WAH SUN INVESTMENTS LTD v. WEALTHY BASE PROPERTIES LTD AND ANOTHER

HCA 3046/2016

[2025] HKCFI 1819

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3046 OF 2016

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J U D G M E N T

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1.  Introduction

1.1  The 1^st Defendant (“D1”) is the registered owner of 9 lots of land, particulars of which are set out at Schedule 1 of the Amended Statement of Claim (“Relevant Lots”). In these proceedings, the Plaintiff (“P”) seeks a declaration that it is the beneficial owner of the Relevant Lots and consequential relief. It is P’s case that D1 holds the Relevant Lots on common intention constructive trust or alternatively resulting trust for it.

1.2  The 2^nd Defendant (“D2”) was the sole director and sole shareholder of D1 until 2016. It is P’s case that the agreement and/or common intention underpinning its common intention constructive claim was formed with D2’s involvement in or about April/May 2013. P’s claim against D2 was dismissed on the basis that P failed to comply with an unless order dated 18 May 2023 to provide security for costs by 4 pm on 30 May 2023.

1.3  At the trial, P was represented by Mr Avery Chan and D1 by Mr Danny Chan (with Mr Johnson Cheung).

2.  Background

2.1  The background matters set out in this section are largely taken from the documentary evidence and the Agreed Chronology.

2.2  In 1992, P purchased Lot No 204, Lot No 287 and the Remaining Portion of Lot No 294 in Demarcation District 51 (“Land”). On 10 March 1993, the Land was subdivided[1] into, inter alia, the Relevant Lots[2]. As set out in the Joint Valuation Report dated 5 September 2023 (“Joint Report”), the Relevant Lots are located in a rural settlement area known as Tin Ping Shan Tsuen in Sheung Shui, North District, New Territories and within a Village Type Development zone. The Relevant Lots are primarily intended for development of small houses by indigenous villagers.

2.3  There is no dispute that P acquired the Land for redevelopment.

2.4  By letters dated 16 and 29 April 1993 from Messrs Ho and Wong (“H&W”) to P (“April 1993 Letters”), Mr Lau Cham Yuen Albert (“Mr Lau”) was asked to sign sets of documents in respect of a number of plots of land which included, inter alia, the Relevant Lots. Mr Lau was at that time a joint owner of P with his father (“Lau Senior”).

2.5  Each set of documents comprised (1) an Assignment (not to be dated), (2) a Chinese Agreement, (3) a Deed of Trust (not to be dated) and (4) a set of Minutes (to be signed by Lau Senior as well). The April 1993 Letters were in, inter alia, the following terms:

“ … I shall also let you have the Chinese Application Forms in respect of each of the 14 indigenous villagers when the said Assignments are duly registered with the Land Office, as we need to know the registration number of the said Assignments before we can complete the said Chinese Application Forms…”

2.6  On 7 June 1993:

(1)  By the relevant Assignments (collectively “1993 Assignments”), the Relevant Lots were assigned to the named indigenous villager as particularized at Schedule 4 of the Amended Statement of Claim (“1993 Assignees”);

(2)  Each of the 1993 Assignees executed a Deed of Trust (collectively “Deeds of Trust”) acknowledging that the purchase monies paid under the 1993 Assignments were in fact provided by P and that the Relevant Lots were held on trust for P.

2.7  As alluded to in the April 1993 Letters, the Chinese Application Forms were eventually submitted to District Lands Office, North (“DLO“) on 16 July 1993, by which the 1993 Assignees applied for a construction permit under the Small House Policy. However the applications were rejected by the DLO on 16 December 1994, on the basis that that they would jeopardize the implementation of the Tin Ping Shan Village Expansion Area (VEA) Scheme. As explained further in DLO’s letter of 19 September 1995, the Land was subject to overland flow and inundation during heavy rainfall, and development in the area including the implementation of the VEA would not be commenced before the training of River Indus nearby.

2.8  On 13 January 2001, a legal charge (“Legal Charge”) was executed between P (as borrower) and Winland Finance Limited (“Winland Finance”). By Clause 3.01 of the Legal Charge, the Land was charged as security for loan facilities granted by Winland Finance.

