TANG KIM KWAN PATRICK ALSO KNOWN AS PATRICK TANG v. LEE CHI TING KAREN ALSO KNOWN AS KAREN LEE

HCA 920/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 920 OF 2009

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J U D G M E N T

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Background

1. This is a dispute concerning ownership of four properties.  In summary three of those properties were purchased in the name of the Defendant, while the other property was purchased in the joint names of the 1^st Plaintiff and the Defendant.  It is common ground that the Defendant provided no cash funding for these property purchases although she did, in some cases take on a mortgage for part of the purchase price.

2. The Plaintiff is a businessman who has achieved considerable success with businesses manufacturing and selling shoes, and in the field of property speculation.  The 1^st Plaintiff has carried on his property speculation through a company owned and controlled by him, which company is the 2^nd Plaintiff in these proceedings. The Defendant was, for a period of time resident in France.  She returned to Hong Kong and began a personal relationship with the Plaintiff in 2002.  Following her return to Hong Kong she pursued studies as a gemmologist and this was her intended career path.  However, after starting her relationship with the 1^st Plaintiff she was, she says, persuaded to give up her ambitions to further her career and she took no employment during the period of her relationship with the 1^st Plaintiff. 

3. The 2^nd Plaintiff (hereafter “Priway”) became a party to the proceedings during the course of the trial when an application to amend the Writ and the Statement of Claim was made.  The basis of this application was evidence which showed that funding for one of the properties in issue had been provided by Priway rather than by the 1^st Plaintiff personally.  This raised a question as to whether, were any resulting trust to be established, such trust ought properly to reflect Priway as the party beneficially entitled.  To deal with this an amendment to join Priway as a party was sought, to claim relief in the alternative in regard to one of the properties.  The application was opposed by the Defendant, the opposition focusing on the lateness of the application and the possible ramifications in regard to evidence.  So far as the former consideration was concerned, there was no doubt that the application was late, but given the very narrow ambit of the amendment, and the fact that no significant additional factual averments arose, I could see no prejudice to the Defendant in allowing the application.  For similar reasons I was not persuaded that there was anything in the contentions as to a possible impact on the evidence and in fact no additional material was discovered by either party.  Discovery had already been given by the 1^st Plaintiff of certain relevant documents and records of Priway.  Having formed the view that Priway was a necessary or appropriate party to the proceedings I granted leave for the amendment to be made.

4. There is some disagreement between the parties as to when precisely their relationship started during 2002, but it is common ground that it quickly developed into a close intimate relationship which lasted for approximately 6 years.  The 1^st Plaintiff made a number of gifts of a substantial value, including cash and jewellery, to the Defendant.  Those gifts are not in issue in these proceedings.  The 1^st Plaintiff also provided the Defendant with a monthly living allowance, which he commenced paying soon after their relationship began and which was increased from time to time.  The issue which divides the parties in this litigation is whether the four properties which are in issue were gifts or not.

5. The relevant properties were purchased over a relatively brief period of time of approximately 18 months.  In chronological order the properties are; a flat in a development known as Metro Harbour View, purchased in January 2003; a house at Marina Cove, Sai Kung, purchased in November 2003; a flat at a development known as the Royal Peninsula, purchased in March 2004; and an office unit in Cheuk Nang Centre purchased in June 2004. These properties will be referred to respectively as Metro Harbour View, Marina Cove, The Royal Peninsula, and Cheuk Nang respectively.

6. During the period of time encompassed by the property purchases the Defendant became pregnant with the 1^st Plaintiff's child, giving birth to a daughter in April 2004.

7. So far as the three properties purchased in the sole name of the Defendant are concerned (Metro Harbour View, the Royal Peninsula, and Cheuk Nang) it is the 1^st Plaintiff's case that these are or were held by the Defendant on implied resulting trust for the 1^st Plaintiff, or the 1^st Plaintiff and Priway in the case of the Cheuk Nang property.  In regard to these properties, the Defendant's case in essence is that the purchase money which was provided by the 1^st Plaintiff or the Priway was a gift to the Defendant.  The purchase of one property, Metro Harbour View was funded in part by a mortgage loan which was taken out by the Defendant as mortgagor.

