LAM YING KUEN v. LAM CHOR KUEN AND OTHERS

HCA 1304/2018

[2023] HKCFI 1747

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1304 OF 2018

_____________

_____________

BETWEEN

_____________

_____________

JUDGMENT

_____________

A. INTRODUCTION

1.  This was the trial between the Plaintiff, Mr Lam Ying Kuen (“P” / “Ying Kuen”), on the one hand and the Defendants (“the Defendants”), his siblings, on the other, the principal dispute being in relation to the property situated at Flat C on 7^th Floor, Hsia Kung Mansion, Kam Din Terrace, No. 24, Taikoo Shing Road, Taikoo Shing, Hong Kong (“the Property”).

2.  The parties to the litigation are all family members and the children of Madam Lam So Sui Hing (“Madam Lam”). She passed away on 20 April 2014.

3.  Madam Lam had seven children:

(1) Lam Yim Mui, born 1948, who passed away in 1992;

(2) Lam Wai Kuen (“D2” / “Wai Kuen” / also known as “Dominic”), born 1950;

(3) P (also known as “Ken”), born 1952;

(4) Lam Fai Kuen (“D3” / “Fai Kuen” / also known as “Joe”), born 1953;

(5) Lam Yim May (“D5” / “Yim May” / also known as “Karina”), born 1956;

(6) Lam Chor Kuen (“D1” / “Chor Kuen” /also known as “Franky” or “Jacky”), born 1957; and

(7) Lam Sai Kuen (“D4” / “Sai Kuen” / also known as Bobby), born 1960.

4.  By an assignment dated 7 July 1980 (“the Assignment”), Ying Kuen and Chor Kuen became the first registered joint tenants of the Property.

5.  At trial, P was represented by Counsel Mr Lau Ka Kin, and D1 to D3 were represented by Counsel Mr Jeevan Hingorani and Counsel Mr Gilbert Chong.

6.  D4 appeared in person, but was only present on the first 2 days of trial. He had indicated to the Court at the PTR that he would take a neutral position on the disputes.

7.  D5 had never entered an appearance in the case and did not appear at trial.

8.  P’s primary case is that he is and always has been the true beneficial owner of the Property, and that D1 was holding the same on trust for him. He seeks declaratory relief to such effect.

9.  D1 to D3 denied such allegations, alleging that Madam Lam had been the sole beneficial owner of the Property since the acquisition.

10.  D1 and D2 counterclaimed for declaratory relief that P and D1 held the same on trust for Madam Lam; alternatively, for a declaration that she was the sole beneficial owner since acquisition. D3 counterclaimed for declaratory relief that the Property forms part of the estate of Madam Lam (“the Estate”), and originally further addressed some “household goods” in respect of which he wished to seek orders. It was confirmed at the PTR that D3 no longer pursued the counterclaim on household goods.

11.  The sole ultimate issue as framed by the parties for decision, therefore, is whether P is the beneficial owner of the Property or whether the Property belongs to the Estate of Madam Lam.

12.  Over the course of 11 days, the Court heard evidence from P, D1, D2, D3 and a Madam Li Mei Ngor, D2’s wife (“Madam Li”).

B. BACKGROUND

13.  The following matters are not disputed or not readily disputable. Where relevant, the most salient points of dispute are also mentioned in the summary below.

Purchase of the Property

14.  Prior to the purchase of the Property, in 1980, Madam Lam, Ying Kuen, Chor Kuen and Sai Kuen were living together in a flat in Sai Wan Terrace (“Sai Wan Terrace”). This was a staff quarter provided to Wai Kuen by his employer in around 1978.

15.  On 22 May 1980, Ying Kuen and Chor Kuen, represented by Johnson, Stokes & Master (“JSM”) as the purchasers entered into an agreement to purchase the Property at a price of HK$390,000. As recorded in Clause 2 of the agreement, HK$40,000 was paid to the vendor that day as deposit.

16.  By a receipt dated 27 May 1980 issued by JSM, it was recorded that a total sum of HK$363,025 had further been paid, HK$350,000 being for the balance of the purchase price, and HK$13,025 being for the settlement of JSM’s bill no. 405640, inclusive of HK$10,725 being stamp duty.

17.  On 7 July 1980, the Property was assigned to Ying Kuen and Chor Kuen as joint tenants.

18.  It is common ground that at least a large proportion of the funding for the purchase of the Property came from funds borrowed from Wai Kuen’s mother in law. The parties are at odds over who borrowed the funds and how much. P asserts that it was he who borrowed HK$350,000; whereas D1 to D3 assert that it was Madam Lam who borrowed HK$390,000.

19.  It is also common ground that interest was paid to Wai Kuen’s mother in law for a few years after the initial loan, and the principal was repaid by the mid-1980s. P says that it was he who paid; whereas D1 to D3 assert that it was Madam Lam who paid.

20.  Underlying the disputes over the funding are further disputes over: (1) the means available to P; (2) the means available to Madam Lam, and hence their respective abilities to pay for the purchase and repay the loan at the material time (i.e. in or around 1980 to the mid-1980s); as well as (3) disputes over the exact means and timing of repayment of the interest and principal to D2’s mother in law.

21.  Madam Lam, Ying Kuen, Chor Kuen and Sai Kuen moved from Sai Wan Terrace to the Property once it was completed. Ying Kuen lived in the Property until 1983; Chor Kuen until the late 1980s; and subsequently thereto, Madam Lam and Sai Kuen lived there. Sai Kuen continues to live there to date.

Events in 2010 and 2011

22.  Towards the end of 2010, a typed Chinese document was prepared by Sai Kuen dated 24 December 2010 (“Chinese Document”), which was signed by Madam Lam. The Chinese Document stated as follows:

“本人林蘇秀卿 ID No.A133515(7) 於2020年12月初與林偉權，林英權，林輝權，林楚權商議後決定將本人現在的居所位於太古城夏宮閣７樓C的單位只留給林世權 ID#D244547(7) 一人居住但不可出租分租或出售，其餘五名子女及其後人都不可入住該單位直至林世權身亡。

為免日後子女們有所爭議及不和故立此遺書，祝願大家能和平共處，身體健康。

註: （所有子女都不可在林世權生前出租或出售該物業直至林世權死後才可出租或出售該物業）。”

(There is no official translation, but D1 to D3 offer this:

“After discussion with Lam Wai Kuen, Lam Ying Kuen, Lam Fai Kuen and Lam Chor Kuen in early December 2010, I, Lam So Sui Hing …. decided to leave my present residence: …. for Lam Sai Kuen …. for his residence only, but such flat should not be leased, subleased or sold, and my other five children and their descendants are not allowed to live in such flat until the death of Lam Sai Kuen.

