CHAU SIN v. CHAU CHUN KIT

DCCJ 2698/2026

[2026] HKDC 1153

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2698 OF 2026

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DECISION

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A.  Introduction

1.  By a generally indorsed writ issued 27 May 2026, the Plaintiff (“P”) claims 49.4% beneficial ownership in a residential property (“the Property”); and, further or alternatively, its sale proceeds. On 9 June 2026, the Defendant (“D”) filed a notice of intention to defend.

2.  On 24 June 2026, P filed a Statement of Claim (“SOC”), and took out a summons (“the Summons”) seeking an injunction in the following terms:

“The Defendant and/or the Defendant’s conveyancing solicitors, Messrs C L Chow & Macksion Chan, shall, upon the completion of the sale of the [Property], pay the net sale money (after payment of any mortgages) into the Court, pending determination of this action.”

3.  The Property has been sold to a third party purchaser (“the Purchaser”), and the completion date is 30 June 2026.

4.  On 26 June 2026, this Court heard the Summons. Due to the imminent completion date, and to avoid any possible prejudice to the parties, I deliver my decision on the same day as follows.

B.  Factual background

5.  The following facts are not disputed by the parties.

6.  On 5 July 2006, P became the sole legal and beneficial owner of the Property.

7.  P and her late husband (“Mr Sum”) knew D in around 2017. In June 2022, D went through certain “ceremony” to become Mr Sum’s godson.

8.  In 2022, D moved to live with P and Mr Sum in their home (“the Home”). Afterwards, on 4 August 2022, Mr Sum passed away.

9.  On 25 July 2023, P sold the Property to D pursuant to a provisional agreement for sale and purchase for HK$8,800,000. The stated initial deposit and further deposit were HK$80,000 and HK$800,000 respectively.

10.  On 29 September 2023, D obtained a mortgage loan totalling $4,282,680, and the same was received by P.

11.  P paid half of the stamp duty in the sum of HK$134,725.

12.  On 29 September 2023, the completion of the above transaction took place.

13.  Thereafter, P received from D 30 monthly instalments of $5,556 totalling HK$166,680.

14.  The total sum received by P from D was $4,449,360.

15.  On or about 12 May 2026, P was informed by an estate agent that the Property was sold in or about late March 2026. P discovered from the Land Registry records the relevant sale and purchase agreement dated 14 April 2026 (“SPA”) that the complete date is 30 June 2026, and she does not know the Purchaser.

16.  She then instructed her solicitors to write to D and D’s conveyancing solicitors, leading to without prejudice negotiations.

17.  By letter dated 16 June 2026, P’s solicitors wrote to the Purchaser’s solicitors that she “has no intention to block the sale of the property and intends to negotiate with [D] as to how proceeds should be paid to [her] reflective of [her] interests in the said property.”  P’s proposal to D regarding the sale proceeds was enclosed but it is not before this Court.

C.  P’s case

18.  P pleads a case of common intention constructive trust, or alternatively resulting trust in the SOC, which is reflected in her supporting affirmation as follows.

19.  In or about June 2023, D informed P that he wanted to purchase his own property and rent out the same. He had only very limited funds and he had difficulties in taking out a substantial mortgage. She suggested D purchase the Property with an existing tenancy (§§7-8).

20.  After her enquiries with a bank, P was told that the Property was valued at about HK$8,800,000 and D could obtain a mortgage loan of roughly 50% of that value (§10).

21.  P decided to assist D to purchase a property and they discussed ways of financing such purchase (§12).

22.  In or about June 2023, at the Home, D and P “reached the common intention by an oral agreement with terms as follows” (“Common Intention Constructive Trust”) (§13):

“(a) The Property be sold to the Defendant for a consideration of HK$8,800,000 (“Purchase Price”). The Defendant did not have to pay the full Purchase Price of HK$8,800,000 at the time of completion. This is due to the love and affection of the Godson-Godmother relationship between the Defendant and I;

(b). Based on the valuation of the Property by the bank when the mortgage is to be taken out, the Defendant shall take out a mortgage representing 50% of the valuation of the Property. The Defendant shall finance the mortgage taken out with HSBC on his own;

