CHEUNG PAK CHUEN v. AU YEUNG WING CHI

HCA1858/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1858 OF 2010

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J U D G M E N T

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Background

1. This dispute centres on the right to ownership and occupation of certain land registered at the Land Registry as Lot No. 1301 in D.D. 130 (“the Lot”).  The Lot was purchased in January 1973 in the name of Au Yeung Kwai, deceased (“Madam Au Yeung”).  Madam Au Yeung passed away in September 2007 and the Defendant, Au Yeung Wing Chi, is sued in his capacity as the executor of the estate of Madam Au Yeung.

2. The Plaintiff was born on 4^th October 1951 in Wuxi, China and came to live in Hong Kong in or about 1983 with his father, Cheung Yan Ching (“The elder Mr Cheung”).  The elder Mr Cheung was permanently resident in Hong Kong, and at that time was employed in a position with Hang Seng Bank.  Madam Au Yeung was also at one time an employee of Hang Seng Bank, and she formed a relationship with the elder Mr Cheung which ultimately resulted in a form of marriage taking place between them on or about 7^th April 1965.

3. The elder Mr Cheung had earlier married a wife (Madam Ng Kgan Kuen) who lived permanently in China and the plaintiff was the youngest child of that marriage, having also an elder brother and elder sister who remained in China.

4. Not long after her marriage Madam Au Yeung left the employment of Hang Seng Bank and took up farming, raising chickens.  This small farming business was operated from the Lot, which was originally rented, but which was later purchased.  There is some dispute between the parties as to the source of funds for the purchase and as to the beneficial ownership of the Lot.  Madam Au Yeung took up residence at the Lot to run this business, but the elder Mr Cheung appears to have lived primarily at a flat in Wanchai, which was closer to his place of work, visiting and staying at the Lot mainly at weekends.  The relationship between the elder Mr Cheung and Madam Au Yeung was nevertheless a close one it appears.  They will be referred to collectively as “the Parents”.

5. At or about the time that the Lot was purchased the chicken farm business was closed and in its place a pig farm was opened. This business was operated, and expanded upon over a number of years until about 1987 when it was closed.  During that period, in 1980, the elder Mr Cheung retired from his employment, and took up full-time residence at the Lot.  Also during that period the elder Mr Cheung decided to invite the plaintiff to come to live with him in Hong Kong and assisted him in his application for a permit to do so.  The Plaintiff obtained his permit and came to Hong Kong on 12^th June 1983.  After doing so he lived with the Parents at the Lot and assisted them in raising pigs.

6. In or about June 1984, the Plaintiff left the Lot and went to work for his uncle after quarrelling with the elder Mr Cheung. He lived separately from the Parents until he moved back to the Lot sometime in 1986.  In that same year, the Plaintiff's wife and daughter, Chi Yuet Fun and Cheung Hoi Yin also came from China to live in Hong Kong.  Accordingly, by that time, the plaintiff, his wife and daughter, and his father, the elder Mr Cheung and Madam Au Yeung, were all resident at the Lot.

7. When purchased the Lot contained a small brick house which was used as a residence.  In or about 1986 this was demolished and replaced with a concrete house which remains there to this day.  This became the family residence and indeed is still the Plaintiff's residence.  There is disagreement between the parties as to whether the concrete house was built out of necessity due to the state of disrepair of the brick house, or whether it was built with a view to occupation by the enlarged family group including the plaintiff's wife and daughter. 

8. Initially, following the arrival of his wife and daughter and following his return to live at the Lot the Plaintiff continued to work for his uncle.  He was engaged in the manufacture of metal gates for use in housing developments.  In about 1987 a decision was made to close the pig farm.  There is no disagreement that this was a matter of necessity, but as to whether the cause was disease affecting the pigs or because of a change in governmental policy has been disputed by the parties.  The cause is perhaps unimportant.  The consequence is that the portion of the Lot previously occupied by the pigsty became disused.

9. Subsequently, according to the Plaintiff, the Parents proposed to the Plaintiff that he should set up his own metalworking business using the former pigsty area for a workshop.  This invitation is alleged to have constituted a representation on the part of the Parents and isthe 2^nd in a series of 6 such representations underpinning the Plaintiff’s claim in respect of the property. These representations are discussed in more detail below.

10. The Plaintiff did not take up this invitation immediately but he quit his job in or about November, 1989, and began preparation works for the demolition of the pigsty, and started the construction of a workshop (“the Workshop”) which he has run since 1992 under the name of Shun Fat Ironware Engineering.  He engaged others to carry out much of the construction work, but did at least some of this himself, and was assisted by the elder Mr Cheung.  The Workshop occupied about 4,300 square feet representing about 3/4 of the Lot. Construction was completed in or about September 1991.

