CHIN NAI MAN v. CHIN YAT KEUNG ALEX

HCA 1197/2014

[2020] HKCFI 403

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1197 OF 2014

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J U D G M E N T

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I.  THE DISPUTE

1.  This action is a battle between two brothers over the interest in a number of properties owned within the family. The plaintiff is the elder brother of the defendant. There are six properties involved (“the Six Properties”), all registered in the name of the defendant, namely:-

(1)  The half-share of House No.9, 6^th Street, Section M, Fairview Park, Yuen Long, New Territories (“House No.9”), acquired in 1987.  The other half share of House 9 is held in the name of the plaintiff as tenant-in-common with the defendant. In the years running up to the trial, the plaintiff had been occupying the entire property to the exclusion of the defendant.

(2)  Shop No.29 on Upper Ground Floor of Block 18 & 19 of Tsuen Wan Centre Shopping Arcade, Phase 2, Nos.100-102 Tsuen King Circuit, Tsuen Wan, New Territories, acquired in 1992/ 1999 (“Shop No.29”).

(3)  Shop No.3B on Upper Ground Floor of Block 18 and 19 of Tsuen Wan Centre Shopping Arcade Phase 2, Nos.100-102 Tsuen King Circuit, Tsuen Wan, New Territories, acquired in 1994 (“Shop No.3B”).

(4)  Flat D on 27^th Floor of Tower A, Clauge Garden Estate, No.22 Hoi Shing Road, Tsuen Wan, New Territories, acquired in 1995 (“Flat 27D”).

(5)  Workshop No.9 on 15^th Floor & Roof, Ming Fat Industrial Centre, No.1 Kin Fat Street, Tuen Mun, New Territories, acquired in 2000 (“Workshop No.9”).  At the time of the trial Workshop No.9 was being used by the plaintiff for storage.

(6)  No.11, 6^th Street, Section M, Fairview Park, Yuen Long, New Territories acquired in 2001 (“House No.11”).

2.  It is the plaintiff’s case that he is the sole beneficial owner of each of the Six Properties and that the defendant has been holding the proprietary interest of each of these properties on trust for the plaintiff. He seeks a declaration of his sole beneficial ownership of all of the Six Properties, to restrain the defendant from disposing of the same, and for the assignment of their titles to him. Additionally, he seeks an account of any income and for any mesne profits relating to the Six Properties.

3.  The plaintiff and the defendants had both since graduation from Form V in secondary school been working under their father, Mr Chin Chuen (“the Father”), who founded and operated a lucrative business in the name of Chin’s Motors Company (“CM Co.”)[1] as a sole proprietor trading in motor vehicles and public transport vehicle licences, and providing related services.  It is not in dispute that the Six Properties were amongst many other properties held by family members that were funded by the business of CM Co.

4.  The basis of the plaintiff’s claim is that he had since about 1989 upon the Father’s retirement become the sole beneficial owner of the business of CM Motor. The Plaintiff asserts that the Six Properties purchased with the funds of CM Motors were all intended to be beneficially owned solely by him despite they were registered in the name of the defendant, the latter having made no contribution whatsoever towards their purchase. The plaintiff argues that the defendant holds the Six Properties in trust for and on his behalf.

5.  The defendant’s case is that the Father had remained in full control of the business and finances of CM Co. until 2005 when he decided to retire and the business registration was terminated, and there was no promise or agreement to transfer control or ownership of the business to the plaintiff whether effected in 1989 or at all.  The defendant disputes the claim and maintains that the Six Properties were gifts to him from his father, as there were gifts of other properties (not in issue) made to the plaintiff by the Father and registered in the plaintiff’s name over the years, also funded by CM Co..  The defendant therefore denies that there was any common intention constructive trust as alleged arising from the acquisition of the Six Properties or any of them. The defendant maintains that the Six Properties were each acquired for his benefit alone.

6.  The defendant counterclaims, inter alia, for the following reliefs:-

(1)  An order that the plaintiff do reinstate[2] and make good Workshop No.9 and deliver vacant possession of Workshop No.9 to the defendant.

(2)  An order that the plaintiff do pay mesne profits (currently estimated by the defendant to be HK$8,500 per month) for the wrongful occupation of Workshop No.9 until the delivery of vacant possession of Workshop No.9 to the defendant.

(3)  An indemnity and/or reimbursement of all government rent, rates and management fees concerning Workshop No.9 until delivery of vacant possession to the defendant.

(4)  Damages to be assessed regarding the plaintiff’s trespass onto House No.9.[3]

(5)  An order for sale of House No.9 and distribution of the sale proceeds between the plaintiff and the defendant in equal shares.

(6)  An order that the plaintiff do forthwith deliver up the full set of title deeds of Workshop No.9 and Shop No.3B to the defendant.

(7)  Damages to be assessed[4].

7.  The following background facts are not in dispute:-

(a)  The late Chin Chuen is the father (“Father”) and Fung Tai Ho (“Mother”) is the mother of the plaintiff and the defendant; and the plaintiff (born in 1962) is the elder brother of the defendant (born in 1966).

(b)  In or about late 1979, Father commenced a sole proprietorship business under the name of Chin’s Motors Co.[5] (“CM Co.”). The shop premises were at Ground Floor, 100 Sha Tsui Road, Tsuen Wan, New Territories, later changed to Shop No.3, Ground Floor, Fu Yung Building, Sha Tsui Road, Tsuen Wan, N.T. (“the CM Shop”). The CM Shop was held in the joint name of Father and Mother until it was transferred to the plaintiff in 2005.

(c)  At all material times, CM Co. carried on business as a trader of motor vehicles including taxis, minibuses and trucks, and their commercial licences, and provided other supporting services from the CM Shop. The business of CM Co. was terminated in 2005. The business registration of CM Co, remained in the name of the Father throughout.

(d)  In about 1981, the plaintiff began working in CM Co.. His main responsibilities were the internal operation of the business such as finance, accounting and clerical work. He became a joint signatory of the current account of CM Co. together with Father after the plaintiffs’ half-elder brother Chin Nai Kan left CM Co. for his studies abroad.

(e)  In 1984, the defendant joined and started working for CM Co. too. His main responsibilities were to deal with external matters that required dealing with third parties away from the shop premises.  He departed Hong Kong briefly in 1992 to 1993 to pursue studies in relation to auto-technology, and returned to work in the business thereafter. He also became a joint signatory of the current account of CM Co.’s current account, but not until 2002.

(f)  The funds for purchasing all of the 6 Properties have come from CM Co..[6]

(g)  On 15 December 2015, Father passed away after the commencement of this action.

(h)  On 20 October 2016, Mother also passed away.

II.  THE ISSUES AND APPLICABLE LAW

8.  The core of the dispute between the parties is who was the beneficial owner of CM Co. between 1989 to 2005, and whether any contribution had been made by the plaintiff or the defendant (other than from the funds of CM Co.) to the purchase money of the Six Properties. The answer to the question will have a direct impact on the beneficial ownership of the Six Properties based on resulting and constructive trusts. The issue therefore turns on the facts and circumstances surrounding the operation of the business and the acquisition of the Six Properties.

9.  It should first be noted that the plaintiff does not rely on express trusts, notwithstanding his case that there was an express agreement between the plaintiff and the defendant over the creation of trusts over the Six Properties. Any express trusts would have failed for formal requirements under s5(1) of the Conveyancing and Property Ordinance (Cap 219).  Rather, the plaintiff relies on both resulting and constructive trusts.

10.  The following legal principles are not in dispute. Legal ownership of a property is normally consistent with the beneficial entitlement. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership: see Chan Hin v Chen Bai Dyi (unreported, HCA 680/2014, 25.7.2017, Anthony Chan J) at §21; Stack v Dowden [2007] 2 AC 432 at §§56, 68. In the present case, the burden rests on the plaintiff.

11.  In a domestic context, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust: see the recent Court of Appeal decision of Primecredit Ltd v Yeung Chun Pang Barry (unreported, CACV 246/2016, 21.7.2017) at §1.3 (per Lam VP).

12.  In ascertaining the (alleged) common intention;

(a)  The plaintiff must prove (i) there was a common intention between him and the defendant that the plaintiff was to be the beneficial owner of the property despite that it was acquired in the defendant’s name; (ii) the plaintiff altered his position in detrimental reliance upon such common intention; and (iii) it is unconscionable for the defendant to assert ownership in reliance on his legal title to the property;

(b)  In ascertaining whether there was a common intention, it is the objective intention of each party which was reasonably understood by the other party to be manifested by that party’s words and conduct that one must examine;

(c)  Such intention is to be found, first and foremost, from any agreement, arrangement or understanding reached between the parties with respect to the beneficial ownership of the property concerned based on evidence of express discussions.  It is only where there is no evidence to support a finding of such an agreement or arrangement that the court seeks to infer from the conduct of the parties the relevant common intention;

(d)  Even where reliance is placed on an express agreement, arrangement or understanding between the parties, their other conduct remains relevant as a matter by reference to which their assertions about the agreement or understanding must be gauged and tested.

See Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §§46-50, Godfrey Lam J, approved in WML v LCK (unreported, CACV 82/2014, 27.2.2015 at §41).

13.  The modern approach in conducting the assessment is to adopt a holistic approach having regard to the context.  Context was even described as a “:fundamental consideration” : Chan Hin v Chen Bai Dyi (unreported, HCA 680/2014, 25.7.2017).

14.  In the context of a traditional Chinese family involving older generations, where explicit discussions on property rights within the family was not that common, the Court has to pay more regard to circumstantial matters : Primecredit Ltd v Yeung Chun Pang Barry (unreported, CACV 246/2016, 21.7.2017).

15.  As to the demeanour of witnesses, Chu J (as Chu JA then was) in Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5.5.2011 at §§35, 39-41) also gave helpful guidance :

“… it will not be a satisfactory approach to assess the creditability and reliability of [the witnesses] by reference to their demeanours or solely with regard to how they respond to questions and behave in the witness box. The appropriate approach is to assess their evidence in terms of their inherent probabilities or improbabilities.”

