LEE SHUNG KWAN v. CHAN SIU MUI

DCCJ 4530/2021

[2025] HKDC 62

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4530 OF 2021

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  This is the trial of the Plaintiff’s claim against the Defendant in relation to the property known as Unit E on 16/F of Block 7 (Lok Wing Yuen), Chi Lok Fa Yuen, No 18 Tsing Hoi Circuit, Tuen Mun (“Property”).

2.  It is the Plaintiff’s case that, although the legal title of the Property is registered in the joint names of the Plaintiff and the Defendant, he alone should be entitled to all the beneficial interests therein as he has contributed to all the Property’s purchase price and outgoings since its acquisition.

SERVICE ON THE DEFENDANT

3.  By the order dated 8 December 2022, Master Bryan Lung ordered that the service of the Writ of Summons and all accompanying documents on the Defendant be substituted by advertising a Notice of Proceedings to be settled by the Registrar in the Oriental Daily once and such service shall be deemed to be good and sufficient service of the proceedings. Pursuant to the said order, the Plaintiff advertised a Notice of Proceedings in the Oriental Daily on 19 January 2023. Despite the substituted service, the Defendant has not filed an Acknowledge of Service and not participated in the proceedings.

4.  The Defendant is absent at the trial. In reply to my enquiry whether the Notice of Trial (“Notice”) has been served on the Defendant, Mr Cheng for the Plaintiff refers to Order 65 rule 9 which provides that:-

“Where by virtue of these Rules any document is required to be served on any person but it is not required to be served personally or in accordance with Order 10, rule 1(2), and at the time when service is to be effected that person is in default as to acknowledgment of service or has no address for service, the document need not be served on that person unless the Court otherwise directs or any of these Rules otherwise provides”

5.  Mr Cheng submits that the Notice is not a document which is required to be served personally or in accordance with Order 10 rule 1(2). Since the Defendant is in default of acknowledgment of service and has no address for service, the Notice need not be served on the Defendant unless the Court otherwise directs or any rule provides otherwise. Mr Cheng further submits that there is no rule in the Rules of the District Court which provides otherwise and there is no direction requiring the Plaintiff to effect service of the Notice by substituted service. Mr Cheng invites the Court to proceed with the trial in the absence of the Defendant.

6.  I note that the Defendant was also absent at the PTR hearing on 14 October 2024 and the Court did not give any direction for service of the Notice. I agree with Mr Cheng’s submissions that the Notice need not be served on the Defendant in the circumstances of the present case by virtue of Order 65 rule 9 and would proceed with the trial in the absence of the Defendant pursuant to Order 35 rule 1(2). If the Defendant later shows up and wishes to set aside the judgment made in her absence, she may apply under Order 35 rule 2.

THE PLAINTIFF’S CASE AND EVIDENCE

7.  The Plaintiff gives evidence at the trial. He adopts his witness statement as his evidence in chief and, with the leave granted by the Court, answers the questions raised by Mr Cheng. His evidence can be summarized as follows.

8.  The Plaintiff and the Defendant met in around 1991 and soon began a romantic relationship. They were married on 16^th March 1992 and resided in a subdivided flat in Cheung Sha Wan (“Subdivided Flat”). According to the Plaintiff, the Subdivided Flat was about 110 square feet and the living condition was poor. They wished to improve the living condition but they could not afford to purchase their own property. The poor living condition affected their matrimonial relationship and they had frequent arguments over trivial matters of daily living.

9.  Due to frequent arguments, on or about 15 July 1995, the Defendant moved out of the Subdivided Flat to live with her parents in North Point whilst the Plaintiff continued to live in the Subdivided Flat.

10.  Shortly after, the Plaintiff learnt that Hong Kong Housing Authority (“HKHA”) had launched a Home Purchase Loan Scheme (“Scheme”) to provide interest free loans to eligible families to acquire their own properties in the open market. It occurred to the Plaintiff that, despite the separation, they remained legally married and were eligible for the Scheme. The Plaintiff says that he had no intention to divorce at that time and still wished to make up with the Defendant. He hoped that they could reconcile when the living condition was improved after they purchased their own property with the assistance of the Scheme. The Plaintiff also considered that it would be a good investment to purchase a property even if they did not make up at the end.

11.  The Plaintiff then went to the Defendant’s residence in North Point to discuss his idea with her. After discussion, they agreed to apply for the interest-free loan under the Scheme so as to acquire a property in their joint names and their beneficial interests in the property would be based on their actual contributions to the purchase (“Common Intention”).

12.  Pursuant to the Common Intention, the Plaintiff and the Defendant entered into a preliminary agreement on 1 February 1996 to purchase the Property at the consideration of $865,000 in the open market. The deposit of $86,500 was paid by the Plaintiff and the balance was financed by the following loans:-

(a) A mortgage loan of $460,000 from HSBC at the interest rate of 10% per annum (“HSBC Loan”); and

(b) An interest free loan of $400,000 from HKHA (“HKHA Loan”).

13.  The purchase was completed on 12 March 1996 and the Property was registered in the names of the Plaintiff and the Defendant as joint tenants. After purchase, the Plaintiff moved to live in the Property but the Defendant chose to remain to live in North Point.

14.  Unfortunately, the purchase of the Property did not improve the matrimonial relationship between the Plaintiff and the Defendant. On the contrary, they started to have arguments on matters relating to the Property. According to the Plaintiff, they had a big fight in June 1996.

