CWW v. WYF AND ANOTHER

FCMC 15963 / 2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 15963 OF 2013

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JUDGMENT
(Preliminary Issue)

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1.  This trial is for the determination of a preliminary issue regarding the beneficial ownership of a property, which is a residential unit in Century Gateway, Tuen Mun (“Gateway”), of which the 2^nd Respondent, the elder son of the family (“the elder son”), is the sole registered owner. The Petitioner (“the Father”) is, however, seeking a declaration that the elder son is merely holding it as trustee for the Father and the 1^st Respondent (“the Mother”).

2.  Although the proceedings were conducted in Cantonese, some of the affirmations submitted were in English and some in Chinese.  Both Mr Chow for the Father and Mr Yim for the Mother, and the elder son, who acted in person, agreed that my judgment could be delivered in English.

Background

3.  The Father and the Mother were married in 1985 and there are two sons of the family. The elder son was born in July 1987 and he is now 28 years of age.  After obtaining his degree in 2010, the elder son has been working in a shipping company and he is now an assistant sales manager earning around HK$15,000 per month.  The younger son (“the younger son”) was born in September 1990 and is now 25 years of age.  He graduated from a university in Hong Kong and now works as a junior engineer earning HK$40,000 per month. 

4.  It is not in dispute that for a long period of time since the early 1990s, the Father had been working mainly in Mainland China and was rarely at home. It is also not in dispute that some of the properties purchased during the subsistence of the marriage were registered under the name of the Mother only.  The Father, on his part, said such arrangement was for easy and better management as he spent most of the time in Mainland China.  On the other hand, the Mother said that the monthly maintenance provided by the Father was never enough to cover the family expenditure, and that as she had been working throughout the marriage, she had always been financially independent from the Father.  In any event, she inherited a sum of around HK$887,000 from her deceased father in 1987 and she used the legacy to do various investments in the stock and property markets.  Because of the economic growth during those years in Hong Kong, her own assets multiplied.  The Mother said that those stocks and properties were paid for solely by her, and that the Father’s assets had all along been registered under his own name.

5.  Those stocks and properties and the Father’s assets would no doubt be dealt with subsequently at FDR hearings or ancillary relief proceedings.

Gateway: why is it held under the elder son’s name?

6.  It is the Father’s case that in or around August 2012, the Mother wanted to purchase Gateway as a family investment and she believed there would be a 20-30% return in a short time.  However, the Mother told the Father that she could not take out another mortgage due to the fact that she was holding too many properties at the time. After some discussions between them, the Father agreed to use the elder son’s name as the owner.

7.  The Father said that the elder son initially refused to let them use his name because he was worried that he had to be responsible for the mortgage repayments.  The elder son eventually agreed to accept the arrangement only after the parents reassuring him that he would not be held liable for that.  The elder son is fully aware that he is merely holding Gateway as trustee for his parents and Gateway therefore remains the family asset of the Father and the Mother.  The Father further alleged that he had raised a total sum of HK$950,000, part of which was RMB 650,000 borrowed from his Mainland China friend.  Why should he raise a personal loan and use it as a gift to his son?

The elder son’s case

8.  The elder son said that before the purchase of Gateway he had already been in gainful employment for 2 years and he also had a steady girlfriend.  His father had on occasions asked him about his future planning and when he would get married etc. The elder son repeatedly told his father that he and his girlfriend were saving up hard and until they were in a position to purchase a home of their own, they would not consider marriage.

9.  In the evening on 16 September 2012, while he and his brother were watching television, their parents returned home.  As soon as the Father came in, he told the elder son that he had just viewed the Gateway show flat. He said it was a good housing development and asked the elder son whether he had seen it.  The elder son said he had not seen it because he had no money.  The Father then said to him that as he wasalready 20 odd years old and had a steady girlfriend, he should start planning for buying a flat for his marriage. The elder son again said that he had no money and told his father that he would save up the money required bit by bit to buy his own home.  The Father then said to him that without the Father’s help, he clearly could not achieve anything. 

10.  The Father then proposed to contribute HK$1 million to assist him to purchase Gateway and asked the Mother to be responsible for the rest. The Father told the elder son to buy a 3-bedroom flat to take into account the need to accommodate future babies and a domestic helper so that he would not need to move again in the near future.  At the time, the Father had looked at the younger son, but his brother immediately said to his father that he had no objection to the arrangement and that if he needed a property, he would buy it himself and he did not mind his father contributing to the elder brother’s home. 

