents between the Siblings after his death. 

86. The Aunt gave evidence in Court following Mr Tse but after a lunch break.  She gave detailed account of the events happened on 10 September 2004 which mirrored Mr Tse’s evidence.  Her explanation that she was able to remember the exact date and the event clearly because it happened a few days after the commencement of the school term and she had to pick up her son after school on that day is implausible.  She failed to justify how she related the picking up of her son a few days after commencement of school term to the exact date of 10 September 2004. 

87. Further, when she was asked for the reason of not including this event in her witness statement which was filed to challenge Madam Lam’s witness statement, her answer was that the event had not been put to her when preparing her witness statement.  However, she subsequently contradicted herself by saying that she was reminded of the event by Mr Tse when preparing her witness statement at the solicitor’s firm.  Coupled with the fact that she had no interest in the Property and the event took place 10 years ago, I do not believe that she would be able to recall all those details as she now alleged. 

88. In my judgment, the allegations are recent fabrications.  It is too much a coincidence that such important piece of evidence was absent in all the affirmations and witness statements of the Siblings and the Aunt.  The fact that the Aunt is not a reliable witness became apparent under cross-examination. 

89. She admitted that she had solid experience in purchasing four to five landed properties before 2004.  She was accordingly invited by the Tse’s family to view the Property on 10 September 2004 and later on to attend the appointment of signing the sale and purchase agreement at the solicitors firm (“Meeting”) so as to give opinion on the purchase of the Property. 

90. In her witness statement, she claimed that it was the Father who purchased the Property.  In court, she at first accepted that she was invited by the Tse’s family to attend the Meeting for giving opinion on the formality and arrangement for the purchase of the Property as important documents were to be signed.  She nevertheless said that she actually did not know what the Parties and the Father were going to do at the Meeting.  She even said that she had no knowledge about who was or were going to sign the sale and purchase agreement and what the Father’s intention was. 

91. When pressed on, she said that all she knew was that the Father had contributed money for the purchase, she in fact did not know whether he had contributed the full purchase price and took the full interest in it or someone else had also funded the purchase and shared the interest in the Property together with him.  After all, she admitted in court that the Father did not say he had 100% interest in the Property or that the Couples had no interest in it.  

92. Further, given that she was asked to give opinion on the formality and arrangement for the purchase throughout the transaction, it is highly unlikely that she would have absented herself from attending the signing of the preliminary sale and purchase agreement on 10 September 2004 or that she had no knowledge about the persons who funded the purchase and to take interest of it.  In particular, she said that she knew the Property was to be subject to mortgage at that time. 

93. In all, her evidence in court completely undermined her allegation in her witness statement.  Her allegation that in the Meeting she asked the Father, being the sole beneficial owner, for the reason of not registering himself as the legal owner in the conveyancing instrument and the Father’s decision to name the Parties as owners to hold the Property on trust for him for mortgage purpose is plainly not true. 

94. On the contrary, Madam Lam’s case is more consistent with the background facts.  The Aunt was obviously asked to participate in the signing of the preliminary sale and purchase agreement on around 10 September 2004 to give opinion on the arrangement of the purchase.  She therefore proposed to name Madam Tse as joint tenants together with the Couples for her to hold the Property on trust for the Father so as to avoid any troubles and formality of inheriting the Property on his death as well as to let her feel secured when taking care of the Father.

95. Madam Lam’s evidence that so long as her interest in the Property was secured, she had no objection to have Madam Tse held the Property on trust for the Father which was a matter between the Father and his daughter is logical and consistent with the normal course of events. 

Cease contribution towards mortgage repayment

96. I am also not impressed by the Siblings’ argument that Madam Lam’s cessation of contributions towards mortgage repayment after moving out of the Property, leaving the Tse’s family to pay for them after 15 April 2010 was solid proof that her mortgage repayments were rent and that she was merely an occupant. 

97. Having considered the background facts and the relationship between the Parties, I accept Madam Lam’s explanation that her cessation of payment was caused by her genuine belief that the Tse’s family should pay the mortgage installments for their sole and exclusive occupation and enjoyment of the Property after her departure as she has not asked for and they have not paid any rent to her.  Her explanation was consistent with her evidence that the Property was purchased for the occupation and enjoyment of the Parties and the Father.  It is understandable that she would have formed such belief.

98. Suffice it to say that neither of the Parties has pleaded any change in common intention, there is no evidence to suggest that it was commonly intended that it should bring about a change over the beneficial ownership.  Madam Lam’s cessation of mortgage repayment after 15 April 2010 simply did not justify such cause. 

99. I should add that Mr Tse’s another allegation that Madam Lam had agreed to have her name removed from the legal title of the Property at a park after their break up in April 2010 is unbelievable. There is no reason that such important allegation was not mentioned in Tse’s Email or Tse’s Letter which would advance his defence to Madam Lam’s claim. When asked why no action has been taken to remove her name until now, Mr Tse answered that he had been too upset to do it.  Apparently this is not a valid reason for his inaction for five years. 

