NG YUK PUI KELLY v. DUNG WAI MAN AND OTHERS

HCA 1826/2011

[2019] HKCFI 210

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1826 OF 2011

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J U D G M E N T

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1.  This is a dispute on the beneficial ownership of two flats in Central. They are Flats B and C on the 1st Floor & Portions of the Flat Roof of Winner Building, Block A, No. 37 D’Aguilar Street. They are hereinafter referred to as “Flat B” and “Flat C” respectively and collectively as “the Flats”.

2.  The 1st Defendant (“Mrs Ng”) is the registered owner of the Flats.  She was the lawful wife of the late Ng Bing Kuen (“Kuen”).  Kuen passed away on 18 February 2010 because of chronic obstructive pulmonary disease (C4/905-1).

3.  Kuen had three children with Mrs Ng. They are Ng Kwok Wah Vincent (“Vincent”), who is the representative of Kuen’s estate as the 2nd defendant; the younger son, Ng Kwok Keung James (“James”) and the youngest daughter, Ng Lai Ling Winnie (“Winnie”).

4.  The plaintiff Ng Yuk Pui Kelly (“Kelly”) was Kuen’s younger brother.  He was 10 years younger than Kuen.  He has two daughters Ng Che Ling Jennifer (“Jennifer”) and Vivien Ng (“Vivien”). Jennifer is a member of the Hong Kong Bar and a factual witness in this action.

KELLY’S CLAIM

5.  Though Mrs Ng is the registered owner of the Flats, Kelly claims that the purchase price was provided by Kuen and she was holding them on trust for Kuen from the purchase on 15 November 1973 until they were sold by Kuen to Kelly on 12 or 13 September 1985.  From then onwards, she held and still holds them as trustee for Kelly’s benefit.

6.  Kelly’s case is that in or about August 1985, Kuen told Kelly that Mrs Ng and/or Kuen himself had suffered serious loss in property speculation in the New Territories and Kuen was under financial pressure to repay the bank loans.  Kuen further told Kelly that he wanted to sell the Flats to repay the bank loan.  He with the help of Kelly advertised the Flats for sale at HK$650,000 each which was later reduced to HK$600,000 each.  However, there was no interested buyer.  Kuen then asked Kelly to consider buying the Flats at a total sum of HK$ 1 million. 

7.  On or about 12 or 13 September 1985, Kelly, out of love and respect for Kuen and with a view to help Kuen, orally agreed with Kuen at the Flats to buy the Flats from Kuen at HK$1 million (“the 1985 Agreement”). Kelly also paid a cheque for HK$1 million to Kuen. 

8.  In the light of the close relationship between Kelly and Kuen and the trust they reposed to each other, Kelly and Kuen did not see the need to execute the assignments to assign the title of the Flats to Kelly immediately after Kelly’s purchase and payment of the HK$1 million.  

9.  Mrs Ng was aware of and/or ought to be aware of the matters relating to the 1985 Agreement and the dealings between Kelly and Kuen.  She also agreed to and/or acquiesced in the 1985 Agreement.

10.  Kelly further pleaded in §13 and §§30A to 32 of his re-amended statement of claim that:

(a)   there was a common intention and/or agreement amongst Kelly and/or Kuen and/or Mrs Ng that Kelly should be regarded as the sole beneficial owner of the Flats.  It was in reliance on this common intention and/or agreement that Kelly to his detriment paid Kuen the HK$1 million with the approval and/or knowledge of Mrs Ng. 

(b)   furthermore, Kelly, as the real and/or de facto owner, had suffered further detriment in maintaining the Flats through the years.  Hence, it would be unconscionable and/or inequitable for Mrs Ng and/or Kuen’s estate to deny the said common intention and/or agreement. 

(c)   by operation of law, Mrs Ng and/or Kuen’s estate is and has been holding the Flats as bare trustee(s) on a common intention constructive trust for Kelly since 13 September 1985.

(d)   Kelly also relies on proprietary estoppel and/or estoppel by standing by.

11.  Kelly, after having purchased the Flats from Kuen, used and occupied them as their owner to the exclusion of the whole world.  Kelly, as the owners of the Flats, also paid the utility charges, management fees, government rent and rates and for their necessary repairs and renovations. 

12.  Kelly pleaded in §4B of his amended reply and defence to counterclaim that he had occupied the Flats as follows:

(a)   in around 1976 or 1977, Kuen granted Kelly a license to occupy the Flats as the office of his trading business Astro International Limited (“Astro”) and advertising business Worldwide Advertising & Publicity (“Worldwide”).  Kelly paid Kuen a monthly rental or license fee of HK$2,000 for the licence.  This lasted until about August 1985.

(b)   in September 1985 Kelly, with the full knowledge and/or consent of Mrs Ng, purchased the Flats from Kuen at HK$1 million. 

(c)   after the purchase, Kelly continued to use and occupy the Flats but ceased paying any rental or license fees to Kuen or anyone else.  Kelly also paid all the expenses in respect of the Flats, including management fees, government rents/rates. 

(d)   in or around 1990 or 1991 Kelly, at Kuen’s request, allowed Vincent to use Flat B for his businesses free of charge with a view to help him establish his business and reduce his operating costs.  Vincent had to pay the management fee and government rent/rates for Flat B.  Kelly continued to use and occupy Flat C for his businesses. 

(e)   in or around 1997 or 1998, Kelly, at Kuen’s further request, allowed James to join Vincent in using Flat B.  Kelly again agreed not to charge James any rental or license fee with a view to help James establish his business and reduce his operating costs.  James had to share the management fee and government rent/rates for Flat B with Vincent.

13.  In early 1987, Kelly needed finance for his business and wanted to use the Flats to obtain mortgage loans.  He asked Kuen to arrange the assignment of the Flats by Mrs Ng to him.  However, Kuen told Kelly that Kuen was troubled by Mrs Ng’s mental illness and could only arrange her to execute a mortgage of the Flats to secure banking facilities for Kelly. Kelly agreed and a mortgage dated 31 March 1987 was executed by Mrs Ng over the Flats to secure banking facilities to the extent of HK$500,000 for Kelly (“1987 mortgage”).

14.  In late 1990, Kelly needed further finance for his business.  He again requested Kuen to arrange the assignment of the Flats by Mrs Ng to him for him to obtain more mortgage loan.  However, Kuen again referred to Mrs Ng’s mental illness and said he could only arrange her to sign another mortgage over the Flats to secure additional banking facilities for Kelly.  Kelly agreed and Mrs Ng executed a further charge over the Flats on 12 November 1990 to secure a further HK$300,000 for Kelly (“1990 further charge”).

15.  (The 1987 mortgage and 1990 further charge and the loan facilities secured by them remained until they were cancelled by Mrs Ng in March 2011 after the ownership of the Flats was in dispute.)

16.  Kelly pleaded in the alternative that if Mrs Ng should have any interest in the Flats, the same had been sold to Kelly by her through her agent Kuen pursuant to the 1985 Agreement by virtue of Kuen’s apparent agency authority.  Kelly relies on the following facts: -

(a)   all along Mrs Ng had permitted Kuen to deal with the Flats; for example, in granting the license to Kelly to occupy the Flats as the office of Astro and Worldwide in return for a monthly rental or license fee of HK$2,000 payable to Kuen and the license lasted until August 1985; and

(b)   both Mrs Ng and Kuen had mentioned to Kelly their intention to sell the Flats, and Mrs Ng was aware of and/or ought to be aware of the dealings between Kelly and Kuen in respect of the Flats including, in particular, that Kelly had stopped paying any license fee in respect of the Flats after September 1985.

17.  Kelly pleaded a further alternative that Mrs Ng had by conduct ratified Kuen’s authority to make the 1985 Agreement with Kelly.  Kelly relies on the following facts: -

(a)   Mrs Ng was the director and a major shareholder of Madam Tung (H.K.) Limited (“Tung Ltd”) (holding 700 out of 1,500 shares issued).  She accepted the purchase price of HK$1 million paid by cheque which was deposited into the bank account of Tung Ltd without any query; and

(b)   furthermore, Mrs Ng had executed the 1987 mortgage and 1990 further charge to secure banking facilities for Kelly without any query.

18.  By reason of the aforesaid agency between Mrs Ng and Kuen, Mrs Ng was bound by the 1985 Agreement whether she was holding the Flats on trust for Kuen or she had any interest in the Flats.

19.  Kelly thus claims a declaration that Mrs Ng and/or Kuen’s estate has been and still is holding the Flats as his bare trustee since 12 or 13 September 1985.  He also seeks an order that Mrs Ng and/or Kuen’s estate do assign and transfer the title of the Flats to him.

20.  Kelly also seeks an alternative declaration that Mrs Ng and/or Kuen’s estate is estopped from enforcing proprietary interests and/or title in respect of the Flats against him and that the court may grant him appropriate remedies under the doctrine of proprietary estoppel.

21.  The final alternative relief sought by Kelly is a declaration that the title of Mrs Ng and/or Kuen’s estate in the Flats had been extinguished by his adverse possession of the Flats for a continuous period of not less than 20 years since 12 or 13 September 1985 or alternatively 12 years since July 1991 and he has acquired a possessory title over them.

22.  Kelly also seeks an injunction against Mrs Ng and Kuen’s estate from assigning or selling or otherwise dealing with the Flats.

MRS NG’S COUNTERCLAIM

23.  Mrs Ng in her amended defence and counterclaim (“defence and counterclaim”) and Vincent as the 2nd defendant in his amended defence (“defence”) dispute that there was the 1985 Agreement and deny all of Kelly’s claims.  Vincent on behalf of Kuen’s estate accepts that Mrs Ng has always been the beneficial owner of the Flats. 

24.  Mrs Ng pleaded that she had paid the HK$400,000 purchase price for the Flats out of her own monies.  Alternatively, if the price was paid by Kuen, she relied on the presumption of advancement in favour of Kuen’s wife.

25.  She further pleaded that the HK$1 million was Kuen’s share of profits derived from businesses run jointly by him and Kelly and not the purchase price for the Flats.

26.  She then pleaded in §9 of her defence and counterclaim that after the purchase of the Flats:

In respect of Flat B:

a.   initially and for a few months after the purchase in November 1973, she used Flat B as the office of the business of Tung Limited running a fashion wholesale business.  Tung Ltd was a company owned by Mrs Ng, Kuen and a relative;

b.   Mrs Ng then granted a licence to Kuen and Kelly (in 1974) to use Flat B as the office of the companies run by them at a licence fee of HK$2,000 per month which was alter increased to HK$10,000 per month.  They also had to pay the management fees, rates, utility charges and other outgoings for the flat;

c.   in about 1986, Kuen and Kelly moved their companies from Flat B to Flat C on the same terms.  They however did not occupy Flat C exclusively and shared it with the companies operating in Flat B;

d.   since 1986 and up to now, Flat B has been used by companies run by Kuen’s direct family members including his children. The companies included Tung Ltd that was run by Vincent.  The companies had to pay licence fees to Mrs Ng and be responsible for all expenses and outgoings in relation to the flat;

e.   from March 1993 to June 1993, Mrs Ng allowed a friend of James, Mr. Lee Chok Kay (“Chok Lee”) to use (part of) Flat B as the office of his company; and

f.   since about June 2004 Mrs Ng let part of Flat B to Dr LED Limited (“Dr LED”) (which was and is run by James and Winnie).

In respect of Flat C:

g.   Mrs Ng rented Flat C to an outsider at a monthly rental of about HK$4,000 to HK$6,000 from 1973 to 1985;

h.   from 1986, Kuen and Kelly used Flat C instead of Flat B for their companies.  They did not use or occupy Flat C exclusively but shared the same with the companies operating in Flat B from time to time.

i.   After Kuen’s death, Kelly has been using and occupying part of Flat C.

27.  The defendants further pleaded that Mrs Ng and Kelly had executed together the 1987 mortgage and the 1990 further charge.  They provided that Mrs Ng was the beneficial owner of the Flats.  Mrs Ng and Kelly also jointly and severally covenanted and agreed in the two documents that Mrs Ng had good right and title to charge the Flats free from all encumbrances.  Hence, Kelly was estopped from denying that Mrs Ng was and is the beneficial owner of the Flats

28.  Mrs Ng counterclaims: 

(a)   a declaration that Kelly has no right, interest or title in the Flats;

(b)   an order for possession of Flat C from Kelly;

(c)   mesne profits to be paid by Kelly in respect of his possession of Flat C from 15 March 2011 until delivery of vacant possession of the same;

(d)   an order vacating Kelly’s registration of the writ of summons herein as a lis pendens in the Land Registry against the Flats; and

(e)   damages for slander of title as the registration of the lis pendens has prevented the sale by Mrs Ng of Flat B to one Sino Leading Ltd (“Sino Leading”) pursuant to an agreement dated 10 October 2011 at the price of HK$7.2 million.

THE ISSUES

29.  Mr Lam, SC, leading counsel for the defendants set out the primary factual issues in his opening.  But he revised them substantially to the following in his closing submissions (to be followed by some legal issues if Kelly should win on these facts):

(a)   Who was the beneficial owner of the Flats?

(b)   Whether Kuen had agreed to sell the properties to Kelly?

(c)   Whether Mrs Ng knew and consented to, and had authorized Kuen to sell the Flats?

30.  Mr Ismail in turn set out in his closing submissions the key issues as follows:

(a)   Whether Kuen was the de facto owner of the properties (including the Flats) in the sense that he was the sole provider of the necessary capital for Mrs Ng to purchase and hold properties on trust for him?

(b)   Whether the motive behind the sale of the Flats was due to the fact that Kuen’s family had suffered major financial loss as a result of a series of bad investments in at least 3 residential properties in Fairview Park made by Mrs Ng/ Tung Ltd?

(c)   Whether the advertisements placed for eight days in Sing Tao for the sale of the Flats were genuine?

(d)   Whether the cheque payment of HK$1 million made by Kelly to Kuen was in consideration of the sale of the Flats from Kuen to Kelly made in September 1985?

(e)   The effect of the 1987 mortgage and the 1990 further charge (referred to below) on the Flats signed and agreed by Mrs Ng and Kelly?

(f)   Whether the manner in which Kelly subsequently used and occupied the Flats up till the present day was consistent with that of a beneficial owner?

31.  In the light of Kelly’s pleaded case and the defendants’ defence, I would revise slightly Mr Lam’s three questions to the following three primary issues:

(a)   Was Kuen or Mrs Ng the beneficial owner of the Flats?

(b)   In either case, whether Kuen had sold the Flats to Kelly for HK$1 million?

(c)   If Mrs Ng was the owner of the Flats and Kuen had sold them to Kelly for HK$1 million, did Mrs Ng authorize Kuen to sell them or did she ratify their sale by Kuen afterwards?

32.  All other factual issues mentioned by the parties and some other factual issues highlighted in the summary of evidence below are issues within the three primary issues. 

33.  If any of the three primary issues should be decided in favour of Mrs Ng, then Kelly’s claim will be dismissed. 

34.  If Kelly should succeed in all three primary issues, then the terms of the 1987 mortgage and 1990 further charge executed over the Flats will have to be considered.  The legal issue is whether the terms of the two documents will defeat Kelly’s interests in the Flats by way of estoppel.  (The deeds were for securing bank loans for Kelly’s use.  The factual issues raised by the deeds are the reasons of their making to secure bank loans for Kelly.   Their resolution can assist the resolution of the three primary issues above.)

35.  If the three primary issues and legal issue raised by the 1987 mortgage and 1990 further charge should all be determined in favour of Kelly, then the other legal issues of part performance, common intention constructive trust, proprietary estoppel and adverse possession will have to be determined accordingly.

BURDEN OF PROOF

36.  The burden of proof for the three primary issues is on Kelly.  As pointed out by Mr Lam in §20 of his closing submissions, it is incumbent upon Kelly to adduce sufficient positive evidence to prove his case.  Otherwise, even if the Defendants’ evidence should be rejected, his case will still be unproven (see Chan Ka Lim v Chow Wai Kin [2008] 5 HKLRD 881 at §26 per Le Pichon JA citing Scrutton LJ in Hobbs v Tinling (CT) & Co Ltd [1929] 2 KB 1 at p 21).

NARROWING DOWN TO THE RELEVANT ISSUES

37.  The parties have sought to argue in their pleadings and witness statements over other issues that are not relevant to the said issues and the relief claimed and counterclaimed. 

38.  The parties argued with vigour on whether Kuen’s family was financially very well off since the 1970s and continuously until the present.  The defendants also claimed that some of the companies and development projects managed by Kelly are and were beneficially owned solely by Kuen and some jointly owned by Kuen and Kelly.  However, this action has not been sufficiently pleaded or prepared for determining whether Kuen’s family has been wealthy from the 1970s up to now or the ownership as between Kuen and Kelly of the companies or projects managed by Kelly.  I therefore advised the parties to steer clear of matters not relevant to the issues of the action.

39.  I also advised the parties that if I should decide whether or not Kuen had owned solely or jointly with Kelly any company or project, it would only be an incidental finding for the purpose of deciding the nature of the HK$1 million paid by Kelly to Kuen on 13 September. I will not otherwise decide any question about the ownership of the companies or projects as between Kuen and Kelly as such is not an issue in this action.

40.  I further advised the parties that for companies incorporated or acquired from secretarial companies and projects started in or after September 1985, I will not consider them as they can have nothing to do with the alleged distribution of profits of HK$1 million to Kuen on 13 September 1985. 

41.  I have not considered whether the defendants should have raised these other matters in this action (Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581) though I regard them as irrelevant by reason of the state of the pleadings and relief pleaded by the parties. Even if the defendants should have raised them in this action, the defendants have not done so properly and sufficiently to enable them to be properly resolved herein.

ASTRO

42.  The defendants initially said that the HK$1 million cheque dated 13 September 1985 was a distribution by Kelly to Kuen of the profits derived from businesses they ran jointly.  The business under focus was Astro.  Most of the defendants’ witnesses gave evidence that Astro was owned solely by Kelly or jointly by Kuen and Kelly and managed by Kelly.  Vincent alleged in the defence that from 1974 to 2005, Astro was owned by his father, Kuen and one Mr. CK Wong (“CK Wong”) (who died in 1989) with each holding one of the two allotted shares. 

43.  Kelly disputed this.  Kelly’s case is that he was the sole owner of Astro holding one share of the company and his friend CK Wong held the other share as his nominee.  In about 1994, Kelly was also a director of a listed company 高昇地產 (“Ko Sing Land”).  Ko Sing Land had business dealings with Astro.  In order to conceal the conflict of interest, Kelly asked Kuen to hold his Astro share as his nominee and replace him as Astro’s director. But Kuen effectively returned the share in Astro to Kelly in 2005 by signing an allotment to allot 298 new shares to Kelly and made Kelly the shareholder of 298 out of 300 Astro shares.  Kelly is still the sole owner of Astro.  Kelly’s case on this point is convincing particularly when Mr Lam, SC for the defendants accepts for the purpose of this action that the allotment of the 298 shares of Astro to Kelly on 1 September 2005 is valid and effective.

44.  Vincent and his friend Dave Yip (“Yip”) also gave evidence that they had assisted Astro in earning over US$1.6 million from the sale of 1.6 million semi-knocked-down (SKD) calculator kits and re-sale of some television sets to the Mainland in about 1984.  Kelly denied these allegations.  He produced a Chinese judgments of the Intermediate Peoples’ Court of Guangzhou City dated 4 October 1988 and of a judgment on appeal therefrom by the Higher Peoples’ Court of Guangdong Province dated 30 December 1988 (C1/203-214). The judgments showed that Astro was selling completely assembled calculators and not SKD kits.  The selling price was at US$1.10 per calculator.  Apart from the cost of the SKD kit, Astro had to pay a factory HK$1.10 per kit to assemble the SKD kits into completely assembled calculators.  Hence, the gross profit could not be as high as US$1.00 per set.  Kelly also said that Astro could not recover the judgment debt of US$110,000 less HK$10,000. 

45.  Kelly also said that Astro suffered losses between 1980 and 1986.  He produced Astro’ tax assessments for the financial years of 1984/85 and 1985/86 showing that Astro was suffering losses for the financial years of 1983/84, 1984/85 and 1985/86.  It had accumulated losses of HK$1,722,262 as at 31 December 1985 (Core/80 and 116). There is no challenge to these assessments.  This defeats the defendants’ claim that Astro had profits to distribute to Kuen and the HK$1 million dated 13 September 1985 cheque came from such distribution.  This is so regardless of the ownership of Astro.

46.  Astro’s significance dwindled with the progress of the trial.  Though the defendants initially said that the HK$1 million came from Astro’s profits, Mr Lam only mentioned Astro in §73(c) of his closing submissions as follows:

“In addition, contrary to Kelly’s evidence, a document prepared and signed by him about Astro shows that he admitted that Astro was set up and run by both of them [Core/154, 156]. Yip’s evidence also supported that Astro was owned and run by Kuen and Kelly. There were apparently business dealings with the two brothers. It was not unlikely that monies related to such business dealings would be transferred between the two brothers.”

47.  Since Mr Lam did not pin-point to Astro or its profits being the source of the HK$1 million, I enquired with him in oral submissions on Astro’s significance.  My initial dialogue with Mr Lam on Astro was as follows:

“COURT: Yes. And by the way, I also have one point. What do you say as to the relevance of Astro in all these things, because I don’t think you have really mentioned Astro to any significant extent in your written submissions.

MR LAM: No, not -- I do not think...

COURT: Its name has featured once, but not relevant to the matters in dispute.

MR LAM: I think as evidence unfolds before you, the significance of Astro and the other company diminish for many reasons that -- some of them have already been mentioned by my Lord.

I mean, initially Astro was so -- well, was mentioned largely because our evidence -- I mean, it’s still our evidence...

COURT:   Kuen was one of the two equal shareholders for quite some time.

MR LAM:  Yes.  Not only that.  That goes to the purpose, the true purpose of the one million cheque, because you heard evidence that it’s not sale and purchase price, it’s distribution of profit probably related to Astro, and in our written submission we accept that the evidence may well be not too much evidence to support that proposition.  So I fall back to another submission that assuming that you do not accept that this distributable profit within Astro and any of the company it doesn’t follow that the one million cheque must be for sale of a property.  Simply we don’t know.”  (emphasis supplied)

48.  After some further exchange, Mr Lam stated his final position regarding Astro as follows:

“MR LAM: I do not wish to go into the evidence. Because my Lord asked me what is the significance of Astro, I said initially because the case had been put forward, we invite my Lord to accept that the one million dollar related to profit, but having heard all the evidence, I think to be objective and reasonable, I would not go as far as saying that there is sufficient evidence to invite my Lord to draw such inference, but even then, as my Lord correctly pointed out, it’s still for Kelly to prove that it’s for sale.” (emphasis supplied)

49.  I think it is right for Mr Lam to have chosen the final position aforesaid regarding Astro.  The defendants say that the payment by Kelly to Kuen of HK$1 million was a sharing of the profit from their business in Astro.  But their case on the nature of this cheque is only supported by their bare assertions.  Furthermore, the allotment of 298 shares of Astro to Kelly strongly supported Kelly’s case that he solely owned Astro.  Hence, there was no basis for him to distribute HK$1 million of Astro’s profit to Kuen.  Regarding the document Kelly signed which admitted that Astro was set up and run by both of them, Kelly explained in evidence that he did so to make Kuen appeared to be a businessman and to give face to Kuen.

50.  Kelly also showed by way of unchallenged tax documents that Astro had not made any profit and was suffering substantial loss at the material time.  Hence, regardless of the ownership dispute, Astro had no profit to share at the material time. 

51.  In the light of Mr Lam’s concession, it is not necessary for me to consider the defendants’ allegation that the HK$1 million was a distribution of Astro’s profit by Kelly to Kuen.  In any event, even if Mr Lam should maintain that the HK$1 million was distribution of Astro’s profits, I would rule against it.  The reason being the allotment of 298 shares of Astro to Kelly shows that Kelly was practically the sole beneficial owner of Astro and the unchallenged tax documents showing that Astro had not made any profit and was suffering substantial loss at the material time.  It is just for Kelly to prove that the HK$1 million cheque was the purchase price he paid Kuen for the purchase of the Flats under the 1985 Agreement. 

KELLY’S EVIDENCE

52.  Kelly is now 80 years old.  He is a businessman.  He used to run the advertising business of Worldwide in the 1970s.  From mid-1980s, he gradually switched to realty development in Hong Kong and the Mainland.  Healso traded in television parts, calculators and electrical appliances.  He is still involved in various property development projects in the Mainland.

Kuen and Kelly

53.  Kelly had four siblings.  Their father passed away in 1940 or 1941.  His elder sister Ng Yuk Wah was killed in a bomb explosion during the 2nd World War (“the War”).  He was about ten years’ old when the War ended.  His mother died in 1953 after the War.  His elder brothers Ng Pui Fun (“Fun”) and Kuen brought him up.

54.  Life was tough after the War.  Fun and Kuen were thirteen and ten years older than Kelly respectively.  They supported his living and education.  They played the father’s role.  Their relationship with Kelly was extremely close.  Kelly had immense respect and love for them.  He was particularly close to Kuen.  He and Kuen kept no secret from each other.  Whenever he encountered problems, he approached Kuen for help.

55.  Kuen was engaged in betting in greyhound racing in Macau since early 1950.  He was passionate about this activity.  He also owned some racing greyhounds.  He spent a lot of time researching into the racing and was very successful.  He was also well-connected with the “big shots” in the gambling world in Macau.

56.  Kuen told Kelly repeatedly that gambling in greyhound racing was not straightforward but involved illegality.  People in the game might engage in illegal off-course bookmaking and fixing of the outcome of races.  Kuen strictly prohibited Kelly from being involved in the game.

Mrs Ng

57.  Kuen and Mrs Ng started cohabitation in around 1951 or 1952.  Mrs Ng had received limited education.  Before the marriage, she worked as a manicurist in a beauty salon in Central.  After the marriage, she stopped working and Kuen supported her.  Kelly did not regard her a businesswoman. She did not have any gainful employment and did not run any business.  She merely held some properties and investments for Kuen.

58.  Kuen told Kelly that he had put his assets in Mrs Ng’s name as he did not want others to know that he had accumulated wealth through gambling in greyhound racing.  He was wary of potential investigation by the authorities.  He also told Kelly that if he could not trust his wife, there was no one he could trust.  Kelly referred to some real properties including Kuen’s matrimonial home which were all in Mrs Ng’s name.  He said they were Kuen’s properties held by Mrs Ng as Kuen’s trustee/nominee. 

59.  Since about 1990 or 1991, Mrs Ng suffered from mental problems.  Her problems were obvious.  She had occasional hallucinations. She was and still is on regular medical treatment.  (Mrs Ng produced a letter dated 10 January 2015 by her doctor, Dr. Ignatius How Mo Lam (C4/899) stating that Dr Lam had discovered in a consultation in July 1990 that Mrs Ng was suffering from mental illness.  But the records of and report given by the Psychiatric Department of Pamela Youde Nethersole Eastern Hospital (“Eastern Hospital”) show that Mrs Ng’s mental illness should have arisen in the early 1980s.  I will deal with this in detail in Winnie’s evidence.)

The children of Kuen and Mrs Ng

60.  Kuen had three children with Mrs Ng; Vincent, James and Winnie.  Before the present dispute had arisen, Kelly’s family was very close to them.  In his life time, Kuen had on occasions asked Kelly to look after his children in particular Vincent and help them if necessary. Kelly always agreed.

61.  Vincent was born in 1959.  He was educated overseas and returned here in about 1982.  Kelly let him use Flat B as his office.

62.  James was born in 1960.  He received university education in the USA and had been awarded with a scholarship.  He was an engineer and established his business in the USA.  He returned here in 1994/5 when Vincent was in financial trouble.  He now runs Dr LED in making LED lights in the Mainland and wholesaling them in the USA.  With Kelly’s permission, he and Vincent used Flat B as their office since 1997 or 1998.

63.  Winnie was born in 1963.  She used to run a sandwich shop in Quarry Bay.  That was closed in about 2009.  When Kelly’s daughters, Jennifer and Vivien studied in Canada, Winnie took care of them for about a year. They used to have a good relationship.

Purchase of the Flats on 15 November 1973

64.  Kuen was very active in greyhound race gambling in the early 1970s.  He earned a substantial wealth from it.  Mrs Ng was financially dependent on him.  The Flats were purchased in Mrs Ng’s name on 15 November 1973 for HK$400,000. Kelly, for reasons explained above, regarded the price as paid by Kuen and Mrs Ng was holding the Flats as trustee/nominee of Kuen. 

Use of the Flats prior to 1985

65.  Kelly recalled that the Flats had been vacant for a year or two in the early 1980s (which should be the early 1970s after the purchase).  Kuen then invited him to use them as his business office. It was Kuen who discussed the matter with him.  Mrs Ng was not involved. 

66.  Kelly was running Worldwide and Astro.  Worldwide was an advertising business and Astro was trading in various electrical appliances and parts. His office was in Wellington House in Wyndham Street.

67.  Kelly accepted Kuen’s invitation and moved his office to the Flats after the expiry of his Wellington House tenancy. He commenced occupying the Flats from about 1976 or 1977.  He used Flat B for Worldwide to draw up plans and arts layout and Flat C as an office for Worldwide’s sales and marketing and as an administrative office for Astro.  He paid a rental of HK$2,000 per month directly to Kuen until he purchased the Flats from Kuen in September 1985 as referred to below.

68.  Kelly stressed that throughout the years he had never paid any rental or license fee to Mrs Ng and Mrs Ng had not asked him for any.  She merely held the Flats as her husband’s nominee.

The 1985 Agreement and the HK$1 million

69.  In the 1980s, Kuen had already retired. One day in late July 1985, Kuen told Kelly that Mrs Ng had purchased some houses in a new real estate development in the New Territories as an investment, but the investment resulted in substantial loss.  Mrs Ng and/or Kuen had to repay the mortgage loans.  Kuen wished to sell the Flats to repay the loans. 

70.  Back in the mid-1980s there were only a few estate agents in Hong Kong.  It was common to advertise the offer for sale of commercial premises in newspapers.  Since Kelly was in the advertising business, Kuen and Mrs Ng went to his office in late July 1985 to place advertisements in the Sing Tao Daily to offer the Flats at HK$650,000 each.  It appeared to Kelly that Kuen owned the Flats and he decided to sell them.  Mrs Ng had no say and did not express any view.

71.  The advertisements were first posted on 1, 2, 5 and 6 August 1985 offering Flat C for HK$650,000.  There was no response. Kuen then lowered it to HK$600,000 and advertised again on 23 and 27 August and 3 and 4 September 1985.  There was still no body interested.  Kuen then told Kelly that he was worried that the United Chinese Bank might enforce the mortgage loan.  If so, he and Mrs Ng would have no money to repay the bank.  Kelly admitted in cross-examination that he could recall the exact time when Kuen told him this, but he maintained that it was said by Kuen.

72.  In mid-September, Kuen told Kelly “都冇人有興趣買呢兩個單位，不如你用一百萬同我買咗佢，我又可以還銀行D貸款，你又唔使搬, 你覺得點?” (Since there is no interested buyer for the two flats, what if you buy them from me at HK$1 million.  I can pay off the bank loan and you don’t have to move out.  What do you think? – free translation.)

73.  At that time, Kelly had made some money from his advertising and realty business.  He produced his personal profits tax assessment issued by the Inland Revenue Department for the financial year 1985/86 showing that he had made a net profit of HK$10.48 million out of his purchase and sale of a property at No. 6 Tai Hang Road (C1/198 – 200 and Decision in HCA 5223/1979 dated 31 July 1980).  He said in evidence in chief that his net profit from the transaction was about HK$8 million net after some payments to the vendor and to part of the vendor’s tax.

74.  In the light of Kuen’s financial difficulty and because of their close relationship, Kelly agreed to purchase the Flats from Kuen at HK$1 million (“the 1985 Agreement”).  He drew a personal cheque for HK$1 million, dated it 13^th September 1985 and paid it to Kuen (Core/72).

