WONG YIN TAK v. YIP WAI MAN

HCA 1491/2017

[2021] HKCFI 2124

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1491 OF 2017

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JUDGMENT

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1.  This action concerns the beneficial ownership of a residential property, namely, Flat C, 15/F, Sunrise Villa, No 33 Sung On Street, Kowloon, Hong Kong (“Property”).

2.  The Plaintiff claims that 3/4 of the beneficial interest in the Property is held in his favour on (1) common intention constructive trust; or alternatively (2) resulting trust.  There is also a fall-back argument based on unjust enrichment.

Issues

3.  The adjudication of this action turns largely on the factual findings on the rival cases.  There is no disagreement over the applicable legal principles.

Plaintiff’s case

4.  It is the Plaintiff’s case that he and his father (“Wong Senior”) had a close relationship with the Defendant.  They became relatives by marriage.  It was the Defendant who introduced her cousin to the Plaintiff, and this cousin later became the Plaintiff’s wife in 2016.

5.  It is not in dispute that the Property was purchased under the Defendant’s sole name.  According to the Plaintiff, from around 25 July 2014 to 26 September 2014 he had paid or caused to be paid a total of HK$2,631,902 for the purpose of the acquisition.

6.  It is the Plaintiff’s case that back in mid-2014, he reached a common understanding (“Common Understanding”) with the Defendant that they would jointly purchase a property for investment.  The Common Understanding was that :

(1)  Whilst the property to be purchased would be registered in the Defendant’s name, the Plaintiff and the Defendant should co-own the property in proportion to their respective financial contribution;

(2)  On the disposal of the property, the Plaintiff and Defendant should share the profits in proportion to their respective financial contribution;

(3)  Before the disposal, the property would be rented out, and the rental would be used to repay the mortgage loan.

7.  Since the Plaintiff was busy with his tour/school bus business, he entrusted his father to liaise with the Defendant and the estate agent (“Ms Law”) to identify an appropriate property.

8.  The Property was chosen after Wong Senior and the Defendant had inspected a few properties at the introduction of Ms Law.  At Ms Law’s suggestion made to his father, the Plaintiff drew a cheque on the account of Tak Yin Travel (“Tak Yin”), which was a sole trader business belonging to him, for HK$640,000 dated 25 July 2014 (amounting to 10% of the purchase price) in favour of the vendor as deposit to enhance the offer to purchase the Property.

9.  On 25 July 2014, a Preliminary Sale and Purchase Agreement for the Property was signed by the Defendant as the purchaser at the price of HK$6.4 million.  The Property was acquired with an existing tenancy which would expire on 30 June 2016 (“Tenancy”). 

10.  The Plaintiff, relying on the Common Understanding, eventually contributed a total sum of HK$2,631,902 for the purchase of the Property as follows :

(1)  The initial deposit of HK$640,000 by a cheque of Tak Yin dated 25 July 2014;

(2)  On 12 August 2018, the Plaintiff paid HK$220,000 to the conveyancing solicitors (“H&W”) by way of a personal cheque for the purpose of stamp duty;

(3)  On 26 September 2014 (the date of completion), the Plaintiff caused a sum of HK$1,000,000 to be transferred by World Rich Consultants Ltd (“World Rich”) to H&W.  It was a temporary loan to the Plaintiff, which was repaid with the funds obtained from the re-mortgaging of 2 coaches by Golden Million Travel Ltd (“Golden Million”).  The Plaintiff was a 90% shareholder and a director of Golden Million.  World Rich was acting as an agent for the re-mortgage exercise.  The HK$1 million was used as part payment of the purchase price of the Property. 

(4)  On 26 September 2014, the Plaintiff drew 2 cheques of respectively HK$500,000 and HK$271,902 (the former was drawn on his own account and the latter on the account of Tak Yin) in favour of H&W, and the funds were used for part payment of the purchase price of the Property and discharging the costs and expenses relating to the purchase.

11.  The total costs for acquiring the Property were HK$3,484,000: (1) 50% of the purchase price, ie, HK$3,200,000[1]; (2) stamp duty of HK$220,000; and (3) agency fee of HK$64,000.

12.  Based on these figures, the Plaintiff says that he had contributed around 3/4 (or 75.54%) of the acquisition costs, ie, HK$2,631,902 out of HK$3,484,000.

