MOK SUI LING v. ZHANG YUXIAN

DCCJ 1079/2014 &
DCCJ 3898/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1079 OF 2014

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3898 OF 2014

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JUDGMENT

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1. Both actions arise from the dispute over the 50% interest of the property known as 2/F and Roof of Lot No 703 in D.D. 2, Mui Wo, New Territories (“the Property”). At all material time, the Property was and still is registered in the names of Mok Sui Ling (“Mok”) and the late Lee Kam Ming (“the Deceased”) as tenants in common in equal shares.

2. DCCJ 1079/2014 is an action for trespass. Mok claims against Zhang Yuxian (“Zhang”) for mesne profits representing damages for wrongful occupation of the Property.

3. Under DCCJ 3898/2014, Zhang as the sole administratrix of the estate of the Deceased sues Mok for, inter alia, a declaration that Mok’s registered half share of the Property is beneficially owned by the Deceased. Mok by her counterclaim seeks, inter alia, for an order for sale of the Property.

Issues for determination

4. Under DCCJ 1079/2014, the issues for determination are:-

(1) Based on the strength of Mok’s title, did an action of trespass arise?

(2) If the answer to (1) is in the affirmative, for which period of wrongful occupation and for what amount of mesne profits is Zhang liable?

5. Under DCCJ 3898/2014, the issues for determination are:-

(1) Whether Mok holds her registered half share of the  Property for the Deceased on resulting trust?

(2)  In the alternative to (1), whether there was an oral agreement between Mok and the Deceased that Mok’s 50% interest in the Property be surrendered and vested in the Deceased? If the answer is in the affirmative, whether the said oral agreement is enforceable in law?

6. There is no dispute that if the answer to either (1) or (2) is in the affirmative, Zhang is entitled to the reliefs sought; and if the answers to (1) and (2) are both in the negative, Mok is entitled to the reliefs sought.

Background

7. At all material time until they broke up, the Deceased and Mok were cohabitants living as husband and wife. Since purchase of the Property in 1996, they moved in and had been residing thereat until Mok alone moved out as a result of their separation.

8. Before his relationship with Mok ended, the Deceased in about 1997 or 1998 was already acquainted with Zhang who was a mainlander. Zhang married to the Deceased in 2003; shortly after she came to live with the Deceased in Hong Kong at the Property.

9. The Deceased passed away on 30 November 2012. Zhang  continued to reside at the Property up to date.

DCCJ 1079/2014

Issue (1): Did an action of trespass arise?

10. A claim for damages for wrongful occupancy of the land being based on trespass by relation requires an entry to gain possession by the claimant, unless the claim is joined with an action for the recovery of land. The slightest acts to indicate the intention to take possession are sufficient to enable the claimant to bring an action for trespass. In the absence of actual entry, making a formal claim has the same effect in entitling the claimant to bring an action for trespass: see Clark and Lindsell on Torts, 21^st edition, paras 19-27 at pp 1357-1358. There is no dispute to the above principles.

11. Mr Lam for Mok submitted that by demand letter dated 18 February 2014, a formal claim for vacant possession has been made.

12. On proper construction of the said letter, there was no formal claim for vacant possession. Mok has only reiterated her demand for the payment of mesne profits. A forewarning to claim for vacant possession in default of payment does not amount to a formal demand.

13. Further, it is apparent from the chain of correspondences that Mok in fact did not possess the intention to take possession. Even when this action was commenced, her claim was confined to mesne profits only.

14. I find that in the absence of actual entry or a formal claim, Mok is not entitled to bring an action for trespass; her acts or intention post-writ cannot redress the problem. For this reason alone Mok’s claim is bound to fail; it is therefore not necessary to deal with issue (2).

DCCJ 3898/2014

Salient point about evidence

15. Much of the material evidence Zhang sought to rely upon is hearsay in nature. In assessing the weight of hearsay evidence, I bear in mind that all relevant circumstances must be considered, in particular the factors provided in section 49 of Evidence Ordinance Cap 8.

16. This case involves factual dispute over numerous trivial matters. I bear in mind that the court should not be caught in the thick of thin thing and lost sight of the main issues. Although this case essentially turns on the credibility of witnesses, inherent probability should not be submerged by trivial details of little evidential value. 

