陳敏 AND ANOTHER v. 香敬有 AND ANOTHER

HCA 195/2017

[2021] HKCFI 442

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 195 OF 2017

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J U D G M E N T

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1.  In this action, the 1^st and 2^nd plaintiffs, 陳敏 (“P1”) and Mr Li Kam Chi (李金鋕) (“P2”) (together “Ps”), claim against the 1^st defendant, Ms Seung King Yau (香敬有) (“Mother”), and the 2^nd defendants, Mr Lee Yat Wah Walter (李日華) (“Lee”), Ms Chick Tsz Kwan (植子君) (“Chick”) and Ms Law Hoi Yan Helen (羅凱欣) (collectively “Trustees”), for a declaration that P1 and P2 are the beneficial owners of Flat G, 23/F, Block 1, Harmony Garden, Siu Sai Wan, Hong Kong (“Property”) as to 78% and 22% respectively, an order to “remove” Mother and the Trustees as legal owners of the Property,and an order to “annul” the “Charging Order” over the Property.[1]

2.  At trial, Ps are unrepresented.  P2 conducts the trial on behalf of himself and P1.  Mother is represented by Mr Paul HM Leung, while the Trustees are represented by Mr Ken TC Lee. 

A.  BACKGROUND

3.  The following facts are not in dispute or are indisputable.

4.  Mother was born in 1941 and is illiterate.  Mother and 李定容 (“Father”) have begotten 2 sons and a daughter.  李創志 is the eldest son (“Brother”).  Li Wai Yee李惠儀 (“Sister”) is the younger sister of P2. 

5.  Until their retirement in 1998 and 2001 respectively, Father and Mother were employed by the Government as cleaners.  Mother suffered twice from stroke in 2009 and 2018. 

6.  P2 obtained a degree and MBA in 1993 and 1995 respectively.  He is a qualified accountant. 

7.  P1 was born in Guizhou in 1977 and received education until she was 15 years old.  In 1992, P1 moved to Shenzhen where she worked at a factory earning RMB 500 per month part of which she remitted to her family members in Guizhou.  In August 2004, P1 married to another man and the marriage came to an end in 2010. 

8.  In February 2012, P1 married to P2 in Hong Kong and met P2’s parents for the first time.  In April 2016, P1 obtained an one-way permit to move to and reside in Hong Kong. 

A1.  Purchase of the Property

9.  Since 1979 Mother had been the sole registered tenant of a public housing unit in Wah Fu Estate until she surrendered the unit in exchange for the right to purchase the Property under the Home Ownership Scheme.  The purchase was completed in May 1997 with Mother and P2 as joint tenants. 

10.  The price of the Property was $1,410,700.  Apart from a 10% deposit, the purchase was financed by consecutive loans advanced to P2 and Mother (as borrowers) by the following banks (collectively “mortgage loans”, each “mortgage loan”), which were secured by:

(1)  A legal charge in favour of The Yien Yieh Finance Co Ltd (“Yien Yieh”) dated 20 May 1997;

(2)  a legal charge in favour of Kincheng Banking Corporation (“Kincheng”) dated 17 March 2000; and

(3)  a legal charge in favour of Wing Lung Bank Ltd (“Wing Lung”) dated 17 December 2001 until it was discharged on 25 July 2013. 

11.  Since then and until May 2015 when P2 asked his parents and Sister to move out of the Property, P2 had resided at the Property together with his parents and Sister. 

A2.  P2’s bankruptcy

12.  On 12 June 2004, P2 presented a petition for his own bankruptcy in HCB 6035/2004 (“HCB”).  On 20 July 2004, a bankruptcy order was made against P2 and the Official Receiver (“OR”) was constituted receiver of his property. 

13.  In the “Preliminary Examination of Bankrupt” dated 21 July 2004 (signed by P2) submitted to the OR it was stated, inter alia, that:

(1)  P2 was unemployed at the time;

(2)  P2’s total income for 2001/02, 2002/03 and 2003/04 were $242,490, $310,510 and $328,516 respectively;

(3)  P2’s assets included the Property, which he described in this way:

“MORTGAGE LOAN WITH WING LUNG BANK LTD FOR HALF SHARE RESIDENTIAL PROPERTY FLAT G, 23/F., BLOCK 1, HARMONY GARDEN, 9 SIU SAI WAN ROAD, HONG KONG” (underline added); and

(4)  On 8 June 2004, P2 first became aware that he had insufficient assets to pay his debts in full and stopped payment of such debts.

