郭 (前稱郭) v. 孫 (又名孫) AND ANOTHER

CAMP 482/2022, [2023] HKCA 946

On an intended appeal from [2022] HKFC 87

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 482 OF 2022

(ON AN INTENDED APPEAL FROM FCMP NO. 3 OF 2019)

____________________

____________________

_________________________

JUDGMENT

_________________________

Hon Chu VP (giving the Judgment of the Court):

A.  Introduction

1.  This is the 1^st defendant’s renewed application for leave to appeal against the judgment of Deputy District Judge R Chow (“the Judge”) given on 12 April 2022^[1] granting to the plaintiff an order for the sale of a property registered in the name of the 1^st defendant pursuant to a charging order to secure the payment of maintenance by the 1^st defendant to the plaintiff.

2.  The plaintiff has not responded to the application.

3.  Having considered the documents and submission in this application, we consider it is appropriate to determine the application on paper without an oral hearing pursuant to Order 59 rule 2A(5)(a) of the Rules of the High Court Cap.4A.

B.  Background

4.  The plaintiff and the 1^st defendant were an unmarried couple. The 1^st defendant is married to another woman (“Zhao”). By a judgment dated 31 October 2016 (“the Maintenance Judgment”)given in proceedings brought under the Guardianship of Minors Ordinance Cap.13 (FCMP 97 of 2014), His Honour Judge C K Chan sitting in the Family Court ordered the 1^st defendant to pay to the plaintiff maintenance for their child in the sum of (1) HK$400,000 for the period of 9 April 2014 to 8 November 2016; and (2) HK$35,000 per month commencing 9 November 2016 until the child attains 18 years of age or completes full-time education, whichever is the later. Judge Chan further ordered (“the Charging Order”) the judgment sum to be secured by a charge over a property situated at Flat No. 2821 on 28^th Floor, Tai On Building, Nos. 57/87 Shau Kei Wan Road, Hong Kong (“the Property”) which is registered in the sole name of the 1^st defendant.  

5.  The 1^st defendant’s application for leave to appeal was refused by Judge Chan on 17 January 2017.

6.  It is not in dispute that the 1^st defendant failed to comply with the Maintenance Judgment and has not made any maintenance payment to the plaintiff.

7.  On 28 January 2016, the plaintiff commenced enforcement proceedings in the District Court seeking an order for the sale of the Property.  The proceedings were subsequently transferred to the Family Court and became FCMP 3 of 2019.

8.  In the meantime, the 1^st defendant’s father-in-law (“the Deceased”) intervened in the enforcement proceedings and was joined as the 2^nd defendant.  He counterclaimed for a declaration that the Property was held by the 1^st defendant on trust for him and for an order discharging the Charging Order.  He passed away before the trial.  His wife (“Wong”) was appointed as the personal representative of his estate to carry on with counterclaim.

C.    The dispute

9.  The Property was purchased on 7 October 2002 at the price of HK$620,000 and has since been registered in the sole name of the 1^st defendant.  On the date of completion, the 1^st defendant executed a bank mortgage on the Property which he fully repaid on 7 December 2006.

10.  The defendants’ pleaded case is that the purchase price was paid by the Deceased and the Property was held by the 1^st defendant under an “express or implied, constructive or resulting” trust for the Deceased.  As the 1^st defendant has no beneficial interest in it, the Property cannot be charged as security for the payment of maintenance by the 1^st defendant; nor can it be sold to enforce the Charing Order.

11.  Specifically, the defendants say the Deceased had provided RMB 650,000 in cash for the purchase of the Property in 2002, and the 1^st defendant and the Deceased expressly agreed that the Property was to be registered in the sole name of the 1^st defendant but he would not have any interest in it.  

12.  To prove the trust arrangement, the defendants put forward two documents.  The first is an agreement dated 3 July 2002 and signed by the 1^st defendant and the Deceased (“the 2002 Agreement”) which purportedly to show that the 1^st defendant acknowledged receipt of RMB 650,000 in cash from the Deceased for the purchase of the Property.  The second agreement was dated 9 April 2009 and signed by the 1^st defendant and the Deceased (“the 2009 Agreement”).  The 2009 Agreement states that the 1^st defendant and the Deceased agreed that the purchase money of the Property was provided by the Deceased, who owned 100% of the beneficial interest of the Property, the 1^st defendant only had a legal title to the Property and no legal rights, and that the 2002 Agreement is superseded (廢止) by the 2009 Agreement.  