(c). As to the outstanding balance of the Purchase Price (“Outstanding Balance”), the same shall be paid by the Defendant to me in two parts:-

(i) Part 1: the Defendant shall pay me a total of HK$2,000,000 by monthly instalments for a period of 30 years. The monthly instalment shall be in the amount of HK$5,556 (“1^st Part of the Outstanding Balance”);

(ii) Part 2: As to the part other than the HK$2,000,000, there is no fixed term of payment in order to provide flexibility to the Defendant in repaying the same as I did not want to overburden the Defendant (“2^nd Part of the Outstanding Balance”). In exchange for the flexibility in making repayments, the Defendant shall take care of me until my demise;

(d). So long as the Outstanding Balance remained unpaid, I shall retain portions of the beneficial interest in the Property pro rata to the unpaid Outstanding Balance.”

23.  P did not received the initial and further deposits totalling HK$880,000 (§16).

24.  As P retained about 50% of its beneficial interest, P paid half of the stamp duty and continued to manage its rental affairs (§§18-19).

25.  D paid 30 monthly instalments totalling HK$166,680 to settle the 1^st part of the Outstanding Balance pursuant to the Common Intention Constructive Trust; but she received nothing regarding the 2^nd part of the Outstanding Balance (§§20-21).

26.  Based on her total receipt of HK$4,449,360, P has 49.4% beneficial interest in the Property pursuant to the Common Intention Constructive Trust, i.e. 1 – ($4,449,360 / $8,800,000).

D.  D’s case

27.  On 25 June 2026, D filed a 12-page affirmation, which disclosed his case that D purchased the Property as an absolute owner with the aid of two gifts: (1) the Gift of cash of HK$2,500,000 from Mr Sum; and (2) in substance another gift of HK$4,400,000 from P.

28.  Regarding the first part, just prior to his passing, Mr Sum, in contemplation of his death and in P’s presence, told D that he had set aside a sum of HK$2,500,000 cash, held by P, for him to purchase his future matrimonial home (“the Gift”) (§12).

29.  D says the Gift belongs to him and has been kept by P, who “is the trustee of the Gift” (§13). He did not seek her release of the Gift to him immediately because he knew that P needed a lot of money for her legal fees to defend against claims by Mr Sum’s issues from his prior marriage (§14).

30.  D says part of the Outstanding Balance in P’s case “was, in fact, covered by the Gift from Mr Sum, which was always meant to be released to [him] upon request” (§15).

31.  As to the second part, P made a specific promise to D that if D was willing to continue living with her at the Home, she would transfer the Property to him for 50% of its market price, namely HK$4,400,000―representing the maximum amount D could obtain from a mortgage in September 2023 (§17).

32.  It was their common intention that D could freely dispose of the Property as its absolute owner (§19).

33.  D paid a monthly ex gratia stipend to P (§§24-25). Later, D decided to sell the Property to the Purchaser (§31).

E.  Applicable principles

34.  In Kan Sau Lan v Xu Hong [2025] HKCFI 1161, the plaintiff applied for a preservation order and/or proprietary injunction requiring the defendant to pay the income arising from certain lands into an escrow account. DHCJ Alan Kwong applied at §15 the following principles summarised by Yeung J (as he then was) in  Gentle Soar Ltd v CMBC Capital Finance Ltd & Others [2021] HKCFI 3450 §36:

(1)  For the grant of an interlocutory injunction, the broad requirements are that (a) there is a serious issue to be tried, and (b) the balance of convenience lies in favour of granting or continuing the injunction.

(2)  Specifically in relation to the grant of a proprietary injunction or a preservation order:

(a)  There is property which is bona fide the subject matter of the cause or matter, or as to which any question may arise;

(b)  Something ought to be done for the security of that property, because for example damages may not be an adequate remedy;

(c)  Unlike application for a Mareva injunction, no risk of dissipation needs to be demonstrated;

(d)  Even if there has been delay in making an application which may lead to refusal of a freezing injunction, a proprietary injunction may nonetheless be granted;

(e)  An enquiry into the relative merits of rival claims is not necessary. In respect of the merits of the claim, the party seeking the preservation order only needs to show that there is a serious issue to be tried on the merits on the normal American Cyanamid principles;

(f)  If the opposing party seeks to show that there is no serious issue to be tried, the threshold is high, as it would be necessary to demonstrate that the claim should be struck out;

(g)  There is no strict requirement for an undertaking as to damages where the Court grants a proprietary injunction or a preservation order, albeit that the Court may require such an undertaking where the circumstances warrant;

(h)  There is no need for P to show that damages would not be an adequate remedy;

(3)  As a fundamental principle, the Court at the interlocutory stage would take whichever course that appears to carry the lower risk of injustice if it should turn out that it is wrong.