11. The Workshop construction represented a not inconsiderable investment of time as well as money for the Plaintiff who says that he spent a total of HK$60,000 on the purchase of materials and HK$2,250,000 in respect of plant and machinery.

12. Also in about 1991 the Plaintiff contends that he assumed full financial responsibility for the overall family including the Parents.  Prior to this date he had been in the habit of making contributions to the family, referred to in the evidence as “pocket money”, which he says he continued to pay after assuming financial responsibility for all other family matters.  The Defendant characterises the payment of pocket money after 1991 as payment of rent for the Workshop.  As part of this responsibility the Plaintiff contends (but the Defendant disputes) that he took up the responsibility of arranging and paying for all the birthday banquets of the Parents.

13. In September 1995, the elder Mr Cheung suffered a stroke.  Subsequently he made a will dated 26^th January 1996 by which he appointed the Plaintiff as the sole executor of his estate which was left to the Plaintiff and Madam Au Yeung in equal shares.  The elder Mr Cheung passed away in Hong Kong on 7^th April 1996, and probate of his estate was granted to the Plaintiff on 8^th May 2000.

14. In or about 2002, the Government resumed part of the Lot being part of the Workshop and the access road to the Workshop. Compensation for the resumed land was agreed and was paid to the registered owner, Madam Au Yeung. 

15. Madam Au Yeung made a will in March 2001 and she made a further will dated 4^th August 2004 (“the Will”) in each of which she left the Lot to the Defendant who is her nephew.  Madam Au Yeung left her share of the Wanchai flat to the Plaintiff.  Madam Au Yeungdied on 28^th September 2007.  Probate of the estate was granted to the Defendant on 13^th August 2010.

16. For some time following the grant of probate the Plaintiff continued to live at the Lot, with his family, (as he still does today) without, it appears, anything being said by the Defendant.  On 15^th December 2008 the Plaintiff's solicitors wrote to the Defendant's solicitors purporting to put the Defendant on notice that the Lot was subject to the equitable interest of the Plaintiff.  There seems to have been no immediate response however, on 1^st September 2010, the Defendant’s solicitors wrote to give notice to the Plaintiff to vacate the Land and to pay mense profit up to the delivery up of vacant possession.  In consequence the Plaintiff has commenced these proceedings and seeks a declaration as to his interest in the Lot, and orders in regard to the transfer of title in the land. 

17. The Defendant maintains, by way of defence, the validity of the Will and seeks similar relief by way of counterclaim in these proceedings as was requested prior to proceedings, namely vacant possession and/or mesne profits.

The Issues

18. The Plaintiff’s case in a nutshell is that, various representations which have been made to him by the elder Mr Cheung and/or Madam Au Yeung, which when taken together with his conduct in reliance on those representations, mean that he has acquired a proprietary interest in the Lot.  It is alleged that by making the various alleged representations, the elder Mr Cheung and Madam Au Yeung either promised the Plaintiff or encouraged him to believe that he would obtain an interest in the Lot by taking care of the elder Mr Cheung and Madam Au Yeung and building and operating the workshop on the Lot.  Accordingly, it is the Plaintiff's case that the purported passing of the Lot by the Will to the Defendant, was wrongful.  The Plaintiff relies upon a proprietary estoppel to establish his interest in the Lot.  In the alternative he contends that a constructive trust arose. 

19. The Plaintiff also submits that the facts give rise to a promissory estoppel against the Defendant’s counterclaim.

20. The Defendant does not accept that the representations which are alleged were in fact made, with one exception, and contends simply for the validity of the Will.  The Defendant says that the Plaintiff has established neither the representations nor appropriate reliance on the alleged representations such as to give rise to the alleged proprietary interest.  The Defendant seeks by way of counterclaim a declaration and orders for vacant possession and mesne profits.

21. The parties helpfully agreed a List of Issues in advance of the Hearing, and these Issues were as follows:

(a)   Whether the elder Mr Cheung and Madam Au Yeung had made the oral representations as pleaded in the Statement of Claim (“the Representations”) to the Plaintiff (“P”);

(b)   If the answer to (1) is affirmative, whether the Plaintiff had relied on the Representations when he defrayed the family expenses and spent time and money to look after the elder Mr Cheung and Madam Au Yeung and constructing, establishing and operating the workshop on the subject land;

(c)    If the answer to (2) is affirmative, whether P had the expectation and acted in the belief that he had owned or would own an interest in the Land when he did the acts referred in (2) above;

(d)   If the answer to (3) is affirmative, whether P had suffered any detriment by doing the acts referred in (2) above;

(e)    If the answers to (1) to (4) are affirmative, whether P had acquired an equitable interest in the Land and whether it is equitable to deny P’s interest in the Land;

(f)    Further or alternatively, if the answers to (1) to (4) are affirmative, whether by reason of the promises and agreements contained in the Representations there was a common intention between The elder Mr Cheung, Madam Au Yeung and P that P would have equitable interest in the Land and P had acted to his detriment by relying on the promises and agreements so that after the demise of Madam Au Yeung, the Defendant (“D”) as proving executor of the estate of Madam Au Yeung held the Land on trust for P.