15.  On 7 September 1996, the Defendant filed a Petition for divorce under FCMC 8265/1996 based on one year separation. The Plaintiff says that he was unaware of the Defendant’s decision/ intention to divorce before receiving the Petition. In the Petition, the Defendant did not seek an order for ancillary relief and the decree absolute was granted on 19 March 1997. The Property was not dealt with in the matrimonial proceedings. The Plaintiff says that he did not realize the need to do so because he was acting in person in the matrimonial proceedings and the Defendant’s solicitors did not raise the issue.

16.  Since the divorce, the Plaintiff and the Defendant have never contacted each other. According to the Plaintiff, he has lost contact with the Defendant.

17.  The Plaintiff remarried in around 1999 and his wife moved to live in the Property. Their two daughters were born in 2005 and 2014 and are also living in the Property.

18.  Throughout the years, the Plaintiff has solely repaid the HSBC Loan and the HKHA Loan using money in his personal account with HSBC. The Plaintiff also solely settled all the expenses relating to the Property such as government rates and rents, management fees, utilities, etc.

19.  According to the Plaintiff, he has fully repaid the HSBC Loan and the HKHA Loan but he is unable to get back the title deeds of the Property or to sell the Property because he cannot find the Defendant to sign the requisite documents. Furthermore, the fact that the Defendant remains a registered owner of the Property has caused constant arguments between the Plaintiff and his wife.

20.  The Plaintiff confirms that the Defendant has never contributed to the purchase of the Property or the expenses relating to the Property. She also has never lived in the Property.

21.  The Plaintiff premises his claim for beneficial interests in the Property on (a) the doctrine of common intention constructive trust, or alternatively (b) the doctrine of resulting trust.

LEGAL PRINCIPLES

22.  For common intention constructive trust, Johnson Lam J (as His Lordship then was) held in Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 that in order to determine the beneficial ownership of a property held under joint names, the Court should approach the matters in a two-stage process:-

(a) At the first stage of inquiry, the Court should determine whether there is a common intention (either actual or inferred) that a party should have a beneficial interest in the property (§§20-21); and

(b) When the first stage is decided in affirmative, the second stage is to determine the extent of beneficial interests among the parties (§22).

23.  It was further held at §25 in Chan Chu Mee that, in determining the actual portion of beneficial interests, the Court will first look at evidence of “what the parties had said and did at the time of the acquisition”, and in lack of such evidence, the Court should consider the “whole course of dealings between them in relation to the property” which should include “the arrangements which they make from time to time in order to meet the outgoings … which have to be met if they are to live in the property as their home”.

DISCUSSIONS

24.  I have carefully assessed the Plaintiff’s evidence. I find him to be a credible witness. His evidence is reasonable and supported by contemporaneous documents. In particular, the bank statements of his personal account with HSBC show monthly deductions for “LOAN REP” (meaning “loan repayment”) and the amounts deducted are consistent with the amounts of monthly instalments of the HSBC Loan and HKHA Loan. Although the Plaintiff is unable to produce documentary proof due to the lapse of time, there is nothing to contradict his evidence that he paid the deposit of $86,500 for the purchase of the Property.

25.  Furthermore, the Plaintiff has enjoyed the exclusive use of the Property without any interference from the Defendant since the purchase. It has been more than 28 years since the purchase and there is nothing to show that the Defendant has made any assertion that she has a beneficial interest in the Property. On the contrary, the fact that, despite having legal representation, the Defendant did not treat the Property as a family property that needed to be dealt with in the matrimonial proceedings shows that the Defendant did not regard herself as having any beneficial interest in the Property.

26.  Based on the Plaintiff’s evidence which I accept, I find that:-

(a) There exists the Common Intention between the Plaintiff and the Defendant prior to the acquisition of the Property that the beneficial interest therein would be based on their actual contributions to the purchase;

(b) The Plaintiff detrimentally relied on the Common Intention and solely paid or repaid the deposit, the HSBC Loan, the HKHA Loan and all other expenses relating to the Property whereas there is no evidence to show that the Defendant has made any contribution to the purchase of the Property or the related expenses; and

(c) It would be unconscionable for the Defendant to depart from the Common Intention and assert a beneficial interest in the Property.

27.  I agree with Mr Cheng that, since the present case can be resolved by reference to common intention constructive trust, it is not necessary for the Plaintiff to rely on the resulting trust; Primecredit Ltd v Yeung Chun Pang Barr [2017] 4 HKLRD 327. In any event, given my finding that the Plaintiff had paid all the purchase price of the Property and the related expenses, and the Defendant has never made any contribution, the outcome would have been the same.

28.  I also agree with Mr Cheng that, given the existence of the Common Intention, there is no room for the presumption of advancement to operate even though the Property was purchased at the time when the Plaintiff and the Defendant were still legally husband and wife.

CONCLUSION

29.  By reasons of the aforesaid, I would enter judgment against the Defendant and make the following orders:-

(a) A declaration that the Plaintiff and the Defendant are holding the Property on trust for the sole benefit of the Plaintiff; and

(b) An order that the Defendant do assign all her title and interests in the Property to the Plaintiff absolutely at nil consideration at the Plaintiff’s costs, failing which all such conveyance, conduct or other necessary document(s) shall be executed by a person to be appointed by the Court pursuant to section 38A of the District Court Ordinance (Cap 336).

30.  Mr Cheng confirms that the Plaintiff does not seek costs against the Defendant. I therefore make no order as to costs.

31.  Lastly, it remains for me to thank Mr Cheng for his very helpful assistance to the Court.