13.  The defendants also produced: (1) an application (申請書, “the Application”) made by the Deceased and the 1^st defendant applying for a lawyer’s certification of the 2009 Agreement (申請對雙方於2019年4月9日簽訂的協議書進行律師見證); and (2) a certificate entitled “律師見証書” (“the Certificate”) issued by a lawyer in Guangdong, in which the lawyer attested (見證) that the 2009 Agreement complied with the legal requirements, the signatures on it reflected the true intention of the Deceased and the 1^st defendant, and the 2002 Agreement was repealed (廢止) by the 2009 Agreement.  

14.  The plaintiff does not accept that the Property is held by the 1^st defendant on trust for the Deceased. While she has no personal knowledge of the purchase of the Property, she points out that the 1^st defendant did not mention or disclose in the proceedings before Judge Chan that the beneficial interest in the Property belonged to the Deceased.  The plaintiff also challenges the authenticity of the 2002 and 2009 Agreements (原告人就2002年協議及2009年協議的真僞性提出爭議)[2]. The Judge understood the plaintiff’s case to be a challenge to the authenticity of the content of the agreements[3].

D.    The Judge’s decision

15.  At the trial, only the 1^st defendant gave evidence and the Deceased’s affirmation was admitted into evidence.  The plaintiff, who resides in mainland China, did not attend the trial in person.  The Judge noted that she had difficulty coming to Hong Kong during the pandemic.

16.  By his judgment handed down on 12 April 2022, the Judge granted an order for sale of the Property and dismissed the defendants’ counterclaim.

17.  In gist, the Judge found the 1^st defendant was not a credible witness and his evidence was evasive, inconsistent, unreasonable and inherently improbable, and rejected his evidence[4]. In particular,   

(1)  The Judge did not accept that the 1^st defendant and the Deceased had an agreement in 2002 under which the 1^st defendant was to purchase the Property and held it on trust for the Deceased, taking into account the fact that[5]: (a) the 1^st defendant’s unsatisfactory explanations as to why the Property had to be registered in his sole name; (b) if the Deceased had agreed to pay and had provided the full purchase price, there would be no need for the 1^st defendant to take out a bank mortgage; (c) the 1^st defendant’s representation in the mortgage documents that he was the sole beneficial owner of the Property was incompatible with the existence of a trust; and (d) the 1^st defendant admittedly took out the mortgage without the prior knowledge or consent of the Deceased when the mortgage constituted a major encumbrance over the Property that adversely affected the Deceased’s beneficial interest, and this is incompatible with the existence of a trust relationship.

(2)  The Judge did not accept that the Deceased provided RMB 650,000 for the purchase of the Property having regard to[6]: (a) the inconsistent accounts given by the 1^st defendant as to how the money was brought from Shenzhen to Hong Kong; (b) the defendants’ failure to adduce any documentary proof to show that any money had come from the Deceased and any deposit into the 1^st defendant’s account; and (c) the 1^st defendant’s unsatisfactory explanation on the non-availability of any bank records.

(3)  The Judge did not accept that the 1^st defendant and the Deceased entered into the 2002 and 2009 Agreements to provide proofs of their trust relationship, considering that[7]: (a) there was no need for the two of them to enter into the two agreements since it is their evidence that the Deceased totally trusted the 1^st defendant; (b) even if the Deceased subsequently had no issue with the bank mortgage, the 2009 Agreement should have made reference to it, but it did not; and (c) neither of the agreements was disclosed in the proceedings before Judge Chan when the 1^st defendant was under a duty to make full and frank disclosure on his financial matters, and the unsatisfactory explanation given by the 1^st defendant.

18.  As to the evidence of the Deceased[8], the Judge found it was essentially the same as that of the 1^st defendant.  He noted that it had not been subject to cross-examination, and considered that it suffered from the same weaknesses in the 1^st defendant’s evidence, being inherently probable, unreasonable and inconsistent with contemporaneous records, and incapable of corroborating the 1^st defendant’s evidence which was rejected as being incredible.  

19.  The 1st defendant and the Deceased’s daughter (as representative of Wong), who were both unrepresented, applied to the Judge for leave to appeal against the Judgment.  By his decision dated 4 November 2022, the Judge dismissed the application[9].