(g)   By resolving the aforesaid issues, whether P is liable to deliver up vacant possession of the Land to D and to pay mense profit to D for the use and occupation of the Land.

Amendment of the Statement of Claim

22. On the first day of the hearing I heard and application on the part of the plaintiff seeking leave to amend part of the Statement of Claim in which the plaintiff had pleaded the detriment alleged to have been suffered by him in reliance upon the several representations said to have been made to him.  This amendment was in the nature of the tidying up exercise, and was not opposed on behalf of the defendant.  Accordingly the amendment was allowed.  The defendant subsequently indicated that no consequential amendment to the defence was necessitated.

The Representations

23. The core of the Plaintiff's case lies in the series of 6 oral representations said to have been made to him (in Cantonese) over a period of 12 years or more and the way in which he is said to have conducted himself in consequence.  As was pointed out on behalf of the Defendant these are in some senses progressive in nature in that the extent of the land or property which was the subject matter of each representation increased over time.  It is accordingly convenient to summarise these as a set, while bearing in mind the span of years over which they are said to have been made.

The 1^st Representation

24. This is said to have been made by the Parents to the Plaintiff not long after his arrival in Hong Kong in June 1983:

“Now that you have come to Hong Kong. Your wife and daughter will also come to Hong Kong 2 years later. The house is not big enough to accommodate all of us when they join the family. Therefore I want to engage someone to build a 2-storey concrete house for you, your wife and daughter to reside. Now that the Government has loosen its policy, [occupants] on agricultural land for 10 or more years may apply. We are old now. [You should] live with and take care of us.”

The 2^nd Representation

25. This is said to have been made by the Parents in early 1989:

“Stop working for the Uncle and come back to run your own business. The pigsty is now vacant, you can rebuild it and turn it into a small workshop. You can then receive some ironware or railings jobs. That will be much better than working for the Uncle. ”

The 3^rd Representation

26. Was also made during 1989; in November:

“Stop working for others. Work as a contractor on your own instead. Now the said pigsty can no longer be used for raising pigs. The roof is worn out and may fall down. We give you the whole pigsty and let you build your own factory and workshop there. [You] may carry out the contract works by yourself. This is much better than working for others, but you must take care of us and pay all the expenses of the family.”

The 4^th Representation

27. It is alleged that this representation was made approximately 2 years after the previous representation, in about September 1991: 

“We want to tell you something. Both of us are old. We shall not manage this family anymore. We now pass everything of this family to you [and your wife]. From now on you [and your wife] have to take good care of us and be responsible for taking care of this family and pay all the expenses. [In that case], our wish will be fully fulfilled.”

The 5^th Representation

28. This alleged representation, and also the 6th representation is said to have been made at some time after 1995.  This was after the elder Mr Cheung had his stroke and it is said that these 2 representations were made by Madam Au Yeung only:

“You and me should be named [as the only beneficiaries] in [your father's] will. If only you are so named, Pak Hing [elder brother] and Ah Ying [elder sister] will contend for the estate with you. If you and me were jointly named, they will not contend for the estate with you. After I passed away, all the estate will be yours anyway.”

The 6^th Representation

“Name me and Pak Chuen [as the beneficiaries] in [your] Will. I have no child. I will also give all the family assets to Pak Chuen when I pass away. If I was not so named in [your] will, Pak Hing and Ah Ying will contend for your estate with Pak Chuen.”

Reliance

29. As with the representations it is perhaps helpful to collate the detrimental reliance alleged by the Plaintiff, again bearing in mind that there is a span of time involved in all of this.

30. In summary the Plaintiff contends that the 1^st representation was at least part of the reason why he helped with the preparation for the demolition of the brick house in preparation for the construction of the new concrete house; and why he subsequently moved back to live with the Parents with his own wife and family, following which he helped to take care of the Parents.

31. After the 2^nd and 3^rd Representations were made to him, that is, after he was offered space within which the set up a workshop the Plaintiff stopped working for his Uncle, and set up his own business on the site of the former pigsty.  His evidence was that he invested a not inconsiderable sum of money in setting up that business.

