FU WAN SANG AND OTHERS v. FU MAN KWONG AND OTHERS

HCA 16108/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 16108 OF 1999

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J U D G M E N T

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Parties

1. The 1st to 3rd Plaintiffs are brothers. They are the sons of Fu Kei Cheuk (傅基爵). The 4th Plaintiff is the daughter to the 1st Plaintiff. They have another brother called Fu Lee Sang (傅利生). Fu Lee Sang died in 1978. He had six sons. They are the Defendants in this action. The Fus are indigenous villagers of Hoi Pa Village (海壩村) at Tsuen Wan.

Lot 924 DD 449 and relocation of Hoi Pa Village

2. Prior to 1982, the Fus lived in two village-type houses erected on Lot 924, Demarcation District 449, Hoi Pa Village. Since 1951, that piece of land had been held under the names of the four brothers (viz. the three Plaintiffs and Fu Lee Sang), each holding 1/4 of the legal title. Although neither the Rent Roll certified by the District Officer in 1951 (at p. 7 of the Bundle of Documents) nor the Memorial for Division of Property at p. 8 explicitly spelt out each brother's share, their respective interest as 1/4 owner is evidenced by a number of documents. In a letter dated 14 January 1982 from the District Officer to the Fus at p. 79 of the Bundle of Documents, the respective interest of the brothers and nephews was set out. Likewise, in the Memorial for the Succession to Property dated 8 June 1981 (p. 14), the six Defendants were recorded as succeeding to the 1/4 interest of Fu Lee Sang in the land. To the same effect is the memorial for the appointment of the 1st Defendant as trustee for the 5th and 6th Defendants in June 1981 (at p. 16-17). Although Mr Wong contended that the collective beneficial interest of the Defendants in Lot 924 was more than 1/4, this is not a matter raised by the Defendants in their Defence and it is also contrary to the evidence of his clients. The 1st Defendant confirmed in his evidence that his father and uncles each had 1/4 interest in that piece of land. I am not impressed by the submission of Mr Wong that by the mere fact that Fu Lee Sang's family occupied more than 1/4 this court must conclude that Fu Lee Sang's beneficial interest was more than 1/4. Counsel did not explore how and why Fu Lee Sang occupied more than 1/4 at the trial and there could be many explanations consistent with Fu Lee Sang having only 1/4 beneficial interest. On the evidence, I do not find any reason to hold that Fu Lee Sang's beneficial interest was not the same as stated in the documents, viz. 1/4. I also reject the suggestion of the 5th Defendant in Paragraph 9 of his witness statement that his father had a larger share by village custom in the absence of expert evidence proving such alleged custom. I therefore proceed on the basis that the four brothers each held 1/4 beneficial interest in Lot 924.

3. After the death of Fu Lee Sang, the six Defendants succeeded to his interest in the land. This is evidenced by an instrument called Succession to Property registered by memorial No. 220780. That instrument was dated 8 June 1981. At that time, the 5th and 6th Defendants were still minors and the 1st Defendant was appointed as trustee for them under Section 18 of the New Territories Ordinance.

4. Hence, the 1st to 3rd Plaintiffs and the six Defendants became co-owners of Lot 924. Each of the three uncles held 1/4 interest whilst the six Defendants each held 1/6 of the remaining 1/4 interest.

5. The Government was planning for the relocation of Hoi Pa Village in the late 1970's and early 1980's. By a letter dated 11 June 1981, the District Officer proposed that basing on the New Territories village removal policy, two 3-storeyed resite houses each of 700 square feet ground area would be reprovisioned to the Fus upon surrender of Lot 924.

6. Due to the size of their families, the Fus felt that two houses were not sufficient to satisfy their residential needs. They asked for four houses. After some correspondence, the District Officer replied by a letter dated 14 January 1982 informing them as far as removal policy was concerned the Government could only offer two resite houses. However, taking into account of the predicament of the Fus, the Government could sell to them two additional small house sites, one at a place called Yau Ma Hom, the other at West Cheung Pei Shan. That proposal was accepted and the Fus surrendered Lot 924 on 3 March 1982.

7. As a result, in exchange for Lot 924, the Fus got the following,

(a) two resite houses at Lots 1525 & 1526 Demarcation District 451 known as No. 21 and 20 respectively of Hoi Pa Resite Village ["the 1st and 2nd Properties"] --- they needed not pay anything for these two houses;

(b) a site at Lot 1514 Demarcation District 451 known as No. 9 Hoi Pa Resite Village ["the 3rd Property"] --- this is one of the additional house site. The Fus had to pay a concessionary premium for its acquisition and constructed a 3-storeyed house thereon at their own costs;

(c) a site at Lot 1230 Demarcation District 450 known as No. 168 Yau Ma Hom Road ["the 4th Property"] --- this is the other additional house site. Again the Fus had to pay a concessionary premium to acquire it and constructed a 3-storeyed house thereon at their costs.

Distribution of the four properties

8. The legal owners of these four properties, as set out in the Government Grants of the respective property were as follows,

(a) 1st Property (New Grant No. 6253 dated 22 October 1984) --- 3rd Plaintiff (6/12 share) and the six Defendants (1/12 share each);

(b) 2nd Property (New Grant No. 6254 dated 22 October 1984) --- 1st and 2nd Plaintiffs, 1/2 share each;

(c) 3rd Property (New Grant No. 6209 dated 20 August 1984) --- 1st Plaintiff and 2nd to 6th Defendant, 1/6 share each;

(d) 4th Property (New Grant No. 6040 dated 25 March 1983) --- 2nd and 3rd Plaintiffs and 1st Defendant, 1/3 share each.

These four properties are the subject matter of this action.

9. By a Vesting Deed dated 12 December 1986, the legal title in respect of the 1/6 share in the 3rd Property was vested to the 6th Defendant after the latter attained majority. Similar vesting deeds were executed in favour of the 5th and 6th Defendants with regard to the latter's interest in the 1st and 3rd Properties.

10. The concessionary premium and the construction costs of the 3rd and 4th Properties were paid partly by an ancestral fund kept by the Fus and partly by the sale proceeds obtained from the sale of one unit at the Ground Floor of the 1st Property to outsider. Before the sale was completed, the legal owners of the 1st Property entered into a Deed of Mutual Covenants dated 22 January 1987 ["the 1st DMC"] (memorial No. 424031). The 1st DMC converted the original 12 shares into 36 shares so that the 3rd Plaintiff held 18/36 shares instead of 6/12 shares, each of the six Defendants held 3/36 shares instead of 1/12 share. These shares were allocated in respect of each floor of the 1st Property. The net result was that each floor represented 1/3 share of the 1st Property. The 1/3 share for the ground floor was made up of 6/36 share from the 3rd Plaintiff and 1/36 share from each of the Defendants. The 3rd Plaintiff, as owner of the remaining 12/36 shares was given the exclusive use, occupation and enjoyment of the 1st Floor whilst the six Defendants, as owners of their respective remaining 2/36 shares (in total again 12/36 shares), was given the exclusive use, occupation and enjoyment of the 2nd Floor.

11. The sale to the outsider was completed by an Assignment dated 22 January 1987 and the 1/3 share together with the exclusive use, occupation and enjoyment of the ground floor unit was assigned to the purchasers.

12. The 1st and 2nd Plaintiffs also entered into a Deed of Mutual Covenants in respect of the 2nd Property on 22 January 1987. However, no Deed of Mutual Covenants has been executed in respect of the 3rd and 4th Properties.

13. In terms of actual occupation or use of the units, up to August 1999, the distribution was as follows,

(a) 1st Property:

i. Ground Floor --- sold to others;

ii. First Floor --- 3rd Plaintiff;

iii. Second Floor --- the Defendants.

(b) 2nd Property:

i. Ground Floor --- 1st Plaintiff;

ii. First Floor --- 1st Plaintiff;

iii. Second Floor --- 2nd Plaintiff.

(c) 3rd Property:

i. Ground Floor --- 1st Plaintiff;

ii. First Floor --- the Defendants;

iii. Second Floor --- the Defendants.

(d) 4th Property:

i. Ground Floor --- 3rd Plaintiff;

ii. First Floor --- 2nd Plaintiff;

iii. Second Floor --- the Defendants.