2.9  On 16 April 2013, D2 became the sole director and sole shareholder of D1.

2.10  Between 22 April and 8 May 2013, the following documents were executed:

(1)  A Cancellation Agreement was signed by each of the 1993 Assignees and P (collectively “Cancellation Agreements”);

(2)  The 1993 Assignees entered into sale and purchase agreements to sell the Relevant Lots to D1 (collectively “S&P Agreements”);

(3)  The 1993 Assignees and D1 signed receipts in respect of the purchase prices under the S&P Agreements (collectively “Receipts”);

(4)  The 1993 Assignees executed statutory declarations and assignments (collectively “2013 Assignments”) assigning the Relevant Lots to D1.

2.11  The Cancellation Agreements were in the following terms:

“ 本公司 [P] … 曾與閣下簽訂 … <丁屋權利買賣合約>，現與閣下達成協議取消，所簽署一切文件，聲明作廢，各不追究，閣下可將上述地段及閣下之丁屋自由轉讓。”

2.12  The term “丁屋權利買賣合約” is a reference to the Chinese Agreements alluded to in the April 1993 Letters. Whilst the Chinese Agreements have not been adduced into evidence, according to the Powers of Attorneys drafted by H&W and executed by the 1993 Assignees (collectively “POAs”)[3], it appears that the Chinese Agreements were of the following effect:

(1)  Each of the 1993 Assignee agreed to sell his lot together with a three-storeyed village house erected thereon to P or its appointee;

(2)  Each of the 1993 Assignee had assigned to P the right to apply for a “Consent to Build a small Village House” together with all the “de facto” rights he would obtain therefrom;

(3)  P would at its own costs and expenses construct the Village House on the Relevant Lots.

2.13  The POAs were executed by the 1993 Assignees to appoint P as its attorney to perform the acts set out therein, including “to sell assign transfer surrender whether for consideration or otherwise to such person or persons company or companies including the Attorney itself… in such manner and on such terms and conditions as my Attorney may think fit without accounting to me the proceeds of sale or other consideration whatsoever my Attorney may receive…”

2.14  According to the S&P Agreements, the 1993 Assignees and D1 jointly appointed Messrs Dickman LT Chan & Co (“Dickman Chan & Co”) to handle the transactions.

2.15  The Receipts, which were addressed to Dickman Chan & Co, were in the following terms:

“ 有關上述物業之雜費 (包括差餉及地租) 及或其他一切應收款項 (包括交易代價…)，我倆雙方已經在外交收，無需貴律師事務所辦理，我倆雙方關於該款項及/或其他一切應收款項若有紛爭，亦與貴律師事務所無關。”

2.16  On 11 August 2016, D1 allotted new shares to D2 and Foster Success Holdings Limited (“Foster Success”).

2.17  On 28 October 2016, D2 ceased to be a director of D1.

2.18  On 2 November 2016, D2 and Foster Success transferred their respective shareholdings in D1 to one Mr Phillip Cheng (“Mr Cheng”) at a consideration of HK$10,000.

2.19  On 22 November 2016, the present proceedings were commenced.

2.20  On 29 August 2018, Mr Cheng transferred the entire shareholding in D1 to Mr Ng Oi Yu (“Mr Ng”).

3.  Issues for determination

3.1  As directed at the pre-trial review (“PTR”), the parties have identified the following issues for determination:

(1)  Whether P was the beneficial owner of the Relevant Lots (as defined in Schedule 1 of the Amended Statement of Claim) before they were assigned to the D1 in 2013? In particular:

(a)  Whether the 1993 Assignees had been holding the Relevant Lots on trust for P since 7 June 1993;

(b)  Whether any such arrangement(s) vis-à-vis P and each of the 1993 Assignees was subsequently terminated;

(c)  Whether D1 was a bona fide purchaser for value without notice, and, if so, whether any trust arrangement vis-a-vis the P and each of the 1993 Assignees is void against D1 (“Issue (1)”);

(2)  Regarding D1’s acquisition of the Relevant Lots in 2013, whether there was an oral Agreement between P and D2 for D1 to hold the Relevant Lots on trust for P? If there was such an oral agreement, whether it is valid and enforceable (“Issue (2)”);

(3)  Whether P is entitled to the return of legal title of Relevant Lots based on an express, constructive and/or resulting trust, and/or unjust enrichment (“Issue (3)”);

(4)  Whether P is entitled to damages / equitable compensation / mesne profits and, if so, the quantum of such claim (“Issue (4)”).