11.  After making some researches and calculation as to his financial capabilities, the elder son subsequently told his mother that he was agreeable to the arrangement.  His initial plan was to lease out the property upon taking delivery of vacant possession so that the rental together with part of his monthly salary could be used to pay the mortgage repayments.  He calculated that by the time he got married at the age of around 30, his income combined with that of his girlfriend’s should be able to afford the monthly repayments without difficulty.

12.  The elder son said that his mother had reminded him that the property was to be registered in his sole name, but that his financial ability at that time would not be able to pass the bank’s stress test and that therefore he needed his father as a guarantor.  Upon the Mother’s advice, he talked to his father, who agreed to do so.  He also accepted his father’s idea about a 3-bedroom flat; he therefore went ahead with the purchase.

13.  Unexpectedly, on 15 June 2013, the Father suddenly returned home after disappearing for a few weeks and got mad with the Mother, demanding that there be a division of the family assets.  The Father told the Mother that if she disagreed and/or failed to pay him an amount to his satisfaction, he would kill her.  The Mother was so terrified that she moved out to live with his maternal grandmother temporarily.  Although the elder son and his brother remained in the matrimonial home, the Father as usual returned only occasionally and when he returned, he behaved arrogantly and smelled strongly of alcohol.  In the meantime, the two brothers noticed that although the Mother was living with their maternal grandmother, she was suffering from depression and at times had suicidal thoughts.  Whenever the Mother was travelling to and from work, she had to hold an umbrella tightly so as to protect herself from being harmed.  Such distressing sight of the Mother broke the hearts of the two brothers, because the mother whom they knew used to be a strong and independent woman, but it was apparent that the Mother had completely broken down due to the above events.  After some discussions between the two brothers, they decided to move to Gateway together with the Mother so that she could properly be looked after during the most difficult time in her life.  Although this arrangement would mean that the elder son’s original plan would have to be delayed, the two brothers felt that they, being her sons, were obliged to do so and at that time, all they wanted was to help the Mother to come out of her depression and put her on the road to speedy recovery.

14.  The elder son denied that he was holding the property on trust for his parents and he said that he had never heard of that until the present preliminary proceedings were taken out by the Father.  The elder son admitted that his emotional ties with the Father was distant when he was young.  However, as he became older, he started to understand that his father was also under a lot of pressure.  He therefore treasured very much the time when the Father returned home and he went out to ‘yum cha’ (“lunch at Chinese restaurant”) with him on Sundays so that they could chitchat in a causal atmosphere.  The Father knew that he would not get married before he could afford a flat of his own.  When the Father suddenly brought up the idea that he would assist him in paying the down payment, he really appreciated his father’s kindness and thought that his offer was generous.  He was utterly heartbroken by the incident happened on 15 June 2013, the resulting illness of his mother and the Father’s complete change of attitude from his initial offer.

What did the Mother and the younger son say?

15.  The elder son called his younger brother to give evidence.  The elder son’s evidence as to the details of the family’s discussion about the purchase of the property was corroborated by the Mother and the younger son. The Mother further added that on 16 September 2012, the Father brought along Mr Xu and 2 friends from China and they went to ‘yum cha’.  She was told by the Father that Mr Xu was planning to immigrate to Hong Kong by way of investing in Hong Kong.  As the Mother had much experience in investing in the property market, she was asked to introduce some estate agents who had knowledge of this area to Mr Xu.  At the ‘yum cha’ gathering, there were 7 people, including 2 estate agents, Mr Xu and the 2 Chinese friends. Mr Tsang, an estate agent whom she knew since 2010 suggested to Mr Xu that he should have a look of some properties because Mr Xu probably needed to buy a residential property, which would be his home in Hong Kong, should he decided to settle here.  After the lunch, they went to the Elements to view the Gateway show flats. The Mother said that the Father appeared to be very excited about the development because when Mr Tsang drove the Father and the Mother back by his car, the Father kept on saying that Gateway was good and that they should give some thoughts to it. 

16.  As soon as they arrived home, it was the Father who proposed to the elder son that he would contribute HK$1 million as down payment for the purchase of Gateway and he asked the Mother to be responsible for the rest.  The Mother said that the elder son never felt reluctant to accept the arrangement and that he had in fact thanked his father at the time.  The Mother said that the family did not discuss much further because Mr Xu and the 2 friends came to their home and the Father went back to China with them that evening. The Father did not return home the following week.

17.  About 3 days later, after the Mother and the son respectively did some assessments of their own financial resources and abilities, the Mother and the elder son had some discussions.  The Mother said that she knew her son’s plan about letting out the property before he would get married and the elder son was fully aware that he had to start repaying the equitable mortgage before vacant possession could be taken, but he reassured the Mother that even if he failed to get any tenant within one year after taking possession, he could still manage financially. 