13.  After the Tenancy had expired (30 June 2016), in July 2016, the Plaintiff engaged a renovation contractor via his father to carry out painting work and waxing work in the Property, for which he paid a sum of HK$35,500.

14.  It is the Plaintiff’s case that but for the Common Understanding, he would not have made the said contributions, and it would be unconscionable for the Defendant to deny his beneficial interest in the Property.

Defendant’s case

15.  It is the Defendant’s case that Wong Senior, not the Plaintiff, had paid or arranged the payment of the total sum of HK$2,631,902 for the purchase of the Property on her behalf as part of a series of practical arrangements as follows.

16.  Wong Senior was a good friend of the Defendant. They were in the same line of business and were sharing an office (with another person) since 2009.  They would refer business to each other from time to time. 

17.  When Wong Senior learned that the Defendant needed to pay a large sum of money (HK$640,000) urgently as down payment for the purchase of the Property, he offered to do so for the Defendant since he had sufficient funds in his account.  When the Defendant offered to repay him on the next day, Wong Senior said to her that he wanted to be paid in Renminbi in the Mainland since he was looking to purchase a property there. 

18.  Later, Wong Senior suggested to the Defendant that he would also pay the stamp duty (HK$220,000) for her since he needed more than HK$640,000 in Renminbi equivalent.  In around the middle of September 2014, Wong Senior informed the Defendant that he would like her to give him RMB 2 million for his intended purchase.  There was therefore an arrangement for Wong Senior to make further contribution for the completion of the purchase so that, together with the HK$640,000 already paid by him, it would make up the equivalent of RMB 2 million. 

19.  The Defendant had repaid Wong Senior in full by (1) a repayment of HK$222,000 in cash to him on 19 August 2014; and (2) a repayment of RMB 2 million to him on 27 September 2014 at the office of Mr Zhou Shang Cun (“Zhou”) in Shenzhen.

20.  Half of the purchase price of the Property (HK$3,200,000) was financed by a mortgage loan (“Mortgage Loan”) from OCBC Wing Hang Credit Ltd (“Wing Hang”), with the Defendant as the sole borrower under the relevant legal charge dated 30 September 2014.  The Defendant had opened an account with Wing Hang for discharging the monthly instalment for the Mortgage Loan.

21.  The Defendant had never asked the Plaintiff to make any payment for her in respect of the purchase of the Property.  The Property was purchased for her self-use.  She never agreed to any joint investment with the Plaintiff.

22.  The Defendant has been residing in the Property since July 2016 (after the expiration of the Tenancy).  She has been paying all the mortgage instalments and outgoings of the Property as the sole legal and beneficial owner of the same.

23.  In any case, the Defendant says that the Plaintiff’s claim for 3/4 of the beneficial interest in the Property is flawed, assuming that he did contribute HK$2,631,902 to the purchase price.  The Plaintiff’s calculation (see paras 11 and 12 above) failed to take into account (1) the Mortgage Loan for which the Defendant was solely liable; and (2) the figure of HK$3,484,000 adopted in the calculation was only part of the costs of acquisition. 

24.  Properly assessed, and putting aside the interests incurred on the Mortgage Loan, the sum of HK$2,631,902 at best only represented  41.1% of the acquisition costs of the Property.

Principles of law

25.  There is no controversy over the applicable legal principles.  They were recently summarised by the court in Woo Tat Huen v Lee Wai Ping [2021] HKCFI 576, Recorder Sit SC, §§42-47 :

“42. The starting point where there is sole legal ownership (as is the present case) is sole beneficial ownership, and the onus is on the person seeking to show that beneficial ownership is different from the legal ownership; in other words, it is for the non-owner to show that he has any interest at all: Stack v Dowden [2007] 2 AC 432, §56.

43. The relevant principles have been conveniently summarized recently by Coleman J in Lam Ka Kui v Choi Yuen Ling [2020] HKCFI 2647; HCA 537/2017 (unrep., 23 October 2020), §§8-16:-

(1)  Where a common intention constructive trust has arisen, ownership in the property is split into legal ownership and beneficial ownership.  The trustee holds the legal title on trust for the beneficiary.

(2)  Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the plaintiff regarding their shared beneficial interests in the property that matters.  The trust is constituted by the three elements of (i) the common intention, (ii) the plaintiff’s detrimental reliance on their common intention, and (iii) the unconscionability of the property owner departing from it.