8. So far as the Marina Cove property is concerned, this is held in joint names by the 1^st Plaintiff and the Defendant as joint tenants, although, at the time of purchase, it was conveyed to them as tenants in common.  The Plaintiff's case in regard to this property is that the Defendant's share of the property was a conditional gift.  The condition was described as being a proviso; “that the Defendant would maintain the relationship [with the 1^st Plaintiff] and not be involved in any affairs with others failing [which] her interest would revert back [to the 1^st Plaintiff]”.

9. It is not factually disputed that the Defendant began a relationship with another man in late 2008 or early 2009.  On that basis the 1^st Plaintiff alleges that the Defendant has breached the condition such that the conditional gift failed, and the Defendant’s interest in the Marina Cove property lapsed.  The Defendant does not accept this proposition, denying that there was any condition attached to the gift of the half interest in this property.

10. At the trial both the 1^st Plaintiff and the Defendant gave evidence as did the Defendant’s brother, Lee Hon Kiu (“Tim”).

The Law

11. It is common ground between the parties that in a relationship such as the present case, there is no presumption of advancement in regard to the alleged gifts made by the 1^st Plaintiff.  It follows therefore that the applicable presumption, in circumstances in which purchase money for a property has been provided by one party but the property has been put into the name of the other party, is that the party providing the funding does not intend a gift to the other party, and that other party holds the property on resulting trust. 

12. If there is any sharing of the funding between the parties, then the resulting trust extends to the relevant proportion of the property in question.  Of relevance also therefore is the proposition that where any proportion of the purchase price of a property has been funded by a mortgage, then the mortgagor is to be treated as having provided that proportion of the purchase price. 

13. I am reminded of the following principles by the parties.  Firstly; as summarised in Underhill at paragraph 25.9:

“A’s and B’s equitable interests under resulting trusts are fixed at the time they purchased the property by paying the purchase price. They get the shares they paid for when they provided the purchase price, whether by way of their own cash (whether saved, inherited, or borrowed on mortgage) or a discount arising from their status..”

14. Secondly, in Carlton v Goodman [2002] EWCA Civ 545 Mummery LJ cited with apparent approval a passage from the decision of Vinelott J. in Re Gorman [1990] 2 FLR 284 at 291

“In circumstances of this kind, the court is concerned to ascertain, so far as is possible, from the evidence, what was the intention of the parties when the property was purchased, or what intention is to be imputed to them. Prima facie, if the purchase is financed in whole or in part on mortgage, the person who assumed liability for the mortgage payments, as between the joint owners, is to be treated as having contributed the mortgage monies.”

15. Having reviewed this and other authorities Mummery LJ concluded that those cases showed that a determination of the proportions of the interests held by joint owners of property had to take account of their common intention as to the discharge of the mortgage, that is, whether the payment obligations were to be shared, or were to be met by one party only. 

16. These propositions deal with presumptions that arise when the person holding property is not the person who provided funding for its purchase.  Such presumptions must however give way to evidence of actual intention.  In Carlton Laws LJ and Ward LJ both stressed the primacy of the evidence of actual intention over any presumed intention that may appear from the finance arrangements adopted by parties purchasing (in that case) in joint names.  As is referred to in Halsbury’s Laws of England (5^th Ed, Vol 52, para 205), for a gift to be established in circumstances in which no presumption of a gift arises, “there must be a clear and distinct act of gift and evidence that a gift was intended”.  The act of making the gift need not be by the use of particular words, but the words or conduct which are relied on must be clear.  See Gissing v Gissing [1970] 2 All ER 780 (per Lord Diplock at 790):

“As in so many branches of English law in which legal rights and obligations depend on the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. It is in this sense that in 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 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.”

17. It follows from the above that there is common ground between the parties as to the starting point, namely that there is no presumption of a gift in the present circumstances for any property, and also as to the necessity for clear evidence of a gift to rebut the presumption of a resulting trust.