75.  Owing to their close relationship and the trust and confidence they reposed to each other, they did not engage lawyers to sign the contract and/or deal with the transfer formalities immediately.   There was some latitude about the formalities.  Besides, Kuen was concerned about face.  He was well acquainted with the bank managers.

76.  Kelly said that Mrs Ng knew about the 1985 Agreement and had agreed to and/or approved of the same.  It is also Kelly’s case that even if she were the true owner of the Flats, she must have authorized Kuen to act for her and to represent her in making the agreement with Kelly or she had ratified the 1985 Agreement.

Kelly stopped paying rental to Kuen & Astro paid rent to Kelly

77.  After paying Kuen the HK$1 million pursuant to the 1985 Agreement, Kelly stopped paying any rent to Kuen.  He also started paying the management fees government rates/rents for both Flats.  He also procured Astro to pay him rent at HK$2,000 per month for the Flats. This was gradually increased to HK$10,000 per month in 1990.  The Accrued Expenses section of Astro’s accounting journal from 1 January 1989 to 31 December 1994 showed that Astro owed Kelly rental for these years totaling HK$906,000 (C2/287 – 297).

Use of the Flats after the 1985 Agreement

78.  Since about 1983, Kelly had spent considerable time in the Mainland to work on real estate projects.  The development projects were undertaken through PRC joint venture companies.  Apart from the Mainland projects, Kelly was also involved in some Hong Kong projects.  Hence, he needed an office in Hong Kong.  After the purchase of the Flats, he continued to use them as the business office of Astro, Worldwide and his other companies such as China-PNG International Ltd.

79.  Flat B was also the registered address of Tung Ltd, a company belonging to Kuen’s family.  This had already been so before the making of the 1985 Agreement.  But Tung Ltd had no physical presence in the Flats at all.  It had no substantive business.  Owing to the close relationship between Kuen and Kelly, Kelly let the company use Flat B as its address.  

The 1987 mortgage

80.  In early 1987, Kelly was involved in some projects in the Mainland in Guiyang, Changsha, Xi’an, Yingde.  They needed substantial investments from Kelly.  He asked Kuen to transfer the Flats to him for him to obtain mortgage finance.  However, Kuen was concerned about the unstable mental conditions of Mrs Ng.  He was afraid that the title transfer would provoke her. (A letter dated 21 March 2011 by Alvin Cheng & Rosaline Choy, solicitors for Kelly stated that Mrs Ng had mental illness in 1980 or even earlier.  However, Kelly said in §13 of his witness statement dated 18 June 2014 that Mrs Ng had mental illness since around 1990 or 1991.  He confirmed it in oral evidence by reference to his agreement to set up a flour factory in the Mainland.  Mrs Ng’s doctor, Dr Ignatius Lam also stated in a letter dated 10 January 2015 that he learnt of Mrs Ng’s mental illness in a consultation in July 1990 (C4/899).)

81.  Kuen proposed to Kelly that instead of transferring the Flats to him, the Flats could be mortgaged to United Chinese Bank for a loan for his use.  Kuen at that time was very well acquainted with the senior managers of this bank which included the general manager Kwan Tao Ngai and manager Choi Chuen Fat.  Kuen said he could obtain the relevant loan documents from the bank managers and arrange Mrs Ng to the sign them at a convenient place.  In this way, the irritation and/or discomfort to Mrs Ng could be kept to the minimum. 

82.  Kelly accepted Kuen’s suggestion. He could tell that Kuen was concerned about the condition of Mrs Ng.  He did not push and stress Kuen.  Kuen then arranged Mrs Ng to sign a mortgage deed dated 31 March 1987 to mortgage the Flats to United Chinese Bank and obtained a loan facility of HK$500,000 for Kelly’s use.

The 1990 mortgage

83.  In early 1990, Kelly’s projects in Changsha and Guiyan again needed cash.  Kelly again requested Kuen to transfer the Flats to him for him to obtain more mortgage loan.  Kuen replied that Mrs Ng’s conditions had not improved.  Kuen suggested that he would obtain another mortgage loan facility for Kelly from United Chinese Bank in the same way as he did in 1987.  For the same reasons mentioned above, Kelly agreed and Kuen arranged a further mortgage loan facility of HK$300,000 for him. 

84.  These two mortgage loan facilities were continuously renewed for Kelly’s use until they were cancelled by Mrs Ng in March 2011 when the ownership of the Flats was put into dispute.

85.  On various occasions in 2005, 2007 and 2009, Kelly asked Kuen to transfer the title of the Flats to him.  However, Kuen always said that Mrs Ng’s conditions were still unstable and he was worried that the transfer would irritate her and worsen her conditions.  Kelly recalled one occasion in 2009when he and his staff Ms. Pak Ching fetched Kuen from the Hong Kong Sanatorium Hospital.  When they returned to Kuen’s home, Kelly asked Kuen to transfer the title of the Flats to him.  Kuen said “好，我睇吓可以點做” (Ok, I will see what could be done – free translation).  In the light of Kuen’s plight, Kelly did not push him further.

Ownership of Astro and Kuen’s other companies

86.  Vincent alleged in the defence that from 1974 to 2005, Astro was owned by his father, Kuen and CK Wong with each holding one of the two allotted shares.  Vincent also said that he had worked in Astro from 1982 to late 1985 and helped it gain substantial profits in some trades involving calculators and television sets.  I have already pointed out above that Mr Lam SC does not contend anymore that the HK$1 million was from Astro’s profits.  Hence, it is not necessary to consider the ownership of Astro or whether it had made any profit at the material time.  It is just for Kelly to prove that the HK$1 million was given by him to Kuen for the purchase of the Flats.

87.  Kelly further said that back in the 1970s, Kuen had a circle of friends of high social status.  Although Kuen had gained substantial wealth from gambling, he did not have any legitimate business or profession. Kelly added him as a director or shareholder to his companies whenever possible so that he could present himself as a businessman.  This was to give him face. However, for companies with other investors, Kelly would refrain from adding Kuen as nominee shareholder or director except when he needed more voting rights in the board or shareholders’ meetings.  Kuen in fact had no beneficial interest in these companies.  Kuen also introduced Kelly to his friends to expand Kelly’s business opportunities.  The defendants, however, say that Kuen has business investments in Hong Kong and Macau and one of which was in a floating seafood restaurant.  But I need say no more about these as there is no allegation that they had anything to do with the HK$1 million cheque.

Vincent’s return to Hong Kong

88.  Vincent returned to Hong Kong in the early 1980s.  Kelly at Kuen’s request employed him to work in Astro for about a year.  He assisted Kelly in some trading of electronic calculators in the Mainland. Vincent soon decided to run his business and stopped working for Kelly. 

89.  In around 1990 or 1991, Kelly at Kuen’s request allowed Vincent to occupy Flat B for free to help Vincent reduce operating expenses of his new business.  Kelly was then using Flat B to store miscellaneous stuff like office furniture and Flat C as Astro’s office.  He had stopped Worldwide.  Vincent then moved into Flat B with a few staff.  He later paid the management fees and government rents/rates for Flat B.

90.  In 1992 or 1993, Vincent established a financial business in the name of Niceson in the Bank of China Tower.  He kept Flat B as his personal office.  After his business had failed, he stored some office furniture in Flat B.

   James’ return to Hong Kong

91.  James returned to Hong Kong (to work with Vincent).  In about 1997 or 1998, Kelly at Kuen’s request allowed James and Vincent occupy Flat B as their office free of charge.  Vincent at that time had no staff working in Flat B.

92.  James then ran Dr LED to manufacture and sell LED lights.  He travelled to the Mainland regularly.  He needed an administrative office in Hong Kong.  Healso did not recruit any staff.  He simply transferred the telephone lines in Flat B to Flat C for Kelly’s staff to take message for him. He mostly worked at home.  He shared the management fees and government rates/rents of Flat B with Vincent.  Kelly also allowed Winnie to do accounting work for VincentandJamesinFlatC. 

93.  The defendants have disclosed some tenancy agreements saying that Dr LED had leased Flat B from Mrs Ng.  Kelly said he had never seen such agreements and had no knowledge of them.  He believed that James made this artificial arrangement to reduce Dr LED’s tax liability.  

Kelly’s payment of expenditures and contribution towards the Flats in reliance of the 1985 Agreement

94.  Kelly believed that there was no doubt that Kuen, Mrs Ng and their two sons had accepted and acknowledged that pursuant to the 1985 Agreement, Kelly was the real owner of the Flats.  Kelly had throughout the years maintained the Flats as a true owner would.

95.  After Kelly had purchased the Flats pursuant to the 1985 Agreement, he started paying the management fee and government rent/rates for the Flats.  When Vincent had the use of Flat B, he (and later with James) paid the same fees for Flat B upon Kelly’s request.

96.  In 1996, 2002 and 2003, Kelly engaged contractors to improve, repair and/or renovate the Flats. 

97.  On or about 5 February 1996, the Building Authority issued two building orders against some illegal structures on top of the concrete canopy of the Flats.  Kelly, as the owner, took care of the matter. His neighbours received similar orders.  Kelly engaged “Sing Kee Company” to carry out the demolition and related repair works at the cost of HK$22,000.00.  Kuen, Mrs Ng, Vincent and James had no involvement in these works at all.

98.  In 1996 or 1997, the air-conditioning system in the Flats caused water seepage.  Kelly engaged contractors to rectify the problem.  

99.  In about 2002, the Building Authority took issue with some metal frame that supported the air-conditioners.  Kelly procured Astro to engage “Wai Lung Decoration Engineering” to rectify the problem and pay HK$42,000.00 for the works.

100.  On about 14 April 2003, the Building Authority issued a letter against some metal fences erected on the concrete canopy of the Flats.  These were illegal structures.  Some neighbours received similar complaints.  Kelly liaised with them and engaged “Wai Lung Decoration Engineering” to carry out the necessary rectification works and procured Astro to pay HK$5,000 for the works. Kuen, Mrs Ng, Vincent and James had little involvement in these works.

101.  Kelly also paid the cleaning fees for both Flats until 2008.  He stopped sending workers to clean up Flat B in 2008 partly because of the increase in the fees and partly because he thought that Vincent and James should pay the cleaning workers themselves.  Kelly also did not want his cleaning workers to disrupt the tests conducted by James on his LED lights in Flat B. 

   After the death of Kuen on 18 February 2010

102.  One day in about mid-2010, Kelly told Vincent and James in Flat C that they knew that the Flats had been sold to him long ago.  They should honour their father’s promise to arrange the transfer of title of the Flats to him.  They said they would see what they could do.  They did not dispute Kelly’s claim or suggest that the Flats belonged to Mrs Ng or Kuen. 

103.  However, on 4 December 2010, Mrs Ng through Messrs Yung Yu Yuen & Co. sent an open letter to Kelly offering him HK$2 million for him to deliver up vacant possession of Flat B to Mrs Ng (Core/254).

104.  Yung Yu Yuen & Co. on behalf of Mrs Ng sent Kelly a follow up letter dated 15 February 2011 demanding him to deliver up vacant possession of Flat C (Core/255). 

105.  Kelly then instructed his solicitors to issue a reply letter dated 21 March 2011.  The letter stated that the Flats had been sold by Kuen to Kelly for HK$1 million back in 1985 and Kelly was the real and/or beneficial owner thereof (Core/256-257).

   The sale of Flat B by Mrs Ng

106.  Mrs Ng signed a preliminary sale and purchase contract on 10 October 2011 agreeing to sell Flat B to Sino Leading for HK$7.2 million.  But the sale could not proceed to completion because of this action. 

  Kelly’s alternative claim of adverse possession

107.  By reason of Kelly’s evidence summarized above, Kelly claims that Mrs Ng all along knew and accepted that Kelly had purchased the Flats from Kuen in September 1985 pursuant to the 1985 Agreement. She had agreed to the transaction and knew that Kelly was the “real” owner of the Flats (or at least before her mental condition had deteriorated).

108.  Kelly further says that even if Mrs Ng had no knowledge of the 1985 Agreement and/or the dealings between Kelly and Kuen, Kelly had assumed total and exclusive physical possession and occupation of the Flats since September 1985 as the owner thereof to the exclusion of the whole world. Even if Mrs Ng had any interests in the Flats, the same should have been extinguished in favour of Kelly.

JENNIFER’S EVIDENCE

109.  Jennifer is the younger daughter of Kelly.  She used to have a close relationship with Kuen’s family.  She was particularly close to James and Winnie because she and her elder sister had been under their respective care when studying in North America.  After James had decided to stay in Hong Kong, Jennifer had met him from time to time for dinner.

110.  Jennifer knew since she was a child that her father Kelly had been using the Flats as his office for his businesses. Her understanding was that Kelly owned the Flats.  She learnt this from her late mother who told her that Kelly had bought the Flats from her uncle Kuen when Kuen was in need of money.  Her late mother, when terminally ill in 1993, told her at home the particulars of the properties Kelly owned and reminded her of his ownership of the Flats.  Her late mother passed away in 1995.

111.  Jennifer also recalled that when she worked in Kelly’s office in the summer vacation in July 1988, Kuen occasionally visited Kelly at the office in the morning to have short chats and stayed there for a while reading newspapers.  She also recalled that Kelly had nagged at Vincent for his making Flat B messy.  That was the first time she met Vincent.

112.  In about 1995 when Kelly mentioned at home about Vincent’s financial situation, Kelly also told her that he had purchased the Flats from Kuen and/or Mrs Ng back in 1985 at HK$1 million when they suffered from cash-flow problem caused by some bad property investment. 

113.  It appeared to Jennifer that Kelly always treated the Flats as his own and he would be engaged by matters relating to them.  He had sought her advice on how to deal with some illegal structures on the canopies of the Flats when the structures were dealt with by Building Authority in around 1996 and 2002 and 2003.  She had drafted reply letters to the Building Authority for him.  He eventually engaged contractors to carry out the necessary rectification works.  

114.  Jennifer did not find it surprising that no step had been taken to transfer the title of the Flats from Mrs Ng to Kelly because Kelly and Kuen shared an extremely close relationship and their brotherhood bondage was extremely strong.

   The discussions and emails in 2005

115.  In late 2004 or early 2005, Jennifer received a phone call from Winnie.  Winnie sighed and said, “My mother is trying to sell the properties.  Is there any way we can stop her?”  Jennifer replied, “Are the properties her own properties?  If they are her own properties then of course, you cannot stop her from selling them even though you think it is impulse selling due to her mental disorder.”  Winnie then said, “Of course not!  They are my father’s properties.”  This conversation confirmed what Kelly had told Jennifer that Kuen did not hold properties in his own name but put them in Mrs Ng’s name.

116.  In or about early 2005, Winnie called Jennifer saying that Mrs Ng’s manifestation of mental problems had caused a lot of stress to Kuen.  Mrs Ng often called property agents to sell Kuen’s properties. Winnie enlisted Jennifer’s help to make a Chinese Will and power of attorney for Mrs Ng.  Jennifer explained that if Mrs Ng lacked the necessary mental capacity, the validity of the documents might be challenged in future.  She then sent Winnie a draft power of attorney for her use (Core/243-244).

117.  On or shortly before 12 August 2005, Kuen called Jennifer and asked her whether there was any way to restore the title of properties from Mrs Ng back to Kuen in view of the mental conditions of Mrs Ng.  She told Kuen to engage doctors to examine Mrs Ng’s mental conditions and apply to court for an order under the Mental Health Ordinance that she was mentally incapable of managing her assets.  Kuen responded that such was impossible, because getting Mrs Ng to be examined by a doctor would make her go wild which would turn into a disaster.

118.  After the conversation with Kuen, Jennifer received an email from Winnie on 12 August 2005 relaying Kuen’s query if it was possible to add Winnie as a co-owner of a property.  Jennifer understood that the property was Kuen’s home at Flat F, G/F, Conway Mansion, Conduit Road (“Conway Mansion”) which was in Mrs Ng’s name.  Kuen was worried that because of Mrs Ng’s conditions, she might suddenly sell everything (Core/246).  She then replied to Winnie.  The email exchange “the August 2005 email exchange”) is as follows:

“Jennifer,

It’s me. The trouble one. Call me if you have time. My daddy asked again, it’s possible to add my name into the property, or change the owner….. In case my mother might sell everything…

….

Love, Winnie”

119.  Jennifer replied on the same day as follows:

“Hello sis!

It’s ok bor! Not so troublesome lor…I will call you to discuss about it tonight la…don’t worry…

Jennifer”

120.  Kelly told Jennifer that Kuen at some stage considered procuring Mrs Ng to transfer 50% interest of the Conway Mansion to Winnie and then mortgage this 50% interest for some cash for their family. Kelly also said that Kuen had considered selling the Conway Mansion outright, but Kelly was against the idea.  Kelly was worried that Kuen might have nowhere to live thereafter.

121.  Sometime in October or November 2005, Jennifer’s elder sister, Vivien reminded Kelly to make a will.  They discussed the ownership of the Flats.  Jennifer told Kelly to ask Kuen to set the formalities right to avoid a future dispute.  Kelly said it would be very difficult for him to ask Kuen again because Kuen was like his father.  He could not press Kuen further as Kuen did not want to agitate Mrs Ng.  Kelly asked Jennifer to talk to Kuen’s children.  Jennifer then sent an email to Winnie and copied it to James and Vincent on 10 November 2005 (“the November 2005 email”) (Core/247-248). The November 2005 email read:

“Hello Winnie,

My dad asked me about the stamp duty issue if your mother would give half share of the property your family is now residing to you as a gift and your father want to take out a mortgage loan on that half share. Stamp duty would be charged for the transfer but I would suggest that you should go on to prepare the deed of gift for your mother’s transfer of the half share to you but I don’t think it is a wise step to take out a mortgage loan, simply for the purpose of family expenses. Uncle (your dad) was so very upset and told my dad yesterday that he wanted to sell the property he is residing now. This is of course not a good idea. I am sure that the three of you can shoulder the family expenses together such that Uncle needs not worry about the taking out of a mortgage loan. Perhaps the three of you should reach a consensus as to the contribution to the family expenses so as to calm Uncle’s worry.

As Vivien returned and we had persuaded Dad to make a will, so I have to clarify the details of his assets and of course, liabilities.

As I understand, the 2 office properties, one occupied by Dad and the other by James and Vincent are both registered in the name of your mother holding on Uncle’s behalf but both premises had been sold to Dad at the consideration of $1,000,000 in 1985, without taking steps to change the title owner. You may confirm this with Uncle so as to avoid any misunderstandings and I understand that Vincent and James also knew about this matter.

My Dad told me that he would give one office back to Uncle (the one James and Vincent is using now). In that case, I would like to make all the necessary documents to set things right. So, if you have to make the deed of gift as well, I suggest that I can find a lawyer to do everything in one go so that the legal cost would be cheaper.

I understand that your mother had signed a Power of Attorney before in your favour but I have forgotten the terms therein. Perhaps you could fax to me or email the Power of Attorney to me for perusal and see what we can do with it.

Get back to me as soon as possible la. Talk later.

    Jennifer”(emphasis supplied)

122.  Previously when Jennifer discussed the matter with Kelly, Kelly said that as he did not use Flat B, he would give it back to Kuen.  He envisaged that James and Vincent could inherit the flat in future.  Kelly was always kind to James and Vincent and wished that they could run their business successfully.

123.  Winnie replied to Jennifer on the next day as follows:

“If you have time, please call me. It’s just too complicated to explain.

Cheers,

   Winnie”

124.  Jennifer recalled in cross-examination that she did not call Winne after her receipt of Winnie’s reply.  She explained that when she got this reply, she focused on the words “too complicated to explain”.  She did not see any complication in the matter. If there were, Winnie could have set out her understanding.  She thought that Winnie just did not want to deal with the problem.  She did not want to push Winnie, James or Vincent as they were facing many problems.  She also told Kelly about Winnie’s reply and her view that they did not want to face the problem.  Kelly suggested to leave the problem as it was.  She also told her sister Vivien about Winnie’s reply and Vivien did not express any view.  She then put the matter aside.  She mentioned it again in an email on 26 March 2008 as referred to below. 

125.  She denied Winnie’s case that she had called Winnie and got an explanation from Winnie.  She denied that there was such conversation.

126.  None of Winnie, James or Vincent sought to rebut by email what Jennifer said in the November 2005 email on the Flats. They also did not suggest by email that the Flats were owned by Mrs Ng or that Kelly was only a licensee allowed by Mrs Ng to use the Flats.

   The discussions in 2007 and 2008 and the March 2008 email

127.  In 2007 and 2008, Jennifer talked to James and Winnie individually and suggested that they and Jennifer should get Kelly and Kuen together and see how to transfer the title of the Flats to Kelly.  James and Winnie always said it was difficult because of Mrs Ng’s conditions. They said Mrs Ng would go crazy if she was asked to transfer the title of the Flats to Kelly.

128.  In early 2008, Kelly told Jennifer that in view of the property market and the title problem, it might be a good time to sell the Flats and buy a newer commercial property.  Kelly considered this a way to resolve the title issue.  Jennifer told him again to get all parties together to discuss how this matter could be resolved.

129.  Not long after this discussion, James sent Jennifer an email complaining that Kelly had used her as an excuse to gather everyone for a discussion on the title issue.  He said Kelly was driving everybody crazy. 

130.  The email chain started on 18 March 2008 with a discussion between Jennifer and James on how to handle a potential civil claim by James (or his company) against two entities called Wellbase and Wah Wang and to get back some moulds from Wellbase.  Jennifer explained in cross-examination that James had invested in a manufacturing of LED lights, but the moulds were detained by the factory.  James had orders to fulfill and wanted to get back the moulds and investment.

131.  The email chain continued to 26 March 2008 when James incidentally complained to Jennifer about Kelly’s calling for a discussion over a dinner meeting (Core/243-253).)  James said in his email:

“By the way, your father is driving everybody crazy. Every time, when he sees me in the office he comes to talk to me about the D’Aguilar office this and that.

He said YOU want everyone comes together to have a discussion dinner meeting!”

132.  Jennifer then replied as follows (“the March 2008 email”):

“First of all, pls stop saying that my father is driving everybody crazy.

He is right that I am the one who says that everybody should sit down together and have things sorted out clearly. I hate the way things are being done, in such a chaotic and ambiguous way.

And with respect, I really am displeased to hear from Winnie or you making remarks/complaints against my dad whether they are true or not.

After all, I know that he cares and worries so much about yr dad and the three of you because he always respects and cares for your dad as if he was his own father. One thing I am sure is that he and I have no intention of getting any advantage from you all.

However, from time to time, I received calls from yr family members or my father asking me how to stop your mother from selling the properties. The answer is simple: MAKE EVERYTHING CLEAR!

It all goes down to the simple question, whose title do the offices in Winner Bldg belong to? If it is Yr dad and my dad in 50:50 shares, then make the proper documentation and legal registration. If not, it is 100% yr mother’s or 100% your dad, then it is even much simpler. I won’t listen to one side story whether it’s from dad or others. That is why I ask my dad to get everyone sitting together and make things clear. Then I can decide what to do to make things right.

Remember I once sent out an email asking you and Winnie and perhaps c.c. Vincent about this issue but none of you wanted to answer me directly. All I need to know is a straight forward answer.

He may have suggested selling the properties because the market is so good and we do share the concern that half of the properties are indeed illegal structures and would not worth as much as it is now if the market is not with us. But even when he was thinking selling the properties, he also had in mind to buy another one such that you can have a place to continue yr work.

I heard about complaints from Winnie that my dad wants a Seaview office etc etc. Well, to be honest, I have been with George all these years learning to invest in properties and we both agree that if you want to buy a property, get a good quality one, a property with Seaview is certainly a good asset. I do not see the problem Winnie complained about. Quite the opposite, if you use the purchase money to buy any cheap affordable office, the property value would definitely drop significantly when the market goes downhill.

Winnie/You once told me that my dad caused all the troubles and asked your mum out for tea to discuss about selling the properties. I asked my dad about this and the truth is that it is yr mum who called my dad to discuss about selling the property. So, my dad told her that he would get back to her some later time for tea. That is why he called yr mum out for tea. So, sometimes things are not as simple as you see.

Having said so, I am still of the view that we should all get together and clarify these matters.  Otherwise, I can assure you that the longer this drags on, the chaotic it will get.”

133.  James then responded to Jennifer’s email point by point (replies by James are underlined and italicized):

“First of all, pls stop saying that my father is driving everybody crazy.

He is right that I am the one who says that everybody should sit down together and have things sorted out clearly. I hate the way things are being done, in such a chaotic and ambiguous way.

Dear Jen,

In that case, we should have a meeting if that helps.

And with respect, I really am displeased to hear from Winnie or you making remarks/complaints against my dad whether they are true or not.

Sorry about that.

After all, I know that he cares and worries so much about yr dad and the three of you because he always respects and cares for your dad as if he was his own father. One thing I am sure is that he and I have no intention of getting any advantage from you all.

None taken but as you know it is a mess I have no idea how to fix. And one crisis after another I have to fix.

However, from time to time, I received calls from yr family members or my father asking me how to stop your mother from selling the properties. The answer is simple: MAKE EVERYTHING CLEAR!

If there is an easy resolution to that, that would be nice.

Actually, both of them (your father and my mom) wanted to sell but in different time frame and against the opinions of each other’s and for diffident reasons.

It all goes down to the simple question, whose title do the offices in Winner Bldg belong to? If it is Yr dad and my dad in 50:50 shares, then make the proper documentation and legal registration. If not, it is 100% yr mother’s or 100% your dad, then it is even much simpler. I won’t listen to one side story whether it’s from dad or others. That is why I ask my dad to get everyone sitting together and make things clear. Then I can decide what to do to make things right.

I have no idea how “simple” or “difficult” that could be.

Remember I once sent out an email asking you and Winnie and perhaps c.c. Vincent about this issue but none of you wanted to answer me directly. All I need to know is a straight forward answer.

I never ask them, I have just found out that my father paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed.

He may have suggested selling the properties because the market is so good and we do share of concern that half of the properties are indeed illegal structures and would not worth as much as it is now if the market is not with us. But even when he was thinking selling the properties, he also had in mind to buy another one such that you can have a place to continue yr work.

I heard about complaints from Winnie that my dad wants a Seaview office etc etc. Well, to be honest, I have been with George all these years learning to invest in properties and we both agree that if you want to buy a property, get a good quality one, a property with Seaview is certainly a good asset. I do not see the problem Winnie complained about. Quite the opposite, if you use the purchase money to buy any cheap affordable office, the property value would definitely drop significantly when the market goes downhill.

Winnie is so into the restaurant that she does not have a global view on things.

Winnie/You once told me that my dad caused all the troubles and asked your mum out for tea to discuss about selling the properties. I asked my dad about this and the truth is that it is yr mum who called my dad to discuss about selling the property. So, my dad told her that he would get back to her some later time for tea. That is why he called yr mum out for tea. So, sometimes things are not as simple as you see.

I always try to avoid or get involve in the last generation mess. It all started in the turn of the century 1900 with a weak China, and then the Second World War… Really, otherwise, it would not be so messy. It was indeed a very difficult time in the 50s, 60s and 70s. I remember most of it starting the 60s of course. It is a different world now.

Having said so, I am still of the view that we should all get together and clarify these matters. Otherwise, I can assure you that the longer this drags on, the chaotic it will get.

OK, sometimes next week is good for me.

As you know I need to go to China most of the time.

James”

134.  This email chain concluded with Jennifer’s reply on 27 March 2008 as follows:

“I understand the frustrations you are in and the stress and of course, the mess of NG family. Don’t worry about that issue, it is not as urgent as your case anyway. I just want to express how I feel and don’t want to get things worst with further misunderstandings. So, let’s get back to your case first. …

   Jen”

135.  Despite James’ agreement in his reply to get everybody together to discuss the matter, it never materialized.  The problem again faded to the oblivion.  Jennifer continued to assist James in his civil claim.  She did mention to James about the fixing of dinner twice.  On one occasion, he said Vincent was not in Hong Kong.  On the next occasion, he said he had failed to fix the gathering.  But she was a bit relieved as James did not dispute Kelly’s interest in the Flats.

   Kuen’s alleged visit to Jennifer’s chambers in 2009

136.  One day in 2009,Kuen called Jennifer telling her that he would visit her at her chambers at Far East Finance Centre on the next day.  Jennifer said in cross-examination that this could be before 22 July 2009 when Kuen received the second opinion on his lung cancer. Kuen went to her chambers on the next day.  He told her that the Flats had been sold to Kelly years ago, but he could not procure Mrs Ng to complete the title transfer.  Mrs Ng would go crazy if anyone dared to get her money.  He was sorry for his inability to do anything.

137.  He asked Jennifer if there was any way to transfer the Flats to Kelly.  He had previously declined Jennifer’s suggestion of applying to court for a declaration on Mrs Ng’s capability of managing her own assets, Jennifer told him that she had no other way.  Hewas quite emotional and distressed.  He broke into tears.  Jennifer comforted him and told him notto worry and that he could deal with the matter when his health improved.  The conversation lasted for about half an hour.

   Jennifer was caring to Kuen and James

138.  Kuen was diagnosed with lung cancer in about the middle of 2009.  The medical advice he received was quite poor.  The recommended treatment was invasive and costly.  Jennifer was acquainted with an oncologist.  She accompanied Kuen and Winnie to this specialist for consultation on 22 June 2009 and obtained a better second medical opinion for Kuen.  She then wrote a comforting email to James reporting to him the second opinion in detail (Core/253-1-253-2).

   The discussions after this dispute has arisen

139.  Jennifer told James more than once that Kelly owned the Flats and they should find a way to set the title right.  However, every time when she mentioned this issue, James appeared to be evasive and just said that he tried not to be involved in the mess of the last generation.  Jennifer then asked him to verify the matter with Kuen.

140.  The last two occasions when Jennifer discussed this matter with James took place sometime after Kelly had received the demand letter from Mrs Ng’s solicitors demanding vacant possession of Flat C from Kelly and after Kelly and Jennifer learnt that Mrs Ng had sold Flat B.

141.  One of the conversations took place when Jennifer was driving James to her home for dinner.  She asked him what Mrs Ng was trying to do by issuing the demand letter.  James said he knew nothing about the demand letter.  She then confronted him with Winnie’s change of the correspondence address for paying rates for the Flats from Kelly’s office to their home and Dr LED then settled the rates with cheques signed by James.  James was then silent.  Jennifer said that unless James, Vincent and Winnie would sit down with Kelly to discuss the transfer of the title without delay, Kelly would engage lawyer to deal with the matter.  James said he would try to make the arrangement, but it never materialized.

142.  Jennifer in cross-examination also referred to some more conversations she had with James.  But they do not have material effect on the development of the dispute.

   The relationship between the two families

143.  Jennifer all along stressed that the relationship between Kuen and Kelly was very good and was akin to that of father and son.  She also said that her relationship with James was very good. She said near the end of her cross-examination that Kelly and her family had flown to Seattle and stayed in the house of James for two weeks in August 2010 waiting for the birth of Vivien’s baby.  James was also there for the two weeks.  Their relationship was still good up to June 2011 when she invited James to her new home for dinner.  That was after Kelly’s receipt of Yung, Yu & Yuen’s demand letter.  Her relationship with Winnie was also good though not as close as her relationship with James.  But she did not like Vincent at all.  After Kelly had received Yung, Yu & Yuen’s demand letter, she thought that it was Vincent who had engineered it.

MRS NG’S EVIDENCE

144.  Mrs Ng was born in 1935.  She is now 82 years old.  She married Kuen in 1958 in Hong Kong.  Before her marriage, she was a beauty salon apprentice and then a beautician at the Beauty Department of the Peninsula Hotel at Tsimshatsui.  In about 1964 the French beauty master at the hotel closed his practice.  Mrs Ng then set up her own beauty salon.  After her marriage, she kept an independent career.

