WONG WING AND ANOTHR v. TANG PUI WING

Property law - assignment of domestic premises by way of gift - whether assignment absolute or conditional upon assignor continuing to receive rental income therefrom during her lifetime - if not whether at date of gift the assignees orally agreed to gift such income to assignor - in either event duty of assignee responsible for the collection of the rental income to account to the remaining assignees - whether conduct of other assignees operated as an estoppel in favour of the assignee responsible for collection of the rental income - Held: 1. The assignment was unconditional; 2. The assignees did not orally agree to gift the rental income to the assignor; 3. The conduct of the other assignees did not give rise to estoppel; 4. Judgment for plaintiff assignees ordering the remaining assignee to account for the rent collected from the date of the assignment.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. Madam Kong Kwai Kan died on 16th May 1982 when she was more than 80 years of age. She had been married as a young lady in China but her husband died just a few months after the marriage. There were no children of the marriage. Later she came to Hong Kong. For many years, until her retirement in 1965, she had worked as an amah for an English solicitor resident in Hong Kong. From the evidence she was clearly a lady of considerable industry and thrift. By the time of her retirement she had acquired relatively substantial assets. These consisted of domestic premises at 506 Nathan Road, 9th Floor, Kowloon, two stone huts at Sheko and cash savings. When she retired she moved from her employer's residence to Sheko. Her retirement income included rents from the Nathan Road flat and from those parts of the Sheko huts that were tenanted. There was also evidence that until near her death she manufactured plastic flowers at home and was in receipt of an old age allowance from the Social Welfare Department.

2. During her lifetime she took a particular interest in three of her nephews who lived in Hong Kong who were sons of three of her sisters. The nephews were Wong Wing, Wing Pak Chuen and Tang Pui Wing. The first two of these nephews are the plaintiffs in this action. The third nephew is the defendant. Wong Pak Chuen was in fact largely brought up by Madam Kong and after attending the Hong Kong Sea School he became a seaman. In 1978 he and his wife, Madam Leung Kwai Fong, emigrated to Sweden where they now live at Gothenburg.

3. On 6th June 1978 Madam Kong before Wong Pak Chuen emigrated, assigned her Nathan Road premises to her three nephews as tenants-in-common in equal shares by way of gift. At the same time she also gave them $10,000 cash each and made other gifts to their children. The present dispute concerns the application of the rental income of the Nathan Road premises from the date of gift. The plaintiffs seek orders that the defendant account to the plaintiffs for the rent collected from the premises together with other consequential relief.

4. From the evidence I am satisfied that for some years before the premises were gifted, the defendant collected the rent on behalf of his aunt and accounted to her for all monies received. In view of the close relationship between Madam Kong and her nephews this was and also for other reasons a convenient arrangement. The premises were in Kowloon. The defendant was then a postman in Kowloon while Madam Kong and her other two nephews lived on Hong Kong Island. The defendant stated that he gave the rent received from the tenant either direct to his aunt or handed it to his wife who passed it on to Madam Kong. The defendant's wife had also worked as an amah for the same solicitor who had employed Madam Kong. I am also satisfied that, particularly in latter years, the defendant's wife regularly visited Madam Kong at Sheko and gave her increased assistance during her declining years. The 1st plaintiff is illiterate. The 2nd Plaintiff emigrated to Sweden in 1978.

5. The plaintiffs and the defendant agree that on the Nathan Road premises being gifted to them, the defendant was to continue to collect rent but that it was to be deposited in a savings bank account which was opened in their joint names. However, as to the application of the rents from the date of the gift to the date of Madam Kong's death, there is a sharp conflict between the parties. The plaintiffs assert that the rents were to be accumulated in the savings bank account during the lifetime of Madam Kong and then distributed equally between the parties. The defendant alleges that the rents were first to be applied for Madam Kong's benefit and on her death any balance was to be distributed equally between the parties. The disputed period, representing the interval from the date of gift to the date of death, is from 6th June 1978 to 16th May 1982. It is undisputed that the defendant collected the rent down to 17th November 1984. At the commencement of the hearing Counsel for the defendant repeated in open Court, a previously rejected offer, to account for the sum of $52,769.29 for the period from 6th June 1978 to 17th November 1984 plus accrued interest. The defendant further acknowledged that the plaintiffs were entitled to receive two-thirds of that sum. The offer was unacceptable to the plaintiffs.