I make the testamentary instrument to avoid any future disputes and frictions among my children, wishing them to live together in peace and good health. Note: (All my children are not allowed to lease out or sell the property while Lam Sai Kuen is alive and could only do so after his death).”)

23.  Four of the then surviving siblings – Wai Kuen, Ying Kuen, Fai Kuen and Chor Kuen – also signed the Chinese Document. They were identified therein as “見證人” (witnesses). Yim May did not sign and, contrary to the other signatories, there was no typed area provided for her signature on the document. There seems to be consensus that she was not made aware of the document at all.

24.  On 4 January 2011, Madam Lam made a Will prepared by Messrs. T. S. Tong & Co. (“the Will”). The Will appointed Wai Kuen and Ying Kuen as the executors. According to the Will, Madam Lam’s two grandsons born of Yim Mui would each receive a sum of cash; the residuary estate would be divided amongst her 6 surviving children. The Will did not expressly deal with or mention the Property.

Madam Lam’s passing and disputes between the siblings

25.  On 20 April 2014, Madam Lam passed away at the age of 84.

26.  Shortly thereafter, the siblings had serious disagreements on a number of issues.

27.  On 28 June 2014, P through his then solicitors Messrs. T.C. Lau & Co (“T.C. Lau”) invited D2 to apply for probate together as co-executors.

28.  On 13 August 2014, D2, at that point still unrepresented by any solicitors’ firm, commented on and revised the draft Schedule of Assets and Liabilities prepared by T.C. Lau.

29.  On 18 August 2014, T.C. Lau sent a revised draft Schedule of Assets and Liabilities to D2 for his approval. He approved the draft on the same day, indicating that he was “not a client” of T.C. Lau. The draft Schedule did not mention the Property. The approval of this draft was done by email, which copied in Fai Kuen and Chor Kuen.

30.  On or about the same date, T.C. Lau asked Wai Kuen to confirm whether he would join P to apply for probate together. This was eventually not agreed, and on 19 September 2014, P applied for grant of probate by himself. Wai Kuen was informed of the same on 20 September 2014.

31.  Probate of the Will was granted on 28 October 2014.

32.  Following the grant, there was extensive correspondence between T.C. Lau on the one hand and the solicitors then instructed to represent Wai Kuen, Fai Kuen and Chor Kuen, Messrs. Y. C. Lee, Pang, Kwok & Yip (“Y.C. Lee”) on the other. The correspondence covered inter alia disputes over the amounts to be paid to Madam Lam’s grandchildren and certain sums which it was said was held by Chor Kuen on trust for Madam Lam. There is no dispute that the Property was not mentioned at the time of this correspondence; it was only mentioned for the first time in February 2015, as described below.

33.  On 26 November 2014, Y.C. Lee to T.C. Lau to enquire on the progress of the application for grant.

34.  On 29 November 2014, T.C. Lau sent a copy of the Grant to Y.C. Lee and requested Chor Kuen pay to the Executor the sum of HK$1,514,383.11 (“HK$1.5M”), said to be held on trust for Madam Lam.

35.  On 2 February 2015, T.C. Lau wrote to Y.C. Lee to indicate that if Chor Kuen still failed to repay HK$1.5M to the Estate, legal proceedings would be commenced against him.

36.  Y.C. Lee replied by letter dated 12 February 2015, saying:

“Lastly, regarding another material fact which had not been disclosed by your client in such Schedule, we are instructed by Mr. Lam Chor Kuen of our clients that your client and he, as joint tenants, held [the Property] on trust for the Deceased at the time of her death.”

37.  By a handwritten declaration made on 10 February 2015 by Chor Kuen at Sham Shui Po District Office, he declared that he was holding the HK$1.5M and the Property on trust for Madam Lam.

38.  By letter dated 14 February 2015, Ying Kuen through T.C. Lau denied that the Property belongs to the Estate; he continued to request that Chor Kuen repay HK$1.5M to the Estate.

39.  On 10 March 2015, Chor Kuen paid HK$1.5M to the Estate.

40.  On 12 March 2015, T.C. Lau wrote to Y.C. Lee stating that Madam Lam’s assets were HK$7Ｍ (and did not include the Property), and liabilities were HK$1Ｍ odd; and hence the residuary estate to be distributed to each of the beneficiaries was HK$1m odd.

41.  On 17 April 2015, T.C. Lau sent 3 cheques each of HK$1.064,469.46 drawn in favour of Wai Kuen, Fai Kuen and Chor Kuen respectively.

42.  On 18 May 2015, Y.C. Lee wrote to T.C. Lau in the following terms:

“… we are instructed by our clients to acknowledge receipt of the three cheques drawn by your client each in the sum of HK$1.064,469.46, being their respective shares of the proceeds of the estate of the Deceased on a non-waiver basis.”

43.  On 19 May 2015, T.C. Lau wrote stating that P took D1 to D3’s acceptance of the 3 cheques as agreement on full and final settlement of their share of the Estate, saying “If our understanding of this matter is not correct, you are requested to say so and return the several cheques to us forthwith.”

44.  The cheques were cashed thereafter.

45.  Yim May and Sai Kuen also received equivalent cheques. Both of them signed written confirmations dated 23 May 2015, confirming that they have no claims against the Estate or P.

46.  On 29 May 2015 and 30 May 2015, Y.C. Lee wrote to T.C. Lau, expressing disagreements about the administration of other “household and personal items” of the Estate.

47.  On 13 June 2015, Wai Kuen wrote to Y.C. Lee, copied to T.C. Lau. The letter stated inter alia as follows:

“… Now that the probate matter of the Deceased had been concluded following our receipt of the three cheques …. As such, you have no obligation to entertain on our behalf any requests made by [T.C. Lau] in relation to the above probate matter and estate of the Deceased.”