18.  The Mother then went with the elder son to view the show flats the following Saturday and she paid 10% of the total consideration when the preliminary sale and purchase agreement was subsequently executed.  She also paid the stamp duty and legal fees but she did not accompany the son to the law firm or the bank, and the matter was solely handled by the elder son. As to the Father’s reaction when he heard about the purchase, the Mother said that he simply said 28^th Floor was good because it was an auspicious figure.

19.  Despite the Father’s initial offer to pay HK$1 million, the Mother said that he had only contributed HK$700,000.  HK$400,000 was paid to her little by little by cash and $300,000 was by way of a cheque.  The Mother said that she had once chased him for the shortfall of HK$300,000 in January 2013 but the Father simply said he had no money.  She therefore did not pursue the matter anymore.

20.  As for the sum of HK$250,000 which the Father alleged that he had also paid, the Mother said that he had indeed paid but that was in the period between January and August 2012, and that again little by little by way of cash.  The Father specially told the Mother that it was for the repayment of part of the debts which he borrowed from the Mother when he set up his own business in 2006.  In any event, the payment was made before the purchase of Gateway and she therefore refused to treat this sum of HK$250,000 as part of the Father’s contribution to the purchase of Gateway. 

21.  The Mother said that the total down payment of Gateway was HK$2,082,700, of which she had contributed HK$1.38 million plus HK$208,270 as stamp duty.  She treated those sums as a gift to her elder son because she had agreed in the family discussion that she would be responsible for the rest. The Mother however said that she did not pay any of the monthly mortgage repayments because it was agreed that it would be the elder son’s responsibility.  Although she had real worries about the elder son’s financial ability, she was confident that, being his mother, she would definitely come to her son’s rescue in case anything went wrong because she still had earning capacity.  However, the Mother said in her oral evidence that she had never disclosed this thought to the elder son. 

22.  The Mother denied that Gateway was a family investment because with her plenty years of experience in the property market, she would never purchase any first hand property with 3 bedrooms, for the reason that not only the cost was high, but the profit would be less than what she could gain in the secondary market.

Issues

23.  Mr Chow submitted that the elder son is holding the property under express or resulting trust whereas Mr Yim and the elder son said that it was a gift inter vivos.  Both Mr Chow and Mr Yim agreed that because all parties including the elder son confirmed that there had been a family discussion before the purchase of Gateway and the version of the Father totally contradicts that of his family members, a finding of fact is required to be made as to what had actually been discussed and what agreement was made as a result.  Furthermore, as there is no dispute that both the Father and the Mother had contributed money for paying the down payment of Gateway, and only the actual amounts of their contributions are in dispute, the Court also needs to make a finding as to how much the Father had paid.

The Law

24.  Mr Justice Mostyn in the case of Bhura v Bhura & Others [2014] EWHC 727 at paragraph 8 of his judgment set out the legal principles to be applied to a property dispute as follows:

“The applicable legal principles concerning a property dispute such as this are tolerably clear and have most recently been re-stated by the Supreme Court in Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776. In summary I think they are as follows:-

(i) If there was an express declaration of beneficial interests that was, almost invariably, the end of the matter. Such an express declaration could only be displaced if it had been procured by fraudulent conduct.

(ii) If there was no express agreement about the beneficial interests then there was likely to be (at least) a tacit understanding...... In determining whether there was such a tacit understanding, and if so what it was, the court would look at all the evidence holistically and would examine the whole course of the parties' conduct in relation to the property.

(iii) In the rare case where the evidence did not reveal a tacit understanding about ownership, the court could reach for presumptions. An obvious presumption is that beneficial ownership is the same as legal title (see Jones v Kernott at [17] and [51](1)).

(iv) Another was the presumption of the resulting trust.

....

(vi) But presumptions are only presumptions. In a memorable dictum Lamm J in Mockowik v Kansas City, St Joseph and Council Bluffs Railroad Co (1906) 196 Mo 550 at 571 stated that 'presumptions ... “may be looked on as the bats of the law, flitting in the twilight but disappearing in the sunshine of actual facts.” '

(vii) 'Actual facts' were those which suggested that a result steered by a presumption was unfair....”   