145.  After their marriage, she and Kuen moved to a flat in 125 Caine Road in about 1960 (“Caine Road Building”).

146.  In 1963, she also started her business of trading in jade and precious stones from home.  She came to know one Mr Law through Kuen’s introduction.  Mr Law owned a pawn shop in Macau.  She bought from him unredeemed pawned items at low price.  The items included diamonds and jewellery.  She resold them to customers in Tahiti, United States, United Kingdom, Taiwan and other places for considerable profit.  She ran this business until about 1979.  She still keeps some of the jade and precious stones in her safe deposit box.  She had given some of them to James and James is still keeping them.

147.  During the 1967 riots, the owner of the Caine Road Building left Hong Kong.  Mrs Ng and Kuen jointly purchased the entire building for HK$140,000.  (The record shows that the purchase was in Kuen’s sole name.)

148.  Two years later in 1969 when Mrs Ng was traveling in the United States for business and pleasure, Kuen sold the Caine Road Building for about HK$410,000.  When Mrs Ng discovered this later, she was very angry and had a heated quarrel with Kuen.

149.  Since then Mrs Ng insisted that she and Kuen would deal with their respective assets and investments separately to avoid conflict and dispute.  They were financially independent of each other.  Mrs Ng continued with her trading in jade and precious stones until about 1979 and then began investing in real properties for rental and in other investments with her own financial resources.

150.  Although Kuen had provided for the family, Mrs Ng also provided financial support for part of the daily expenses of the children including their overseas education.  Kuen also gave her many expensive gifts such as watches and diamonds from time to time. 

151.  Kuen earned considerable income from his gambling business.  He gave her from time to time large amounts of cash ranging from a few thousand dollars to over ten thousand dollars.  She spent a small amount of such money on household expenses and used the rest together with her own money to support her beauty salon and investment in real properties.

   Kuen’s family

152.  Kuen’s father passed away in about 1950.  His mother passed away in about 1954.  His elder brother was Fun and younger brother was Kelly.  He had to start working at a very young age.  He and Fun supported their family together.  They raised Kelly and paid for his education so that Kelly was able to graduate from an English high school.  Kuen was comparatively well off. He often provided financial support to Fun and Kelly in their businesses and livelihood.

   Kuen’s career and investments

153.  Mrs Ng’s evidence showed that Kuen had a colourful career in in football and diving.  He had very good social standing and was acquainted with many socialites and celebrities in Hong Kong and Macau.  Mrs Ng said he had lots of business opportunities and diversified businesses operations and investments in Hong Kong and Macau.  It is not necessary to decide whether Kuen’s family was since the 1970s and is still wealthy.  Hence, I do not think this part of Mrs Ng’s evidence is relevant. 

154.  It is the defendants’ case that except the Caine Road Building which Kuen jointly owned with Mrs Ng, Kuen did not hold other real properties.  It is however undisputed that at about the end of 1971 Kuen purchased Flat F on the 2/F of Winner Building as the office of ABC Service (“the 2/F Flat”).  He gave it as a gift to his brothers Fun and Kelly.  The registered owners were Fun and Kelly. Kuen used one of its rooms as his private office until he passed away.  In or about mid-1990s, Fun sold his interest in the 2/F Flat to Kelly and Kelly transferred Fun’s interest in the flat to his wife Tsang Yuet Wah Shirley as a gift.  (This is the “the ABC office (on the second floor)” that James mentioned in his email reply to Jennifer in the March 2008 email referred to above (Core/243-253)).

   Kuen and Kelly did business together

155.  Since the defendants do not say that the HK$1 million came from Kuen’s business or business jointly owned and/or run by him and Kelly, I will not consider this part of Mrs Ng’s evidence.

   Mrs Ng’s property investments in HK and overseas

156.  Apart from her alleged joint purchase with Kuen of the Caine Road Building (registered in Kuen’s sole name), Mrs Ng said she had purchased with her own resources the following real properties all in her name save one house in Fairview Park that was registered in the name of Tung Ltd.  (She however made no mention in her written evidence on the three Fairview Park properties.)

	Properties	Date of Acquisition (Purchase Price)
1/F, Robinson Garden Apartment, No 3D Robinson Road (“Robinson Garden”).		7 October 1969  (HK$131,000)
3/F including the Roof, 105 Jaffe Road, Hong Kong.		7 March 1980 (HK$450,000)
6/F, Block K & Car Parking Space No 123 Merry Terrace, Seymour Road (“Merry Terrace”).		1 December 1969 (HK$120,000)
Part of lot No. 3, Range 1, South Section of Braddock’s Bay Township, at Town of Parma, Country of Monroe and State of New York.		1 February 1971 (USD13,500)
Conway Mansion, Conduit Road.		30 April 1973  (HK$263,040)
Flats B and C with flat roofs, 1/F, Winner Building, 37 D’Aguilar Street, Hong Kong (the Flats).		15 November 1973 (HK$400,000)
6061 Grant Street, Burnaby, BC, Canada.		12 September 1975 (CAD69,000)
Subsection 57, Section O, Lot No. 4665 in DD 104, the New Territories (No. 27 River North 10th Street, Fairview Park) (Purchased in the name of Tung Ltd)		(S & P Agreement dated 24 December 1979 ) 3 May 1982 (HK$688,540)
Subsection 58, Section O, Lot No. 4665 in DD 104, the New Territories (No. 29 River North 10th Street, Fairview Park) (Initially purchased together with Chan Hon Keung on 24 December 1979 and then took over the whole purchase on 29 March 1982.)		(S & P Agreement dated 24 December 1979 ) 3 May 1982 (HK$702,600)
Subsection 150, Section O, Lot No. 4665 in DD 104, the New Territories (No. 68 Lychee Road North, Fairview Park)		(S & P Agreement dated 4 December 1979 ) 3 May 1982 (HK$702,060)
Flat B, 26/F & Car Parking Space No.7 on Lower Ground Floor 1, Shing Loong Court, No. 13 Dragon Terrace.		26 June 1990  (HK$3,600,000)

157.  Robinson Garden, which was bought on 7 October 1969, was let out for rental until 2003 when it was sold.  From about 1969 to 2003, the monthly rental income ranged from HK$5,000 to HK$56,000.

158.  Merry Terrace was bought on 1 December 1969.  Kuen’s family moved from the Caine Road Building to this property.  They moved again in 1972 to Conway Mansion and lived there until the present.

159.  Merry Terrace was let out from about 1972.  The monthly rental ranged from HK$4,000 to HK$30,000. 

160.  In 1973, the Flats were bought for HK$400,000.  Mrs Ng said she paid for them with her own money.  She said she let out Flat C from 1973 to 1985 for rent that ranged from HK$4,000 to HK$6,000 per month.  She kept Flat B for her own use. 

161.  Merry Terrace was mortgaged to United Chinese Bank on 2 April 1974 for HK$200,000 credit.  It was further charged to this bank on 26 November 1979 for a further credit of HK$300,000. It was further charged again on 17 December 1990 for a further credit of HK$1 million.  The mortgage and two further charges were discharged when the property was sold on 22 October 1991 (F/24 to 27). 

162.  The HK$300,000 credit secured by the further charge dated 26 November 1979 was probably for investing in the Fairview Park properties.  The sale and purchase agreements for No. 68 Lychee Road North was entered on 4 December 1979 and the agreement for No. 29 River North 10^th Street was entered on 24 December 1979.

163.  On 10 December 1979, Robinson Garden and Conway Mansion were mortgaged to the United Chinese Bank for up to HK$2 million credit (Core/41).  Tung Ltd used (part of it) to purchase an investment property in Yuen Long in about 1979 (turned out to be No. 27 River North 10^th Street, Fairview Park).  The sale and purchase agreement for 27 river North 10^th Street was entered into on 24 December 1979 and the purchase was completed on 3 May 1982 (with the help of a mortgage loan raised on the property itself) (§16(a) of her supplemental statement but with some errors).  This property was sold on 20 June 1984 and the mortgage over it discharged on the same day (C/1916-disclosed as item 262 in the 2^nd supplemental list of documents but added to the bundles afterwards). 

164.  The mortgage over Robinson Garden and Conway Mansion for securing HK$2 million was later discharged on 4 October 1985. (Kelly’s personal cheque for HK$1 million payable to Kuen was dated 13^th September 1985 (Core/72).)  Mrs Ng said the mortgage was discharge because the credit was not needed and there was no outstanding balance (Core/74).  Vincent corroborated her in §§22 and 23 of his supplemental witness statement (but with some errors).  She denied Kelly’s allegation that she had made a bad investment in the New Territories and was unable to repay a huge outstanding loan which forced her to sell the Flats.

165.  She said she also purchased residential properties in Tin Hau, Wanchai, Pok Fu Lam and Aberdeen, but cannot remember the addresses of these properties.  She used her rental income to pay for part of her family expenses and other investments.  She denied any trust arrangement for her to hold properties as the trustee or nominee of Kuen. 

166.  I note here that the investment property in Yuen Long in fact comprised of at least three investment properties in Fairview Park, Yuen Long two of which were purchased in her name and one in the name of Tung Ltd as shown in the table above. 

167.  Despite Kelly having pleaded in §8 of his statement of claim that she had suffered serious loss in speculating in properties in the New Territories which created the need to sell the Flats to repay the bank loan, she did not give any particular about these three properties in her statutory declaration or supplemental statement.  Both she and Vincent only mentioned that she had an investment in a new property development in Yuen Long.  They did not even accept that the investment had resulted in a loss.  The only relevant document disclosed by the defendants was a notice of reassignment of mortgage registered by Tung Ltd on 20 June 1984 with the Companies Registry.  It related to No. 27 River North 10^th Street purchased by Tung Ltd.  It is not registered at the Land Registry.  All the documents on the purchase, mortgage and sale of the three Fairview Park properties were disclosed by Kelly.  Kelly only discovered the sale and purchase by Mrs Ng of No. 68 Lychee Road North in the course of the trial.

168.  The loss resulted from the purchase and sale of No. 27 River North 10^th Street was at HK$347,600 or 49.47% of the purchase price.  The loss from the purchase and sale of No. 29 River North 10^th Street was at HK$318,540 or 46.26%.  The loss from the purchase and sale of No. 68 Lychee Road North was at HK$282,060 or 46.26%.  The total loss suffered from September 1983 to June 1984 is HK$948,200.  This does not include the stamp duty, legal and other costs and all the interests paid on the mortgages.  Mr Ismail reminded me in his closing submissions that Hong Kong was suffering from a monetary crisis in September 1983.  The Hong Kong Dollar exchange rate was at an all-time low and the prime lending rate close to 20 percent per annum.  The crisis was brought under control by re-pegging the exchange rate at HK$7.8 = US$1 on 17 October 1983 through the currency board system.

169.  Though Mrs Ng said she had lost all documents and could not recall the particulars of the properties, it is not really that difficult to discover the particulars of these properties.  For No. 27 River North 10^th Street purchased by Tung Ltd, the particulars appeared in the notice registered at the Companies Registry (C/1916).  It seems that nobody on the defendants’ side paid any attention to this document and hence the defendants failed to make the related discovery. 

170.  For the other two properties purchased in Mrs Ng’s name, one was No. 29 River North 10^th Street which was next door to No. 27 purchased by Tung Ltd.  Hence, it should not be difficult to recall No. 29 and make discovery on it. 

171.  Furthermore, the purchase of all three properties were completed on the same day, namely 3 May 1982.  Their memorials registered at the Land Registry are close to one another.  In fact, the assignment and mortgage of No. 29 River North 10^th Street are registered by memorials YL262093 and YL262094 respectively while the assignment and mortgage of No. 68 Lychee Road North are registered by memorials YL262091 and YL262092 respectively.

172.  In the light of the defendants’ failure to make proper discovery of the properties in Fairview Park that Mrs Ng and/or Tung Ltd had invested in, it is reasonable to suspect that this investment in Fairview Park might include other houses therein and the total loss suffered by Mrs Ng and/or Tung Ltd might be larger than the HK$948,200 referred to above. 

   Tung Ltd

173.  In 1974, Mrs Ng together with Kuen and her niece, Ng Mai Ling founded Tung Ltd.  Its address was and still is at Flat B.  Its statutory record has always been kept in Flat B.

174.  Its initial business was fashion wholesale trading.  However, the business was not good enough and was closed after a few months.  Mrs Ng said in her supplemental statement that she stopped the business in 1975 and used it as to hold property investments.

175.  She said Vincent returned to Hong Kong at the end of 1982.  He was made the general manager of the company.  Kuen remained the chairman of the board.  Vincent managed the affairs of the company on behalf of Mrs Ng, including the company’s bank accounts.  Mrs Ng ceased her participation in and did not pay much attention to the company’s affairs and accounts.  However, the company had no specific business before 1985 as Vincent was then learning business management and development in Astro.  In about 1989, Tung Ltd changed its name to VMG International Limited (VMG means Vincent Management Group) (“VMG”).

   Flat B

176.  Mrs Ng acquired the Flats in about 1974.  She used Flat B as the office of Tung Ltd. 

177.  Kelly’s advertising business Worldwide was not doing well at that time.  He wanted to move his office at Wyndham Street to a place with lower rent.  The fashion wholesale business of Tung Ltd ended in 1975.  Kuen asked Mrs Ng to let Kelly move Worldwide into Flat B.  Kuen said Kelly would save much costs on renovation and office equipment as the office furniture, fixtures and equipment in Flat B were practically brand new.  Mrs Ng agreed and Kelly moved Worldwide into Flat B. 

178.  Kuen and Kelly had to pay licence fee to her.  The fee initially was at HK$2,000 per month.  It was later increased to HK$10,000 per month.  They also had to pay the management fees, rates, utilities, and incidental expenses of Flat B.  However, Mrs Ng said that the company owned by Kuen and Kelly did not pay the licence fee on time and all payments were made by Kuen to Mrs Ng.

   The advertisements for sale

179.  Mrs Ng said that by (August) 1985, the licence fee was overdue for more than six months.  That was not the first default and she was very angry.  She was about to travel to the UK.  Before setting off for her journey, she specifically asked Kelly’s advertising company Worldwide to advertise for the sale of the Flats.  She expected that the staff of Worldwide would inform Kelly and Kuen about her action.  That would warn them and make them realize that if their default should continue, she might sell one or both Flats.  As a result, Kuen quickly paid all outstanding licence fees to her after her return from her UK tour.

180.  She revised her story on this matter in §18 of her supplemental statement.  She said she did not directly instruct Worldwide to place the advertisements.  She only told Vincent to place newspaper advertisements for the sale of the Flats through Worldwide before she travelled to the UK.  Since the purpose of the advertisements was just to warn Kuen and Kelly that the licence fee was overdue for more than six months, she did not specify a selling price and left it to Vincent to decide.

   Kuen and Kelly to Flat C and Tung Ltd moved into Flat B

181.  In about 1986, the tenant of Flat C moved out.  Vincent wanted to use Flat B to develop the business of Tung Ltd.  Therefore, Kuen asked Mrs Ng to allow him and Kelly to move their companies from Flat B to Flat C under the same arrangement as before i.e. they would pay licence fee and management fees, rates, utilities, and incidental expenses for occupying Flat C. Vincent thus moved into Flat B to run Tung Ltd.

182.  From 1986 until to date, companies operated and/or managed by her family members (Kuen, Vincent, James, and Winnie) have been using Flat B as their office.  They had to pay her licence fees and be responsible for the management fees, rates, utilities, and incidental expenses. Kelly has not occupied Flat B since 1986.

183.  From March 1993 to June 1993, Mrs Ng also allowed Chok Lee, a friend of James since university days, to use part of Flat B as his company’s office.

184.  From June 2004 until now, part of Flat B has been let to Dr LED which is co-owned by her daughter Winnie and an investor.  Dr LED has to pay rent and be responsible for the management fees, rates, utilities and other miscellaneous charges.

   Flat C

185.  Mrs Ng let out Flat C between 1973 and 1985 at a monthly rent of about $4000 to $6000.  As mentioned above, the tenant moved out in 1986 and she allowed Kuen and Kelly to move their companies from Flat B to Flat C.  Though Flat C was mainly occupied by the companies owned by Kuen and Kelly, the other companies owned by Kuen, Vincent, James, and Winnie, which occupied Flat B, also used Flat C and they had employees working in Flat C.  The phone system and office equipment also belonged to the occupants of Flat B.

   The HK$1 million paid by Kelly to Kuen

186.  Kelly’s case is that Mrs Ng and Kuen had told him in August 1985 that they had financial difficulties and wanted to sell the Flats.  Kelly further alleged that on about 12 or 13 September 1985, he paid HK$1 million to Kuen with his personal cheque to purchase the Flats from Kuen. Mrs Ng, however, stressed that the Flats are her properties and have nothing to do with Kuen.   Furthermore, she and Kuen were not in any financial difficulty at that time.  She had not received any demand for payments from the banks and Kuen had also not told her that he had received such demand.

187.  She further said that it was after Kelly had commenced this action that she learnt for the first time of Kelly’s claim that he had paid Kuen HK$1 million to purchase the Flats from Kuen.  This HK$1 million was deposited into the bank account of Tung Ltd.  She said she had given Vincent full authority as early as 1983 to manage the businesses and accounts of Tung Ltd. She therefore had no knowledge about this HK$1 million.  Upon her subsequent enquiry, Vincent told her that this sum was Kuen’s share of profits from his businesses with Kelly (not contended as such by the defendants anymore).  When Kuen received the cheque, he deposited it into the account of Tung Ltd.

188.  She revised her case on this in §15 of her supplemental statement.  She said Vincent had told her in 1985 that Kuen had deposited HK$1 million to Tung Ltd for Vincent to develop the business of the company.  She at that time had no idea that it was from Kelly.  She only knew that it was profit from Kuen’s businesses.  Tung Ltd at that time had more than HK$1 million savings in the bank.  Vincent then left Astro and focused on developing the businesses of Tung Ltd.  It was in about 2011 after Kelly had commenced this action that she found out from Vincent that the HK$1 million was profits of Kuen’s business paid by Kelly (not contended as such by the defendants anymore).  

189.  She also said that throughout the years, Kelly had never told her that he had purchased either of the Flats.  He had also never paid her any money for the purchase of the Flats.

   Kelly and the mortgages in 1987 and 1990

190.  As far as Mrs Ng knows, Kelly in or before 1987 had to incur substantial household expenses.  His living expenses were very high.  Mrs Ng was of the view that whenever Kelly had a chance, he would take advantage of others and he never kept his promise.  Mrs Ng did not have a good impression of him.  (However, Jennifer said in her email to James dated 26 March 2008 that Kelly had no intention of getting any advantage from Kuen’s family and James agreed that Kelly had not.)

191.  In 1987, Kuen told Mrs Ng that Kelly needed relief from personal cash flow problem.  Mrs Ng and Kuen did not want to lend him money as they worried that he would default on his borrowing.  However, Kuen needed Kelly’s help in managing his businesses.  Kuen therefore suggested that Kelly could take out a bank loan to be secured by a mortgage of Flats B and C. That would prevent Kelly from denying the loan from the bank.  Mrs Ng agreed to mortgage the Flats to secure a bank credit line of up to HK$500,000 for Kelly’s use on condition of Kelly’s personal guarantee for the facility. 

192.  Later in 1990, upon the request of Kuen, Mrs Ng agreed to mortgage the Flats again to secure a bank credit line for a further HK$300,000 for Kelly.

   Sale of Flat B and Flat C

193.  After Kuen had passed away on 18 February 2010, Kelly did not pay any licence fee for Flat C to Mrs Ng.  Mrs Ng intended to sell the Flats for some cash for her to enjoy her remaining years.  She told Kelly that she intended to sell the Flats for HK$15 million and requested him to vacate Flat C.  Kelly said that his Mainland customer would buy them.  However, he was uncooperative and refused to vacate from Flat C.

194.  Since Kuen had only passed away for only a few months and she was still very depressed at the time, she did not want to confront Kelly.  She just wanted to sell the Flats as soon as possible.  She therefore instructed her lawyer in December 2010 to offer HK$2 million to Kelly, being compensation for his relocation.  She hoped that Kelly would leave out as soon as possible (the letter dated 4 December 2010 referred to Flat B only) (Core/254).

195.  Kelly did not move out after about two months.  She then instructed her lawyer to write a demand letter requiring him move out within a month (the letter of 15 February 2011 referred to Flat C only) (Core/255).

196.  In March 2011, Kelly’s solicitors replied with Kelly’s case on the matter.  She said she was totally shocked.  It was the first time she heard of Kelly’s case since she acquired the Flats in 1973. After Kuen’s death, she had mentioned to Kelly of her desire to sell the Flats. Kelly did not then say that the Flats belonged to him.  He only said that his customers might buy the Flats.  Therefore, his allegations are totally false and unfounded.

197.  Mrs Ng then informed the bank to cancel the mortgage of the Flats that secured the credit line for Kelly.  Kelly repaid the outstanding amount on his credit line without any objection or complaint.

198.  Since Mrs Ng could not deliver procession of Flat C, she then sold Flat B.  But Kelly unexpectedly took legal action to stop her sale.

VINCENT’S EVIDENCE

   Mrs Ng was not Kuen’s nominee and the Flats belong to her

199.  Vincent corroborated Mrs Ng that she had never held any property on Kuen’s behalf and that she had not sold the Flats to Kelly.  He also corroboratedher that she and Kuen had their respective careers and income and she was always financially independent.  He also corroborated her on the purchase of the Caine Road Building by her and Kuen and her dispute with Kuen after Kuen had sold the same without consulting her. 

200.  Vincent also recounted in his witness statement the properties that had been registered in Mrs Ng’s name.  He, however, also missed out the three Fairview Park properties. 

   Mrs Ng’s mental health

201.  Vincent also said that Mrs Ng had never suffered from any unstable mental illness.  She was not mentally unstable as Kelly claimed.  She only had mental illness at the age of 55 in the 1990s.  She consulted a doctor and took medications.  Her illness had been well managed and she could handle her own affairs with sound decisions.  But as will be seen below in my discussion of Winnie’s evidence, the onset of Mrs Ng’s mental illness should be in the early 1980s and not as late as 1990 when she was 55. 

   Purchase of the Flats

202.  The former owner wanted to sell the Flats in 1973 after a fire had happened there.  Vincent recalled that after a visit there, Mrs Ng told him the Chinese saying “火燒旺地” (meaning fire makes land prosperous).  She believed that the fire had brought luck to the Flats and decided to purchase them there and then.

203.  Vincent emphasized in cross-examination that everyone in his family knew that Mrs Ng had bought the Flats with her own money.

204.  After the purchase, Mrs Ng set up a boutique for Tung Ltd at Flat B and let out Flat C.  Kuen and Kelly then operated some companies including Astro in Flat B.  He also recounted the later arrangement by which Mrs Ng allowed Flat B to be used by Tung Ltd, companies managed by Vincent for Kuen, and companies of Vincent, James and/or Winnie and Flat C for those managed by Kelly for Kuen.

   The advertisements for sale of the Flats

205.  Vincent also said that Mrs Ng had been receiving licence fee since about 1974 from Kuen for the use of the Flats by the companies that he and Kelly had an interest. There were many occasions when the licence fee was overdue and Mrs Ng then complained to Kuen.

206.  One such occasion was in about 1985 when the fee was overdue for over 6 months.  Mrs Ng wanted to chase for the fees but desired to inflict less damage to the familial relationships.  She asked Vincent to place through Worldwide newspaper advertisements offering the Flats for sale. She then left for England.  Vincent carried out her direction.  Upon her return to Hong Kong, Kuen paid her the overdue fee. 

207.  Vincent elaborated this in §§35 and 36 of his supplemental statement.  He said Mrs Ngdid not intend to sell the Flats.  She only wanted to alert Kelly and Kuen, in particular Kelly, that if they still failed to pay the fees, they might lose the use of Flat B.  He called an estate agent and checked the market price.  He then grossly inflated the asking price for the Flats as he did not want to be bothered by too many enquiries.  When Kitty, the staff of Worldwide subsequently told him in Kelly’s presence that no one showed interest in the Flats, he told Kitty to reduce the asking price in order to convince Kelly that Mrs Ng really wanted to sell the Flats.  At that time, Mrs Ng was in London.

208.  The advertisements were published on 1, 2, 5 and 6 August 1985 offering Flat C for HK$650,000.  It invited potential purchasers to call “Mrs Ng” at 5229448 “between 2 pm to 5 pm”.  The telephone number was that of Kelly’s office.  The dimension of the advertisements published on 1 and 2 August were of “two units” at the cost of HK$44 per day (Core/62).  The dimension published on 5 and 6 August was of “three units” at the cost of HK$66 per day (Core/65).  There was no response. 

209.  The price for the unit was then lowered to HK$600,000 and the advertisements posted again on 23 and 27 August and 3 and 4 September 1985 with a dimension of “three units” at the cost of HK$66 per day (Core/67 and 70).  The hours of contact for interested persons were changed to “during office hours” (Core/62 – 71).

210.  From the stamps in Mrs Ng’s passport, it can be seen that she arrived at Heathrow Airport on 11 August 1985.  She then left Heathrow on 12 September and re-entered Hong Kong on 13 September 1985 (F1/68).  Hence, she was in Hong Kong on 1, 2, 5 and 6 August when the advertisements offering Flat C for HK$650,000 and the hours of contact for interested persons between 2 pm to 5 pm was published.  But she was in England from 12 August to 12 September 1985 when the advertisements offering the lower price of HK$600,000 with hours of contact during office hours was published on 23 and 27 August and 3 and 4 September 1985 (Core/62 – 71 and C/1298)). 

211.  If the advertisements were indeed intended to be warnings against non-payment by Kelly and Kuen, then it should have offered Flat B instead of Flat C.  It is the defence case that Kuen and Kelly and their companies were occupying Flat B and they only moved to Flat C in 1986. 

212.  Furthermore, if the advertisements were indeed warnings against non-payment, then their publication on the first four days did not produce any result as Kuen and Kelly did not pay up after their publication.  Mrs Ng should have been unhappy.  One would expect that Mrs Ng or Vincent on her behalf would verbally ask Kuen and/or Kelly to pay up as the advertisements were ineffective.  Vincent said in oral evidence that he was then working together with Kelly in Flat B.  But neither Mrs Ng nor Vincent had asked Kuen or Kelly to pay.

213.  The advertisements for sale of the premises are a warning that Kuen and Kelly may have to move out from the premises.  Regardless of whether they are more damaging to familial relationship than a verbal demand for payment, they are costly.

214.  It was curious that neither Mrs Ng nor Vincent on her behalf had made any verbal request or demand for payment after the first four days of the so-called warning by advertisements which produced no result.  Vincent was then 25 to 26 years old.  His explanation in cross-examination for not asking Kelly or Kuen to pay up is because his parents had the habit of not listening to him.  He also said that he did not think that he was in a position to make suggestion regarding the affairs of his respected older generation or to meddle in such affairs.  In answer to my question, he confirmed that from 1 August to 4 September, he had not thought that he could have solved the problem by simply reminding Kelly to pay up.

215.  If there was indeed outstanding licence fee, I think a verbal reminder by Vincent to Kuen and/or Kelly would have cost nothing and been more effective as a direct reminder.

216.  More curiously, Vincent said that he placed four more days of newspaper advertisements per Mrs Ng’s instructions on 23 and 27 August and 3 and 4 September when Mrs Ng had not even returned to Hong Kong. The advertisements placed on these four days asked any interested person to phone Kelly’s office during office hours.  If Kuen and/or Kelly was minded to pay the alleged fee on or about those days, Mrs Ng was not there to receive it.  The warnings by advertisements, if they indeed were, would have been more effective if published when Mrs Ng was in Hong Kong.  If the advertisements were merely intended to be warnings, there was no reason to enlarge the dimension from 2 units to three for the last 6 days.

217.  The second round of four more days of advertisements to sell Flat C at a lower price and with longer hours of contact for interested persons also indicated a genuine desire to sell.  This round of advertisements did not seem to anticipate the need for Mrs Ng’s involvement in the subsequent negotiation for sale.  They asked interested persons to phone in during the office hours in Hong Kong which was from 9 a.m. to 5 p.m.  These hours equaled to 12 mid-night to 8 a.m. in England (adjusted for daylight savings time or summer time). Long distance phone calls in 1985 were not as cheap and convenient as nowadays.  The second round of advertisements is thus in line with Kelly’s case that Mrs Ng had no beneficial interest in the Flats as the negotiation for their sale could be conducted in her absence and without her involvement.  She only had to complete the formality for Kuen.

218.  Vincent further said that after the license fee was paid, Mrs Ng complained that Kuen had spoiled Kelly too much, but Kuen retorted that she had taken the matter too seriously.  In order to defuse their quarrel and tension, Vincent told Mrs Ng that Kuen had deposited HK$1 million into Tung Ltd for him to develop business in China.

219.  Vincent also corroborated Mrs Ng on her permission given in March 1993 for Chok Lee to use part of Flat B for a few months without consulting Kuen or Kelly.  Since then, Chok Lee frequently helped Vincent, James and Winnie on matters relating to their business such as reviewing business plans and sourcing of electronics goods.  Chok Lee also fixed the problems of their computers in the Flats.

   Kuen’s financial status and Vincent’s role in Astro

220.  Vincent also corroborated Mrs Ng’s evidence on Kuen’s alleged change of career from illegal bookmaking to legitimate business with the help of Kelly.  He also alleged that Astro had made substantial profits in about 1984.  The allegation of Astro’s profitability was defeated by the IRD tax assessments produced by Kelly.  (The defendants’ case that the HK$1 million cheque dated 3 September 1985 was a distribution of Astro’s profits is not relied on anymore.)

   The HK$1 million cheque and Vincent’s businesses

221.  Vincent had operated Tung Ltd for a while and had decided to use it as the platform for establishing his own business. Kuen then paid the HK$1 million cheque dated 13 September 1985 into the account of Tung Ltd as Kuen’s shareholder’s/director’s loan for his use as startup fund.  He told Mrs Ng that Kuen had deposited the HK$1 million cheque into Tung Ltd’s bank account for him to develop the business of the company.  He denied that the cheque was for repaying any bank loan. 

222.  He then left Astro and used Tung Ltd to establish a trading business and investment in the Mainland.  Since the tenant of Flat C had removed, Astro and the other companies in Flat B moved to Flat C with Mrs Ng’s permission leaving Flat B for the exclusive use of Tung Ltd and Vincent’s businesses.

   Release and discharge of mortgage

223.  Vincent recalled that Mrs Ng had asked him in 1985 to arrange for the discharge of a mortgage (of Robinson Garden and Conway Mansion to United Chinese Bank for general banking facilities up to HK$2 million) (Core/41).  He said that was no outstanding loan.  He called the bank in August 1985 and the bank discharged the mortgage on 4 October 1985 (Core/74). But no bank statement was produced to show the balance in the account before or at the time when the mortgage was discharged.  One also wonders why Mrs Ng should terminate such financial facilities if it was true that Vincent had just started his business with Tung Ltd as the vehicle. 

   Kelly was boastful and Jennifer’s 2005 email

224.  Vincent said that Kelly often boasted to others (including to his family) about things he had done or owned when the alleged deed was never done and he never owned the thing.  An example was his boasting of being a director of Jumbo Floating Restaurant and that Kuen’s driver was his.  Kuen’s family did not expose the truth to others to save Kelly’s face.  Hence, when Vincent received Jennifer’s November 2005 email (where Jennifer said that the Flats were registered in Mrs Ng’s name holding on Kuen’s behalf but were sold to Kelly at $1,000,000 in 1985) (Core/247-248), he believed that it was just another lie of Kelly that he did not need to clarify.  He therefore did not bother to respond to Jennifer.

225.  Vincent further said that Jennifer and her husband, George Lam, were his barristers helping him on a litigation case at that time.  He did not want to upset Jennifer by exposing Kelly’s lie.  He, however, corrected this in evidence-in-chief and agreed that the litigation case was only brought against him in December 2006, but the email was dated 10 November 2005.  He then said what he meant in his statement was that since Jennifer had become a barrister, she had been helping his family as its legal adviser.  One instance was her drafting a power of attorney for Mrs Ng in favour of Kuen in early 2005.  He therefore did not want to expose Kelly’s lie to her.