14.  At the last page of the Preliminary Examination, P2 declared that “all answers and statements made by [him] in this Form of Preliminary Examination of Bankrupt (including annexures) are true and correct to the best of [his] knowledge and belief and were made after my attention had been drawn to Section 36 of the Crimes Ordinance (Cap 200).”

15.  During his bankruptcy, P2 submitted 4 statements of monthly income and expenditure to the OR which stated, inter alia, as follows:

Date of Statement	Monthly Income	Monthly Expenditure	Provision for Parents
21/7/2004	$0	$26,501	$5,000
16/8/2004	$21,467	$19,910	$4,000
22/6/2005	$23,000	$15,249	$6,000
27/10/2006	$20,000	$15,249	$6,000

16.  According to the information and documents provided by P2 to the OR, his employment history during bankruptcy was as follows:

Period	Position	Monthly Salary	Travel to Mainland
9/8/2004-15/4/2005	Corporate finance & administration manager	$23,000	No
17/5/2005	Accounting and finance manager	$23,000	1-2 times, no reimbursement
1/3/2006-10/4/2006	Finance manager	$23,000	Yes, with reimbursement
22/5/2006	Assistant accounting manager	$20,000	Yes
17/7/2006	Finance and administration manager	$20,000	No
16/7/2017	Finance manager	$15,000	No

17.  In response to the questions raised by the OR in respect of the 21/7/2004 Statement, P2 replied by letter dated 16 August 2004 (“8/2004 Letter”) (enclosing the 16/8/2004 Statement) in this way:

“住所： 位於香港柴灣小西灣道九號富欣花園第一座23樓G室 [i.e. Property],與本人同住之居屋聯名物業持有人- 母親香敬有女士因不懂文書,現我代她回覆有關貴司提問,有關物業首期,印花稅,律師費,裝修費,按揭還款都是以現金支付,我與母親各佔一半,她是無能力購買我的半份業權,也無法繼續還款,她是同意出售她佔的半份業權,現向物業按揭永隆銀行洽商出售事宜,待貴司指示。

租金: 上述原因,現需找五佰多平方尺單位居住，每月租金約需七千圓，隨函附上更新表格b007aa,祈為批准,以便遷出。” (underline added)

18.  In the notice dated 27 August 2004 filed in HCB (“Attachment Notice”), the OR gave notice that:

“the Bankrupt’s interest of and in any premises affected by the Bankruptcy Order has become vested in the trustee in bankruptcy by virtue of Section 58 of the Bankruptcy Ordinance (Cap. 6), AND THAT the vested title of the trustee in bankruptcy in such premises will not be affected by the Bankrupt’s subsequent discharge from bankruptcy.”

19.  On 1 September 2004, the bankruptcy order together with the Attachment Notice were registered against the Property at the Land Registry.

20.  At the general meeting of creditors held on 3 September 2004, Lee and Chick were appointed as joint and several trustees of the property of P2 with immediate effect.

21.  On 22 June 2005, P2 met with a representative of the Trustees during which:

(1)  P2 submitted the 22/6/2005 Statement. 

(2)  P2 informed the Trustees that he, Sister and parents lived in the Property, and that he needed to travel to the Mainland 1 or 2 times a month and his employer would not reimburse his travelling expense.

(3)  In reliance on the 22/6/2005 Statement, the Trustees assessed the monthly contribution payable by P2 to the estate at $7,751, and P2 signed the assessment to confirm his understanding of the same.

22.  On 20 July 2008, the bankruptcy order against P2 was automatically discharged by effluxion of time.

A3.  Proposed sale of Property

23.  By letter dated 10 January 2011, the Trustees referred to P2’s interest in the Property (as vested in them) and invited Mother to acquire their share in the Property or to sell the Property jointly with the Trustees.  In her letter dated 15 January 2011 to the Trustees, Mother stated that she and Father had both retired and were aged 70 and 73 respectively.  They did not have the means to acquire the Trustees’ share and if the Property was sold, they would have no place to live.