25.  As to the burden of proof, Deputy High Court Judge To (as he then was), in Lee Tso Fong v. Kwok Wai Sun & Anor [2008] 4 HKLRD 270, [2008] 4 HKC 36, said as follows:

22.   I do not think there is any simple rule that the burden of proof lies upon the party against whom the presumption operates.  Presumptions are rules of evidence.  They are not determinative of which party bears the legal burden of proof.  The legal burden of proof in any particular case depends on the circumstances in which the claim arises.  The general rule is Ei qui affirmat nopn ei equi negat incumbit probation. Proof rests on he who affirms, not he who denies.  It therefore lies upon the party who substantially asserts the affirmative of the issue: see Constantine Line v Imperial Smelting Corporation [1942] AC 154 at 174.  This burden is fixed at the beginning of the trial by the state of the pleading. 

23.   Prima facie, beneficial ownership goes hand in hand with legal ownership.  If a plaintiff seeks to divorce the beneficial ownership from legal ownership and to claim the beneficial ownership in the property which he purchased and transferred to the name of another, he must bear the burden of proving his equitable right which is inconsistent with the undisputed legal title.  He may discharge that burden by proving an express trust.  Or, he may be assisted by the presumption of resulting trust by proving that he paid the purchase price of the property. But, like all presumptions, the presumption of resulting trust operates only in the absence of evidence to the contrary.  Once this presumption is raised, the party seeking to challenge it bears the evidential, but not legal burden, of adducing evidence to displace the presumption of resulting trust.  That party may adduce evidence of a contrary common intention of making a gift.  If that evidence is insufficient to displace the presumption of resulting trust, the presumption prevails.  But if that evidence is sufficient to displace the presumption of resulting trust, the party who has the legal burden will fail unless he can prove the resulting trust.

Discussion

26.  Mr Chow pleaded express trust for the Father, but section 5 (1)(b) of the Conveyancing and Property Ordinance Cap 219 provides that:

“a declaration of trust respecting land or any interest therein shall be manifested and proved in writing signed by the person who is able to declare such trust or by his will.”

27.  In the absence of a proper declaration of trust, I am not satisfied that the Father can rely on express trust.

28.  As an alternative, Mr Chow submitted that since there are no disputes that the parents had contributed towards the purchase of the property, the elder son is holding Gateway on resulting trust for his parents.

29.  In order to support this argument, the Father first of all argued that the elder son’s version of the events could not be correct because at the time of the purchase of Gateway, it was still an uncompleted development.  Therefore, from the date of the execution of the equitable mortgage in January up to August 2013, when vacant possession was to be delivered, no rental income could possibly be generated. Since the elder son’s monthly income was only HK$15,000, the Father argued that he could not afford to pay the mortgage repayments of HK$17,699.30 per month.

30.  With respect, the Father’s argument is difficult to understand.  The Father in his affirmations in support of his application repeatedly said that, “(the elder son) at first refused to use his name to hold the property because he was worried that he may be eventually responsible for any mortgage repayment if we failed to make such mortgage repayment.  After our assurance to him that he would not be in trouble by so doing as we would be fully responsible for the mortgage loan repayment, he finally agreed to use his name as purchaser in the transaction...”[1].

31.  If the elder son is holding the property as trustee and Gateway is a family short-term investment, it seems to be the Father’s case that he and the Mother should be responsible for the monthly mortgage repayments given the Father’s allegation that the elder son had no financial ability to do so. However, from the Mother’s evidence that was unchallenged, apart from the stamp duty, legal fees and the initial down payment, she did not assist the son in the monthly mortgage repayments. By his own admission in Court, the Father also agreed that the elder son was responsible for the mortgage repayments for those 7 months.  The Father further admitted that the amounts listed by the elder son, which represent the monthly mortgage repayments since January 2013 are correct[2]. So, what is the Father’s point?

32.  The Father said in his oral evidence that when he finally broke up with his wife in June 2013, it was agreed that the elder son would be responsible for the monthly mortgage repayments, but he did not explain why there was such an agreement if Gateway was indeed a family investment. 

33.  On the basis of the Father’s own admission, I accept that the elder son had been responsible for the monthly mortgage repayments since February 2013, ie one month after the equitable mortgage was executed. I am also satisfied that the elder son had the means to do so. In Court, the elder son said that he had more than HK$200,000 in his savings at the time of the purchase of Gateway because he had been teaching classes for children who had special needs and Taekwondo since he was in Form 5.  Furthermore, there was pocket money from his father in the sum of around HK$3,500 per month before he was financially independent and the yearly lai sees (red packet money). Since this part of his evidence was not challenged, I accept his evidence.

34.  As the Father did not dispute the list produced by the elder son showing the amounts of contributions paid by the brothers, I accept that after the brothers moved into Gateway with the Mother in September 2013, the younger brother also contributed HK$8,000 per month towards the mortgage repayments until the time when Gateway was leased out in May 2015.  I accept the younger brother’s evidence that HK$8,000 was not a big sum to him and that in any event, he understood that there was a family crisis and as a son, he treated it as maintenance and that he did not mind making the contributions even though he was not named as an owner of the property.  