3.2  In relation to Issue (4), the parties have, by reference to the Joint Report, agreed on the quantum of P’s claim for equitable compensation.

4.  The witnesses

4.1  P called Mr Lau and Mr Ng gave evidence for D1. It is pertinent to state at the outset that Mr Ng only became involved when he acquired D1 on 29 August 2018. As such, he does not have any personal knowledge of the matters which are germane to the resolution of Issues (1) and (2).

4.2  The person who did have personal knowledge of those events which are relevant to D1’s case is D2. As stated at §1.2 above, P’s claim against D2 was dismissed for procedural reasons. Prior to the PTR held on 25 July 2024, by a letter dated 19 July 2024, solicitors for D1 enquired whether D2 was willing to attend the trial to give evidence. Prior to the dismissal of P’s claim against D2, D2 had filed 2 affirmations and a witness statement in these proceedings.

4.3  On 22 July 2024, D2’s solicitors replied and stated that D2 was overseas and had no plans to return to Hong Kong shortly.

4.4  At the trial, Mr Danny Chan sought to rely on D2’s witness statement (“D2’s Statement”) as hearsay evidence subject to the appropriate weight to be given.

4.5  There is no dispute between counsel on the approach on fact‑finding and assessment of credibility, namely the credibility of a witness should be assessed by reference to contemporaneous documentation where it exists, as well as inherent probabilities having regarding to all the facts that are known. It is also important to bear in mind the internal consistency of the evidence of a witness, which is often tested by a comparison between the oral testimony of the witness on the one hand and his witness statement and pleadings on the other: Hui Cheung Fai v Daiwa Development Ltd, HCA 1734/2009, 8 April 2014 §§77-82.

4.6  In the following sections, I will evaluate the evidence chronologically. Although the analysis is done chronologically, I have considered the evidence overall as a whole in reaching my findings.

4.7  My overall impression is that Mr Lau is an honest and reliable witness. On the other hand, for the reasons set out below, not only does Mr Ng not have any personal knowledge of the material events, his evidence is generally incredible on significant aspects and inherently improbable. Given the fact that D2 is overseas, I am of the view that I should accede to Mr Danny Chan’s invitation to admit D2’s Statement as hearsay evidence. However, having considered the factors set out at sections 49(1) and (2) of the Evidence Ordinance Cap 8, and having assessed the content of D2’s Statement against the totality of the evidence, no or no significant weight should be attached to it.

5.  Factual findings

5.1  The matters set out in this section, unless otherwise stated, are not in dispute and should be read together with the background matters set out at section 2 above.

5.2  In about 1990, Lau Senior was minded to acquire the Land for redevelopment (“Redevelopment”). P was set up by Lau Senior for this specific purpose. At the time of P’s incorporation, Mr Lau and Lau Senior were the directors and shareholders of P. In 2010, due to Lau Senior’s health deterioration, Mr Lau became the sole shareholder and director of P. As I understand the evidence, another key personnel was Mr Liu Chun Kui, the village head of Tin Ping Shan Village (“Mr Liu”).

5.3  For the purpose of the Redevelopment, P had put in place a team which included H&W, an architectural firm, a surveyor firm and a consultant firm (“Team”). The Redevelopment was spearheaded by Lau Senior and the Team and Mr Lau did not have any primary responsibility. When requested by the Team, Mr Lau would execute documentation on P’s behalf.

