CHAU CHIN CHUN v. TAM LIM SIN

DCMP1613/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 1613 OF 2005

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J U D G M E N T

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1.  The plaintiff is the administratrix of the deceased Madam Yam Sui Yee’s estate.  Letters of administration of the deceased’s estate have been granted on 12 April 2005.

2.  In this action, the plaintiff claims against the defendant for vacant possession of the suit premises known as Unit E on the 18th Floor, Block 4 of Chui Chuk Garden, No. 8 Chui Chuk Street, Kowloon, Hong Kong, also known as all those 502 of 2007727 parts of New Kowloon inland lot of No. 6023 (hereinafter referred to as “the suit property”).  The defendant opposes the application, claiming he has a beneficial interest in the suit property.

3.  The plaintiff’s counsel, Mr Lau, informed the court that the plaintiff is no longer seeking for mesne profits against the defendant, the plaintiff is only seeking recovery of vacant possession against the defendant.

Background

4.  The deceased, Madam Yam, was the mother of the plaintiff, Chau Chin-chun, PW1, and PW2, Leung Yee-may.  Leung Yee-may is also known as Camay (hereinafter referred to as “Camay”). 

5.  Camay began cohabiting with the defendant, Mr Tam, in 1983 at the age of 15.  At the time, they resided at a public housing unit in Wong Tai Sin which belonged to a friend of the defendant’s.  Camay gave birth in 1987 to a daughter named Tam Suk-mei.  In 1989, the deceased’s public housing unit was due for redevelopment.  Consequently, the suit property, a Home Ownership Scheme property, was purchased when the deceased succeeded in her application upon the surrender of her public housing unit.  The purchase price was $424,100.  The date of the purchase was 1 November 1989.  A mortgage was taken out at the Hongkong and Shanghai Banking Corporation upon payment of 0.5 per cent of the purchase price as down payment.

6.  The deceased passed away on 30 December 1994.  Subsequent to her death, her family members who had for a period resided with her also gradually left the suit property, leaving Tam residing there up to the present date.  The plaintiff applied to repossess the suit property in the administration of the deceased’s estate.

The Plaintiff’s Case

7.  It is the evidence of the second plaintiff witness, Camay, that she started to work for a living since the age of 15 years.  She worked as a waitress and a receptionist in her early years.  From the age of 19, after the birth of her daughter, she began working in a nightclub, earning an average of $13,000 to $15,000 per month at the time.  She claimed in her evidence in court that she has not stopped working at nightclubs up to now except for the period she was operating a florist shop in 1990 to 1992.  She claimed that was why she had made sufficient savings and was able to put up the down payment for the purchase of the suit property and she claimed she had been solely responsible for the mortgage instalment payments up to the present.

8.  Camay produced 65 bank deposit slips and a savings account passbook showing payments into the deceased’s HSBC mortgage account set up for the mortgage repayments.  These documents covered the period between November 1991 and May 2005.  She claimed that she had always been responsible for the mortgage repayments and at times she would be working abroad, she would give money to Tam to deposit into the deceased’s mortgage account.  She claimed that was why Tam had kept some of the earlier bank deposit slips.  Camay denied the money for the down payment, legal costs and decoration and furniture had come from Tam. 

The Defence Case

9.  The defendant’s case was he had given Camay a sum of $90,000 to pay the down payment of the suit property in 1989 and finance the legal charges and decoration of the suit property.  He claimed initially he had enough savings in 1989 to pay for the down payment, but later on in his evidence, he admitted that he had borrowed the money from his friends and he claimed the loans amounted to $90,000 which he claimed he had repaid his friends from his own earnings.

10.  Mr Tam admitted he had been working at mahjong schools even before he left the police force in 1989 and he had continued working at mahjong schools after he left the police force in 1989.  He also claimed that he had been working as a security officer after he left the police force and at times worked as a courier for parallel imports to Taiwan, Thailand and Mainland China which supplemented his income.  He claimed that his earnings before his retirement due to poor health in 1998 was quite substantial, that he had been paying Camay $6,500 to $7,000 per month which she would use to pay for the mortgage and household expenses.  In addition, he claimed he had been giving the deceased $1,000 to $2,000 per month until her death in December 1994.