35.  Based on the above findings, I agree with the elder son that if there had been a family discussion that he was merely a trustee of Gateway, it would not have been necessary for him to pay any of the mortgage repayments.  It is in fact the Father’s allegation that the elder son initially refused to put his name down and that he would not have agreed to do so but for his parents’ reassurance that he would not be held liable for the mortgage repayments.  I therefore find the Father’s evidence self-contradictory.

36.  The Father in his affirmations also repeatedly alleged that, “by reference to (the elder son’s) own income, it is unreasonable and beyond his ability to purchase a property of such price at this stage of his life.”[3] I agree.

37.  However, it is the Father’s case that he had promised to contribute HK$1 million towards the down payment and the Mother would be responsible for the rest no matter whether it was a gift or a trust and that the Father had indeed paid a substantial part even though the exact amount he paid is in dispute.  As regards the monthly mortgage repayments, the Father never in his evidence said that he had made any contribution and he even agreed in his oral testimony that the amounts that the brothers had contributed towards the monthly mortgage repayments are not in dispute.  If that is the case, again what is the Father’s point?

38.  The Father also argued that “it is certainly not believable or reasonable for me to raise a personal loan and use it as a gift to my son XXX to purchase the subject property.”[4] 

39.  Both the two sons and the Mother confirmed in Court that they did not know that the Father’s contribution was a loan from his friend.  The Father in his oral evidence also confirmed that when the Mother said she needed HK$1 million, he did not tell the Mother that it was a loan and that he just paid as requested.  Therefore, when the Father called his friend Mr Xu, who had lent him RMB 650,000, as witness to confirm the loan, Mr Xu’s evidence did not assist the Father’s case. 

40.  Although I find Mr Xu an honest witness, Mr Xu only said that the Father did invite him to view Gateway because the Father had said to him that there would be a 20-30% return. Although he had no interest in this matter, Mr Xu came to Hong Kong with the Father for viewing the property and for sightseeing.  Mr Xu also said in Court that he had not met the elder son before this Court appearance and he also confirmed that he did not know why the Father bought the property and, being a friend of the Father, when the Father said that he needed to borrow money, Mr Xu did not ask him for the reason but just told his wife to give the money to the Father. I therefore did not find Mr Xu’s evidence particularly helpful to the Father’s case save that Mr Xu confirmed that the Father did borrow money from him.

41.  Although I tend to agree with the Father that it may not make any sense to raise a personal loan just to use it as a gift to his son and yet at the same time, neither does it make much sense for the Father to borrow a sum of RMB 650,000, which formed the major part of his initial promise to contribute HK$1 million for the family investment, if the Father did not have the financial means to do what he said he intended to do from the beginning.  I suppose only the Father knows why he chose to do so.

42.  Another argument put forward by the Father is that he had not thought of giving any properties to any of his sons and denied that he had ever heard the elder son say that he would not marry before he had a property of his own. 

43.  The Father; in answering a question put by Mr Yim, admitted in Court that he had once asked the Mother to transfer her property in Nerine Cove to the elder son and let him be responsible for the remaining mortgage repayments, but he was told off badly by the Mother because she claimed that those properties of her own were for her retirement.  The Father said in his oral evidence that after that occasion on which the Mother lost her temper, he decided not to make any more of those suggestions. The Mother confirmed in Court that when the Father made that suggestion, she refused to do so because the Nerine Cove property was funded by her own mother and she therefore would not give this particular property to the elder son.

44.  I find the Father very evasive when cross-examined by Mr Yim as to why he had that idea about asking the Mother to transfer the Nerine Cove property to the elder son, which was contrary to his statement in his affirmation that he had never thought of giving any properties to the son.  The Father in reply said that the proposal to the Mother was not meant to be a gift because the Nerine Cove property was registered under the sole name of the Mother. In any event, he said that the proposal was made 7 months before the purchase of Gateway. 

45.  The Father appeared to be saying that because the Nerine Cove property was a property under the Mother’s name, his proposal was not meant to be a gift by him.  When asked by Mr Yim again whether he had any interest in those properties that were held in the Mother’s sole name, the Father kept on repeating in his oral testimony that he had paid HK35,000 per month as maintenance and asked why he should not be entitled to any of those assets. 