48.  The present action was commenced in June 2018.

C. THE PARTIES’ RESPECTIVE PLEADED CASES.

49.  P’s pleaded case is summarized as follows. He says:

(1) He paid the purchase price of HK$390,000 and the stamp duty. He was not only a legal owner, but the sole beneficial owner of the Property.

(2) All the title deeds and documents of the Property had been in his possession since the purchase.

(3) At the time of purchase, it had been expressly agreed, alternatively it was the common intention, understanding and/or arrangement all along (since the purchase of the Property), between Madam Lam, P, and D1 to D4 (“the Informal Agreement”), that he would provide the purchase price, and that the Property would be primarily used for and occupied by Madam Lam, P, D1 and D4; further, that D1 was registered solely for the purpose of assisting P in taking care of Madam Lam (to manage the Property as a registered owner); yet further, that D1 would not have any beneficial interest in the Property, and P would be the sole beneficial owner.

(4) It was in reliance of the said Informal Agreement that he obtained the loan of HK$350,000 from D2’s mother in law, and the balance of the purchase price as well as all other expenses connected to the purchase were funded through his own personal savings.

(5) He had repaid the interest annually (an approximate sum of HK$50,000) in about June each year, and the principal was repaid in late 1984; all of this was done via D2.

(6) He has been responsible for all of the management fees, government rates and rent, utilities, household expenses and decoration costs of the Property since purchase, as well as the renovation works carried out in Taikoo Shing.

(7) His mother and D4 were staying there as bare licensees.

(8) He further relies on the failure to address the Property during the probate process as evidence contrary to D1 to D3’s contentions that the Property is held on trust by him for the Estate.

50.  Whilst D1-D2 and D3 filed separate pleadings, the material portions thereof are essentially the same. They say:

(1) Madam Lam was the sole beneficial owner of the Property since acquisition.

(2) They reference the fact that she inherited and owned 1/3 of the beneficial interest in a redevelopment project of a set of old buildings in Russell Street, Causeway Bay (“Russell Street Project”). Whilst she had substantial assets (viz. the said project), she lacked liquidity, and it was in such circumstances that she obtained a loan of HK$390,000 from D2’s mother in law (of which D2 was said to be guarantor).

(3) There was no intention on the part of Madam Lam that the Property was to be an advancement to P and D2.

(4) Interest was calculated at the prevailing bank deposit rate, with the deduction of 10% interest tax; it was payable in June and/or July each year.

(5) The loan was repaid by Madam Lam in 1985, funded by personal savings of Madam Lam and/or the rental income and/or sale proceeds of the Russell Street Project; with financial assistance from her children.

(6) In the circumstances above, D1 to D3 say that Madam Lam was the sole beneficial owner by way of resulting trust.

(7) In the alternative, they suggest that there was a common intention, understanding and/or arrangement (“the Family Arrangement”) largely along the lines pleaded in subparagraphs (1) to (5) above; and in addition, P and D1 would be registered as legal owners – with no entitlement to any beneficial interest – because they were not yet married, and D4 was too young to be registered; further that the Property would be the “ancestral home” where Madam Lam would reside, and unmarried children would reside, with children having to move out once they got married.

(8) It is suggested that in reliance on the said agreement, Madam Lam obtained the loan and made the relevant payments for the purchase of the Property.

(9) It is further pleaded that the relevant payments in relation to the Property since purchase were also made by Madam Lam via her savings account; and that her children had provided allowance to her monthly. Insofar as the Taikoo Shing renovation costs, those had been deducted from the monthly management fees without separate payment.

(10) They cite the Chinese Document as evidence of the signatories recognizing Madam Lam as sole beneficial owner of the Property; saying further that in drafting the Will Madam Lam had “misunderstood” the coverage and consequence thereof, resulting in the arrangement as to the Property not being included in the Will.

(11) Insofar as the parties’ conduct during the probate process, their essential contention remains that the Property formed part of the Estate, and they point to inter alia the 10 February 2015 declaration by D1 in support of the same.

(12) They thus counterclaim for declaratory relief to the effect that Madam Lam was the sole beneficial owner of the Property since acquisition and that P and D1 were and are holding the same on trust for the benefit of Madam Lam since acquisition.

51.  In Reply, P’s position is essentially that:

(1) He challenges the version of events regarding the obtaining of the loan, including specifically D2’s status as “guarantor”, as well as the funding for repayment from the proceeds of the Russell Street Project.

(2) The Chinese Document has no legal effect, and was prepared by D4 in circumstances where D4 was worried about his own accommodation in the event Madam Lam passed away.

(3) There was no “misunderstanding” on the part of Madam Lam when she prepared her Will.

(4) He denies the existence of the Family Arrangement or any concept of there being an “ancestral home”.

(5) Whilst he acknowledges that some of the other children had given Madam Lam pocket money, he maintains that the funds used to settle expenses relating to the Property had come from him (sometimes given to Madam Lam, who then settled the expenses).

(6) He continues to rely on the acceptance and endorsement of the draft Schedule of Assets and Liabilities by Wai Kuen on 18 August 2014, as well as the conclusion of the probate process generally.

52.  As indicated above, the ultimate issue in dispute is therefore the beneficial ownership of the Property.

D. RELEVANT LEGAL PRINCIPLES

D1. Common Intention Constructive Trust

53.  The parties are largely agreed on the relevant principles to be applied.

54.  As regards the common intention constructive trust, reference is made to Lam Chuen Lung v Tse Hau Woon [2022] HKCFI 828, where Deputy High Court Judge Winnie Tsui summarized the principles as follows:

“… 103. On common intention constructive trust, the principles are not in dispute. They are recently summarised by Deputy High Court Judge Alexander Stock, SC in Leung Hang Lin v Lam Mei Yung [2019] HKCFI 2819 at para 8.

(1) The starting point is that equity follows the law. There is a presumption that the beneficial interest follows the legal interest. Where the property is registered in a defendant’s name, the plaintiff bears the burden of showing, on the balance of probabilities, that the defendant held the property on trust for him such that the beneficial ownership differs to the legal ownership.

(2) The burden may be discharged by showing that (a) there was a common intention held by the plaintiff and the property owner at the time of the purchase (or exceptionally, after that) that the beneficial ownership was to be different to the legal ownership, (b) the plaintiff altered his position in detrimental reliance upon the common intention, and (c) it is unconscionable for the property owner to assert ownership in reliance on the legal title. The constructive trust is constituted by the plaintiff’s detrimental reliance on the common intention and the unconscionability of the legal owner departing from that.

