CHENG KEE CHUN v. YU LEUNG KIN

HCA 3464/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3464 OF 2003

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J U D G M E N T

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1.  The plaintiff claims that she purchased the suit property of the shop premises at 50 Second Street, Western (“the Shop”),  and put it in the name of her youngest son, the defendant, and he is holding the Shop on trust for her, and the defendant should return to her the rent collected on her behalf, and to repay a loan of $270,000.  On the other hand, the defendant claims that the Shop was a gift to him by his late father, and the plaintiff should hand over to him the title deeds of the Shop, and to account to him the rent retained by the plaintiff.

Introduction

2.  The plaintiff is now 95 years old.  She used to work as a green grocer.  She held a mobile hawker’s licence.  She has 4 sons and 4 daughters, but her son Yu Leung Chung died in 1969.

3.  The plaintiff’s husband used to sell rice during the Japanese Occupation.  After the war, he held a fixed stall hawker’s licence.  There is an issue as to what part he played in the green grocery business, and whether he was entitled to the purchase money of the Shop.

4.  The Shop was purchased in 1975 at $190,000 without any mortgage.  It is common ground that the defendant did not contribute to the purchase price.  The title deeds of the Shop have been kept by the plaintiff.

5.  The Shop was used for the rice retail business of Yue Cheong Provision Company (“Yue Cheong”).  The defendant was the sole proprietor under the Business Registration.  The late Mr. Yu also worked in Yue Cheong, and the business ceased soon after his death in mid-1980. 

6.  From 1981, the Shop was let out and the plaintiff collected the rent.  Since about 1984 until October 2002, the rent were paid into a joint savings account in the names of the plaintiff and the defendant at the Liu Chong Hing Bank.  Thereafter, the defendant directed the tenant to pay the monthly rent of $25,500 into his own bank account.

7.  The defendant did not dispute that he received $270,000 from the plaintiff in August 2002.  However, he said that was payment of part of the rent of the Shop to which he was entitled.

8.  At the trial, the defendant gave evidence that he allowed the plaintiff to use whatever amount of the rent collected.  Effectively, the counterclaim for an account of the rent collected was abandoned.

Issues

9.  The plaintiff’s case is that neither she nor her husband intended to confer a gift upon the defendant.  If her late husband had ever told the defendant that the Shop was a gift for him, it was just a pretext to lure the defendant to start the rice business with her late husband, lest the defendant would become bone idle and ridden with vices.  Further or alternatively, the Shop was held on resulting trust for the plaintiff as the purchase money belonged to her solely.  The plaintiff claims the rent collected after October 2002 qua beneficial owner only.  There is no alternative claim for such rent.

10.  The issues are:

(1)     Ownership of the purchase money of the Shop;

(2)     Whether the plaintiff and/or her husband made a gift of the Shop to the defendant in 1975;

(3)     Whether the $270,000 paid by the plaintiff to the defendant was a loan or payment of rent to the defendant.

Resulting trust?

11.  Mr. Shum for the plaintiff submitted that on the basis that the plaintiff provided all the purchase money of the Shop, the defendant holds the property on resulting trust for the plaintiff, as the presumption of advancement does not apply in a purchase by a mother in the name of the child (see Bennet v. Bennet (1879) 10 Ch D 474, as applied in Hong Kong by the Court of Appeal in Watson v. Smith [1998] 3 HKC 461).

12.  Mr. Li for the defendant referred to Gray & Gray, Elements of Land Law (4^th Ed., 2004) and submitted that the historic position in Bennet v. Bennet is hopelessly out of touch with the egalitarian nature of contemporary society, and invited the Court to adopt the position adopted by the High Court of Australia in Nelson v. Nelson (1995) 184 CLR 538 in declaring the presumption of advancement to be equally applicable to father and mothers.

13.  I hold that I am bound by the precedent in Watson v. Smith.

14.  Be that as it may, it was held in Yuen Yat Shan Fiona formerly known as Yuen Chui King v. Sit Hin Kau CACV 41/2005 (28 October 2005) per Tang JA giving the judgment of the Court of Appeal at para. 20 that:

“Further, when there is sufficient evidence on actual intention at the time of the transaction, there is no room for the operation of presumption of resulting trust, see Drake v. Whipp [1966] 1 FLR 826.  In effect, the learned Judge founded that the common intention of the parties at the time of the transfer was to effect an outright transfer from the plaintiff to the defendant.  Given such intention shared by the plaintiff, the question of presumed intention does not arise.”