11.  He admitted in court that Camay and he were jointly responsible for the payments of the suit property.  He further admitted that since 1998, Camay began to be solely responsible for the mortgage repayments, that Camay had left Hong Kong to work in Japan the same year.  Since 2003, he had lost all contact with her.

12.  The defence called Mr Wong Chi-kong, a former colleague of Tam, who claimed he lent a sum of $60,000 to Tam in 1989 to pay for the purchase of the suit property.  He claimed that Tam had repaid the money within one year.  It was Mr Wong’s evidence that Tam was employed by him to work at a mahjong school called Tai Tung Sang he was managing at the time.  The employment period was between 1989 to 2000, and that Tam was paid the sum of $320 per day.

13.  Mr Wong claimed that Tam’s monthly income was around $8,000 to $9,000.  Mr Wong also said that he would sometimes ask Tam to work as a courier on days that Mr Wong himself was not free to take merchandise into Taiwan in the 1980s and 1990s.  According to Mr Wong, Tam’s reward depended on the value of the merchandise he took over and the average net profit to Mr Wong was around $1,000 or $1,000-odd,  Mr Wong would pay Tam a few hundred dollars or up to 1,000 for each trip.

The Issues

14.  The issues in this action are whether the defendant has a beneficial interest in the suit property by reason of his contributions towards the purchase price and the mortgage payments up to 1998 and whether he has shown that there was a resulting trust or constructive trust because of his financial contribution to the purchase of the suit property.

15.  The defence based its case on the resulting-trust principle that because the defendant had made contributions towards the purchase price and the mortgage repayments, he is entitled to have an equitable interest in the suit property.  Miss Lee, counsel for the defendant, submitted that Tam’s interest was fixed at the time of the purchase of the suit property in 1989 and there was a common intention resulting on a constructive trust.  Miss Lee relied on paragraphs 31.5 to 31.6 of Underhill and Hayton’s Law Relating to Trusts and Trustees, 17th edition at pages 435 to 436 which states that where the property at title was taken in one name, the following would happen:

“A’s and B’s equitable interests under resulting trust are fixed at the time they purchased the property by paying the purchase price.  They get the shares they paid for when they provided the purchase price, whether by way of their own cash, whether saved, inherited or borrowed on mortgage or discount arising from their status.  Exceptionally, it seems that if at the time of purchase A and B agreed that B would undertake responsibility for the mortgage payments, then A would hold on resulting trust for B as to the proportion of the price provided by the mortgage, equity regarding as done that which has to be done by B.  This holds true even if B subsequently fails to make the mortgage payments as agreed, and these are made instead by A although on sale of the property, equitable accounting principles may require deductions to be made against B’s share of the sales proceeds.”

16.  31.6:

“If B did not contribute to the cost of purchase when the property was bought on mortgage by A but subsequently provided £10,000 whether towards discharging A’s mortgage liability for capital moneys or in paying for a capital improvement like a conservatory, this is regarded as a gift and will not confer on B a one-tenth or other proportionate share in the property unless an agreement with A or a representation by A enables B to claim an equitable interest under a common intention constructive trust or proprietory estoppel principles.  The position is a fortiori if B’s £10,000 happens to represent periodical contributions to interest due under the mortgage or to premiums on the endowment policy that on maturity will ensure that the capital moneys due under the mortgage will be repaid.  Lax use of language and confusion between resulting and constructive trusts has, however, led some judges to treat subsequent mortgage payments as giving rise to resulting trusts rather than constructive trusts or proprietory estoppel interests.”

17.  The above two passages describe situations where the property was in one person’s name, i.e. A when in fact two persons, A and B, had both contributed to the purchase price or part of the purchase price at the beginning of the purchase or at the time of the purchase.  These passages should not be read out of context.

18.  In the present case, the title to the suit property was in the deceased’s name who contributed her right to purchase the Home Ownership Scheme flat.  The purchase price was a reduced price for eligible persons such as the deceased who otherwise would have been allotted a public housing unit for her own use.  In her application surrendering her eligibility to a public housing unit, she had contributed her share to the purchase of the suit property.

19.  In this case, the purchase price of the suit property did not come from the deceased herself; according to Camay, the down payment and the subsequent mortgage payments were made by her alone; but according to the defendant, Tam had contributed in part to the down payment and to some of the mortgage payments.  One should not, however, ignore the deceased’s own contribution.