226.  Vincent also said that as a matter of law, Mrs Ng was the registered owner of the Flats.  His comment should have no bearing on her ownership of the Flats.  Furthermore, Jennifer was a barrister, his answer was therefore unimportant.  Jennifer should have asked Mrs Ng instead of him for clarification.  (But he had never told Jennifer to clarify this matter with Mrs Ng.)

227.  Vincent also agreed in cross-examination that at the time of Jennifer’s email, the relationship between the two families was good.  He accepted that Jennifer was not making any claim in her email.  But he did not tell her that Kelly was lying.  He considered that exposing Kelly’s lie and clarifying the matter would affect the relationship between Jennifer and Kelly and he did not want to do that.  He also said that Jennifer could have asked Kuen directly for clarification.  When asked why he did not tell Jennifer to ask Kuen direct, he answered that Jennifer was an adult and a barrister and it was unnecessary for him to teach her how to do things.  Hence, he decided to completely ignore the November 2005 email.  He also did not communicate with either James or Winnie on this email.

JAMES’ EVIDENCE

Kuen’s family, businesses, Mrs Ng and the Flats

228.  James corroborated Mrs Ng’s evidence that she controlled her own finance and purchased with her own money the real properties registered in her own name.  She was financially independent of Kuen and had never held any property on Kuen’s behalf.  She had in or about November 1973 used her own money to purchase the Flats.  He also corroborated her on how the Flats were being used with her permission.  He also said that she did not have any financial difficulty in 1985 and United Chinese Bank did not ask her repay any loan as Kelly alleged. 

229.  James went to Canada and the USA to further his studies in April 1980.  After obtaining a master degree from the California Institute of Technology (“CIT”), he started working in Seattle.  He came back here in 1992 to work in the family businesses.  He worked in the management and business development of VMG and some other family companies.

230.  He first met Chok Lee in the summer of 1980 in Canada when they were attending universities there.  Chok Lee returned to HK in about 1989. They met again in Hong Kong in 1992 when James came back to help his family business.

231.  In about February 1993, Chok Lee started his own business.  He through James sought permission from Mrs Ng who allowed him and his staff to use part of Flat B for a few months for his start up business.

232.  Dr LED (run by James and Winnie) was founded in 2004.  It signed a rental agreement with Mrs Ng to lease the front portion of Flat B.  The agreement has been renewed since 2004.  Dr LED did not need permission from Kelly to use Flat B.  It paid rent to Mrs Ng direct. 

233.  Flat B was renovated in 2004.  The roofs of both Flats were repainted to reinforce the waterproofing. Two air conditioners were installed in June 2004 in Flat B.  Repair to leakage was also done in August 2005 in Flat B.  These were paid by Pearldek Ltd (a company owned by Kuen’s family) and Dr LED.

234.  A Building Order dated 22 Aug 2012 was addressed to and rectified with the costs paid by VMG. 

235.  In summary, the user fees and all outgoing expenses such as government rates, management fee, utilities, leasehold improvements, etc. had been the responsibility of the respective flat users since 1974.

Jennifer’s emails

236.  James said that he and Winnie were surprised when they received from Jennifer the November 2005 email.  It stated that Kelly had paid HK$1 million to Kuen for the purchase of the Flats.  He discussed this email with Winnie over the phone as he was then in the USA. They concluded that the allegation was a total nonsense.  He understood from Winnie that Jennifer had called Winnie afterwards and Winnie told her to clarify the matter with Kelly, Kuen and Mrs Ng.  He did not reply to Jennifer because Winnie had already addressed this issue with her.  (Hence, he allowed Jennifer’s version to remain on record.)

237.  James did not hear from Jennifer on this matter again until March 2008 when he received Jennifer’s March 2008 email dated 26 March 2008.  Before this mail, he was discussing with Jennifer by email on a High Court Action (involving Dr LED and two entities Wellbase and Wah Wang and some moulds that Dr LED wanted to get back from Wellbase).  Jennifer and George Lam were Dr LED’s legal representatives in that case.  James said that Jennifer’s March 2008 email showed that she did not really know if Kelly’s story was true or not. 

238.  Jennifer complained in the March 2008 email that she had “once sent out an email asking about this issue but none of you wanted to answer me directly”.  James said in his witness statement that Winnie had already told Jennifer in 2005 that Jennifer should ask Kelly, Kuen and Mrs Ng directly.  He further said that Winnie had told Jennifer that Kuen’s children did not own the Flats and had no authority to decide on them.  He also said that Jennifer, being a barrister, should have asked the owner of the Flats directly. However, he agreed that he had not said any of these things in his reply email to Jennifer’s March 2008 email.

239.  James also said in his statement that he had not given much thought to the March 2008 email as he did not want to be insensitive to Jennifer or upset her because his family was relying on her and her husband as their legal representatives.  He said he just went along and gently disputed her story.  He further said that in retrospect, he should have been more careful in dealing with her allegations. 

240.  He also said that he had told Jennifer in his reply email that he had not talked to or asked his parents about Kelly’s claim.  He had also found out from Winnie that Kuen had paid for the 2/F Flat above the Flats albeit Kelly and Fun were the registered owners.  (Winnie confirmed this in §18 of her witness statement.)  Following the purchase of the 2/F Flat, Kuen had been using one of its rooms as his personal office until he passed away.  So he told Jennifer that Kuen had paid for the second floor office but did not put his name on the title deed. 

241.  He then went on to assert in his statement that his words in the reply email that Kuen had“paid for … the first floor office as well” were without any basis or any real knowledge on his part as he just assumed that Kuen had paid for everything.  He had not really given much thought about the whole incident. He simply wanted Jennifer not to bother him anymore on such nonsense.  He clearly told Jennifer that he had tried not to get involved with the last generation’s business as it was too messy. 

242.  In cross-examination, he said that by saying in his reply email to Jennifer: “I never ask them, I have just found out that my father paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed.”, he wanted to tell Jennifer that he had not asked his parents, Winnie had told him that Kuen had bought the 2/F Flat as a gift to Fun and Kelly, and he thought that Kuen had also bought the Flats as a gift to Mrs Ng.  But he had to agree again that he had not set out in his email to Jennifer that the Flats were a gift by Kuen to Mrs Ng. 

243.  He further explained in cross-examination that his assumption that Kuen had paid for the Flats was based on the facts that Kuen was the richest, Kuen paid for the bulk of his overseas expenses, and Kuen decided on the profit distribution (with Kelly). He also assumed that Kuen had paid a lot of money to Mrs Ng.  He thought that Vincent was wrong in his evidence that everyone in Kuen’s family knew that Mrs Ng had paid for all the properties that were registered in her name.  He thought that the Flats and 2/F Flat were paid for by Kuen.

244.  He then revised his evidence by saying that all along until 2008, his family knew that the properties including the Flats were bought by Mrs Ng.  But in 2008, Winnie told him that the 2/F Flat was bought by Kuen.  He then thought that the Flats were also bought by Kuen.  He said he came to this thinking all by himself and without anyone telling him so.  

245.  When specifically confronted with the words “I have just found out” he used in his reply email, he said he had not made himself clear in the email and he assumed that Kuen had bought the Flats.

246.  I am of the view that James has tried very hard to wriggle out of his reply to Jennifer’s March 2008 email.  But his evidence on Jennifer’s March 2008 email and his reply to it is conflicting and convoluted.

247.  James then said that after his reply to the March 2008 email, Jennifer did not bring this matter up again until the commencement of this action.  Furthermore, Dr LED was making good profit at the time and he had to concentrate his effort and energy in its management including dealing with legal matters, quality control issues with manufacturing factories and customers’ demands.

248.  James and Winnie believed that they should not be involved in explaining to Jennifer the conflict between their parents and Kelly.  It was best for her to clarify with Kelly, Kuen and Mrs Ng.  James and Winnie did not discuss this with their parents as they did not want to upset them.

Kuen’s alleged visit to Jennifer’s chambers in 2009

249.  James also corroborated Winnie that in 2009, Kuen was very sick and was largely immobile or bedridden.  Hence, the alleged visit by Kuen to Jennifer’s office was extremely unlikely.

Mrs Ng wanted to sell the Flats

250.  Mrs Ng wanted to sell the Flats from time to time but Kelly, Kuen, Vincent, James, Winnie were all using the Flats for their businesses.  They all wanted to keep the Flats.  However, they could not do anything because the Flats were her properties.  At one time in early 1990s, Kelly suggested that James should persuade Mrs Ng to sell the Flats and buy a much bigger and newer office away from Central for the use of their businesses.  Kelly in about 1993 took James to view an office in Causeway Bay.  (This is in line with Jennifer’s evidence that Kelly had wanted to sell the Flats and buy a new office unit.)

251.  Mrs Ng had also told James that some months after Kuen’s death, she had:

(a)   requested Kelly to cooperate with her to deal with the estate of Kuen, but Kelly declined;

(b)   requested Kelly to pay user fees or else vacate from Flat C of the Flats, but Kelly again declined;

(c)   discussed with Kelly about paying money to him in return for vacant possession of Flat C; and

(d)   instructed Messrs. Yung, Yu, Yuen & Co, solicitors, to make an offer to Kelly for him to vacate from Flat C.

252.  After the commencement of this action, Jennifer contacted James in early 2012 and told him that she and George Lam could no longer represent Dr LED in the High Court proceedings if Kuen’s family did not settle this action with Kelly.  James repeatedly told her that the Flats belonged to Mrs Ng and he had no right to make decision on her behalf.

   Relationship between the two families

253.  When James was asked about his relationship with Jennifer in 2008, he said their relationship was all along very good even up to Kelly’s application for injunction.  His relationship with Kelly was also very good.  Before Kelly started dating Jennifer’s mother, he kept Kelly company.  When he was referred to Jennifer’s email dated 22 June 2009 (Core/253-1-253-2) in which Jennifer told him about the 2^nd medical opinion on Kuen’s lung cancer, he agreed that Jennifer was very caring to Kuen.  He said the relationship between two families was a very close one and Kuen also had a very special relationship with Kelly.

WINNIE’S EVIDENCE

254.  Winnie left Hong Kong in August 1983 for further study in France and university education in Canada.  She returned to Hong Kong in February 1990 to work for the family companies.  She corroborated Vincent and his friend Yip that they had worked in Astro in the summer of 1983 when she was working in Kelly’s Worldwide before going to France.  She also corroborated Mrs Ng and her brothers that no one ever had any control over Mrs Ng’s finance as she was a very independent person buying her own properties with her own money.

255.  Winnie also said that Mrs Ng had purchased the Flats and Winnie had full access thereto since her return to Hong Kong in 1990 to help manage the family businesses.  She never needed permission from Kelly to use the Flats.  She and James ran the business of Dr LED. 

   The will and power of attorney in January 2005

256.  Jennifer gave evidence that Winnie had called her in early January 2005 to make a Chinese will and power of attorney for Mrs Ng.  The reason being Mrs Ng’s manifestation of mental problems and her requests to property agents to sell Kuen’s properties which were registered in her name.  Winnie disputed this evidence.  She said Mrs Ng and Vincent had a car accident on about 25 November 2004.  Mrs Ng was admitted to the Adventist Hospital between 13 and 16 Jan 2005 for a surgery.  Before the surgery, Winnie called Jennifer for advice if a power of attorney and will should be prepared for Mrs Ng’s execution just in case anything might happen to her.  Jennifer then emailed Winnie on 11 January a standard power of attorney and advised her the matters relating to the execution of a will (Core/243-244).  Winnie also disputed Jennifer’s evidence that Mrs Ng had been suffering from mental problems for a long time.

   The August 2005 email exchange

257.  Jennifer also gave evidence that Winnie had sent her on 12 August 2008 an email relaying to her about Kuen’s query on whether Winnie could be added as a co-owner of Kuen’s home at Conway Mansion, Conduit Road (Core/246). The property was registered in Mrs Ng’s name.  Kuen was worried that because of Mrs Ng’s conditions, she might suddenly sell everything.  Winnie disputed this evidence.

258.  Winnie said in §25 of her statement that Mrs Ng had wanted to sell the Flats (but not Conway Mansion) from time to time.  Winnie had seen estate agents visiting the Flats with potential buyers. Kelly was sometimes also in the office, but he never made any comment or objection. The Flats had also been listed for sale since early 2000s with several major real estate agents such as Midland and Centaline.  Kelly was aware of the listings. Everyone in Kuen’s family except Mrs Ng was against the proposed sale because they were using the Flats for businesses.  But they could do nothing as the Flats were owned by Mrs Ng. 

259.  Winnie then said in §26 of her statement that at one stage Kuen suggested that Winnie could persuade Mrs Ng to add Winnie as a co-owner of Mrs Ng’s properties so that Winnie could help manage them as Mrs Ng was getting old.  It was also suggested that Winnie could be made the owner of the properties for estate planning purposes.  Winnie therefore emailed Jennifer on 12 August 2005 and asked her what could be done.

260.  Winnie also explained in §26 that the word “everything” in the phrase “in case my mother might sell everything” in her email just meant the Flats and not the other properties of Mrs Ng.  But she changed her case in oral evidence by saying that “the property” should be “all the properties” of Mrs Ng and “everything” meant everything under her name.

   The November 2005 email

261.  Winnie said in her statement that Kelly had throughout the years made many false claims to his daughters.  For example, Kelly had in about 1989 boasted to his daughters that he owned a Jaguar when it was Kuen’s car.  Kelly had also falsely claimed to his daughters and others in 1992 and 1993 that Kuen’s new Jaguar and chauffeur were his.

262.  On or about 10 November 2005, Jennifer sent Winnie the November 2005 email with copy to James and Vincent.  Winnie said that it was a convoluted email with allegations including ownership of the Flats.  James said in response to her enquiry that he had never heard of the allegation.  She replied to Jennifer by email saying “it is just too complicated to explain”. She did not discuss this with Vincent.  She also did not ask Kuen or Mrs Ng about the allegation.  It did not appear to her that she should ask them a matter of their generation.

263.  In retrospect, she thought that the phrase “too complicated to explain” in her email was badly worded.  She just wanted to explain to Jennifer that Kelly’s claims were false as Kuen had been demanding his returns from his business with Kelly since early 2000s but Kelly repeatedly denied that there was anything for Kuen.  She told Jennifer in the email to call her for her to address this.

264.  Winnie said she used to go to the Shaukeiwan wet-market on Saturdays.  On the Saturday after the November 2005 email when she was there, Jennifer phoned her.  She then told Jennifer that she and James had never heard of the allegations in Jennifer’s email.  She told Jennifer to clarify that with Kelly, Kuen, and Mrs Ng.  She also told Jennifer that Kuen’s children did not own the Flats and that Mrs Ng was the owner.  Jennifer then told Winnie that Kuen had already visited George Lam and her at his chambers and told them the “whole story”.  Winnie disputed this visit.  She said she had asked Kuen later that day if he had visited Jennifer or George at their chambers and Kuen said he had never visited them.  (Jennifer’s evidence on Kuen’s visit to her chambers was in 2009.  She never said that Kuen had visited her at her chambers in 2005.)

265.  When cross-examined on why she did not just say in her reply to Jennifer’s November 2005 email that Jennifer’s understanding about the Flats was not true, she said that they were then on reasonably good terms and she did not want to hurt Jennifer directly by pointing out what she said were all false thereby suggesting that Kelly was lying.  She wanted to tell Jennifer over the phone about what happened in an indirect way.  (But her so-called explanation to Jennifer on the phone was not indirect at all.)

266.  She also said in cross-examination that she had not heard of the matters mentioned in the first and second paragraphs of the November 2005 email.  The first paragraph was about Kuen’s enquiry of stamp duty if a half share of Kuen’s home was given to Winnie and then take a mortgage loan on the half share for living expenses.  Winnie further said that there was also something wrong about Jennifer’s understanding of the power of attorney which was given to Kuen and not to her.  Hence, there were too many things to deal with. She therefore wanted to talk to Jennifer over the phone.  She also said that she did not realize the importance of this email.  But what she said in her witness statement about the contents of her phone conversation with Jennifer after the November 2005 email did not touch on the issues of stamp duty, living expenses or power of attorney.  Jennifer also complained to James in her March 2008 email that none of Kuen’s children had answered her directly on the allegation that Kelly owned the Flats. 

267.  Winnie said that Jennifer’s complaint was false as Jennifer had indeed called Winnie in 2005 and was told to clarify the matter with Kelly, Kuen, and Mrs Ng.  Since then Winnie had seen Jennifer on many occasions some of which included Kuen and Kelly.  But Jennifer did not mention this matter again until the commencement of this action.

268.  I will hold in my analysis below of this email and the evidence relating that Winnie’s evidence is not believable.  I will hold below that Jennifer had not talked to her on the phone after and in relation to the November 2005 email.

   Kuen’s alleged visit to Jennifer’s chambers in 2009

269.  Jennifer said that Kuen visited her at her chambers in 2009.  Winnie believed that Kuen could not have managed such visit in 2009 because of his poor health condition.  Winnie said Kuen was suffering from stage 5 lung cancer and was hospitalized from time to time in 2009. His mobility was low.  If he had to go out, he had to be accompanied by a maid with his oxygen tank which could only supply about one-hour of oxygen to him. Winnie was mostly with him.  He always told Winnie his plan for the next day. Winnie was usually his driver as he could not waste time to wait for taxi with limited oxygen supply.  Winnie did not recall that he had visited Jennifer in 2009.

   Mrs Ng’s Health

270.  Winnie said that Mrs Ng had been suffering from some form of mental illness since 1990.  However, her illness had been well managed by the doctors.  She had been taking medications regularly and kept all her doctors’ appointments.  She could manage her own affairs and always made sound decisions.  Kelly or Jennifer said that she could not even carry on a normal conversation. Winnie disputed that.  She said Mrs Ng never liked Kelly and his family.  She did not even want to talk to them.

   Mrs Ng’s medical records

271.  Mrs Ng has a history of mental illness.  A letter dated 10 January 2015 by Dr. Ignatius How Mo Lam (C4/899) stated that Dr Lam had discovered in a consultation in July 1990 that Mrs Ng was suffering from mental illness.  Dr Lam referred Mrs Ng to a psychiatrist who diagnosed that she had some psychotic problem, probably in early stages of schizophrenia.  She also attended the Geriatric Clinic of Ruttonjee and Tang Shiu Kin Hospitals.  The clinic referred her to the Eastern Hospital to manage her psychiatric problem. 

272.  Her first consultation with Eastern Hospital was on 31 August 2002 (C4/893-894 and C7/1671-1677). The medical notes made in that consultation recorded that she had mental illness for over 20 years (C7/1671).  She was accompanied by Winnie and that she had consulted a general practitioner over 20 years ago because of abnormal behaviour (C7/1672).  She presented with grandiose belief of being the queen, had elated mood, paranoid delusion against her relatives.  She refused to see psychiatrist and her husband consulted Dr Ip Yan Ming who instructed a general practitioner to give her antipsychotics.  She never admitted that she had mental illness (C7/1672).  It was in the recent 10 years that she was on regular treatment by Dr Ignatius How Mou Lam (C7/1673). 

273.  Mrs Ng said in §20 of her supplemental witness statement that she had mistakenly told the doctor that she had the illness for 20 years when it should have been 12 years but not “20 years”. I do not accept this evidence because it is in contradiction with the rest of the medical notes in particular the part about the involvement of Dr Ip Yan Ming. 

274.  A letter dated 11 November 2014 from the Eastern Hospital and signed by Dr Yim Heung-wah (“Dr Yim”) of the Psychiatric Department of the hospital said that she had onset of mental illness more than 30 years ago (C4/893-894). 

275.  From these notes and the hospital’s letter, Mrs Ng should have suffered from her mental illness since the early 1980s.  This is in line with Kelly’s case that it was because of Mrs Ng’s mental illness in the early 1980s that Kuen was unable to arrange the assignment of the Flats to Kelly.  Winnie (and Vincent) appeared to have pushed the onset of Mrs Ng’s mental illness to a decade later.  On this, I do not ignore the letter dated 10 January 2015 from Dr. Ignatius How Mo Lam (C4/899). However, the medical notes and letter from Eastern Hospital are clear that Mrs Ng had suffered from such illness since the early 1980s and Kuen had consulted Dr Ip Yan Ming for her treatment before she was treated by Dr Lam.

276.  There was another consultation with Dr Yim of Eastern Hospital on 15 November 2002 (C7/1680 and 1680A).  It was an overdue consultationwhich Winnie also attended.  Dr Yim recorded in her medical notes that Winnie had reported to her as follows:

“that [Mrs Ng] was emotionally stable x 2/52 (= for two weeks).

scolded family members.

poor in sleep 10 pm – 1 am.

restless, washed hair and moving around.

irritable mood, hyperactive.

scolded [husband] [with] foul language.

boastful, believed she looked after the family [since/because] houses (bought by [husband]) were under her name.

no aggressive behaviour.” (emphasis supplied)

277.  Winnie agreed in cross-examination that she had told Dr Yim that the houses bought by Kuen were under the name of Mrs Ng.  She further said that she had just repeated to Dr Yim what Mrs Ng had told her, but she did not believe what Mrs Ng said was true.  When asked whether Vincent was lying when he said “everyone at home knew” that the Flats were bought by Mrs Ng, she said that she was not sure that the words she repeated to Dr Yim had been said by Mrs Ng to her.  When asked whether the words she repeated to Dr Yim were said by Kuen to her, she again changed her evidence and said that she had just overheard Mrs Ng saying these words to someone and she just repeated them to Dr Yim.  She thought she had to report to Dr Yim the things said and done by Mrs Ng for the sake of Mrs Ng’s illness.

278.  She aligned herself with Vincent’s evidence that all family members knew that it was Mrs Ng and not Kuen who had bought the properties that were in Mrs Ng’s name.  In the light of what Mrs Ng had said which she had repeated to Dr Yim, she thought that Mrs Ng was suffering from some problem.  When she was confronted again by the simple and straight forward medical notes, which did not sit well with her varied and conflicting explanations, she said she did not quite remember and not understand why the doctor had so recorded.

279.  As pointed out by Mr Ismail in closing submissions, if Winnie just reported to Dr Yim the words she overheard from Mrs Ng which she did not believe to be correct, she should have told Dr Yim that Mrs Ng’s words were not correct as the houses under Mrs Ng’s name were in fact bought by Mrs Ng.  But Winnie did not say so to Dr Yim and there is no such thing in the medical notes.  The notes of what she had said to Dr Yim on 15 November 2002 thus stand as evidence that she knew that the houses bought by Kuen were under the name of Mrs Ng. 

DAVE YIP’S EVIDENCE

280.  In or about 1980s (or 1979), Yip met Vincent in Canada when they were attending university there.  After finishing his university education, Yip returned here in 1983 to work in his father’s company, Shiu Kong Sek Kee Plastic Factory (by transliteration) (兆光錫記塑膠廠) (“Yip’s company”).

281.  Yip’s evidence was about Vincent’s role in Astro, Astro’s business in the 1.6 million calculator SKD kits of which Yip’s company was a supplier and Astro’s re-sale of television sets.  But his evidence on how much was earned from the calculator business was contradicted by the two Chinese judgments produced by Kelly.  In any case, Astro’s business or distribution of profit is no longer relevant to the HK$1 million paid by Kelly to Kuen by reason of the position taken by the defendants at final submissions and also Astro’s tax returns. 

282.  The interesting part of Yip’s evidence is his allegation that he learnt of Astro’s profit from the calculator business because he had read Astro’s order.  Vincent also gave him the L/C received by Astro from its purchaser for him to make a copy which he took to a bank for advice. He further said that all these had happened because of his deal with Vincent was one of faith and trust.

283.  Yip also went so far in cross-examination to say that Kuen was the true boss of all companies operating in the Flats including the advertising business.  He also said that Kelly’s long time employee Tim had told him that the advertising business was not doing too well.  Kuen had also told him that Kelly’s finance was not sound.

284.  He mentioned in his statement three times that Kuen was the boss of Astro.  But he said on one occasion that Kelly “was a person seemingly having assumed the position of a general manger of Astro and following the instructions of Mr. Ng Bing Kuen”.  He explained in cross-examination that Kelly was just hanging around and doing nothing whilst Vincent was the one who did all the nitty-gritty of the management and administration of Astro per Kuen’s order.  Vincent was most heavily involved in Astro’s business.  He said Kelly was dispensable, but Astro could not operate without either Vincent or Kuen. 

285.  Yip also said that between 1983 and mid-1990s, he met Vincent’s mother, Mrs Ng on many occasions.  They met a few times in Flat B and/or Flat C and a few times in their home on Conduit Road.  Yip also went on vacation with Mrs Ng, Vincent and his sister, Winnie twice in early 1990s.  Mrs Ng was very nice and appeared to be a normal person.

286.  Yip’s evidence has several peculiar aspects.  His evidence on the profitability of the calculator business was contradicted by the Chinese judgments produced by Kelly.  He alleged for the first time in oral evidence that he had read Astro’s order and Vincent gave him the L/C for him to make copy and go to the bank for advice and he learnt of Astro’s profit in the calculator business from these documents.  He also said for the first time in oral evidence that Kelly was just hanging around and doing nothing whilst Vincent was the one who did all the nitty-gritty of the management and administration of Astro per Kuen’s order.  But he said he was Astro’s supplier to this transaction.  I can see no reason why he should be given access to Astro’s order so that he could learn of Astro’s profitability in the transaction.  There was a clear conflict of interest.  His further allegation that Vincent gave him the L/C of the transaction for him to make a copy which he took to a bank for advice is even more bewildering and unbelievable.  This L/C was Astro’s confidential document.  There was absolutely no reason for it to be given to a supplier to make a copy.  I also cannot see any reason why Astro would have asked him to go to the bank for advice on the L/C.  It is simply beyond imagination.  His new allegation that Kelly was just hanging around doing nothing whilst Vincent did everything per Kuen’s order is also contrary to the defendants’ case as the defendants say that Kuen wanted Kelly’s help to run the companies that belonged to Kuen or Kuen and Kelly jointly.  This allegation is also contrary to what Chok Lee said in cross-examination though they referred to different periods.  I find that Yip was trying to be smart in making these new allegations in his oral evidence. But these allegations made him unbelievable.  I reject his evidence.

LEE CHOK KAY’S EVIDENCE

287.  Chok Lee met James in Vancouver, Canada in the summer of 1980 when they were attending universities there.  He graduated in 1983 and returned here in 1989.

288.  James came back here in 1992. Chok Lee met him a few times in his office in the Bank of China Tower in 1992. Chok Lee also met Kuen, Vincent and Winnie who were working for the family business.

289.  In about February 1993, Chok Lee started his own business.  He was looking for an office to house several employees.  He asked James for help.  By chance, space was available in the Flats.  James said he asked his mother, Mrs Ng for permission as she was the owner of the Flats.  With Mrs Ng’s permission, Chok Lee moved into Flat B in March 1993 to start his business with several employees.  He did not have to seek permission from Kelly or anyone else to do so.  He moved his company to the New Territories in June 1993.

290.  Chok Lee had met Kelly in Flat C. Kelly had not said anything regarding his moving his company into Flat B.  Kelly was working in Flat C.  During his stay there, he had met Kelly 8 to 10 times.  He had chatted with Kelly once and introduced his company to Kelly. 

291.  There was in Flat B a gentleman, Mr. Chan who helped Kuen, Vincent, and James to manage their China projects.  Sometimes, Kuen would bring Kelly to Flat B for meetings at the conference table.  He stayed in the office in Flat B for 80% of the time.  He described in cross-examination that Flat B had an area of about 1,000 sq. ft with a small toilet.  (The defendants’ surveyor report said that Flat B had a saleable area of 378 sq ft. and a flat roof of 283 sq ft. (D/5).  Kelly’s surveyor report said that the saleable area was also at 378 sq ft. and the flat roof had 274 sq ft. (D/61).  The flat roof was enclosed to form part of the office.  Hence, the total office area of Flat B would be at about 661 to 652 sq ft. and less than 1,000 sq ft). 

292.  Unlike Yip’s evidence, Chok Lee said in cross-examination that Kelly was also involved in the Ng family businesses. During Chok Lee’s stay in Flat B, Kuen, Mr. Chan, and/orKelly had engaged in many meetings discussing various investments in China, for example, real estate projects.  He said in cross-examination that these meetings were conducted on a conference table in Flat B about 10 feet away from him and within the earshot of his staff and his.  He and his two or three staff were doing their own work there. Sometimes when the meeting talked loudly, he would turn around and take a look at them.  All together they had ten odd meetings in his presence and he was never told to stay away even when he asked whether he should.

293.  Throughout the years since 1993, Chok Lee had come to the Flats many times and met Kelly on many occasions. Kelly had not claimed to him that he was the owner of the Flats. 

294.  Throughout these years, Chok Lee had also met Mrs Ng on many occasions including Kuen’s birthday banquet in 1993, the weddings of Kelly’s two daughters in 2008, Kuen funeral in 2010 and a few times in the Flats at her home on Conduit Road.  Chok Lee had also run into Mrs Ng several times in Central.  He had also talked to Mrs Ng over the phone many times when he called James, Vincent or Winnie.  He regarded Mrs Ng a very nice person.

295.  I would not place much weight on Chok Lee’s over estimate of the size of the office.  He must have been there though his recollection of the area is faulty.  However, his description made for the first time in oral evidence of how Kuen, Kelly and their staff had held ten odd meetings sometimes loudly all in the presence of his and his staff is surely unbelievable.  He was an outsider.  If Kuen, Kelly were indeed conducting meetings with their staff and discussing their business, I cannot imagine how or why they would have allowed Chok Lee and his staff to be in their earshot.  I find that Chok Lee was trying to be smart in making these new allegations which made him unbelievable.  I reject his evidence too.  If he should have operated his business in Flat B for three months without Kelly’s permission, then it must have by the permission of James as James was occupying Flat B then and Chok Lee only operated there for three months. 

VALUATION

296.  The parties agreed that each of the Flats had a market value of HK$375,000 on 13 September 1985.

PRELIMINARIES

   The undisputed facts

297.  The following are the undisputed facts which have been referred to by Mr Lam in §2.3 of his opening submissions:

(a)   Mrs Ng is all along the sole registered owner of the Flats. (CB 2/168-187)

(b)   The Flats were purchased in 1973 at the consideration of HK$400,000 ($200,000 each). (CB/173 & 183)

(c)   In 1985, Kelly paid a cheque dated 13 September 1985 in the sum of HK$1 million to Kuen. (CB/72).

(d)   The cheque, with Kuen’s endorsement on its back, was deposited into the bank account of Tung Ltd with United Chinese Bank Limited on or about 13 September 1985 (CB1/73).

(e)   In March 1987, Mrs Ng as the registered owner of the Flats and Kelly as the borrower executed the 1987 mortgage deed for HK$500,000 banking facilities in favour of Kelly (CB/81-115).  It was provided therein that Mrs Ng charged the Flats to the United Chinese Bank Limited as beneficial owner of the Flats (CB1/89).

(f)   The 1990 further charge was executed by Kelly and Mrs Ng in favour of Kelly in November 1990 (CB1/117-131).  Again, it was provided therein that Mrs Ng charged the Flats to the United Chinese Bank Limited as beneficial owner of the Flats (CB/119). 

(g)   Both Kelly and Kuen’s sons have used the Flats at the material times.

(h)   In 2010, Mrs Ng offered to pay Kelly HK$2 million for him to vacate Flat B (CB/157).

   The Plaintiff’s evidence and the effect of Kuen’s death

298.  Mr Lam referred to Kuen, Mrs Ng and Kelly as the first generation and Vincent, James, Winnie and Jennifer as the second generation. He submitted for the defendants that the members of the first generation were directly involved and should have personal knowledge of the most crucial factual issues.  Since Kuen had died on 18 February 2010 due to chronic obstructive pulmonary disease (C4/905-1), it is necessary to approach Kelly’s evidence with a healthy dosage of scepticism.  He referred in §15 of his closing submissions to what Lord Walker said in Yung Shu Wu v Vivien Sung Wu (2011) 14 HKCFAR 39at §73:

“… Vivienne is making a claim against the estate of a deceased person who cannot give evidence against her claim. The court has always approached such claims with some suspicion, especially (in the case of an alleged gift) where the only or principal witness in support of the claim is the donee. Corroboration is not essential in every case. But as Plowman J said in Thomas v. The Times Book Co. Ltd [1966] 2 All ER 241, 244 (the curious case about ownership of the manuscript of Dylan Thomas’ Under Milk Wood),

‘Therefore, not only in this case is the onus of proof on the defendants [who were resisting a claim by the poet’s administratrix], but I am enjoined by authority to approach their story with suspicion having regard to the fact that the other actor in the story, the late Dylan Thomas, is dead and cannot therefore give his own version of what took place.’