100. Given the property price in Hong Kong, it is highly unlikely that Madam Lam who had contributed substantially to the mortgage would have abandoned the Property.  Further, from the fact that she has at no stage asked to have her name removed from the mortgage and the sending out of Lam’s Email and her solicitor’s letters demanding for her share of the Property, her position of demanding one-third of the interest in the Property has been unequivocal and consistent throughout the years.  In my view, Mr Tse’s allegation is a fabrication to meet Madam Lam’s claim.  I find no evidence pointing to a change of intention.

101. In passing, I should add that for reasons set out above, Mr Ching’s attempt to discredit Madam Lam through criticism on her silence on several matters in her affirmations is futile.  It is noteworthy that her claim is premised on the beneficial interest follows the legal title.  It is understandable that she did not find it necessary to account for all the events and arrangements leading to the purchase of the Property in her affirmations which were filed at the commencement of the present claim.

102. Further, I fail to see how Mr Tse was the one who went to view the properties with the property agents would take the defence case any further.  It is normal that Madam Lam entrusted her boyfriend to select and view the properties for her as the Father did.  After all, she had viewed the properties selected by him including the Property before the purchase.

103. Having considered all the evidence before me, I find Madam Lam to be a credible witness.  Her evidence is logical and consistent with the background facts, contemporaneous documents as well as the relationship and conduct of the parties.  Her evidence remained unshaken despite extensive cross-examination on her.  On the contrary, the Siblings and the Aunt are dishonest witnesses for reasons set out above.  For their evidence that is contrary to Madam Lam’s evidence, I prefer Madam Lam’s evidence.

104. When the matter is looked at in the round, I take the view that the balance weighs strongly in favour of Madam Lam’s case.  I believe that there was a common intention and arrangement among the Parties and the Father that the Property was jointly purchased by the Father, Mr Tse and Madam Lam and to be shared by them equally.  Madam Lam was not a trustee of the Father.  She contributed as intended and agreed.  The beneficial interest will be held in accordance with their common intention.  Since there had been no evidence of a change in common intention and no unusual facts in this case.  There is no room for application of resulting trust as it is not in accordance with the parties’ express or implied intention from the conduct. 

Issue 2: Who were and are the beneficial owner of the Property

105. For reasons aforesaid, I am satisfied that Madam Lam has proved her case that subject to the mortgage, Madam Lam was the joint owners in equity, as well as in law, of the Property. There was a common intention of the Parties and the Father for the beneficial ownership to be shared between Madam Lam, Mr Tse and the Father equally, that is, one-third of the beneficial interest of the Property.

Issue 3: What was the contribution made by Madam Lam, Mr Tse and the Father to acquire the Property

106. As elaborated above, Madam Lam, Mr Tse and the Father each agreed to and actually contributed or has been liable to more or less one-third of the purchase price.  Madam Lam has committed to bear the mortgage liability as one of the three co-mortgagors.  Her contribution to the purchase price was agreed to be half of the mortgage repayments, namely 35% of the purchase price which they regarded as around one-third of total amount of the purchase price and the ancillary charges.  She has actually paid more than half of the mortgage repayment until April 2010. 

Issues 4 & 5: whether a partition of the Property would not be beneficial to all and an order for sale should be granted

Partition Ordinance

107. There is no disagreement on the construction of the Ordinance for the purpose of this case.  Section 6 of the Ordinance empowers this Court to make an order for sale of the Property provided that partition of it will not be beneficial to all the persons interested by reason of the nature of the Property, the number of the persons interested or presumptively interested, the absence or disability of some of the persons interested, or any other circumstances.

108. The authorities in this area were summarized by Recorder Fok, SC in Wong Chun Kei Johnny and others v Poon Vai Ching and others, HCMP 4322 of 2002 which were further elaborated in Fong Kai Po and Fung Kwok Hing v Yan Yee Wan DCMP 3150 of 2006.  The Court articulated the following propositions:-

(a) a co-owner has a basic right to rid himself of the shackles of co-ownership and ask for an order for partition or sale if she has no other remedy;

(b) when it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner) that such an order will not be beneficial to all the co-owners, or that it will result in very great hardship to one co-owner;

(c) whether an order for sale is beneficial to all the co-owners is not determined by the dissent of the opposing co-owners or the assertion by them that it is not beneficial.  It has to be determined by the court objectively.

(d) The court would only make no order for sale when the interests of all the parties would be better served by their continuing to remain as co-owners, or where the order would result in hardship to any of the co-owners.

109. In respect of a residential flat which in legal concept and parlance is one undivided equal part or share in the land together with the sole and exclusive right and privilege to hold use occupy and enjoy the unit, itis obviously impracticable to contemplate partition and partition cannot be beneficial to the owners.  See Liu Chung Hang and others v Liu Chung Leung Alfred, HCMP 1255/2007 Recorder B Yu SC 19 December 2007.

110. I am content to adopt the above as a guide.  I also bear in mind that the discretion should be exercised by taking into account all the circumstances of this case.  I have to give due regard to the primary object of the Ordinance as well as to the individual and collective interests of the co-owners.