20.  The prima facie case for the plaintiff is that the deceased was the sole registered owner of the property.  The defendant claiming an equitable interest must prove that he had contributed to the purchase of the suit property.  Tam claimed he and Camay had jointly purchased the suit property, that since the property is not in Camay’s name or Tam’s name but in the deceased’s name, paragraphs 31.5 and 31.6 of Underhill and Hayton are not strictly applicable.  If there is a resulting trust, it has to take into account the deceased’s share also.  The defendant has the burden of proof to show he not only paid part of the down payment and the mortgage repayments; the burden is on him to show the exact payments he made in support of his beneficial interest claim and its proportion as well as the persons who are entitled together with the deceased and Camay.

Findings

21.  On the evidence adduced before me, I find the evidence of Camay to be more reliable.  She has given credible evidence and produced a great deal of the documentary evidence in support of the plaintiff’s case.  The documents produced by her showed that she was and has been a responsible individual who took up the burden of the mortgage payments even when she was working abroad, between the years of 1998 and 2002.  She kept sending money back to her own savings account at the Hongkong Bank that made monthly transfers on a standing instruction into the deceased’s mortgage account.

22.  The evidence of her sources of income is also clear and unambiguous.  She admitted she had been working at nightclubs throughout the years.  Her income clearly should be able to cover the $21,200 down payment and the monthly mortgage payments.  She also claimed that she had paid for the upkeep of her daughter who had been looked after by caretakers in the early years. 

23.  As to the defendant, Mr Tam, and his witness, Mr Wong, I find their evidence totally inconsistent.  They were both evasive as to Tam’s claim of working at mahjong schools when he was a police officer in the 1980s, his working full-time at mahjong schools after he left the police force in 1989.  On the other hand, Tam also claimed he was working as a security officer after he left the police force.  He claimed his income at the mahjong school was between $6,000 to $7,000 per month.  However, Mr Wong said Tam was earning $8,000 to $9,000 a month.  At one time, Tam said he earned $450 per shift at the mahjong school, while Mr Wong claimed Tam was paid $320 per shift.  Then there was evidence that the basic pay for Tam was in fact $170 per day. 

24.  Mr Tam claimed that half of his winnings or losses at the mahjong school when he worked as the mahjong school’s employed player would be shared by the mahjong school; Mr Wong, however, claimed that the split between the school and Mr Tam was completely different.  He claimed that Tam was only liable for 10% of his losses and received 10% of his winnings.  Consequently, it is quite impossible with the kind of confused evidence from the defence for the court to come to an assessment of the earnings of Mr Tam after he left the police force.

25.  As to whether he was capable of having any savings to pay for the suit property, one has also to look at his income prior to the time he left the police force in 1989.  Mr Tam admitted he has a wife and three children. In the early 1980s, he had to be responsible for their daily living even though Mr Tam claimed that his wife was working as a sewing worker at the time.  Although Mr Tam claimed he had to pay for household maintenance to both households, i.e. his wife and three children and to Camay and her daughter, it is very much in doubt if he was capable of having any savings before his dismissal from the police force.

26.  Upon leaving the police force, his earnings were understandably unstable.  It very much depended on whether he was able to win at the mahjong table each day.  This is consistent with Camay’s evidence on the earnings of Mr Tam.  It is further consistent with Mr Tam’s own evidence in court that his contribution was on the basis that if he made more money, he would contribute more.

27.  After giving careful consideration of Tam’s evidence and his court demeanour, taking into account his failing health and his incomplete recollection when he gave evidence in court and taking into consideration also the documentary evidence produced by Mr Tam, I have come to the conclusion that in 1989 Mr Tam had little savings after he was dismissed by the police force.  At the time, he admitted he did not have the money to appeal against his dismissal.  The dismissal also left him without a pension.  Under such circumstances, he could very well have borrowed money from friends, including Mr Wong, in 1989.

28.  With the uncertainty over his future earnings, it is most unlikely that he would come to an agreement with the deceased and Camay that he would finance the purchase of the suit property.  He was simply not in a position financially to make such a commitment.

29.  The down payment for the purchase was not a huge sum, consisting of only 0.5% of the purchase price, but the monthly instalment payment was a totally different matter altogether.  The monthly repayments were at first around $4,000 and later between $3,600 to $3,700 per month, plus the rate charges and ground rent.  Since Mr Tam was earning $5,000 to $6,000 per month as a police officer, he certainly would not be able to afford to pay the instalments even if he had been moonlighting at  mahjong schools, if, as he claimed, he had been paying maintenance to his wife and children and Camay and her daughter.  This also came at a time when the property was purchased after Tam lost his job at the police force.