This principle has been applied in Cheung Cho Kam Sindy v. Cheung Yuet Ying Rose (Deputy High Court Judge Muttrie, 13 July 2007).”

299.  Mr Lam repeated this submission in §89 of his closing submissions in relation to Jennifer’s evidence on Kuen’s visit to her chambers in 2009.

300.  Mr Ismail disagreed with this submission in §§7 and 8 of his closings submissions.  He agreed that the most direct evidence in support of Kelly’s case are the transactions, meetings and conversations regarding the Flats that took place between Kelly and Kuen over the years preceding Kuen’s death. But he submitted that:

(1)   The remarks of Lord Walker NPJ were made in a claimwhere the claimant was the sole witness to an alleged oral giftof the entirety of the deceased’s assets (worthmillions of US dollars) allegedly made at a time when thedeceased was still in good health.  It was therefore necessary toapproach the claim “with some suspicion” as the stakes werehigh and corroborating evidence low.  But Kelly has notclaimed against Kuen’s estate.  He only maintained that hepurchased the Flats at HK$1,000,000 in September 1985 and had used and occupied the same for his businesses ever since.  Thus, what Lord Walker saidin the context of Yung Shu Wu is inapplicable to this case.

(2)   Even if Lord Walker’s remarks are applicable here, it is incorrect to adopt a starting point of “scepticism” towards Kelly’s uncorroborated evidence because there is no rule of law laying down such a proposition.  In Re Cummins (deceased), Cummins v Thompson and others [1971] 3 All ER 782, Lord Denning MR (with whom the Court of Appeal agreed) said (at 786h-787b):

“Then it was said that the evidence of the widow was not corroborated and ought to be regarded with suspicion. But I think the answer to it is sufficiently contained in the judgment of Sir James Hannen P in Re Hodgson, Beckett v Ramsdale (1885) 31 Ch D 177 at 183, [1881-85] All ER Rep 931 at 934, …:

‘… it is said on behalf of the defendants that this evidence is not to be accepted by the court because there is no corroboration of it, and that in the case of a conflict of evidence between living and dead persons there must be corroboration to establish a claim advanced by a living person against the estate of a dead person. We are of opinion that there is no rule of English law laying down such a proposition. The statement of a living man is not to be disbelieved because there is no corroboration, although in the necessary absence through death of one of the parties to the transaction, it is natural that in considering the statement of the survivor we should look for corroboration in support of it; but if the evidence given by the living man brings conviction to the tribunal which has to try the question, then there is no rule of law which prevents that conviction being acted upon.’” (emphasis added)

(3) In the event that corroboration of the material particulars is desired, it can be amply found in Jennifer’s evidence and the other supporting evidence. A similar approach was taken in Re Cummins(deceased): see 787c-g.

301.  I agree with Mr Ismail’s approach.  Kelly is not just relying on his words against Kuen.  He is supported by Jennifer.  There are also the documentary evidence as well as admissions by Kuen’s children and Mrs Ng’s hospital records.  I do not think it necessary for me to start off with some scepticism on Kelly’s evidence.

   Jennifer’s evidence

302.  In relation to Jennifer’s evidence, Mr Lam admitted that it would be difficult to criticize her demeanour in Court.  He, however, submitted that Jennifer loves her father Kelly and is therefore not an independent witness.  He further submitted that whether what she did or said was inherently reliable and credible must be considered in the light of the fact that she is a practising barrister.

303.  Mr Ismail again disagreed. He submitted that the same reasons that rendered Jennifer not an independent witness also rendered Vincent, James, Winnie not independent witnesses.  On this point, Mr Ismail must be right.

304.  Regarding the fact that Jennifer is a practising barrister and hence her evidence should be considered in a different light, Mr Ismail submitted that this is a wrong approach.  He referred to the decision of Deputy High Court Judge Cheng SC in Polestar Assets Ltd v Anton Capital Ltd HCA 1836/2009 & HCMP 1883/2010, unrep., 16 January 2012 at §120:

“When in the witness box, a member of the general public and one of the legal profession should have been accorded equal weight from the outset. They both have come to give evidence to assist the court in resolving the dispute. I know of no presumption nor can there be one that statements from a legal profession must necessarily be afforded greater weight irrespectively.” (emphasis added)

305.  I agree with Deputy Judge Cheng SC and hold that Jennifer’s evidence of fact should be considered in the same way as the evidence of any other factual witnesses in this action.

   Mrs Ng’s mental illness

306.  Though Mrs Ng has a history of mental illness, there is undisputed evidence that she is mentally capable and of sound mind to decide her personal affairs and to understand legal documents.  I therefore regard her as an ordinary factual witness and would not consider her evidence as having been affected by her illness.

WHETHER KUEN OR MRS NG WAS THE BENEFICIAL OWNER OF THE FLATS

   Whether Kuen had motive to buy properties in Mrs Ng’s name

307.  Mr Lam referred to Kelly’s case that Kuen had paid the purchase price of HK$400,000 for the Flats and Mrs Ng was merely holding them as a bare trustee/nominee for Kuen.  He, however, submitted that there is no written declaration of trust executed by Mrs Ng in relation to the Flats in favour of Kuen as required by s 5(1)(b) of the Conveyancing and Property Ordinance (“CPO”).  Nevertheless, he also accepted that s 5(2) has excluded the effect of s 5(1) from the creation or operation of resulting, implied or constructive trusts and that Kelly is relying on the presumption of resulting trust.

308.  Regarding resulting trust, Mr Lam referred to Kelly’s admission in cross-examination that he did not know up to the time when he was in the witness box as to how or from where did the purchase price come.

309.  Mr Ismail however referred to Kelly’s evidence in §§18 and 33 to 36 of his closing submissions that Kuen was concerned that he might be investigated by the authorities.  Kelly said in evidence that Kuen had told Kelly that Kuen had put his assets in Mrs Ng’s name as he did not want others to know that he had accumulated wealth through gambling in greyhound racing.  Kuen was wary of potential investigation by the authorities.  Kuen also told Kelly that if he could not trust his wife, there was no one he could trust.

310.  Judging from the other evidence and my conclusions on issues of whether Mrs Ng was holding real properties on trust for Kuen as dealt with below, I accept Kelly’s evidence as it is consistent with the other findings I make below.

   Was Mrs Ng a business woman?

311.  Mr Lam submitted that Mrs Ng was not financially dependent on Kuen, at least not totally.  She had her own incomes and own properties.  Whether she owned properties that she had purchased with her own funds is a contested issue. 

312.  Regarding her own business, her evidence is that she used to work as a beautician at the Peninsula Hotel.  She then opened a beauty salon with a friend.  And later on, she traded in jewels. She would buy jewels which were not redeemed from a pawnshop, redecorate and then resell them at a profit.  She also said that she had invested in shares. 

313.  Regarding her beauty salon, it was allegedly opened after the closure of the beauty salon at the Peninsular Hotel shortly after 1964.  She did not say how long did it last or whether it was profitable or not.  Regarding her jewelling trading and share investment, there is nothing but her own words and the words of the other defence witnesses about them.

314.  Mr Lam referred to her “Personal History” in the medical notes of the Psychiatric Department of the Eastern Hospital made by the doctor on her first consultation on 31 August 2002.  The notes say that she had come to Hong Kong at the age of 8 when her parents stayed in China.  She studied to form 3.  She started working as a cosmetic worker since 16 years old and started her business (beauty salon) for 2 years.  She married at 19 and had good marital relationship. Financially, she had property (C7/1674).  

315.  I note her claim of having owned property which is an issue here.  The dispute is whether she had bought the real properties under her name or she was holding properties on trust for Kuen.  What is also of interest is the lack of any reference in the medical notes to her jewellery business and investment in shares.  Kelly also said in evidence that he had not heard that she had such a business.  It is thus doubtful whether she had run such business and invested in shares.  Even if she had run a jewellery business, it is doubtful that such business would have brought in significant income which enabled her to purchase the real properties that were registered in her name.  There are also many other pieces of evidence that I discuss below that throw more light on this issue.  

316.  Mr Lam also referred to the Form 23 which transferred to Mrs Ng the title of 6061 Grant Street, Burnaby, BC, Canada which was executed on 20 October 1983 (Core/60).  Mrs Ng described herself in the form as “self-employed”.  Mr Lam submitted that this was a piece of evidence showing that she was earning incomes and owned properties.  But it is not known what kind of employment she was in.  The form did not say that she was a jewellery merchant.  It is also her evidence that she only ran her jewellery business until about 1979.  This part of the document was also not canvassed in oral evidence.

317.  From the above, I hold that Mrs Ng was not in any business which would have earned her enough money to buy the properties that were registered in her name.  Regarding the question of whether she had used Kuen’s money together with her own money to buy these real properties, this is dealt with below in the context of whether she was the beneficial owner of these properties or she was merely holding them on trust for Kuen.

   The medical notes on Mrs Ng dated 15 November 2002

318.  The medical notes of the Eastern Hospital also reflected on Winnie’s knowledge of the ownership of the properties held under Mrs Ng’s name.  Winnie initially in cross-examination maintained that Mrs Ng had purchased the Flats.  However, the medical notes of Dr Yim made on 15 November 2002 recorded Winnie as having told Dr Yim [C7/1680 and 1680A]:

“[Mrs Ng] scolded [husband] [with] foul language.

boastful, believed she looked after the family [since/because] houses (bought by [husband]) were under her name.”

(emphasis added)

319.  When Winnie was confronted by these notes in cross-examination, she said she merely relayed to Dr Yim what Mrs Ng had told her. I have already recorded above her evidence on these notes.  I noted above that her varied and conflicting explanations on what and from whom she had heard and relayed to Dr Yim did not sit well with the simple and straight forward medical notes.  She at the end said that she did not quite remember what she had said to Dr Yim or understand why Dr Yim had made such record.  I have also referred to Mr Ismail’s submissions that if Winnie was merely relaying to Dr Yim what she had overheard from Mrs Ng, she should have told the doctor that the information was what she had overheard and that, according to her knowledge, what she heard was not true as the properties under Mrs Ng’s name were in fact bought by Mrs Ng.  But Winnie did not say that she had so advised Dr Yim.  The medical notes also did not say so.

320.  Bearing in mind that Winnie shareda close relationship with Kuen and managed his assets before his death, there is no surprise that she could have learned this from Kuen. Winnie had on behalf of Kuen asked Jennifer by email dated 12 August 2005 on whether Winnie’s name could be added to or be made the owner of the “property”.  I find that the medical notes are an accurate reflection of what Winnie had told Dr Yim.  She did so from her knowledge and understanding of how Kuen had managed his assets and ordered his affairs.  Kuen had provided the funds to purchase properties including the Flats and placed them under the name of Mrs Ng.  But Kuen’s family knew that the belonged to Kuen.  That was why Winnie had told Dr Yim that Mrs Ng was boastful.  I do not accept Winnie’s convoluted explanation on what and from whom she had heard that resulted in Dr Yim’s medical notes. 

321.  Mr Lam also submitted that the medical notes merely stated “houses (bought by H) were under her name”.  There is no reference to any house or property let alone the Flats.  It also did not say “all” the houses or properties under Mrs Ng’s name.  Mr Lam further submitted that it could not have been Winnie’s intention to give a detailed account to Dr Yim and Dr Yim would not be interested in such details and that was simply not the purpose of the conversation. 

322.  Whether the “houses” would include the Flats can be gleaned from other evidence given at the trial.  James in his reply in the March 2008 email said: “I have just found out that my father (Kuen) paid for the ABC office (on the second floor) and the first floor office (the Flats) as well but did not put his name on the deed”. James’s source of knowledge was obviously Winnie.  He said after he had received the November 2005 email from Jennifer which talked about Kelly having purchased the Flats from Kuen, he discussed the matter with Winnie. 

323.  Furthermore, it is Kelly’s case that all houses or real properties held in Mrs Ng’s name were Kuen’s properties.  But it is the defendants’ case that all such properties held in Mrs Ng’s name belonged to Mrs Ng and Kuen had no interest therein.  Nobody suggested that some of the real properties in Mrs Ng’s name were beneficially owned by her while some others were owned by Kuen.  The medical notes were categorical in recording that “[since/because] houses (bought by [husband]) were under her name.”  The notes did not say “some houses”.  I thus conclude that the “houses” in the medical notes refer to all houses or real properties and included the Flats and Winnie was telling Dr Yim categorically that all real properties held in Mrs Ng’s name were purchased by Kuen.

   Jennifer’s email dated 10 November 2005 to Winnie

324.  Jennifer sent the November 2005 email to Winnie and copied it to James and Vincent (Core/247-248).  The November 2005 email read, among other things:

“Hello Winnie,

...

As I understand, the 2 office properties, one occupied by Dad and the other by James and Vincent are both registered in the name of your mother holding on Uncle’s behalf but both premises had been sold to Dad at the consideration of $1,000,000 in 1985, without taking steps to change the title owner. You may confirm this with Uncle so as to avoid any misunderstandings and I understand that Vincent and James also knew about this matter.

My Dad told me that he would give one office back to Uncle (the one James and Vincent is using now). In that case, I would like to make all the necessary documents to set things right. So, if you have to make the deed of gift as well, I suggest that I can find a lawyer to do everything in one go so that the legal cost would be cheaper.

…

Get back to me as soon as possible la. Talk later.

   Jennifer”(emphasis supplied)

325.  Only Winnie replied to Jennifer.  She asked Jennifer to call her as it was “too complicated to explain” to Jennifer.  Jennifer’s evidence is that she did not call Winnie.  She also said in cross-examination that she did not see any complication.  If there was, Winnie could have set it out in the reply.  She thought that Winnie did not want to deal with the problem.  She therefore did not call and push Winnie as Winnie, James and Vincent were facing many problems.

326.  Mr Lam submitted that Jennifer was unsure of her understanding as her understanding was from her parents and Kelly’s understanding of Mrs Ng being Kuen’s trustee was based on what Kuen had told him.  He further submitted that what Kuen said, if not shared by Mrs Ng, is inconclusive.  I disagree.  Despite Mrs Ng’s denial, there may be other evidence to show that she was Kuen’s trustee. 

327.  I also do not think that Jennifer was unsure.  She was spelling out her understanding of the matter to Winnie. Her purpose was to regularize the title of the Flats in legal deeds with one flat be returned by Kelly to Kuen.  She needed the co-operation of Kuen’s family to do this.  She asked Winnie to confirm the matter with Kuen so that Winnie would not have a different understanding.  She further said that Vincent and James also knew about the matter (meaning that they shared her understanding).

328.  Winnie also said in evidence that the November 2005 email was convoluted with allegations including ownership of the Flats.  James told her that he had never heard of Jennifer’s allegation about the Flats.  She did not discuss this allegation with Kuen, Mrs Ng or Vincent.  She did not consider that she should ask Kuen or Mrs Ng a matter of their generation.  Regarding her reply to Jennifer that “[i]t’s just too complicated to explain”, she thought in retrospect that it was badly worded.  She asked Jennifer to call her so that she could give Jennifer the explanation.  She said Jennifer had called her on the Saturday after the November 2005 email when she was at the Shaukeiwan wet-market.  She told Jennifer that she and James had never heard of Jennifer’s allegations.  She also told Jennifer to clarify the matter with Kelly, Kuen, and Mrs Ng.  She further told Jennifer that Kuen’s children did not own the Flats and that Mrs Ng was the owner.

329.  Winnie also explained in cross-examination that she did not contradict Jennifer’s understanding of the ownership of the Flats in her email reply because she was on reasonably good terms with Jennifer and did not want to hurt Jennifer by contradicting her thereby suggesting that Kelly was lying.  She wanted to relay this to Jennifer indirectly on the phone.  She also wanted to talk to Jennifer about the other matters mentioned in the November 2005 email.  They were about Kuen’s enquiry of stamp duty for assignment of a ½ share of his home to her, to mortgage the half share for the living expenses of Kuen’s family and Jennifer’s understanding of Mrs Ng’s power of attorney given to Kuen.  Hence, there were too many things to deal with and she wanted to talk to Jennifer on the phone.  However, I note that what she said in her witness statement about the things she had discussed with Jennifer in the alleged phone conversation did not touch on these other issues.  She also said in cross-examination that she did not realize the importance of the November 2005 email.

330.  If Winnie was truthful in that she did not consider that she should ask Kuen or Mrs Ng about Jennifer’s allegation, then she should have said so in her reply email to Jennifer rather than asking Jennifer to call her to discuss the matter.  It was also simple and straight forward for her to reply in email that she and James had never heard of Jennifer’s allegation and Jennifer should confirm it with Kelly, Kuen, and Mrs Ng.  I also cannot see why Winnie could not have told Jennifer in email that the Flats were bought and owned by Mrs Ng and had not been sold to Kelly as everyone in her family knew. I cannot see how such a reply could have hurt their relationship. 

331.  In any event, Jennifer had set out her understanding in the November 2005 email.  Even if Winnie should have clarified the matter with Jennifer in the telephone conversation, her failure to contradict Jennifer by email has left Jennifer’s understanding remain uncontradicted and prejudicial to Mrs Ng’s interest in the Flats.  I cannot see why Winnie should have failed to reply to Jennifer by email at least to confirm that she had explained everything to Jennifer on the phone. 

332.  I also doubt if Jennifer had called Winnie on the Saturday after the November 2005 email as alleged by Winnie.  Winnie said that she had explained in the conversation to Jennifer not just the ownership of the flats, but also the issues of stamp duty, living expenses or power of attorney. She also said that Jennifer had told her that Kuen had already visited George Lam and Jennifer at their chambers and told them the “whole story” - meaning that Kuen had told them that Mrs Ng was the owner of the Flats.  (Winnie disputed this visit and Jennifer did not allege it.)  If Winnie was telling the truth, it is unlikely that Jennifer would have forgotten about this conversation altogether.  It is also unlikely that Jennifer would have raised with James the issue of ownership of the Flats in her March 2008 email again because, according to Winnie, Jennifer had already learnt the “whole story” from Kuen.  If Winnie was credible, Jennifer should also not have said in her March 2008 email to James that none of Kuen’s children had answered her directly on the allegation in her November 2005 email that Kelly owned the Flats.  Even if Jennifer should have forgotten about the conversation, James would have referred to it in his reply to the March 2008 email (which he did not).  It is undisputed that Jennifer’s relationship with James and Winnie was very good even upto 2010 and Jennifer was helping with the litigation of James in March 2008.  There was no reason for her to write the March 2008 email in the way she did if Winnie was truthful that there was the alleged conversation between her and Jennifer on the Saturday after the November 2005 email.  All in all, Winnie’s allegation that there was this conversation not credible at all.  I do not accept Winnie’s evidence.  I hold that Jennifer had not talked to her on the phone after and in relation to the November 2005 email.

333.  James also said that he and Winnie were surprised when they received the November 2005 email from Jennifer.  He discussed this with Winnie over the phone and concluded that the allegation was a total nonsense.  He understood from Winnie that Jennifer had called Winnie afterwards and Winnie told her to clarify the matter with Kelly, Kuen and Mrs Ng.  He did not reply to Jennifer because Winnie had already discussed this issue with her.  But I cannot see why he did not even send a short email to Jennifer to put on record that Winnie had explained everything to her.

334.  Furthermore, Jennifer also complained to James in the March 2008 email that she had “once sent out an email (the November 2005 email) asking about this issue but none of you wanted to answer me directly”.  James in his reply did not contradict Jennifer by saying that Winnie had already explained to her on the phone that the Flats were purchased and owned by Mrs Ng.  He instead answered that he had never asked Kuen and Mrs Ng about the matter but had “just found out that [Kuen] paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed”.  This betrays James’s evidence that he did not reply to Jennifer’s November 2005 email because Winnie had already done so on the phone.  I reject his evidence in this regard.  This rejection is also consistent with my finding that that there was no conversation between Winnie and Jennifer on the November 2005 email.

335.  James also said that Jennifer should have asked the owner of the Flats directly, but again he had not said so in any of his emails to Jennifer.

336.  Vincent said that Kelly was a boastful person.  He boasted about things he had done or owned when such were lies.  Kuen’s family did not expose the truth to others to save Kelly’s face.  Hence, when he received the November 2005 email, he believed that it was just Kelly’s lie and he did not need to clarify it.  He therefore did not bother to respond to Jennifer.  He further said that Jennifer was a barrister and had been helping his family as its legal adviser.  He therefore did not want to expose Kelly’s lie to her.  He also said that as a matter of law, Mrs Ng was the registered owner of the Flats.  His comment should have no bearing on her ownership.  Jennifer was also a barrister and his answer was unimportant.

337.  However, he had in his evidence maintained that everyone in his family knew that the properties in Mrs Ng’s name were purchased with her own funds and owned by her and that Kuen had told him that the sum of HK$1,000,000 from Kelly was for “money distribution”.  If that was the case, it would have been easy and simple for him to send Jennifer a short reply saying that her understanding was incorrect and the Flats were purchased and owned by Mrs Ng.  Alternatively, he could tell her in the reply that she should consult Kuen and Mrs Ng.  But he did anything.

338.  There is a further problem in Vincent’s allegation that Kelly was just telling a boastful lie when he told Jennifer that he owned the Flats.  As a matter of fact, Kelly did not merely tell Jennifer that he owned the Flats.  The beginning of Jennifer’s March 2008 email showed that Kelly had, on Jennifer’s suggestion, tried to organize a meeting with Kuen’s family to sort out the ownership of the Flats.  His action caused so much anxiety to James that James said that he was driving everybody crazy. But upon Jennifer’s exhortation in the March 2008 email, James also agreed that there should be a meeting to sort the matter out.  James also suggested to have the meeting in the following week though it never took place.  James also said in the March 2008 email that both Mrs Ng and Kelly wanted to sell the Flats “but in different time frame and against the opinions of each other’s and for diffident reasons”. If Kelly was merely telling a boastful lie, it is unlikely that he would have tried to get Kuen’s family to sit down and sort the matter out with him or wanted to sell the Flats.  James would also not have agreed with Jennifer to have such a meeting.  I do not accept Vincent’s evidence that he regarded Kelly’s claim of ownership of the Flats was a boastful lie.  I find that he did not reply to Jennifer because he knew that Jennifer was right.

339.  Mr Lam further submitted that the lack of response from Kuen’s children to Jennifer’s the November 2005 email cannot be construed as an unequivocal admission of the suggestion made in; and in particular when the matter was not within their personal knowledge.  Hence, any admission made by them is worthless.  I disagree.  This submission is contrary to the evidence of Kuen’s children.  They all maintained emphatically that everyone in their family knew that the properties in Mrs Ng’s name were purchased with her own funds and owned by her.  I would not be surprised if Kuen’s children should have knowledge of such matter as such may be commonly discussed amongst the family.  Since all Kuen’s children maintained that they knew the truth, if the truth should be the contrary, I see no reason why they could not be in possession of the same.

340.  Furthermore, Jennifer’s understanding was on the ownership of the Flats.  That was a very important matter.  If she was wrong, there was absolutely no reason for Winnie, James and Vincent not to put pay to her misunderstanding and set the record straight in emails.  The reasonable explanation for their failure to do so is because they knew that Jennifer’s understanding was correct.  Such understanding is also in line with what Winnie had reported to Dr Yim on 15 November 2002.

341.  Mr Lam also submitted that when Winnie and her siblings appeared to be evasive (in Jennifer’s words) towards Jennifer’s November 2005 email, it was surprising that neither Kelly nor Jennifer took any further action as it was important to have the Flats transferred to Kelly if he was their owner.  This was particularly so when Winnie had in her previous email to Jennifer dated 12 August 2005 said that Mrs Ng “might sell everything” [CB2/246].  There was real risk that Kelly might lose the Flats upon such sale.  Bearing in mind that both Jennifer and her husband were practising barristers, it is beyond belief that they simply allowed the risk to perpetuate and did nothing.

342.  Jennifer’s explanation for her inaction is because she thought that Winnie did not want to deal with the problem and she did not want to push her or her siblings as they were facing many problems.  Kelly also suggested to Jennifer to leave the problem as it was.  She therefore put the problem aside. I note that her subsequent conduct was consistent with this evidence.  She did not even appear to have archived the November 2005 email properly so that it would be at her fingertips.  When she wanted to refer to it in her March 2008 email, she could only say “Remember I once sent out an email asking you and Winnie and perhaps c.c. Vincent about this issue but none of you wanted to answer me directly.”  She could not mention the date of the mail or recall correctly that it was sent to Winnie and copied to James and Vincent.  In fact, her attitude remained the same even after James had replied to her March 2008 email.  She again put the matter aside and returned to assist James in his litigation to retrieve his moulds.  I therefore do not accept this submission by Mr Lam. 

343.  As pointed out by Mr Ismail, the relationship between Jennifer and Kuen’s children was amicable at that time.  The failure of Kuen’s children to expressly rebut Jennifer’s understanding was very likely to be because they knew that Jennifer was correct.  They therefore missed a chance to settle the matter with Kelly amicably as Kelly was offering through Jennifer Flat B to Kuen so as to resolve the title issue.  This miss is lamentable.

344.  In the light of my analysis above, I do not find the evidence of Winnie, James and Vincent on and in relation to the November 2005 email credible and I reject it.

   The March 2008 email exchange

345.  I have set out above Jennifer’s March 2008 email and the point by point reply by James.  The following points in the dialogue are important (replies by James are underlined and italicized):

“…

After all, I know that he cares and worries so much about yr dad and the three of you because he always respects and cares for your dad as if he was his own father. One thing I am sure is that he and I have no intention of getting any advantage from you all.

None taken but as you know it is a mess I have no idea how to fix. And one crisis after another I have to fix.

However, from time to time, I received calls from yr family members or my father asking me how to stop your mother from selling the properties. The answer is simple: MAKE EVERYTHING CLEAR!

If there is an easy resolution to that, that would be nice.

Actually, both of them (your father and my mom) wanted to sell but in different time frame and against the opinions of each other’s and for diffident reasons.

It all goes down to the simple question, whose title do the offices in Winner Bldg belong to? If it is Yr dad and my dad in 50:50 shares, then make the proper documentation and legal registration. If not, it is 100% yr mother’s or 100% your dad, then it is even much simpler. I won’t listen to one side story whether it’s from dad or others. That is why I ask my dad to get everyone sitting together and make things clear. Then I can decide what to do to make things right.

I have no idea how “simple” or “difficult” that could be.

Remember I once sent out an email asking you and Winnie and perhaps c.c. Vincent about this issue but none of you wanted to answer me directly. All I need to know is a straight forward answer.

I never ask them, I have just found out that my father paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed.

He may have suggested selling the properties because the market is so good and we do share of concern that half of the properties are indeed illegal structures and would not worth as much as it is now if the market is not with us. But even when he was thinking selling the properties, he also had in mind to buy another one such that you can have a place to continue yr work.

...

Having said so, I am still of the view that we should all get together and clarify these matters. Otherwise, I can assure you that the longer this drags on, the chaotic it will get.

OK, sometimes next week is good for me.

As you know I need to go to China most of the time.

   James”

346.  Mr Lam referred to Jennifer’s postulation of different possibilities of ownership and submitted that she was not sure who owned the Flats.  But I think Jennifer had a clear understanding that Kelly was the owner as she had been told by Kelly.  Her mother had also reminded her about it when in grave illness.  She had this understanding when she sent out the November 2005 email.  But she was being fair in this email in not asserting her understanding on James but made it plain that she was willing to listen to other versions of the matter.  Ultimately she wanted to regularize the ownership of the Flats.  I see no reason why she should doubt her parents’ words.  She also said in this email “[b]ut even when he (Kelly) was thinking (sic) selling the properties, he also had in mind to buy another one such that you (James) can have a place to continue yr work.”  She thus regarded Kelly as the owner.  But she was expressing on behalf of Kelly the goodwill that even if Kelly was going to sell the Flats, he would still buy a property so that Vincent and James could have a place to carry on with their work.  Her attitude was not belligerent or assertive on the ownership issue. She just appeared to be a bit impatient and wanted to have this long lasting issue sort out. 

347.  Mr Lam then submitted that it was wholly inexplicable why Kelly and Jennifer did not hold the meeting to “make everything clear”.  That is to assume that Kelly and Jennifer could direct Kuen’s family to sit down and sort the matter out.  It was Jennifer’s evidence that James was unable to attend a meeting in the following week and the matter again got put aside.

348.  James said in his witness statement that he had not given much thought to this email as he did not want to be insensitive to Jennifer or upset her because his family was relying on her and her husband as their legal representatives.  He further said that he therefore went along with Jennifer and gently disputed her story.  But he in fact replied to this email point by point and did not dispute anything she said.  I also disagree that it would have been insensitive for James to tell Jennifer the Flats were owned by Mrs Ng.  Both sides agree that they were then in an extremely good relationship.  Jennifer was also not belligerent or assertive on the ownership issue in her email.

349.  James also asserted that his words that Kuen had“paid for … the first floor office as well” were without any basis or any real knowledge on his part as he just assumed that Kuen had paid for everything.  He simply wanted Jennifer not to bother him anymore on such nonsense. 

350.  In cross-examination, he said that by replying: “I never ask them, I have just found out that my father paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed.”, he just wanted to tell Jennifer that he had not asked his parents but Winnie had told him that Kuen had bought the 2/F Flat as a gift to Fun and Kelly, and he thought that Kuen had also bought the Flats as a gift to Mrs Ng.  I really cannot see how his words in the reply email could have expressed to Jennifer that “he thought that Kuen had also bought the Flats as a gift to Mrs Ng.”. 

351.  He further explained that his assumption that Kuen had paid for the Flats was based on the facts that Kuen was the richest, Kuen had paid for the bulk of his overseas expenses, and Kuen decided on the profit distribution (with Kelly).  He also assumed that Kuen had paid a lot of money to Mrs Ng.  He thought that Vincent was wrong in saying that everyone in Kuen’s family knew that Mrs Ng had paid for all the properties that were registered in her name.  He thought that the Flats and 2/F Flat were paid for by Kuen.  But he then revised his evidence by saying that all along until 2008, his family knew that the properties including the Flats were bought by Mrs Ng.  However, in 2008, Winnie told him that the 2/F Flat was bought by Kuen.  He then thought that the Flats were also bought by Kuen.  He said he came to this thinking all by himself and without anyone telling him so.  When specifically confronted with the words “I have just found out” that he used in the email reply instead of “I assume” that he did not use, he said he assumed that Kuen had bought the Flats.  My observation is that I do not expect such conflicting and convoluted evidence to come from an honest witness. 

352.  In a nut-shell, James’ explanation on his words “I have just found out that my father paid for the ABC office (on the second floor) and the first floor office as well but did not put his name on the deed” was said to be based on his very many assumptions and not on any fact or information he acquired from anyone or anywhere.  I do not forget that he had been granted a scholarship to attend the CIT in the US and obtained a master degree there.  He is highly educated and intelligent.  I do not accept that he would have written something so specific about Kuen’s purchase and/or ownership of the Flats without a solid basis.  If he was saying something on the basis of an assumption, he would have said so rather than putting it forward as a fact.  I find that he was lying through his teeth in trying to explain away his admission that Kuen, his father had bought the Flats in his reply email.