6. The plaintiffs submit that the gift of the Nathan Road premises was absolute and unconditional. They pleaded that they are entitled to two-thirds of the rents received since the date of the gift less deductions for necessary outgoings in respect of the Nathan Road premises. The defendant pleaded alternative defences. The first was that on making the gift Madam Kong imposed certain oral conditions. These included the condition that rent collected after the gift would be accounted back to her to meet her living expenses and only after her death were the rents to be divided between the plaintiffs and the defendant. Secondly, in the alternative the defendant pleaded that the parties to the present action had agreed that all rentals after the date of gift would be given to Madam Kong during her lifetime to meet her living expenses, outgoings and other debts. Thirdly, the defendant pleaded estoppel.

7. As the hearing progressed, Counsel for the defendant sensibly recognised the major evidential and other difficulties in attempting to establish that the gift was conditional. Instead the defendant more vigorously pursed the alternative defence that the plaintiffs and the defendant had entered into an oral agreement to give the rentals to their aunt Madam Kong. In view of the unconditional nature of the assignment by way of gift and having considered all the admissible evidence relevant to the first defence pleaded by the defendant, I reject the submission that the gift was conditional. I hold that the assignment by way of gift was unconditional.

8. Moving on to the second defence pleaded, the crucial issue is whether the parties orally agreed to give Madam Kong the benefit of the rents from the date of gift down to the date of her death. To consider this defence it is necessary to consider the actions of the parties in 1978 when the gift was made and subsequently. As to these matters I had the evidence in turn of Madam Leung Kwai Fong who is the wife of the 2nd plaintiff, the 1st plaintiff, the defendant and Mr. P. W. H. Lee, the solicitor's clerk present when the assignment by way of gift was executed.

9. From that evidence I am satisfied that Madam Kong accompanied by her three nephews, Madam Leung, Madam Tang Pui Wing and at least on one occasion by a Madam Lau, twice visited Madam Kong’s solicitors office in relation to the gift. The deed of gift purports to have been executed on 6th June 1978 and I am prepared to find that was the date of one of those visits and the date when it was executed. I also find that the other visit was made a little earlier when no doubt the solicitor obtained the particulars from the parties to enable the subsequently executed assignment to be prepared. After one of those visits Madam Kong and the other persons present, went on to a restaurant to have tea after which a savings bank account was opened for the purpose of depositing future rents. Madam Leung and the 1st plaintiff thought that the savings bank account was opened later on the same day as the assignment was executed. The defendant stated that it was opened on a separate occasion. The defendant and his wife were responsible for holding the passbook and receiving and banking the rents. Having considered the documentary evidence I am satisfied that the savings bank account was opened on 18th May 1978 which was probably the date of the first visit to the solicitors.

10. All parties are agreed that before the account was opened they had tea at a restaurant. There are some other matters not in dispute. These included the fact that initially the savings bank account was to be opened at the Chartered Bank in the name of the plaintiffs and the defendant for the purpose of receiving rents from the Nathan Road property from the date of gift. During the period they were at the restaurant the 2nd defendant enquired that as he was a seaman frequently out of Hong Kong whether there was any objection to the account being in the name of his wife Madam Leung. No objection was made. The defendant then requested that the account also be in his wife’s name instead of his own. In the event the account was opened in the joint names of the 1st plaintiff, Madam Leung and Madam Tang and required all three signatures for withdrawals. The passbook was handed to the defendant who with Madam Tang was by agreement to continue to be responsible for rent collection.

11. According to both Madam Leung and the 1st plaintiff, while the parties were at the restaurant, Madam Kong told them that a savings bank account in the parties three names had to be opened for the deposit of future rents. These two witnesses further said that Madam Kong told them that during her lifetime they were to accumulate the rents and wait until she died before they were distributed. On her death the parties might then divide the accumulated rent between them for their own businesses. The defendant denied that Madam Kong ever gave such a direction or made such a request. In view of my having already held that the prior gift was unconditional, if Madam Kong did speak in these terms, her words could only, as a matter of law, have amounted to a request.