III.  THE EVIDENCE, ANALYSIS AND FINDINGS

16.  Each party relied on two of their own witness statements that were exchanged before trial. At the trial of this action, both the plaintiff and the defendant gave oral evidence and were cross-examined. In addition, the plaintiff called three witnesses and the defendant called two witnesses who all gave oral evidence and were cross-examined. 

17.  Several thousand pages of documents were disclosed by the parties in this action. Those included in the trial bundles filled 15 box files. Amongst these I shall at this stage mention two documents in particular which originated from the Father, who was deceased by the time of the trial.

18.  According to the defendant, the Father was very upset about the plaintiff commencing these proceedings against the defendant, and had intended to give evidence in these proceedings for him. He even made and signed an affirmation in Chinese[7] that recorded his testimony on 8 June 2015 at the law firm then known as Johnson Stokes and Master, in case there were any condition that might prevent him from giving oral evidence at the trial (“the 2015 Affirmation”).  The Father having passed away in 2015, the defendant seeks to rely on the 2015 Affirmation for the purpose of these proceedings. In addition, there is a letter signed by the Father dated 30 April 2010 to the plaintiff, bearing the signatures of a number of relatives and close friends of the Father as witnesses (“the 2010 Letter”), including the two witnesses called by the defendant. The letter contains statements of the Father’s intentions regarding the control and ownership of CM Co. in the past.  The late Father not being available to be tested in cross-examination, it is a matter for the Court whether to attach any, and if so how much, weight to the statements in these two documents.

(A)  OWNERSHIP AND OPERATION OF CHIN MOTORS CO. - 1979 to 2005

(1)  The Father’s Alleged Promise in 1981 and the Alleged Transfer of Ownership in 1989

19.  The plaintiff states in his witness statement[8] that in 1981 when he was 19 years of age, Father had requested him not to pursue further studies upon completing Form 5 education, but to assist him in operating the business of CM Co., with Father’s promise and guarantee (allegedly repeated in the ensuing years) that the business and the CM Shop would be gifted to the plaintiff in the future. According to him, on the strength of the alleged promise and guarantee, he had made huge personal commitment and sacrifice in the years to follow, devoting his life in the years of his prime to the business of CM Co., including not starting his own family until the age of 49 as a result.

20.  The above statements of the plaintiff regarding Father’s promise and guarantee were, however, withdrawn during cross-examination[9]. The plaintiff accepted that Father did not make any promise to transfer the business to him as a gift at the time. Instead, what Father said was that if the plaintiff were to work hard and perform well in the business, there would be “suitable arrangements” made for him.

21.  On the other hand, in oral evidence the plaintiff maintained his position that Father decided to retire in 1989 at the age of 61, and handed over ownership and control of CM Co. to him, together with control of all its accounts and assets, as he allegedly promised. According to the plaintiff, from 1989 all business decisions were for him alone to make, without the need to consult the Father, who had completely withdrawn from the operation and relinquished ownership of the business and its assets.

(2)  P’s Case on His Control and Management over CM Co.

22.  The plaintiff claimed that he had always had custody of the bank passbook and cheque books of what he alleged to be the business account of CM Co. kept with Sin Hua Bank (later renamed Bank of China), and that apart from using the funds to operate the business, he had always been at liberty to use the funds in the account for his personal purposes including for his personal investments in his own discretion, and that he had even used his personal funds for the business expenses of CM Co.. The plaintiff claimed that especially since 1989 after the Father allegedly withdrew from the business, the Father had “gifted” (“送予“) the business along with all its assets to the plaintiff to be owned, managed and planned solely by him.[10]

23.  The plaintiff’s case is that since the transfer of business in 1989, the Father ceased to participate in the operation and the management of CM Co., and had no knowledge or control over its affairs, investments and finances. The deployment of funds of CM Co. since 1989 were deployment of funds owned solely by him and for his own benefit.

24.  The plaintiff called three witnesses,石懷謹 (“Shek”)、謝雲根 (“Tse”)、and 黃世祥 (“Wong”) to support his evidence that that the person “in charge” of CM Co. or is the beneficial owner of the business after 1989 was the plaintiff and not the Father.  For convenience, the contents of their evidence will be addressed below under section (B) (10) Analysis and Findings.

(3)  Defendant’s Case on the Roles of the Father and Sons in the Business

25.  The defendant’s evidence was that CM Co. was owned and managed by the Father throughout the time from its establishment in 1979 through to its closure in 2005.  The Father had injected significant personal funds into the business for its daily operation and for investment purposes. The business of CM Co. in trading passenger and commercial vehicles and operating licences had all along earned a stable income. It provided a one-stop-shop to customers in vehicle purchase, financing, insurance, repair and sale, enjoying different sources of income from vehicle owners, insurers and finance companies[11].

26.  Regarding the role of the respective parties in the business, the defendant’s evidence is that plaintiff was primarily responsible for internal matters such as managing the books and accounts, while he was assigned by the Father to handle external affairs such as dealing with clients and suppliers, as his personality was more outgoing and assertive. He would accompany the Father to meet external contacts and had learned to inspect and invest in vehicles, and both of them spent much time away from the shop premises. They did not really care about job titles, and each of them worked hard in their respective roles for the family business.

(4)  Control over Bank Accounts of CM Co.

27.  As regards control over the bank accounts of CM Co., the defendant pointed out that the account kept with Bank of China and identified by him as the 1^st Account had always required signatures from 2 authorised signatories. The Father added the plaintiff as an authorised signatory in about 1983.  The defendant recalled that the Father added him as another signatory sometime in the 1990s though he had never asked Father to do so. In fact the documentary evidence shows that the defendant was added as a signatory in 2002. As he and the Father would be taking care of external matters to be transacted outside the shop premises most of the time, either of them would sign some cheques in blank so that the plaintiff can issue them by countersigning on them in their absence in order to meet urgent expenses. All three of them remained the signatories of the 1^st Account until its closure in 2009[12].

28.  The defendant explained that there were many instances of transfer of funds from the 1^st Account to the plaintiff’s personal account. This was due to the plaintiff’s practice of having cashier orders issued from his own personal account to meet business expenses of CM Co., and then arranging funds to be transferred from the 1^st Account to reimburse himself.[13]

29.  The plaintiff argued in cross-examination that the defendant had “pressurised” the Father to add him as a signatory in 2004 as he was plotting to grab a share of the business which belonged solely to him. When asked why the defendant would have done so only 13 years after the Father had transferred the business to the plaintiff (as the plaintiff claimed he did), the plaintiff was unable to give any intelligible answer.

30.  Improvising from his unintelligible theory about the defendant’s motive in getting himself signatory right, the plaintiff suggested that prior to 2002 there was no disagreement in the business operation. He suggested that it was only after 2002 when he was added as a signatory that his behaviour in the company started to deteriorate. When asked why so, the plaintiff suggested that in 2002 the defendant found out that there was poor cash flow in the business, and mortgage payments were defaulted. That had prompted him to want to take any cash there was and leave the company, such as by taking the rental income of properties.[14] It makes it inexplicable for the plaintiff to have misremembered the date the when the defendant was added as a signatory if there was indeed this marked change of behaviour at the relevant time. In any event, that explanation is hardly consistent with his account in his witness statements.

31.  The defendant asserts that the Father had retained full control of the financial matters of CM Co. throughout. He would keep all fixed deposit slips and vehicle registration documents of the vehicles owned by CM Co. in his safe deposit box. The Father also kept the bank passbook of the CM Co’s savings account at Sin Hua Bank (subsequently renamed Bank of China) in his drawer in the shop premises, and would only give the passbook to the plaintiff for any specific withdrawal to be carried out.  This practice is supported by diary entries dated 4 and 5 December 1997[15] respectively in the Father’s diary, showing that the plaintiff was instructed to withdraw specific sums from the Sin Hua bank account for specific purpose, e.g. the plaintiff was instructed to arrange for the sale proceeds of a taxi belonging to CM Co. to be deposited as fixed deposit at Sin Hua Bank, and he had kept the fixed deposit slip in his safe deposit box.

32.  The plaintiff asserts that he and the Father were the only two signatories to the savings account, where surplus funds are transferred into and kept. The defendant does not dispute that. In cross-examination, the plaintiff claimed that money from the 1st Account was transferred to the savings account according to his own free will. He was however unable to explain why the Father was in control of the fixed deposits made from the funds in the account, the slips of which he kept in his own safe deposit box.

(5)  Dump Truck Business and the Defendant’s Alleged Exit from CM Co.

33.  The plaintiff further alleged that there was a common understanding amongst the Father, the plaintiff and the defendant at the time when the defendant was given the sum of $420,000 in 1989 to start a dump truck business of his own that the defendant was to leave CM Co, whereupon the plaintiff would formally take over sole control of the business of CM Co.. The plaintiff alleged that it was understood by all three parties at the time that the Father would henceforth retire and relinquish entirely his interest in the business including his ownership of the CM Shop, despite the business registration of CM Co. was unchanged[16] and the shop premises not assigned until the business registration was cancelled in 2005. He explained that it was due to the respect he had for the Father, and the trust reposed in him by the Father, that he had not considered it necessary to amend the business registration to reflect the change in ownership. Further, he claimed to have been informed by the bank manager that any amendment would have a negative impact on the overdrawn facilities granted to CM Co..

34.  As regards the above assertion, the defendant’s evidence was that in late 1980s to early 1990, the Father wanted to develop a side business in dump trucks to take advantage of the huge construction projects undertaken at the Chek Lap Kok Airport site. In August 1990, two dump trucks were purchased with deposit money of HK$467,135 drawn from CM Co., with the balance of HK$500,000 financed by hire-purchase loans. The defendant was put in charge of this new side business. Both the expenses and the income generated by the 2 dump trucks were all for the account of CM Co.. When this side business did not turn out to be profitable due to acute competition, it was decided to sell the dump trucks in 1991. The hire purchase loans were paid off and the surplus returned to the account of CM Co.[17]. The investment achieved a break-even position.

35.  The defendant was adamant that the ownership of the dump trucks had always been with CM Co.. The defendant does not accept that the dump truck business as described above represented a gift of a sum of money to the him personally to start his own business, on the basis and understanding that the Father and the defendant were both leaving the business of CM Co. to the exclusive ownership and control of the plaintiff. His case is supported by one of the notes[18] quantifying the profit and loss position of this project, where the Father was recorded as having advanced money for the dump truck business, showing the Father’s direct involvement through CM Co. on the project.