5.4  In 1993, upon the arrangement of H&W and Mr Liu, Mr Lau executed the documents mentioned at §§2.4-2.6 above. I should mention that P only made disclosure of the Deeds of Trust shortly before the PTR. As explained by Mr Lau in his witness statement dated 7 February 2022, the documentation kept by P was incomplete. It was only in July 2024 that he managed to obtain the Deeds of Trust from Winland Finance. In my view, D1 has (rightly) not served a notice to challenge the authenticity of the Deeds of Trust. The existence of the Deeds of Trust is amply supported by the contemporaneous documents (ie the April 1993 Letters).

5.5  I accept Mr Lau’s evidence that the 1993 Assignees were each paid HK$50,000 “tea money” (茶錢) as reward for their agreement to execute the 1993 Assignments. The Deeds of Trust expressly provide that the 1993 Assignees were holding the assigned land on trust for P and that the purchase money paid under the 1993 Assignments were in fact provided by P.

5.6  Following the rejection of the application made by way of the Chinese Application Forms in July 1993 (§2.7 above), the Redevelopment came to a halt and the Relevant Lots were left idling.

5.7  Mr Lau met D2 in 1998 through the introduction by a mutual friend. D2 was experienced in redeveloping land in the New Territories. Between 1999 and 2001, Mr Lau needed financing for his project in Macau. D2 told Mr Lau that he had a good relationship with the owner of Winland Finance. As a result, P obtained a loan from Winland Finance in January 2001 which was secured by a personal guarantee from Lau Senior and the Legal Charge. Disputes subsequently ensued with Winland Finance, and on 1 September 2003, P and Lau Senior commenced HCA 2517/2003 against Winland Finance, which proceedings remain unresolved. Mr Danny Chan queries why Winland Finance would offer assistance by providing the Deeds of Trust to P when they were in litigation. However, it seems to me that it is unsurprising that Winland Finance would offer assistance as it is commercially not in its interest for P to lose the present proceedings, which would negatively impact Winland Finance’s ability to obtain repayment.

5.8  There were no material developments for 10 years between 2003 and April 2013. As stated at §2.10 above, between 22 April and 8 May 2013, the Relevant Lots were assigned to D1. The circumstances of the 2013 Assignments form the core dispute between the parties.

5.9  P’s case is as follows:

(1)  In September 2012, Mr Lau became aware that land in the vicinity of the Relevant Lots were appreciating in value. He therefore was minded to restart the aborted Redevelopment. However, as he was recuperating from an operation, he sought assistance from D2 which D2 agreed to provide;

(2)  One of the topics discussed between Mr Lau and D2 was the fact that there was an ongoing dispute with Winland Finance. D2 suggested to Mr Lau that the Redevelopment should be carried out in D2’s name, as were the Redevelopment carried out by Mr Lau or P, it was likely that Winland Finance would proceed with HCA 2517/2003 and seek repayment;

(3)  Conversely, were the Redevelopment carried out in D2’s name, D2 could capitalize on his good relationship with the owner of Winland Finance;

(4)  As a result, an oral agreement (“Oral Agreement”) was reached in April 2013 between P (through Mr Lau) and D2 that D2 would assist and manage the Redevelopment through a company to be set up by D2 to hold the Relevant Lots for P and that D2 would be remunerated upon the completion of the Redevelopment;

(5)  Pursuant to the Oral Agreement, D2 acquired D1 (which was shelf company incorporated on 21 March 2013) and became its sole shareholder and director on 16 April 2013;

(6)  The documents mentioned at §§2.10 above were executed pursuant to the Oral Agreement;

(7)  In September 2013, Mr Lau requested D2 to return the Relevant Lots to P but D2 refused, insisting that D2 should be rewarded by retaining one of the Relevant Lots;

(8)  On 23 May 2016, P issued a demand letter to D1 to reassign the Relevant Lots back to P but to no avail. These proceedings were thereafter commenced on 22 November 2016. It is Mr Lau’s evidence that P was not aware of the transfer for D1 to Mr Cheng on 2 November 2016 until after the commencement of these proceedings.