14. I do not need to describe in details how the Defendants actually occupied and used their units because in this action, the contest is basically between the Defendants on the one side and the Plaintiffs on the other. I should mention that the 2nd Defendant did not appear at the trial and I was told by counsel for the other Defendants that he was willing to abide by the decision of this court. Hence, when I refer to the Defendants, this rider has to be taken into account.

15. The 1st Plaintiff had allowed his daughter, the 4th Plaintiff, and her family to occupy and use Ground Floor of the 3rd Property. The 2nd Plaintiff had emigrated to Canada in 1992. Even before his emigration, he had let out the First Floor of the 4th Property to a tenant. His daughter Fu Sau Chun collected rent for him after his emigration. The 3rd Plaintiff had also leased out the Ground Floor of the 4th Property.

16. Hence, discounting the unit which had been sold for the construction costs of the 3rd and 4th Properties, the legal ownership of the 1st to 4th Properties were distributed amongst the uncles and nephews in a manner which the Defendants held 1/3 regarding 1st Property plus 5/6 regarding the 3rd Property plus 1/3 regarding the 4th Property. Attributing 6 shares to each house, the proportions of distribution of legal interest after the sale of Ground Floor of the 1st Property as between the Defendants and their three uncles and the purchaser of Ground Floor of the 1st Property can be worked out as follows,

Defendants: 9 (2 for 1st Property, 5 for 3rd Property and 2 for 4th Property)

1st Plaintiff: 4 (3 for 2nd Property, 1 for 3rd Property)

2nd Plaintiff: 5 (3 for 2nd Property, 2 for 4th Property)

3rd Plaintiff: 4 (2 for 1st Property, 2 for 4th Property)

purchaser: 2 (for Ground Floor 1st Property).

Amongst the uncles and nephews, the Defendants held 9/22 of the overall legal interest which is much more than 1/4 (the equivalent of which should be 5.5/22).

17. There was also an assignment by way of gift from the 2nd Plaintiff to the 1st Plaintiff in January 1987 regarding the former's legal interest in the 2nd Property. The 2nd Floor of the 2nd Property was assigned to Fu Man Leung (the son of the 2nd Plaintiff) at the same time. In 1993, Fu Man Leung sold the unit to people unconnected with the Fu family after the 2nd Plaintiff had emigrated. Since there is no dispute between the Plaintiffs, I do not need to work out the proportion of shareholdings as between them.

18. Of course, I appreciate that the aforesaid calculation does not take into account of the difference in terms of the valuations of the four properties. Valuation reports in respect of some of the units have been placed before me. However, I do not have the valuation in respect of the Ground Floor of the 1st and the 2nd Floor of the 2nd Property. The valuations of the 3rd and 4th Properties were given by the surveyor by way of one figure for the whole property instead of different figures given for each floor. Hence, I am unable to compare the values of these four houses. Mr Wong did not address me on the case of the defence as pleaded in Paragraph 6(f) of the Re-re-re-Amended Defence and Counterclaim. On the material available, I am not satisfied that the total of the market values of the 1st and 2nd Properties is higher than that of the 3rd and 4th Properties as alleged by the Defendants. Regarding the legal and other costs pertaining to the preparation of the deeds of mutual covenants, the only evidence I have are the receipts of Messrs.Wong, Hui & Co. issued to the 1st Plaintiff.

19. However, I have evidence from the surveyor as to the premium for the discharge of the restriction on alienation in the Government Grants for the 3rd and 4th Properties. By reason of such premium, the net value of the 3rd Property was $1,240,000 out of a market value of $3,000,000 and that of the 4th Property was $1,269,000 out of a market value of $2,820,000. On the other hand, the Government Grants for the 1st and 2nd Properties do not contain any restriction against alienation. If this factor is taken into account, and one were to consider the 1st and 2nd Properties separately from the 3rd and 4th Properties, the Defendants held 1/5 of the overall interest of the uncles and nephews in the 1st and 2nd Properties (disregarding the Ground Floor of the 1st Property), 7/12 of the 3rd and 4th Properties. Hence, in respect of the 1st and 2nd Properties, the Defendants held 1/20 share less than 1/4 whilst in respect of the 3rd and 4th Properties, they held 4/12 more than 1/4. Even taking into account of the premium factor, it is still likely that the 4/12 excess is more than adequate to cover the 1/20 shortfall. Further, the surveyors' evidence indicates that the higher the floor levels, the more valuable the properties would be and the Defendants got the 2nd Floor units for the 1st, 3rd and 4th Properties in the distribution. Therefore, one can safely proceed on the basis that the Defendants got more than 1/4 out of the overall legal interests in the four properties held by the uncles and nephews. As I said, Mr Wong did not advance any arguments to suggest otherwise.

20. In terms of occupation and use, under the arrangements set out in Paragraph 13 above, out of the 11 storeys held by the uncles and nephews, the Defendants got 4 storeys, hence more than 1/4.

21. The Defendants claimed that they had been mistreated by their uncles. Mr Wong said his clients' case was that the beneficial interests in the 4 properties were not accurately mirrored in the legal ownership. The Defendants' beneficial interest, according to Mr Wong, were greater than their legal ownership. When I enquired with Mr Wong about the defence case as to the extent of beneficial ownership, at first he was unable to tell this court the quantification of the beneficial interest of the Defendants. It was only in the afternoon of the first day of trial that Mr Wong informed this court that his clients' case was that the Defendants' beneficial interest in the properties should be 6/9 of the total interest of the uncles and nephews on the basis that out of the nine co-owners holding Lot 924, the Defendants accounted for six of them. This seems to be flying in the face of the fact that prior to the relocation, each of the 1st to 3rd Plaintiffs held 1/4 interest in Lot 924 and the six Defendants collectively held the remaining 1/4. But Mr Wong has tried to argue that 6/9 is equitable in the circumstances and I would deal with his submissions later.

Changes in 1999

22. I now need to recite an unhappy incident in 1999. As mentioned, the 4th Plaintiff resided at Ground Floor of the 3rd Property. In 1999, the 4th Plaintiff lived there with her husband, their son of 12 years old and daughter of 7 years old. Since 26 June 1999, the husband of the 4th Plaintiff had been hospitalized and he sadly passed away on 29 September 1999. The 1st Plaintiff and his wife were living at the 2nd Property and the 4th Plaintiff and her family used to have dinners at the home of the 1st Plaintiff.

23. The following account is based on the evidence of the 4th Plaintiff and the conviction of the 4th to 6th Defendants for criminal damage in Tsuen Wan Magistracy Case No. TWC 3117 of 1999 as well as the admissions of the 4th and 5th Defendants in their evidence. I find the 4th Plaintiff to be a credible witness and in fact her account of the event was not subject to much challenge by Mr Wong. On 8 August 1999, when the 4th Plaintiff was having dinner at her father's place at the 2nd Property, the 1st and 4th Defendants went there and demanded fiercely for the key to her home. She asked them why they needed the key to her unit. They did not give any reason but kept on demanding. She did not give the key to them and they left. The 4th Plaintiff asked her brother to check if there were any mishaps to her flat and when he returned, she was told that her unit was being pried open and some people were going into her flat. Her sister advised her to make a report to the police and she did accordingly.

24. When the police arrived, she went back to her home accompanied by the police and found that her properties including electric appliances were thrown all over the place outside her door. The locks at the door and iron grille of her flat were pried and damaged. Some of her properties like television, computer, video recorder and some furniture were damaged. Her bed was overturned. Some of the damage to her flat and her properties were shown in a series of photographs taken on 8 August 1999 produced as exhibit "P-2". It can be seen from those photographs that the damages were quite extensive. Obviously, the persons responsible for such actions meant to oust the 4th Plaintiff from the flat and the damages done to the properties were caused maliciously.

25. The three persons who had entered into the flat to cause the damages, the 4th to 6th Defendants, were arrested by police. They were subsequently charged with and convicted of criminal damage and each was sentenced to four months' imprisonment, suspended for 12 months and fined $5,000.

26. Although the 5th Defendant said in Paragraph 30 of his witness statement that the Defendants regretted about this incident, I am sad to say that I cannot discern any remorse on his part about his conducts in the incident. The 4th Plaintiff testified that the Defendants did not say sorry to her nor did they offer any compensation. They pleaded not guilty and were convicted after trial. When the 4th and 5th Defendant gave evidence before me about the incident, they made it plain to me that they felt justified in their actions and the 5th Defendant was even critical of the 4th Plaintiff making a report to the police.