24.  By summons dated 9 November 2011, the Trustees applied for (1) a declaration that the Property was held by Mother and the Trustees as tenants in common in equal share, (2) an order that the Property be sold pursuant to s 6 of the Partition Ordinance (Cap 352), and other consequential relief. 

25.  On 15 December 2011, Mother and P2 both filed an affirmation to oppose the Trustees’ application.  In P2’s affirmation (“P2’s 2011 Aff”) he said:

“1.  反對物業業權只佔一半，附上供款證據及比例計算，應該佔77.86% (香敬有女士的業權)

2.  反對出售物業，因為物業是香敬有女士唯一養老居所。

3.  破產受託人接管物業時是負資產淨值，以後供款是由香敬有女士負擔，所以香女士應該佔100%業權，附上房屋委員會買賣記錄。

4.  反對由香女士支付訟費，破產責任不在她。” (underline added)

26.  According to P2[2], Mother’s affirmation was drafted by him (“Mother’s Aff”). The contents of Mother’s Aff were identical to those of P2’s 2011 Aff. 

27.  After a series of correspondence exchanged between their respective solicitors, in August 2016, Mother and the Trustees reached a consensus in respect of the sale of the Property.  They jointly applied for and obtained a consent order dated 26 August 2016 from Ng J in HCB requiring Mother to deliver possession of the Property within 7 days, and approving a sale of the Property at a reserve price of $5,500,000 in the open market (“Order for Sale”).   

A4.  Ps’ claim against the Property

28.  On 22 September 2016, P1 and P2 each filed an affirmation in HCB alleging, for the first time, that they are the beneficial owners of the Property and, therefore, the Order for Sale should be “annulled”. 

29.  In P1’s affirmation, she claimed that:

(1)  She was the beneficial owner of the Property based on the principle of resulting trust (§2);

(2)  From July 2004, she alone provided all the funds for repaying the bank loans until they were repaid in full.  She paid an aggregate amount of $1,717,162.53, which represented 78% of the total cost for purchasing the Property (§3);

(3)  In January 1996, she gave RMB 55,000 to P2 which had been used by P2 to pay the deposit for the Property.  From June 1997 onwards, she gave RMB 6,500 every month to P2 for the purpose of repaying the mortgage loans until June 2004 when, owing to P2’s financial difficulty, she increased the amount to RMB 8,500 per month (§5);

(4)  Mother was a bare trustee as she had never paid any money towards the purchase or renovation of the Property (§§2, 7);

(5)  In May 2013, she paid RMB 300,000 to P2, which he used to pay off the mortgage loan in full (§8); and

(6)  In May 2015, her daughter needed to study in Hong Kong and, therefore, she together with P2 and their daughter moved into the Property.  Due to the clashes between P2 and his parents, their parents moved out of the Property voluntarily (§9). 

30.  In P2’s affirmation, he asserted that Ps alone are the beneficial owners of the Property of which P1 has 78% beneficial interest.  At §§3 to 5, P2 said this:

“3.  香敬有沒有為 ‘該物業’ 支付任何購樓款項，包括首期及還貸。購樓款項，包括首期及還貸都是由本人太太陳敏及本人支付 ... 以回歸信托 (Resulting Trust) 為法律憑據，本人要求法庭頒令本人和太太是 ‘該物業’ 的真正實益擁有人，而香敬有只是該物業的信托人。

4.  … 以回歸信托 (Resulting Trust) 為法律憑據，本人太太是 ‘該物業’ 的78%實益擁有人。

5. ‘該物業’是本人和太太及女兒一家三口的唯一居所。在2004年7月破產令領下時是負資產物業 (Negative equity)。…

破產令領下以後 ‘該物業’ 由本人太太陳敏獨力負擔按揭供款。後來 ‘該物業’ 負債減少及升值，如果破產受托人也能佔一份，豈不變相是侵吞本人太太的私人財產，這樣還有法律正義和公平公道嗎？” (underline added)

31.  On 23 November 2016, the Trustees (with leave of the Court) issued a Writ of Possession with respect to the Property.  A Notice to Occupier to Quit dated 5 January 2017 (“Notice”) was issued by the Bailiff and posted at the Property.