(6)  Father’s Diary Entries Showing Continued Interest and Supervision post-1989

36.  Diary entries attributed to various dates in 1993 and 1996[19]  are relied on to illustrate the Father’s continued control and/or participation in the operation of the affairs of the Company. He continued to sign cheques, commercial agreements with parties, was kept informed of financial matters and controlled the bank accounts and title documents of vehicles,[20] while the plaintiff oversaw the internal operation of CM Co..  The diary entries show that throughout the mid-1990’s at least, the Father had continued to attend the shop premises for hours in a day, and the business of CM Co. continued to be operated much in the same manner as before 1989, with the Father as the boss and the two sons assisting him. He continued to be informed of business opportunities and transactions involving the use of the funds of the business[21]. Tax returns of the company continued to be signed by him and he continued to be alert and interested in the business affairs of CM Co[22]. In the many pages of the Father’s diary spanning diverse dates in 1996 and 1997, there can be seen a consistent pattern of the Father attending the shop premises on weekdays at around 10 to 10.30 am in the morning after his morning walk, breakfast, and a short rest, and would stay there until after lunch. There is also evidence that the Father continued to be looked upon as a source of funding of the business.[23]

37.  There is also evidence that clearly points to the Father being on top of the acquisition and management of properties within the family.[24] In particular, the Father was kept informed of the plaintiff’s inspection of potential investment properties and the asking price, including the sharing arrangement of any investment property designated for the joint ownership of the plaintiff and a third party.[25]

(7)  Termination of the Business by the Father in 2005

38.  I also consider it pertinent to take into account evidence on how the closure of the business came about in 2005. According to the defendant, it was caused by a breakdown in trust between the Father and the defendant on the one hand, and the plaintiff on the other, triggered by the downturn in the property market and the attendant financial strain on the plaintiff on account of his property investments when he tried to draw more and more money out of the business accounts in order to meet mortgage payments. It culminated in 2004 when the plaintiff claimed that there was a cashflow problem in CM Co., demanding the Father to inject more cash into the business, to which demand the defendant refused to comply. The Father became suspicious of the handling of the funds in the family business by the plaintiff but did not pursue any inquiry at the time to preserve family harmony. After the plaintiff disappeared for 2 weeks without handing over the ongoing business affairs of CM Co., the defendant became frustrated and decided to leave the family business once and for all. In view of the rift and the lack of collaborative attitude amongst the three, the Father also decided to close down the business in mid-2005.

39.  The plaintiff disputes some of these allegations, and put the blame on the defendant for having bad-mouthed him in front of the Father, resulting in tension in that relationship. There is however no dispute that the relationship between the brothers broke down irretrievably towards 2005, leading to the late father’s decision to wind up the business of CM Co. by cancelling the business registration. According to the defendant, the plaintiff never told the Father that he had already taken out a business registration in the same name in English in May 2005, contrary to what the plaintiff claimed. However, I do not find it necessary to make any finding on when the Father and the defendant first learned about the new business registration. 

40.  The Father carried out his decision by taking a number of steps in 2005, none of which indicated that he had intended those steps to be merely a completion of formalities to give effect to the alleged transfer of business back in 1989. Rather, they were clearly steps intended for the closure of the business to mark his retirement.  He cancelled the test plate #T9410 needed for new vehicles and vehicles without a road licence to be tested on the road. He cancelled the business registration of CM Co. and paid off all outstanding Inland Revenue liabilities of CM Co. The only remaining step he had not found necessary at the time was to close the 1^st Account, which only had a negligible balance standing in it.  He only did so in 2009 after the defendant received two legal demands for the Six Properties, when it became necessary to investigate into what the plaintiff had done with the funds in the business in the period running up to 2005.

41.  A test licence plate is needed for putting on the road vehicles without insurance cover, such as second-hand vehicles which may need to be test-driven by their potential buyers. It is obviously of value to a business of the type CM Co. was operating. In trying to maintain his version that the Father did hand over to the plaintiff the entire business of CM Co. from 1989 against the fact that the test licence plate was never transferred to him but was cancelled by Father only in 2005, the plaintiff tried to diminish the value of the test plate by arguing that CM Co. never really carried out car repair service and therefore did not need a test licence plate for that purpose. Whether CM Co. provided car repair service directly or indirectly is neither here nor there. What is clear is that the test licence plate was a necessary tool in the business of CM Co.. The plaintiff also admitted that he had registered another test licence plate #T-12188 under his own business name of CM Co. when the Father cancelled his test plate terminated the business registration. This only confirmed that the test licence plate was a useful tool for the business of CM Co., and had the Father intended to transfer his business to the defendant as a going concern, he would have transferred the plate in 1989, and latest by 2005, rather than to cancel it when the plaintiff would then need to get another test plate for his business. The Father’s action was consistent with an intention to wind up the business 2005 without knowing or intending that it would be somehow continued by the plaintiff.

42.  More importantly, it was only at the time of the cessation of the business in 2005 that the CM Shop was assigned to the plaintiff on his request, but not as a gift as the plaintiff asserted it was. The Father only agreed to sell it to the plaintiff for the sum of HK$950,000[26].  Both the defendant and the Father testified that the plaintiff failed to pay the sum to the Father despite repeated demands. The plaintiff offered no explanation on why there was a price attached to the assignment of the CM Shop. 

(8)  The 2010 Letter Witnessed by Relatives and Family Friends

43.  The evidence of the defendant regarding the ownership of CM Co. until its cessation of business in 2005 is supported by the contents of a letter in Chinese signed by the Father and addressed to the plaintiff dated 30 April 2010[27] (“the 2010 Letter”). According to the defendant, the letter came about as a direct result of the two letters sent on behalf of the plaintiff by Yeung Law & Co (“2009 YLC Letters”) to the defendant. The first one dated 17 March 2009[28] was to assert beneficial ownership and to deny the defendant’s right of possession of Shop No. 9, and the second one dated 17 April 2009 was to claim the plaintiff’s beneficial ownership of all the Six Properties and to threaten legal action. The defendant was taken by surprise and commenced an investigation into the movement of funds in the 1^st Account. However the bank records he was able to obtain was limited to the 7 years prior to April 2009.

44.  The investigation uncovered astounding facts, namely the funds of the business had frequently been misappropriated by transfers to the plaintiff’s own personal account other than for reimbursement of business expenses or for payment of mortgage instalments of properties gifted to him by the Father. The amount involved during the limited period of 2002-2004 alone came to around $3.7 million. That appeared to him to account for the demand made by the plaintiff in 2004 for the Father to inject funds into the business to deal with an alleged cash flow problem, which was rejected.

45.  While the 2010 latter was addressed to the plaintiff, there is an absence of clear evidence that it was in fact passed on to the plaintiff at the time or thereafter by the Father. In the 2015 Affirmation, the Father only deposed to the fact that he had written the letter which was witnessed by his close friends and relatives, and that he had handed a copy and the contact telephone numbers of the witnesses to the defendant[29] in case he needed to rely on it in defence of the plaintiff’s claim.

46.  The plaintiff claimed never to have seen this letter until November 2015 when this document was disclosed in discovery in this action by the defendant[30]. However, as seen below, there were attempts even prior to the writing of the 2010 Letter to bring the plaintiff to the negotiation table with the Father, which were frustrated by the plaintiff’s pre-set conditions, as discussed below. The Father in his 2015 Affirmation[31] also referred to an approach made by the then girlfriend of the plaintiff on 4 June 2011 requesting the Father to assist the plaintiff to have the defendant’s half-share of House No.9 transferred and gifted to the plaintiff as their future wedding present, which request the Father refused. In fact, the Father believed that was reason why no reconciliation was possible, and the action was filed against the defendant. There was also a mediation meeting after the commencement of the action that did not bear fruit.  All in all, I do not believe that the plaintiff did not know that Father’s stance on the ownership of the Six Properties was as stated in his 2010 Letter and the 2015 Affirmation. Evidence on the above have not been refuted by the plaintiff.

47.  While the 2010 Letter is inaccurate with regard to the date of cessation of the Father’s Business[32], the Father clearly and unequivocally confirmed that there never was any transfer of ownership of the business, and indeed never any such intention. The timing of the 2010 Letter accords with the timing of the 2009 YLC Letters and the subsequent investigation of the 1^st Account, and refers to the discovery in the latter. The Father characterised the surreptitious transfer of funds away from CM Co. as misappropriation of his assets, for which the Father would “for the time being not make [the plaintiff] account for”, due to his old age and his desire for harmony within the family. The Father then gave a stern warning to the plaintiff not to twist facts and harass his brother and his family, or to threaten to bring legal action in order to usurp for himself properties that belonged to his brother the defendant.

48.  The plaintiff attacks the 2010 Letter as being “self-serving” in that the defendant must have exerted influence on the Father and procured the letter to be signed by the Father to assist his case. He complained that the defendant often stood between him and the Father, and left him with no opportunity to talk to his Father alone. He expressed doubts as to whether the Father understood or agreed with the contents.

49.  He however was unable to advance any argument or rely on any evidence to show that he contents were fabricated or that the Father was incoherent in presenting the contents to all the signatories. Regardless of when the plaintiff in fact saw it for the first time, the 2010 Letter credibly recorded the Father’s statement of who in his view owned the business of CM Co. at the material time, and therefore the Six Properties, a view that he had wanted to make known to his close friends and relatives. The fact that he might have had clerical assistance in putting together and typing up the letter for the signature of all concerned takes no credibility away from the contents of the document.

50.  Among the signatories or witnesses to the 2010 Letter, Tsang Chiu (曾照, “Tsang”), and Chin Kwai Chuen (錢桂泉 “KC Chin”) were both called as defence witnesses. They gave evidence of the circumstances in which the letter was shown to them by the Father.  It would appear that the main purpose of the letter was that the Father wanted to state his case on the dispute for all his close friends and relatives to know, hoping that the weight of their opinion might discourage the plaintiff to insist on his claim. From their description, Father was completely coherent in his conversation with them, and there was nothing that had indicated he had an unsound mental capacity. In cross-examination, they were not challenged as to the Father’s state of mental health at the time of 2010 Letter.