27. The conducts of the Defendants after the incident also indicated their lack of remorse in respect of the incident. They locked up the Ground Floor of the 3rd Property and refused to allow the 4th Plaintiff to have access to the same. The 4th Plaintiff had to seek the assistance of police officer to accompany her back to the unit to collect some of her belongings. Understandably, in view of the fact that some of the Defendants were living in the upper floors of the 3rd Property, the 4th Plaintiff did not feel able to continue to live there and she had to move to live elsewhere. Later on, the 4th Defendant moved into the flat and has lived there ever since.

28. Regarding the 4th Property, Fu Sau Chun gave evidence before me as to how the Defendants effectively ousted the others from the property. I accept her evidence in this regard which were not seriously challenged by Mr Wong at the trial. In August 1999, the tenant of the First Floor was told by someone claiming to be a cousin of her to move out because there was dispute over the ownership of the property. The tenant moved out at the end of August 1999 and handed back the keys to her. She went to the flat to inspect and eventually found that the locks had been changed without the knowledge of the tenant or herself. A report was made to the police. Prior to the tenant leaving the flat, he was paying a rent of $4,000 per month. The 6th Defendant moved into the unit later.

29. Based on the evidence of the 5th and 6th Defendants, it is quite clear to me that the Defendants had procured the moving out of the tenants at the Ground Floor and 1st Floor of the 4th Property. The 5th Defendant said in his cross-examination that the Defendants recovered possession of the Ground Floor and 1st Floor after the tenants left. He maintained that the Defendants did not occupy those flats prior to 2000 although they had the right to possession. The 6th Defendant lived on the Ground Floor and he also had keys to the 1st Floor. He said under oath he occasionally lived at the 1st Floor. Although the 5th Defendant tried to impress this court that the Defendants only moved in after they found the flats vacant, I do not believe him. Bearing in mind what they did on 8th August 1999, and the Defendants' evidence that they were quite frustrated about the lack of living space for their families at the material time, it is plain to me that the Defendants were responsible for causing the tenants to vacate from the 1st Floor and Ground Floor. I also accept the evidence of Fu Sau Chun that the lock to the First Floor of the 4th Property was changed as soon as the tenant had moved out. Hence, when she visited the flat in September 1999, she could not open the door. I have no doubt whatsoever that it was the Defendants who changed the lock and they did so in September 1999, hence the 6th Defendant got the keys to those two units.

30. I have no doubt that they caused the lock to be changed in order to oust the Plaintiffs or their agents from the premises just as what they did to the 4th Plaintiff regarding the Ground Floor of the 3rd Property. I do not accept the evidence of the Defence witnesses who professed that if the 1st to 3rd Plaintiffs asked for keys to the premises which they were co-owners or asked for re-possession of the units, the matter could be discussed. On their own evidence, the Defendants had been demanding for more units and the uncles had stalled their demands. They thought they had been treated unfairly and I find as a fact that they decided to resort to forcible re-entry and self-help in August 1999. In those circumstances, it is most unlikely that the Defendants would agree to surrender possession of units they had obtained through questionable means even if the Plaintiffs were to raise the issue with them. Moreover, there is no suggestion that the Defendants had proposed the surrender of possession of any units to the Plaintiffs after the commencement of this action. To the contrary, the 5th Defendant said in his evidence that there could not be any discussion since the Plaintiffs had made reports to the police and issued proceedings against them. I find as a fact that the actions of the Defendants in 1999 were calculated to oust the Plaintiffs from the Ground Floor of the 3rd Property and the Ground Floor and First Floor of the 4th Property. Upon the successful eviction or in the case of the 4th Property the procurement of vacation by those originally in occupation, the Defendants intended to and did actually occupy the three units as their owns to the exclusion of the Plaintiffs.

31. After the present action had been commenced, the 3rd Plaintiff sold the First Floor of the 1st Property at $1,380,000 and the proceeds were paid into court pursuant to his undertaking to the court.

32. Hence, the current position regarding the possession of the units is as follows,

(a) 1st Property:

i. Ground Floor --- sold;

ii. First Floor --- sold;

iii. Second Floor --- the Defendants.

(b) 2nd Property:

i. Ground Floor --- 1st Plaintiff;

ii. First Floor --- 1st Plaintiff;

iii. Second Floor --- sold.

(c) 3rd Property:

i. Ground Floor --- the Defendants;

ii. First Floor --- the Defendants;

iii. Second Floor --- the Defendants.

(d) 4th Property:

i. Ground Floor --- the Defendants;

ii. First Floor --- the Defendants;

iii. Second Floor --- the Defendants.

The positions of the parties

33. The final stances of the parties in this trial are as follows. On behalf of the Plaintiffs, Mr Cheung submitted that the distribution of ownership as set out in the Government Grants should not be disturbed. The use and occupation of the 1st and 2nd Properties should continue to be governed by their respective Deed of Mutual Covenants. The 3rd and 4th Properties should be sold and their sale proceeds should be distributed in accordance with the shares of the parties under the Government Grants.

34. On behalf of the Defendants (other than the 2nd Defendant), Mr Wong asked for all the properties held under the names of the Plaintiffs and the Defendants to be sold and the proceeds be distributed as to 6/9 to the Defendants and 1/9 to each of the 1st to 3rd Plaintiffs. He did not address me specifically as to how I should deal with the three units which had already been sold. I do not think he suggested this court should do anything to disturb those sales. The purchasers had not been joined as parties to this action. This is one of the reasons why it is simply not possible for this court to grant any relief by way of partition in respect of the 1st and 2nd Properties. The parties have been well advised to abandon their applications for such relief. In respect of the First Floor of the 1st Property, I take it that the Defendants asked for the proceeds that had been paid into court be distributed in the same manner.

35. Counsel agreed that this court should first decide on the question of beneficial ownership of the properties. After the handing down of my decision, the parties would, if necessary, come back to address the court as to the appropriate order to be made regarding the sale of the properties in view of this decision.

Beneficial ownership of the four properties

The respective case and evidence of the parties

36. As I have said, initially it was not clear to me what was the extent of the beneficial interest claimed by the Defendants. It was not satisfactorily pleaded in the Re-re-re-amended Defence and Counterclaim. In Paragraph 6(b), it was pleaded that there was an understanding amongst the uncles and nephews that "in due course rights of ownership and occupation of the flats within the 4 Properties would be divided and allocated according to need and at the end of the day the 6 Defendants would be entitled to own and occupy no fewer than 6 flats between them". That is not a plea of 6/9 of the overall beneficial ownership of the Properties. Mr Wong submitted that beneficial ownership of the Defendants could stem from two alternative bases,

(a) alleged promises by the uncles;

(b) contribution in terms of exhaustion of concessionary rights on the part of the Defendants.

He relied on cases on constructive trust like Bannister v Bannister [1948] 2 All ER 133.

37. Although in Paragraph 6(b), the pleader averred that there was an understanding that in the interim, the 1st, 2nd and 3rd Plaintiffs and the Defendants and each of them would have collective beneficial ownership of all the flats in the four Properties, the evidence of the Defendants is to the contrary. Their evidence was that the question of ownership was not discussed (see Paragraph 6 of the witness statement of the 1st Defendant, Paragraph 4 of the witness statement of the 3rd Defendant, both adopted as their evidence).

38. Even in their oral testimonies, the Defendants focused on the question of occupation and said they had been complaining to their uncles about insufficient living space. They alleged their uncles promised them they would be given 6 units. According to the 1st Defendant (the eldest of the six Defendants), the promise was made after they had moved into the properties. This piece of evidence, even if accepted by the court, cannot assist the Defendants. The alleged promise was made after the division amongst the uncles and nephews and it was unsupported by any consideration. It was not evidenced in writing. Even if that alleged promise were to be understood as a promise regarding the beneficial ownership of six flats, it is not enforceable.