35.  In Wason Holdings Ltd v BHP International Markets Ltd [2018] HKCA 113, Barma JA (with whom Yuen JA agreed) held at §§37-38:

“37. [A]s the injunction sought was proprietary, it was also unnecessary to show that damages would not be an adequate remedy. However, it remains necessary to demonstrate that the balance of convenience favours the granting of the injunction, and that it would be just and convenient to do so.

38. …Given that the shares had been sold, the effect of the injunction could be to secure a sum of money (whether the cash proceeds of the sale of the shares, or the eventual proceeds of any further loan to other customers of the 1^st defendant which could be identified as having been made using those proceeds) to satisfy any judgment the plaintiffs might ultimately obtain. … Although their claim may be characterised as proprietary, in the particular circumstances of this case, it is nonetheless a claim to money. Unless there is reason to think that the 1^st defendant will be unable to meet such a claim, there is no particularly pressing need for money to be kept aside to meet it.”

F.  Discussion

F.1  D’s arguments

36.  In resisting the Summons, Mr Cheung raised the following main arguments.

37.  First, he argued that P was guilty of unreasonable delay of six weeks in making this application since she knew about the sale on 12 May 2026, and there is now a real risk that the transaction will be cancelled due to such delay―this can be fatal to the Summons (§§4-14). He even suggests that the grant of the Summons would completely derail the pending completion to the prejudice of the Purchaser (§27). However, D filed no evidence to support the asserted “real risk” or derailment, despite P’s clear position conveyed to the Purchaser that she “has no intention to block the sale”.

38.  The position has been explained by Harris J in Re Wako Giken (HK) Co Ltd [2010] 4 HKLRD 121 §§24-25:

“24. I of course accept that applications for interlocutory injunctions should be made promptly and that there are authorities that suggest that mere delay can be fatal to an application, but as Spry observes at page 488 of the 8^th edition of The Principles of Equitable Remedies “Statements such as these, however, are in several respects misleading and do not reflect the actual practice of the courts of equity.” In my view the correct approach is summarised by Eichelbaum J. in Monsanto Company v Stauffer Chemical Company [1984] FSR 599 at 571:

“Further, and without wishing to detract from the proposition that equitable relief needs to be sought promptly, it is not sufficient for a defendant to show that the applicant has delayed unreasonably. It must be shown that because of that delay, it would be unreasonable to grant the remedy; that it has become practically unjust to do so. As Megarry J. said in: Legg v. Inner London Education Authority [1972] 1 W.L.R. 1245:

‘What seems to me important is not so much the length of the delay per se, but whether the delay has in some ways made it unjust to grant the injunction claimed.’ (pp. 1259-1260).

And see Lindsay Petroleum Co. v. Hurd (1874) L.R. 5 P.C. 221, 240 and Spry, Equitable Remedies, 2^nd Ed., pp. 405, 454-455.” (italics in original)

39.  Second, he submitted that “the first stage the Court shall consider is whether the damages are adequate in P’s claim. If so, there is no reason for the Court to grant an injunction. Only after this criterion is met then the Court may consider whether there is a serious question to be tried, and whether P’s undertaking can compensate D” (§16) citing Hong Kong Civil Procedure 2026 at §29/1/12.

40.  However, this submission suggests an approach which is at variance with the authorities cited above. Moreover, faced with P’s allegation of his inability to pay damages, D “has not adduced a shred of evidence to illustrate [his] financial position and ability to pay damages”: Kan Sau Lan v Xu Hong [2025] HKCFI 1161 §26. Rather, he merely deposed that he continued to pay P the ex gratia stipend even after he learned that P was contemplating legal action to prevent the sale of the Property (§30), nevertheless somehow he decided to sell the Property “at a financial loss” to the Purchaser (§31).