46.  No doubt those other properties would be dealt with in the subsequent ancillary relief proceedings.  Suffice it for me to say now that I do not believe the Father when he said that he did not know that the elder son would not get married if he did not have his own property.  I accept the Mother’s evidence that since the elder son got older, the relationship between the Father and the elder son had been good. Even the Father confirmed in his oral evidence that he frequently went to yum cha with his two children save that he alleged that he had to pay each of them HK$100 as an inducement for them to join the lunch, which allegation was however denied by the elder son. The Father said that in Guangzhou he had given HK$1000 together with a bottle of wine to the elder son for him to give them to his girlfriend’s family as present so as to show courtesy.  In Court, the Father mentioned that he looked after the two boys when the Mother once abandoned them when they were young. Although the allegation was denied by the Mother, I accept that the Father and the two sons did have good relationship before.  I also accept the Mother’s evidence that by way of comparison, the relationship between the Father and the elder son was much better than that between the Father and the younger son. 

47.  If the relationship between the Father and the elder son was good, isn’t it normal for a father during causal chit-chat at the weekly ‘yum cha’ gatherings to ask his son about his future planning?  Given the Father’s admission that he had once asked the Mother to transfer the Nerine Cove property to the elder son, it begs the obvious question of why he made such a suggestion and even asked the Mother to let the elder son be responsible for the remaining monthly mortgage repayments.  In my view, the Father’s suggestion clearly demonstrates that he had the idea that the elder son should have a property of his own and that the son needed parents’ assistance.  I therefore do not believe the Father’s evidence that he did not know the elder son wished to have his own property before his marriage, nor do I believe that he had not thought of giving any properties to the elder son.

48.  Mr Chow in his closing submission submitted that the Mother’s version could not be believed because she contradicted herself in that according to her own admission, the Mother had rejected the Father’s idea to transfer the Nerine Cove property to the elder son and yet she followed the Father’s instructions to purchase Gateway a few months later. 

49.  With respect, I disagree. I accept the Mother’s explanation that the Nerine Cove property could not be transferred to the elder son because it was funded by her own mother.  Even the Father said in his evidence that the Mother was mad at his suggestion because she said that those properties which were registered under her name were for her own retirement.

50.  I accept the Mother’s evidence that even though she and the Father had not been on good terms for years, she was still delighted at the Father’s proposal to contribute towards the down payment of Gateway as a gift to their own son.  She said that as a matter of fact a lot of parents nowadays assisted their children to set up their homes by giving them money to pay the down payment for acquiring their first property.  I entirely agree.

51.  Mr Chow in his closing submission also submitted that if Gateway was indeed a gift to the elder son in anticipation of his marriage, it is unbelievable that the elder son did not bring his girlfriend to view Gateway before the purchase.  I beg to differ.  I accept the elder son’s explanation that because the down payment was paid by his parents, he had never thought of taking the girlfriend to view the property and the girlfriend was not at all angry with him.  As it is a matter between the elder son and his girlfriend, I do not find anything wrong with his decision.

52.  Another point that the Father raised in paragraph 12 of his 3^rd Affirmation is that “It had never come to my mind that I would use my name as the purchaser to complete this deal on this occasion and such was also never suggested by the 1^st Respondent at all...”[5]. 

53.  When answering a question put by Mr Yim, the Father however admitted in Court that he had thought of putting down his name as the owner of Gateway but the Mother told him that he was of old age.  I therefore find this part of his evidence inconsistent.  In any event, it is not in dispute that the Father did put his name down as the guarantor, why could he not hold Gateway as the owner? I accept the Mother’s evidence that if the Father so wanted, he could be the beneficial owner because he was only 55 years of age at the time of the purchase and he still has another 20 years before he would reach 75, which was the upper age limit the bank(s) set for considering who would normally have the financial ability to repay a loan.

54.  The Father also in his oral testimony said that during the family discussion, the younger son had mentioned that if he wanted to purchase a property, he would buy it himself (阿俊話要買樓，佢會自己買).  If there was discussion that Gateway was a family investment, out of what context did the younger son utter this sentence?  The only logical conclusion is that during the family discussion, the Father did suggest buying Gateway as a gift for the elder son by way of contributing money towards the down payment and upon hearing that, the younger son told the Father that he did not mind his father’s generosity towards his elder brother. 

55.  As the onus is on the Father to prove that the elder son is holding Gateway as trustee, he needs to discharge that duty.  In this case, I find no evidence that is in the Father’s favour.

56.  I believe that the family did have a family discussion in the sitting room in Aegean Coast on 16 September 2012 and that the Father did suggest contributing HK$1 million as part of the down payment with the Mother contributing the rest.  My finding is based not only on my view that the Mother and the two sons are honest and credible witnesses, but also on my judgment that their versions are more logical.