32.  Ps say that they only became aware of the repossession of the Property upon seeing the Notice.[3] Upon application by Ps, on 1 March 2017, Au-Yeung J in HCB stayed the Order for Sale until 1 March 2018.  It is not clear if the interim stay was extended beyond 1 March 2018.   

B.  ISSUES

33.  On 25 January 2017, P1 and P2 commenced this action claiming (1) a declaration that they are the beneficial owners of the Property as to 78% and 22% respectively, (2) an order to “remove” Mother and the Trustees as legal owners of the Property, and (3) an order to “annul” the “Charging Order” on the grounds that:

(1)  P1 and P2 paid all the cost of purchasing the Property including the deposit, stamp duty, solicitors’ fee and repayments of the mortgage loans as to 78% and 22% respectively (SOC §§12, 21). 

(2)  The Trustees abused their power under the “outdated” Bankruptcy Ordinance (Cap 6) (“BO”) to oppress P2 even after the bankruptcy order had been discharged (SOC §19).  The Trustees’ right over the Property had a limitation period of 12 years (ie expired on 19 July 2016) and, as such, they had no right to apply for the Order for Sale on 26 August 2016 (SOC §19AA). 

34.  It has never been made clear by Ps what “Charging Order” they seek to annul.  Since Ps have in HCB sought to oppose the Order for Sale, I assume that the “Charging Order” is a reference to the Order for Sale.   

35.  Both Mother and the Trustees deny that Ps have the alleged interest in the Property on the bases that (1) P1 fails to discharge the burden of proving that she has contributed the alleged or any amount towards the cost of purchasing the Property, and (2) P2’s 50% interest in the Property has upon P2’s bankruptcy been vested in the Trustees. 

36.  Accordingly, the issues which require determination of the Court are:

(1)  Whether P1 and P2 contributed 78% and 22% of the cost of purchasing the Property, such that the Property is held by Mother and the Trustees on resulting trust for P1 and P2 as to 78% and 22% respectively (Resulting Trust Issue); and

(2)  Whether the Trustees’ right over the Property is subject to the alleged limitation period, and whether the Order for Sale  should be discharged (Order for Sale Issue).

C.  DISCUSSION

C1.  Evidence

37.  The approach of the Court in fact finding and the assessment of credibility has been stated by DHCJ Eugene Fung SC in Hui Cheung Fai & anor v Daiwa Development Ltd & ors, HCA 1734/2009, 8 April 2014, §§77-81, and may be summarised as follows:

(1)  Generally, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.   

(2)  In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events. 

(3)  In determining a witness’ credibility, it is important to consider the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence as between his oral testimony and witness statement.

(4)  The Court has to guard against the danger of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses, or from the assessment of the witnesses’ character.

38.  At trial, P1, P2, Mother, Father, Brother and Lee give viva voce evidence.  The evidence of Mother, Father, Brother and Lee is of little relevance given that Mother and the Trustees  are the legal owners of the Property. 

39.  As discussed further below, many of the factual matters which Ps seek to dispute in this action are either recorded in contemporaneous documents or have previously been confirmed by P2 (under oath) to be true and correct. 

40.  So far as P1 is concerned, at the Pre-Trial Review on 13 August 2020, this Court noted from the draft index of trial bundles that Ps did not disclose any document evidencing P1’s case that she had remitted or withdrawn her funds to pay for 78% of the cost of purchasing the Property.  It was explained to Ps, who had all along been unrepresented, that it is incumbent upon them to obtain and disclose all documents relevant to their claim before the trial.  These include the demands or receipts issued by the Mainland tax authorities to P1 from 1996 to 2013, the statements of her bank accounts, the bank withdrawal slips, remittance advices or foreign exchange slips converting RMB into Hong Kong dollars, and generally any documents to prove that P1 had contributed 78% towards the cost of purchasing the Property.  It was further explained to Ps that:

(1)  They have the burden to prove their claim;

(2)  P2 in the past confirmed on oath that Mother had contributed 78% of the cost of purchasing the Property such that she had 78% interest in such Property;

(3)  the documents then disclosed by Mother and the Trustees, on their face, show that they are the legal and beneficial owners of the Property; and

(4)  it is unlikely that the Court would accept Ps’ bare assertions without any documents in support of their claim.  They should therefore make use of the remaining time to retrieve or obtain the relevant documents and disclose them to the other parties before trial.