5.10  Conversely, D1’s case is as follows:

(1)  D1 relies on the fact that it is indisputably the registered owner of the Relevant Lots;

(2)  D1 paid for the Relevant Lots as evidenced by (a) the S&P Agreements, (b) the Receipts, (c) the Cancellation Agreements and (d) D1’s audited financial statements for the period from 21 March 2013 to 31 March 2015 (“D1’s AFS”) recording “an amount due to a director” at HK$3,759,604 and an addition of HK$3,750,000 in “leasehold land and buildings”, which entries were consistent with the payment of the consideration totalling HK$3,750,000 stipulated in the S&P Agreements and the 2013 Assignments;

(3)  In contrast to the Oral Agreement, the factual case set out in D2’s Statement is that in late 2012, Mr Lau approached D2 for help as some of the 1993 Assignees were attempting to sell and/or pledge part of the Relevant Lots. Mr Lau told D2 that he was not in a financial position to reacquire the Relevant Lots from the 1993 Assignees and he sought D2’s assistance to preserve the Relevant Lots. D2 agreed to source buyer (including himself) to acquire the Relevant Lots from the 1993 Assignees as a personal favour, with the possibility that Mr Lau could in the future through P reacquire the Relevant Lots when it was financially feasible to do so. Eventually, D2 acquired the Relevant Lots through D1 from the 1993 Assignees;

(4)  It is D2’s further evidence that if Mr Lau managed to secure funds for the acquisition of the Relevant Lots, D2 was more than happy to transfer the Relevant Lots to him without making any profit. As it transpired, D2’s relationship started to turn sour in or around 2014. Eventually D2 sold the Relevant Lots to Mr Cheng through the transfer of D1.

5.11  As pointed out by Mr Avery Chan, in a case where there are only two competing theories of events before the court, the rejection of one version of events should normally lead to the acceptance of the other, and there is generally no need to speculate as to other alternatives. This approach was specifically applied in a common intention constructive trust context in Pang Ketian Sally v Tam Yuk Hung Annie, HCA 298/2012, 11 June 2013 at §55.

5.12  I have no hesitation in rejecting D1’s case, for the following reasons:

(1)  Prior to the transfer of the Relevant Lots to D1, P was plainly the beneficial owner of the Relevant Lots. The Deeds of Trust expressly so provide and the fact that the Relevant Lots were held on trust is entirely consistent with the terms of the POAs. As noted at §2.13 above, P was given the power by the 1993 Assignees, consistent with the terms of the Deeds of Trust, to transfer the Relevant Lots to any person (including to P itself) without any obligation to account to the 1993 Assignees the consideration;

(2)  The effect of the Cancellation Agreements was to cancel the Chinese Agreements to enable the transfer of the Relevant Lots to D1 and to enable D1 (as opposed to P under the Chinese Agreements) to carry out the Redevelopment (§§2.11 and 2.12 above);

(3)  I do not accept Mr Danny Chan’s case theory that the Cancellation Agreements had the effect of terminating the Deeds of Trust, as it does not make any commercial sense for the 1993 Assignees to have become both the legal and beneficial owners of the Relevant Lots without paying any consideration. As agreed by counsel, there is no pleaded case that the Relevant Lots were gifted to the 1993 Assignees at any point in time;

(4)  There are no contemporaneous records of payments by D1 of the consideration allegedly paid pursuant to the S&P Agreements. Conversely, the effect of the Receipts (§2.15 above) was to relieve Dickman Chan & Co of any responsibility to verify payments were in fact effected;

(5)  D1’s AFS records that there is an amount due to a director in the sum of HK$3,759,604 (“Director’s Loan”). It is Mr Ng’s evidence in his witness statement that the Director’s Loan was owed to D2. However, at the trial, Mr Ng said that the Director’s Loan was instead owed to Mr Cheng. When it was pointed out to him that his viva voce evidence was at odds with his witness statement, he then said that he needed his solicitor to look into the matter. What is important is that Mr Ng accepted that he did not know whether the Director’s Loan was in fact advanced by D2 to D1;