39. The evidence regarding the alleged promise is also problematic. None of the Defendants who gave evidence before me was able to testify specifically that a promise as to one unit being given to each of the Defendants having been made by the uncles prior to the Government Grants being issued. As I said, the 1st Defendant only adverted to promises made after they had moved into the new houses. The 3rd Defendant was quite vague in his evidence and he said he did not take much part in the family matter since he was rarely in Hong Kong. I do not find his evidence to be of any assistance. The 4th Defendant testified that it was mainly the 2nd Plaintiff who told the Defendants that they would get one unit each although the 3rd Plaintiff also mentioned the same. When pressed by counsel for more specific information as to circumstances under which the promise was made, he said he could not remember. The 5th Defendant only became involved after 1994. He had discussions with the Plaintiffs including long-distance telephone conversation with the 2nd and 3rd Plaintiffs. The specific grievance he mentioned was about the occupation of the Ground Floor by the 4th Plaintiff and insufficient living space for the Defendants. He considered it was unfair that as the owners of 5/6 of the legal interest in the 3rd Property, some of the Defendants were only given the actual occupation of 2 out of 3 flats. He said the 3rd Plaintiff told him that he would solve that problem for them. In his oral testimony, he did not mention any alleged promise from the Plaintiffs to give each of the Defendants one unit in the Properties. Although he referred to that in Paragraph 21 of his witness statement, it was quite obvious from his oral testimony that he did not take part in the matter prior to 1994 and what he said in that paragraph about the alleged agreement could only be hearsay. Given the evidence of his elder brothers, I attach no weight to it.

40. The 1st Plaintiff also gave evidence as to the agreement between the uncles and nephews. According to him, there had been a number of meetings amongst the uncles and nephews concerning the distribution of the flats. Although the 5th and 6th Defendants did not take part (as they were then minors), the 1st to 4th Defendants (or at least three of them) took part. Those discussions culminated in a consensus reached on 7 August 1983 at the home of the 2nd Plaintiff. They had to reach a consensus as they were about to sign a contract for the construction of one of the houses. The consensus was subsequently recorded in a Chinese document written by the 2nd Plaintiff. A copy of that document was produced as exhibit P-1 which, according to the 1st Plaintiff, was handed to him by the 2nd Plaintiff about two weeks after 7 August 1983. It was not signed by anybody.

41. P-1 recorded that ancestral fund would be used to construct the house at the 4th Property (which was granted to the 2nd and 3rd Plaintiffs and 1st Defendant on 25 March 1983). If the fund was insufficient, the 1st Plaintiff would be responsible for 1/4 and the Defendants would be responsible for the 3/4 of the balance. As it turned out, according to the evidence of the 1st Plaintiff, neither he nor the Defendants needed to pay anything for the construction costs. According to P-1, the construction cost of the house at 3rd Property would be paid by sale proceeds from one of the Ground Floor units in the two resite houses built by the Government.

42. As to distribution, P-1 recorded that both 2nd and 3rd Plaintiffs would each get one unit at the Government resite houses (viz. the 1st and 2nd Properties) and one unit at the 4th Property. The 1st Plaintiff would get two units at the Government resite houses and one unit at the 3rd Property. The Defendants would get one unit at the Government resite house and two units at the 3rd Property. As to the remaining unit at the 4th Property, initially the 1st Plaintiff was to hold 1/4 interest whilst the Defendants were to hold 3/4. Presumably, this was to mirror the financial arrangement concerning the construction costs of the 4th Property. Upon completion of the construction of the house at the 4th Property, the 1st Plaintiff would transfer his 1/4 interest back to the Defendants. Hence, ultimately, the Defendants would have the remaining unit at the 4th Property.

43. There was no specific allocation of units by reference to a particular floor level in P-1. That was only done when construction of the houses were completed and keys were distributed. However, the arrangement recorded in P-1 was consistent with the subsequent distribution of occupation of the units as stated in Paragraph 13 above.

44. The 1st Plaintiff said he was anxious to have the agreement recorded in writing as he might have to pay for the construction of the 4th Property on which he had no legal title. Hence, P-1 was prepared by the 2nd Plaintiff at his request. The 1st Plaintiff said some minor details recorded in P-1 had not been discussed at the meeting of 7 August 1983, but the distribution of the flats amongst the four fongs ("房", viz. the four branches of the family) had been discussed.

45. After the construction of the houses was completed, the 2nd Plaintiff being the eldest in the Fu family distributed the keys. For the 3rd Property, the keys were given to the 1st Plaintiff around the end of 1985. The 1st Plaintiff then proposed to the Defendants that he would have the Ground Floor whereas the Defendants would have the 1st and 2nd Floors. The Defendants agreed. Hence, the 1st Plaintiff gave the keys to the 1st and 2nd Floors to the Defendants.

46. As to the allegations of the Defendants that the Plaintiffs had promised them one unit for each of the Defendants, the 1st Plaintiff denied that such promise had ever been made. However, he also said that the Defendants might have suggested that there was such a promise in oral conversations and in casual chats ("口講或者有", "談話傾偈或者有", "求其講"). But he was adamant that the Plaintiffs did not make such promises.¹ Although he tried to retract such evidence, I attach no weight to such retraction. I have listened to the digital recording of these parts of his evidence carefully. It had not been suggested that these remarks had been made prior to the acquisition of the properties. From the context in which the questions were asked by counsel and the answers were given by the 1st Plaintiff, my understanding is that these conversations and chats took place after the Defendants had moved into the houses.

47. The Defendants denied that there was such a meeting on 7 August 1983. They said they had entrusted the Plaintiffs to deal with the Government concerning the surrender of the land and relocation of their families. They respected their elders and believed that the Plaintiffs would take care of their interest. They did not take part in any discussions and the decision about the distribution was made by the Plaintiffs. The Defendants said they only did what the Plaintiffs told them to do in signing documents relating to these transactions.

My analysis as to the consensus in 1983 and the alleged promises by the uncles

48. I think it is necessary to distinguish between two different periods. The dividing line is the time of acquisition of the Properties. In Gissing v Gissing [1971] AC 886 Lord Diplock observed at p. 906C to F,

""...[I]n the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself. It is for the court to determine what those inferences are.

In drawing such an inference, what spouses said and did which led up to the acquisition of a matrimonial home and what they said and did while the acquisition was being carried through is on a different footing from what they said and did after the acquisition was completed. Unless it is alleged that there was some subsequent fresh agreement, acted upon by the parties, to vary the original beneficial interests created when the matrimonial home was acquired, what they said and did after the acquisition was completed is relevant if it is explicable only upon the basis of their having manifested to one another at the time of the acquisition some particular common intention as to how the beneficial interests should be held." (my emphasis)

49. There is no plea of fresh agreement reached between the parties after the acquisition of the four properties in the Re-re-re-amended Defence and Counterclaim. The focus is therefore on the parties' common intention when the properties were acquired. Moreover, even if the case of the defence could be regarded as a claim based on a fresh agreement, for reasons given in the other paragraphs in this judgment, I would also reject the same.

50. I shall first examine what happened prior to the acquisition. Despite the attempts by the 1st Plaintiff to retract his evidence concerning the casual remarks, I have no difficulty in accepting his evidence that a consensus was reached between the uncles and nephews at the meeting of 7 August 1983. In this respect I preferred his evidence to the evidence of the Defence witnesses. I find it inherently unlikely that the Defendants were not involved in the discussions in the family concerning relocation and the distribution of the units amongst the four fongs. The 1st Defendant was 33 years old in 1983, the 3rd Defendant was 31, the 4th Defendant was 29. They were capable of looking after their own interest and according to the evidence they did take steps to do so. The 1st Defendant was appointed as the manager for the 5th and 6th Defendants. The 1st Defendant gave evidence that initially, the uncles were minded to accept the Government's proposal of giving the Fu family 2 pieces of land in exchange for Lot 924. It was upon the 1st Defendant's insistence that the Fus asked for 4 pieces of land instead. The letter dated 1 July 1981 from the Fu family to the chairmen of Tsuen Wan Rural Committee enlisting support for their request for more land was signed by the uncles and the 1st Defendant. It was only after the District Officer had indicated by a letter dated 14 January 1982 that another two pieces of land could be earmarked for the Fus that they executed the Deed of Surrender on 3 March 1982. The Defendants (except the 5th and 6th Defendants) executed that Deed personally. Likewise, they also executed the Government Grants in respect of the 1st, 3rd and 4th Properties in which their respective shareholdings in the Properties were set out. It is clear to me that the Defendants did have a say in the relocation arrangement and they took part in the discussions.