41.  I do not think P1 is a truthful witness. 

(1)  She is unable to produce a single document in support of her assertions that (a) between January 1996 and August 1997, she provided RMB 172,840 to P2[4] to pay the deposit, stamp duty, solicitors’ fee in relation to the purchase of the Property, (b) she had since June 1997 provided RMB 6,500 every month towards repayment of the mortgage loans, and (c) in May 2013, she provided another substantial sum of RMB 300,000 to discharge the mortgage loan in full.  This is despite the specific reminder made by this Court at the PTR.  Had P1 contributed her funds towards the cost of purchasing the Property, she would have been able to produce some documents evidencing the payments she claims to have made in the past 17 years.  I do not accept P1’s bare assertion that she has not been able to obtain the relevant documents from the banks or Mainland authorities, when no document evidencing her attempts to request for such documents have been produced.   

(2)  I do not accept P1’s assertion that she was able to accumulate sufficient savings to acquire and operate a restaurant in Shenzhen by March 1995.  On her own evidence, P1 only started to work at a factory earning RMB 6,000 a year in 1992 (when she was 15 years old).  By March 1995, she was 18 years old and had only worked at the factory for around 3 years and earned a total of RMB 18,000.  Although P1 refuses to say how much money she spent on herself and her family members, it is inconceivable that with her very modest income, she would have been able to save enough money to acquire and operate a restaurant on her own as she claims.

(3)  Again, P1 is unable to produce any document to substantiate her assertion in respect of the alleged restaurant, be it bank statements showing the money she claims to have earned, business registration certificate or documents evidencing the various taxes payable by such restaurant.  I do not accept P1’s assertion, in her attempt to explain the complete absence of documents, that she was able to operate the restaurant for a period of 17 years (from March 1995 to June 2012) without having to obtain any licence or pay any taxes.  The assertion defies common sense and only stands to be rejected.

(4)  It is equally inconceivable that within 2 years after P1 had begun to operate the alleged restaurant that she was able to generate substantial profits which enabled her to pay all the deposit, stamp duty, solicitors’ fee associated with the purchase of the Property in May 1997.

(5)  Furthermore, P1’s assertion does not sit well with the undisputed fact that between August 2004 and 2010, she was married to another man (not P2).  There was no reason for P1  to use her own funds to pay for the Property which had all along been registered in the names of P2 and Mother.  In her witness statement, P1 paints the picture that since 1995, P2 and her had developed a very close relationship so much so that she used her funds to assist P2 to purchase the Property.  The picture is shown to be false when she is forced to admit, under cross-examination, that her first marriage only came to an end in 2010.  When this fact is put to P1, she is unable to offer any credible explanation as to why or how she could have contributed so much money to pay for the Property when she was married to another man during the whole period.  Although P1 claims that the first marriage came to an end in November/December 2004, this cannot be true in light of her admission that she only divorced from her first husband in 2010.   

(6)  P1’s claim is also inconsistent with, and contradicted by, all the statements made by P2 to the OR, and his affirmations filed in HCB where P2 confirmed, time and again, that the Property had been purchased with Mother’s money and that Mother has 50% or 78% beneficial interest in the Property.  There was not a single reference to P1 in all the statements submitted by P2 to the OR and the Trustees during his bankruptcy.  To the contrary, P2’s statements and affirmations show that until 2008 when he was discharged from bankruptcy, P2 had been living with his parents and only travelled to Mainland when his jobs required.   

42.  In any event, I find that P1’s bare assertions on (1) how she was able to save substantial amount of money during the 3 years when she was employed at the factory with very modest income, (2) how she was able to earn RMB 11,000 a month by operating a restaurant in Shenzhen illegally (without any licence and without having to pay any taxes), and (3) how she allegedly paid so much money to P2 for the purpose of purchasing the Property, all of which are unsupported by any documents,  so inherently implausible that I have no hesitation in rejecting them as being untrue.   