(3) The approach to ascertaining common intention is objective. One looks to the intention of each party which was reasonably understood by the other party to be manifested by the first party’s word and conduct.

(4) The doctrine is sometimes described as having two limbs. First, where at any time prior to the acquisition (or exceptionally, at a later date), there is an agreement, arrangement or understanding reached between the parties as to how the property is to be held beneficially, based on evidence of express discussions. Second, where there is no evidence to support such a finding but the court relies on the parties’ conduct as a basis from which to infer a common intention. There is some authority that under the second limb, direct contributions to the purchase price by a party who is not a legal owner will readily justify the inference.

(5) However, the modern approach is to assess the parties’ common intention by a holistic approach having regard to the context and the particular facts. The court is not constrained to consider only pure direct monetary contributions to the purchase price. In a Chinese setting, especially for the older generations, where explicit discussions on property rights within the family are not that common, the court has to pay more regard to circumstantial matters.

104. In the present case, the Property is registered in the joint names of the plaintiff and the mother. The starting point of the analysis is therefore that prima facie the two of them enjoy joint and equal beneficial interests in it. The plaintiff, however, says that the beneficial interest solely belongs to him. The burden is therefore squarely on him to make good that case: Stack v Dowden [2007] 2 AC 432 at paragraph 58.” (emphasis added)

55.  See also Stack v Dowden [2007] 2 AC 432 at §§56-58; Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 at §38; and Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985.

D2. Resulting Trust

56.  Insofar as the operation of any alleged resulting trust, there is authority to the effect that where it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust analysis (Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at §1.3 per Lam VP (as he then was)).

57.  See also Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §45 per G Lam J (as he then was)).

D3. Assessment of Evidence

58.  The following propositions are well-settled as regards the approach to witness evidence and documentary evidence:

(1) The Court will have regard to the inherent probabilities of the parties’ respective cases, and the internal consistency of the witnesses’ evidence and their demeanor when testifying at trial. Further, the Court will have regard to the contemporaneous documents, circumstantial evidence tending to support one account rather than the other, and the overall impression of the character / motivation of the witnesses (Re B (Children) [2009] 1 AC 1).

(2) The Court bears in mind not only the witnesses’ demeanor in court, but also the history of events, and the contemporaneous documents and the inherent probabilities of the witnesses’ accounts (Esquire (Electronics) Ltd v The Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 at 494C).

59.  In particular, when one is concerned with subsequent conduct, words and declarations as evidence of the intentions at the time of the transaction, the following passage from Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605 at §§55-56 per Stock NPJ is relevant:

“55. A question canvassed in the course of argument before this Court was whether those earlier and later events were admissible as evidence of intention at the time of transfers. It seems to me that they were and that the issue was one of weight. In the context of a question whether evidence of conduct subsequent to the registration of shares in the names of children was admissible to rebut the presumption of advancement, it was held in Shephard v Cartwright that whereas acts and declarations of the parties before or at the time of the transaction or so immediately after it as to render it a part of that transaction are admissible “either for or against the party who did the act or made the declaration.subsequent declarations are admissible as evidence only against the party who made them, not in his favour.” The modern approach is less rigid in relation to evidence of subsequent conduct:

‘… it does not follow that subsequent conduct is necessarily irrelevant. Where the existence of an equitable interest depends upon a rebuttable presumption or inference of the transferor’s intention, evidence may be given of the subsequent conduct in order to rebut the presumption or inference which would otherwise be drawn.’

56, As a matter of common experience, contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event, especially in the case of “self serving statements or conduct of the transferor, who may long after the transaction be regretting earlier generosity.” That rationale is not restricted to evidence in rebuttal of presumptions but embraces any evidence from which an inference of the transferor’s intention may properly be drawn.”

E. DISCUSSION

E1. The Appropriate Starting Point

60.  Whilst the parties have addressed the plea of resulting trust in their submissions, it makes more sense on the facts of this case to address the competing claims of common intention constructive trust first. If the Court can come to a finding on this aspect, then there is no need to fall back to the resulting trust presumptions / analysis (paragraph 56 above).

61.  As set out in Stack v Dowden [2007] 2 AC 432 at §56, the starting point is that the onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. In the present case, both P and D1 to D3 bear respective burdens of proof to persuade the Court on the balance of probabilities that their respective version of events are to be believed.

62.  In relation to the above, I note that P asserted that since D1 has confirmed that he has never had beneficial interest in the Property, the starting point is that the Property “belongs to P beneficially” and that “D1 to D3 bear the burden of showing that the beneficial ownership differs to the legal ownership.” I accept the latter proposition as being part of the exercise the Court must engage in insofar as D1 to D3’s case (as it is positively asserted) goes, but I do not accept the former proposition as being a correct statement of the appropriate starting point.

63.  In short, it remains the case that each side bears the burden of proving their case insofar as it departs from the starting point of the legal ownership. In practice, what this means is that their respective versions of events are assessed with reference to the available contemporaneous evidence and against the inherent probabilities, and between the two, the Court will decide which is more credible after having engaged in a holistic assessment of the context and facts.

E2. Areas of factual dispute and approach to the evidence given

64.  The following areas of factual dispute are relevant to and feed into the consideration of the ultimate issue:

(1) The reasons for and the logistics of purchase, as well as the funding arrangements for the purchase of the Property – viz. who was it that located the Property and made the decision to buy, what were the circumstances in which the purchase was made, whether it was P who paid from his own funds or whether it was Madam Lam who paid from her own funds (including the repayment by either of them of the loan), and the like. Underlying this, the financial circumstances of each of the alleged funders as at the late 1970s to mid-1980s are to be explored;

(2) The events surrounding the Chinese Document and the Will in 2010 and 2011; and

(3) The probate process and the parties’ statements and conduct during 2014 to 2015.

65.  There are three further points of note as regards the discussion of the evidence:

(1) The Court heard evidence over the course of 11 days, covering a plethora of topics and history, not all of which would be possible to recount in detail in this judgment. The evidence as heard and the extensive submissions by counsel on the same have been taken into account in coming to the findings below; what follows are my observations on those aspects which I consider most directly relevant and/or most hotly contested.