353.  Furthermore, this email was the second one that Jennifer talked about Kelly’s ownership of the Flats.  Though she appeared in this email to be willing to listen to other versions of ownership of the Flats, she had set forth her understanding in her November 2005 email.  She said unequivocally in her earlier email: “[a]s I understand, the 2 office properties (the Flats), one occupied by Dad and the other by James and Vincent are both registered in the name of your mother holding on Uncle’s behalf but both premises had been sold to Dad at the consideration of $1,000,000 in 1985, without taking steps to change the title owner.”  James would not have forgotten about her stance.  He said that after the receipt of this earlier email, he talked to Winnie and they both concluded that the allegation was a total nonsense.  Hence, there was every reason that he would have been careful in answering this later email when the issue of ownership of the Flats was raised by Jennifer again.  If he was truthful on his discussion with Winnie on the November 2005 email, I can see no reason why he would not have, in his reply to the March 2008 email, advised Jennifer that the Flats were paid for by Mrs Ng and Kuen or Kelly had no interest in them at all.  In particular, he would not have said anything indicating that the Flats were not paid for by Mrs Ng but by Kuen.  In the circumstances of this reply email, his statement that Kuen had paid for the Flats and the ABC office on the 2^nd floor of the same building.  must have reflected what he then believed to be true.

354.  For the above reasons and Winnie’s knowledge as shown in the medical notes above-mentioned, I find that James and Winnie knew that Kuen had paid for and owned the Flats.  I also hold that Vincent was aware of this.  If not, he would have refuted Jennifer’s understanding as expressed in her November 2005 email.  I reject his evidence that he was in the company of Mrs Ng when she allegedly bought the Flats.  That is a bare assertion which cannot tally with the evidence I analyzed above.  I also hold that Mrs Ng was aware of this too as she must have known that she had not paid for the real properties that were registered in her name.

The presumption of advancement and whether Mrs Ng has beneficial ownership of the properties purchased by Kuen

355.  Mr Lam submitted that even if the purchase price was paid by Kuen, in the absence of any shared or common intention between Kuen and Mrs Ng suggesting otherwise, the presumption of advancement shall apply.

356.  Mr Lam referred to moneys allegedly given by Kuen to Mrs Ng and submitted that such monies must be assumed to be gifts.  However, the evidence in the medical notes and James’s reply email to Jennifer referred to properties bought or paid for by Kuen, not properties bought by Mrs Ng with monies given by Kuen to her.  Since I accept that Kuen had paid for the Flats and had them registered in Mrs Ng’s name, the issue is whether Mrs Ng held the Flats on trust for Kuen or as the beneficial owner thereof by operation of the presumption of advancement.  The issue has nothing to do with Kuen having paid monies to Mrs Ng. 

357.  Mr Lam then submitted that even if I should hold that the purchase price of the Flats was solely paid by Kuen, the presumption of advancement would still defeat the presumption of resulting trust.  He referred to Cheung Pui Yuen v Worldcup Investments Inc (2009) 12 HKCFAR 31 where Litton NPJ said at §§6 and 7:

“6. The presumption of advancement is nothing more than an evidential tool; its weight varies with the circumstances of the case. English case law over the past half-century indicates that, the presumption, in a family context, now carried less weight than it did in earlier times…

7. But, as Cons V-P observed in Re Mak Woon Shui [1992] 2 HKC 144 at p. 149, the social changes which influenced their Lordships in England do not have the same force in Hong Kong; the presumption of advancement in the local context is not so easily displaced.” (emphasis supplied)

358.  Mr Lam further submitted that Kuen and Mrs Ng were a traditional Chinese couple who had received not much education and did not know English.  The Flats were bought a long time ago on 15 November 1973.  Even if Kuen had paid the purchase price for the Flats, the presumption of advancement must apply as it is “not so easily displaced”. 

359.  Mr Lam further submitted that the presumption of advancement can be displaced by evidence of the shared or common intention of the parties that the property was not intended to be a gift.  In other words, the presumption of advancement can be rebutted by evidence of the common intention of Kuen and Mrs Ng that Mrs Ng would only hold the Flats as a trustee/nominee for Kuen.  He referred to Stack v Dowden [2007] 2 AC 432 at p 455F and Marr v Collie [2017] UKPC 17 at §54 per Lord Kerr for support.  Lord Kerr said in §54 on joint purchase:

“If it is the unambiguous mutual wish of the parties, contributing in unequal shares to the purchase of property, that the joint beneficial ownership should reflect their joint legal ownership, then effect should be given to that wish.  If, on the other hand, that is not their wish, or if they have not formed any intention as to beneficial ownership but had, for instance, accepted advice that the property be acquired in joint names, without considering or being aware of the possible consequences of that, the resulting trust solution may provide the answer.”  (emphasis supplied)

360.  The present case is not a joint purchase.  It is a case of Kuen buying the Flats in Mrs Ng’s name.  If the presumption of advancement is to be rebutted, it should be proved that Kuen intended at the time of the purchase of the Flats in Mrs Ng’s name that Mrs Ng was to hold them as his trustee. Presumably Mrs Ng, in agreeing to have the Flats to be registered under her name for her to hold the same as Kuen’s trustee, should have shared the same intention as Kuen.  Otherwise, the Flats would not have been conveyed to her. The fact that Mrs Ng had changed her mind subsequently and wanted to appropriate the beneficial interest of the Flats to herself cannot make her their beneficial owner.  But a common intention may not be necessary in a unilateral transfer of property or asset.  It is the intention of the person paying the purchase price or making the transfer that matters.  Such intention can be gleaned from the conduct of all involved (Underhill and Hayton, Law relating to Trusts and Trustees (19^th ed) §25.37 and Snell’s Equity (33^rd ed) §§25-011 to 25-013).

361.  I agree with Mr Ismail that whether the presumption should or should not apply is a matter of evidence and a question of weight.  I have already accepted above Kelly’s evidence that Kuen had said that he had put his assets in Mrs Ng’s name as he had accumulated wealth through gambling in greyhound racing and was wary of potential investigation by the authorities.  He also told Kelly that if he could not trust his wife, there was no one he could trust.  For this reason, Kelly considered that Kuen had paid for the purchase of the Flats for Mrs Ng to hold them on trust for him.

362.  I also accept that Kelly’s evidence that he had rented the Flats from Kuen and not Mrs Ng.  He had only paid rent to Kuen before his purchased of the Flats in September 1985 and had never paid any rent or licence fee to Mrs Ng.  It is also Mrs Ng’s case that Kelly had never paid any rent to her for his occupation of Flat B and then Flat C despite her repeated demands since 1974 (see the letters of Yung, Yu, Yuen & Co written on her behalf to Kelly and dated 15 February and 13 May 2011 (Core/255 and 258).  The letter dated 13 May was drafted pursuant instructions given in a meeting by Mrs Ng, Vincent and James – §9 of the witness statement (B/290) and oral evidence of the solicitor, Mr Chan).  The fact that Kelly only paid rent to Kuen and never paid any rent or licence fee to Mrs Ng shows that he did not regard Mrs Ng as the beneficial owner of the Flats and Mrs Ng was contented with it. 

363.  If Mrs Ng was the beneficial owner of the flats and Kelly did not pay her any rent that she was entitled for more than 3 decades, I cannot imagine why she would not have taken any serious action to recover the same apart from making repeated but futile demands for same since 1974. 

364.  Mr Lam did submit in §158 of his closing submissions that Mrs Ng had said that she had allowed Kuen and Kelly to use the Flats in return of payment of users’ fees and her evidence is that Kuen only stopped paying the users’ fees till he was sick. After that, Kuen and Kelly became bare licensees.  However, this revised version of evidence is also hard to believe.   The reason being that she had said in §22 of her supplemental witness statement that as a matter of fact, Kuen had become seriously ill since early 2000s.  I cannot imagine that if she was the beneficial owner of the Flats, she would have allowed Kelly to occupy the Flats or at least Flat C without paying what was lawfully due from him from early 2000s to May 2011.  If she was right, she would have taken action against Kelly long before May 2011.  She also had her children to assist her to get back what was rightfully due to her. 

365.  I would also note that in re-examination and in answer to my questions on payment of rental by Kuen to her, she revised her evidence again by saying that Kuen had only fallen ill in about 2007 and did not pay her rent since then.  But I still cannot see why she would not have taken action against Kelly for the rental if any was due to her since 2007.  I also find it beyond imagination that, if she was the owner and had been deprived of the rental for over 3 decades or since early 2000s or since 2007, she would still offer Kelly HK$2 million for him to surrender Flat B or the Flats to her.  Further, if she had been receiving rent or licence fee or payment of whatever description from Kuen for the occupation of Flat B or C until the early 2000s or 2007, her solicitor’s letter of 13 May 2001 would have claimed that Kelly had not paid her any rent despite her repeated demands since 1974 as that would be a half-truth. 

366.  I also accept Kelly’s evidence that it was Kuen who wanted to sell the Flats in late July 1985 to repay the mortgage loans to the United Chinese Bank.  Kelly said that Kuen appeared to be the owner of the Flats and Kuen decided to sell them.  Mrs Ng had no say and did not express any view.  Such again shows that Mrs Ng had no beneficial interest in the Flats and did not conduct herself to show otherwise.

367.  Regarding the advertisements published in August and early September 1985, I will hold below that it was published to invite potential buyers for the Flats.  Mr Lam relies on Kelly’s evidence that it was Mrs Ng who decided that any interested purchaser should contact her (not Kuen) when they decided to place advertisements for the sale of the Properties.  But Kelly did say in his oral evidence in chief that it was Kuen and Mrs Ng who together decided that Mrs Ng should be the contact person.  He then changed and said that It was decided by Kuen.  Hence, this point is unclear as Kelly’s evidence is conflicting.  But it is a matter that happened some 30 years ago and Kelly was already 83 when giving evidence.  Fading of memory can be expected.  Furthermore, the telephone number for enquiry by potential buyers was that of Kelly’s office and not Kuen’s home number. Kelly said that if someone should ask for Mrs Ng, his staff would arrangement for Mrs Ng to meet with the purchaser.  If Mrs Ng should not be available, the staff would ask Mrs Ng to deal with the purchaser.  Furthermore, I have already pointed out above Kelly’s evidence that Kuen appeared to be the owner of the Flats and Kuen decided to sell them.

368.  Furthermore, the second round of the advertisements were on 23 and 27 August and 3 and 4 September 1985 when Mrs Ng was in England.  She was there from 12 August to 12 September 1985.  This round of advertisements asked interested people to phone to Kelly’s office during office hours and ask for Mrs Ng.  The office hours in Hong Kong equaled to 12 mid-night to 8 a.m. in England (adjusted for daylight savings time or summer time).  The dates of this round of advertisements and the hours of contact show that Mrs Ng’s involvement was not required for any negotiation to sell the Flats.  Hence, this supports the view that Mrs Ng was just holding the Flats on trust for Kuen.  But even if Mrs Ng could negotiate for the sale of the Flats, that would not have necessarily meant that she was the beneficial owner.  The reason being that the sale was to raise money to repay a debt incurred by her investment in houses in Fairview Park. 

369.  I accept Kelly’s evidence that in mid-September 1985, Kuen told him there was no interested buyer for the Flats and offered them to Kelly at HK$1 million.  The followed naturally to the failed attempt to sell by the advertisements.  The making of this offer by Kuen showed that he owned the beneficial interest in the Flats.  As shown below, I also accept that Kelly’s cheque for HK$1 million was for purchase of the Flats.  It was made payable to Kuen and not Mrs Ng.  This again shows that Kuen was the beneficial owner of the Flats.

370.  I also refer to the 1987 mortgage and 1990 further charge on the Flats executed by Mrs Ng on 31 March 1987 and 12 November 1990 respectively and securing a sum of HK$500,000 and a further sum of HK$300,000 banking facilities for Kelly’s use.  Kelly said that they were made because Kuen could not procure Mrs Ng to transfer the Flats to Kelly owing to her mental conditions.  The 1987 mortgage and 1990 further charge were only cancelled by the bank at Mrs Ng’s direction in March 2011 (21 years later from the 1990 further charge) after the ownership of the Flats was in dispute. 

371.  Mr Lam submitted that the medical evidence showed that Mrs Ng only had mental problems in the 1990s and not back in 1987.  But I have already referred to the medical notes and report showing that her illness should have commenced in the early 1980s.  Hence, Kelly’s evidence on this point has a ring of truth. 

372.  Mr Lam also submitted that On Kelly’s case, she also knew or should have known about the 1995 Agreement and hence, it is inconceivable why she would be provoked if she was asked to transfer the legal title of the Flats to Kelly.  But if the medical notes about Mrs Ng being boastful and so on are truthful, and I think they are, that shows Mrs Ng could unreasonably refuse to transfer the Flats to Kelly even though she knew that Kelly had already bought and paid for the Flats.  She would hold on to the Flats and treat them as her own.

373.  Mr Lam further submitted that a mortgage was no less provocative to Mrs Ng than a transfer of the Flats.  It is also clear that under the 1987 mortgage and 1990 further charge, she had to shoulder potential liability for the banking facilities granted to Kelly.  Mr Lam thus concluded that it is ridiculous to suggest that the exposure of Mrs Ng’s to financial risk under the 1987 mortgage and 1990 further charge for no benefit to her at all would be less provocative.  I disagree.  The execution of the 1987 mortgage and 1990 further charge would not divest her of the title to the Flats.  The Flats were still under her name though subject to mortgage.  Her execution of the mortgage and further charge to help Kelly reflected her understanding that Kelly was the true owner.  Her doing so also held off Kelly’s demand for transfer of the Flats.   I also agree with Mr Ismail that she knew that should Kelly default on the mortgage and further charge, it was Kelly who would lose the Flats.

374.  I also agree with Mr Ismail that if Mrs Ng was truthful, she would not have agreed to provide financial help to Kelly.  The reason being that Mrs Ng had a poor impression of Kelly.  She said in her statutory declaration:

“67. As far as I know, since 1987, Kelly had at least two families, so his daily expenses were very high. I am of the view that whenever Kelly Ng has a chance, he will take advantages of others and never keeps his promises. So I do not have a good impression of him.”

375.  If Mrs Ng regarded Kelly as a person who never keeps his promises, I can see no reason why she would have trusted Kelly that he would repay the financial facilities up to HK$800,000 plus interest.  Furthermore, it is her case that she and Kuen managed their financial affairs separately ever since Kuen had allegedly sold the Caine Road property behind her back for HK$410,000 in 1969.  For these reasons, it is impossible for her to mortgage and further charge the Flats to help Kelly if she really thought that she owned the Flats.

376.  In any case, even if Mrs Ng was, at Kuen’s request, willing to assist Kelly, I cannot see why she would or should extend the help and hence expose herself to the risk of Kelly’s default at HK$800,000 for over two decades.  During this long period, Kuen’s family also had the need of mortgage finance.  Merry Terrace was mortgaged to United Chinese Bank on 2 April 1974 for HK$200,000 credit.  It was further charged to the bank on 26 November 1979 for a further credit of HK$300,000 and further charged again on 17 December 1990 for a further credit of HK$1 million.  The mortgage and two further charges were discharged when Merry Terrace was sold on 22 October 1991.  The mortgage and further charge on the Flats for facilities for Kelly are thus evidence in support of Kelly’s case that Mrs Ng knew that she had no beneficial interest in the Flats.

377.  I also refer to the medical notes which showed that Winnie had told Dr Yim that Mrs Ng was boastful (as she believed she had looked after the family because houses bought by Kuen were under her name).  Winnie would not have regarded Mrs Ng as boastful if Mrs Ng was indeed the beneficial owner of the real properties in her name.  Winnie’s knowledge and understanding that Kuen owned the real properties (including the Flats) beneficially should reflect the knowledge and understanding of every member of Kuen’s family.

378.  Furthermore, if Mrs Ng should own the Flats beneficially, Winnie, James and Vincent would have rebutted Jennifer’s November 2005 email when she said “both (Flats were) registered in the name of your mother holding on Uncle’s behalf”. 

379.  Mr Lam submitted that the presumption of advancement should not be rebutted and that Mrs Ng should be the beneficial owner of the Flats.  He pointed at the lack of evidence showing that Kuen had been investigated by the authorities in Macau or Hong Kong about his off-course greyhound racing gambling activities. But Kelly’s evidence is that Kuen was wary about such investigation so that he made Mrs Ng his trustee in holding his real properties.  It is not Kelly’s case that Kuen had been so investigated and therefore made the trust arrangement.

380.  Mr Lam further submitted that Kelly was wrong in saying that Kuen had a consistent pattern of putting properties under Mrs Ng’s name in order to hide his illicit incomes.  He referred to a number of matters to show either that Kuen had held properties under his own name or that Mrs Ng had disposed of property under her name.  The matters referred to by Mr Lam are:

(a)   Kelly said Kuen was involved in greyhound racing gambling since early 1950.  But the first property acquired at No 125 Caine Road on 3 June 1968 was in Kuen’s own name [F/1-4].  This property was more expensive than two other properties acquired (in Mrs Ng’s name) in late 1969.  Kelly could not explain why Kuen did not put this first property under Mrs Ng’s name if he intended to conceal his assets.  The answer to this is that there is no evidence on when did Kuen started to purchase property in Mrs Ngs’ name.

(b)   Mrs Ng in her will dated 31 December 1971 specifically created a life interest in favour of her god-sister, Cheung Wai Ying, over 4/F, No 105 Jaffe Road which was under her name [F1/2b, 10].  She would not be entitled to do so if the property belonged beneficially to Kuen.  The answer to this is that Kuen was named a co-executor of the will. One would suppose that he had agreed to this arrangement.

(c)   Save and except the home at Conway Mansion, all other properties had been sold at a profit.  But there is no evidence that the profits had gone to Kuen (which should be the case if Mrs Ng was holding them as nominee only).  The answer to this is that there is no evidence of where did the sale proceeds go.

(d)   Kelly said Kuen gradually ceased to be engaged in greyhound racing and had retired by early 80s.  Yet, the last property at Dragon Terrance was acquired in Mrs Ng’s name on 26 June 1990.  There was no plausible reason why Kuen still needed Mrs Ng to act as his nominee by that time. The answer is that Kuen might just be doing things in the same old way. Furthermore, he had only stopped his gambling activities for a few years.

(e)   In 1970, Kuen invested HK$200,000 in shares in Aberdeen Restaurant Enterprises Ltd and the shares were registered in his own name [F1/165].  The answer is that it was an enterprise that Kuen established with his friends.  His interest could obviously not be camouflaged by registering the shares in Mrs Ng’s name.

(f)   According to the Schedule of Assets and Liabilities attached to the Letters of Administration regarding Kuen’s estate [C4/902], Kuen held a substantial number of shares in private and public companies in his own name at the time of his death.  The answer is that if the shares were purchased in this century, that would be very long after his betting activities which would not be of significance anymore.  Kuen was also holding some of these shares in his own bank account which he could buy and sell with ease. 

381.  Mr Lam further submitted that Kuen had made a gift of the ABC Office to his two brothers Fun and Kelly on or about 19 November 1971 by putting it under their names.  Since Kuen was a good husband and brother, it was most likely that he had also made gifts of real property to his wife out of love and affection.  I disagree with this submission which is a conjecture.  It is undisputed that Kuen had made a gift of the ABC office to Fun and Kelly, but the evidence that I have analyzed above showed that Mrs Ng was holding the Flats as Kuen’s trustee.

382.  Mr Lam then submitted that Kuen would not have understood the meaning of trust in the legal sense as now used by Kelly and there is no evidence that he had sought legal advice on the meaning of trust.  I however do not consider it necessary for Kuen to understand the meaning or significance of the legal concept of trust.  He just bought properties and put them in his wife’s name for her to hold them for him so that no outsider would know that he was the owner thereof. 

383.  All in all, I find that the presumption of advancement did not apply when Kuen bought the Flats and placed them in Mrs Ng’s name.  Kuen intended that Mrs Ng should hold them on trust for him and Mrs Ng was aware of Kuen’s intention which she shared at that time.

   Decision on the beneficial ownership

384.  In the light of the above analysis and findings, I find that Kelly has proved on a balance of probability that Kuen was the beneficial owner of the Flats when he purchased them and he held such interest until he sold the Flats to Kelly as I will so find below.

WHETHER KUEN HAD SOLD THE FLATS TO KELLY FOR HK$1 MILLION

   Whether Kuen had the motive to sell

385.  Mr Lam submitted that Kelly has failed to prove that Kuen had the motive to sell the Flats.  He referred to Kelly’s ignorance of the details of Kuen’s financial need and the lack of documentary proof of such need.   Regarding the loss from the investment of three houses in Fairview Park, the three houses were sold at a loss on 27 September 1983, 17 January 1984 and 20 June 1984 respectively with related mortgages discharged on the same dates.  That was about 14 months before August 1985.  It is illogical to infer that Mrs Ng and/or Kuen experienced financial difficulty in August 1985 because of the loss that they suffered back in June 1984.  James had also remitted CAD$117,000 (the bulk of the sale proceeds of sale of the property in Burnaby, BC, Canada) shortly after 20 October 1983.  There is no evidence that she had to borrow any bridging loan from any bank including the United Chinese Bank Ltd to complete the sale of the three houses.  The mortgage over Robinson Garden and Conway Mansion which was created on 10 December 1979 in favour of the United Chinese Bank Ltd to secure HK$2 million general banking facilities for Tung Ltd was discharged on 4 October 1985.  Both Mrs Ng and Vincent said that Tung Ltd did not need the banking facilities, and it was simply cancelled without the need to pay anything. There is no contrary evidence.

386.  Mr Lam also submitted that there is no evidence of any demand by any bank for payment by anyone in Kuen’s family in or around August 1985 or that they had repaid any such loan after the Alleged 1985 Agreement by using any part of the HK$1 million paid by Kelly to Kuen.  Mrs Ng had also said that she had monies in her bank account.  There is no contrary evidence to what Mrs NG. 

387.  In a nut-shell, Mr Lam’s submissions are that the loss from the Fairview Park investment was incurred from September 1983 to June 1984.  All three houses were sold with mortgages repaid.  James had also sent back CAD$117,000 in October 1983.  Mrs Ng also said that she had monies in her bank account and nobody in her family was demanded by any bank to pay any money.  Mr Lam further submitted that Kelly has nothing to rebut these assertions. 

388.  However, the crux is whether Kuen and/or Mrs Ng had used all or part of the HK$2 million mortgage facilities from the United Chinese Bank to tide over their financial difficulty incurred from September 1983 to June 1984 until late July 1985 assuming but not accepting that they had only invested in three and not more houses in Fairview Park.  Kelly said in his witness statement (B/17/§48) that Kuen was worried that the United Chinese Bank might enforce the mortgage though he could not recall when exactly did Kuen tell him this.  I have already referred to the tune of their loss at HK$948,200 plus all the stamp duty, legal and other costs and all the interests paid on the mortgages.  The purchases were completed on 3 May 1982.  Interests had to be paid on the three mortgages until the houses were sold.  Hong Kong was then suffering a financial crisis with interest rate staying at a high level.  The mortgage for the HK$2 million facilities from the United Chinese Bank was incidentally discharged on 4 October 1985, about 20 days after Kelly had given Kuen the HK$1 million cheque.  The defendants also do not have a positive case on why Kelly would have paid Kuen the HK$1 million cheque at that time.  They can only put Kelly to strict proof that it was for his purchase of the Flats from Kuen.  The burden of proof is of course on Kelly. 

389.  To consider whether Kuen and/or Mrs Ng were in financial difficulty in late July 1985, the advertisements published in August and early September 1985 are one of the telling facts.  I turn to that now.

   The advertisements

390.  Mrs Ng and Vincent said that the advertisements were merely used to put pressure on Kuen and Kelly to pay up the outstanding users’ fees for Flat B and not a genuine attempt to sell the Flats. Mr Lam accepts that such was an unusual means to chase outstanding sums.  But he submitted that there were curious and extraordinary features in the advertisements which Kelly was unable to explain in cross examination and which cast very serious doubts on whether it was a genuine attempt to sell the Flats.

391.  Mr Lam pointed out that the advertisements referred to Flat C only and described its area to be 1000 square feet.  He submitted that this was an obvious mistake as 1000 square feet was the approximate total area of the two flats.  If Kuen intended to sell both Flats, it is difficult to understand why the advertisements referred to Flat C only. Such mistakes should have been discovered if there was a serious intention to sell. I note that the survey reports state that each flat had a saleable area of 378 sq ft and a flat roof of 274 to 283 sq. ft.  The flat roofs were enclosed as part of the offices.  The total office area of each flat would be at about 661 to 652 sq ft.(D/5 and 61). 

392.  Kelly was cross-examined on these points.  Regarding the exaggerated area to 1,000 sq ft, Kelly said that each unit had about 400 sq ft.  The area was exaggerated as buyers in those days did not fancy small units.  Hence, they put in 1,000 sq ft to attract buyers.  It was also not an error to refer only to Flat C.  They advertised for sale of one flat so that the intended purchaser would not think that two units were available so that the purchaser need not hurry up but could take time.  If a buyer should want to buy two units, the asking price would be HK$1.3 million.

393.  Mr Lam further submitted that the advertisements were placed in one newspaper only. If Kuen and/or Mrs Ng were eager to sell, they should have advertised in other newspapers as well (in particular, when there was no response to those posted at Sing Tao). I would however note that the page of the newspaper where the advertisements were published is full of advertisements for sale of real properties both residential and commercial.  It was obviously a specialist section of the newspaper for such advertisements (Core/71).  Kelly’s evidence is that there were two newspapers which were known for this kind of advertisements.  The decision was made to post the advertisements in the one that had a wider readership. 

394.  Kuen and Mrs Ng of course had other options then just to advertise in one newspaper.  But what needs to be considered here is not whether they could have promoted the intended sale more effectively.  The question is whether the publication of the advertisements was a genuine attempt to sell which could have been done with more vigour or it was just a warning for payment of outstanding sums. 

395.  I also consider it incredible to use the advertisements for sale as a threat to chase outstanding rent or users’ fees when a simple verbal reminder would have sufficed.  I also cannot see how a verbal reminder by Mrs Ng to Kuen to pay up would damage the familial relationship.  If there was indeed outstanding rent due to Mrs Ng, then she was entitled to be paid what she deserved.  Nobody has suggested that Kuen was so unreasonable a person that he would ill-treat Mrs Ng in response to her reasonable demand for payment.  Even if Mrs Ng should consider the use of such the advertisements as effective warnings to chase her well-deserved rental, I cannot see why she had to place the advertisements for so many days ranging from August to early September 1985.  It would have been sufficient for her to do so for one day only as she said in §48 of her statutory declaration that she expected the staff of the advertising company would inform Kuen and Kelly about her advertising the Flats for sale and that would serve as a warning to them.

396.  In the course of summarizing Vincent’s evidence above, I have also noted that the publication of the advertisements on the first four days of 1, 2, 5 and 6 August 1985 did not produce any result as Kuen and Kelly did not pay up after their publication. Therefore, Mrs Ng or Vincent should verbally ask Kuen and/or Kelly to pay up. Vincent was then working with Kelly in Flat B.  But neither Mrs Ng nor Vincent had asked either Kuen or Kelly to pay.  Instead, there was the second round of advertisements. 

397.  Vincent was then 25 to 26 years old.  He said in cross-examination that he did not ask them to pay up, because his parents had the habit of not listening to him.  He also did not think that he should make suggestion on the affairs of the older generation or to meddle in the same.  From 1 August to 4 September, 1985, he had not thought that he could solve the problem by simply reminding Kelly to pay up.  Instead of making a simple verbal reminder to Kuen or Kelly to pay up, he incurred on behalf of Mrs Ng several hundred dollars to publish the second round of advertisements. The publication was also at a time when Mrs Ng was not there to receive the money if Kuen or Kelly should choose to pay up.  I find this incredible.  I do not accept such evidence of Vincent as I do not accept that he was that silly when he was 25 to 26 years old.  He had a tertiary education and had operated a finance company occupying a floor in the Bank of China Building.  If there was indeed outstanding licence fee, Mrs Ng and/or Vincent would have verbally reminded Kuen or Kelly to pay up.

398.  Furthermore, as submitted by Mr Ismail, the fact that the name “Mrs Ng” was used lends support to Kelly’s case that she and Kuen were personally involved in the process, and not Vincent.  I would go further and say that if Mrs Ng had instructed Vincent to place the advertisements but without any intent to sell the Flats, Vincent would have put in his name as the contact person so that her mother would not be troubled by any enquiry pursuant to the advertisements.  This was particular so when Mrs Ng was in London.  I find that Vincent was not involved in the placing of the advertisements.  I accept Kelly’s evidence on this.

399.  Mr Lam then submitted that the advertisements were placed on 1, 2, 5, 6, 23, 27 August, and 3, 4 September 1985 but did not attract any interested buyer.  If Kuen and/or Mrs Ng were so eager to sell the Flats, they should have advertised for more days.  I disagree.  The dates of publication covered the beginning and end of August and the beginning of September 1985.  The United Chinese Bank was not waiting.  Kelly said in his witness statement and oral evidence in chief that when Kuen and Mrs Ng came to him to place the advertisements in late July 1985, Kuen was tense and restless.   The pressure from the bank was great.  It was when there was no interested buyer after placing the advertisements for a month that Kuen offered the Flats to Kelly.

400.  Mr Lam further submitted that when the advertisements did not attract any interested buyer, and if they wanted to sell the Flats so badly, it is unthinkable that they did not engage an estate agent. I refer to Kelly’s witness statement at §44 where he said that in the mid-1980s, there was only a small number of estate agents and it was common for people to advertise sale of commercial premises publicly.  In fact, the page of the newspaper containing the advertisements showed numerous other advertisements of domestic and commercial premises for sale (Core/71). I also reiterate that the issue here is not whether the promotion for the sale of the Flats could have been done better but whether the advertisements reflect a genuine attempt to sell.

401.  Mr Lam then referred to the surveyors’ agreed value of each of the Flats at $375,000 or a total sum of $750,000 for both. He accepted that one might consider it strange to offer the Flats at $650,000 or $600,000 each (which was much higher than the market value) and such offer might not constitute any real threat because it was unlikely that it would arouse any interested buyer.  But he submitted that though Mrs Ng’s threat could have been carried out in a more meticulous or effective way, it was still a threat.  Furthermore, it in the end worked as it is her evidence that after her return from England, Kuen paid her a few ten thousand dollars to settle the outstanding users’ fees.  However, I would observe that if the advertisements were indeed to promote the sale of the Flats, their seeking a higher then market price merely reflected the subjective intention of the offeror or the offeror was not being realistic in making the high offer.

402.  Furthermore, I also note that the size of the advertisements was enlarged from two units to three units from the 3^rd day onwards.  The hours of contact were lengthened from “between 2 pm to 5 pm” to “office hours” and the price lowered from “HK$650,000” to “HK$600,000” for the second round.  All these changes are consistent with a genuine desire to sell and are for the purpose of enhancing the chance of attracting interested buyers.  If the advertisements were for Mrs Ng’s alleged purpose, it was absolutely unnecessary to place them for so many days and to make the changes as referred to above.  It was also absolutely unnecessary and ridiculous to have the second round of publication for four days on 23 and 27 August and 3 and 4 September 1985 when Mrs Ng was in England from 12 August to 12 September 1985 (Core/62 – 71 and C/1298).

403.  Mr Lam then submitted that it would make no sense to state Mrs Ng as the contact person in the second round of advertisements as she was in England from 11 August till 13 September 1985.  I have already dealt with this point in the context of the presumption of advancements above.  The phone contact in the advertisements was Kuen’s office phone.  The second round of advertisements were published on dates when Mrs Ng was in England shows that her involvement was not required for any negotiation to sell the Flats.  Hence, this supports the view that Mrs Ng was just holding the Flats on trust for Kuen. 

404.  I also accept Mr Ismail’s submission that Kelly owned the advertising agency (Worldwide) that arranged for the publication of the advertisements in Sing Tao for 8 (non-consecutive) days.  It defies all common sense to think that Kelly would have allowed the entire process to go through if the point was simply to warn him to pay up the alleged outstanding rental payments of an unfixed amount of not less than HK$20,000.