20.  The Judge rejected the arguments raised by the 1st defendant, which principally and challenged the Judge’s rejection of the defendants’ evidence and findings of fact, holding that his findings and conclusion were based on a consideration of all the evidence and arguments of the parties. 

21.  The Judge also rejected the contention of the Deceased’s daughter that she had been unlawfully deprived of the right to participate in the enforcement proceedings and the Deceased’s interests had not been adequately safeguarded.  The Judge pointed out that the Deceased’s wife as the personal representative of the Deceased’s estate had carried on the enforcement proceedings on behalf of the Deceased’s estate, and she was legally represented at the hearing.  

E.    The present application

22.  By a summons filed on 18 November 2022, the 1^st defendant made a renewed application to this Court for leave to appeal the Judge’s judgment.  In the draft notice of appeal, he put forward four proposed grounds of appeal, which may be summarised as follows (respectively “Ground 1” to “Ground 4”):

(1)  The Judge erred in rejecting the 2002 and 2009 Agreements:

(a)  The rejection of the 2002 and 2009 Agreements had the effect of finding them to be forged, but there was no evidence from the plaintiff to satisfy the evidential burden of proving forgery.

(b)  In finding that there was no need to sign the 2002 and 2009 Agreements, the Judge failed to consider the other purpose served by these agreements, namely to protect the Deceased from third parties’ claims such as the enforcement proceedings brought by the plaintiff.

(c)  The reference to the 2002 Agreement in the 2009 Agreement supported the existence and authenticity of the 2002 Agreement.

(d)  The Judge failed to give separate consideration to the unchallenged evidence of the Certificate and the Application, which support the existence and authenticity of the 2002 and 2009 Agreements.

(e)  The Judge was wrong to reject the Deceased’s evidence on the same basis as the 1^st defendant’s evidence when the Deceased did not execute the mortgage documents and the representations and warranties in the documents could not be used to contradict his evidence. 

(2)  The Judge erred in finding that the Deceased did not give the 1^st defendant RMB 650,000 for the purchase of the Property:

(a)  The obtaining of the bank mortgage was not incompatible with the 2002 and 2009 Agreements because the agreements did not prescribe the method of purchase. Nor was it inconsistent with the fact that there was an upfront payment of RMB 650,000 by the Deceased.

(b) The Judge was wrong to find the Deceased did not give RMB 650,000 to the 1^st defendant simply because there was no mention of the bank mortgage in the 2009 Agreement. 

(3)  The Judge failed to consider whether there was any evidence to infer a common intention constructive trust between the 1^st defendant and the Deceased.

(4)  Upon rejecting the existence of a common intention constructive trust, the Judge failed to consider whether there was a resulting trust based on the payment of RMB 650,000 from the Deceased for the purchase of the Property.

F.  Our reasons for decision

F.1       Relevant legal principles

23.  Section 63A of the District Court Ordinance Cap.336 provides that leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interest of justice that the appeal should be heard.

24.  The 1^st defendant’s intended appeal is primarily a challenge to the Judge’s findings of fact and his assessment of credibility and evaluation of evidence.  The approach of the appellate court to this kind of appeal and the applicable principles are well settled.  Those relevant to the present application include: (1) an appeal court will not interfere with the trial judge's conclusions on primary facts unless it is satisfied that he was plainly wrong, which is a high threshold; (2) “plainly” does not refer to the degree of confidence felt by the appeal court that it would not have reached the same conclusion as the trial judge and what matters is whether the decision under appeal is one that no reasonable judge could have reached; (3) the mere fact that a judge does not mention a specific piece of evidence does not mean that he overlooked it, and an appeal court is bound, unless there is compelling reason to the contrary, to assume that the trial judge has taken the whole of the evidence into his consideration; (4) while the trial judge must consider all the material evidence, he needs not discuss all of them in his judgment, and the weight he gives to the evidence is pre-eminently a matter for him; and (5) There may be times when the trial judge’s reasons for judgment could have been better expressed, it is thus important to understand the judge’s reasons and judgment in context and not to pick over the judgment or subject it to narrow textual analysis: Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at [42]; China Gold Finance Limited v CIL Holdings Limited & Ors (unreported) CACV 11/2015, 27 November 2015, at [17]; ZJW v SY (unreported) CACV 10/2017, 1 December 2017; and Volpi & Anor v Volpi [2022] EWCA Civ 464, at [2]-[5].