Issue (1): Whether Mok holds her registered half share for the Deceased on resulting trust?

17. Mok being the registered owner of the half share is prima facie the beneficial owner of the same, the onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. There is no dispute to this principle regarding presumption of joint interest.

18. The assertion of resulting trust is premised on the following grounds:-

(1)  Zhang was told by the Deceased that Mok had not made any monetary contribution to the Property;

(2)  Given Mok’s financial ability, she could not have afforded to make monetary contribution as alleged;

(3)  Mok’s evidence on her extra sources of fund was incredible and unbelievable; and

(4)  There is no documentary evidence to prove Mok’s monetary contribution as alleged.

Discussion

Ground (1)

19. First of all, I do not believe Zhang that the Deceased has told her Mok had not made any monetary contribution to the Property. Not only because this was not mentioned in her witness statements but said for the first time under cross-examination, it is also upon detailed analysis of the pre-action correspondences that I find Zhang’s allegation incredible.

20. It is evident from Zhang’s letter dated 27 December 2013 that she had yet any idea on the issue of monetary contribution. This explains  why she did not repeat what the Deceased told her to rebut Mok’s allegations in the letter dated 19 December 2013; instead she made enquiries and searched for information probably for the purpose of assessing her position with an intended claim.

21. In any event, even if the Deceased has told Zhang what she now repeats, I do not think what he has said was true. As discussed below, what purportedly said cannot sit right with the factual matrix of the case.

Ground (2)

22. While evidence on the employment history and income of Mok and the Deceased remains unchallenged, I find that it is in all respect reasonable that Mok could afford to make contribution as alleged. Further, without an abundance of income on the part of the Deceased who has worked as a chauffeur, a yacht man and a taxi driver, it was improbable the Deceased could have solely afforded the investment without Mok’s contribution.

23. By Mok’s detailed account of the history of her joint property investments with the Deceased, it can be seen how profits had accumulated to fund the purchase of the Property. Her evidence is consistent with the details she has provided in the pre-action letter dated 19 December 2013.

24. Although the previous investments were in the sole name of the Deceased, I find Mok’s explanation reasonable when it is considered against the relevant background, in particular her age and her relationship with the Deceased.

Ground (3)

25. On Mok’s evidence regarding some extra sources of fund, every effort was exhausted by Mr Lo for Zhang to challenge the credibility, but these attempts were in vain. Regarding the loan from an elder sister and the bonus payment from her employer, I find nothing unbelievable or unreliable. While Mok’s account was of events which happened two decades ago, I do not think some inconsistencies or mistakes on some minor details would render her evidence incredible or unreliable.

Ground (4)

26. When the absence of documentary proof of Mok’s monetary contribution is considered against the relevant background and in particular her relationship with the Deceased, I find nothing unacceptable. It was not unreasonable for Mok to simply advance her share of contribution to the Deceased in cash when there was no foreseeable need to retain any form of proof.

Finding on Issue (1)

27. I find Mok a credible witness. In relation to the monetary contribution to the Property, I accept her evidence as follows.

(a)   The down-payment for the purchase of the Property was paid from sale proceeds of a Shatin property which was the joint investment and interest of Mok and the Deceased;

(b)  The monthly mortgage repayment, utility expenses, government rent and rates were at all material time settled by Mok and the Deceased in equal shares, until Mok alone moved out of the Property upon their separation in 2000;

(c)   Pursuant to a separation arrangement in 2000, it was agreed that until the Property was sold, the Deceased in consideration for his right to occupy the Property to the exclusion of Mok, would be responsible for Mok’s half share of monthly mortgage repayment; and

(d)  Mok therefore has not made any monthly mortgage repayment, until she paid off the outstanding encumbrance of HK$76,727.09 in October 2013.

28.  Although the Deceased has paid for the costs of renovation, this does not affect my finding on Mok’s share of interest in the Property. It is because the same was expended during the exclusive occupancy for the sole benefit of the Deceased and/or his licensee(s) without the knowledge or consent of Mok.

29.  By reason of the above, I find that Mok is the beneficial owner of her registered half share of the Property. Zhang failed to prove that Mok holds the same on trust for the Deceased.