405.  All in all, I accept the evidence of Kelly.  The explanations by Mrs Ng and Vincent on the purpose of the advertisements are unreasonable and incredible.  They cannot stand together with the objective facts I analyzed above.  I hold that Kuen and Mrs Ng had approached Kelly to place the advertisements for the purpose of inviting buyers to buy the Flats as Kuen was being chased by the United Chinese Bank for payment. 

   HK$1 million purchase price and the market price of the Flats

406.  Mr Lam then raised the question of why Kelly would have agreed to buy the Properties at $1,000,000 at that point of time.  This question arose because I suggested valuation evidence in a PTR.  The agreed market value of the Flats was $750,000 at the material time.  But Kelly said he paid HK1 Million.  That was 33.33% more.  Mr Lam submitted that the price is inherently improbable that any reasonable man would have agreed to pay despite the close relationship between Kuen and Kelly. He also questioned why the amount was fixed at HK$1 million when there is no evidence showing that $1 million had any bearing to what Kuen or Mrs Ng needed urgently at that point of time.  He said Kelly’s failure to explain this is a significant lacuna in his case. 

407.  Mr Lam submitted that the cheque for $1 million is not capable of independently showing its purpose.  There is no contemporaneous record showing its purpose.  It was not even mentioned or referred to in any other document at all.  He thus concluded that it is at best a neutral piece of evidence. 

408.  Mr Lam further submitted that Kelly had given different reasons to explain why the sale of the Flats to him was not completed.  Kelly had said that Mrs Ng was then out of town and hence, the procedure had to be deferred till she returned. But he could not explain why the formalities were not completed after Mrs Ng’s return to Hong Kong on 13 September 1985, the same date when he drew the cheque for Kuen.  He then said that the transfer was further postponed due to Mrs Ng’s mental illness.  But his evidence said that Mrs Ng only started to have mental illness since around 1990 or 1991.  Mr Lam concluded that Kelly’s evidence as to why the legal title of the Flats was not transferred to him shortly after the payment by the cheque is both inconsistent and unconvincing.

409.  Mr Ismail responded by referring to the failed attempt to sell the Flats through the advertisements despite the reduction of the asking price from HK$650,000 per flat to HK$600,000.  Given Kuen’s eagerness to sell, it is inherently probable that Kuen would offer the Flats to Kelly for HK$1,000,000, which Kelly immediately accepted. 

410.  Mr Ismail further submitted that it was inherently probable that there was the 1985 Agreement because Kelly at that time had good financial means as evidenced by the assessment of profits tax on him personally for the year of assessment for 1985-1986 (C1/198-200) for a profit HK$10,480,000 for the purchase and sale of No 6 Tai Hang Road (decision of Mr Commissioner Mayo in HCA No. 5223 of 1979, unrep., 31 July 1980).  Kelly was already in occupation of the Flats.  Most significantly, Kelly shared a close and special relationship with Kuen. Kuen had treated Kelly and Fan very generously by giving them the ABC office unit. Kelly’s heart was set on helping out his Kuen.  Kelly’s oral evidence in cross-examination is that Kuen asked for HK$1 million and he did not bargain. He knew that Kuen had to sell the Flats as he needed the money.  Jennifer has also said in her March 2008 email to James that “[Kelly] always respects and cares for [Kuen] as if he was his own father.”  The sum of the amount of HK$1,000,000 was also very close to the amount lost on the 3 Fairview Park properties, i.e. HK$948,200 assuming that Mrs Ng and Kuen had only invested in no more than 3 such properties.

411.  Contrary to Mr Lam’s suggestion, though there was no contemporaneous record showing the cheque’s purpose, it was indeed mentioned Jennifer’s November 2005 email to Winnie and copied to James and Vincent.  Jennifer said: “[a]s I understand, the 2 office properties, one occupied by Dad and the other by James and Vincent are both registered in the name of your mother holding on Uncle’s behalf but both premises had been sold to Dad at the consideration of $1,000,000 in 1985, without taking steps to change the title owner.”  This email came into being years before the present dispute had arisen.  Regarding when Mrs Ng was first affected by mental illness, I have already referred to medical notes and report which clearly say that Mrs Ng was already mentally ill in early 1980s.  I have also mentioned that Kelly was already 83 when giving evidence and his memory might have faded and become inaccurate. 

412.  On the whole, I think Mr Ismail’s submissions are a lot more convincing that Mr Lam’s as I would stand back and look at the scenario from a bigger angle rather than the cheque in isolation. The payment of the HK$1 million by the cheque should be viewed in the context of Kelly’s special relationship with Kuen, Kuen’s failed attempt to sell the Flats in August and early September 1985, the discharge on 4 October 1985 of the mortgage over Robinson Garden and Conway Mansion for securing HK$2 million, the mortgage and further charge over the Flats securing facilities of HK$500,000 and HK$300,000 for Kelly executed in 1987 and 1990 but only discharged in March 2011, Jennifer’s November 2005 email to Winnie and the response or lack of it and Jennifer’s March 2008 emails and the reply by James. 

   Kuen’s visit to Jennifer at her chambers in 2009

413.  Mr Lam referred to the lack of any written record of Kuen’s visit.  He submitted that what Kuen had said to Jennifer about the 1985 Agreement and his inability to procure Mrs Ng to transfer the title to Kelly was of crucial importance.  Kuen was old and his health deteriorated.  He had to be accompanied by a maid and could breathe only with the assistance of an oxygen tank.  Mr Lam therefore further submitted that in the circumstances, it was most surprising and unthinkable that she did not take any step to put what Kuen told her on record, or ask Kuen to sign on such record; which were both extremely easy to do.  Mr Lam also submitted that there was no conceivable reason why Kuen would feel offended if he was asked to do so.  To do so, Jennifer was to assist Kuen and her father to resolve the issue. Mr Lam impliedly submitted that the absence of any such record signed by Kuen shows that the visit was a fabrication by Jennifer.

414.  Mr Ismail instead referred to Jennifer’s evidence that Kuen had come to her chambers with an oxygen tank and a domestic helper to assist him.  He became emotional when he talked about his health and his family’s problems.  He asked Jennifer whether there was a way to transfer title to the Flats back to Kelly.  Mr Ismail thus submitted that in the circumstance, it would have been cruel and inappropriate for Jennifer to have asked Kuen to sign a written record of what he told Jennifer about the 1985 Agreement and his failure to vest title of the Flats to Kelly. Jennifer did say in evidence:

“When an old man comes up to find you, looking so apologetic, talking about his own family’s problems – and he broke into tears – how could you have the heart to say ‘hey, can we put this in writing?” (From the notes of Kelly’s counsel)

415.  I agree with Mr Ismail.  I am also of the view that Jennifer’s conduct on this occasion is consistent with her pervious conduct in dealing with her November 2005 and March 2008 emails.  She did not properly achieve her November 2005 email so that it was not at her finger tip.  That was properly because she did not regard that email as of importance.  After she had corresponded with James by her March 2008 email, she did not pursue the matter and instead resumed her work for James to get back his moulds.  She was not trying every means available she had to get the Flats back to Kelly. 

416.  I also note that Kelly only started this action after Mrs Ng had sold Flat B to Sino Leading.  It was also for James and Winnie who had engineered the change of correspondence address for paying rates from Kelly’s office to their home and Dr LED then settled the rates with cheques signed by James.  That was a prelude to Mrs Ng’s sale of Flat B.

417.  Regarding Winnie’s evidence that Kuen’s health in 2009 would not have permitted him to make the visit to Jennifer’s chambers at Admiralty, Mr Ismail in footnote 13 of his submissions referred to the fact that Kuen was at an early stage of cancer in 2009 and was physically able to visit Jennifer just as he was physically able to travel from to Baptist Hospital: see Jennifer’s email to James dated 22 June 2009 (CB2/253-1 to 2).  Kuen was treated with radiotherapy from July to November 2009 (C6/1324-1337).  Kuen was only admitted to hospital on 21 January 2010 (C6/1338-1352).  Kuen did not die of cancer but of chronic obstructive pulmonary disease at home (C4/905-1).  Mr Ismail submitted that Winnie was exaggerating or mistaken when she said that Kuen was suffering from stage 5 cancer and could not manage to visit Jennifer at her chambers (B2/282§32).  I agree with Mr Ismail.

Kuen’s death in early 2010 and the absence of any written record signed by him of the 1985 Agreement

418.  Mr Lam submitted that the title of the Flats had not been transferred to Kelly despite his repeated requests and after a lapse of more than 25 years when Kuen passed away. Hence, the complete absence of any documentary record, in particular, any record signed or written by Kuen and/or Kelly, is most surprising and wholly inexplicable in the circumstances.  However, if one looks at the special relationship between Kuen and Kelly, Kelly was already in occupation of the Flats as the owner since September 1985, one would not be surprised by the lack of written records.  Furthermore, there are all the other facts and evidence including but not limited to Jennifer’s emails to Kuen’s children.  I have referred to them above more than once and am not going to repeat all of them here.

   Mrs Ng’s demand letter in late 2010 and subsequent events

419.  Mr Lam then referred to Mrs Ng’s demand letters as issued by Yung, Yu & Yuen for her.  Mr Lam submitted that it was surprising that Kelly did not give a prompt reply to the first demand dated 4 December 2010.  However, Jennifer was then having a holiday in Japan and it was understandable that Kelly would have wanted her advice before responding.  Mr Lam then submitted that Kelly did not take any action after receipt of these letters but only did so after Mrs Ng had sold Flat B to Sino Leading on 10 October 2011.  However, the same can be said of Mrs Ng.  She did not take court action against Kelly when it is her case that Kelly had been occupying Flat B since 1974 and then Flat C since 1985 but did not pay her any rent for the occupation (Core/258).  Kelly further claimed ownership of the Flats through his solicitors (Core/256).

Conclusion on whether Kuen had sold the flats to Kelly for HK$1 million

420.  In the light of my discussion of the respective submissions of the parties and findings made therein, I hold that Kuen had sold the Flats to Kelly for HK$1 million on about 13 September 1985 and Kelly paid the purchase price to Kuen by the cheque for HK$1 million.

IF MRS NG OWNED THE FLATS AND KUEN HAD SOLD THEM TO KELLY FOR HK$1 MILLION, DID MRS NG AUTHORIZE KUEN TO EFFECT THE SALE OR DID SHE RATIFY THE SALE AFTERWARDS?

421.  Mr Lam submitted that even if Kuen had orally agreed to sell the Flats to Kelly, there is no evidence that Mrs Ng was aware of, let alone, consented to the 1985 Agreement.  Mrs Ng was adamant that she did not know about the 1985 Agreement. She also did not know about the cheque for HK$1 million until after this action had been commenced.  Kelly could only say that Mrs Ng was present at a meeting in late July 1985 where Kuen asked Kelly to place an advertisement to sell the Flats at $650,000 each.  Mr Lam submitted that even if there was such a meeting, it did not begin to suggest that Mrs Ng was aware that Kuen had later agreed to sell the Flats to Kelly for HK$1 million.  There is no evidence that anyone had told Mrs Ng about it.

422.  This submission looks at the evidence on Mrs Ng’s knowledge in isolation of all other evidence.  The 1985 Agreement was not entered into all of a sudden and for no particular purpose. Kuen sold the Flats pursuant to this agreement to raise funds to discharge the debts incurred by Mrs Ng’s investment in real properties.  Mrs Ng knew that there were the debts that had to be repaid.  She and Kuen went to see Kelly to advertise the Flats for sale to repay the debts.  The debts were eventually repaid with the HK$1 million paid by Kelly for the Flats and the mortgage on Robinson Garden and Conway Mansion for securing HK$2 million discharged on 4 October 1985.  She could not have been ignorant that her debts had been repaid and there was no more worry of action by the bank.  Kuen also had no reason not to let her know that her debts had been paid by the proceeds of sale of the Flats.  She therefore must know that money had been raised by the sale of the Flats to Kelly.  I hold that Kelly has proved on a balance of probability that Mrs Ng was aware of the 1985 Agreement and that Kelly had pursuant to the agreement paid Kuen HK$1 million. 

423.  Mr Lam then submitted that the 1985 Agreement would not be binding on Mrs Ng as she was the beneficial owner of the Flats and there is no evidence that Kuen had either actual or apparent authority to enter into the 1985 Agreement on her behalf.  There is no evidence of any unequivocal representation or “holding out” by Mrs Ng to Kelly that Kuen had the authority to enter into the 1985 Agreement on her behalf.  There is also no evidence that she had ratified the 1985 Agreement. 

424.  I have already held that Kuen was the beneficial owner of the Flats and Mrs Ng was only his trustee holding the Flats for him.  However, in case I am wrong and Mrs Ng was the beneficial owner of the Flats, I would also decide that if Kuen had her authority to sell the Flats to Kelly.  I am of the view that Kuen indeed had Mrs Ng’s actual authority to sell the Flats to Kuen as she had to sell the Flats to raise funds to repay her debts.  The placing of the advertisements was for this purpose. When the advertisements did not produce any result, she would of course authorize Kuen to sell the Flats by other means as she needed the money to repay her debts.  Even if she was still on the plane from London and had not authorized Kuen to effect the sale, she must have ratified the sale by receiving the cheque of HK$1 million into the bank account of Tung Ltd and then applied the fund to repay her debts.  I need not emphasis too much that this money paid by Kelly produced the discharge of the mortgage on Robinson Garden and Conway Mansion.  Hence, I find that if Mrs Ng was the beneficial owner of the Flats, Kelly has proved alternatively and on a balance of probability that Kuen either had actual authority from Mrs Ng to sell the Flats to Kelly or Mrs Ng had ratified Kuen’s sale afterwards.

WHETHER THE TERMS OF THE 1987 MORTGAGE AND 1990 FURTHER CHARGE WILL LEGALLY DEFEAT KELLY’S INTERESTS IN THE FLATS BY WAY OF ESTOPPEL

425.  The 1987 mortgage provided:

(a)   in clause 3.01(a) that Mrs Ng, the mortgagor “as Beneficial Owner” charged the Flats to the United Chinese Bank Ltd (CB1/89).

(b)   in clause 7.01(ii) that Kelly and Mrs Ng jointed and severally covenanted and agreed that: “the Mortgagor [ie Mrs Ng] has good right and title to charge [the Flats] in manner aforesaid free from all incumbrances save as may be specified herein.”  (CB1/94)

426.  The 1990 further charge further provided:

(a)   in clause 2(a) that Mrs Ng, the mortgagor “as beneficial owner” declared that the Flats shall stand charged as security for loans advanced under that agreement.  (CB1/119)

(b)   in clause 6 provided that all the terms in the 1987 mortgage shall be deemed to be incorporated into it.  (CB1/125)

427.  Mr Lam thus submitted that there cannot be any doubt that, by virtue of the above provisions in the 1987 mortgage and the 1990 further charge, Kelly had agreed to a state of affairs (i.e. Mrs Ng was the beneficial owner of the Flats).  Based on such agreed state of affairs, Kelly had obtained, and enjoyed the use of, the banking facilities. Hence, Kelly must be estopped (whether by contractual estoppel or estoppel by convention or both) from asserting that Mrs Ng was not the beneficial owner of the Flats.

428.  Mr Lam referred to Nokia Corporation v TCT Mobile Ltd, CACV191/2014 (6/3/2017, unreported) for support.  Barma JA (with whom Cheung JA agreed) held at §24:

“23. … The concept is, in my view, now quite firmly established in English law, and it seems to me (as it did to Aikens LJ) that there are sound reasons for it to be adopted in Hong Kong, as it would promote certainty in contractual relationships, and reduce the scope for disagreement and disputes in the working out of the contract. …”.

429.  The concept referred to by Barma JA was explained by the learned Judge in the earlier §21 of the judgment:

“21. In [Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511], Moore-Bick LJ said, at paragraph 56 of the judgment:

‘There is no reason in principle why parties to a contract should not agree that a certain state of affairs should form the basis for the transaction, whether it be the case or not. For example, it may be desirable to settle a disagreement as to an existing state of affairs in order to establish a clear basis for the contract itself and its subsequent performance. Where parties express an agreement of that kind in a contractual document, neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerned those aspects of their relationship to which the agreement was directed.  The contract itself gives rise to an estoppel.’”

430.  Barma JA further held at §27:

“Further, it seems to me that the plaintiff could in this case just as well proceed on the basis of an estoppel by convention, as the contract (in particular by the recitals) clearly shows a mutually assumed state of affairs (i.e. the essentiality of the plaintiff’s patents to the manufacture of mobile telephones meeting the relevant standards) on the basis of which the parties ordered their affairs. In the circumstances of this case, it would clearly be unjust to permit the defendant to resile from what it has agreed. For this reason also, I consider that it is not open to the defendant to deny the essentiality of the plaintiff’s patents by putting essentiality in issue in these proceedings, and that it is a matter that is capable of being considered at this stage, rather than at trial.”

431.  Mr Ismail disagreed.  He referred to Kelly’s evidence when Kelly was cross-examined on whether anyone had explained to him that clause 7.01(ii) of the 1987 mortgage had provided that Mrs Ng was the beneficial owner of the Flats before he signed the 1987 Mortgage.  His answer was that nobody had explained it to him.  He was also asked that since Mrs Ng was personally liable on the 1987 mortgage, whether he and Kuen had discussed the possibility that the execution of the mortgage would excite or upset her, to which he said:

“At the time, I needed money. Since he [i.e. Kuen] fixed it for me, I got my money and went on to do my own stuff. In those circumstances, he explained to me and we had a close relationship, we would not push further. I had to use the money for my businesses. Everything about the transfer of title, I did not think about.” (From the notes of Kelly’s counsel)

432.  I agree with Mr Ismail that the purpose of Mrs Ng and Kelly executing the 1987 mortgage and 1990 further charge was to raise loans for Kelly’s use with the Flats as security for repayment. Kelly’s execution of the 1987 mortgage and 1990 further charge did not mean that he was acknowledging that Mrs Ng was the beneficial owner of the Flats.  The fact of the matter was that Kelly could use the Flats as security for his borrowing from the bank because of he was the beneficial ownership of the same rather than his acknowledging that Mrs Ng was their beneficial owner.  I do not think that as a matter of fact Kelly and Mrs Ng in executing the mortgage and further charge had thereby agreed with each other that Mrs Ng was the beneficial owner of the Flats.  That was only the basis of their agreement with the bank in the two documents, but not so vis-à-vis the two of them. 

433.  Mr Ismail also relied on Lowe v Lombank Ltd [1960] 1 WLR 196.  The plaintiff in that case signed a delivery receipt acknowledging that she had inspected a second hand car that the defendant hire purchase company was providing her in a hire purchase contract.  The defendant in fact had not allowed inspection and car turned out to be not roadworthy.   Lord Diplock held that the plaintiff was not estopped by the receipt.  Two of the reasons were that the plaintiff did not intend the defendant to act upon her representation of having inspected the car and the defendant did not believe in the representation and had not acted upon it.

434.  Mr Ismail also referred to Hui Cheung Fai & anor v Daiwa Development Ltd & others HCA1734/2009, unrep., 8 April 2014 where Deputy High Court Judge Eugene Fung, SC said in §71:

“71. The classic definition of “sham” is Diplock LJ’s formulation in Snook v London and West Riding Investments Ltd [1967] 2 QB 786. A sham exists where (1) the parties intended that the documents or acts they have done would not create the legal rights or obligations they appear to create and (2) it was intended that the documents or acts would mislead a third party into believing the parties had created those rights and obligations. At p 802C-F, Diplock LJ said:

‘As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a “sham”, it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities ... that for acts or documents to be a “sham”, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a “shammer” affect the rights of a party whom he decided.’”

435.  In this case, both Kelly and Mrs Ng knew that Kelly was the beneficial owner of the Flats and they both intend to execute the two documents to raise loans for Kelly’s use as Mrs Ng refused to transfer the Flats to Kelly.  The two documents could be regarded as a sham to the bank.  Kelly did not intend to surrender to Mrs Ng his beneficial interest in the Flats by executing the two documents.  Mrs Ng also could not have acquired Kelly’s interest by these two documents which only held off Kelly’s demand. Kelly in fact said in oral evidence:

“At the time, I needed money. Since he [i.e. Kuen] fixed it for me, I got my money and went on to do my own stuff. In those circumstances, he explained to me and we had a close relationship, we would not push further. I had to use the money for my businesses. Everything about the transfer of title, I did not think about.” (From the notes of Kelly’s counsel)

436.  In the light of the above discussion and findings, I hold that Kelly has shown on a balance of probability that his beneficial interest in the Flats have not been defeated by the terms of the 1987 mortgage and 1990 further charge and he is not and has never been estopped by the terms of the two documents from asserting his beneficial ownership of the Flats.

CREDIBILITY OF WITNESSES

437.  Looking in isolation, Kelly’s paying Kuen HK$1 million to buy the Flats without completing the transfer of the legal title and without even any written record back in September 1985 may indeed look odd.  But this event must be considered in context. 

438.  One of the most important feature in the context of this case, which is accepted by all parties, is the especially close relationship between Kuen and Kelly.  Kelly treated Kuen as close as his father.  There are then the following matters and events of significance that form the context.  The first significant happening was the substantial loss suffered by Mrs Ng and/or Ng from land investment from September 1983 to June 1984 culminating to at least HK$948,200 (not including the stamp duty, legal and other costs and all the interests paid on the mortgages).  Kuen and Mrs Ng then advertised the Flats for sale in mid-1985.  The advertisements published from 1 August to 4 September 1985 did not attract any purchaser but over a month had passed.  Kelly had the money as shown in his tax return.  Kelly’s companies were then in occupation of the Flats (or one of them) as a tenant. Kelly paid Kuen HK$1 million by way of a cheque dated 13 September 1985. Kelly’s payment was followed by the discharge of the mortgage on Robinson Garden and Conway Mansion on 4 October 1985.  Kelly remained in occupation of at least Flat C, if not Flat B as well.  The Flats were then mortgaged in 1987 and further charged in 1990 for a total of HK$800,000 facilities for Kelly’s use. The mortgage and further charge remained for about 21 years and were only discharged in 2011.  In the meantime, there were Jennifer’s November 2005 email and March 2008 email and the responses thereto by Kuen’s children. 

439.  Mr Lam attacked Kelly’s evidence by focusing on each of the individual events and matters in isolation of the others.  That approach is of course wrong.  The evidence of a witness should be considered in the context of the case and should be considered as a whole rather than in segmented fashion.

440.  In the context of these undisputed matters and events (without any colouring by the oral evidence of the witnesses), Kelly’s paying Kuen HK$1 million to buy the Flats without completing the transfer of the legal title and without even any written record back in September 1985 does not seem odd but appear believable. 

441.  Furthermore, Kelly’s evidence is straightforward.  He was forthcoming in answering questions and his answers are reasonable when viewed in context.  There is no dispute that Kuen was fully engaged in off course greyhound gambling prior to his retirement in the 1980s. He might have own some shares of some private and listed companies, but nobody suggested that he knew how to and had been engaged in the conduct of any business (save Dave Yip).  Only Kelly was known to be a businessman.  Kelly said he had put up Kuen as a businessman wherever possible so as to give him face.  Mrs Ng and Kuen’s children however said that Kelly was just managing businesses owned by Kuen or Kuen and Kelly.  But the business that was referred to by Vincent and his friend Dave Yip was Astro which clearly belonged to Kelly as shown by Kuen’s allotting 298 shares of it to Kelly on 1 September 2005.

442.  Kelly said that he did not press Kuen to arrange the transfer of title of Flats to him as he did not want to push Kuen as it was difficult for Kuen to procure the same since Mrs Ng was suffering from mental illness.  Mrs Ng’s attitude regarding the properties registered in her name (including the Flats) can be seen from the medical notes of the Eastern Hospital which was made from information supplied by Winnie. Kelly’s evidence on this when viewed against the medical notes is highly believable.

443.  Kelly also said that he did not push Kuen because he was using the banking facilities secured by the Flats. 

444.  In line with their especially close relationship, Kelly was generous to Kuen.  When Kuen was to be discharged from a private hospital, it was Kelly who went to the hospital to receive Kuen and pay the hospital bill.  There are other instances when Kelly had provided finance to Kuen’s family.

445.  All in all, I find Kelly a reliable witness whose evidence is reasonable and believable.  I accept Kelly’s evidence.

446.  Regarding Jennifer, her evidence is again straightforward.  She dodged no question and gave prompt answers.  Her case is also reasonable.  The background leading to her November 2005 email was the return of his sister Vivien had returned here and they wanted Kelly to make a will to deal with his properties.  But she did not push the matter after Winnie’s reply saying that the matter was very complicated.  The background leading to her March 2008 email was the complaint by James that Kelly was trying to arrange a meeting of the two families to sort out the matter of the Flats.  She again did not push the matter but instead focused on how to help James get back his moulds.  I would say that James was lucky in having such a cousin.  She did not appear to have created these emails for the purpose of litigation.  As Mr Lam has put it in §8 of his closing submissions, it is difficult to criticize the demeanour of Jennifer in Court.  Mr Lam submitted that Jennifer was not an independent witness.  But I do not think any witness of importance in this case is independent save the solicitor, Mr Chan of Yung, Yu & Yuen. 

447.  I find Jennifer a reliable witness and I accept her evidence. 

448.  Regarding the evidence of the defence witness, I find that Mrs Ng’s evidence shifty and incredible.  The following are a few examples.  She gave different versions on how the advertisements were placed.  Her alleged use of the advertisement to chase outstanding rental is far-fetched.  She also gave different versions on when Kuen had fallen ill.  This is a date of significance in that she alleged that Kuen had from then stopped paying her rent and Kelly never paid any.  She did not give proper discovery in the action and I doubt very much that her investment in 1980s and before mid-1985 was limited to three houses in Fairview Park and no more.  The mortgage interest rates in the early 1980s were in excess of 15%.  Though she has been the victim of mental illness since the early 1980s, she has all along been treated by doctors and her symptoms were under proper management.  So she knew what she was doing.  I find that she is not to be trusted.  This is at least corroborated by the medical notes which were compiled from information given by Winnie.  I reject her evidence to the extent that it is in conflict with that of Kelly and Jennifer.

449.  Regarding Vincent, he is a crafty witness.  I suspect that he is the author of all the deceitful explanations put forth by the defendants’ camp to explain the events and matters that appeared to be against Mrs Ng.  They include but are not limited to the alleged reason for Mrs Ng and Kuen to have separate finance, how and why Mrs Ng had allegedly purchased the Flats with her own money, the reason for placing the advertisement for sale of the Flats, whether Kuen and Mrs Ng did not have to sell the Flats to repay debts, the reason why Kelly paid Kuen HK$1 million on 13 September 1985, the reason for making the 1987 mortgage and the 1990 further charge on the Flats and the reason for the response by Winnie and James to Jennifer’s two emails in November 2005 and March 2008 respectively.  When viewed in context, these explanations are unreasonable and I reject them.  I also reject Vincent’s evidence whenever it conflicts with the evidence of Kelly and Jennifer.

450.  I also reject the evidence of James in so far as it is in conflict with the evidence of Kelly and Jennifer. His explanation on his reply to Jennifer’s March 2008 email is nothing but a pack of lies.  It is lamentable that he, in order to go along with his siblings to help his mother to keep the Flats which in fact belong to Kelly, has made himself a crook in this case.

451.  Regarding Winnie, her explanation on her response to Jennifer’s November 2005 email, her story of a conversation with Jennifer on the following Saturday and her explanation on the medical notes are convoluted.  They are not believable.  I find that Winnie is also a false witness whose testimony I reject to the extent when it is in conflict with that of Kelly and Jennifer. 

IS THE 1985 AGREEMENT VOID FOR UNCERTAINTY?

452.  Mr Lam suddenly took the point in section G1 of his closing submissions that the 1985 Agreement was void for uncertainty.  He submitted that there was no stipulation on the time for completion.  This point, though taken within the main section of part performance, is an independent issue.

453.  Mr Lam relied on the case of Cook v Norlands Ltd [2001] UKPC 52 at §§2 and 11.  But in this case, the uncertainty was more on the amount to be paid under the relevant agreement and the amount actually paid by way of reduction of wages of the purchasers rather than uncertainty on the date of completion (see §11 of the judgment).

454.  Mr Lam then relied on the decision of DHCJ Kwok SC in Chow Nap Man v Chung Wai Kwong, HCMP3307/2016 (9/6/2017, unreported).  In that case, it was not just that the completion date was not fixed.  It stipulated that the vendor would give time to the purchaser to raise the purchase money, but it did not say how much time was to be given or what to happen if the purchase could not raise the necessary fund.  In any case, completion was obviously not supposed to take place within a reasonable time after the making of the agreement.  I do not think this case can assist Mrs Ng.

455.  Mr Ismail responded in his closing submissions by submitting that the agreement was certain for the purpose of completion.  The act of completion is just to transfer the legal title to Kelly and that should take place within a reasonable time from the making of the 1985 Agreement.  I agree with Mr Ismail.

456.  Apart from the question of merit, the more important question is pleading.  The statement of claim pleaded in §§10 and 12 as follows:

“10.   On or about 12 or 13 September 1985, at the Subject Properties, out of love and respect for his elder brother (i.e. the Deceased) and with a view to help him, the Plaintiff orally agreed with the Deceased to buy the Subject Properties at the price of HK$1,000,000.00 (hereinafter “the Oral Agreement”). ...  The Deceased further represented to the Plaintiff at the time of the Oral Agreement that the formal documentation of the assignment of the Subject Properties to the Plaintiff would be arranged by the Deceased in due course as the 1st Defendant was out of town.

12.   Pursuant to the Oral Agreement and in reliance on the Deceased’s said representation and promise, the Plaintiff purchased from the Couple the Subject Properties by way of a cheque payment of HK$1,000,000.00 dated 13 September 1985 (hereinafter “the Cheque”) as full payment of the purchase price of the Subject Properties.”  (emphasis supplied)

457.  Mrs Ng dealt with the allegations in §§10 and 12 of the statement of claim in §§16 to 19 of her defence, but did not mention that the 1985 Agreement was uncertain for want of stipulation of date or time for completion.  Vincent dealt with these allegations in §§12 to 13 of his defence, but he again did not mention that the 1985 Agreement was uncertain for want of stipulation of completion time.  Not only did they not take this point in their pleadings, they made no mention of it anywhere until the filing of the defendant’s closing submissions on 30 June 2017.  I do not think they can take such an important in this manner.  I ignore this point altogether.

PART PERFORMANCE

458.  Mr Lam referred to the judgment of Viscount Dihorne in Steadman v Steadman [1976] AC 536 at 556E and submitted that the acts of part performance that Kelly must prove “must point to the existence of some such contract as alleged.”  Mr Lam further referred to the judgment of Robert Walker LJ inYaxley v Gotts and Anor [2000] Ch 162 at p 172C and submitted that Kelly had not proved that “(he had) done acts unequivocally referable to performance of the contract on his part.” 

459.  Mr Lam submitted that:

(a)   regarding the payment of the $1 million, its nature is equivocal.  It could be a gift or a payment made pursuant to a contract not for the sale and purchase of real property.

(b)   Kelly did not enter into possession after entering into the 1985 Agreement.  He was already in possession of the Flats before that.  His continuation in possession of the Flats was equivocal in the circumstances.  Hence, he cannot rely on entering into possession of the Flats. 

(c)   He stopped paying rent or licence fee but paid management fees and rates.  But his payment of the outgoings, rates, and also other costs relating to the repair of the Flats were all explicable by his continuation in the use and occupation of the Flats.  These acts were equally consistent with Kelly being a licensee all along.

460.  Mr Ismail in response referred to the judgment of Lord Salman in Steadman v Steadman at 570G and of Lord Reid at 541H and submitted that there is no rule that payment of money can never be part performance.  He then submitted that the purpose of the doctrine of part performance is to prevent fraud, and this purpose would be defeated if the doctrine were not applied in this case.  He further submitted that the Court should look at Kelly’s payment of the sum of HK$1,000,000 to Kuen, Kelly’s relationship with Kuen, Kuen’s and Mrs Ng’s cash flow difficulties, the advertisements, the close proximity of events and Mrs Ng’s health.  He submitted that “context is everything”.  But apart from framing the context, Mr Ismail did not refer to any particular act as referable to performance of the 1985 Agreement or why the payment of HK$1 million by Kelly to Kuen was such an act. 