51.  Tsang, owner of a On Tat Motor Co. (安達車行) was an old family friend and a business associate of the Father in the motor business. He had known the Chin family members for a long time. He stated that because of his cordial relationship with all the family members involved, he had no intention to side with anyone in giving evidence. Indeed, Tsang came across as a truthful witness only stating the facts as he knew it.

52.  Tsang deposed to the fact that the Father had come to see him at his motor shop in July 2010, carrying with him the 2010 Letter and requesting him to bear witness to the letter. The Father told him about the plaintiff’s claim that the properties were held on trust by the defendant for him with the plaintiff as the beneficial owner, which the Father told him were false. He told Tsang about the plaintiff’s threat to commence legal action against the defendant, which was very much against his wish. He was hoping his statement of the true position in the letter would put a stop to the plaintiff’s threats. However, he expected the plaintiff might challenge the authenticity of his letter if it were to be used as evidence in court. For that reason, he had asked Tsang to bear witness to the letter. Tsang did as he requested, and noticed that before he appended his signature, four others of the Chin clan, all known to him and including KC Chin, the surname “Chin” had already signed on the letter, including KC Chin.

53.  KC Chin shared the same ancestral village as the Father, and they had grown up together. Like Tsang, KC Chin knew the members of the Chin family well. He has always been addressed as “4^th Uncle” by the plaintiff and the defendant. He made in clear in evidence that he was completely neutral and had no interest in this litigation, but only desired to give a true account of what he knew to this court. KC Chin gave a description of the personalities of the Father and two sons. In short, the defendant as the youngest son was known to be the favourite son, as he shared a very similar personality with the Father. He was active and outgoing, generous and less calculating. He also displayed a talent in handling motor vehicles.

54.  Throughout the years KC Chin has kept a good relationship with both the plaintiff and the defendant. The Plaintiff would often seek his company and chat with him over morning tea, and the defendant would also visit him and go out to meals with him when he happened to be in Hong Kong for visits.

55.  KC Chin deposed to the fact that in 2009 he had learned from the Father about legal demand letters having been sent by the plaintiff to the defendant regarding several properties. At the time, he volunteered to the Father to be a middle man to mediate the matter between the plaintiff and the Father.  His attempts to bring the plaintiff to the table with the Father were met with rejections from the plaintiff. He made a further attempt subsequently, and the plaintiff put forward a demand for House No.9 (of which the defendant owned a half share) and the Tuen Mun property (Workshop No. 9) to be transferred to him. These pre-set conditions made any meeting impossible and none took place.

56.  It was only after the above failed attempts that the Father requested him to bear witness to the 2010 Letter. I can understand the Father would only have taken this step out of desperation to avoid a family feud taken to court, for which he was willing to pay the price of airing the dirty linen in front of his close friends and relatives, not without considerable sadness. Of particular relevance is the observation of KC Chin that the Father was in excellent physical condition at the time when he met him together with several other members of the Chin clan, namely, 2^nd Uncle, 3^rd Uncle and 6^th Uncle over tea in a Cheung Fat Restaurant in Cheung Fat Estate.

57.  At the meeting in the restaurant, the Father recounted the claims raised by the plaintiff, and stated that his claims that the properties held in the defendant’s name were held on trust for him were false. He also explained the purpose of the 2010 Letter in the same terms as he explained to Tsang.  With his sincere wish for peace in the family, KC Chin appended the four characters “以和為貴” next to his signature, and the 3 other uncles signed on it too.

58.  KC Chin’s oral evidence might not have been lucid, but the most important part of his evidence was in my view his signature witnessing the 2010 Letter.  Neither Tsang nor KC Chin were challenged on their evidence that they indeed appended their signature on the 2010 Letter at the request of the Father in the circumstances described by them, and knew the Father’s stance on the properties in issue at the time. It was not suggested that they should have realised the Father was not speaking the truth or twisting facts to favour the defendant or had any reason to do so.

(9)  The 2015 Affirmation made by the Father

59.  As referred to above, the Father also made an affirmation in Chinese on 4 June 2015[33] at the law firm then known as Johnson Stokes and Master. This was at a time when the litigation had been commenced and there appeared to be no chance of avoiding a battle in court between the brothers. According to the defendant, the Father was paying close attention to this case, even insisting on participating in the mediation session, which was unfruitful. He had intended to give evidence in court, but due to his age and his deteriorating health, he decided to make the affirmation to set out the facts in case he might not be able to give evidence in court when called upon to do so. I note that no witness statement made by him was exchanged in this action. Upon legal advice, the Father also procured his family doctor to provide a medical certificate[34] dated 3 June 2015 on the state his health and mental condition at the time of the signing of the affirmation.  He was observed to be “alert, ambulant and conversant”.  Apart from suffering from bronchitis, his mental faculties were observed to be “normal”. The doctor who provided the certificate was not summoned for cross-examination.  

60.  Unfortunately, the Father committed suicide 6 months after making the affirmation. KC Chin’s evidence was that he was suffering unbearable pain on his back at the time.

61.  The 2015 Affirmation contains a detailed account of all aspects of the family and business affairs relevant to the issues in this case, many of which were never mentioned in any of the witness statements and would not have been in the defendant’s, or indeed the plaintiff’s knowledge. Some facts predate their births and others contain communications they were not privy to. The account was structured, relevant and coherent.  Diary entries that the Father kept on relevant dates were exhibited to support his evidence. The account is a success story of a hardworking immigrant who started in Hong Kong penniless, but through his own industry, stamina and fatherly dedication had raised two families and built considerable business goodwill and assets. The story is marred by a sad ending where brothers who have been beneficiaries of the Father’s generosity were embroiled in a dispute that was deeply hurtful to the Father.

62.  The Father in his 2015 Affirmation gave a description of his relationship with the defendant which accords with how KC Chin described it. He was closer to the defendant because he had a more open, outgoing personality. The defendant spent a lot of time with the Father working outside of the shop premises. He also described that throughout the years the plaintiff, being an introvert, hardly ever talked to him directly even if he needed to, but would mostly do so through his mother or the defendant. This accords with the various entries in the diary recording the mother channelling the wishes of the plaintiff to the Father. The Father also told of a deterioration of relationship between him and the plaintiff in the years running up to 2015, such that the defendant has not visited him for many years.[35] That would go to explain why there was no “confrontation”. The mode of communication between the Father and the plaintiff had never been easy even when there was no dispute. It was hardly surprising that the Father had had to resort to putting his case in writing and sharing it with family members and close friends, in the hope that the message will be filtered to him. This also explains how he had welcomed the offer of KC Chin to be the middle man in trying to talk sense into the plaintiff, though to no avail.

63.  The Father confirmed the respective role of the plaintiff and the defendant in CM Co. as the defendant described it, and the fact that they each took only a nominal salary, lived in property provided by the Father, with their daily expenses paid out of the business. The Father also confirmed his practice of making gifts of properties to members of the family by designating them legal owners of properties he purchased with the business proceeds as rewards for their contribution to the business operation. These properties were either purchased without mortgage, or mortgage loans would be repaid with the business funds of CM Co.. As the patriarch of the family and the owner of the business, he considered he had the sole right and authority to request his sons to transfer the properties according to his wish, and would not expect his sons to disobey his request, as they were all well provided for by the business he owned.

64.  The Father deposed to the list of properties that he had acquired throughout the years in the aforesaid manner that were gifted to the plaintiff, being 9 in total, including the half-share of House No.9, and House No.11, which was later sold to the defendant. The Six Properties that he purchased and gifted to the defendant, are also listed. He confirmed that he was fully aware and had authorised each of these acquisitions. 

65.  The Father gave evidence in his 2015 Affirmation on the operation of the accounts of CM Co., the dump truck business, and the defendant’s  departure from the business for a year to pursue studies in the US on vehicle repairs, the request for injection of funds made by the plaintiff through his mother in 2004-2005, the reason leading to the termination of the business, and the investigation of the accounts of CM Co. in 2009, what he deposed to accord with the evidence of the defendant and is supported by the corroborating documentary evidence.

66.  In his Supplemental Witness Statement, the plaintiff likewise cast aspersions upon the defendant on the Father’s making of the 2015 Affirmation as he did the 2010 Letter, suggesting that the Father was forced to make the Affirmation and was put under immense stress to make the affirmation in support of his case by saying what he would not have been able to testify as true in court.

(C)  ANALYSIS AND FINDINGS ON ALLEGED TRANSFER OF BUSINESS IN 1989

67.  Given the diametrically opposite versions of evidence given by the parties pertaining to ownership of the family business post-1989, I would first comment on the credibility of the plaintiff as a witness.

68.  I find the plaintiff an evasive witness struggling to keep his case afloat, even by giving evidence inconsistent with his pleaded case. Both his pleaded case and his evidence on the Father’s decision to abruptly retire in 1989 defy common sense and were inherently improbable when read in the context of the overall circumstances of the family. When confronted on specific financial records that did not support his assertion, he prevaricated and tried to wriggle out of his previous stance by making frivolous arguments[36]. His theory about the defendant pressurising father to add him as a signatory was meant to explain away why the defendant would still be made an authorised signatory long after both the Father and the defendant had supposedly left the business, but did not stand up in cross-examination at all. His evidence on how he was the sole owner of income from rental of the properties was inconsistent with what his witness, Tse, deposed to how rent was paid by the tenant of Shop 29. All in all, the plaintiff is a singularly unimpressive witness who appeared to have been motivated by greed and grudge against his brother and the Father.

69.  On the other hand, I am impressed by the defendant’s demeanour in his oral evidence. He was straightforward, unargumentative, gave his evidence concisely and clearly, and without any exaggeration or any sign of grudge. In cross-examination, he remained unshaken in all aspects where his evidence was challenged.  Even more importantly, his evidence on how his family functioned with CM Co. as a centre of resources and wealth providing for all is convincing according to a fair understanding of a family in the relevant social background and circumstances. I have no hesitation in accepting his evidence as the truth.