Issue (2): Whether there was an oral agreement between the Deceased and Mok?

30. According to Zhang, the Deceased has told her about the following oral agreement he made with Mok in about the summer of 1998 when his relationship with Mok ended (“the Oral Agreement”).

(1)  Mok’s 50% interest in the Property would immediately be surrendered and vested in the Deceased; and Mok would assign her legal title to the Deceased upon demand; and

(2)  In consideration for Mok’s 50% interest in the Property, the Deceased would surrender to Mok his 50% interest in an uncompleted joint investment, i.e. the purchase of the property known as 1/F, Block 6 at Subsection 6 of Section B of Lot No. 725 in D.D. 2, Mui Wo, New Territories (“the 725 Property”); and Mok would become the sole registered owner on completion of the 725 Property.

Discussion

31. First of all, I do not believe Zhang that the Deceased had told her about the Oral Agreement, whether as alleged or at all. It is noteworthy that while the Oral Agreement was the entire basis of Zhang’s asserted right, it was never mentioned during the exchange of correspondences.

32. Under cross-examination Zhang explained that she has at the first opportunity told her lawyers about the Oral Agreement, but she had no idea why her lawyers did not mention about it in any of the letters. I find this explanation wholly absurd and unbelievable. The only reasonable inference to draw is that Zhang was never told about the Oral Agreement.

33. In any event, even if the Deceased has told Zhang what she now repeats, I do not think what he has said was true. As discussed below, what purportedly said cannot sit right with the factual matrix of the case.

34. Determination of the Oral Agreement involves the following sub-issues:

(a)    Whether the Deceased had any interest in the 725 Property, or whether it was Mok’s personal investment?

(b)    Did the Deceased and Mok separate in 1998 or in 2000 when the purchase of the 725 Property has already completed? and

(c) Is the evidence of 潘培新 credible and reliable?

Sub-issue (a): Whether the Deceased had any interest in the 725 Property, or whether it was Mok’s personal investment?

35. Zhang had no knowledge about the background to this investment at all. Mok gave a detailed account of the background to this investment of her own, and has explained with reference to the documents  why the Deceased turned out not being a party to this investment.

36. On detail analysis of the background and the documents concerning the purchase of the 725 Property, Mok’s evidence sits well with the same. With the long lapse of time, Mok’s failure to explain some inconsistencies on some minor details does not render her evidence incredible.

37. I accept Mok’s evidence that the Deceased had no interest in the 725 Property to surrender in consideration for Mok’s interest in the Property.

Sub-issue (b): Did the Deceased and Mok separate in 1998 or in 2000 when the purchase of the 725 Property has already completed?

38. If the Deceased and Mok separated in 2000, i.e. at a time after the purchase of the 725 Property in Mok’s sole name has completed in October 1999, it follows that the Oral Agreement could not have existed as alleged.

39. In reliance of some love letters sent by the Deceased to her in 1998, Zhang purported that the content could show the Deceased and Mok had by then already separated. I am not convinced; there are too many assumptions and speculations in Zhang’s interpretation of the love letters.

40. Concerning when did the Deceased and Mok actually separate, the love letters read neither here nor there. Assuming what the Deceased had expressed in the love letters were true, the most I can gather therefrom was that he was suffering for love.

41. Zhang also referred to the Zhuhai meeting to establish that the Deceased and Mok have by then separated. I do not think what was said in the Zhuhai meeting is direct or reliable evidence on the issue in question. 

42. On the part of Mok, she relied on some photographs to show  that up to December 1999 she was still maintaining her relationship with the Deceased.  Among these is a photograph of Mok taken at the Property by the Deceased with the captions “99年” and “聖誕快樂” inscribed thereon.

43. Zhang said the Deceased had a hobby of inscribing artwork, captions and dates on photographs. With an attempt to explain the said photograph away, she went far to say that the Deceased was fond of post-dating photographs. I find this piece of evidence so deliberate and artificial that Zhang has given herself away.

44. I accept Mok’s evidence that she separated with the Deceased in 2000. Hence, the Oral Agreement could not have been made as alleged.

Sub-issue (c): Is the evidence of潘培新 credible and reliable?