57.  I do not agree with Mr Chow when he said in his closing submission that the evidence of the younger brother, the elder brother and the Mother are bound to be consistent because they are in the same camp.  I wish to say that this is a family case.  All parties including the younger brother are family members.  By taking side with the elder son, the Mother would end up losing all her interests in Gateway despite the fact that she had paid a substantial part of the down payment.  The younger son, likewise, would obtain no benefit if Gateway was a gift to his brother because if Gateway is a family asset, he might have some benefits in future by way of inheritance.  I therefore do not agree with Mr Chow’s submission that because the Mother and the two sons are in the same boat, they are bound to say essentially a similar story.

How much did the Father contribute?

58.  The Father said that he had paid HK$950,000 and that part of the RMB 650,000 borrowed from Mr XU was converted to HK dollars amounting to around HK$700,000.  As for the balance, the Father said that the Mother had possession of his Hong Kong Bank ATM card so that she was at liberty to withdraw any of his money herself.  As the Mother told him that she had further withdrawn HK$250,000 from his ATM card, he therefore contributed a total sum of HK$950,000 as down payment for the purchase of Gateway.  The Father said that he had never checked the bank statements as he had all along trusted the Mother, and that he believed she would not take more than necessary.  The Father also mentioned that he had given HK$35,000 monthly to the Mother for maintenance, of which HK$20,000 was direct debit from his company to her bank account and the rest by the Mother’s withdrawing money by using his Hong Kong Bank ATM card. 

59.  The Mother, on the other hand, denied that she had ever had possession of the Father’s ATM card.  She stated that the monthly maintenance provided by the Father initially was only HK$2,000 and progressively increased to HK$10,000 when the sons were admitted to university. Although she had no actual knowledge as to his exact income, she said that she had noticed from the joint tax return that the Father was earning HK$130,000-140,000 and HK$240,000-250,000 respectively in the year 2003 and 2004.  The Mother therefore said that the Father could not be able to give her HK$35,000 per month as alleged.

60.  At this stage I need not deal with the amount of monthly maintenance provided by the Father during the marriage.  However, I find the Father’s evidence that the Mother could use his HSBC ATM card to withdraw money without any restriction to be totally unbelievable.  The Father in Court could not pinpoint which debit entries made up the sum of HK$250,000 which he said the Mother had withdrawn.  By looking closely at the bank statements exhibited with his 3^rd Affirmation, I noticed that the Father never had HK$250,000 in his HSBC account from August 2012 onwards, and August 2012 was the time the Father alleged that the Mother first raised the issue of buying Gateway as a family investment.  As I can see from his bank statements[6], the Father only had HK$67,827.72 as at 1 August 2012 after an online deposit of HK$18,750.00 on the same day.  The land search record shows that the agreement for sale and purchase of Gateway was entered into on 5 October 2012 and yet the bank statements show that there was only HK$94,583.32 as at 3 October 2012 and it was further reduced to HK$74,583.32 on 6 October 2012.  In any event, the total amount of ATM withdrawals from 1 August 2012 up to 17 January 2013, when the purchase price of Gateway was to be fully paid, was far less than HK$250,000; it was HK$141,300 only.  Furthermore, if the Father did have the sum of HK$250,000 in his Hong Kong Bank account as alleged and the Mother had to pay 10% of the total consideration in one lump sum at the time of the execution of the preliminary sale and purchase agreement, which was not challenged, why did the Mother bother to take the trouble to withdraw the sum of HK$250,000 little by little? 

61.  When answering a question put by Mr Yim, the Father admitted that there was only one ATM card but the bank statements clearly show that there were a few cash withdrawals in Macau comprising the sums of HK$2,020 and HK$15,020 on 4 July 2011, and a sum of HK$20,020 on 28 May 2012. Why did the Mother, who was also working, need to withdraw cash from the Father’s bank account in Macau? I do not believe the Father’s evidence that the Mother always had the liberty to withdraw money from his HSBC bank account.  I accept the Mother’s evidence that she never had in her possession the Father’s ATM card.

62.  Although neither the Father nor the Mother could produce any concrete evidence as to the Father’s payment of HK$250,000, as a matter of fact, the Mother and the Father do not dispute that a total sum of HK$950,000 had been paid by the Father in the year 2012.  The only disputes are about when the HK$250,000 was paid and for what purpose it was paid. 

63.  On the whole, I find that the Father’s evidence is contradictory and evasive.  I illustrate this by an example: No matter whether it was a gift or a family investment, the Father’s case is that he would contribute HK$1 million because the Mother was short of that amount to purchase Gateway.  However, nowhere in his evidence can be explained why there was a shortfall of HK$50,000.

