WONG YUK KUN v. WONG YUK WAN

DCCJ 4846/2016

[2018] HKDC 1018

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4846 OF 2016

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DECISION

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1.  This is the defendant’s application filed on 21 March 2018 for leave to adduce expert evidence on quantum at the trial of the action.

Background

2.  The plaintiff and the defendant are cousins and became the joint tenants of a property situated at Unit 8, 2^nd Floor, Block D, Trend Plaza, No 2 Tuen Hop Street, Tuen Mun, New Territories (“Property”) on 3 February 1997.  The plaintiff’s case is that the purchase price of the Property in the sum of HK$2,155,000 was paid by the plaintiff from the following sources: (a) HK$455,000 from the plaintiff; (b) HK$700,000 from a personal loan granted by Ms Wong Yuk Chun (“Chun”), a cousin of the plaintiff and the elder sister of the defendant; (c) HK$1 million from a mortgage granted by Hang Seng Finance Limited on 3 February 1997.

3.  The plaintiff alleges that from January 1997 to January 2014, she repaid a total sum of HK$1.01 million to Chun, of which HK$700,000 was the principal sum of and HK$310,000 was the interest on the personal loan.  Meanwhile, the plaintiff was solely responsible for repaying the mortgage since March 1997 and had fully repaid the same by April 2011.  It was the common intention of the parties that the plaintiff would be the sole beneficial owner of the Property and the defendant would not be beneficially interested in the Property in any way.

4.  The defendant, on the other hand, claims that she had made HK$100,000 contribution and Chun had made HK$600,000 contribution to the purchase price of the Property.  It was the parties’ understanding that the plaintiff would reside at the Property with her family and be responsible for rental payments to Chun and mortgage repayments.

5.  The defendant avers that the HK$1.01 million paid by the plaintiff to Chun was in fact rental payments, instead of loan repayments, between March 1997 and January 2014.  It was the common intention of the parties that the defendant and Chun would retain a beneficial interest in the Property by virtue of and proportionate to their respective contributions to the purchase price.

The action

6.  The writ of summons and the statement of claim were filed on 3 October 2016.  The statement of claim was amended on 13 April 2017.  It was re-amended on 9 August 2017 and re-amended again on 12 February 2018.  The plaintiff seeks, inter alia, a declaration that she is the sole beneficial owner of the Property and that the defendant holds her interest in the Property on trust for the plaintiff.

7.  The defence and counterclaim was filed on 12 December 2016 and amended on 25 April 2017.  It was re-amended on 30 August 2017 and re-amended again on 1 March 2018. The defendant counterclaims, inter alia, a declaration that the Property is held by the plaintiff and the defendant on trust for the plaintiff, the defendant and Chun; and arrears of rent commencing February 2014.

8.  The defendant’s pleaded case in connection with the alleged rental payments made by the plaintiff to Chun is contained in §15 of the re-re-amended defence and counterclaim:-

“15. In further answer to Paragraph 20:-

…….

(2) …The Defendant expressly denies that the Plaintiff and/or her family members were residing in the Property rent-free. The Defendant further avers that the Plaintiff had made rental payments in cash to Chun in the sum of about HK$110,000 from about March 1997 to about November 1999 on several occasions. From December 1999 onwards, the Plaintiff started to pay rent to Chun by way of bank transfer to Chun’s bank account with the Bank of China (“BOC”) as follows:-

……

(3) …The Defendant further avers that it was mutually understood and agreed between the Plaintiff and Chun that the Plaintiff and/or her family members will reside at the Property and thus, the Plaintiff shall be responsible for repaying the Mortgage and also pay rent to Chun…

……

(5) …The Defendant avers that it was mutually agreed between the Plaintiff, the Defendant and Chun that since the Plaintiff and/or her family members shall reside in the Property, they would be responsible for repaying the Mortgage which represented part of the rent payable in respect of the Total Contribution.”

9.  The pleaded case in relation to counterclaim of arrears of rent is stated under the prayer for relief:-

“AND the Defendant counterclaims:-

…….

(4) Arrears of rent commencing February 2014;

…….”

10.  In the defendant’s answers to request for further and better particulars of the amended defence and counterclaim dated 3 July 2017, it is stated at §23 that:-

“…there was no formal discussion on the amount of rent, how the rent is to be calculated, on which day the rent should be paid to Chun and the duration of the rental period of the Property. However, it was mutually agreed and understood by the Plaintiff and Chun that the Plaintiff shall pay rent to Chun as long as the Plaintiff and/or her family is residing at the Property.”

11.  The agreed statement of issues in dispute is as follows:-

(1)  Was the HK$700,000 from Wong Yuk Chun a personal loan to the plaintiff or was it investment in the Property by Wong Yuk Chun and/or the defendant?

(2)  Why was the defendant registered as a joint tenant of the Property?

(3)  What was the nature of the payments in the total sum of HK$1.01 million from the plaintiff to Wong Yuk Chun from January 1997 to January 2014?

(4)  Did the defendant make any direct or indirect monetary contributions towards the sum of HK$700,000 which Wong Yuk Chun paid for the purchase price of the Property?

(5)  Is the defendant holding the Property on trust (common intention constructive trust and/or resulting trust) for the plaintiff?

(6)  If the answer to (5) above is in the negative, whether the Property is held by the defendant and the plaintiff on trust for the plaintiff and the defendant and Chun.