(2) The purchase of the Property in this case took place some forty-odd years ago. There is limited documentary evidence save for what has been retained as to title deeds, receipts and the like, as referred to by the parties during cross-examination and in their submissions. By way of example, there are only some (very scant) records on P’s employment at the time and his sources of wealth, or indeed Madam Lam’s sources of wealth and any evidence on any proceeds which she may have received from the Russell Street Project. In the circumstances, much turns on the Court’s assessment of the credibility of the witnesses, which has been assessed against the principles set out in paragraph 58 above.

(3) Bearing in mind the principles summarized at paragraph 59 above, it is the events closest to the time of purchase and repayment of the loan which are inherently more likely to be reliable indicators of the relevant intentions. Insofar as the subsequent events surrounding the Chinese Document, the Will, and the probate process are concerned (which took place 30 to 35 years after the purchase), those are assessed according to the principles summarized above – and have accordingly been given relatively lesser weight in the overall holistic assessment.

66.  In terms of the structure of the discussion, I will approach each area of the three areas of factual dispute (paragraph 64 above), setting out the evidence of each party, and making observations and findings on the same where relevant. Having addressed each of those three areas, I come to a conclusion on the ultimate issue in Section F below.

E3. The Purchase of the Property

67.  It is helpful to first set out the most pertinent contemporaneous documents which were available in relation to this period and the transactions which took place in this period. These were:

(1) Title deeds of the Property;

(2) A number of bills / receipts issued by JSM in relation to the payments by cashiers order and cheque (drawn on a Hang Seng Bank account) for the Property and the professional services associated therewith;

(3) Documents in the Land Registry records relating to the Russell Street Project, and the Building Agreement and Supplemental Agreements relating to the same; and

(4) Land Registry documents which set out the sales and certain rental records of the redeveloped units of the Russell Street Project.

68.  The salient points of P’s evidence (from his witness statement and tested in cross-examination) were as follows:

(1) In or about 1980, he was working in a brokerage as a manager, earning approximately HK$3,500 to HK$5,000 per month.

(2) He expanded upon this in his oral evidence, saying that he was very successful in trading shares in the late 1970s to 1980s and eventually became very wealthy. His wealth was such that later on (well after the date of the purchase of the Property and the repayment of the loan), he acquired quite a number of cars (at least one of which was given to his brother to drive), was able to fund family meals and gatherings regularly, had loaned funds to Chor Kuen to assist him in a property purchase, and also funded the education expenses for his nephew.

(3) At the time of the purchase, he was living with Madam Lam, Wai Kuen, Chor Kuen and Sai Kuen in Sai Wan Terrace, a rental property which was arranged by virtue of Wai Kuen’s employment with Swire.

(4) Wai Kuen only notified P and Madam Lam that the Sai Wan Terrace lease would expire around two to three months prior to expiry, and that they would then need to vacate. His mother was particularly worried about their living situation, but since P had a decent monthly income and a certain amount of savings, it was in those circumstances that he decided to purchase the Property, the intention being that he would live there with Madam Lam, Chor Kuen and Sai Kuen. In his witness statement, he does not address who found the property in question. He later agreed that it was Wai Kuen who had told his mother about it.

(5) As to the financing, he reiterates the plea that he funded it from his own savings – ie. for the HK$40,000 deposit – and the loan of HK$350,000. Whilst he had considered a mortgage from the bank, he says that Wai Kuen was the one who suggested to Madam Lam that he (P) could borrow the balance of HK$350,000 from Wai Kuen’s mother in law. It was his case that the loan was repaid within approximately five years, with interest payments being made annually every June.

(6) In his witness statement he says that all funds (that he paid) were received by Wai Kuen on his mother in law’s behalf, and that there was never any written agreement. He says that because Wai Kuen was his brother, he was not worried about there being any problems.

(7) It was confirmed during cross examination that even on his case, P did not directly arrange the loan nor interact with Wai Kuen’s mother in law, but that the discussions, logistics (e.g. for repayment of interest), and the like were all carried out through Wai Kuen. It also appeared that even own P’s own recollection, often, Wai Kuen discussed and arranged these matters with Madam Lam who then discussed with P, rather than Wai Kuen and P discussing or making arrangements confirmed.

(8) It was also apparent from the cross-examination (and corroborated by the JSM receipts) that it was a cashier’s order that was used to pay for the balance of the purchase price. This drawing up of the cashier’s order was arranged by D2, made payable to JSM. Whilst P said he physically handed it to the firm, he had no part in making the arrangements for the funds, which was something that D2 handled.

(9) As to the reason why Chor Kuen was added as a joint tenant, he says that since he anticipated that he would eventually get married, he suggested this should be done for management of logistics in relation to the Property (such as payment for miscellaneous expenses, renovations, and the like). Sai Kuen was too young and hence not considered appropriate to perform this role.

(10) Later on in his statement, he says that all the rates, management fees and miscellaneous expenses were directly paid by him to begin with, but that after he moved out, he paid these via Madam Lam. He also says all renovation costs were paid for by him. Whereas, he says, the other siblings gave her pocket money to “買嘢食” (to buy food to eat).

(11) It was not entirely clear from the witness statement as to how regularly or how much he had given funds to Madam Lam. He was tested on this in cross-examination, wherein he gave varying answers that it varied depending on his income (which was not fixed given he was typically trading shares or in some form of commission-based role). He also gave evidence that there was an occasion wherein around the time of his marriage he had given his mother a lump sum of HK$300,000 in 1983 as his then wife did not like him regularly giving Madam Lam money.

(12) Insofar as the safekeeping of the deeds, in his witness statement, he shifted stance (from the original pleading) to indicate that both he and Chor Kuen took the deeds after signing at the JSM offices and kept them until the present date. He did not specify in his evidence who kept what documents. He did bring an envelope to Court which contained some original documents, but a proportion was also held by Chor Kuen.

(13) He further challenges the timings of payments and availability of the proceeds from the Russell Street Project.

69.  Insofar as D1 to D3’s case was concerned, the person who was most involved in the arrangements for the purchase of the Property and the arrangements for the loan was D2. It is thus helpful to first consider his evidence before then turning to that of D1, D3 and Madam Li.