64.  As both the Father and the Mother agreed that a sum of HK$700,000 had been paid, I accept the Mother’s evidence that the Father had contributed HK$700,000 in total; HK$400,000 was by way of cash little by little and HK$300,000 was by way of a cheque.  As for the remaining HK$250,000, the Father could not pinpoint which debit entries represented the sums that the Mother had withdrawn and further, he could not produce any proof to support his allegation, because the bank statements he produced show that he never had sufficient fund to do so.  I therefore do not accept that the Mother had withdrawn a sum of HK$250,000 from the Father’s HSBC account by using his ATM card.

65.  Although I agree that the Mother has also failed to prove that the Father’s payment was for the repayment of the debt that he owed when he set up his business in 2006, on balance of probabilities and for the reasons that I have already given, I believe the Mother.  I accept the Mother’s evidence that HK$250,000 was paid to her by cash by the Father during the period between January and August 2012 and not by way of ATM withdrawals.  I accept that the Father had paid a total sum of HK$950,000 to the Mother in the year 2012 but HK$250,000 was paid before the purchase of Gateway and it was therefore not financial contribution for the purchase of Gateway.

Why did the Father change his mind and claim that Gateway was a family investment and therefore formed part of the family assets? 

66.  The Father admitted in Court that he was angry with the Mother before the incident because when she was travelling by herself he tried to call at least 50-60 times but could not find her.  The Father also admitted that on 15 June 2013 he was angry because when he asked the Mother why she did not respond to him, she replied ‘Yougo your own way and I go mine’ (你有你，我有我).  The Father admitted that because of this, he said in that case they should divide the family assets.  He admitted that his voice was loud but denied that he was abusive.  When cross-examined by the elder son why he could not have meaningful communication with his mother, the Father said that when the Mother said ‘You go your own way and I go mine’, apart from dividing family assets, there was nothing he could do.

67.  In Court, the elder son asked his father whether the Father was angry when the elder son took side with the Mother after the incident.  The Father in reply said that he was very angry when the elder son opened his bedroom door on the night of 15 June 2013 and told the Father that the Mother would pay the Father HK$2 million out of sympathy with him （老豆，可憐他，給他HK$200萬）in order to settle the matter. The Father said that he was even angrier when the elder son said that he would change his surname and would not pay respects to the Father at his grave after his death.  He was so angry that he rushed out trying to hit the elder son but was stopped only by the younger one. When asked by the elder son in Court whether the Father wanted him to be happy and why he took out the present proceedings, the Father said that he had already warned him that if he wanted to live happily, he should not meddle in adults’ affairs.（大人嘅事，唔好理，就會有好日子過）. The Father alleged that it was the elder son who did not listen to him to begin with.

68.  In Court, the Father said a few times that he had nothing left because he had sold his business already at the same price as the price at which he paid when it was set up (乜都冇曬，廠冇埋).  Out of the RMB650,000, the Father said that he had already repaid RMB300,000 to Mr Xu but had kept the remainder for his own use.  The Father admitted that after he broke up with his wife in June 2013, he had never paid any maintenance since.

69.  Having heard that exchange of words in Court between the Father and the elder son, I believe that the Father was angry with the elder son as admitted by the Father.  Perhaps this is the reason why he had taken out the present proceedings.

Conclusion

70.  As Gateway is held under the elder son’s sole name, the burden is on the Father to prove his equitable right which is inconsistent with the undisputed legal title.

71.  I have found no evidence which shows that the elder son had been specifically told that he was holding Gateway as trustee for his parents.  On the contrary, I am satisfied that there had been a family discussion in the presence of all family members in the sitting room in Aegean Coast and that it was the Father who proposed to contribute HK$1 million towards the down payment and he asked the Mother to pay the rest as a gift to the elder son. 

72.  As regards the amount that the Father had contributed, I do not believe that the Mother had withdrawn cash from the Father’s HSBC account by using his ATM card, and since the Father could not provide any other evidence, I am satisfied that the Father had only paid HK$700,000 in total.

Order

73.  I order that the Father’s application be dismissed and the Notice of Application for Ancillary Relief registered by the Father in the Land Registry by Memorial number 13112902080017 be forthwith discharged.

Costs

74.  Since the Father has lost his case, the general principle should apply. The Father shall pay the Mother’s and the elder son’s costs of and incidental to the present application.  I will make an order nisi, which shall become absolute in 14 days’ time, with counsel certificate, to be taxed if not agreed.

75.  Last but not the least, it remains for me to express my gratitude to both Mr Chow and Mr Yim for their assistance in this trial.