(7)  If the answer to (6) above is in the affirmative,

(a) whether the defendant has a beneficial interest of 4.64% in the Property;

(b) whether Chun has a beneficial interest of 27.84% in the Property; and

(c) whether the plaintiff owed both the defendant and Chun arrears of rent commencing February 2014.

The proposed expert evidence

12.  In the summons dated 21 March 2018, the defendant seeks leave to adduce expert evidence relating to the following issues:-

(1)  the then market rental of the Property for the period from March 1997 to January 2014 (“1^st Period”); and

(2)  the market rental of the Property for the period from February 2014 to the date of trial (“2^nd Period”).

13.  The defendant argues that the aforesaid expert evidence is necessary to demonstrate that the monies received by Chun from the plaintiff represented the then fair market rental in proportion to the contributions made by the defendant and Chun to the purchase price of the Property during the 1^st Period.  The expert evidence would also assist the court in determining (1) whether the HK$1.01 million paid by the plaintiff to Chun was loan repayments (inclusive of interest) as alleged by the plaintiff or rental payments in proportion to the contribution for the plaintiff (and her family) to reside at the Property in the 1^st Period; and (2) the market rental of the Property in the 2^nd Period.

Legal principles

14.  In an application for leave to adduce expert evidence under O 38 r 36(1) of the Rules of the District Court (“RDC”), the burden is on the applicant to show that the proposed expert evidence is relevant to the issues in dispute.  The court has to examine the pleadings to determine whether the proposed expert evidence is required to resolve the issues in dispute: Hong Kong Civil Procedure 2018, Vol 1 at §38/36/1.

15.  It is the pleaded issues that define the scope of the evidence, and not the other way around.  In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced: Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 at §21 per Ma CJ.

16.  Where the proposed expert evidence is plainly inadmissible or irrelevant, the court ought to exercise its discretion to refuse the admission of such evidence.  But where the court cannot form a clear view on the relevance of the proposed expert evidence or where it considers that the proposed evidence is clearly relevant, then it should grant leave for the evidence to be adduced at the trial: Wong Hoi Fung v American International Assurance Co (Bermuda) Ltd & Another [2002] 2 HKLRD 507 at 511J-512A per Chu J (as she then was).

17.  In assessing the relevancy and usefulness of the proposed expert evidence by reference to the pleaded issues and evidence disclosed and adduced so far by the parties, the questions for the court to consider would include: (a) how cogent the proposed expert evidence will be; (b) how helpful it will be in resolving any of the issues in the case; and (c) how much it will cost and the relationship of that costs to the sums at stake: Wong Giles v Donowho Simon Christopher HCPI 1046/2014, 26 October 2016 at §§19-22 per High Court Master Roy Yu.

Discussion

18.  Ms Wendy Yeung, appearing for the defendant, conceded in her written submissions that the respective cases of the parties have made no reference to the market rental, or to the fact that the plaintiff had agreed to pay market rent of the Property.  Despite the concession, Ms Yeung was adamant that should the defendant’s case prevail at trial, the trial judge will need expert evidence on market rental as a “benchmark” to decide whether the HK$1.01 million was above or below the then market rental during the 1^st Period.  The “benchmark” will also be used to give a fair adjustment on the arrears of rent in the 2^nd Period.

19.  In my view, the fact of the matter is throughout the re-re-amended defence and counterclaim, the defendant does not seek to rely on or make reference to the market rentals of the Property.  It is simply not the defendant’s pleaded case that the alleged rental payments made by the plaintiff were based on market rental value, or that the defendant’s counterclaim for arrears of rent is to be assessed in accordance with the market rental rate.

20.  This reading of the re-re-amended defence and counterclaim is supported by §23 of the defendant’s answers to request for further and better particulars of the amended defence and counterclaim, in which it is pleaded that there was no formal discussion between the parties on the amount of rent, how the rent was to be calculated, on which day the rent should be paid to Chun and the duration of the rental period of the Property.

21.  As Mr Frederick Chan, appearing for the plaintiff, rightly pointed out, putting the defendant’s case to its highest, the monies received by Chun from the plaintiff does not even hinge on the notion of a market rental as the “rentals” were allegedly matters of express understanding and agreement on the parts of the plaintiff and Chun.

22.  That being the status quo on pleadings, only factual evidence of the parties rather than expert evidence on market rental, in my judgment, would be relevant and useful to the trial judge in ascertaining whether the HK$1.01 million was rental payments or loan repayments, or in assessing the arrears of rent under the defendant’s counterclaim.

23.  As the pleadings stand, it is not permissible for expert evidence to be introduced to demonstrate that the monies received by Chun from the plaintiff represented the then fair market rental in proportion to the contributions made by the defendant and Chun to the purchase price of the Property, as proposed by the defendant.  To allow such evidence to be adduced is, in my view, to allow the defendant to slip in an unpleaded issue. 

24.  I am also able to say for certain that the proposed expert evidence does not serve any meaningful purpose in resolving any live issue of dispute between the parties.  The defendant simply failed to justify the admission of the proposed expert evidence.

25.  For the above reasons, the defendant’s application should be dismissed.

Conclusion

26.  I therefore order that the defendant’s summons dated 21 March 2018 be dismissed.  The plaintiff’s costs of this application (with a certificate for counsel) summarily assessed at HK$78,800 [HK$26,550 (sections B-D) + HK$2,250 (section E1) + HK$50,000 (section E2)], be paid by the defendant to the plaintiff forthwith. The plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

27.  I thank Mr Chan and Ms Yeung for their assistance.