(3)  The burden of proving each element of common intention, detrimental reliance and unconscionability is on the person seeking to show that the beneficial ownership is different from the legal ownership. The focus is on the intention of the parties at the time of acquisition of the asset. Contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event.

(4)  Common intention can be expressed or implied.  It can be deduced or inferred objectively from the parties’ conduct. As a matter of common sense, it is easier to infer such an intention prior to the acquisition of property which results in an obvious change in legal ownership (rather than after such an acquisition where there is no change in legal ownership and a change in beneficial ownership is not otherwise apparent).

(5)  In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327, §§2.3-2.4, Cheung JA identified two situations where a common intention constructive trust may arise.

(a)  The first is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially.  The finding of such an agreement or arrangement can only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been.

(b)  The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property, and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by mortgage instalment payments, will readily justify the inference necessary to the creation of a constructive trust.

(6)  A resulting trust arises by virtue of the plaintiff’s contribution in money or in some other way towards the property's acquisition. Equity holds the legal owner to be a trustee of that property for the plaintiff in an appropriate share, giving effect to the parties presumed intention. Particularly in a domestic context, but also generally, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust.

(7)  As emphasized in Stack v Dowden §§68-69, an intention to have beneficial interest different from legal interest in property is unlikely, and the task of showing that should not be lightly embarked upon. It was recognized that, in family disputes, strong feelings are aroused when couples split up which can often lead the parties, honestly but mistakenly, to reinterpret the past in self exculpatory or even vengeful terms.  If a difference is to be found between the beneficial and legal interest, clear evidence will be required.  Unequal contributions to the purchase price of property will not likely be enough to move away from the starting point that equity follows the law.

44.   As can be seen from the above, ultimately it is a question of intention – in the case of constructive trust, the common intention of the property owner and the plaintiff; and in the case of resulting trust, the intention of the person who provided the purchase price at the time the property was acquired. Between the two, and particularly in a domestic context, if it is possible to resolve the matter by reference to common intention, it would not be necessary to resort to resulting trust at all: Primecredit §1.3.

45.   The modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context.  In a domestic context (particularly in relation to a matrimonial home), the court is not constrained in that exercise by pure direct monetary contributions to the purchase price: Primecredit §1.6.

46.   Moreover, in the assessment (whether on constructive trust or resulting trust), the court should have regard to inherent probabilities in light of the surrounding circumstances at the time the property was acquired: Primecredit §1.4.

47.   Whilst the authorities cited above are mostly concerned with matrimonial homes or residences of cohabitating couples, whereas the Property in this case is an industrial premise and not a home, in my view the same approach applies.  The matrimonial home / residence is just an additional context which may be taken into account in an appropriate case (whether for the assessment of intention or inherent probabilities) which does not feature in this case.”

Witnesses

26.  Apart from giving evidence himself, the Plaintiff had called his father, the manager of World Rich (“Ms Wong”) and Mr Lai Bing Fat (“Mr Lai”) to give evidence.

27.  In addition to giving evidence herself, the Defendant had called as witnesses Mr Zhou and Ms Chen Chuxia (“Ms Chen”), both of whom resided in Shenzhen and they gave their evidence via VCF.

Analysis of the evidence

28.  It is trite that inherent probabilities and undisputed documentary evidence are the best guide to resolving factual disputes.  With the summary of the parties’ case set out above, the analysis of the evidence can focus on the documents and inherent probabilities.

29.  In respect of the Plaintiff’s witnesses, Ms Wong’s evidence added little to the documentary evidence on the re-mortgage of the coaches.  However, she explained the background to the re-mortgage, namely, the Plaintiff’s urgent need to fund the purchase of a property, and due to the urgency he asked World Rich to give him a bridging loan of HK$1 million (it was subsequently repaid with the funds obtained from the re-mortgage).  Ms Wong was not an interested party and her evidence was not challenged. 

30.  Mr Lai’s evidence confirmed that the Defendant and Zhou were, to his knowledge, lovers before 2013.

31.  As regards the Defendant’s witnesses, Zhou gave evidence about the alleged payment of RMB 2 million in cash to Wong Senior in Shenzhen. Ms Chen, an estate agent in Shenzhen, spoke about the acquisition of a Shenzhen property in about August 2015.  It was acquired in the name of the Plaintiff and the transaction was handled by Wong Senior.

32.  Although the evidence of the Plaintiff and his father was much challenged in cross-examination, the payments made or caused to be made by the Plaintiff for the purchase of the Property were well-documented and not open to doubt.