15.  In the present case, there are evidence as to the actual intention at the time of the transaction from the plaintiff as well as from the defendant.  The matter is one of dispute of fact.  There is no need to resort to any presumed intention.  In any case, I shall also determine the ownership of the purchase money.

Ownership of the purchase money

16.  The plaintiff’s case is that she the purchase money belonged solely to herself.  There is no alternative claim of a share of the Shop rateably reduced by the partial entitlement to the purchase money.

17.  The plaintiff said she was main breadwinner of the family.  Her late husband was a gentleman and somewhat contemptuous of the green grocery business.  He was mainly responsible for the housework, and only helped out at the green grocery stall. 

18.  The plaintiff’s eldest daughter Yu Sau Ying (PW1) said she contributed $30,000 towards the purchase.  The plaintiff said Sau Ying had saved up $30,000 from her wages at the green grocery stall, while Sau Ying said she was never formally paid any wages, and the money actually belonged to the family business.  I find that the money came from the family business and not from Sau Ying’s savings.

19.  The plaintiff’s eldest surviving son Yu Leung Yick (PW2) said he contributed $10,000 towards the purchase money.  He knew his father wanted to teach the defendant to do business and he gave his father $10,000 to start the business.  He gave the money as his parents had raised him up and it was only right to give back.  At that stage, there was no mention of purchase of a shop.  I find that Leung Yick had agreed to give money to his father to start a business.  He did not care whether it was contribution towards the purchase of the Shop.

20.  Notwithstanding the plaintiff’s claim to the purchase money, in fact her evidence was that she regarded the money as jointly belonging to her husband and herself.  Her husband was the holder of the fixed stall licence.  She said both she and her husband cooperated in the business.  She managed the money but he also had a share in it because they were very cooperative.  Her husband could use the money at any time.

21.  Another fact is that the matrimonial home at Canton Road was registered in the sole name of the husband.  It is inconsistent with the allegation that the husband had no ownership to the family assets.  Just before the death of the late father, the Canton Road property was given to Leung Yick and the other surviving son Leung Yum.  Although Leung Yick said in evidence that he regarded himself as a trustee for the plaintiff, he also said in the event of his death, he would give the property to his son and the daughter of his deceased brother Leung Chung rather than to have the property reverting back to the plaintiff.  Also, the Canton Road property was omitted in the will of plaintiff made just a few days prior to the issue of the Writ.

22.  In all the circumstance, I find that the purchase money of the Shop belonged to the plaintiff and her late husband jointly and did not belong to the plaintiff solely.

Intention of the plaintiff and her late husband

23.  The plaintiff said the Shop was purchased for two main purposes: first, to realize her late husband’s ambition to run a rice business, secondly, to lure the defendant to run the rice business lest he became bone idle ridden with vices.  She had never personally spoken to the defendant about naming him as the purchaser of the Shop.  However, it was the intention of her and her late husband that the defendant was an owner in name only, and she was to remain the beneficial owner of the Shop.

24.  The plaintiff introduced evidence that two of her children also contributed to the purchase price of the Shop, to make it unlikely that she would have gifted the Shop to the defendant only.  I have already dealt with this point above.

25.  Yu Leung Yick (PW2) said the Shop was purchased for the purpose of the father to teach the defendant to do business.  It was not put in the plaintiff’s name because she was illiterate.  The plaintiff asked him to be the purchaser together with the defendant, but he feared the loss of the public housing unit, and he also did not cherish getting the parents’ property, hence, he refused to be named a purchaser.  The plaintiff then asked his brother Leung Yum to be a purchaser, who also refused.

26.  Leung Yick said although he never heard whether the Shop was a gift to the defendant, but as the money belong to the parents, and it was decided not to be purchased in father’s name but to use the children’s name instead, hence, according to his reasoning, it should not be a gift to the defendant.