111. In the present case, Madam Lam is locked in the co-ownership.  Given the poor relationship between the Parties, it is unrealistic for her to live together with the Tse’s family.  Since May 2010, she could neither enjoy the Property nor derive any benefits from her ownership of it.  The situation will continue unless an order for sale is made.

112. Madam Lam claims against the Siblings for an order that the Property be sold with net proceeds of sales after paying off the mortgage loan, half of the mortgage repayment after her cessation of mortgage repayment and any ancillary charges in relation to the disposal of the Property to be divided among the Parties in equal share under section 6 of the Ordinance.

113. The Siblings have put forward neither suggestion nor evidence to show any hardship that may be suffered by the Siblings or the Father should an order for sale is ordered.

114. Mr Tse and Madam Tse (on behalf of Father) would be entitled to two-third of the net sale proceeds of the Property should an order for sale be granted. Madam Tse has her own savings.  She gave evidence that the Father owns the Old Premises and a shop premises.  Mr Tse has a stable employment.  They should not have difficulty in securing a roof over their heads with the two-third net sale proceeds of the Property.  There should not be any hardship that will be suffered by any of them. 

115. Taking into account all the evidence before me, I am satisfied that a partition of the Property would not be feasible or beneficial to all the owners.  Further, there should not be any hardship that will be suffered by any of them.  I should make an order for sale.  The net sale proceeds shall be divided between Madam Lam, Mr Tse and Madam Tse (on behalf of the Father) equally.  Madam Lam shall, out of her share, give half of the mortgage repayments she should have given since her last mortgage repayment (as agreed by Madam Lam).

Issue 6: Directions for the sale of the Property and the distribution of the net proceeds of sale thereof

116. The Parties have helpfully prepared a set of directions in the event that I find in favor of Madam Lam pursuant to my direction.  I am minded to adopt them with some amendments to be made thereon.

Conclusion

117. Having considered all the evidence as well as the oral and written submissions of the Parties, I give judgment in favour of Madam Lam and make an order for sale of the Property pursuant to section 6 of the Ordinance.

118. I further order that : -

(a) an updated valuation report on the current market value of the Property (“Current Market Value”) prepared by the surveyor as agreed by the Parties, RHL Appraisal Limited, be obtained within 14 days from the date hereof;

(b) there be stay of the sale for 28 days from the date hereof pending the Parties’ discussion as to one of them buying out the other’s share. 

(c) the Property be put up for sale jointly by the Parties by private treaty within 14 days thereafter at a price not less than the Current Market Value or at a price as agreed by the Parties.

(d)the Siblings shall have the conduct of the said sale.  If preliminary sale and purchase agreement of the Property cannot be entered into within one month from the date on which the Property is put up for sale,  Madam Lam shall have the conduct of the said sale.  If preliminary sale and purchase agreement of the Property cannot be entered into within one month thereafter, the Property shall be sold by way of public auction.

(e) the first public auction shall be held within one month from the date when the sale by private treaty period ends. 

(f) the completion date for the sale of the Property (“Completion Date”)  shall not be more than 3 months from the date of the preliminary sale and purchase agreement.

(g) the timetable specified above shall be strictly complied with unless all the Parties consent in writing to any variation of the time limit.

(h) the proceeds of sale be applied in discharge of : -

(1) government rent, rates and/ or other outgoings due and outstanding and affecting the Property;

(2) outstanding mortgage loan, any prior encumbrances affecting the Property; and if such prior encumbrances due and owing by any of the Parties solely, be deducted from the shares of which that party is entitled to;

(3) payment of the estate agent’s commission, fees of the expert report as specified in paragraph 1 above, conveyancing costs, legal costs and disbursements, auctioneer’s remuneration and all other reasonable expenses payable or incurred for the purposes of or in connection with the sale ;

(i) the net proceeds of sale be held by the solicitors firm acting for the vendor as stakeholder and distributed to the Parties in equal shares, i.e. one-third of the net proceeds of sale.

(j) Madam Lam shall, out of her share, give half of the mortgage repayments since her last mortgage repayment.

(k) Madam Lam or the Siblings may purchase the share and/ or interest of the other party(ies) in the Property at a price as agreed by the Parties and in which event each party shall bear its own costs and expenses incidental to the sale and purchase.  The net proceeds of sale in such circumstances shall be calculated after paying off the outstanding mortgage loan and any prior encumbrances.

(l) the Parties shall be at liberty to offer to purchase in a private sale or to bid at an auction for the purchase of the Property.

(m) liberty to apply to the Court for further directions on the conduct of the sale or for directions to implement the terms of this Order.

Costs

119. Costs follow the event.  I make an order nisi for the Siblings to pay Madam Lam’s costs of the whole action, including all costs reserved, to be taxed if not agreed, with certificate for counsel.

120. Mr Tse’s own costs be taxed in accordance with the Legal Aid Regulations.

121. In the absence of application to vary by summons within 14 days, the costs order nisi shall become absolute.

122. I thank both Ms Ng and Mr Ching for their assistance.