45. The evidence of 潘培新 is also hearsay in nature. He repeats what the Deceased said to him that the 725 Property was given to Mok and the Deceased kept the Property for himself.

46. This piece of information was extremely brief lacking dates and details. Besides, even if the Deceased has told 潘培新what he now repeats, I do not think what the Deceased has said was true. As discussed above, what purportedly said cannot sit right with the factual matrix of the case.

Other matters for consideration

47. Since 2003 when Zhang was married to the Deceased up to the passing away of the Deceased in 2012, for a period of 9 years no demand was made that Mok should assign to the Deceased her registered half share of the Property held on trust for him. Had the Oral Agreement truly existed, there was no reason why the Deceased and Zhang would have tolerated Mok to remain as a registered owner of their matrimonial asset.

48. Zhang gave a few explanations to this, namely she trusted that Mok was not a greedy person; Mok’s whereabouts could not be located; and the Deceased did not want to incur legal cost for the assignment.

49. I reject all these absurd explanations which are practically moonshine. A reasonable inference to be drawn is that the Oral Agreement never existed; the Deceased continued to occupy the Property and make mortgage repayments pursuant to the said separation arrangement with Mok in 2000.

50. Among the factors provided in section 49 of Evidence Ordinance Cap 8, extra regard is given to the fact that since Zhang is the beneficiary to the estate of the Deceased, prima facie there is motive on her part to misrepresent or conceal facts.

Finding of Issue (2)

51. By reason of the above, I find that the Oral Agreement did not exist. It is therefore not necessary to consider its enforceability in law.

52. Since Zhang failed to establish either issue (1) or (2), her claim failed. It follows that Mok succeeds on her counterclaim.

Conclusion

53. For DCCJ 1079/2014, the plaintiff’s (Mok’s) claim be dismissed.

54. For DCCJ 3898/2014, the plaintiff’s claim be dismissed. On the counterclaim, I find in favor of the defendant (Mok) and enter judgment against the plaintiff as follows.

(1)  There be an order for sale of the property known as 2/F and Roof of Lot No 703 in D.D. 2, Mui Wo, New Territories; and

(2)  Subject to paragraph 55(g) below, the defendant (Mok) is entitled to half share of the net sale proceeds.

55. By consent of the parties, I made the following orders regarding the conduct and manner of sale.

(a)  The plaintiff and the defendant (Mok) shall endeavor to agree on a minimum selling price of the Property, failing which they shall procure a joint valuation report by an independent surveyor for the market value on vacant possession basis;

(b)  All costs and expenses incurred for the joint valuation report be borne in equal shares by the plaintiff and the defendant (Mok);

(c)   Unless the plaintiff exercises its right of option to purchase the interest of the defendant (Mok) in the Property, the entire Property be sold by public auction or private treaty in open market at a selling price which is either agreed or in accordance with the joint valuation;

(d)  The plaintiff and the defendant’s solicitors shall have the conduct of the sale of the Property;

(e)   Upon such sale, the plaintiff should do all acts and things necessary for the transfer of the legal title and beneficial interest in the Property to the purchaser;

(f) Each party shall bear her own costs and expenses relating thereto;

(g)   On completion of the sale, sale proceeds be applied in the following manner:

(i)  in discharge of expenses properly incurred and incidental to the sale such as auctioneer fee or estate agent commission etc;

(ii)   the net balance be split into 2 equal shares and distributed respectively to the plaintiff and the defendant (Mok);

(h)  On completion of the sale, the plaintiff shall separately reimburse the defendant (Mok) the sum of HK$76,727.90 without interest payment; and

(i)  There be liberty to apply for further directions regarding the conduct of sale.

Costs

56. I make the following order nisi:-

(1)  For DCCJ 1079/2014, the plaintiff (Mok) do pay the defendant’s costs of the action with certificate for counsel, to be taxed if not agreed;

(2)  For DCCJ 3898 of 2014, the plaintiff do pay the defendant’s (Mok’s) costs of the action with certificate for counsel, to be taxed if not agreed; and

(3)  The parties’ own costs in both actions be taxed in accordance with the Legal Aid Regulations.

57. The order nisi shall become absolute unless an application to vary is made within 14 days from today.