12. The defendant stated that arrangements in relation to future rents were made in the solicitors office when the assignment by way of gift was executed on 6th June 1978. It is common ground that of those who attended the solicitors office, Madam Leung remained in the waiting room when the others went into the private office of the solicitor who acted on the assignment. The solicitor was assisted by his clerk Mr. Lee who was also present. Madam Kong was by this time a frail lady and Madam Lau who assisted her in walking, helped her into the office. Madam Tang also went with Madam Kong as she was required to hold Madam King's hand to help her to sign her name on the assignment.

13. According to the defendant, before the gift Madam Kong had on several occasions told him that she would contine to need the rent, for her living expenses. Mr. Tang stated she repeated that statement in the solicitors office. This evidence may be contrasted with Madam Leung's, who said that Madam Kong on several occasions stated that because of her other income, she did not need the Nathan Road rent. On what occurred in relation to the issue of rent while in the solicitors office, Mr. Tang's evidence is, at least in part, contradictory. At first he stated that he agreed to his aunt's statement that she still needed the rent but that “My cousins said nothing”. Later he stated that his cousins agreed.

14. In cross-examination he stated that after Mr. Lee had interpreted the contents of the assignment to them, Mr. Lee went on to tell them that the rents would continue to be paid to Madam Kong during her lifetime and they all agreed. Mr. Tang said he indicated his agreement by expressly saying to them that the rent would be for his aunt's use. Earlier it was put to the 1st plaintiff in cross-examination that he was a shy, retiring man who normally did not take part in conversations, unless he had any objection. The 1st plaintiff agreed with this description of his personality but emphatically denied that he had either heard the suggestion from the solicitor or his clerk that Madam Kong would continue to receive the rents or that he agreed to that proposal.

15. On this issue there was a crucial conflict between these two parties, whether the solicitor's clerk explained the position in respect of future rents and whether the parties as assignees, then all agreed to the rent proposal. As a matter of law it was, of course, open to the parties in their new capacities as absolute owners of the Nathan Road premsies as tenants in common, to agree to pay the rents to Madam Kong. On the defendant's own evidence he had unequivocally indicated in the solicitors office that he was agreeable to such a course. The evidence whether his two cousins agreed was less powerful and, by itself, would require a consideration of the extent to which, in this instance silence could be accepted as evidence of consent.

16. However, I also had the advantage of the evidence of the solicitors clerk, Mr. Lee called by the defendant and correspondence from his firm which at a late stage was added to the agreed bundle. Mr. Lee's signature appears on the assignment as the person who interpreted the contents to the parties. He confirmed that he interpreted the contents of the unconditional assignment by way of gift to the parties but could not recall any discussion over rent. However, after Madam Kong had signed, he recollected that one of the assignees had said “After this the rent will go back to you as before”. He was unable to identify which of the three assignees made that statement or whether anyone objected. Mr. Lee's evidence is consistent with the defendant's evidence that he stated that the rents would continue to be paid to Madam Kong and that his cousins did not object. However, it does not support the defendant's allegation that Mr. Lee in addition to interpreting the assignment, went on to explain that the rents would continue to be paid to Madam Kong.

17. Counsel for the defendant urged that the parties subsequent actions reinforce the defendant's evidence that when the assignment was executed, the assignees orally agreed that Madam Kong would continue to receive the rents. I was referred to the fact that although Madam Kong died in 1982, no demand for the rent was made by the plaintiffs until 1984. I was invited to infer that the 2nd defendant personally upset that, shortly before her death, Madam Kong had gifted the Sheko properties to the defendant, had pressed the 1st plaintiff to support him in bringing the present proceedings which defence Counsel described as “malicious”. Further, that the application of the rent received since the date of gift had been explained and supported by the documents produced to the Court. These showed that the rent had in part been applied in payment of rates and Crown rental for both the Nathan Road and Sheko premises; for repairs to the Sheko premises; hospital expenses; nursing expenses; funeral expenses; and other payments for the benefit of Madam Kong. In relation to the 1st plaintiff, it was alleged that he had not only made no demand for rent before 1984 but had countersigned withdrawal slips, in relation to the savings bank account for funeral and other expenses of Madam Kong. I find that there was no such oral agreement.