33.  The key dispute is on the purpose of those payments.  The documents are certainly more consistent with the Plaintiff’s case that he contributed to the purchase as a joint investment, rather than the Defendant’s case that Wong Senior wanted to exchange his Hong Kong dollars for Renminbi.

34.  To begin with, contrary to what the Defendant had allegedly been told by Wong Senior, the HK$640,000 did not come from him. It was paid by the Plaintiff’s company.  The rest of the contributions all came from the Plaintiff or his companies.  I am unable to see why the Plaintiff would have made these substantial payments if not for a joint investment as he said.

35.  Secondly, the documents show that the payments were made either to the vendor or H&W.  I fail to see why the Plaintiff would have gone to such trouble by making the various payments to different entities over a period of 2 months if not for his own investment.  If the payments were made pursuant to certain “practical arrangements”, one would expect that the money would be paid to the Defendant (expect perhaps the down payment which was urgently needed) and that she would deal with the purchase of her own property herself. 

36.  Thirdly, the Plaintiff had to go to the length of re-mortgaging 2 coaches to raise part of the funds.  That is not consistent with the Defendant’s story that Wong Senior wanted to exchange his money for Renminbi.  More likely than not, the re-mortgage would involve financial cost to the Plaintiff’s company.  A businessman would not normally engage in such an exercise without an expected return.

37.  In respect of the challenge in cross-examination on why the Plaintiff had not put his name down as one of the owners of the Property, his explanation that he wanted to minimise the financial risk was not surprising given that he was operating a sole trader business, and as he said, his father had been made bankrupt.

38.  There was another payment which provided support for the Plaintiff’s case, namely, the payment of HK$35,500 for the renovation of the Property in July 2016.  There was clearly no reason for such payment by the Plaintiff unless he had an interest in the Property. 

39.  The renovation payment was disputed by the Defendant.  However, it was supported by the fact that the Tenancy had come to an end, and it was quite normal for premises to be renovated before re-letting.  Further, there was a receipt issued for the HK$35,500, and a screen capture of some Whatsapp messages between Wong Senior and the contractor.  In her evidence, the Defendant accepted that the photo in the capture showed the bathroom of the Property.  There is no valid reason to doubt the Plaintiff’s case on this issue. 

40.  It is telling that there was no document produced by the Defendant to support her allegation that the money was repaid. It is unlikely that the cash obtained from the bearer cheque of HK$265,000 drawn on the Defendant’s account on 18 August 2014 was used in part to repay Wong Senior as alleged by her. 

41.  Firstly, the timing of the alleged repayment request (4 days after Wong Senior allegedly paid the stamp duty for the Defendant[2]) sits poorly with the Defendant’s case that Wong Senior wanted to be repaid in Renminbi.  Further, why would Wong Senior volunteer to pay the stamp duty for the Defendant (as she alleged) in the first place if he needed to have the money back 4 days later? 

42.  Secondly, there was no explanation why the repayment had to be in cash.  Further, the Defendant’s evidence that she decided for herself to paid Wong Senior HK$100,000 worth in HK$500 notes and the rest in HK$1,000 notes does not accord with common sense.  One would expect that Wong Senior would be asked about his preference, assuming that he had asked to be repaid in cash. 

43.  As for the alleged repayment in cash (Renminbi) to Wong Senior in Shenzhen on 27 September 2014, it is very surprising for the Defendant not to have obtained any documentary evidence of this substantial payment.  She could easily have obtained a simple receipt from Wong Senior or taken a picture with her smart phone to record the event. 

44.  Further, there was no documentary evidence that the Defendant had RMB 2 million kept with Zhou at the time.  The Defendant’s evidence was that the money came from profits accumulated over time from the business she and Zhou were conducting.  However, contrary to her evidence that there was no record of accounts to show what was owed to her, Zhou said that there were running accounts kept of the business which would show how much had been kept for the Defendant.

45.  The lack of documentary evidence over the RMB 2 million also raised doubt on the Defendant’s allegation that she was able to finance the purchase of the Property by herself.  She said that, in addition to more than RMB 2 million kept in the Mainland, she had over HK$1 million kept in Hong Kong.  Documentary evidence could easily have been produced in support of the Hong Kong deposit.  There was no such evidence.  Apart from a contribution of HK$800,000 and the payment of agency fee of HK$64,000 for the purchase, the Defendant had paid no other part of the acquisition costs. 