70.  Having considered the evidence of Tsang and KC Chin in witness statements and observed the two witnesses under cross-examination, I have no hesitation in accepting their evidence regarding the circumstances in which the Father had sought their assistance as witnesses to the 2010 Letter as his account of the state of financial affairs of the family. Given the circumstances in which their assistance were sought, I can find no reason to disbelieve what the two witnesses said the Father had told them, and the truth of the matters that were stated in the 2010 Letter. I reject the suggestion on the part of the plaintiff that the defendant had procured the Father to make the 2010 Letter and/or the 2015 Affirmation to set out matters that he would not have been prepared to testify as true.

71.  If the content of the Father’s 2010 Letter is accepted as a truthful representation by the Father of the facts, it follows that the 2015 Affirmation should likewise be accepted as a truthful account, albeit much more detailed, of the matters referred to therein.

72.  I find that that the contents of the 2010 Letter and the 2015 Affirmation are true accounts of the Father’s knowledge and belief on the business of CM Co and the ownership of the properties he acquired for the benefit of the sons respectively, and he was in a fit state in terms of mental capacity to make those statements to record his stance on the facts. The facts are that the Father never relinquished his interest, nor surrendered control over his business in CM Co. until he decided to cancel the business registration in late 2005, and the properties that were registered under the name of the defendant were gifts to the defendant from the Father paid out of funds owned by him, over which the plaintiff could have no claim of beneficial ownership whatsoever.

73.  A substantial part of the contents of the affirmation, in particular the background facts of the business of CM Co. and the roles of the two sons and the Father in the business, are verified by Tsang and KC Chin in their evidence. KC Chin was an uncle to the two brothers whereas Tsang was a close family friend and business associate. Both had enjoyed a much closer relationship with the Father and the two sons than the three witnesses called by the plaintiff to support his version.  More importantly, there is no suggestion that they might have been partial or unfair. Bearing in mind all the other evidence in this case, I am satisfied that their evidence of the family and the business, and their understanding and agreement to the parts of the 2015 Affirmation identified by them, were all based on their personal knowledge and are reliable. 

74.  For reasons set out above, I would accord more weight onto the alleged understanding of the above issues as deposed by Tsang and KC Chin him in his witness statement. In so far as it conflicts with the evidence of the plaintiff and the witnesses called on his behalf, I would prefer to believe their evidence to the evidence of the plaintiff and his witnesses.

75.  On the other hand, the alleged promise and guarantee from the Father to the plaintiff, painstakingly repeated in the plaintiff’s pleading and witness statements, only to be withdrawn and amended in oral evidence, are inherently difficult to comprehend and even harder to believe. Its withdrawal inevitably impacts upon the credibility of the rest of the plaintiff’s account. In particular, it casts even more serious doubts on whether the Father indeed relinquished control of a successful business he built from scratch to raise a family of many members. At the time the Father was still relatively young and energetic, whereas the plaintiff was only a young man in his twenties lacking in qualifications or business experience, having spent only 8 years to learn under the Father about the internal aspects of the business operation.

76.  In the course of the plaintiff’s oral evidence, he had repeatedly sought to emphasise how all the documentary records relating to the Six Properties, and other financial records relating to tax, insurance-related claims or vehicle trading were all kept by him as proof of his beneficial ownership of the business of CM Co. since its alleged transfer to him in 1989. However, the plaintiff admitted that secretarial work was his core duties, and the financial and accounting work of the business were also his responsibilities, while the Father was responsible for liaising with clients, understanding the market condition and signing cheques and documents.

77.  I reject the plaintiff’s evidence that in performing those functions in the business, the Father was “in essence [his] rubber stamp” as the plaintiff claimed he was.[37] The plaintiff’s function was no different from the manager or chief operating officer of a small business, with the Father still at the helm and retaining all signatory rights. I also reject any suggestion that his possession of the business documents of CM Co., or the fact that he had liaised with lawyers and given instructions on behalf of CM Co. in a piece of litigation, would add credence to his assertion of beneficial ownership of the Father’s business. Quite apart from the fact that he would have been the contact person in correspondence as the chief operational personnel of the business, the Father was nearly 80 during the period running up to the cessation of the business in 2005, and can only be expected to become less hands-on in relation to the daily affairs of CM Co..

78.  The plaintiff’s assertion is also incredulous that the Father would have picked the plaintiff to gift the lucrative business to, when the defendant has already worked alongside the Father and the plaintiff for a few years in this family business, and allegedly showing much promise in the vehicle business[38]. The plaintiff has given no plausible reason why the Father would have chosen to practically dispossess the younger and favourite son of his future share to a lucrative and successful business allegedly in exchange for a relatively small sum of money to start a new venture into a dump truck business that was of an uncertain prospect. There is no credible explanation why the Father would himself choose to abruptly give up a business that he had built up through hard work, leaving a young and relatively inexperienced son to own and operate it all by himself.  If it had been for the relief of the duties as the owner, it would be inexplicable why he would still hold onto the responsibility to be the “rubber stamp”, and had for years been obliged to present himself at the shop only to do mechanical signing of documents of no financial interest or consequence to himself.

79.  All the above is made even more incredulous against the plaintiff’s own admission that between the two sons, the Father had always been partial to the plaintiff.[39] The fact that the defendant, not the plaintiff, had always been the favourite sons is a fact known and testified to by not only the Father himself, but KC Chin. I also find that the dump truck business was a side business commenced for the account of the family business, although the defendant was put in charge of it. I reject the plaintiff’s version of evidence asserting that the money needed to purchase the dump trucks was a sum given to the defendant for him to start a business on his own, with any agreement or understanding that both the Father and the defendant would thereafter leave the operation of CM Co. and all the assets of the business to the ownership and control of the plaintiff. I accept the evidence of the defendant that in fact the Father retained ownership and control of the business well beyond the time when the dump truck project began, and in fact until its cessation in 2005

80.  The plaintiff provided no convincing explanation as to why the CM Shop was not transferred at the time of the alleged exit of the Father and the plaintiff in 1989.  If the business had indeed been transferred to him as his operation with the funds being his own assets by 1989, there is no credible explanation why Father would still retain all signatory rights, and would choose to trouble himself by having to be the person signing on all contracts, bank documents and reporting documentation such as tax returns. If the change of bank signatory would indeed have any impact on the banking facilities available to the business, that would only suggest the plaintiff was not yet in a capacity to operate the business as its owner. The plaintiff was not ready and simply lacked the credibility to take over the business and goodwill of CM Co. back in 1989.  I do not believe that there was any credible reason why the Father would agree to the alleged arrangement when he was man standing behind the business throughout the years, and continued to retain the business relationships with clients and had the trust of his banker.

81.  After carefully considering all the evidence both from witnesses and the contemporaneous documents relevant to the period of time 1979 to 1992 regarding ownership and control of the business of CM Co., I find there is insufficient evidence to support the plaintiff’s assertion of any promise from the Father to gift the business to the plaintiff at any time, nor any actual transfer of the business of CM Co. and its assets to the plaintiff whether in 1989 or at any time prior to 1992.  

82.  On the other hand, there is strong evidence pointing to the established practice of CM Co. acquiring properties for the benefit of the plaintiff and/or the defendant, to the Father’s order and direction, throughout the time between 1987 to the early 2000’s, while the business remained solely owned by the Father. In this regard I have only attached weight to the contents of the 2010 Letter and the 2015 Affirmation as corroborative evidence to the lucid and well corroborated accounts of the defendant, and that of Tsang and KC Chin, and relevant contemporaneous documents. I found their accounts to be much more probable and credible. I have carefully observed their demeanour in giving oral evidence at the trial and find all three of them to be honest and credible witnesses. I do not accept that Tsang or KC Chin had both been misled whether by the Father or by the defendant, as the plaintiff said they were.

83.  I reject the evidence of the plaintiff that the Father had relinquished control of the business of CM Co. in about 1989 and had gifted all the assets of the business to him for his full disposal, such that any purchase made with the funds of CM Co. would be for his own benefit alone.

84.  I do not accept the evidence of the witnesses called on behalf of the plaintiff, namely 石懷謹 (“Shek”)、謝雲根 (“Tse”)、and 黃世祥 (“Wong”) in so far as they suggest that the person “in charge” of CM Co. or is the beneficial owner of the business after 1989 was the plaintiff and not the Father.  

85.  Shek was introduced to the plaintiff in 1987 or 1988. He and the plaintiff became good friends. He had used the service of the CM Co. for vehicle transfer and had visited the shop regularly, about once a week, apparently to present to the plaintiff opportunities in property transactions. He became acquainted also with the Father and the defendant.   

86.  He claimed to have “clearly remembered” that between 1987 to 1989, the Father was still seen managing the business at the shop from time to time, but he was seldom seen after about 1990. His evidence was that the defendant was not working in the business between 1989 to 1994, returning only thereafter to assist his brother in external duties.

87.  He recounted two incidents that led him to believe that the plaintiff was the “boss” of the business. One was that he was the only contact person responsible for a transfer of a taxi licence. The other was when he introduced to the plaintiff an opportunity to purchase a taxi, and observed that he was able to make the decision on the purchase on the spot without consulting anyone else. He believed that had he not been the boss, he could not have done so.

88.  Under cross-examination by counsel for the defendant, he admitted that the Father never told him that he was retiring or giving the business to the plaintiff, and that he seldom saw the Father and did not know what his thoughts and intentions were. He also admitted to being closer to the plaintiff than to the defendant.  The fact is that he had numerous property-related dealings with him and he regarded the plaintiff as someone who could make all the sale and purchase decisions.  I cannot regard him as a completely impartial witness.

89.  In respect of the purchase of two properties, namely House 3B and a carpark space No. 79 in Tseung Kwan O (the latter not being the subject of this action), Shek claimed that he knew the source of funding came from the plaintiff, and that the defendant was only a nominee to hold the properties in favour of the plaintiff. He also claimed to know that the plaintiff was entitled to all the rental proceeds and handled all the affairs relating to rental of those properties. Shek did not disclose his source of knowledge of these personal financial matters relating to members of the Chin family, the arrangements of which he had no reason to be privy to. Neither did he explain how he was able to draw the conclusion on beneficial ownership merely on the basis of his observation that the plaintiff handled the negotiation for the purchase and rental of the properties.