41.  Third, Mr Cheung argued that “the specific terms of the alleged oral agreement are entirely absent from [P’s] evidence” (§21). However, the legal position has been established in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 §5.8 (Cheung JA, with whom the other members of the Court agreed), applying Lloyds Bank Plc v Rosset [1991] 1 AC 107, 132F (Lord Bridge, with whom the other members of the Appellate Committee of the House of Lords agreed):

“The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust…” (emphasis added)

42.  Fourth, Mr Cheung submitted that detrimental reliance does not arise in 2023 as pleaded (§22). In Cheung Lai Mui  v Cheung Wai Shing [2020] 2 HKLRD 15, Lam VP (as he then was) held at §1.22 that “the issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it”, citing the second propositions of Robert Walker LJ’s judgment in Gillett v Holt [2001] Ch 210, 232E. Cheung and Au JJA agreed at §6.32-6.34 and §9.

43.  On appeal, the Court of Final Appeal cited with approval Gillett v Holt [2001] Ch 210, 232 (§24); but reversed the finding that the going back from an assurance can take place after the death of the promisor, holding that “where there is not the necessary reliance by the promisee prior to the death of the promisor, the promise or assurance by the promisor must be taken to have lapsed”: (2021) 24 HKCFAR 116 §31, Ribeiro PJ and Gummow NPJ (with whom the other members of the Court agreed).

44.  P has deposed that but for the Common Intention Constructive Trust, she would not have accepted the sale of the Property in the absence of the full payment of the purchase price of $8,800,000 (§14). This constitutes clear prejudice when D sought to go back from an assurance by selling the Property in 2026.

45.  Fifth, Mr Cheung contends that the Summons is highly disproportionate in that P seeks to freeze the entire net proceeds while claiming only a 49.4% share in the Property (§26). But as Miss Chan pointed out, that reflects the fact that P was not responsible for the mortgage.

46.  Lastly, Mr Cheung emphasised that, even if the injunction were to be framed in such a way as to permit completion, the Purchaser may still terminate the transaction, referring to clause 30 of the SPA which provides that “[i]n the event of any third party claim to the Property … the Purchaser is entitled to rescind the purchase”. However, both parties are of the firm view that the Purchaser is a bona fide purchaser without notice. I cannot see how the relief sought by P regarding the Property’s sale proceeds could affect that position.

F.2  Strength of D’s case

47.  Although it is not strictly necessary to consider relative merits of the rival claims, the strength of D’s claim must be viewed in light of the following matters.

48.  First, D alleged that P became the trustee of HK2,500,000 in his favour. However, except for her presence when Mr Sum made the alleged declaration, D did not explain how P accepted this office: see Lewin on Trusts (20^th ed, 2020) §§13-023 to 13-024.

“A trustee may accept the office…by express declaration of his assent…

In addition, acceptance may be implied from acts done in connection with the administration of the trust. … [But] acceptance will not be inferred if the acts are such as to be plainly referable to some ground other than administration of the trust in the capacity of trustee.”

49.  Second, D says part of the Outstanding Balance came from the Gift released (presumably) by P to him upon “request”. But D adduces no evidence of such “request”. Mr Cheung fairly accepted that, on the evidence, there was no such request.

G.  Disposition

50.  Although the authorities show that an undertaking as to damages is not necessary, P is willing to provide such an undertaking. Applying the above principles, taking into account all the relevant factors, the balance of justice lies in favour of granting the injunction sought, and it carries the lower risk of injustice if it should turn out that it is wrong.

51.  After discussion with the parties, upon P’s undertaking as to damages in the usual term, I grant an injunction in an amended form submitted to the Court as follows:

(1)  D must not in any way dispose of or deal with or further encumber the Property, save and except for carrying out the completion for the SPA registered in the land registry by memorial no. 26042101790075.

(2)  Without prejudice to paragraph (1) above, D, upon the completion of the sale of the Property, do pay the net proceeds of sale (after payment of any mortgages) into the Court, pending determination of this action.

(Discussion on costs)

52.  Costs of the Summons be in the cause, with certificate for counsel.

53.  I thank counsel for their assistance.