46.  The Defendant’s case that the Property was acquired for her self-use is not consistent with the fact that it was purchased with the Tenancy which would not expire for nearly 2 years. 

47.  On 13 January 2015, the Defendant signed a tenancy agreement to rent a unit in the same building where the Property was situated from 2 February 2015 at the monthly rent of HK$19,000 exclusive of rates and management fees.  At that time, the Tenancy (at the monthly rent of HK$17,500 exclusive of rates and management fees) could be terminated with 1 month notice given after 15 June 2015.  In other words, the Defendant needed only to wait about 6 months to move into her own property if she wanted to, and that exercise would have saved her at least HK$1,500 per month in rent.  The fact that she did not do so is not consistent with her case that the Property was acquired by her solely for self-use. 

48.  Finally, there is another important fragility in the Defendant’s case.  As submitted by Mr Kwong, who appeared for the Plaintiff with Ms Sat, the Defence filed on behalf of the Defendant back in September 2017 contained no positive case.  There was no sign of the Defendant’s case that the HK$2,631,902 paid for the Property was in exchange for Renminbi and that they had all been repaid until the Defendant filed her witness statement in March 2018.  Subsequently, she amended her pleading in May 2021.

49.  I am unable to accept the Defendant’s evidence that she had given full instructions to her solicitors but they had failed to plead her case properly.  Apart from the fact that the Defence was verified with a Statement of Truth by the Defendant after it was translated to her, the Defence was drafted by counsel.  It is highly unlikely for both the solicitors and counsel to have failed to plead the Defendant’s case properly.

50.  For completeness, Mr Lam, who appeared for the Defendant, had also criticised the Plaintiff for not having pleaded his case on common intention constructive trust until the Statement of Claim was amended in response to the Amended Defence.  In its original form, the causes of action pleaded were confined to resulting trust and unjust enrichment.  

51.  Whilst I see some merits in the criticism, the Plaintiff had set out his evidence on the Common Understanding in his first witness statement dated April 2018.  Viewed in light of (i) the lack of positive case in the Defence and (ii) the law that direct contributions to the purchase price (pleaded in the Statement of Claim) by a non-owner would readily justify an inference of common intention that the contributor should have an interest in the property (see Primecredit Ltd v Yeung Chun Pang [2017] 4 HKLRD 327, §2.4, per Cheung JA), I can understand why the Statement of Claim was not amended earlier.

52.  I disagree with Mr Lam that the Common Understanding had not been adequately pleaded[3].  Although it might be preferable for the oral basis of the Understanding to be expressly pleaded, properly read, I do not believe that the Plaintiff had confined his case to one of inference as the basis of the Understanding. 

53.  There are 3 miscellaneous points which should be dealt with.  Firstly, there is a dispute between the parties on whether the Shenzhen property purchased in the name of the Plaintiff was another joint investment between him and the Defendant.  I do not believe that it is a matter which would assist the court in resolving this action.

54.  Secondly, the fact that the Plaintiff had not contributed anything to the mortgage repayment or the expenses of the Property do not, in my view, detract from the force of his case.  The Tenancy had produced a rental income which was sufficient to cover both the mortgage instalments (HK$12,000 per month) as well as the expenses.  After the Defendant had moved into the Property, it was perfectly logical that she should be discharging such obligations.

55.  Thirdly, in his final submissions Mr Lam advanced the proposition that the beneficial interests represented by the contribution of HK$2,631,902 might belong to Wong Senior instead.  With respect, I agree with Mr Kwong that this is an unpleaded allegation which was never explored in cross-examination.  It is rejected. 

56.  For these reasons, I take the view that both the inherent probabilities and the undisputed documentary evidence are supportive of the Plaintiff’s case that he had contributed to the purchase of the Property as a joint investment.  The Defendant’s case on the purpose of the Plaintiff’s payments is rejected. 

Common intention constructive trust

57.  Given that the Plaintiff had made a total payment of HK$2,631,902 for the acquisition of the Property, it was quite likely that he had discussed with the Defendant about the joint investment prior to the purchase.  It would be surprising otherwise. 

58.  I accept the Plaintiff’s evidence that he had telephone conservations with the Defendant both before and after the purchase, and the Common Understanding was reached during their conversations.  In all probabilities, the Common Understanding was reached prior to the purchase because it is difficult to see why the Plaintiff would have paid for a property in someone else’s name.  The terms of the Understanding were simple, and probably quite common for informal joint investment.  It is plainly unconscionable for the Defendant to resile from the Common Understanding.