43.  I do not regard P2 to be an honest witness.  His evidence to the effect that he and P1 alone provided all the funds for purchasing the Property is contradictory to all the contemporaneous documents, his statements provided to the OR during his bankruptcy as well as his affirmations filed in HCB (until 2016).  These include:

(1)  In the Preliminary Examination, P2 confirmed that he had “half share” in the Property, and further declared that his answer was true (see §§13-14 above).

(2)  In the 8/2004 Letter, P2 told the OR that the deposit, stamp duty, solicitors’ fee, renovation expense and all repayment of the mortgage loans had been paid by him and Mother as to 50% each (see §17 above).

(3)  In P2’s 2011 Aff, he said that prior to his bankruptcy, Mother had contributed 77.86% of mortgage loans repayment and, after his bankruptcy, 100% of such repayments.  P2 drafted Mother’s Aff to depose to the same fact (see §25 above). 

44.  In this action, P2 makes a complete volte-face and asserts that Mother had no financial means to pay for the Property and did not pay any money towards its purchase.  The assertion is contradicted by:

(1)  P2’s statements of monthly income and expenditure where he stated that he would provide $5,000 to $6,000 per month to his parents (see §15 above);

(2)  Mother’s bank accounts passbooks which showed that every month, she deposited around $8,000 cash into her bank accounts, which were deducted by the bank for the purpose of repaying the mortgage loans;

(3)  the letter issued by The Treasury to Mother, which confirmed that she received a lump sum pension in the amount of around $330,000 when she retired in August 2002, and she continued to receive monthly pension payment from the Government; and

(4)  according to P2 himself, by the end of 2011, Mother had accumulated savings in excess of HK$1 million which were deposited in the Sister’s bank accounts.

45.  At trial, P2 asserts that the money deposited into his bank account every month came from the cash provided by P1.  This is flatly contradicted by the entries in the passbooks, almost all of which recorded that the amounts were “PRL”, that is, payrolls, rather than cash deposits.

46.  During cross-examination, P2 claims that he had no financial means to pay the monthly repayments of the mortgage loans and had to depend entirely on the cash of RMB 6,000 – RMB 8,000 given to him by P1, as he had to pay for the flat he rented in Shenzhen and other living expenses incurred there.  As stated above, this assertion flies against P2’s statements made to the OR, which did not mention any such alleged expenses.

47.  Although Mother and Trustees do not have to prove that they are the legal and beneficial owners of the Property, they have disclosed contemporaneous documents which show that the Property had been purchased with the funds provided by Mother and P2, and their interest in the Property has always been equal:

(1)  the deposit, stamp duty and legal fees associated with the purchase of the Property were paid by 2 cashier orders purchased by Mother, using the money deposited in her bank account at HSBC;

(2)  Mother and P2 (alone) were the borrowers of the loans advanced by Yien Yieh, Kincheng and Wing Lung;

(3)  under the legal charges executed in favour of Yien Yieh, Kincheng and Wing Lung, Mother and P2 gave personal covenants to repay the loans owed to these banks.  Where, as here, the covenant to repay is joint and several, each party to the covenant is taken to have contributed half of the sum raised for the purchase (Re Superyield Holdings Ltd, 107G);

(4)  the legal charges were executed by Mother and P2 as beneficial owners of the Property[5]; and

(5)  Mother’s bank account at Bank of East Asia shows that she had received monthly deposits of $11,000 from August 2011 to February 2013, which came from cheques issued by P2 to her. There were regular withdrawals of $8,000 – $9,000 from the same account which, according to Mother, were used to repay the mortgage loans by depositing the same into the accounts held with the mortgagee banks.  

48.  For the above reasons, I do not find the assertions of P1 and P2, insofar as they relate to their claim that they alone have paid for all the cost of purchasing the Property, to be credible, and I reject the entirety of such evidence. 