30.  It is further incredible that if he had borrowed the sum of $90,000 from friends for the purchase of the suit property, why did he not pay a larger sum of his borrowings as down payment to alleviate and reduce the monthly repayment sum?  He could not even recall in his evidence in court the exact amount of the down payment.  He was further unable to show any receipts for his contributions of the down payment.  All the aforesaid factors indicated that Tam was not in a position to make such a generous offer to the deceased or to Camay to be solely responsible for the purchase and financing of the suit property.

31.  As to his later claim in court that he and Camay would collectively come up with the resources to finance the purchase, his unstable income would not have allowed him to do so.  He claimed he was working at two mahjong schools, but this was obviously not known to Mr Wong, his friend, who testified that Tam was working at Tai Tung Sang from 1989 to 2000.  I find Tam and Wong’s evidence most incredible because Tam himself confessed he ceased working in 1998 due to illness and that he was put on comprehensive social security.  Yet, Wong claimed that Tam was working up to the year 2000.  I have difficulty to accept either of their evidence.  I find both of them to be less than truthful witnesses.

32.  I further find Tam’s claim that it was from his own savings the Kam To Florist and Aquarium Shop was financed.  Camay claimed she was financed by a client who gave her the money and told her to stop working at the nightclub in 1990.  She was able to give full details of the dates and the operation of the shop. 

33.  Tam, on the other hand, admitted that in spite of the fact that Camay was not there to run the shop, he had worked hard buying flowers and fruits as well as operating the juice bar and making deliveries.  He admitted he had left all the financial matters to Camay and Camay collected all the takings of the shop.  Even though he could not recall the exact dates of the operation of the shop, he claimed the mortgage and household expenses came from the profits at the shop that Camay was put in charge of.

34.  From the evidence of Camay, the shop lasted only two years, between 1990 to 1992, because her benefactor stopped the funding.  I find Camay’s evidence to be more credible.  It is obvious that Camay was in charge of the household finances and, most important of all, the payment of monthly mortgage repayments.

35.  On Tam’s own admission, he had left the finances to Camay, leaving her to pay the mortgage payments.  His claim that he and Camay would collectively come up with the resources probably meant that Camay had to find the resources to pay for the purchase.  I am not persuaded that Camay and Tam had an agreement before the suit property was purchased they would jointly and collectively purchase and finance the property.

36.  I am left with little doubt that Tam was not able to finance the purchase, whether it was the $21,000-odd down payment or the monthly mortgage payments.  He was able to produce a number of bank deposit slips, around 11 in total, for the monthly payment of mortgage instalments during the period when Kam To Florist was in operation because, according to Camay, she had given him the money to make the deposits.  Beyond that period, Tam could not produce any others deposit slips.  I accept it was Camay who gave him the money to pay the deposits into the deceased’s bank account rather than he paying Camay the money monthly to pay the mortgage payments.

37.  I also find the defendant has failed to show he had made any monetary contributions towards the purchase of the suit property.  In fact, he has been allowed to reside rent-free at the premises since 1989 up to the present because for a long period of time since the deceased’s death in 1994, after which everyone left the premises, Tam had remained in occupation alone for over 12 years.  Camay had continued to pay the mortgage throughout this period and before as well as paying the ground rent and rates. 

38.  It is to be noted that Camay and Tam were never legally married and they have, according to Camay, not cohabited for a very long time.  In fact, they have been separated for a longer period of time than they were together.  Their child is now almost 20 years old but had spent the majority of her childhood living with caretakers and at the children’s home.  This showed the lack of closeness between Camay and Tam.  The child and Camay did not benefit much from the suit property, whatever benefits Tam was eligible to or entitled to, if any, as Camay’s boyfriend terminated when Camay separated from him many years ago.  And since he had made no contribution towards the purchase price or the mortgage payments, he is not entitled to any beneficial interest in the property.

39.  I grant an order for possession against the defendant.  Costs against the defendant to be taxed if not agreed with certificate of counsel.  Defendant’s own costs to be taxed in accordance with legal aid regulations.