70.  The salient points of D2’s evidence (from his witness statement and tested in cross-examination) were as follows:

(1) It was Madam Lam who wished to purchase the Property for long term residency and as an “ancestral home” (citing this concept as understood by a layman rather than in its technical sense). In his oral evidence, he further confirmed that he was the one who had liaised with the relevant estate agent.

(2) At the time of the purchase, Madam Lam had 1/3 interest in the Russell Street Project, but lacked liquidity because the redevelopment would not be ready yet. D2, as the eldest son, and who was working at Swire at the time, assisted Madam Lam in sorting out the logistics of the Russell Street Project (after P had stepped out owing to certain disagreements between relatives).

(3) Since she lacked liquidity, Madam Lam obtained a loan in the sum of HK$390,000 from D2’s mother in law. D2 and his wife had been entrusted by his mother in law to invest this sum in safe investments (the total sum available being approximately HK$500,000, which represented the mother in law’s life savings). He thus suggested, after discussing with his wife Madam Li, that HK$390,000 could be lent to his own mother, interest being calculated at the prevailing bank deposit rate of 12 months with a deduction of 10% interest tax, payable in June or July of each year until full repayment of the principal (originally intended to be repaid within 2 years). This was effectively a solution which was a win-win for both sides.

(4) He says that the Family Arrangement was discussed and agreed between Madam Lam and all 5 sons agreed.

(5) The loan was eventually repaid in 1985, funded by a mixture of Madam Lam’s personal savings, the rental income from the Russell Street Project, and the sale proceeds of various units in the same said project. D2 says that this had been agreed, and it was understood that the children might provide financial assistance in this regard.

(6) Prior to the full repayment, there were two extensions of time that had been agreed in relation to the loan, the first occasion because there had been a delay in completion for the Russell Street Project, and the second because there was a period when proceeds of sale from the project were retained by a solicitors’ firm before being released to inter alia Madam Lam.

(7) The Russell Street Project eventually completed in about April 1983, with the DMC being signed on 7 June 1983. Certain units were then allocated to Madam Lam (and the two other owners), and sold in August 1983. It was at this point that Madam Lam’s share of the proceeds were retained by a solicitor’s firm, necessitating the second extension of time for repayment of the principal of the loan.

(8) Various other sales in the Russell Street Project took place in 1984, and the retained sale proceeds were released in September 1984, which enabled Madam Lam to repay the principal to D2’s mother in law.

(9) Prior to the repayment of the principal, interest was paid annually. There were a number of occasions – viz. July 1982, 1983 and 1984 – when the interest payments were deposited by Madam Li, since she was a joint account holder with D2’s mother in law.

(10) Insofar as the payment of other expenses relating to the Property, the stance of D1 to D3 was essentially to challenge P’s evidence on the same. It was averred that each of the children had given Madam Lam pocket money (the implication being that she paid the expenses out of inter alia this money that had already been given to her).

(11) D2 also sought to cast doubt on the earning capabilities of P at the material time.

71.  D1 and D3 had relatively little to add to the above account insofar as the purchase process was concerned. By their respective witness statements, they confirmed that there had been agreement on the Family Agreement. In addition, D1 gave evidence concerning the handling of the title deeds, giving an account of how the most material of the originals were in the envelope that had been handed to him by JSM.

72.  Finally, Madam Li’s account both in her witness statement and her cross-examination corroborated D2’s account of events insofar as the arrangements for the purchase were concerned. Of particular note:

(1) She says that after having discussed the proposal put forward by D2, she agreed to persuade her mother to consider the property loan to Madam Lam.

(2) She says that her mother trusted D2 and herself.

(3) She expressly disagrees with P’s version of events insofar as the loan to him is concerned, saying inter alia that “It was entirely impossible that I would persuade my mother to lend a substantial amount of money … to [P] … without security. It must be noted that the money my mother was going to lend was the fruit that my father and her had worked very hard in their entire life.”

(4) She confirmed in her witness statement and in her cross-examination that she assisted in depositing the repayment of interest / principal by depositing the cash or cashier orders. Under cross-examination she was able to recount clearly the timing and arrangements for such repayments.

73.  On the whole I did not find P to be a credible witness insofar as the purchase of and dealings with the Property was concerned. I disbelieve his case on this aspect and would note in particular the following matters:

(1) Even taking into account the passage of time and the natural gaps in memory that might occur as a result, his evidence as to the alleged payments for purchase price of the Property, how subsequent expenses were managed and taken care of, and his intentions (whether express or unspoken) was not particularly coherent or consistent. By way of example, insofar as things like rates, management fees, and the like were concerned it was never entirely clear whether he paid directly (the case as originally asserted) or whether it was via monthly payments made to his mother (the case as emerged from cross-examination).

(2) There is no documentary evidence to back up his assertions that he was independently wealthy at the point of purchase or indeed repayment of the loan; and the scant few pages that do speak to his employment in the early 1980s do not of themselves give any indication as to his ability to have paid off the loan within those few short years. I do not doubt that he was subsequently very successful and made a great deal of money, and indeed was very generous with his family members. However, the subsequent success does not assist his case insofar as purchase and repayment of the loan is concerned.

(3) At various points when challenged on his sources of wealth or his payments to his mother (most particularly the alleged HK$300,000 one off payment in 1983) I found him to be evasive. The story about the HK$300,000 is particularly odd, as one must query why he would give this to his mother in one lot, but then not use the same to repay the loan itself.

(4) Whilst I have no doubt that he, alongside most of the other children, were very filial and regularly gave Madam Lam money during her lifetime (most likely on a loose monthly basis, though not rigidly so), I do not believe P when he says that the funds that he gave to his mother were specifically targeted towards the Property, whether for payment of expenses or payment of the purchase or repayment of the loan or otherwise.

(5) His account of the reason behind his decision to purchase in the first place also rings hollow. The account regarding the Informal Agreement was unclear with many instances in cross-examination where P indicated that it was his mother Madam Lam who he discussed with rather than with his brothers. Nor is the Informal Agreement supported by the available documents, nor – on balance – the inherent probabilities. In his witness statement he does not speak to any express agreement with D1 directly as to the holding of the Property; rather, this was allegedly discussed with his mother Madam Lam in the first place – this being another indicia of her say in the matter rather than P’s or D1’s.