C2.  Resulting Trust Issue

49.  Where, as here, there is joint legal ownership, the starting point is joint beneficial ownership.  The burden is on the person who claims that the beneficial ownership is different from the legal ownership to establish his claim.  The principle was stated in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 (CA) at §5.5 thus:

“Baroness Hale in her earlier decision in Stack v Dowden [2007] 2 AC 432 (HL) identified the onus of proof in joint name and sole name situations:

  [56]  Just as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is joint legal ownership is joint beneficial ownership.  The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership.  So in sole ownership cases it is upon the non-owner to show that he has any interest at all.  In joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest.”

50.  The principles governing a claim based on resulting trust have been fully stated in Re Superyield Holdings Ltd [2000] 2 HKC 90 at 106D-108E, per Recorder Kotewall SC:

“1. A useful starting point is article 31(1) of Underhill & Hayton, Law of Trusts and Trustees, 15^th ed., p.317 as follows :

‘When real or personal property is conveyed to a purchaser jointly with others, or to one or more persons other than the purchaser, a resulting trust will be presumed in favour of the person who is proved … to have paid the purchase-money in the character of purchaser (as opposed to that of donor or lender).’

2. The better view is that this is a rebuttable presumption of law in that:

(a) it applies as soon as the fact of contribution to the purchase price is proved; and

(b) in the absence of other evidence, it is conclusive for the party in whose favour it operates and for the purpose for which it operates.

3. The fact being presumed is that of the intention of the parties (or more precisely, the providers of the purchase-money) in the absence of evidence of their actual intention. That being the case, the presumption can be rebutted by:

(a) the application and non-rebuttal of the presumption of advancement;

(b) evidence of an actual intention on the part of the purchaser to benefit the holder of the legal title.

4. The principle is applicable to different combinations of factual circumstances:

(a) Where one person pays the whole of the purchase price and title is taken in the name of another, it is presumed, unless the contrary is shown, that it was intended that the property be held in trust for him.

(b) Where two persons contribute to the purchase price in equal shares and title is taken in the name of one only, it is presumed, unless the contrary is shown, that it was intended that the registered owner holds the property in trust for the other person to the extent of 50%.

(c) Where two persons contribute to the purchase price in unequal shares and title is taken in the name of both as joint tenants or tenants-in-common in equal shares, it is presumed, unless the contrary is shown, that it was intended that the property be held in trust for both of them as tenants-in-common in proportion to their respective contributions.

5. The material intention is that of the provider of the purchase money. See Calverley v. Green (1984) 155 CLR 242, per Gibbs CJ at 251 and per Mason & Brennan JJ at 261.

6. The implied trust arises at the time of the purchase so that the contributor acquires an equitable interest at the outset and such interest corresponds to the share he or she paid for at the time of purchase. See Underhill & Hayton at p.321.

7. The time to take stock of the respective interest taken by the parties is the time of acquisition.

8. It follows that the time at which the respective contributions are to be calculated for the purpose of fixing the parties’ respective interest is also the time of acquisition. See Crisp v. Mullings [1976] 2 EGLR 103G-K and Calverley v. Green at pp.252 and 262.

9. Where land is purchased to be built on, the extent of the parties’ interest would be fixed at the conclusion of the activities of purchase, building and improvement. See Tracy v. Bifield [1998] 23 Fam LR 260, a decision of the Supreme Court of Western Australia.

10. Where some or all of the purchase price is borrowed, the acceptance of a personal liability as against the lender to repay, for instance, by the execution of a mortgage containing a personal covenant to repay, constitutes a contribution to the purchase. Where the covenants to repay the lender is joint and several, each party to the covenant to repay is taken to have contributed half of the sum raised for the purchase. In addition to Crisp v. Mullings and Calverley v. Green, a number of other Australian cases discussing this proposition were referred to. I need not go into the details of these cases. I touch on some of them later on in another context. Most of them are, as to be expected, decisions on their own facts.” (underline added)

51.  For the reasons stated in Section C1 above, Ps fail to discharge the burden of proving that they have paid all the cost of purchasing the Property.  It follows that the Property is not held by Mother and Trustees on resulting trust for Ps.

C3.  Order for Sale Issue

52.  In my judgment, neither P1 nor P2 have the requisite interest to seek a discharge of the Order for Sale, given that:

(1)  P1 fails to prove that she has the alleged or any beneficial interest in the Property. 