90.  Under cross-examination, he admitted that he did not ask and therefore did not know the reasons why the defendant was asked to be legal owner of properties he had introduced to the plaintiff, and he would not know where the rental went after they were received. It is obvious that he merely relied on his impression of who was making the decision on purchase and rental, and the fact that it was the plaintiff issuing cheques to pay for deposits, as the bases for his speculation that the plaintiff was the beneficial owner and was investing the money as his own.

91.  I reject his evidence on what he allegedly knew when he was unable to identify the source of his information, and I find myself unable to rely on his observations in determining the issues.

92.  Tse used to have business transactions with CM Co. at Shop No.3 between 1984 to 2007-2008. As the business of CM Co. had been terminated since late 2005, Mr Tse must have meant that he continued to have a business relationship with the business under the plaintiff’s registration of “Chin’s Motors Co.” after the cessation of the Father’s business.

93.  Tse’s evidence is along the same line as Shek’s in that it contained his own observations on who were seen operating the business at the CM Shop, during which period of time. From these observations he drew his own conclusion as to who the owner or boss was. He asserted that the plaintiff took over at the helm of CM Co. in 1989 when the Father retired, with the plaintiff being responsible for all affairs and development of CM Co. (“但約在1989年始，錢乃民先生接手掌管汽車行的工作, 其先父錢泉先生于1989年已退休，汽車行一切業務發展，乃由錢乃民先生負責”). In so far as this was intended to be read as a statement that the plaintiff had ownership and control of the business and its assets since 1989, Mr Tse provided no factual basis for making these sweeping assertions. What he said he was able to observe as a customer of the business is not inconsistent with the parties’ description of how the business was operated in the years running up to 1989 as may be observed by any customer.

94.  When cross-examined by counsel for the plaintiff, he admitted that he only observed that the Father was attending the CM Shop less often, but he would not know if he in fact retired, and he had never asked him about it. Unlike Shek, he was not a regular visitor, and would only go to the shop when he had business to transact. I however reject his sweeping statements of conclusions, the basis of which he was unable to provide.

95.  Tse also gave evidence on the ownership of Shop No. 29, which will be dealt with in section (E)(2) below.

96.  In my view, even if the acquisition of the properties were the plaintiff’s idea or at his suggestion and procured by him, it does not derogate from the fact that the business had remained the Father’s business throughout, and the utilisation of funds for investment was for him alone to authorise. Given the Father had for years entrusted the operation of the business to the plaintiff, and had taken a more backseat role as the years went by, it was hardly surprising that the plaintiff would have given the impression that he was the sole decision maker.

97.  Wong was employed as an office assistant between 1991 to 1994 in CM Co. to assist the external work of the plaintiff. This was at a time after the defendant had left the business to study in the US. Wong would have been employed to perform the external duties of the defendant, and he would have taken all instructions from the plaintiff, who was overseeing the operation as a whole. It would hardly be surprising that he considered the plaintiff the “boss”[40], as the Father would by then have been relieved of the chore of looking after operational matters, such as to instruct him on what errands to be run. His evidence was that the Father did attend the shop from time to time in the morning.

98.  However, his belief that the plaintiff was the owner with full control of the business was nothing but his own observation as a junior staff based on what he could see when he was not running errands. His description of the actual work and duties of the plaintiff was not in any way inconsistent with how the business was operated prior to 1989. His observation that the Father “did not meddle in or inquire into the business affairs” of CM Co. cannot be relied on against other convincing evidence set out above. Under cross-examination, he admitted that he would not know where the funding for the operation of CM Co. had come from, while he observed that it was the plaintiff who was making all the operation decisions, he admitted that he would not know if there were communications between Father and son out of his sight.  His evidence does not assist the plaintiff at all.

(D) OVERVIEW ON ACQUISITION OF PROPERTIES WITH FUNDS OF CM CO. & THEIR OWNERSHIP

(1) The 6 Subject Properties Out of 14 Allegedly Acquired by P between 1987 to2001

99.  It is not disputed that all the Six Properties in issue had been purchased using CM Co’s funds, and in so far as there were mortgage loans, they were repaid in instalments from the funds out of the CM Co. accounts.[41]  

100.  The plaintiff referred to a total of 14 properties registered either in the plaintiff’s own name, in the name of a company “鴻圖有限公司”[42] or in the defendant’s name acquired between 1987 to 2001.[43] Out of the 7 properties not yet sold prior to the trial, 5 were registered in the name of the defendant and one (House No.9) was in the joint name of the plaintiff and the defendant. The remaining one was in the name of “鴻圖有限公司”, a property holding company controlled by the plaintiff. 

101.  The Six Properties under the defendant’s name or joint name form the subject matter of the claim against the defendant herein. Except for House No. 9 which was purchased in 1987 and used as a home for both parties and later the plaintiff alone, all the other properties identified in the list were purchased between 1992 to 2001 apparently as investment properties.

(2)  The Parties’ Case on Acquisition of Properties Using CM Co.’s Funds

102.  The plaintiff’s case is that due to the gifting of the family business to him since 1989, all the Six Properties were beneficially owned by him, as they were funded by the business which belonged to him. The fact they were in the defendant’s name or in joint name with the defendant did not mean that the defendant held any beneficial interest at all. Rather, the plaintiff claimed that he had since as early as 1993 requested the defendant to hold properties as legal owner or trustee, despite the properties were purchased entirely with the plaintiff’s own funds. The defendant had no entitlement to these properties or their sale proceeds.

103.  The plaintiff asserts that the Six Properties were his personal investments, and the Father did not even know and never bothered about their acquisition or their existence. This is strongly refuted by the defendant. The diary entries of the Father include references to the Father’s participation in viewing and making decisions to purchase properties for his family members, and recorded his knowledge of financial matters in relation to the properties[44]. There is strong evidence in the 1997 diary entries pointing to the Father retaining overall knowledge and control of the business of CM Co, including in its property investments.[45] I note that the plaintiff agreed in cross-examination that the Father was literate and did have the habit of keeping a diary, and made no suggestion that the Father had stated anything in there that was fabricated. I have no reason to doubt that the diary entries disclosed in the action did reflect the daily happenings in the life of the Father on the relevant dates.

104.  The defendant’s testimony is that during the years when the two brothers worked alongside the Father in CM Co., they received only nominal salaries and could not have accumulated any cash or assets of their own. The Father would however respond to the financial needs of any family member by withdrawing funds from the business to meet any requests. The Father had liked purchasing properties both for use by family members and for investments or gifts to family members. The purchase price would be paid from the funds of the business, in full if the sum is not large, or otherwise by taking out mortgage loans to be repaid also from the business funds.

105.  When the Father decided to purchase any property with funds from the family business, it was his call to decide who to give it to by naming the registered owner to the property. The person named would be understood to be the beneficial owner notwithstanding that the purchase was funded by CM Co..  In this regard, the defendant pointed out that the Father well knew how to create a trust if he had intended to, which he did in 1985 when he was 19.  The Father purchased a property and named himself a trustee under a Declaration of Trust holding it in favour of the defendant. In 1987, he executed a Vesting Assignment in favour of the defendant.[46] The defendant relied on the above transactions to demonstrate that when Father designated a registered owner for a property purchased with CM Co.’s funds without executing any declaration of trust, he intended the designated person to receive the property as a gift. The evidence, viewed objectively, is well capable of supporting this claim: it shows that during the time when the family business remained under the Father’s name, the income generated by the business had been used to fund the purchase and serviced mortgage loans of various properties registered in the name of the plaintiff, the defendant, and jointly.

106.  According to the defendant, the plaintiff has received no less than 7 properties in addition to the half share of House No. 9 as gifts in this manner[47], to which he made no claim. Apart from the Six Properties claimed, the defendant himself has also received one residential unit and one industrial unit and 2 carpark spaces as gifts from the Father. These have since been sold.

107.  The defendant points out that his brother had had no employment other than working for the Father in CM Co., and would not have had any funds of his own to utilise in making his own purchases, however frugal he had been. All the properties were in fact funded by the business (a fact which is not in dispute), which was solely owned by the Father until its cessation (which is disputed by the plaintiff).

108.  In answer to the defendant’s evidence, the plaintiff again asserts that the Father had never “confronted [him] saying that the properties in dispute were his gifts to the Defendant”.[48] He therefore expressed surprise when he saw the 2010 Letter. Again, it is futile for the plaintiff to suggest that the Father should have confronted him about ownership of properties had they indeed been owned by the defendant. There is no reason why he would need to do so in the absence of any contrary claim by the plaintiff prior to 2009. The 2010 Letter signed by the Father is strong testimony on the poor relationship between the Father and the plaintiff at that point of time, and it is hardly surprising that there was no personal confrontation at the time after the plaintiff began to make this claim.

109.  3 of the 7 properties identified by the defendant as gifts to the plaintiff were bought between 1995 to 1997 at a time when there was a boom in the property market, but were sub-sold or sold at substantial losses between 1998-2003. The fact that some were sold at a significant loss supports the evidence of the defendant that the plunge of property prices post-1997 resulted in negative equity and a huge financial burden on the business in having to service the mortgage loans of a large number of properties. The plaintiff admitted that there were defaults in mortgage payments since 2000. The Father would have needed to balance the need of a stable financial position for the business on the one hand and the expectation of plaintiff to be able to retain his gifts on the other. Father’s refusal to service some of the loans leading to the selling off of some of the plaintiff’s properties at huge losses would understandably have caused considerable disappointment and chagrin to the plaintiff.

110.  Given the plaintiff’s case on his ownership of the Six Properties is to a large extent founded upon his assertion that the business of CM Co. and its assets belonged to him after 1989, my findings made under the previous section would inevitably have a significant if not determinative impact on the credibility of the evidence given by the parties and their witnesses on the circumstances of the acquisition and the maintenance of ownership of the individual properties referred to below.  My analysis of the parties’ assertions and the related evidence on the specific properties are therefore made with the above findings on the backgrounds facts in mind.