51. Having fought hard to get four pieces of land from the Government, it is incredible that the Defendants just left the actual distribution amongst the four fongs to the uncles. I have alluded to the manners in which the legal title and the actual occupation of the four properties were distributed amongst the four fongs. It is quite obvious that distribution was by reference to fongs. If these were all handled by the uncles without regard to the Defendants, and if the uncles were trying to take advantages of the Defendants as alleged by the Defendants, I find it difficult to understand why the distribution would be so favourable to the Defendants. The 1st Plaintiff said in his evidence that the agreed arrangement was based on common understanding and made in the spirit of tolerance and accommodation amongst family members. I find this to be more likely to be the truth than the version put forward by the Defendants.

52. In respect of the sale of the Ground Floor of the 1st Property, the 2nd and 4th Defendants signed the Chinese sale and purchase agreement (together with the three uncles) for selling that at the price of $300,000 on 9 May 1984 (at p. 144 of trial bundle). For the construction of the house at the 3rd Property, a contract was signed with Wah Kee Construction Company on 24 September 1984 (at p. 177 of trial bundle). The 1st Plaintiff and the 4th Defendant signed that contract. All the Defendants except the 5th Defendant signed an account statement dated 7 December 1986 (p. 272 of trial bundle) concerning the incomes and expenses for the construction of the 3rd Property. Further, there was some refund of deposit from the contractor due to uncompleted works and according to a document dated 18 November 1987, 2/3 was refunded to the Defendants whilst 1/3 was refunded to the 1st Plaintiff. This document (at p. 330 of the trial bundle) was signed by the 3rd and 4th Defendants. These documents, as well as the execution of the Government Grants, the Assignment of the Ground Floor of the 1st Property to the purchaser and the Deeds of Mutual Covenants for the 1st Property in 1987 by the Defendants, in my judgment, evidenced the involvements of the Defendants in the relocation process and the distribution of the four properties in accordance with the understanding recorded in P-1 and their connivance to the same.

53. I reject the evidence of the Defendants that in executing documents, they only did what their uncles told them to do. Most of the Defendants were adults and as mentioned above, the 1st Defendant gave evidence of an independent stance taken by them at least with regard to four pieces of land as a term for surrendering the old lot. The statement of account mentioned in the last paragraph is also illuminating. It shows that the uncles did account to the nephews about the construction costs. In my judgment, this piece of evidence is inconsistent with the scenario put forward by the defence that the uncles kept the nephews in the dark and dictated them to sign documents to implement whatever agreed upon by the uncles.

54. I also reject the contention of Mr Wong that the Defendants did not have any real participation in the decision-making process and the Defendants were in a disadvantaged position in the discussions. The mere fact that the Defendants did not dissent from the proposals put forward by the uncles did not place the uncles in a position of trust and confidence. I am not satisfied on the evidence that in 1983, the uncles were holding a fiduciary position towards the Defendants. The uncles were not acting as the guardians of their interests. It was the 1st Defendant who acted as the trustee for the 5th and 6th Defendants. Mr Wong has not directed my attention to any handicaps suffered by the Defendants which rendered them vulnerable or dependent upon the advice or guidance from the uncles. As I said, the 1st to 4th Defendants were all adults at the material time and they had voiced their independent stance and even managed to persuade the uncles to follow their wishes in respect of the inadequacy of two pieces of land. There is no evidence whatsoever to suggest that the uncles had exerted any actual undue influence over the Defendants regarding the agreement reached on 7 August 1983.

55. In my judgment, contrary to the suggestion of Mr Wong, the Defendants failed to establish any case of undue influence, whether presumed or otherwise. I have already alluded to the lack of evidence as to actual influence being exerted and as to the existence of a relationship of trust and confidence. Amongst the many authorities included in his list of authorities, Mr Wong only referred me to Snell on Equity, 29th Edition p. 551-556 and Tate v Williamson (1866) LR 2 Ch 55 on the topic of undue influence in his closing submissions. He did not indicate to me whether he was relying on a case of presumed undue influence or actual undue influence, and if it was a case of presumed undue influence, whether it was Class 2A or Class 2B (see Chitty on Contracts, 28th Edn. Para. 7-043). Given my above findings, there cannot be any actual undue influence nor presumed undue influence of Class 2B type. Mr Wong cited Tate v Williamson (1866) LR 2 Ch 55 as an example of undue influence exerted by an uncle over a nephew. Insofar as Mr Wong relied on this case as falling under Class 2A (viz. presumption arising from certain specified relationships), I do not think this case supports such a proposition. On my reading of this case, it was a decision under Class 2B (viz. presumed undue influence arising from a de facto relationship of trust and confidence).

56. The equitable jurisdiction of the court in respect of undue influence has recently been examined by the Court of Final Appeal in Bank of China v Fung Chin Kan [2003] 1 HKLRD 181 at Paras. 49 to 51. The essence of the jurisdiction is highlighted in the judgment of Lord Brightman in Hart v O'Connor [1985] AC 1000 at 1024 cited in Para. 50 in the judgment of Litton NPJ. I do not find any basis to suggest that the uncles had acted unconscionably or that the Defendants had been victimized.

57. In my judgment, the 1st Plaintiff gave a credible account as to the circumstances under which P-1 was prepared and handed to him. The contents of P-1 were consistent with what happened afterwards. There were detail provisions in P-1 which are not relevant to the issues that I have to decide and they were unlikely to be there if P-1 was made up for this litigation. As far as I can observe, the 1st Plaintiff is not a sophisticated person and if his evidence about the meeting of 7 August 1983 was untrue, I am sure that he would be exposed by the skilful cross-examination of Mr Wong. Yet, his evidence about this meeting and the consensus reached thereat remained unshaken. I accept this part of his evidence as truthful.

58. I therefore find as a fact that the subsequent distribution of the properties in terms of occupation was in accordance with a consensus reached between the uncles and nephews on 7 August 1983. Up to the acquisition of the properties, there was no agreement or understanding that the nephews would each be given at least one unit.

59. On the issue of beneficial ownership, no evidence has been adduced as to why the legal ownerships of the four Properties were distributed in the manner as set out in the Government Grants. There is no evidence to support the allegation in Paragraph 6A of the Re-re-re-amended Defence that the uncles "unilaterally abused and/or misused their positions to allot more legal interests to themselves in the four properties". Mr Wong has not drawn my attention to any evidence as to how the Government would normally apply its policy regarding small houses for indigenous villagers in a relocation situation. The letter of 17 June 1994 from the District Lands Office showed that the rights of the uncles and nephews had been exhausted by reason of their acquisition of the 3rd and 4th Properties. But there is no evidence to indicate that the arrangement in the present case was unusual or that it was procured by the uncles to benefit themselves.

60. Given the stance of the Plaintiffs as stated in Paragraph 33 above, they in effect said that the beneficial ownerships were distributed in the same manner as legal ownerships. The Defendants contended otherwise. For reasons already given, I am not satisfied that by the time the properties were acquired, there had been any common understanding amongst the uncles and nephews that the beneficial ownership of the four properties would be held collectively with 6/9 thereof belonging to the Defendants.

61. After the acquisition of the properties, based on the evidence of the 1st Plaintiff and the Defendants, I find that the Defendants had on some occasions demanded for six units (but not 6/9 of the beneficial ownership). However, the Plaintiffs had never promised the same. I do not think the 1st Plaintiff in his testimony ever acknowledged that the Plaintiffs had acceded to such requests. Properly understood, his evidence was that he had heard allegations by the Defendants that such promise had been made, but actually no promise had been given by the uncles. As to the evidence of the Defendants, due to the unsatisfactory aspects set out in Paragraph 39 above, I am not satisfied on their evidence that any promise had been given by the Plaintiffs.

62. Further, as the Defendants had not told me the detailed circumstances under which the alleged conversations took place and what had been said exactly, I am not satisfied that the alleged promises, even if they had been given by the uncles, were meant to be legal binding. In any event, I am not satisfied that such alleged promises can be relied upon to enable this court to draw an inference that there was such a common understanding at the time when the properties were acquired. For these reasons, as well as the reasons given in Paragraph 38 above, I am therefore of the view that the oral conversations between the uncles and the Defendants after the acquisition cannot avail the Defendants in their claims, whether it be a claim for 6/9 of the beneficial ownerships or a claim for 6 units.