25.  With these principles in mind, we turn to consider the 1^st defendants’ proposed grounds of appeal.

F.2      Ground 1

26.  For the reasons set out below, we find no merits in Ground 1:

(1)    Ground 1(a)

(1.1)  There is no warrant for the argument that the rejection of the 2002 and 2009 Agreements has the effect of finding the two agreements to be forgeries.  The central issue before the Judge was whether there was a trust over the Property. The defendants’ case is that the two agreements were made in 2002 and 2009 and they are proofs of the trust relationship.  Reading the judgment in context, the Judge only rejected the defendants’ case that the 1^st defendant and the Deceased signed the 2002 and 2009 Agreements because of the existence of a trust relationship between them.

(1.2)  While the plaintiff disputes the authenticity of the 2002 and 2009 Agreements, she has not advanced a case of forgery (see [13] above).  Properly understood, her challenge is as to how the two documents came to be created and the truthfulness of what was asserted in them. 

(1.3)  Likewise, it is apparent from his discussions and findings that when the Judge referred to the issue of the authenticity of the two 2002 and 2009 Agreements, he was not considering whether the two documents were forgeries.  His focus was on whether the two documents were created in the manner and for the purposes asserted by the defendants, and whether they are shams in the sense that their contents or what they purport to show do not reflect the true intention or arrangement over the Property.

(2)    Ground 1(b)

The argument that the Judge failed to consider there were other purposes for the 1st defendant and the Deceased to enter into the 2002 and 2009 Agreements is untenable.  First, this does not appear to be a point relied on by the defendants or canvassed by the parties at the trial.  Second, the 1^st defendant has not identified any evidence adduced at the trial that the 1^st defendant and the Deceased made the two Agreements also for the purpose of protecting the Deceased against claims of third parties or the plaintiff.  Third, both the 1^st defendant and the Deceased’s evidence is that the Deceased fully trusted the 1^st defendant in the purchase of the Property.  The Judge was thus justified to take the view that if this was the case there would be no need to execute the two agreements.

(3)    Ground 1(c)

(3.1)  Similar to Ground 1(b), this ground is effectively a challenge to the Judge’s finding of fact.  The argument that the Judge failed to consider that the 2009 Agreement had mentioned the 2002 Agreement which supported the existence and authenticity of the 2002 Agreement is not reasonably arguable.  As we point out under Ground 1(a), the primary dispute over the authenticity of the two documents is the truthfulness of their contents, whether they reflect the true position as to the purchase of the Property, and not whether they in fact existed. 

(3.2)  This ground was expanded in the 1^st defendant’s written submission to include a complaint that the Judge failed to find a common intention constructive trust based on the 2002 Agreement.  However, the Judge had rejected the 1^st defendant’s and the Deceased’s evidence of a trust relationship, and found as a fact that the two documents were not to record or confirm a trust relationship between them.  The 1^st defendant has failed to demonstrate how the Judge was palpably wrong in these findings.  As such, there is no basis for complaining that the Judge did not infer or find a common intention trust based on the 2002 Agreement.  

(4)    Ground 1(d)

(4.1)  Similar to Grounds 1(a) and (b), the argument under this ground that the Judge failed to give separate consideration to the Certificate and the Application and to hold that they support the existence and authenticity of the 2002 and 2009 Agreements is misplaced.  As explained above, the issue of authenticity is not about whether the two agreements exist, but whether they are shams.  

(4.2)  Further, the Judge was fully aware of the fact that the 2009 Agreement was attested by a PRC lawyer, which was also why he questioned the need for the 1st defendant and the Deceased to enter into the two agreements if the Deceased fully trusted the 1st defendant. 

(4.3)  Moreover, the weight, if any, to be given to the Certificate in light of its content and the fact that the attesting lawyer did not testify, must be a matter for the Judge.  The same goes for the Application bearing in mind that the reason for applying for attestation as stated in it was provided by the 1^st defendant and the Deceased, whose evidence was rejected by the Judge.      

(5)    Ground 1(e)

(5.1)  There is no merit in the argument that the Judge should not have rejected the Deceased’s evidence on the same basis as he did with the 1st defendant’s evidence as the Deceased did not execute the mortgage document and should not be bound by the representations and warranties contained in them.  Importantly, the Judge rejected the defence case and the evidence of the 1^st defendant and the Deceased having regard to a range of matters. 