(6)  It is also important to note that it is Mr Ng’s evidence that he acquired D1 from Mr Cheng at a consideration of HK$5.5 million. No sale and purchase agreement for the sale and purchase of D1’s shares has been adduced into evidence. Of the alleged consideration, Mr Ng said that he paid HK$1.75 million in cash and he only had to pay the remaining HK$3.75 million (ie approximately the sum of the Director’s Loan) should D1 prevail in the present proceedings. Since D2 and Foster Success transferred D1’s shares to Mr Cheng at a consideration of HK$10,000, it would logically mean that the repayment of the Director’s Loan owed to D2 would largely depend on the outcome of the present proceedings. Were this to be the case, the lack of interest on D2’s part to come forward to give evidence in these proceedings is commercially inexplicable;

(7)  The manner in which Mr Ng acquired D1 is also highly suspicious. There is no record of Mr Ng withdrawing the substantial sum of HK$1.75 million from his bank accounts purportedly paid in cash to Mr Cheng. When he acquired D1 in 2018, he was aware that these proceedings were already ongoing. It is Mr Ng’s evidence that he did not look for evidence to support D1’s case that D1 had paid for the Relevant Lots, he did not ask Mr Cheng how D1 paid for the Relevant Lots and he was content to risk the HK$1.75 million allegedly paid in cash without seeking any views on the litigation risk involved;

(8)  All of the above questionable features are consistent with the fact that D2 did not in fact pay HK$3.75 million to the 1993 Assignees, whether through D1 or at all. Further, as pointed out by Mr Avery Chan, the consideration of HK$3.75 million allegedly paid to the 1993 Assignees in 2013 was in fact similar to the amounts in fact paid by P to acquire the Relevant Lots 20 years earlier in 1993, and in most cases rounded up to the nearest hundred thousand.

5.13  Conversely, the documents enumerated at §2.10 are explicable by and not inconsistent with the existence of the Oral Agreement, which involved the assignment of the Relevant Lots from the 1993 Assignees to D1 at no consideration.

5.14  For the above reasons, I find that the Oral Agreement was reached between P and D2, and pursuant to the Oral Agreement, D1 was the corporate vehicle used by D2 to hold the Relevant Lots for P. I do not regard it necessary to resort to the drawing of any adverse inference (advocated by both counsel). For avoidance of doubt, I in particular accept Mr Lau’s evidence set out in his witness statement as follows:

“ [26] 在約2013年4月，我代表 [P] 與 [D2] … 達成口頭協議，同意由 [D2] 開設一有限公司，以他名義持有並由他一人操控，作用為持有及及後發展該等地段… 在收復及發展的工作完成後，[D2] 會獲得金錢上合理的酬勞…。

[27] 依從該口頭協議，D2於2013年4月購入 [D1]。[D2] 亦安排自己為 [D1] 的唯一的股東及董事。[D1] 是 [D2] 在此事中的代名公司，目的為 [D2] 代持有 [the Relevant Lots] 及執行和 [P] 之間的協議 …

[32] 因此，由 [D1] 為 [P] 代持有 [the Relevant Lots] 是根據 D2 和我/[P]之間的協議，[D1] 從來沒有就該些轉讓業權交付任何代價。... ”

5.15  In closing, Mr Danny Chan submitted for the first time that the Oral Agreement, even if it existed, was only in respect of the shares of D1 and not the Relevant Lots. I am unable to accept Mr Danny Chan’s submissions. First, that case is not pleaded. Secondly, the evidence of Mr Lau set out in the preceding paragraph is of the plain effect that the Oral Agreement was in respect of the Relevant Lots and D1 was simply the corporate vehicle deployed to effect the agreement reached.

6.  Analysis of P’s claims

6.1  There is no dispute between counsel on the applicable principles.

6.2  The relevant principles are encapsulated in Lam Ka Kui v Choi Yuen Ling [2020] HKCFI 2647 at §§9-14. In summary:

(1)  Common intention constructive trust is constituted by the three elements of (a) common intention, (b) the claimant’s detrimental reliance on their common intention and (c) the unconscionability of the property owner departing from it (§9);

(2)  The burden of proving each element is on the person seeking to show that the beneficial ownership is different from the legal ownership (§10);

(3)  Common intention can be expressed or implied. It can be deduced or inferred objectively from the parties’ conduct (§11);

(4)  There are two situations in which a common intention constructive trust may arise, namely:

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

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

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

6.3  In considering the evidence of common intention, the modern approach is to apply a holistic approach having regard to the context: Primecredit v Yeung [2017] 4 HKLRD 327 at §1.6.