63. The aforesaid findings dispose of Mr Wong's case for 6/9 beneficial ownership based on alleged promises by the uncles. At this juncture, I reiterate that the defence has not pleaded a claim for 6/9 of the beneficial ownership. The only claims pleaded were for no less than 6 units (Paragraph 6(b) of the Re-re-re-amended Defence) and 1/12 interest for each defendant (Prayer (c) in the Counterclaim). This case of 6/9 beneficial interest is clearly a recent invention. It cannot be found in pleadings nor in witness statements filed by the Defendants. It took Mr Wong quite a while before he could pinpoint his case as such. I do not believe the Defendants when they gave evidence to the effect that 6/9 beneficial interest had always been their case. If what they said were true, I fail to see why it was not pleaded in their Defence. This again reflected adversely on their credibility.

The loss of concessionary rights

64. The other basis on which Mr Wong advanced his case of 6/9 beneficial interest is the utilization of the Defendants' rights as indigenous villagers with regard to the acquisition of the 3rd and 4th Properties. It is not clear to me whether Mr Wong advanced this ground by reference to the principle of resulting trust or that of constructive trust. On final analysis, it does not matter because in either case he failed. Since the 3rd and 4th Properties were granted by the Government to the uncles and the nephews at concessionary premium, the Government regarded that as the exhaustion of their concessionary rights as indigenous villagers in relation to acquisition of land in the New Territories. This stance of the Government was set out in a letter dated 17 June 1994 from the District Lands Officer of Tsuen Wan to the 1st Defendant.

65. It seems to me the loss of such concessionary rights is the real grievance of the Defendants. They thought it was unfair to them even though the uncles' rights were also exhausted. Their reasoning is as follows: all their rights had been exhausted whereas the rights of the sons of the uncles were left untouched. Hence, their cousins were able to apply for other pieces of land with the benefit of concessionary rights whilst they could not do so. Therefore, it is pleaded in Paragraph 12(b) of the re-re-re-amended Defence and Counterclaim,

"For some years the Defendants were prepared to tolerate the situation in anticipation that they would be able to acquire additional small houses sites in accordance with government policy whereby each indigenous male is entitled to a village house...."

When such expectation turned out to be unsustainable, the nephews blamed their uncles for the same.

66. The 1st Defendant said in his evidence that they did not know about such loss until a letter dated 22 May 1992 from the Tsuen Wan District Lands' Office. That letter was apparently written in response to a name list submitted by the village representatives of the Hoi Pa village concerning applicants for acquisition of land at concessionary rates as indigenous villagers. The District Lands' Office informed the parties that the names of, inter alias, the uncles and nephews had to be deleted from the list because they had already benefited under the policy.

67. The 1st Plaintiff also gave evidence that the uncles likewise were not aware of the loss of concessionary rights until this letter of 1992. I accept his evidence. This is consistent with the fact that the names of the uncles were also included in the list of applicants submitted to the District Lands' Office, hence there was reference to the deletion of the uncles' names in the response of 22 May 1992.

68. I have no reason to believe that prior to that letter, the uncles knew more about the loss of concessionary rights than the nephews. On the evidence before me, I have no reason to conclude that the District Officers who handled the execution of documents concerning the relocation exercise had explained the matters in greater details to the uncles than to the nephews. The Defendants (except 5th and 6th Defendants who were represented by the 1st Defendant, not the uncles) attended the execution of the documents at the District Lands Office personally. The letters from the District Officer dated 14 January 1982 was addressed to the uncles as well as the nephews. Since the Defendants were anxious to fight for four pieces of land instead of two, they should have read this letter as well. None of the Defendants who gave evidence before me has suggested that the Defendants did not have any opportunity to read this letter. They must therefore be aware that the 3rd and 4th Properties were sold to them instead of given to them by the Government in exchange for resumption of Lot 924.

69. Mr Wong submitted that the evidence of Fu Kwok Man showed that it was common knowledge that indigenous villagers had concessionary rights. I fail to see how that could be relied upon to establish that the uncles in fact knew of the loss of such rights between 1982 and 1992. As far as common knowledge is concerned, Mr Wong has not put forward any reason why the Defendants were in a less advantaged position than the uncles.

70. Neither party called evidence from the District Lands' Office as to the circumstances under which the relevant Government Grants and the Deed of Surrender were executed by the uncles and nephews. I am therefore unable to tell whether the loss of concessionary rights had been clearly explained to the uncles and nephews between 1982 and 1984. On the material before the court, I would proceed on the basis that the uncles and nephews were ignorant in that regard although the utilization of their concessionary rights should have been apparent from Special Condition 13 in the Government Grants for the 3rd and 4th Properties. Based on the evidence before me, I am not satisfied that the uncles had misled the nephews on the question as to loss of concessionary rights. The uncles were equally ignorant in that regard.

71. I therefore reject the defence's suggestion of exploitation, non-disclosure or equitable fraud on the part of the uncles in relation to the loss of concessionary rights. But this is not the end of the matter. Mr Wong also based his argument on the contention that the concessionary rights should be regarded as contributions to the acquisition of the 3rd and 4th Properties. He submitted that the uncles had benefited from the Defendants' contributions and the in terms of head counts, since the Defendants provided 6 names whilst the uncles provided 3, the Defendants should be entitled to 6/9 beneficial interest. This seems to be an argument on resulting trust.

72. Taking it to its highest, I fail to see how that argument can be applied in respect of the 1st and 2nd Properties. I also have difficulties in accepting that the uncles had benefited from the use of the Defendants' names. The Defendants' case is that under the Government policy, each indigenous villager is entitled to one flat built on land acquired at concessionary premium. Hence, the three Plaintiffs would be entitled to three flats. As it turned out, in respect of the 3rd and 4th Properties, under the arrangement set out in P-1, the Plaintiffs got three flats. Therefore, the uncles did not benefit themselves from the use of the Defendants' names.

73. I am of course aware that despite the use of the names of all the Defendants in the 3rd and 4th Properties, they only got three flats instead of six. I do not know the reason why the names of all six Defendants had to be included in the Government Grants for the 3rd and 4th Properties. I do not know whether it was a special requirement imposed by the Government. The defence adduced no evidence in that regard. I am therefore unable to conclude that this was caused by the uncles. Prima face, the Defendants were given less than what they were entitled under the usual Government policy. But I am unable to say that this was due to the fault of the uncles. For reasons already given, my finding is that the Defendants were capable of looking after and should have looked after their own interest. If they failed in that regard, they cannot cast the blame on their uncles.

74. It is also not clear to me as to why the use of the names of the Defendants could be regarded as contributions. Mr Wong referred to the fact that the parties were able to acquire the 3rd and 4th Properties at a concessionary premium due to the status of the Defendants as indigenous villagers. However, the 1st to 3rd Plaintiffs were also indigenous villagers and as mentioned above, they were entitled to acquire 3 flats at a concessionary premium on their own account.

75. Moreover, the concessionary premium came with a price, the restrictive covenant under Special Condition 13 in the Government Grants. Hence, when an indigenous villager wishes to sell to outsiders, he has to pay back the difference in the premium to the Government. Therefore, the concessionary premium is only a personal entitlement of an indigenous villager. It is not transferable and though it is beneficial to the indigenous villager, it is not a saleable right. I therefore reject Mr Wong's oral submission that this court should recognize that the right to concessionary premium could be traded in the market. That submission is wrong in principle and contrary to authorities, see Chung Mui Teck v Hang Tak Buddhist Hall CACV 20 of 2001, 22.5.2001. Mr Wong relied on Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84 to support his proposition and he also referred to Sihombing & Wilkinson's Hong Kong Conveyancing Law and Practice Vol. 1, II [37]. Unfortunately, the extract included by Mr Wong in his bundle of authorities is an out-dated version. I have checked the latest edition of Sihombing & Wilkinson's Hong Kong Conveyancing Law and Practice. That paragraph has been replaced with a paragraph containing explicit reference to Chung Mui Teck. When this court referred Mr Wong to Chung Mui Teck in the course of his closing submission, he was unable to offer this court any assistance regarding that decision. I have read Li Pui Wan and I cannot find anything therein to support Mr Wong's proposition.