(5.2)  Although the Deceased did not execute the mortgage documents and it is the 1^st defendant’s evidence that he had no prior knowledge of the mortgage, there are many commonalities in the evidence of the 1^st defendant and the Deceased, including the arrangement over the purchase of the Property, the provision of the purchase money and the execution of the 2002 and 2009 Agreements.  Given the Judge’s rejection of those evidence as inherently improbable and incredible, he was well entitled to reject the Deceased’s evidence.

(5.3)  Further, the 1^st and 2^nd defendants were represented by the same legal team before the Judge.  They ran the same case before the Judge.  There was no submission that the Deceased did not accept the 1^st defendant’s evidence or that he would disassociate himself with the 1^st defendant’s evidence.        

F.3      Ground 2

27.  Ground 2 is a challenge to the Judge’s rejection of the 1^st defendant’s and the Deceased’s evidence that the Deceased had given RMB 650,000 to the 1^st defendant for the purchase of the Property.  The Judge had, for the detailed analysis and reasons given in the judgment, found the 1st defendant not a credible witness and rejected this aspect of the defendants’ case and evidence as unreasonable and contradictory to the contemporaneous records.  In our view, the arguments under Ground 2 fail to surmount the high threshold of showing the Judge’s findings to be palpably wrong.

28.  First, the arguments under Ground 2(a) that the two agreements did not prescribe the method of payment for the purchase of the Property and the obtaining of a mortgage was not incompatible with the fact that the Deceased had made an upfront payment do not really address the Judge’s concern or show his evaluation of the evidence to be wrong. The fact remains there is no record, and the defendants have not produced any document, showing that the Deceased had RMB 650,000 and had given the sum to the 1^st defendant; and the 1st defendant has not produced any written reply from the bank to support his assertion that he had tried unsuccessfully to obtain the record(s) from the bank.  RMB 650,000 is not a small sum of money.  The Judge was entitled to take the view that the above indisputable findings of fact together with the 1^st defendant’s conflicting accounts of how the cash was brought to Hong Kong cast doubts on the assertion that the Deceased had provided RMB 650,000 to the 1^st defendant.

29.  Second, contrary to the argument under Ground 2(b), the Judge came to this conclusion after considering a range of matters and not just because there was no mention of the bank mortgage in the 2009 Agreement: see [46]-[47] and [72]-[75] of the Judgment.   

F.4      Ground 3

30.  The 1st defendant argues under this ground that because there was no finding that the contents of the 2002 and 2009 Agreements were inaccurate, a common intention constructive trust can be inferred from the familial relationship between the 1st defendant and the Deceased, the execution of the 2009 Agreement in the presence of a lawyer and the Deceased’s payment of RMB 650,000 as the purchase price.  This ground is plainly unarguable in light of the Judge’s rejection of an agreement in 2002 between the 1^st defendant and the Deceased under which the Property was to be held by the 1^st defendant for the benefit of the Deceased. The Judge also did not accept that the Deceased had provided the purchase money for the Property.  In these circumstances, there is no basis for any consideration of common intention trust.    

F.5      Ground 4

31.  Similar to Ground 3, the complaint under this ground that the Judge failed to consider whether a resulting trust arose from the payment of RMB 650,000 by the Deceased for the purchase of the Property is unarguable.  First, the argument that the plaintiff had not adduced any contrary evidence to challenge the payment of RMB 650,000 overlooks the plain fact that the burden is on the defendants to establish by credible evidence the existence of a trust, be it an express, implied, constructive or resulting trust.  

32.  Second, as noted above, the Judge did not accept that the Deceased had given RMB 650,000 to the 1st defendant for the purchase of the Property.  There is simply no finding that the Deceased had provided the money for the purchase of the Property.  In consequence, there is no basis for any resulting trust to arise.  

F.6      Conclusion  

33.  For the reasons stated above, the 1st defendant’s proposed grounds of appeal have no reasonable prospect of success.  There is also no other reason in the interest of justice for the appeal to be heard.  We refuse the application for leave to appeal.

G.    Disposition

34.  Accordingly, we order that the 1st defendant’s summons dated 18 November 2022 be dismissed.  As the plaintiff has not responded to this application, we will make no order as to costs.

35.  As the present application is totally without merit, we further pursuant to Order 59, rule 2A(8) of the Rules of the High Court Cap.4A, order that no party may request our determination to be reconsidered at an oral hearing inter partes.