18. The amended defence had pleaded that the plaintiffs conduct in permitting the defendant to act to his detriment, in giving all rentals to Madam Kong, raised an estoppel to their present claim. To consider the plaintiffs position more fully it is necessary to commence by reciting what occurred to the original savings bank account at the Chartered Bank which required all three signatories for withdrawals. That account was closed on 21st August 1979 and a balance of $33,934.38 transferred to a new savings bank account opened at the Hong Kong and Shanghai Banking Corporation. The new account was in the joint names of the 1st plaintiff and Madam Tang whose joint signatures were required for withdrawals. This rearrangement and the removal of Madam Leung as a signatory, arose on grounds of convenience due to the emigration of the 2nd defendant to Sweden and was completed with his consent. On 12th March 1980 this second savings bank account in turn was closed and a balance of $38,000 transferred to a new savings bank account at the China State Bank Ltd. by whom the defendant was now employed. The joint signatures of the 1st plaintiff and Madam Tang for withdrawals continued to be required.

19. The majority of payments made since 1978 from the rent collected, were for relatively small amounts. The usual practice followed by the defendant was to effect payment from the cash rent received and to bank merely the balance remaining. Where that practice was followed, neither the signature nor the consent of the 1st plaintiff, was required. There were other larger sums which were withdrawn in 1980 and 1982 which did require the signature of the 1st plaintiff.

20. Before considering these matters in more detail I will first review the conduct of the 2nd plaintiff which is less complicated. According to Madam Leung when they emigrated to Sweden in 1978 they gave the defendant their new postal address and telephone number and asked him to contact them if anything happened to Madam Kong. I found Madam Leung to be a credible witness and as her husband had been brought up by Madam Kong it is not surprising that they took these steps before departing. I am also satisfied that relations between the 2nd plaintiff and his wife with the defendant and his wife, have generally not been good. Madam Leung said that it was only in 1984 that she and her husband discovered that Madam Kong had died in 1982 and they immediately telephoned the defendant. Madam Leung listened on an extension line while her husband spoke to the defendant and his wife. According to Madam Leung her husband was told that Madam Kong had left all her pkoperty to the defendant's wife and that the estate did not concern the 2nd plaintiff. Shortly afterwards the 2nd plaintiff and his wife came to Hong Kong where a meeting took place between the two cousins and their wives, in relation to estate matters which ended up in a dispute.

21. I would record that Madam Kong left a will dated 2nd February 1970 prepared by her former employer's firm of solicitors which left her estate to all three cousins in equal shares. In fact between the time when the 2nd plaintiff emigrated in 1978 and his aunt died in 1982, the Sheko properties were sold. According to the defendant Madam Kong gifted them in her lifetime to his wife but he has since obtained her agreement to divide the proceeds of the Sheko properties equally between the three cousins. The defendant stated that at the 1984 meeting the 2nd plaintiff alleged that the Nathan Road rents should have far exceeded $50,000 and was upset by his belief that Madam Tang had received $90,000 from the sale of the Sheko properties.

22. In relation to the conduct of the 2nd plaintiff I find that he did not become aware of his aunt's death until 1984, I further find that neither the 2nd plaintiff nor his wife were involved in any withdrawals or other dealings with the savings bank accounts after The Chartered Bank account was closed either in relation to Nathan Road rents or otherwise. The 2nd plaintiff made demand on the defendant for an account of the rents shortly after he became aware in 1984 of his aunt’s death. The submission by the defence that the 2nd plaintiff's delay supported the existence of the oral agreement between the parties overlooks the fact that the 2nd plaintiff equally delayed in making demand for his share of the rent for 2 years which, it is common ground, had also accrued after the aunt's death. The more probable cause for the delay in making demand not only for the disputed rent but equally for the undisputed rent, is Madam Leung's evidence that it was only in 1984 that they became aware of Madam Kong's death. I have accepted that evidence. I hold that the conduct of the 2nd defendant does not give rise to any estoppel in the defendant's favour.

23. Turning to the position of the 1st plaintiff, his position is factually different in at least two respects. First, he was a signatory to the savings bank accounts from their inception until they were closed. Secondly, he was aware of Madam Kong's death in 1982 and attended the funeral. Under cross-examination he was questioned about withdrawals of large sums in 1980 and 1982. On 15th September 1980 $60,000 was withdrawn. He agreed he signed the withdrawal slip but stated that he was told by Madam Tang that it represented money from the sale of huts at Sheko. Counsel for the defendant put it to him that while it was true that $47,000 was lodged into the account from Sheko money shortly before on 21st August 1980, the $60,000 withdrawal included $13,000 of Nathan Road rent. The 1st plaintiff replied that he was told by Madam Tang that $60,000 in the account was Sheko money and he signed the withdrawal slip on that basis. The defendant or his wife held the passbook for the account and the 1st plaintiff's signature, of course, was not required for deposits. He never made any deposits. The 1st plaintiff was further cross-examined in respect of withdrawals totalling $15,000 in May and June 1982 and it was put to him that these were made with his knowledge for funeral expenses and he had signed the withdrawal slips. Again the 1st plaintiff denied that allegation. According to the 1st plaintiff, when he was asked to sign those withdrawal slips, he was told that $10,000 was for reroofing Sheko and the balance was for a new iron gate for the Nathan Road premises.