76. Mr Wong also argued that but for the use of all the Defendants' names, and thus the exhaustion of their concessionary rights, the 3rd and 4th Properties could not be acquired. Given the failure of the Defendants to adduce any evidence as to why the names of all the Defendants were included in the Government Grants when three of them (plus the 1st to 3rd Plaintiffs) should be sufficient to satisfy the requirement under the usual Government policy, I cannot be satisfied that without the inclusion of all Defendants as grantees in the Government Grants for the 3rd and 4th Properties, the Government would not sell the same to the uncles and nephews. Hence, this submission fails for want of evidence.

My conclusions on beneficial interest

77. For all these reasons, I am not satisfied that the beneficial interest in the properties should have any correlation to the fact that all the Defendants were named as grantees (with the result that their rights as indigenous villagers had been exhausted).

78. I would also observe that as far as the 3rd and 4th Properties were concerned, the Defendants' overall legal interest is more than 1/4. They have 5/6 in respect of the 3rd Property and 1/3 in respect of the 4th Property. I do not see anything intrinsically unfair or inequitable to the Defendants.

79. In the circumstances, the Defendants failed to convince me that there is any valid ground for intervention by equity as to the distribution of the ownership of the four properties. I therefore hold that in the present case, the beneficial ownership shall be in accordance with the legal titles as set out in the Government Grants. As mentioned by Litton NPJ in Para. 51 of his judgment in Bank of China v Fung Chin Kan,

"[G]enerally speaking, when a person signs a legal document, he or she is bound by the act of signature : As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood."

80. Having so decided, I accept the suggestion of Mr Cheung. I am of the view that the existing position with regard to the 1st and 2nd Properties should not be disturbed. The Deeds of Mutual Covenants shall continue to govern the rights and obligations between the parties. The sale proceeds of the First Floor of the 1st Property should be released to the 3rd Plaintiff. Regarding the 3rd and 4th Properties, my present inclination is to order a sale thereof with its sale proceeds after deducting expenses and costs (and it may include costs of the present action) to be distributed in accordance with the legal interest of the parties as set out in the Government Grants. However, I will give an opportunity to the parties to address me before I make an order to such effect. If the Defendants wish to retain the 3rd and 4th Properties, I will give them a chance to make a reasonable offer to the Plaintiffs to acquire their interest in these properties. That offer should be made prior to restoration of the matter before me. As indicated at the trial, I will hear parties on the exact form of the order which I am going to make. If an order of sale has to be made, the parties should consult the Lands Department as to the form of order bearing in mind the requirement under Special Conditions 12 and 13, particularly the requirement as to payment of additional premium. Again this should be done prior to the restoration of the matter before me.

The Plaintiffs' claims in trespass

81. Lastly, I turn to the claims for trespass. There is no Deeds of Mutual Covenants for the 3rd and 4th Properties. As co-owners, the Defendants were entitled to possession of each and every part of the properties under common law. Trespass cannot be maintained by the Plaintiffs unless there was ouster. The considerations under equity seems to be more flexible. In Re Pavlou [1993] 1 WLR 1046, Millett J (as he then was) said at p. 1050,

"First, a court of equity will order an inquiry and payment of occupation rent, not only in the case where the co-owner in occupation has ousted the other, but in any other case in which it is necessary in order to do equity between the parties that an occupation rent should be paid. The fact that there has not been an ouster or forceful exclusion therefore is far from conclusive. ... The true position is that if a tenant in common leaves the property voluntarily, but would be welcome back and would be in a position to enjoy his or her right to occupy, it would normally not be fair or equitable to the remaining tenant in common to charge him or her with an occupation rent which he or she never expected to pay."

(See also Dennis v McDonald [1982] Fam 63 and my recent decision in Chou Mei Iu v Kung Mui Fong HCMP 2026 of 2000, 28 February 2003.)

82. In the light of my findings above, I have no difficulty in concluding that the actions of the Defendants in August 1999 constituted ouster and forcible exclusion of the 1st Plaintiff from the 3rd Property and the 2nd Plaintiff from the 4th Property. Although at the material time, the actual occupant of the Ground Floor of the 3rd Property was the 4th Plaintiff, given the consensus reached in August 1983 and the distribution of the keys of the 3rd Property and the relationships between the parties, the Defendants must have known that she occupied the same with the permission of the 1st Plaintiff. In fact, the 1st and 4th Defendants went to the premises of the 1st Plaintiff to locate the 4th Plaintiff to demand for keys from her. Likewise, although the tenancy of the 1st Floor of the 4th Property was handled by Fu Sau Chun after the 2nd Plaintiff emigrated to Canada, I infer that the Defendants must have known that the tenant was a tenant of the 2nd Plaintiff. In the circumstances, the forcible expulsion of the 4th Plaintiff and the procurement of the tenant to leave the 1st Floor of the 4th Property together with the subsequent occupation and change of locks of these units by the Defendants were plainly conducts calculating to exclude the Plaintiffs from the use and occupation of the units.

83. Bearing in mind the conducts of the Defendants and the means they employed to secure their possession of the two units, I do not consider the fact that the 1st and 2nd Plaintiffs had not asked for new keys to the units as an indication that they were content to be excluded. Reports were made to the police and the Writ in this action was issued on 11 October 1999 with prayers asking for, inter alias, relief pertaining to the removal of the locks installed by the Defendants at the Ground Floor of the 3rd Property and the 1st Floor of the 4th Property. The response of the Defendants as set out in the Defence was that the Plaintiffs had deprived the Defendants' lawful right of use and enjoyment of these two units (see Paragraph 16 of the Re-re-re-amended Defence). Obviously, it would be futile for the Plaintiffs to demand for keys to those units, particularly in the light of the manner in which the Defendants harassed the 4th Plaintiff and their lack of remorse.

84. The 5th Defendant said in his evidence that the 1st Plaintiff could resume his use of the 3rd Property but it was a matter that had to be discussed amongst all co-owners and the living requirements of all parties had to be considered. In view of what the Defendants had done, I can hardly believe this as the sincere stance of the Defendants. Further, as the 5th Defendant himself admitted, there had not been any meeting of co-owners before the Defendants started to take possession of the three units in the 3rd and 4th Properties previously occupied or used by the Plaintiffs.

85. The Defendants cannot deny that up to August 1999, all the parties had been enjoying exclusive use and occupation of the units in the 3rd and 4th Properties in accordance with the distribution which I find the parties had agreed upon in 1983 and such agreement was subsequently put into effect when keys of the units were distributed upon completion of construction. The Plaintiffs had never disturbed the Defendants' occupation and use of the units distributed to them. The Defendants therefore have enjoyed the benefit of the 1983 agreement throughout these years. Parties have been dealing with their own units in accordance with that arrangement for a substantial period of time.

86. Mr Cheung relied on the doctrine of part performance to argue that even in the absence of deeds of mutual covenants regarding the 3rd and 4th Properties, the 1983 agreement should be given effect by this court and the 1st and 2nd Plaintiffs should be regarded as having the right to exclusive possession of the Ground Floor of the 3rd Property and First Floor of the 4th Property respectively.

87. Mr Wong submitted that this court should not affirm the 1983 agreement as it would be unfair to the Defendants. Given my findings as to the circumstances under which the 1983 agreement came into existence and the developments since 1983, also having regard to the fact that under the 1983 agreement the Defendants actually got more than 1/4 in terms of beneficial ownership as well as actual use of the properties, I do not find that there is any good reason why equity should not give effect to that agreement. In coming to that conclusion, I have also borne in mind the detriment suffered by the Defendants as to their loss of concessionary rights. For reasons already given, I do not regard that as a sufficient reason to disregard the consensus reached between the uncles and nephews in 1983.

88. For the sake of completeness, I record that Mr Wong also argued that the distribution in 1983 entailed the Defendants lived in a less satisfactory conditions than the Plaintiffs. He submitted this is by itself a hardship. I am not aware of any principle of law or equity which enable a co-owner to claim a greater share in the beneficial ownership of the property or a right to encroach upon the exclusive right of possession of other co-owners simply because he finds he has inadequate space to live. The absurdity of such a proposition is readily highlighted by applying that to co-owners in a multi-storey building in Hong Kong. Mr Wong has not advanced any argument before me to suggest the law should be different when the co-owners were uncles and nephews. Neither is there any expert evidence to warrant different consideration in terms of rights of indigenous villagers in the New Territories. Further, on the evidence before me, I am not satisfied that as things stood in 1983, the Defendants would not have adequate space to live under the arrangement envisaged by the 1983 agreement. As the 1st Plaintiff said, the living condition was much more crowded when everyone was living at Lot 924.