461.  In the premises, I hold that Kelly has failed to show that he can rely on the doctrine of part performance of the 1985 Agreement.

COMMON INTENTION CONSTRUCTIVE TRUST

462.  Kelly relies on the doctrine of common intention constructive trust.  He pleaded in §§13 and 30A as follows:

“13. By reason of and/or based upon the Oral Agreement, there was at all material times and all along a common intention … amongst (Kelly) and/or (Kuen) and/or (Mrs Ng) that (Kelly) should become and/or should be regarded as the sole beneficial owner of the Flats. Based upon and relying on the said common intention and/or consensus and/or agreement, (Kelly) paid … HK$1,000,000 to (Kuen) with the approval and/or knowledge of (Mrs Ng), … By … operation of law, (Mrs Ng) and/or (Kuen) is/are and has/have been holding the Flats as bare trustee(s) on a common intention constructive trust for (Kelly) since 13 September 1985.

30A. Further, by reason of the aforesaid, (Kelly) will rely on the doctrine of common intention constructive trust to contend that from about 1985 onwards, he has become the sole beneficial owner of the Flats. In this connection, (Kelly) specifically avers as follows: -

(1)   Paragraphs 12 and 14 to 23 hereinabove are repeated.  It is averred that (Kelly) did act to his detriment in reliance on the abovementioned common intention ...  Specifically, (Kelly) had paid the purchase sum of HK$1,000,000 for acquiring the Flats, and throughout the years (Kelly) did use and occupy the Flats as the real and/or de facto owner thereof.  ...”

463.  Underhill and Hayton’s Law of Trusts and Trustees (19^th ed) discusses common intention constructive trust in para 30.9 as follows:

“Common intention constructive trusts

30.9   A constructive trust may be imposed on property, such as a house in M’s name that is occupied by M and W as a shared family home, to give effect to M and W’s express or inferred (but not imputed) common intention (whether at the time of the purchase or subsequently) that W should have a beneficial interest therein, so leading W to act to her detriment in reliance on that intention, so making it unconscionable to allow M to deny W any interest by pleading the lack of the necessary written formalities for a valid declaration of trust or contract.”

464.  The relevant discussion in Lewin on Trust (19^th ed) is in paras 9-062 and 9-069:

“The common intention constructive trust

The general principle

9-062 Where property is occupied in the domestic context, as a home for more than one party, the presumption of resulting trust has over the past decades gradually given way to changing social and economic conditions. The search is now to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it. A constructive trust arises in connection with the acquisition by one party of a legal title to property whenever that party has so conducted himself that it would be inequitable to allow him to deny to another party a beneficial interest in the property acquired. This will be so where (i) there was a common intention that both parties should have a beneficial interest either at the date of acquisition or at a later date, and (ii) the claimant has acted to his detriment in the belief that by so acting he was acquiring a beneficial interest. Some element of bargain, promise or tacit common intention must be shown in order to establish such a trust. The trust comes into existence at the time of the conduct relied on, not when the court declares its existence, a point very material in the bankruptcy of one of the beneficiaries. These principles apply equally whether the property is held or registered in the name of one or more parties, and take into account the presumption that the beneficial ownership of property will follow the legal ownership, and that the onus is on the party alleging that the beneficial ownership is different to show why.

…

The detriment

9-069   The claimant must prove that he has acted to his detriment in the reasonable belief that by so acting he was acquiring a beneficial interest.  This means that the claimant must have done something which he could not reasonably be expected to have done unless he was to have an interest in the property.  There must be some link between the common intention and the acts relied upon as detriment.  There is no difficulty in establishing such a link where the detriment consists of contributions to the deposit, expenses of purchase or mortgage instalments.  ...  The detriment need not necessarily consist of expenditure of money or some other quantifiable financial detriment, and it suffices that the claimant has changed his position in some substantial way in reliance on the common intention so that repudiation of the common intention by the defendant would be unconscionable.  But conduct of a kind that neither establishes a common intention nor amounts to reliance on it can be taken into account in qualifying the shares of the parties.”

465.  The relevant paragraphs in Snell’s Equity (33^rd ed) are 24-041, 24-051 and 24-057:

“24-041 (a) Summary. A constructive trust may arise when land is purchased as a joint home but where the registered legal title does not reflect the beneficial shares which the proprietors intended for themselves. The common case is of cohabiting partners who buy a house to live in as their home. The legal estate may be registered in the name of only one of them, and the name of the other does not appear on the registered title. Alternatively, both may be registered as joint proprietors but they do not intend to hold for each other as joint beneficial proprietors. In each case, a constructive trust may arise which binds the legal estate and gives effect to the parties’ common intentions as to their beneficial shares in the property. Those intentions are usually inferred from the entire course of dealings between the parties, and go beyond financial contributions to the purchaser or maintenance of the property. In sole proprietorship cases, the trust arises because it would be inequitable for the registered proprietor to hold the legal estate as sole beneficial owner given the contributions made by his partner in reliance on their shared understanding. In cases of joint proprietorship, it would be inequitable for one of the joint registered proprietors to take a larger share than he and his partner intended when each contributed to the property and their relationship.

…

24-051 …

(b) Express and inferred agreements. The claimant alleging the constructive trust or the different beneficial share in the property must prove that there was an agreement, arrangement or understanding about their respective beneficial shares in the property. The agreement may be based on evidence of express discussions between them or it may be inferred from their conduct. The relevant intention should generally be found when the property was first acquired, though later conduct may be relevant to proving what was previously intended. The parties may also intend that their beneficial shares should be “ambulatory” in the sense that they would vary over time. In that case, the parties’ conduct after the property was acquired would be directly relevant to ascertaining the existence and extent of each party’s beneficial share.

...

24-057 Simple proof of the oral or inferred agreement between the parties or an unwritten declaration of trust would not be enough to entitle the claimant to an enforceable interest in the property under a trust. Such an arrangement could only take effect as an express trust. It would be unenforceable since it would not be evidenced by writing signed by the party declaring the trust. Accordingly, proof that the claimant has acted to his detriment in reliance upon the agreement that he would take an interest in the property is essential to explaining the constructive trust. In these circumstances it would be fraudulent for the proprietor of the legal estate to rely on the formality requirements to deny the enforceability of the beneficial interest and claim the entire beneficial rights to the property for himself. The constructive trust arises to prevent this result. Where the agreed is inferred, then the parties’ conduct is both the evidence from which the agreement is inferred and the detriment which gives rise to the constructive trust.” (emphasis supplied)

466.  The common case of common intention constructive trust is of cohabiting partners who buy a house to live in as their home but registered it in the name of only one of them, and the name of the other, who has paid contribution in money or otherwise to the acquisition directly or indirectly per their agreement, does not appear on the registered title.  The present case is different.  In this case, Kuen and Kelly agreed that Kelly would be given immediately the Flats (or all their beneficial interests) if he should pay Kuen HK$1 million.  This was coupled with Kuen’s promise that he would procure the transfer of the title of the Flats to Kelly later on.  Kelly did suffer the detriment by paying Kuen the HK$1 million and immediately assumed occupation and possession of the Flats with the belief that he was the absolute beneficial owner thereof.  

467.  Mr Lam’s main argument is that the common intention should be shared by the legal owner of the property and the claimant.  He submitted that since the common intention in this case was allegedly shared between Kuen and Kelly and there is no evidence that Mrs Ng, the legal owner of the Flats, also shared this intention, Kelly therefore could not rely on this trust to make his claim.  Mr Lam relied on Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 where Riberiro PJ explained at §39:

“… The fact that A and B might form a common intention that they should have shared beneficial interests in C’s property cannot in principle be sufficient to impose a constructive trust on C to hold C’s property on trust for A and B. C is not party to and does not unconscionably depart from any common intention, so there is nothing t constitute C a trustee for A and B. If B does not make good his promise, he might attract personal liability to A, but it does not mean that an equitable interest in C’s property is created in favour of A.”

468.  I do not think Mr Lam can rely on Luo Xing Juan to defeat Kelly’s claim.  Luo Xing Juan is not a case deciding that the doctrine of common intention constructive trust operates only between the legal owner and claimant.  It just happened that in that case, the legal and beneficial interests of the property did not vest in different persons.  This doctrine is to deal with the acquisition or sharing of beneficial interest in property. The common intention need not be shared with a legal owner.  In this case, Mrs Ng was the legal owner but bare trustee and had no power to dispose of the beneficial interests of the Flats.  She was holding the Flats for the benefit of their beneficial owner or the beneficiary of the trust.  Only Kuen, who owned the beneficial interests of the Flats, could share with or dispose to Kelly such interests by the common intention they formed.  If it was Mrs Ng but not Kuen who had shared the common intention with Kelly, then Kelly would have no claim against Kuen and cannot claim the beneficial interests of the Flats.  Furthermore, upon the change of identity of the beneficial owner of the Flats, Mrs Ng’s duty as the trustee would be owed to the new beneficial owner.  I also accept Kelly´s evidence that Mrs Ng was informed orally and knew about the 1985 Agreement shortly after it was made.  In the premises, I hold that Mr Lam’s argument that Kelly cannot rely on the doctrine of common intention constructive trust fails and Kelly’s claim as based on this doctrine succeeds.

469.  Mr Lam’s second argument is that Kelly is seeking to enforce an unenforceable agreement as he is seeking to enforce an unwritten agreement for the sale and purchase of real property.  He referred to Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at §37.  That case is different.  It involved an agreement “binding in honour” which remained in the executory stage.  In this case, Kuen had received what he had bargained for.  Kelly also suffered the detriment by paying Kuen the HK$1 million and had been given the right and benefit of occupation and possession of the Flats there and then.  I hold that Mr Lam’s second argument also fails. 

PROPRIETARY ESTOPPEL

470.  Mr Lam referred to Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at §29 and Actionstrength Ltd v International Glass Engineering SpA [2003] 2 AC 541 at §9 and §§52 to 53 and submitted that proprietary estoppelcould not be used to circumvent the requirement of s5(1) of the CPO which stipulates that no equitable interest in land can be created or disposed of except by writing signed by the person creating or disposing of the same.

471.  Mr Ismail instead referred to Yaxley v Gotts and Anor and Kinane v Mackie-Conteh 2005 WL 62273at §§25-26 and §§28-29 and submitted thata person acts to his detriment in reliance on a belief permitted or encouraged by the defendant that he is to or will obtain an interest in property and where it is unconscionable for the defendant to refuse to confer that interest, a proprietary estoppel would arise.  He submitted that where constructive trust and proprietary estoppel overlap, the claimant can rely on section 5(2) of the CPO to avoid the requirement of s 5(1) of CPO.  I agree with Mr Ismail.

472.  Mr Lam also repeated his argument made under common intention constructive trust that the proprietary estoppel cannot affect Mrs Ng.  I have dealt with this argument under common intention constructive trust.  For the same reason that Mrs Ng was the bare trustee only, I dismiss this argument.

473.  I am of the view that the Kelly can rely on the 1985 Agreement and his payment of HK$1 million pursuant thereto and invoke the doctrine of proprietary estoppel as this doctrine overlaps with the common intention constructive trust in this case in that both arises from the 1985 Agreement and its performance by Kuen and Kelly.  But Kelly’s payment of the utility charges, cleaning service charges, management fees and Government rates and rents for the Flats, compliance with Building Orders registered against the Flats and the execution of improvement works through the years all as pleaded in §§22 to 23 of the statement of claim were acts done in the belief of being the beneficial owner of the Flats rather than in reliance on a belief that he is to or will obtain an interest in the Flats.  Hence, Kelly cannot rely on these acts to establish a proprietary estoppel against Kuen’s estate.

ADVERSE POSSESSION

474.  Mr Lam referred to Lau Wing Hong & others v Wong Wor Hung & another [2006] 4 HKLRD 671 where Recorder McCoy SC held at §37:

“The late Sir Robin Cooke, delivering the judgment of the Privy Council, reversing a decision of the Court of Appeal of Brunei, in Hajjah Tampoi bte Haji Mutusin v Haji Matussin bin Pengarah Rahman (1984) 4 PCC 345 at p. 355; Privy Council Appeal 51/1983, 31 July 1984, emphasized that the issue in adverse possession cases “…was essentially one of fact and degree” which involved “clear evidence of denial of the plaintiff’s title and some positive action by the defendant” to manifest the intention to possess the land.” (emphasis added)

475.  He submitted in §§148 and 149 of his closing submissions that an acknowledgment by the claimant occupier of the paper owner’s title is directly opposite to a denial of the paper owner’s title.  He said Kelly believed that he had acquired the beneficial interest in the Flats upon conclusion of the 1985 Agreement and payment of the $1 million.  Kelly knew that he was not the legal or paper owner but never challenged Mrs Ng’s legal title thereof.  Kelly in asking Kuen over the years to procure Mrs Ng to transfer to him the legal title must have thereby acknowledged Mrs Ng to be the legal owner with the legal title in the Flats.  Therefore, on Kelly’s own case, he was in possession of the Flats in the capacity of a purchaser who had paid the full price and pending completion of the transfer of the legal title. Kelly therefore could not have the requisite animus possidendi in possession the Flats.

476.  He further submitted in §157 of his closing submissions that Kuen had allowed Kelly to use the Flats long before the 1985 Agreement was made (at least in respect of Flat B).  After the 1985 Agreement, it is plain that Kelly’s possession of the Flats was with the continuous knowledge and consent of Kuen.  Such consent granted by Kuen was only terminated as a matter of law upon his death in February 2010.

477.  These submissions twisted the facts and put them upside down.  It is just because Kelly’s belief that Mrs Ng was wrong in not transferring the title to him that he had repeatedly asked Kuen to procure the transfer to him.  Kelly believed that the legal title of the Flats should not be with Mrs Ng but with him.  Ever since he had paid the HK$1 million, he never acknowledged Mrs Ng to be the rightful legal owner of the Flats.  Instead, he regarded her as the wrongful owner of the same.  He also regarded himself the owner of the Flats though the paper title was still with Mrs Ng.  Neither he nor Kuen regarded that he was allowed by Kuen to occupy the Flats or that he occupied the same with Kuen’s consent or licence whether before or after September 1985.  Before September 1985, Kelly occupied the Flats as a tenant.  Kuen was his landlord.  Their relationship was governed by the law of landlord and tenant and Kuen did not “allow” him to occupy the Flats.  From 13 September 1985 onwards, Kelly occupied the Flats and exercised the rights in every respect as the absolute beneficial owner thereof as against the whole world including Kuen and Mrs Ng save that the legal title was wrongly withheld from him.  He did not occupy the Flats with Kuen’s consent.  Kuen could not have disturbed Kelly’s possession since 13 September 1985 having received his HK$1 million purchase price.  Kelly was certainly occupying and possessing the Flats with the necessary animus possidendi for adverse possession. 

478.  Mr Lam also relied on the evidence of Mrs Ng that she had allowed Kelly to occupy the Flats.  I have rejected such evidence above and say no more about it.

479.  Mr Lam’s last point relies on Hyde v Pearce [1982] 1 WLR 560.  In that case, the claimant, after successfully bidding at an auction for a plot of land, entered into a contract to purchase it.  He paid a deposit and obtained the keys by giving an undertaking to return them on demand.  He then entered into possession under the terms of the contract as a licensee as varied by his undertaking that he would return the keys upon demand.  The vendor had inadvertently sold off earlier a small piece of the plot to a third party.  The parties then negotiated for a reduction of price to reflect the smaller area of the plot.  The negotiation did not bear fruit.  The vendor demanded the return of keys which the claimant refused and continued in occupation.  The claimant claimed adverse possession after 14 years’ occupation.  The Court of Appeal in England held that the claimant had an equitable interest in the plot and occupied the same as a would be purchaser pending completion of the contract and not as a trespasser.  He had at no time made it clear that he was no longer bound by the contract of sale.  His possession was therefore not adverse.

480.  Templeman LJ held at 569C-D:

“But the matter does not, however, end there because, notwithstanding the determination of the plaintiff’s licence to occupy, the question is whether, after that determination, he was in adverse possession, and it seems to me that he was, at any rate, in an equivocal position. He was not in the same position was a squatter or a trespasser who, without a shadow of a claim of right, sits in the property for the requisite period and thus acquires a title. ...”

The learned Judge further held at p 571F-G:

“For my part, not only can I see no date by which the vendors ought to have realized the changed status of the plaintiff but, in addition, it seems to me that, having entered the property under a claim of right, albeit on the terms of the understanding, and then having continued in possession ostensibly and as far as he himself was saying at the time, or implying by his conduct at the time, as a purchaser pending completion, if he was to throw off that capacity and appear in the full light as a person in adverse possession acquiring a title, it was at least necessary that he should have repudiated the contract, thus marking his change of status.

   In the event, he never did change his status and, as I have indicated, at the end of the day he is really seeking to have the best of both worlds.  He was able to stay there because of the contract; now he says, in effect, he was there the whole of the time in spite of the contract.  I do not think he has shown that he was in adverse possession…”

481.  Ackner LJ held at p 572H-573A:

“Thus, both in the letter immediately raising his complaint and in the particulars, he contended that his continued occupation of the property was referable to his status as a purchaser under a contract which continued in existence. In my judgment, if proceedings had been brought for possession after September 1958, the plaintiff could have set this up as a valid defence and, in those circumstances, his possession during those years was not adverse.”

482.  Hyde v Pearce was followed in Lam Ngok Ching and others v Tsang Yuk Ming, HCA1192/2004 (8/6/2006, unreported), a decision of Suffiad J.  In that case, the plaintiffs’ predecessor in title of the property was one Lam who was the father of the 2^nd to 5^th plaintiffs and the grandfather of the 1^st plaintiff.  It is not clear when Lam first became the registered owner of the property, but it would have been before 1947.  Lam and the defendant entered into two written Chinese agreements dated 11March 1957 (“the 1st Agreement”) and 20March 1957 (“the 2nd Agreement”) by which the property was agreed to be sold by Lam to the defendant.  The parties agreed that both agreements were intended to be legally binding between Lam and the defendant.  The 1st Agreement provided that the consideration was at $1,400 per “deciliter” with a deposit of $500 having been paid.  It was agreed that the balance was to be paid within a week.  It was also agreed that should the defendant fail to buy, he should not claim back the deposit, and should Lam fail to sell, he should pay double the deposit as compensation.  It was common ground that the total purchase price was $2,000.  The balance outstanding was $1,500.  The parties agreed by the 2nd Agreement that the payment of the balance and completion of the sale and purchase were to be postponed to or before the end of May 1957.  However, the balance was never paid and there was never any assignment of the property to the defendant.  Pending the payment of the balance and completion of the sale and purchase, the defendant was allowed to have actual occupation of the property at some time after the 2nd Agreement but before the end of May 1957.  Lam assigned the property on 22December 1981 to his sons; namely the father of the 1st plaintiff and the 2nd to 5th plaintiffs.  The plaintiffs claimed possession from the defendant in 2004. 

483.  Suffiad J held in §§68 and 73 to 81:

“68. The principles stated in Buckinghamshire County Council v. Moran has also been adopted by the Court of Appeal in Hong Kong where in the case of Cheung Chung Yan v. Chan Man Kwong, CACV No. 268 of 2003, Ma CJHC said at paragraph 17 of that judgment:

‘As a matter of law, where a person occupies land as a licensee or otherwise with the permission of the true owner, he is not in adverse possession, for he enjoys his occupation under lawful title.’

…

73. On this issue of whether the possession by the plaintiff was adverse possession, Templeman LJ held that it was equivocal as to whether the possession was adverse and had this to say:

‘… [The plaintiff] was a licensee whose licence could be determined at any time on demand by the vendors to quit the property, and the vendors in 1958 did purport to determine the licence and to ask for possession of the property.

But the matter does not, however, end there because, (already cited above).’

74. Applying the above principles to the present case, there can be no doubt that the defendant was let into occupation and/or possession of the property by Lam because of the 1st and 2nd Agreements entered into between them for the sale and purchase of the property.

75. It is also not in dispute that the full purchase price has never been paid by the defendant (for whatever reason), apart from the $500 deposit.

76. As such, it follows that there can be little doubt that the original entry into the property by the defendant was as a licensee, or at any rate it was lawful entry with the consent of Lam on the basis as a purchaser.

77.Applying the legal principles stated above, the defendant could not have been in adverse possession of the property when he first took possession of the property.

78. Moreover, as late as September 1971, the defendant had acknowledged the grant of the Modification of Tenancy as the ‘permittee’ of the Registered Landowner, being Lam. By so acknowledging, the defendant was effectively acknowledging that Lam was the owner of the property. That therefore is further proof that the defendant was not in adverse possession of the property since he acknowledged Lam to be still the owner of the property.

79. After 1971, it does not appear from the evidence that anything of significance happened which could effectively have changed the status of the defendant’s possession of the property to being in adverse possession.

80. Until the solicitor’s letter of 12 March 2004, the defendant had not been asked to leave or vacate the property either by Lam or by any of the five sons of Lam or any of the present plaintiffs even after the property was assigned to the five sons of Lam in 1981 by way of gift.

81. The fact that the defendant seeks as his primary relief specific performance of the 1st and 2nd Agreements on the basis that those agreements are still on foot further attests to the fact that his possession of the property was not adverse and has never been adverse possession.”

484.  The facts in the present case are very much different from those in Hyde v Pearce or Lam Ngok Ching. Kelly was not in occupation as a licensee.  Kuen did not grant him any licence.  Kelly’s case which I accept is that he initially occupied the Flats as Kuen’s tenant and then, from 13 September 1985 onwards, in the belief as the beneficial owner thereof.  He thought he had acquired the full beneficial ownership of the Flats from Kuen on 13 September 1985.  He was occupying as an owner to the exclusion of the whole world including Kuen and Mrs Ng despite Mrs Ng being the legal owner.

485.  Mr Ismail also argued that a purchaser in possession can also have the animus possessendi for adverse possession. He referred to the Court of Appeal decision in Cheung Kwong Yuen v Sun Hui Fang [2016] 1 HKLRD 464 where Kwan JA said at §§12 to 13:

“12. Ms Pauline Leung, counsel for the registered owner, accepted on appeal that there is no principle of law by which a person who mistakenly claims to be the lawful tenant or purchaser would be precluded from invoking adverse possession and that the correct position is as stated by Saville LJ in Hughes v Cork [1994] EGCS 25:

‘The learned judge appears to have held that it is impossible for someone who believes himself to be the true owner to acquire title by adverse possession since such a person cannot, ex-hypothesi, have an intention to exclude or oust the true owner. If this were the law then only those who knew they were trespassing, that is to say doing something illegal, could acquire such a title, while those who did not realise that they were doing anything wrong would acquire no rights at all. I can see no reason why, as a matter of justice or common sense, the former but not the latter should be able to acquire title in this way. What the law requires is factual possession i.e. an exclusive dealing with the land as an occupying owner might be expected to deal with it, together with a manifested intention to treat the land as belonging to the possessor to the exclusion of everyone else.

Obviously if the possessor knows or believes someone else has the paper title to the land he must intend to exclude that person along with everyone else. But in the absence of such knowledge or belief it is in my judgment sufficient for this part of the second requirement simply to establish a manifest intention to exclude everyone.’

13.     The law as stated in Hughes v Cork has been applied in a number of cases of first instance in Hong Kong (Wong Luen Chun & Anr v Secretary for Justice [1998] 4 HKC 122 at 129C to I; Tsun Wai Man, the sole executor of the estate of Tsang Kam Chuen v Cheung Yung & Ors, HCA 14202/1999, 9 August 2001, at §§38 to 39; Wong Kar Sue v Sun Hung Kai Properties Ltd & Anr, HCMP 1326/2005, 17 February 2006, at §6; Lau Kam Tai v Dao Kin Ming, HCA 913/2010, 13 March 2014, at §51 to 53; Yu Fung Co Ltd v Olympic City Properties Ltd & Anr, HCMP 1084/2008, 30 July 2015, at §§63 to 74).”

486.  Mr Ismail also referred to Yu Fung Co Ltd v Olympic City Properties Ltd & Anr, HCMP 1084/2008, a decision of Deputy High Court Judge Leung given on 30 July 2015 at §§69 to 73:

“69. The decisions in English case of Hyde and the Hong Kong case of Country Rich Development do not sit well with the what the English court said in Hughes (above) and reiterated in Roberts (above). This was noted by Cheung J (as he then was) in the Hong Kong case of Tsun Wai Man, the sole executor of the estate of Tsang Kam Chuen v Cheung Yung & Ors, HCA 14202/1999 (9 August 2001). In Tsun Wai Man, the plaintiff claimed title to the property in question pursuant to a sale, and alternatively on the basis of adverse possession. Cheung J found for the plaintiff on ownership. Nevertheless His Lordship proceeded to consider the argument by the defendant that the plaintiff could not rely on adverse possession because the plaintiff had claimed to be the owner of the property in question. His Lordship had this to say (at §39):

‘Huges v Cork was applied in the Hong Kong cases of Wong Luen Chun & Anor v Secretary for Justice [1998] 4 HKC 122. It should be noted that Hyde v Pearce was not cited either in Hughes v Cork or in Wong Luen Chun. Without finally deciding on this topic because counsel had not provided me with full arguments, my view is that the reasoning of Hughes v Cork is sound. The decision of Hydes v Pearce should now be read subject to this later decision. Accordingly, insofar as may be necessary, by reason of adverse possession of the plaintiff and his family of Lot 1120, the title of Cheung Ying and Cheung Ah Tau had been extinguished.’

70. In Wong Luen Chun, which Cheung J cited above, the defendant also argued that the 2^nd plaintiff there acted on the assumption that he or his family owned the land and he could not at the same time have had an intention to dispossess the owners. Such argument, Barnett J held (at §§40-42), was disposed of by the English Court of Appeal in Hughes.

71. Where a person is in factual possession of the land with the requisite intention to possess it to the exclusion of the world, the paper owner included, it is the fact that he has no right that entitles him to do so that characterises his such possession as that as of wrong and thus adverse. What he might have believed to be his entitlement, including that to possess the land, is relevant to whether he had the requisite intention to possess as a matter of fact, but not necessarily whether the possession was as of right or as of wrong.

72. In the context of a purchaser in possession pursuant to a sale, I am of the view that he may assert adverse possession of the property once he continues his possession with the requisite intention to do so to the exclusion of the world, including the vendor who has failed to tender the assignment. Time for limitation purpose starts to run from that moment in favour of the purchaser in possession towards extinguishing the vendor’s title.

73.    With the benefit of argument in the present case, which Cheung J did not find in Tsun Wai Man (above), I with respect agree with His Lordship’s observation.  My conclusion is that there is no conflict of position in Lai in his pleaded case.  The contention that Lai has waived or is estopped from asserting adverse possession fails.”

487.  I agree with Mr Ismail and the decisions he referred to though I would not go so far as to suggest that Hyde v Pearce was wrongly decided.  But I have already pointed out above that the facts in that case are very much different from the present case.  I have held that Kelly occupied the Flats believing that he had the absolute right to do so after he had paid Kuen the HK$1 million.  He also exercised the rights of the owner thereof by permitting Kuen’s sons to use and occupy Flat B subject to the condition that they should pay the management and utility charges and rates thereof.  I hold that Kelly occupied the Flats with the necessary animus possessendi for adverse possession.

488.  In the premises, I hold that, if I am wrong in deciding that Kelly had already acquired the beneficial ownership of the Flats by the common intention constructive trust and proprietary estoppel, I would hold that Kelly had by virtue of his adverse possession of the Flats since 13 September 1985 extinguished the legal and beneficial title to the Flats as owned by Mrs Ng under s 17 of the Limitation Ordinance; Cap. 347 and Mrs Ng is barred by s 7 (2) of the ordinance from bringing any action to recover the Flats from Kelly.

489.  Just in case that the beneficial interests of the Flats were owned by Kuen and now vested in his estate, I further hold that in such event, Kelly had by virtue of his adverse possession of the Flats since 13 September 1985 extinguished the beneficial interests of the Flats as owned by Kuen under s 17 of the ordinance and Kuen’s estate is barred by s 7(2) of the ordinance from bringing any action to recover the same from Kelly.

JUDGMENT

490.  In the premises, I declare that Mrs Ng is and has been holding the Flats as a baretrustee on trust for the benefit of Kelly since 13 September 1985.  I further declare that Mrs Ng is estopped from enforcing any proprietary interests and/or title in respect of the Flats as against Kelly.  I also order that Mrs Ng do forthwith assign and transfer the title of the Flats to Kelly.

491.  In the alternative to §490 above, I declare that the legal and beneficial title to the Flats as owned by Mrs Ng has been extinguished under s 17 of the Limitation Ordinance by Kelly’s occupation thereof since 13 September 1985 and Mrs Ng is barred by s 7 (2) of the ordinance from bringing any action to recover the Flats from Kelly.

492.  In the alternative to §490 and further to §491 above and in the event that the beneficial interests of the Flats were owned by Kuen and are now vested in his estate, I hold that the beneficial interests of the Flats as owned by Kuen have been extinguished under s 17 of the Limitation Ordinance by Kelly’s occupation thereof since 13 September 1985 and the estate of Kuen is barred by s 7 (2) of the ordinance from bringing any action to recover the same from Kelly.

493.  I further order that Mrs Ng and the estate of Kuen, whether acting by themselves or their servants or agents, be enjoined from selling, assigning, transferring, mortgaging or otherwise dealing with the Flats or any interests therein.

COSTS AND LIABILITY OF NON-PARTY TO COSTS

494.  This action was defended vigorously by Mrs Ng.  Her three children played equally vigorous roles in the defence. It was a defence advanced by the collaboration of everybody in the family.  The children were not just witnesses for the defence.  Every one of them did their best to resist Kelly’s claim.  It was a defence by a united front.  This can be seen from the strenuous efforts they employed to fabricate stories with a view to explain away matters that operate to Kelly’s advantage. Furthermore, given the age and health condition of Mrs Ng, it is obvious that the children had made substantial efforts to set up and maintain the defence.  It was also a defence by Mrs Ng as well as the estate of Kuen as represented by Vincent.  The finance of the defence should also have come from the children as Mrs Ng did not appear to have the necessary means to do so.  Jennifer’s November 2005 email mentioned that Kuen had wanted to transfer a half share of their home at Conway Mansion to Winnie and mortgage such interest to raise family expenses. 

495.  Since Mrs Ng’s children had played the same or even a bigger role than Mrs Ng in the defence of this action, it is only reasonable that they together with Mrs Ng and Kuen’s estate should jointly and severally pay the costs of the action to Kelly.  S 52A(2) of the High Court Ordinance; Cap. 4 has given this court the jurisdiction to award costs against a person who is not a party to the relevant proceedings if this court is satisfied that it is in the interests of justice to do so.  I think it is in the interests of justice to order that they together with Mrs Ng and Kuen’s estate should jointly and severally pay the costs of the action to Kelly subject to hearing what they may say to the contrary.

496.  O 62 r 6A(1) provides:

“(1) Where the Court is considering whether to exercise its power under section 52A or 52B of the Ordinance to make a costs order in favour of or against a person who is not a party to the relevant proceedings—

(a) that person must be joined as a party to the proceedings for the purposes of costs only; and

(b)   that person must be given a reasonable opportunity to attend a hearing at which the Court shall consider the matter further.”

497.  In line with the requirements of O 62 r 6A(1), I order that Ng Kwok Wah, Vincent, Ng Kwok Keung, James and Ng Lai Ling Winnie all of 29 Conduit Road, Ground Floor, Flat F, Conway Mansion, Mid-Level, Hong Kong be personally joined as the 4th, 5th and 6th defendants in this action for the purpose of costs only.

498.  I will fix a date for them to show cause on why I should not order that they together with Mrs Ng and Kuen’s estate should jointly and severally pay the costs of the action to Kelly.

499.  In the meantime, I make a costs order nisi against Mrs Ng and Kuen’s estate should jointly and severally pay the costs of the action to Kelly to be taxed.