18. In regard to the “conditional gift” of Marina Cove, the Defendant submits that the terms of any condition attaching to an alleged conditional gift must be strictly construed, as giving rise to a right of forfeiture.  It is submitted that such a gift would be void for uncertainty unless the condition precisely and distinctly defines the circumstances in which the failure of the gift and the forfeiture of the property will arise.

The Properties

19. In light of the common ground between the parties as to the need for evidence of a gift an appropriate focus of the investigation would appear to be the circumstances in which the gift is said to have been made.  The evidence however focused to a large extent on the surrounding circumstances and the credibility or otherwise of the rival versions of what happened at the relevant times.  Set out below is a summary of the principal facts and contentions in regard to each of the properties in question. 

Metro Harbour View

20. The 1^st Plaintiff’s case is that this property was purchased as a temporary residence for the Defendant.  The purchase price for the Metro Harbour View property was $1,717,000.00 and this was funded in two parts.  One component was $717,000.00 cash provided by the 1^st Plaintiff.  The balance was funded by a mortgage of $1 million.  The mortgage was taken out by the Defendant and it is submitted by the Defendant that it was understood between the parties that the Defendant would be responsible for the monthly payments. 

21. As referred to above, at the beginning of 2003, and indeed throughout her relationship with the 1^st Plaintiff, the Defendant was unemployed and her only source of income appears to have been the monthly living allowance paid by the 1^st Plaintiff.  Her case in regard to this property is that it was purchased at the suggestion of the 1^st Plaintiff in order to provide the Defendant both with a source of rental income, and also so that she could become a property owner.  The deposit payment made by the 1^st Plaintiff was intended to be a gift she says. The Defendant says that the funding of the balance through the mortgage taken out by her is to be understood as being a contribution to the purchase price made by her.

22. In her evidence the Defendant described how she says she was told by the 1^st Plaintiff prior to the purchase, that he intended to buy a property so that she could become a property owner and collect rental income.  Specifically, she says that the 1^st Plaintiff told her that she ought to have a property “to hold onto” and for collecting rental income.  At the time the property was being viewed prior to purchase the 1^st Plaintiff told her that “this property only marked the beginning and there would be more to come”.  These are the whole of the express words of gift to the Defendant.  Subsequently she says that Tim, her brother, and a witness at the trial, told her that the 1^st Plaintiff had confirmed to him that the Metro Harbour View property was purchased for the Defendant as a gift, and that he subsequently made similar representations to the Defendant's family.  In his evidence Tim confirmed that he had heard the 1^st Plaintiff use similar words to those recounted by the Defendant herself; that the flat was something for the Defendant “to hold”.

23. The 1^st Plaintiff says that the Defendant told him in late 2002 that she was pregnant.  She said that she needed a property to live away from her parents in during this period and the 1^st Plaintiff says that he asked her to look around a small flat.  He subsequently purchased this property as a temporary residence for the Defendant.  His evidence was that this property was therefore intended solely as a temporary residence, and that he did not have any intention of making a gift to the Defendant.

24. The Defendant submits that this is untenable as an explanation as can be seen from the fact that the date for completion of the purchase of the property was 9 May 2003.  The provisional sale and purchase agreement was signed on 27 January 2003  and the formal agreement on 30 January 2003.  The Defendant submits therefore that the purported rationale, namely concealing the Defendant's pregnancy from her family's neighbours was plainly unachievable since she would have been approximately 5 months pregnant by the time she was able to move in to Metro Harbour View.

25. Moreover, says the Defendant, she was not in fact pregnant at the time and nor did she tell the 1^st Plaintiff that she was pregnant.  The subsequent facts bear out the fact that she was not then pregnant.  It follows it is submitted that while the 1^st Plaintiff may not have known at the time the Metro Harbour View property was purchased whether or not the Defendant was actually pregnant, he must have become aware that she could not have in fact been pregnant at that time when an actual pregnancy was diagnosed in late April 2003.  However the 1^st Plaintiff made no comment or complaint about having been misled as to the alleged earlier pregnancy at the time when the later pregnancy emerged, even after the relationship between the parties had come to an end, nor did he suggest in his witness evidence that the Defendant had misled him in this regard.  The 1^st Plaintiff's explanation for this in his oral evidence was, in effect, that he was at that time infatuated with the Defendant and was not looking to cause trouble or to break up with her.