32. Subsequently, he says, he assumed financial responsibility for the extended family by paying all of the household expenses and by providing financial support to the Parents.

33. By the stage of the 4^th Representation, according to the Plaintiff he believed he had acquired an interest in the Lot.   Nevertheless, because of the representation made to him by Madam Au Yeung he did not insist on that interest being fully recognised in the elder Mr Cheung’s will.  Subsequently, following his father’s demise the Plaintiff continued to look after Madam Au Yeung, including hiring a domestic helper to assist her as she became older and more frail.

34. There are a number of factual issues that arise in relation to the above matters, with the Defendant contesting whether the Plaintiff did or did not carry out the work he says that he did in regard to the demolition of the Brick house in particular, and contesting whether the Plaintiff did or did not pay the banquet expenses and so on as alleged and disputing whether the “pocket money” paid by the Plaintiff was a sort of gift, or was in reality the payment of rent by the Plaintiff for the use of the Workshop space. 

35. There is an overarching submission made on behalf of the Defendant however which is that, whatever the factual position, the Plaintiff has not made out any sufficient detrimental reliance.  The Defendant says that several of the matters alleged by the Plaintiff as a detriment show only advantage to the Plaintiff; the construction of a new house or the provision of land for the construction of the Workshop for example. Other aspects of the alleged reliance show only normal family behaviour; the Plaintiff taking care of the Parents in their old age for example.  

The Witness Evidence

36. The Representations were oral and the persons by whom they are said to have been made are now deceased.  The most recent of these representations was made around 17 years ago, and most of the relevant events in terms of what took place in consequence (or otherwise) of the alleged representations precedes even that by a considerable margin of time.

37. The Plaintiff himself was a party to the alleged Representations and he gave evidence in support of his contentions.  The Defendant also gave evidence but, not having been present when the various utterances were allegedly made his evidence was directed to surrounding events, or other statements said to have been made, in particular by Madam Au Yeung, relevant to the disposition of the Lot.

38. Both counsel for the Plaintiff and counsel for the Defendant acknowledged that the span of time involved was likely to lead to genuine mis-recollections, or failures of recollection by the witnesses.  The Defendant in particular had difficulty in not only remembering dates but, in some cases, in identifying even the general period within which certain events may have taken place.

39. In assessing the credibility of the witnesses the Defendant commends to me the approach described by Chung J. in Star Glory Investment Ltd. v Kai Tuo (HK) Technology Co. Ltd. & Ors. (HCA 3523/2002), following Chiu Chi Tong v Lau Chong Sai & Another (HCA 765/2002) at para 28 and Yu Ming Investment Ltd. v Peng Ru Chuan Richard (HCA 814/2002) at para 12:

“There are two objective tests for assessing a witness’s credibility regarding a matter to which he has testified:-

(a) whether that part of his testimony is inherently plausible or implausible;

(b) whether that part of his testimony is, in a material way, contradicted by other evidence which is undisputed or indisputable (an example often given of such evidence is contemporaneous documents).

Further, whether it is shown that a witness has been discredited over one or more matters to which he has testified (using the above tests), this fact is relevant to the assessment of his overall credibility.  Likewise, regard may be had to a witness’s motive for deliberately not giving truthful testimony.  For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest.”

40. Adopting that approach divides the assessment of the witnesses (exercise) into two parts; plausibility of the evidence and consistency with other evidence.

41. So far as plausibility is concerned, neither the version of events contended for by the Plaintiff nor that contended for by the Defendant could be said to be inherently implausible.  As regards the Plaintiff, he had migrated to HK to live with his father leaving his siblings behind in China.  The evidence suggests little, or relatively little contact having been maintained between the Plaintiff, his father, and the members of the family remaining in Wuxi.

42. With the exception of a relatively short duration not long after he came to Hong Kong, the Plaintiff resided with his father and in due course brought his own wife and child to live together in Hong Kong.  That family life extended to and included Madam Au Yeung whom the Plaintiff came to refer to as his mother.  The Plaintiff and his wife and children were living together as a family unit with the Parents from the mid 1980’s to the death of his father in (1996), and the Plaintiff and his family continued to live with Madam Au Yeung until she passed away.

43. Against that background it is far from implausible that the Lot – which was in effect the family house – would be given to the Plaintiff upon the death of the Parents.

44. On the other hand the Lot was purchased in the name of Au Yeung Kwai, and, at the end of the day she made a will, later replaced with a second will, by which she gave the Lot not to the Plaintiff but to the Defendant.  It seems to me more likely than not that the original purchase of the Lot was intended to be a gift to Madam Au Yeung and that she was both the legal and beneficial owner of the Lot as is discussed below.