59.  I do not agree with the submission of the Defendant that the Common Understanding was confined to the Plaintiff sharing in the net profits earned when the Property is sold.  I agree with the Plaintiff that the suggestion is contrary to common sense because, as the sole owner, the Defendant would be in complete control of the disposal of the Property and could refuse to sell it.

Conclusions

60.  In the premises, I find that the Plaintiff’s case on common intention constructive trust proved on a balance of probabilities.  It is unnecessary to rely upon the principle of resulting trust.  However, I would uphold this cause of action if it were necessary.  I do not find that this is, in truth, a case of restitution or unjust enrichment.

Proportion of Plaintiff’s beneficial interest

61.  Mr Kwong submitted in his closing submissions that the acquisition costs for the Property were made up of the following: (i) purchase price of HK$6,400,000; (ii) stamp duty of HK$220,000; (iii) agency fee of HK$64,000; (iv) conveyancing fees of HK$9,010; and (v) insurance premium of HK$2,892.  The total stood at HK$6,695,902.

62.  Mr Lam did not quarrel with such costs, but disagreed with the amount of contribution attributable to the Plaintiff. Firstly, Mr Lam took the point that the HK$1 million was re-paid by Golden Million and its assets should not be treated as assets of the shareholders (the Plaintiff owned 90% of its shares). 

63.  With respect, I do not believe that the point had been taken fairly because it was never explored with the Plaintiff in cross-examination.  The payment must have been booked in the account of Golden Million, eg, as a loan to the Plaintiff or a distribution of accumulated profits to him.  I do not believe that it is right for the Defendant to endeavour to take advantage of this lacuna in the Plaintiff’s case without adequate warning. 

64.  In any case, the evidence of the Plaintiff (confirmed by that of Ms Wong) was that the HK$1 million was a short term personal loan by World Rich to him to enable him to complete the purchase of the Property.  Such evidence was not challenged.  Even if Golden Million had not, eg, passed the requisite resolution approving a loan of the money to the Plaintiff, the matter could be easily ratified in light of the Plaintiff’s majority ownership of its shares and his unchallenged evidence that the other 10% shareholder agreed with the repayment to World Rich.

65.  I therefore reject this challenge by the Defendant.  

66.  Secondly, Mr Lam took the point that since the Mortgage was taken out solely by the Defendant with the repayment responsibilities resting only on her, she should be treated as having contributed the entire HK$3.2 million represented by the Mortgage.  I do not believe that the contention sits well with an appropriate view of the evidence.

67.  Part of the Common Understanding was that the Property would be let out and the rental yield would be used to discharge the mortgage payment.  Plainly, it was envisaged that the acquisition would be partly financed with a mortgage.  Given that the Property was in the name of the Defendant, she would naturally take out the Mortgage in her name.  During cross-examination, whilst acknowledging that he and the Defendant did not discuss the possibility of vacant period where the Property was not let, the Plaintiff accepted that if there was any such period, he would be responsible for ½ of the mortgage payment. 

68.  In my view, such evidence accords with common sense.  To take the view advocated by the Defendant would ignore the Common Understanding that the rent would be used to cover the mortgage payment. 

69.  In the premises, I accept the revised contention by Mr Kwong that the Plaintiff’s entitlement should be calculated on the basis of the contribution of HK$2,631,902 plus half of the mortgage loan amount (HK$1,600,000).  The Plaintiff’s contribution would therefore be HK$4,231,902, which was 63.2% of the acquisition costs of HK$6,695,902.

Relief

70.  Mr Kwong had proposed the following relief in favour of the Plaintiff :

(1)  A declaration that 63.2% of the beneficial interests in the Property are held by the Defendant on constructive trust for the Plaintiff;

(2)  An order that the Defendant do take all necessary steps to assign and/or transfer 63.2% of the interests in the Property to the Plaintiff; and

(3)  There be liberty to apply for consequential directions in respect of (2) above. 

71.  Mr Lam had fairly accepted such relief is appropriate in cases of the present type.  I therefore give judgment to the Plaintiff and grant the proposed relief.  I make a order nisi that the costs of and occasioned by this action be paid by the Defendant. 

72.  Lastly, I am grateful to counsel for their assistance.