27.  Mr. Shum pointed to objective facts tending to show an intention to retain beneficial ownership on the part of the plaintiff:

(1)	At the time of the purchase in 1975, the defendant was merely 22 years old with no stable job nor income;
(2)	And at the time of the purchase, the other children of the family had received nothing;
(3)	The plaintiff has always kept the title deeds of the Shop;
(4)	The plaintiff collected the rent from 1981 to 1984;
(5)	From 1984 until October 2002, the rent was paid into an joint account of the plaintiff and the defendant and the passbook was kept by the plaintiff;
(6)	Even assuming the payment by the plaintiff to the defendant were rent and not loan, out of over $3 million rent collected, the defendant had received just over half a million dollars.

28.  Mr. Shum commented adversely on the credibility of the defendant:

(1)	The defendant claimed that as an joint account holder, he could have withdrawn the money even without the passbook, but he admitted that he had never done so;
(2)	The defendant claimed that the plaintiff had once given him the passbook to withdraw money but this assertion was never disclosed in his witness statement;
(3)	Since 1997, the defendant had financial difficulties, but he merely received $5,000 per month from the plaintiff out of the monthly rent of about $25,500.

29.  The defendant said his father had much affection for him and said the Shop was given to him as a gift.

30.  Mr. Li pointed out that the plaintiff could not dismiss the suggestion that the late Mr. Yu had told the defendant that the Shop was a gift for him, because according to the plaintiff’s evidence, the whole idea of the purchase in the defendant’s name was to tie him down to the rice business.  Hence, the inducement could only have worked if the defendant were never told that he was a mere trustee. 

31.  Mr. Li submitted that the fact that the defendant had allowed the plaintiff to receive the rent of the Shop was not inconsistent with an outright gift of the Shop for it was “an act of reverence and good manners” (see Commissioner of Stamp Duties v. Byrnes [1911] AC 386).  At any rate, the plaintiff said that in the beginning, Leung Yick negotiated the tenancy and she collected the rent because the defendant was too timid to do so.

32.  Although at the time of the purchase, none of the children had received any gift of property, nevertheless the plaintiff said that it was her dream that each son would be given property when she could afford it.  And when her late husband passed away in 1980, the Canton Road property was given to her two other surviving sons.

33.  Mr. Li also commented adversely on the credibility of the plaintiff and her witnesses:

(1)	It was said that the Shop was not purchased under the plaintiff’s name as she was illiterate, but her illiteracy did not prevent her from being the registered tenant of a public housing unit;
(2)	The plaintiff said she paid the rates for the Shop at all times, but from 1984 onwards, the rates were paid by the tenants;
(3)	The plaintiff said she paid the property tax for the Shop, but she produced no document in support, whereas the defendant produced records of personal assessment stating the payment of property tax for the Shop.

34.  I accept the evidence of the defendant as he is a straightforward witness.  On the other hand, the defendant has tried to haggle her way out of the thrust of the cross-examination as perceived by her, which is demonstrative of her bias towards her cause rather than the truth.  I find that the late Mr. Yu did tell the defendant that the Shop was a gift for him.  I find that the plaintiff did share the intention with her late husband of a gift for the defendant at the time of the transaction, and she is only trying now to give evidence contrary to that intention when the defendant told the tenant to stop payment of rent into the joint account.  The plaintiff and the defendant are mother and son, and are in the not uncommon human relationship of give and take.  The retention of the title deeds by the plaintiff is consistent with binding the defendant over to good behaviour.  I accept the defendant’s evidence that he allowed his mother to retain the rent out of due deference, subject to his use when need be.  The defendant is entitled to such rent and there is no occasion of repayment of the sums as loan.  There being no alternative claim for the rent by the plaintiff, there is no liability to return the rent after October 2002.

Conclusion

35.  I find that the defendant is beneficially entitled to the ownership of the Shop, and the plaintiff should hand over the title deeds to the defendant.  The plaintiff’s claims under both trust and money due are dismissed.

Costs

36.  I make an order nisi that the plaintiff do pay the costs of the action to the defendant, to be taxed if not agreed, to be made absolute in 14 days.