45. In those circumstances the making of a statement by her, as is said by Au Yeung Wing Chi to have been made, that the Cheung family assets would stay with the Cheung’s and the Au Yeung family assets with the Au Yeung’s, would be plausible also.  Neither way of dealing with the property is unreasonable or inherently unlikely.

46. So far as the consistency with other evidence is concerned, this is not a major factor in this case because there is very little other evidence.  There are very few documents of any relevance, and, in my view, none that could be said to be inconsistent with the case of either party.

47. The Defendant does not agree with that proposition and submits that there are two undated letters sent by the Plaintiff to Madam Au Yeung which are inconsistent with his case as regards the 5^th and 6^th Representations in particular.  This is a reference to two notes which the Plaintiff wrote to Madam Au Yeung.  One refers to steps taken by the Plaintiff towards recovering possession of the Wanchai flat (which had been left by the elder Mr Cheung to the Plaintiff and Madam Au Yeung as tenants in common).  The Defendant submits that this is inconsistent with the Plaintiff’s case because it is couched in terms that do not treat the Lockhart Road property as being his.  Although his case now is that, by that time he had acquired an interest in the Lot. 

48. That is true, but at that stage, on the Plaintiff’s case, the property in Wanchai had been left to the Plaintiff and Madam Au Yeung jointly on the premise that it would, (along with other property) become his later.  I see no inconsistency in this note therefore.

49. The other note refers to a small refund of property tax which was to be split between the Plaintiff and Madam Au Yeung, and a more substantial sum of money in the bank which was to be distributed between them later.  The Wanchai property is also referred to in the note, with the Plaintiff inviting Madam Au Yeung to consider whether the title should be changed so as to become a joint tenancy.  The Plaintiff wrote that this was something for Madam Au Yeung to decide.

50. In a commercial context I can accept that it might seem unusual for a person believing himself entitled to property absolutely to speak in terms of the formal title being changed from one form of joint ownership to another.  But this was not a commercial context; in reality this was a family relationship, with the note being for all intents and purposes one from a son to his elderly mother.  The Defendant submits that much of the Plaintiff’s conduct is to be attributed to his filial responsibilities rather than being conduct following from his reliance on the Representations and it is true that the family relationship must be “factored in” in considering his conduct.  But it applies equally here as in other cases and, in this circumstance I would, for my part, have been somewhat surprised had the Plaintiff written to Madam Au Yeung to suggest that she transfer the title in the family home to him absolutely, even if he believed himself to be entitled to do so.  Once again therefore I do not agree that there is the inconsistency that the Defendant suggests.

51. One thing which can be gleaned from these notes however is that it was the Plaintiff that was handling matters on behalf of himself and Madam Au Yeung.  That, it seems to me, is consistent with his contentions that he assumed the role of the head of the family.

52. As regards my impression of the two witnesses, the Plaintiff’s evidence was given clearly and consistently.  He was generally consistent with his written witness statement and although I believe he embellished his evidence during cross examination on one or two occasions (adding an assertion that he was involved with the demolition of the cockloft for example) overall I accept him to be a truthful witness.

53. The Defendant’s evidence was at times less cogent but that does not mean that the Defendant’s evidence is to be generally disbelieved.  There are two reasons for this.  The first is that the direct conflicts of fact between the witnesses are relatively few.  The challenges made by the Defendant to the Plaintiff’s evidence are frequently collateral in nature; in effect that (in particular) Madam Au Yeung is unlikely to have made a representation of the sort alleged by the Plaintiff because she said something to the Defendant which was, one one view, inconsistent.  Conflicts such as this can arise from wholly honest evidence.

54. Secondly, and consequentially there are very few aspects on which the evidence of the two witnesses directly conflicts, and none of these, in my view are of particular significance.  There was, for example a debate as to how birthday banquets for the Parents were paid for.  It appears to be common ground that, after 1996 at least it was the Plaintiff that usually paid for these events in the first instance, and the only question is whether he later sought reimbursement from the Parents or (later) Madam Au-Yeung. Through the oral evidence it appears that the Defendant’s basis for asserting that Madam Au Yeung paid for these banquets (after the elder Mr Cheung’s death) was a single statement by Madam Au Yeung.  The fact that the Plaintiff paid for such banquets is perhaps relevant substantiation of him having taken on the role of family provider as he alleges.  But an example of him not paying for such banquets does not by its itself imply that he never took on the role of provider at all.

55. The Defendant contended that the money paid by the Plaintiff to the Parents (and later Madam Au Yeung) monthly was rent for the Workshop, not “pocket money”.  The basis for this assertion appeared from his cross examination to have been an isolated comment made by Madam Au Yeung after she had argued with the Plaintiff’s wife.  I do not find this to be persuasive evidence of the true position.