89. I therefore accept the submission of Mr Cheung that the 1983 agreement should be given effect. Equity looks on that as done which ought to be done. Hence, in the eyes of equity, as between the Plaintiffs and the Defendants, covenants for exclusive possession in respect of the respective units in the 3rd and 4th Properties distributed to the uncles and nephews after completion of construction are deemed to have been given by them to one another.

90. Even if I were incorrect in the above analysis as to the effect of the 1983 agreement, the same conclusion is reached by way of estoppel by convention. It seems to me that obviously, the uncles and nephews have been dealing with each other over the years on the shared assumption that exclusive possession was given to the respective parties who were given the keys to the respective units. It would be unjust and unconscionable to allow the Defendants to go back on it after so many years by relying on a defence of lack of formal covenant. In this connection, I do not regard the demands by the Defendants for more units as being inconsistent with such shared assumption. On the contrary, such demands reinforced this conclusion. If the Defendants were not proceeding on the basis that exclusive possession of the units had been distributed, they needed not demand for redistribution.

91. I am therefore of the view that damages for trespass should be awarded to the 1st and 2nd Plaintiffs by reason of their being ousted from the use and occupation of the 3rd and 4th Properties by the Defendants (except the 2nd Defendant) and such damages should be assessed by reference to their respective loss of use of the Ground Floor of the 3rd Property and First Floor of the 4th Property. Mr Cheung invited me to assessed the damages by reference to the rent regarding the First Floor of the 4th Property which the 2nd Plaintiff had been collecting before the Defendants caused his tenant to leave. The valuation reports produced by the Defendants did not deal with the rental values of the properties. On the evidence before me, I have no reason to believe the rent paid by the former tenant at the rate of $4,000 per month was not indicative of market rent. I shall therefore adopt that as the basis for the calculation of damages. In the case of the 1st Plaintiff, damages should start to run from 7 August 1999 whilst in the case of the 2nd Plaintiff, it started to run from 1st September 1999. Damages shall continue to run until the sale of the properties or otherwise determination of the co-ownership. If the 3rd and 4th Properties were to be sold, such damages shall be deductible by way of equitable accounting from the proceeds payable to the Defendants (other than the 2nd Defendant) on account of their interest in the properties.

92. I am conscious of the fact that the 1st Plaintiff only has 1/6 legal interest in the 3rd Property. However, under the 1983 agreement, he was entitled to exclusive occupation and use of one unit in the 3rd Property. There is no rule of law which prescribes that a 1/6 owner could not have exclusive possession of more than 1/6. It depends on the agreement between the co-owners. In the present case, regarding the 3rd Property, I find there was an agreement that the 1st Plaintiff would enjoy exclusive possession of the Ground Floor. In those circumstances, in my judgment, damages shall be calculated by reference to the loss of use of that unit. Since Mr Cheung did not ask for more than 1/6 of the net proceeds upon sale of the 3rd Property, I need not consider whether the 1st Plaintiff should be entitled to more than 1/6 of the proceeds in the light of this special agreement concerning exclusive possession.

93. As regards the damages to the properties of the 4th Plaintiff, there is plainly no defence on liability. Mr Wong challenged the quantum. The 4th Plaintiff gave evidence that she estimated the damages to her properties to be around $40,000 to $50,000 (for items 4 to 14, 18 and 20 particularized under Paragraph 12 of the Amended Statement of Claim) whilst the decoration of the premises was about $150,000. Mr Wong suggested that some of the damaged items could still be usable and the 4th Plaintiff just abandoned some items because she had no place to store the same. There is no plea of failure to mitigate damages in the Re-re-re-amended Defence. Hence, the only question is whether I am satisfied that these losses were caused by the actions of the 4th, 5th and 6th Defendants to the 4th Plaintiff. Having examined the photographs and listened carefully to the evidence of the 4th Plaintiff, bearing in mind the items damaged and the extent of damages shown in the photographs, I must say the figure of $40,000 to $50,000 is a very conservative estimate. Taking into account the factor of depreciation given the fact that the 4th Plaintiff was ousted from her home, I would award damages (including fittings and decorations) in the sum of $100,000 to the 4th Plaintiff.

94. The 4th Plaintiff also asked for aggravated or exemplary damages. Mr Cheung relied on the case of Yeung Wah v Alfa Sea Limited, HCA No. A426 of 1992, 8.6.1993. In that case, Deputy Judge Yeung (as he then was) awarded $50,000 by way of exemplary damages to a harassed tenant. In so doing, His Lordship followed a dicta of Lord Denning in Drane v Evangelou [1978] 1 WLR 455. The rationale was that when a landlord resorted to harassment to evict a tenant and adopted tactics with blatant and wilful disregard of the rights of such tenant, exemplary damages could be awarded to teach the wrongdoer that tort does not pay.

95. It is important to distinguish between exemplary damages and aggravated damages. The proper approach is to consider whether aggravated damages should be awarded and what is the appropriate amount for such damages first. After that has been done, this court should ask itself whether the award of general and aggravated damages is inadequate to punish and deter a defendant. If it is inadequate, it has to be asked whether the criteria in Rookes v Barnard [1964] AC 1129 for award of exemplary damages could be satisfied and if yes, what is the appropriate figure for exemplary damages. On such distinction in the context of wrongful eviction, see Lawton LJ in Drane v Evangelou [1978] 1 WLR 455 at p. 461; McMillan v Singh (1984) 17 HLR 120 and Ramdath v Daley (1993) 25 HLR 273.

96. As Lawton LJ said in Drane v Evangelou at p. 461,

"To deprive a man of a roof over his head in my judgment is one of the worst torts which can be committed. It causes stress, worry and anxiety. It brings the law into disrepute if people like the defendant can act with impunity in the way he did."

97. In many respects what the 4th to 6th Defendants did to the 4th Plaintiff in the present case is outrageous. The facts speak for itself in this regard. As I said, they remained unrepentant. No apology has been offered. The 5th Defendant gave evidence that since the Plaintiffs had reported the incidents to police, there could not be any further dealings between the uncles and the nephews. In other words, he is of the view that it was wrong for the 4th Plaintiff to make a report to the police. None of the Defendants who gave evidence before me exhibited any sense of regret, not to say remorse, for the uncivilized acts committed on 7th August 1999. All these added insult to injury.

98. I think it is fully justified that the 4th to 6th Defendants should be ordered to pay aggravated damages to the 4th Plaintiff. As to the quantum of aggravated damages, bearing in mind this is to compensate the 4th Plaintiff for injury to her feelings, I will make an award in the sum of $50,000 under this head.

99. As to exemplary damages, on the facts of the present case, I am not satisfied that the 4th to 6th Defendants committed the tort against the 4th Plaintiff with an expectation to make a greater profit than the damages payable. Having regard to the other damages which I have already awarded, and the fact that these Defendants were convicted and sentenced for criminal damages, I do not think this case calls for any award of exemplary damages. I therefore make no award under this head.

Disposal

100. I will leave it to the parties to see whether they can agree on the order that this court should make in the light of this judgment. Parties should liaise with each other in that regard. If no agreement can be reached within one month, the case should be restored before me. Given the manner in which the 3rd and 4th Properties are to be disposed of, I do not think the Plaintiffs need the injunctive relief set out in the Statement of Claim. It also follows from what I have said that the Counterclaim is dismissed. I also wish to hear parties on the question of costs, in particular whether any order should be made by this court pursuant to Section 17(3) of the Legal Aid Ordinance. I was told by Mr Wong that although he and those instructing him also acted for the 5th Defendant, legal aid has only been granted to the 1st, 3rd, 4th and 6th Defendants. As the Director of Legal Aid may also have an interest on the question of costs as well as the proceeds of sale under Section 18A and 19A of the Legal Aid Ordinance, I also direct that notice be given to the Director as to the restored hearing so that if the Director so wishes, he could also address this court on those questions. The parties should also consult the Director as to the proposed order for sale, in particular the term as to distribution of sale proceeds.

1. Evidence-in-chief on 25 February 2003 at 4:26 to 4:27 p.m.; cross-examination at 4:30 to 4:39 p.m. on 25 February 2003 and 11:10 to 11:14 a.m. and 11:16 a.m. on 26 February 2003.