24. Madam Tang, who according to other witnesses was principally in charge of handling the savings bank accounts, was in court but was not called to give evidence. In the absence of other evidence I am left with the competing and contradictory allegations of the 1st plaintiff and the defendant. If the savings bank had continued to be limited exclusively to the deposit of Nathan Road rent, the 1st plaintiff's admission that he had signed a withdrawal slip for Sheko roof repairs would at least have been potentially damaging to his credibility on the lack of knowledge issue. The difficulty is that at least one deposit for the substantial sum of $47,000 was made into savings bank account from the Sheko properties and not from Nathan Road rent. Further complicating factors are that the 1st plaintiff is an illiterate man who did hold the passbook. The passbook was held and the account was managed by the defendant and his wife.

25. I must also weigh the evidence of both the 1st plaintiff and the defendant against the unfortunate background of the distrust and dissension which has arisen over the Sheko properties. I would record that the 1st plaintiff stated that at a later stage the defendant paid him a sum $30,000 for his share of the sale of the Sheko properties, but the defendant told the 1st plaintiff not to inform the 2nd plaintiff that he had received a share of the Sheko sale proceeds. The bitter ill feeling between at least some of the parties makes it even more necessary to scrutinise the evidence with particular care.

26. The burden of establishing estoppel rests on the defendant. On the basis of my findings of fact I have considered the conduct of the 1st plaintiff on which the defendant seeks to found estoppel. After doing so I am not satisfied that such conduct was sufficiently clear or unequivocal to give rise to estoppel. This defence against the 1st plaintiff therefore also fails.

27. In view of these findings I am satisfied that the plaintiffs are entitled to the orders for account which they seek. The account must be taken on the basis that plaintiffs and the defendant, as owners of the Nathan Road premises as tenants in common in equal shares, are beneficially entitled to the whole of the rents since the date of the gift on 6th June 1978. The Crown rent, rates, repairs and maintenance and other charges in respect of the Nathan Road premises must, of course, be deducted before the remaining net sum is reached. The account will then show the net sum to which the parties are, as a matter of law, entitled.

28. However, because of the nature of the evidence and the indication of at least the 1st plaintiff on some of its aspects it may be useful if I were to make a further observation. Although as a matter of law, I have held that the parties were entitled to the rents from the date of the gift, it does appear that at least some of the expenses charged by the defendant against those rents, relate to costs incurred for the benefit of Madam Kong. One of the few satisfying features relating to the dispute which has sadly arisen between the parties otherwise benefitting from their aunt's substantial generosity, is that the 1st plaintiff acknowledged in evidence, that whatever his strict legal entitlement, he would now have no objection to the Nathan Road rents meeting the Crown rent, rates and other charges incurred in respect of the Sheko properties during the period of Madam Kong's lifetime. This was a very proper attitude for the 1st plaintiff to take.

29. I would express the hope that once the accounts are completed and the strict legal entitlement of the parties is ascertained and quantified, the plaintiffs might adopt a similar attitude towards sums which they are satisfied, were reasonably incurred, even if without their lawful authority, for their aunt's benefit.

30. I trust that my findings will enable an account now to be taken without any doubt as to the proper criteria on which it is to be based. However, in case any difficulties do arise liberty for any of the parties to apply is reserved. In addition, in view of the unaccepted offer made by the defendant, I will reserve the question of costs, until the result of the account is known. I similarly reserve the question of interest.

31. At this stage I will for the foregoing reasons limit myself to ordering that the defendant do account to the plaintiff for all rent and other monies received or collected in respect of the Nathan Road premises. Such account shall among other particulars itemise all proper outgoings, disbursements and other deductions from such rent and other monies in respect of the Nathan Road premises.