(E) EVIDENCE ON THE SPECIFIC SUBECT PROPERTIES

(1) HOUSE NO. 9

111.  This property was purchased when the plaintiff was aged 25, having joined his father in operating the business of CM Co. for about 5 to 6 years from completion of secondary education. The plaintiff claimed that the property was purchased with his entire personal savings, amounting to $463,000, which was two-thirds of the price $613,000, with the Father contributing to $150,000 of the purchased price. The plaintiff claims that although it was his parents who signed the Sale and Purchase Agreement and a deed nominating the defendant and the plaintiff as tenants-in-common owning equal shares of the property, the beneficial ownership was in fact one-third belonging to the Father, and two-thirds belonging to him.

112.  Both brothers moved into the house after its acquisition in 1987. The defendant moved away to live in House No. 41 in 1993, and thereafter to House No. 11. The Father said in his 2015 Affirmation that he had lived in House No.9 between 2001 to 2003 to help take care of the defendant’s new born son when the defendant’s family was residing in House No.11. House No.9 is adjacent to House No.11 with connecting front and back gardens. He moved back to his own home in Tsuen Wan in 2003 while the plaintiff’s mother continued to live there until she had to be transferred to a nursing home. The plaintiff claimed that he had been occupying the premises using it as a home for his dog at the time of the trial. According to the defendant’s knowledge, however, the plaintiff has ceased to reside in House No. 9 since about 2010.  In 2013, the plaintiff locked up the house and the defendant has since been denied access.

113.  The property was mortgaged to Hang Seng Bank in July 2000, according to the plaintiff, to provide cash to CM Co. for its operation. The mortgage was executed by both owners, though the repayments were made by the plaintiff alone because the defendant said that the funds were for the plaintiff’s personal use.

114.  It is noted that 2000 coincides with the time when the plaintiff admitted to finding himself struggling in the aftermath of the property market slump since 1997, when he was in default of at least some of the mortgage payments of his investment properties. The overdraft facilities of CM Co. were used to the tune of $1 million.  He had had to sell one of his properties, House A4 Palm Springs Phase 1C in Yuen Long, at a loss of over $1.5 million in December 2003.[49]

115.  According to the defendant, most of the funds for purchasing this property had come from selling the taxi with registration no. “CJ 482”[50], which had a value of HK$450,000. The plaintiff disputes this and says that the proceeds of sale of CJ 482 was in fact used to purchase another taxi DA 2212 on the same day as the completion of the sale. It is noted that in fact DA 2212 was sold again barely 4 months later.

116.  The defendant pointed out that in the Nomination designating him and his brother as joint owners, their parents stated in the recital as follows:

“AND WHEREAS we are in fact purchasing the said premise as trustees for and on behalf of my sons, Chin Yat Keung Alex and Chin Nai Man … and the deposit money in the total sum of HK$50,000 paid under the said Agreement for Sale and Purchase were provided by Chin Yat Keung and Chin Nai Man.”

117.  There is no explanation as to why the recital would have stated as in the above if the version of events as provided by the plaintiff were true.  More importantly, the plaintiff has failed to prove that he in fact provided two-thirds of the purchase price from his own personal savings, when he was simply not in a position to accumulate any significant amount given his circumstances prior to 1987.  I am not at all satisfied that the plaintiff as a young man with little private means did have the capital in 1987 to contribute any substantial amount to the purchase, even if he had been willing to and the Father would accept it.

118.  From the background facts that I find, I am inclined to accept that the Father would have come up with the funds to acquire the property as a residence for the two sons who both devoted their time to working in CM Co., both taking only minimal salaries while the Father would pay for all the expenses out of the business’s income. 

119.  For the sake of argument, if indeed the plaintiff had provided two-thirds of the purchase money for this first ever property he owned, I do not see what would have prompted the Father to practically rob him of one-sixth of his share by assigning a half-share to the defendant when the defendant had made no monetary contribution to it whatsoever.  I am also prepared to accept the evidence of the defendant that the Father would have easily have had legal documents prepared to reflect the true position had he intended the defendant to be but a trustee and not a beneficial owner.

120.  I therefore reject the plaintiff’s evidence that the defendant held his share of the title in House No. 9 on trust for him. I find that the defendant was indeed the beneficial owner of the half-share interest in the property, designated by the Father who funded the purchase of the property for his two sons.

(2) SHOP NO.29

121.  This was a property that was initially acquired in 1992 in half-share, with the other half to be owned by Tse, a witness for the plaintiff. The purchase was made at a time when the defendant was set to leave Hong Kong for a year to study in the US. As the defendant was to be one of the owner and registered tenant-in-common, in order to complete the purchase, the defendant had had to execute a power of attorney in favour of the plaintiff for the sole purpose of executing documents on his behalf to complete the purchase of the half-share. The plaintiff asserts that he has beneficial ownership of the entire property and the defendant is but a trustee holding the interest on his behalf.

122.  The plaintiff’s evidence is that he was the one who found this investment opportunity through an estate agent, which he decided to share with Tse, and the defendant did not play any role in securing the opportunity.  However, the plaintiff did not provide any reason as to why it was considered appropriate or convenient for the defendant to be nominated to hold the title alleged on his behalf and for his benefit, if indeed it was up to him to decide not to hold the share of the property in his own name. It is not in dispute that the defendant was set to go abroad to study, and indeed there was every reason why he should not have been nominated to hold the legal title if indeed he was not intended to be the owner.

123.  The plaintiff asserted that he had provided all the funds for the purchase of the half-share of the property, and had taken half-share of the income generated by it.  In re-examination he was given the opportunity to demonstrate why he said there were financial records to support the assertion. He relied on no banking records to support that assertion but instead put forward some accounts between Tse and him, which showed a sum of $60,000 that Tse reimbursed him for outgoings for the purchase of Tse’s share of the property that he had paid on his behalf.  While that could be evidence of a debt owed to him by Tse, that plainly could not have been evidence of any capital outlay on his part to purchase any part of the property.  Not even Tse could support the plaintiff’s case on what the accounts were about. I have no choice but to ignore them, and regard the plaintiff as being unable to prove what he set out to prove.

124.  The defendant asserts that all the funds for the purchase came from CM Co., as were the mortgage payments. This cannot be refuted. The Plaintiff however suggested that he and Tse were the “guarantors” (“擔保人”) of the mortgage loan taken out in the name of Tse and the defendant jointly, but this again was not borne out in the documentary evidence he relied on, which was only a legal charge with no mention of any guarantor guaranteeing repayment of the loan. The plaintiff executed the document on behalf of the defendant as the borrower’s attorney, and certainly not in any capacity as a guarantor.[51] This false assertion is repeated in the witness statement of Tse, which Tse was likewise unable to justify when cross-examined on it.

125.  The half-share owned by Tse was assigned to the defendant in 1999. The Plaintiff’s evidence is that he decided to take up Tse’s share entirely on his own accord, without having to consult the Father, and again claimed to have paid all the capital, mortgage payments and outgoings from his funds, had managed and procured tenants for the premises, and had taken the rental income as his own money. He accused the defendant of having requested the tenant to pay the rent to him directly, which he said amounted to theft.

126.  Tse in his witness statement gave a version that supports the version of the plaintiff, on the basis of his knowledge and belief, with no specification of his source of knowledge as to who owned the funds used to purchase this property and received as income. Tse was unable to support any of these claims with his own knowledge.

127.  The defendant on the other hand provided a detailed account with supporting documents of the acquisition of the two shares in 1992 and 1999 respectively. He stated that all the funds had come from the business, and the transactions including the use of CM Co.’s funds to make mortgage payments were all with the knowledge and approval of the Father, who intended the shop to be given to him as a reward for his work in CM Co..

128.  I note that in the Father’s diary entry dated 30 December 1997 was recorded an unpleasant incident when Tse upset him over a discussion on how much he was paying his wife for household expenses. The Father recorded that he erupted in a tantrum because of his unwarranted remarks. He told Tse he was the boss of CM Co., threw him out of the shop and told him he was not welcome in the shop, he would not do business with him. This incident tends to support the defendant’s case that Tse would have had no reason to assume that the Father had retired or relinquished his interest in the business. 

129.  In any event, I do not find Tse an impressive witness at all. He was bending over backwards to stick to conclusions he made in favour of the plaintiff based on speculations that he could not justify. His evidence leaves one with the strong impression that he was prepared to make statements on ownership or control of the business and the subject properties in his evidence based merely on his impression or speculation. When challenged, he had had to admit that he in fact had no personal knowledge. I do not consider his evidence adds anything to what the plaintiff asserts as he was unable to explain how he would know that all the funds in fact belonged to the plaintiff.

(3) SHOP 3B

130.  This was a shop space in a Tsuen Wan shopping mall acquired in 1994 under the name of the defendant, a year after his return to the business following his studies in the US. The plaintiff asserts that it was again him who found this investment opportunity and made the decision to acquire the property, and requested the defendant to act as his trustee to hold the property in his favour. The plaintiff claimed that the deposit of $150,000 came from his own funds while the balance of $750,000 came from funds in CM Co., which by then was solely owned by him.  He said the defendant well-knew and understood that the plaintiff was the beneficial owner of the property, and all the capital, rental proceeds, sale proceeds were for his account. He kept the title deeds of this property in his own custody and refused to hand it over to the defendant.

131.  The plaintiff seeks support from the evidence of Shek, who had been instrumental to introducing the opportunity to him. He himself was the owner of the adjacent Shop 2 and Shop 3A, and introduced the plaintiff to the seller of the Shop 3B. His belief of the plaintiff’s control and ultimate ownership of the property is based solely on his observation on the plaintiff being active in the viewing and in securing of the investment opportunity, only naming the defendant as the person holding the property on the eve of the signing of the sale and purchase agreement. He also said that he discussed with the plaintiff matters on tenancy. He then claimed that “he clearly knew that the plaintiff was the only person deciding on and responsible for the rental of Shop 3B”. As set out in the section above, his assertion of knowledge failed to stand up in cross-examination. It turned out to be little more than being based on speculation, appearance and false assumptions.

132.  The defendant said that the shop was a gift from the Father to him in recognition of his hard work after he returned to the business. The funds and outgoings all came from CM Co. Shop 3B with the full knowledge and approval of the Father.