26. The Defendant points to the fact that because the 1^st Plaintiff was in the business of property speculation he had a specific company available to him (Priway) for the buying and selling of speculative properties.  If the property was being purchased simply as a temporary residence, to be sold in due course at a profit, with the profits to accrue to the 1^st Plaintiff then it would be expected that Priway would be used for the purchase.  In other words, purchase in the name of the Defendant and not of Priway is consistent with the property having been intended as a gift to her.

27. The 1^st Plaintiff's explanation for not using Priway was that he did not want his son, who is also a director of Priway, to discover his affair with the Defendant.  The degree to which the 1^st Plaintiff’s son was actively involved in the management of Priway was discussed in the evidence and it appears to me that his involvement was very limited and this risk therefore somewhat remote. 

28. Approximately 60% of the value of the property was financed through a mortgage and, self evidently, mortgage payments had to be made.  At the outset the Defendant was in residence in the property and there was no rental income to finance the mortgage.  The 1^st Plaintiff provided funds during this period.  In April 2004 the Defendant moved out of this property and into the property at Marina Cove, and in September 2004 Metro Harbour View was rented out.  The Plaintiff’s evidence was that this was his suggestion and this evidence was not challenged.  At that stage the rental income was the source of the mortgage payments.  The Defendant submits that if, as the 1^st Plaintiff contends, the property was then intended to provide the Defendant with a source of rental income,  then the “imposition” of the mortgage took away much of that rental income.

29. The significance of the mortgage as a contribution to the purchase has to be understood in the context that the Defendant would have been unable to obtain this financing, or to meet the mortgage payments, without the assistance of the 1^st Plaintiff.  She was not in employment and needed support from the 1^st Plaintiff to obtain this loan.

30. The Defendant’s explanation for the purchase of this property is not without difficulties also however.  The Defendant says that the property was purchased as a source of rental income for her, but in fact it was not rented out.  The completion date of the purchase was May 2003 but the Defendant herself moved into the property as a resident in the same month, meaning that there was little effort made to rent out the property it appears.  She sought to explain this by stating that the plan to rent out the property had to be put on hold due to the SARS epidemic.  As a matter of chronology this appears doubtful since the Defendant moved in almost as soon as the transaction was completed.  I am prepared to accept that SARS may have made either rental or sale of the property more difficult, but the lack of any apparent attempt to rent out the property is puzzling.

31. The 1^st Plaintiff’s evidence, that he was never told about the sale of the property (which took place in December 2005), was not challenged in cross‑examination, but was contradicted by the Defendant in her oral evidence.  This would have been of significance if I accepted the Defendant’s evidence because, if the 1^st Plaintiff was aware that the property had been sold but had not asked for a refund of the proceeds of sale, then it would be corroborative of his having given the property to the Defendant.  On balance however I do not accept the Defendant’s belated recollection of having informed the 1^st Plaintiff of the sale.

Royal Peninsula

32. This property was purchased at a time when the Defendant had discovered that the 1^st Plaintiff was continuing to maintain a relationship with another woman, not his wife.  She described in her evidence how this had upset her.  The Royal Peninsula development was a new development and, according to the Defendant, the 1^st Plaintiff was involved in speculation through Priway in regard to several units in the development.  The Defendant's case is that, in those circumstances the 1^st Plaintiff represented to her that she could herself engage in property investment for profit.  When she pointed out to the 1^st Plaintiff that she did not have the funds to enable her to do so she says that the 1^st Plaintiff simply asked her to look for a suitable flat and that he would “help her out”, or perhaps “help to fix it”.  The Defendant says that she understood his meaning as being that he would buy her a flat and therefore all she had to do was to choose it. 