Ownership of the Lot

56. That there was some distinction drawn between the assets of the elder Mr Cheung and Madam Au Yeung, at least in the earlier stages of their relationship, is shown by the fact that the elder Mr Cheung purchased the Wanchai property in March 1967 in his own name. 

57. So far as the purchase and ownership of the Lot is concerned, there is a dispute as to whether the purchase money was provided by the elder Mr Cheung or the Deceased.  Although Madam Au Yeung became the sole registered owner of the Lot on 13^th January 1973, the Plaintiff’s case is that the purchase money was provided by the elder Mr Cheung, and he therefore retained the beneficial ownership of the Lot.  The Plaintiff says that the Lot was nevertheless conveyed into the Deceased’s name because the elder Mr Cheung had purchased the land at a substantially discounted price in exchange for a recommendation he provided assisting the vendor’s son to gain employment at Hang Seng Bank. 

58. The purchase price of the Lot was HK$15,681, and even with the passage of time, and the restricted use of the land at that time for agricultural purposes, this price level does appear to lend some credence to the suggestion that there was some form of discount involved in the sale and purchase.  The source of the funds for land purchased before any of the current antagonists were in Hong Kong is purely a matter of surmise, although I accept that the elder Mr Cheung would be expected to be better placed to find funds than Madam Au Yeung.  However even accepting that the elder Mr Cheung may have funded the purchase; may have been taking advantage of his position with Hang Seng Bank to obtain a discount on the price; and that he may have wished to keep this quiet from his employers, it does not necessarily follow that he intended to retain beneficial ownership of this land.

59. As is submitted on behalf of the Defendant, it is not suggested that the relationship between the elder Mr Cheung and the Deceased was a clandestine one.  They had “married” in the 1960’s in public, and the risk of anyone investigating the background to the ownership of the land, and its previous ownership, would, in any event, appear remote. 

60. Furthermore, the elder Mr Cheung took no steps to have the Lot re-conveyed to him following his retirement, and did not deal with it at all in his will.  On balance I do not accept that the evidence is sufficient to persuade me that the elder Mr Cheung retained a beneficial interest in this land, even assuming that he provided the funds for its purchase.  In my judgment this land was, as the documents state, the property of Madam Au Yeung.

Were the Representations Made?

61. In effect the evidence on this is all one way. The Plaintiff was of course present when the representations were made and has recounted their contents in precise terms in his witness statement.  While the accuracy of his recollection, particularly in regard to the older statements may be open to question, he was not shaken in cross examination.

62. Counsel for the Defendant realistically accepts that the Plaintiff is better placed to put forward a cogent case based on his own knowledge.  The Defendant relies (as Mr Wong accepted) largely on the surrounding circumstances or potentially conflicting statements said to have been made by Madam Au Yeung to challenge the Plaintiff’s evidence. 

63. By way of example, the Defendant challenges the making of the 1^st Representation by challenging the reason for the demolition of the Brick house.  The Plaintiff’s evidence is that this was demolished and rebuilt in concrete so as to provide more suitable accommodation for himself and his family (when they were able to come to Hong Kong) as well as the Parents.  The Defendant says that demolition was a necessity because of the very poor state of the brick house, which was said to be close to collapse. 

64. Mr Wong points out that there is a possible chronological difficulty in the Plaintiff’s case in that the Brick House (which had been on the lot since at least 1966) was rebuilt during 1984, using funds obtained from the sale of a property in Yuen Long which was sold on 13^th March 1984.  It is submitted to have been unlikely that concrete house was built in 1984 to provide accommodation for the Plaintiff’s family when they did not arrive in Hong Kong until 1986.  I do not think that too much can be read into this however.  Although there is no evidence directly on the point, I do not think that the Plaintiff’s wife and family were able to move to Hong Kong whenever they felt like doing so.  The elder Mr Cheung was required to write to the Public Security Bureau (PSB) in Wuxi to enable the Plaintiff to come to Hong Kong for example.

65. So far as this Representation is concerned therefore there is no direct evidence to challenge what the Plaintiff says. The Defendant is able to show, in my view, that there may have been other motives for demolishing and rebuilding the house, but this is insufficient as a basis on which to conclude that the Plaintiff’s evidence is probably incorrect.

66. Whether the Brick house needed rebuilding for structural reasons or not, it was rebuilt in such a way as to provide sufficient accommodation for the Plaintiff and his family, not simply for the parents.  The Brick house may indeed have been in poor condition, but it does not follow that there was only one motivation for its rebuilding, or therefore that the representation was not made.