(6) He was also unable to make good his originally pleaded case about the Title Deeds. It would appear he only came into possession of the other package (or part thereof) of the said deeds around the time of his mother’s death.

74.  In contrast, D1 to D3’s evidence regarding the purchase of and dealings with the Property are more consistent with the underlying documents (scant as they are), as well as the inherent probabilities given the circumstances of the case. Whilst there were points at which I found each of D1 to D3’s evidence to be somewhat unclear (primarily their accounts of later events, discussed below), insofar as the original purchase and payment for the Property is concerned, and the intentions at the time, I found them to be credible. I note in particular the following points:

(1) D1 to D3’s version of events as to how the Property was found (by D2’s efforts), the loan arrangements were made and the dealings with D2’s mother in law came about make far more sense when one is considering the context of the inter-familial relations, the actual mechanics as to how it came about (all through D2), and the repayment mechanisms (again, all through D2 and his wife Madam Li).

(2) Simply put, the mechanisms put in place are far more consistent with this being a loan between Madam Lam on the one hand and D2’s mother in law on the other. I have borne in mind in this regard that Madam Lam and D2’s mother in law were of the same generation, and the inherent likelihood is that D2’s mother in law would be more at ease with this being a loan to her daughter’s mother in law (who D2 and Madam Li vouched for, and could assure her that proceeds would be forthcoming from the Russell Street Project), than to a relatively young man (P, at the time) of whom she had no personal knowledge.

(3) The account regarding the loan to Madam Lam and the repayment thereof also matches up with available documentation on the Russell Street Project.

(4) Madam Li was a particularly credible witness, despite her witness statement being relatively brief. She came across as straightforward and honest. Her account of the logistics of the interest payments and her understanding that these were monies originating from her mother in law Madam Lam was also clear and consistent.

(5) The parties had addressed the aspect of the Family Agreement whereby married children would be required to move out. Chor Kuen was an apparent exception to this ‘rule’; his explanation being that Madam Lam had indicated that he could stay there despite being married. I accept as credible their explanations that Madam Lam was the relevant decision maker in this regard, and this was accepted at the time by all concerned.

75.  The upshot is that insofar as the purchase of the Property, the loan from D2’s mother in law, the repayments, and the various underlying issues related thereto (such as the parties’ respective available sources of funding) are concerned, I find that D1 to D3’s case is credible.

76.  In accordance with the approach set out in the case law, this aspect is given a relatively heavier weighting. However, it is not of itself determinative. I go on to consider the subsequent events.

E4. The Chinese Document and the Will

77.  The two available documents in respect of these events are the Chinese Document itself, and the Will, which was made shortly thereafter. There is no dispute as to the material terms thereunder. The parties’ differences center around what Madam Lam and each of them understood at the material time of the signing of these two documents – most pertinently, whether it was the understanding at the time that the Property was Madam Lam’s to give instructions on or to dispose of; and if so, why was it not included in the Will.

78.  In this regard, P’s case is that the Chinese Document came into being in order to address a concern of Sai Kuen’s that P would kick him out of the house after Madam Lam passed away; but that it is not indicative of Madam Lam having any beneficial interest in the Property nor was it intended to be any kind of testamentary document. He further points to the non-inclusion of the Property in the Will as being indicative of Madam Lam’s own understanding of what her Estate actually comprised of.

79.  P’s evidence largely repeats the version of events set out in his Reply. He says that the drafting of the Chinese Document by D4 came about because of a specific dispute with the owner of the flat below. As a result of that dispute, P had scolded D4 for failing to take care of their mother, and told him that he would ask him to move out of the Property if he was unable to take care of Madam Lam. D4 then asked Madam Lam to request P to give him a promise that he could live in the Property without any concerns. P agreed because his mother asked. The document was thus drafted by D4 and he was the one who asked the brothers to sign at the end of December 2010 at a family gathering.

80.  D1 to D3’s case, on the other hand, is that the Chinese Document shows Madam Lam’s understanding as to the Property (effectively, that she could make decisions regarding who was entitled to live there because it was her property). They say, as pleaded, that she ‘misunderstood’ the effect of the Will and the renunciation provision therein; the theme that emerged during cross-examination was that (in their lay person’s understanding) the Chinese Document had already dealt with the Property separately, and so it did not need to be dealt with in the Will.

81.  D2’s evidence continues the theme that Madam Lam considered the Property as the ancestral home, and that since D4 was the only one who was still single and living with her, she hoped that he could continue to live there for his lifetime. He says she had discussed the arrangements for D4 with the brothers, and they all respected her wishes. It was with such understanding that D4 drafted the Chinese Document.

82.  There is no dispute between the parties that the document was signed. Whatever they may say after the fact, the wording of the document is, of itself the best and most contemporaneous record of what was intended at the time. On the face of it the document records that:

(1) Madam Lam had discussed the matter with her children (i.e. the sons);

(2) She had made the decision to leave the Property in which she was residing for D4 to live in, that it could not be leased, subleased or sold, and that D4 could live there until he passed;

(3) The document was referred to as a testamentary document – in other words, her wishes were not just for the duration of her lifetime, but were intended to take effect after she passed; and

(4) She did not wish for the children to have disputes in respect of the Property.

83.  The obvious understanding upon reading the document in its entirety, noting that it is drafted by a layman, is that Madam Lam considered that she had a decisive say in how the Property was to be dealt with after she passed – viz. by giving such instructions or indications, she was acting as a beneficial owner would.

84.  Furthermore, the fact that the parties signed on the Chinese Document – P in particular – would, without more, be indication that they agreed she could give such instructions or indications. They were identified as “witnesses” rather than parties who had any particular interest, present or future, in the Property. In other words, by their signing, they agreed with her acting as a beneficial owner.

85.  To frame this act of signing in terms of the legal principles discussed above, P’s conduct in signing was contrary to his position that he was the beneficial owner of the Property. His explanations regarding the specific incident with D4 do not ring true against the explicit wording of the document itself, and I disbelieve his version of events based not only on this incongruence, but also his lack of general credibility (which I have already discussed above).