(i)  Issue (1)

6.4  In view of the factual findings set out above, I answer Issue (1)(a) in the affirmative, Issue (1)(b) in the negative, and Issue (1)(c) in the negative.

(ii)  Issues (2) and (3)

6.5  I have found that the Oral Agreement was reached between P and D2. No submission was made by Mr Danny Chan as to why the Oral Agreement was either invalid or unenforceable.

6.6  The effect of the Oral Agreement is such that P is entitled to the return of the legal title of the Relevant Lots based on constructive trust. All requisite elements set out at §6.2(1) are satisfied. In view of that finding, it is unnecessary for me to deal with the present case on the basis of resulting trust.

(iii)  Issue (4)

6.7  Mr Danny Chan does not dispute the proposition set out in Re Howlett (William Henry) [1949] 1 Ch 767, namely a trustee who has wrongfully occupied a property for his own use and benefit was held chargeable with an occupation rent and to have notionally received the rent on behalf of the beneficiary. See also Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9 at §125 per G Lam J.

6.8  As stated earlier, by reference to the Joint Report, the parties have agreed on the quantum of equitable compensation up to 4 September 2023 as follows:

Period	Calculation (Monthly Market Rent x Period)	Rent receivable over the period
8.5.2013 to 30.4.2015	30,100 x 24 – (30,100 x 7/31)	$715,603
1.5.2015 to 30.4.2017	27,400 x 24	$657,600
1.5.2017 to 30.4.2019	53,400 x 24	$1,281,600
1.5.2019 to 30.4.2023	64,400 x 24	$1,545,600
1.5.2021 to 30.4.2023	26,000 x 24	$624,000
1.5.2023-4.9.2023	30,100 x 4 + (30,100 x 4/30)	$124,413
Total Occupation Rent claimed:		$4,948,816

6.9  However, it seems to me that I should only award compensation from 24 May 2016 to 4 September 2023, which should be assessed by reference to the agreed monthly market rent at set out above. P only formally demanded the return of the Relevant Lots on 23 May 2016 (§5.9(8)). For the period after 4 September 2023, D1 is to pay equitable compensation of HK$30,100 per month until delivery up of the vacant possession of the Relevant Lots.

6.10  As regards interest, counsel agree that interest should be awarded on the basis of the commercial rate (1% over the HSBC best lending rate). There is further no dispute between counsel that the period of P’s claim for pre-judgment interest should be by reference to the notional date when the occupational rent arose up to the date of judgment.

7.  Conclusion

7.1  I enter judgment in favour of P as follows:

(1)  A declaration that D1 holds the Relevant Lots on trust for P;

(2)  An order that D1 do transfer or assign the legal title of the Relevant Lots to P and take all necessary steps to effect, complete and duly register such transfer or assignment in favour of P;

(3)  An order that D1 do deliver vacant possession of the Relevant Lots to P within 14 days from the date of this order;

(4)  D1 do pay to P equitable compensation represented by the occupation rent from 24 May 2016 to 4 September 2023 (payable on the first day of each month) assessed at the agreed monthly market rent set out at §6.8 above and thereafter at the agreed rate of HK$30,100 per month (payable on the first date of each month) until delivery up of the vacant possession of the Relevant Lots;

(5)  There be interest on the equitable compensation payable by D1 at 1% above the best lending rate of HSBC from their respective due dates until the date of judgment, and thereafter at the judgment rate until full payment.

7.2  I dismiss D1’s counterclaim for an order that the registration of the writ of summons in this action in the Land Registry be vacated.

7.3  As no objection was raised by Mr Danny Chan, I also accede to Mr Avery Chan’s request for an order that the security for costs deposited by P into Court on 23 March 2023 (in the sum of $200,000) and 3 October 2023 (in the sum of $250,000) be paid out of court to P.

7.4  I further make a costs order nisi that D1 is to pay to P the costs of the action and the counterclaim (including any costs reserved) to be taxed if not agreed.