133.  Shop 3B is adjacent to Shop 3A, which was owned by Shek. For unknown reasons, these two shops were assessed for rates jointly as a single unit. The two shops were rented out to the same tenant, Mr Ho Kam Tin, who also rented Shop 2 and used all three as a single unit. Shek would pay the government rates and rent for both 3A and 3B, and the defendant would reimburse him for his share. The documentary evidence supports the reimbursements. The joint assessment was severed when in 2010 the tenant stopped renting his unit jointly with Shop 2 and Shop 3A. He had rarely had contact with Shek since.  

134.  I have no hesitation in concluding that the funds of the purchase had come from CM Co. with the Father’s approval and knowledge. The Father had made the property a gift to the defendant by designating him as the purchaser and legal owner, which he was fully entitled to do. While the plaintiff may have secured the opportunity in the first place through his friendship with Tse, and might have subsequent discussions with him on tenancy matters, there is no evidence to support the plaintiff’s claim of beneficial ownership.

(4) Flat 27D

135.  This was a unit in a development of the Hong Kong Housing Authority. The mother of the plaintiff and the defendant was entitled to purchase a unit under the home-ownership scheme of HKHA. In 1994, the plaintiff claimed that he decided to pay for the flat out of his own funds, and he nominated the defendant to be the legal owner to hold it on trust for him. The Father was not involved at all in the purchase decision, so the plaintiff claimed.  

136.  The plaintiff claimed to have paid the deposit, serviced the mortgage payments to Bank of East Asia, and paid all the outgoings. However, no documentary proof was provided to support the claim that the funds were the plaintiff’s own funds, other than the general assertion that CM Co. had by then owned by the plaintiff alone.

137.  The defendant’s version supported by the Father’s evidence in the 2015 Affirmation and the 2010 Letter, the contents of which witnessed by the uncles including KC Chin and Tsang, confirmed that the funds for the purchase and the mortgage payments had all come from CM Co. and the property was intended as the Father’s gift to the defendant.[52]

138.  Shortly before the cessation of business of CM Co. the defendant began paying for the remaining mortgage instalments through his own account. The plaintiff on the other hand claimed that the payment details were thereafter changed without his authorisation, such that he was deprived of the opportunity to continue with the loan repayment.

139.  The ownership of this property can be determined based on my acceptance of the evidence of the defendant on the ownership of the CM Co. prior to 2005, and the lack of evidence of any funds having been put up by the plaintiff in the acquisition of the property other using the funds from CM Co.. I reject the evidence of the plaintiff that he had appointed, or was ever in a position to appoint, the defendant as his trustee to hold the property for him, or there was any understanding to that effect.

(5) Workshop 9

140.  This was a unit in an industrial building acquired in 2000 at the cost of $190,000. The defendant had kept the title deeds with his mother in her safe deposit box. The defendant believes that her demise left the plaintiff as the only person having access to the contents of the box. The plaintiff has refused to return the title deeds to the defendant.

141.  The plaintiff’s evidence of the acquisition and ownership of this unit was in the same vein as in Flat 27D.[53] The plaintiff claimed to be responsible for its management and government rent and rates since its purchase. He had been using the unit for storage of machinery and tools for Man Hing, the plaintiff’s garage business and his own sole proprietorship Chin’s Motors Co.

142.  The plaintiff claimed to have had the agreement of the defendant that he was the beneficial owner of Workshop No.9, and the defendant had never raised any issue until now.

143.  The defendant’s version of the acquisition and ownership of this property is likewise the same as in Flat 27D. He accepted that he had granted a licence to the plaintiff use and occupy the workshop in 2000 and gave him the keys for that purpose, since his brother was operating a garage very close to Workshop No.9. This was on the understanding and agreement that he would not be charged any licence fee but he would pay for all the outgoings such as management fee, rent and rates. They also agreed to deliver vacant possession on demand, and would keep the premise in a reasonable state during his use and occupation.

144.  In 2009, the defendant came to know that the garage has closed down. When he went to inspect the premises, he found to his dismay that the premises have been turned into the plaintiff’s warehouse for storing large and obsolete equipment of his defunct garage in appalling hygiene conditions. Further, government rent and rates have been left outstanding since 2006. Management fee payments were left in arrears to the tune of $31,231.40 before he eventually paid up.

145.  The defendant had demanded for vacant possession of the premises to be delivered up by letter from solicitors in 2009, only to be met with 2 demand letters claiming beneficial ownership of this and 5 other properties now the subject of this action. The defendant claimed to continue to suffer a loss of rental income of $3,500 per month by reason of the unlicensed occupation by the plaintiff.

146.  In his supplemental witness statement in reply to the defendant’s evidence on this property, the plaintiff added no probative evidence, but merely accused the defendant of lying, and resorted to relying on the documents he kept on the initial acquisition of the property. They do not begin to prove how he had funded the purchase, or otherwise should be the beneficial owner of the property independently of his general allegation on his ownership of CM Co. since 1989.

147.  Having considered all the evidence carefully, I am unable to accept the evidence of the plaintiff on his alleged beneficial ownership of the property for the same reason I reject his version on his alleged ownership of the business and its assets since 1989.

(6) House No. 11

148.  This was a house that was initially acquired under the name of the plaintiff in 1996 at the height of the property market for $3,300,000.  At the time the two brothers were also tenants in common of House 9, each owning half a share. The brothers were on good terms in those days. In about 1997, the defendant moved into House 11, so each of the two brothers stayed in a separate house adjacent to each other. There is no dispute that the funds for purchase of the house came from CM Co.’s funds, although the plaintiff argued that by then CM Co. was owned by him.

149.  In 1999, during the slump of the property market, there was the need to mortgage House 11 to Po Sang Bank to provide funds for CM Co.  Again, there is no serious dispute that the mortgage loans were serviced by payments out of CM Co.’s account.

150.  In 2001, House No, 11 was transferred to the defendant for a consideration of $1,980,000 upon the mortgage being redeemed with proceeds of sale of a public light bus, an asset of CM Co. The parties disagreed over the reason, intention and circumstances of this transfer.

151.  The plaintiff insisted that the defendant was only a nominal transferee, the transfer being merely a tactic on his part to avoid jeopardising all his properties in the event that he should fall into debt in bad times. He asserted that the defendant had agreed to be a trustee of the property and knew well that the plaintiff was the beneficial owner. 

152.  The defendant, on the other hand, said that the Father wanted to make House 11 a gift to him for his marriage in June 2000 and to provide a family home for the couple and their son expected to arrive in September 2001. As he was already residing in House 11 since 1996, Father considered the house should be transferred to his name, with the price of $1,980,000 to be paid to the plaintiff. The defendant provided a paper trail on how this was executed, first by the redemption of the mortgage out of CM Co.’s funds. He and his wife also forked out $203,677. The remainder of the purchase price came out of CM Co. funds, as did the outgoings such as rent and rates, in line with how the business had always been funding outgoings of properties occupied by family members.

153.  The defendant said that the transfer was agreed by all the family members concerned, who knew it was a gift to him. The plaintiff even helped with the sale of the public light bus to pay the purchase price. In 2013, the defendant as the sole owner took out a mortgage on the property, on his own accord, to obtain funds for his own use.

154.  The plaintiff’s evidence is that in 2005-2006, upon learning that the defendant had purchased property in Kwai Fong for his family, he requested the defendant to move out of or sell House 11 on behalf of the plaintiff in order to relieve the “financial difficulties of Chin’s Motor Co.”. By mid-2005, the Father had already decided to terminate the business of CM Co. had taken steps to wind up the business. It is not clear what financial difficulties the plaintiff was referring to that required resolving by injection of funds in the old business. The plaintiff provided no other evidence that would prove that he contributed to the purchase price other than to assert ownership of the funds of CM Co. from which the purchase price was paid. I reject his evidence that the transfer was to perpetuate an act of evasion of potential creditors in anticipation of plummeting prices leading to negative equity and crippling debts.

155.  The ownership of this property can likewise be determined based on my rejection of the plaintiff’s evidence on his alleged ownership and control of the business of CM Co. since 1989, and my acceptance of the evidence of the defendant that the property in question was one of the gifts that the Father had intended to and did vest in him.

III. CONCLUSION

156.  On the basis of my findings above, the plaintiff has failed to prove any of his claims. No constructive or resulting trust in relation to the beneficial ownership of the Six Properties could be found. The registered titles of the defendant in relation to the Six Properties stand.

157.  The defendant as the registered owner of Workshop No. 9, is entitled to vacant possession of the premises and mesne profits for unlicensed occupation, thereof, the amount of which was unchallenged by the plaintiff, and all the outgoings until vacant possession is delivered.

158.  The defendant as the registered joint owner of House 9 is entitled to shared use and enjoyment of the property, which has been deprived of him. An order for sale would be appropriate in this situation of deadlock.

159.  The defendant as the registered owner of Workshop No. 9 and Shop No. 3B would be entitled to have the title deeds thereof returned to him forthwith.

IV.   ORDERS

160.  The plaintiff’s claims are dismissed.

161.  There will be judgment in favour of the defendant on his counterclaim, and I make the following orders –

(1)  An Order for the sale of House No. 9 under the Partition Ordinance.

(2)  An Order that the plaintiff do within 28 days of the date of judgment hereof deliver vacant possession of Workshop No. 9 to the defendant;

(3)  An Order that the plaintiff do pay to the defendant mesne profits of HK$3,500 per month in respect of his use of Workshop No. 9 from 1 April 2009 to the date of delivery of vacant possession;

(4)  An Order that the plaintiff do reimburse the defendant of all government rents and rates, and management fees payable in relation to Workshop No.9 until delivery of vacant possession thereof;

(5)  An Order that the plaintiff do forthwith deliver to the defendant all title deeds of Workshop No. 9 and Shop No. 3B.

(6)  There be interest on the sums payable under (3) and (4) above at judgment rate(s) from the date of judgment until payment.

(7)  An order nisi that the costs of the plaintiff’s claim and the defendant’s counterclaim be to the defendant, to be taxed if not agreed. The costs order nisi will become absolute unless parties file written submissions (if any) within 14 days of the date of this judgment, with length to be limited to 2 A4 pages.

162.  It remains for me to thank counsel on both sides for their invaluable assistance, and the parties for their patience in awaiting the delivery of this judgment.