E5. The Probate Process and the Parties’ Statements and Conduct During 2014 and 2015

86.  As indicated above, following Madam Lam’s passing, a series of disagreements erupted between the parties. Much time was spent in cross-examination on the numerous letters, WhatsApps, and various other exchanges that took place during this period. Notwithstanding the wide range of questions that were asked and plethora of information that was covered, what the evidence and questions essentially sought to cover were three broad areas:

(1) The failure to discuss the Property in the draft schedule of assets and the belated raising of Madam Lam’s beneficial ownership of the same in February 2015 by way of the declaration by D1;

(2) The effect of the acceptance of the cheques, and whether this was indicative of the siblings’ agreement to the scope of Madam Lam’s estate (i.e., it did not include the Property); and

(3) Attacking various statements made in writing during that time period (whether in letters written by the parties themselves or their lawyers, or in WhatsApp messages), and based on this, making various criticisms in respect of the credibility of the parties.

87.  Insofar as the failure to discuss the Property is concerned the consistent theme that emerged in D1 to D3’s evidence was that everyone who had signed on the Chinese Document considered that it had been dealt with separately; whereas for P, he now says that he considered the document to be of no legal effect and that through the probate processes, the true estate was already rightfully dealt with.

88.  Considering the timeline of events and the correspondence in question, I consider that it would have been reasonable for the family members to take the view that there was already an understanding on how the Property was to be dealt with, along the lines consistent with the wording of the Chinese Document:

(1) Whilst I do not consider the Chinese Document has any legal effect, the best available contemporaneous evidence is that the parties knew that Madam Lam had indicated that D4 was to be entitled to live in the Property until he passed, that Madam Lam had given an instruction to such effect, and that everyone accepted this to be the arrangement.

(2) Everyone was also aware that Madam Lam was not the registered owner, and thus it was not necessarily the case that it would be obvious to them that it ought to have been dealt with in the probate process for the Will.

(3) D1 to D3 were not legally represented when the draft schedule of assets was being discussed. It was only after P had applied for grant of probate that their solicitors entered the picture and began corresponding on their behalf. Subsequently, the issue of the beneficial ownership of the Property was raised in February 2015.

(4) In short, I accept D1 to D3’s explanation of why they had not raised the issue of the Property earlier.

89.  The legal rights or wrongs of the matter aside, I also accept that it was likely Madam Lam had misunderstood whether she had to deal with the Property in the Will. In this regard, I would note that neither side has sought to adduce evidence from the relevant lawyers regarding the process of the preparation of the Will.

90.  As to the acceptance of the cheques, D1 to D3 point to the letter where they have indicated that this was on a “non-waiver basis”, whereas P points to the subsequent letter indicating that it is on a full and final settlement basis. The short point is that in view of the letter stating the acceptance is on a “non-waiver basis”, the acceptance is more likely than not construed as being equivocal. There is no clear indication that the cashing of the cheques concludes the disputes.

E6. Attacks on Credibility

91.  As to general credibility, the most significant attacks center on the correspondence during 2014 to 2015, but also encompass events prior to that. I have already commented above on P’s credibility. For completeness’ sake, I set out below the most salient points taken by P against D1 to D3 and Madam Li.

92.  The most significant attack was by P against D2. It was obvious that D2 was the author of a considerable amount of correspondence during this latter period and that there were a variety of topics which P says indicate his lack of credibility arising therefrom. To briefly summarise, P sought to attack:

(1) D2’s apparent prevarication over whether he had amended the draft schedule of assets;

(2) D2’s testimony about there having been a “special arrangement” in relation to the Property and the title deeds;

(3) D2’s version of events about the custody of one of the two bundles of documents (i.e. containing title deeds) given to the brothers and then apparently held by Yim May for a period;

(4) D2’s account of a written undertaking having been given to his mother in law (as echoed by Madam Li when she referred to a written guarantee), and how this was subsequently destroyed in 2015/2016 after D2’s mother in law had passed and they had cleared out her flat of old documents.

93.  P also attacked the testimony of Fai Kuen and Chor Kuen, highlighting in particular:

(1) Fai Kuen’s apparently inconsistent account of the telephone conversation he had with Madam Lam in December 2010 regarding the Chinese Document; and

(2) Chor Kuen’s apparent misunderstanding of the “Family Agreement” and his inability to spell this out (identifying it instead as the Chinese Document).

94.  P further attacked Madam Li’s general credibility and said that she was simply echoing her husband’s testimony.

95.  In essence, P’s submission was that these were all indicators of the parties being unreliable witnesses, and therefore, that the Court ought not believe their version of events in relation to the purchase itself and the disputes generally.

96.  Suffice to say that I have considered each of these criticisms in some detail. There are certain aspects where I do accept that there has been a certain degree of confusion by the witnesses. For instance:

(1) It would appear that Chor Kuen was indeed confused as to what “Family Agreement” referred to, mistakenly pointing instead to the Chinese Document and the arrangements set out therein; and

(2) D2 had made various statements in written correspondence about “special arrangements” and the “written undertaking” that were seemingly unclear or not able to be backed by contemporaneous documents, nor fully explained later on in his oral evidence.

(3) However, I would note that these subsequent matters took place long after the actual purchase, and the correspondence in question was exchanged at a time when the parties were embroiled in harsh and acrimonious attacks on each other, there being a clear degree of bluster and posturing throughout that process.

97.  Finally, I would mention that there was an incident on Day 5 of the trial where it was suggested that D1 may have communicated with other Defendants concerning his evidence when he was still under oath. Having reviewed the recording of the events of that morning, I consider that it was not entirely clear whether this had in fact taken place. And in those circumstances, bearing in mind that the accusation is a serious one, I shall give D1 the benefit of the doubt. I do not consider his credibility is affected by this incident.

98.  Overall, I consider that whilst there were some areas where the evidence given lacked absolute clarity, this did not sway or affect my acceptance of D1 to D3’s and Madam Li’s evidence on the core matters concerning the purchase and the common intention at that time, as discussed in Section E3 above. On those aspects, I continue to take the view that they were clear, consistent, credible witnesses.

F. CONCLUSION ON THE ULTIMATE ISSUE

99.  In the circumstances, after considering and weighing all of the above factors in a holistic manner, I dismiss P’s case and find in favour of D1 to D3’s case. Accordingly, I grant a declaration that Madam Lam has been the sole beneficial owner of the Property since the acquisition, and that P and D1 held and continue to hold the same on trust for her Estate. I further make an order nisi that costs of the action shall be borne by P.

100.  I thank counsel for their assistance.