67. The Defendant submits that although the Plaintiff has given a firsthand account of the matters in dispute, there is no documentary evidence supporting his assertion that he paid for household expenses such as water, electricity, government rent, rates and so on.  This is true, but nor is there documentary evidence suggesting that anyone else paid for these expenses, and nothing therefore to cast doubt on the Plaintiff’s oral evidence. 

68. The Defendant was particularly critical of the Plaintiff’s assertions in regard to the 5^th and 6^th Representations, relying on the “inconsistency” with the undated notes referred to above.  As I have summarised above I do not agree that there is any such inconsistency and nor therefore is there evidence contradicting that of the Plaintiff.

69. Looked at overall the sequence of events described by the Plaintiff seems to me to carry an air of credibility, representing in effect the gradual handover of the family, and the Lot, from one generation to the next.

70. I have referred above to the somewhat second hand and sporadic nature of the Defendant’s evidence on such aspects and once again I am not persuade by this evidence that the Plaintiff’s evidence is unlikely to be correct.

71. For these reasons I accept the Plaintiff’s evidence that the Representations were made, and similarly I accept that the Plaintiff took the steps said to have been taken by him in consequence.  To consider the consequences of this it is necessary first to summarise the relevant legal principles.

Proprietary Estoppel

72. This is the primary basis of the Plaintiff’s claim to be entitled to a proprietary interest in the land.  There is no real controversy between the parties as to the relevant legal principles, so these may be summarised shortly.

73. Estoppel of this type acts so as to enable a party to maintain a proprietary interest over property in the face of a denial of any such interest on the part of the ostensible legal owner.  See for example the speech of Lord Scott of Foscote in Cobbe v Yeomans Row Management Ltd [2008] 1 WLR 1752, at 1761:

“An ‘estoppel’ bars the object of it from asserting some fact or facts, or sometimes, something that is a mixture of fact and law, that stands in the way of some right claimed by the person entitled to the benefit of the estoppel. The estoppel becomes a ‘proprietary’ estoppel - a sub-species of a ‘promissory’ estoppel - if the right claimed is a proprietary right, usually a right to or over land but, in principle, equally available in relation to chattels or choses in action.”

74. The ingredients of such an estoppel are therefore the making of a representation by one party to the effect that the person to whom the representation is made either has, or will acquire, an interest in or rights over property.  The rights which arise by way of a proprietary estoppel are such as to form the basis for a claim to be made to the property and are not confined to resisting claims made by the legal owner.

75. A representation alone does not operate to give rise to rights on the part of the representee however unless the representor has anticipated or expected the representee to act in some way in consequence of the representation having been made and moreover, the representee has acted on the basis of the representation.  The acts of the representee must therefore be causally related to the representation and, furthermore, it is necessary for the relevant acts to be such as may be said to be detrimental to the representee.

76. In summary therefore the Plaintiff must establish the existence of the representation or assurance, reliance by him on that representation or assurance, and detriment in consequence.

77. The defendant correctly points out that an underpinning element of any form of estoppel is the presence of unconscionability and this was spoken to in the speech of Lord Walker in Cobbe v Yeomans Row Management [supra] at paragraph 92:

“That argument raises the question whether ‘unconscionability’ is a separate element in making out a case of estoppel… Here it is being used (as in my opinion it should always be used) as an objective value judgment on behaviour (regardless of the state of mind of the individual in question). As such, it does in my opinion play a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements. If the other elements appear to be present but the result does not shock the conscience of the court, the analysis needs to be looked at again.”

78. As summarised by Robert Walker LJ in Gillett v Holt [2001] Ch 210,

“Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded - that is, again, the essential test of unconscionability” (at page 232,E).

79. As is also clear from that judgement, in determining whether there has been a detriment to the party asserting the estoppel the relevant facts are to be considered as at the time at which the person who has given the assurance seeks to go back on it.

80. The question of detriment, it appears to me, is an important element arising out of the facts of this case and accordingly I record the opinions of the authors of Snell’s Equity (32^nd edition) at paragraph 12-020 that:

“On the one hand, ‘[t]here is no doubt that for proprietary estoppel to arise the person claiming must have incurred expenditure or otherwise have prejudiced himself or acted to his detriment.’ But, on the other hand, ‘the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial.”… As with promissory estoppel, this detriment must be causally related to the promise or assurance. The causal requirement is for C to prove that that he or she would have acted differently if the promise had been withdrawn; C is not required to prove that he would have acted differently if the promise had never been made.”

81. This concept was discussed in the judgement of Dixon, J in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-675 (quoted in Gillett v Holt at 232):

“One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action, or inaction, must be such that, if the assumption upon which he proceeded were shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice.”