(2)  Upon P2’s bankruptcy, all his property including his 50% interest in the Property shall vest in the OR by virtue of s 58(1) of the BO and, thenceforth, P2 ceased to have any interest in the Property.  On the appointment of the Trustees, P2’s interest in the Property passes to and vests in the Trustees (see s 58(2) of the BO). Such interest does not re-vest in P2 upon his discharge from bankruptcy (Re Leung Man Yuen, a bankrupt, HCB 582/1996, 20 September 2016, at §3(5), per G Lam J). 

53.  Ps rely on the following provisions in the Limitation Ordinance (Cap 347) (“LO”) and contend that by the time the Trustees applied for the Order for Sale, the 12-year limitation period had already expired:

“Section 4

(4)  An action shall not be brought upon any judgment after the expiration of 12 years from the date on which the judgment became enforceable …

Section 7

(2)  No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person: …

Section 15

For the purposes of this Ordinance, no person shall be deemed to have been in possession of any land by reason only of having made a formal entry thereon, and no continual or other claim upon or near any land shall preserve any right of action to recover the land.

Section 17

  Subject to the provisions of section 10, at the expiration of the period prescribed by this Ordinance for any person to bring an action to recover land (including a redemption action), the title of that person to the land shall be extinguished.”

54.  The contention is wholly misconceived. 

55.  The Trustees have since their appointment in September 2004 become the co-owner of the Property alongside with Mother in their capacity as trustees of P2’s property.  None of the provisions under the LO apply to the Trustees’ application for the Order for Sale, which involved the exercise of the Trustees’ rights in the Property as against the other co-owner (i.e. Mother).  It was not an action to “recover any land” as the “land” in question (i.e. P2’s 50% interest in the Property) had already been vested in the Trustees by operation of law. 

56.  In this regard, Mr Lee (counsel for Trustees) cites Re Leung Man Yuen, §37, which concerned an application by the trustee-in-bankruptcy for an order for sale under the Partition Ordinance, where G Lam J explained the position in this way:

“Such a claim does not in my view fall within the ordinary meaning of the phrase ‘to recover any land’. On the contrary, a proceeding under the Partition Ordinance is premised on the applicant’s joint holding of land, and is launched, in the case of a claim for an order for partition, to ‘obtain a delimitation of parcels’ and, in the case of a claim for an order for sale, to procure a sale and obtain a share of the proceeds, in either case ridding himself of the ‘shackles of co-ownership’. Indeed, in Williams v Thomas, supra, both Buckley LJ (at pp 730-731) and Cozens-Hardy MR (at p 722) considered that the nature of an action for assignment of dower which was in issue in that case was close to the nature of an action for partition and as such not an action ‘to recover any land’. A long period of co-ownership does not give rise to a bar in limitation to prevent a co-owner from seeking partition or sale.” (underline added)

57.  It is unnecessary to deal with the other allegations raised by Ps against the Trustees insofar as they concern the Property as Ps have no interest in the Property.  For completeness, I do not think that the delay in obtaining the Order for Sale can be castigated as the Trustees’ fault.  I accept Lee’s evidence, which is corroborated by documents, that the Trustees had in July 2005 and January 2011 enquired with Mother about her willingness to sell the Property or to acquire the Trustees’ interest in the Property.  It was Mother’s stance that she did not have sufficient funds to purchase the Trustees’ interest and she was unwilling to sell the Property which was the only place where she and her family live in.  Indeed, P2 himself filed the P2’s 2011 Aff taking the same stance as Mother.  It was only until 2016 that Mother changed her mind and agreed to sell the Property, and the application was dealt with by consent.  I do not think the Trustees can be criticized for taking this approach, which had taken into account the rights and wishes of the co-owner, her financial position and the need to avoid what would otherwise be a costly and contested application. 

D.  DISPOSITION

58.  For the above reasons I dismiss Ps’ claims in this action.  I make a cost order nisi that Ps do pay the costs of the action to Mother and Trustees, to be taxed if not agreed.  Mother’s own costs be taxed in accordance with the Legal Aid Regulations.