Detrimental Reliance

82. Having accepted, as I do, that the Representations alleged by the Plaintiff were in fact made to him, and accepting, as I do, that he conducted himself in the manner that he alleges, culminating in him assuming a role as the head of the household and providing care for Madam Au Yeung in her old age, then two further questions arise.  The first is whether the Representations were causative of the Plaintiff’s conduct.  The second is whether the Plaintiff’s conduct amounted to a sufficient detriment.

83. So far as the Plaintiff’s reliance on the Representations is concerned the primary point taken by the Defendant is that many of the steps said to have been taken would have been taken anyway.  The brick house would have been demolished in any event because of its age and size it is said.  The Plaintiff would have started his own business in any event because, as he accepted in his evidence, it was his wish to do so.  Similarly, the fact that these Representations were made were not the reason why the Plaintiff took on the role of head of the household and, later, looked after madam Au Yeung; he did so as a simple matter of filial responsibility in circumstances in which he and his wife and by (1991) children were living together in one family home with the Parents.

84. It is difficult for the Plaintiff to gainsay the benefits that came with the various steps taken by him, and Mr C Y Li SC, counsel for the Plaintiff, does not seek to do so.  His submission is, firstly, that there were nevertheless clear changes of position on the part of the Plaintiff in reliance on the representations.  Secondly, he submits, the benefits that came with these changes of position are to be disregarded in determining whether the estoppel has been established.

85. I do not think that latter proposition can be correct.  See for example Chan Gordon v Lee Wai Hing [2011] 2 HKLRD 506.  Where there has been a change of position both the benefit as well as the cost must be taken into account although I would accept that, in the case of the Plaintiff’s business for example, the Plaintiff should not be penalised in the sense that any detrimental element should be disregarded simply because that business proved, ultimately to be successful.

86. Looked at only in this way the detriment suffered by the Plaintiff is said by the Defendant not to be very substantial. Nevertheless, in my view, it is sufficient.  He has spent money on the establishment of a business which, although no doubt primarily of benefit to himself and his own family, provided a basis on which he was able to reside with the Parents and, in due course, take care of them.  He has provided financial support to the Parents via the “pocket money” some of which might well have been given in any event, but on the Plaintiff’s unchallenged evidence some not.

87. Viewing the matter in the way described by Dixon J in the quotation above the detriment becomes perhaps clearer.  The Plaintiff has established both his family home and part of his business on the Lot. Undoubtedly the provision of the Lot was of benefit to him, but removal of his “right” to be there by the making of the Will and replacing it with at most a licence (or a lease) would clearly be significantly detrimental to him.

88. I accept, on the evidence, that the Parents have encouraged the Plaintiff to believe that, upon their death, the Lot would pass to him.  The Representations made by Madam Au Yeung are particularly important in this regard, it seems to me, since she was the owner of that property.

89. It does not seem to me that this is defeated or negated by her having said to the Defendant that the property of the Cheung’s would stay with the Cheung’s and the property of the Au Yeung’s with the Au Yeung’s.  The extent of property that she may have had in mind in saying this is unknown, but even if it is assumed that the Lot was being discussed as being Au Yeung property, it does not follow that the Plaintiff’s proprietary claim is defeated by an inconsistent statement made to the Defendant on a date or dates which he is now unable to recall.

90. The conclusion I have reached therefore is that the Plaintiff has made out his proprietary estoppel claim and is entitled to appropriate relief.

91. In those circumstances it is not necessary for me to address the Plaintiff’s claims based on a constructive trust, or his promissory estoppel defence to the counterclaim.

The Extent of the Relief

92. It is well established that the entitlement to relief is curtailed, in that the maximum extent of such relief is to make good, so far as may fairly be done between the parties, the expectations of the Plaintiff which have been encouraged by the property owner.

93. The relevant expectations in this case were that the ownership of the property would pass to the Plaintiff and that is the primary relief which is sought.  The immediate detriment to the Plaintiff in simple monetary terms, when account is taken of benefits to him and his family inherent in the steps he has taken in consequence on the representations having been made to him is perhaps not particularly striking, but for the reasons given above, when the detriment faced by the Plaintiff if his claim were unsuccessful is viewed in the context of the change of position of Madam Au Yeung, it seems to me that the Plaintiff is entitled to the intervention of the court.  The appropriate relief to be granted is that sought by the Plaintiff namely a declaration of right, and the transfer of title to the property.  There will be orders accordingly.

94. The form of the Orders has not been the subject of submissions.  Accordingly, absent agreement on this the parties are at liberty to make further specific submissions in writing.  Directions for such submissions will be given as necessary.

95. The parties sought an order nisi as to costs and, on that basis I order that the costs of the action are to be to the Plaintiff.