33. The 1^st Plaintiff accepts having said words to the effect described above, and there seems to be broad agreement that this purchase came about for speculation purposes.  The 1^st Plaintiff's case however is that the agreement was that the property would be bought and sold on a speculative basis with the profit from so doing to be shared.  The 1^st Plaintiff, the Defendant and Tim had engaged in a similar transaction in regard to a property at Shatin City One, and had shared the profits from that transaction.

34. Tim's evidence supports this version, at least to the extent that the property was for short-term speculation for profit.  He recounted in his evidence how, as matters unfolded, the property was not sold, but was rented out.

35. The Defendant submits that if, as the 1^st Plaintiff contends, the intention was simply to share the profits on the resale of the property, then there was no need to put the property into the Defendant's name.  Moreover, during the course of his evidence the 1^st Plaintiff said that he was, by this stage not wholly confident that he could trust the Defendant, and accordingly it is submitted he would have been less inclined to put the property in her name rather than in the name of Priway if it were a joint-venture as he now suggests.  The 1^st Plaintiff's explanation for this is that he did not want to have the complication that came with the joint-venture in regard to the Shatin City One property.  In that case the profit accrued to Priway as the owner of the property, and was booked as such.  The shares of the profit paid to the Defendant and Tim were paid by the 1^st Plaintiff out of his own funds so as not to appear on the books of Priway.

36. The purchase of this property was financed in part by Priway which advanced a sum of $1,680,910 for the down payment for the purchase.  Subsequently the 1^st Plaintiff provided a sum of $600,000 to the Defendant for repayment of part of the advance made by Priway.  A mortgage was taken out to the value of $1 million by the Defendant.  Although the Defendant was receiving a salary from Priway at this stage, it is accepted that she required the assistance of the 1^st Plaintiff to arrange the mortgage facilities with the bank.  At a later stage the Defendant signed an audit acknowledgement issued on behalf of Priway confirming that she owed that amount to Priway.  The 1^st Plaintiff submits that the signature by the Defendant of the audit confirmation evidences the Defendant’s awareness that the property was not a gift to her.  The Defendant says that she was asked to sign the loan documents by the Plaintiff simply for the company's records having been assured by the 1^st Plaintiff that he would arrange to make the repayments by making transfers of funds to her account. 

37. Once again she describes a conversation in front of her family in which the 1^st Plaintiff said that he would not expect the Defendant to repay the loan since she was “his wife”.  This seems to reflect the way in which the matter was dealt with because the loan to Priway was repaid by the Defendant with funds provided by the 1^st Plaintiff.

38. The Defendant's witness statement refers to the discussion with the 1^st Plaintiff described above and says that she understood “I would help you out” as meaning that the property would be given to her as a gift.  In her oral evidence however she supplemented this evidence and described conversations said to have taken place at the Marina Cove property in which the 1^st Plaintiff said that the purchase of this property was meant to be a gift.  This was said to have been repeated by the 1^st Plaintiff in front of her family members.  Not surprisingly the Defendant was cross-examined as to why such important conversations were not set out in her written witness evidence, and her brother was also asked about his recollection of any such conversation.  Tim could not remember any such conversations having taken place.

39. In those circumstances the 1^st Plaintiff submits that the Defendant is making up this part of her evidence and I do not accept that the conversations in Marina Cove took place or had the significance the Defendant now alleges.  It remains undisputed however that the 1^st Plaintiff did say to the Defendant that he would “help her out” in regard to this purchase and the issue in essence is the effect of this statement by him and the funding arrangements that were put in place. 

40. The original mortgage loan was repaid in April 2007 and the property was refinanced with a loan from another bank in May 2008.  The property is still held by the Defendant.

Cheuk Nang

41. This property was purchased on 25 May 2004 (the date of the Agreement for Sale and Purchase) by Priway for $722,000.00.  Priway executed a Nomination on 8 June 2004 nominating the Defendant as the purchaser of the property, and the property was assigned to the Defendant on 12 June 2004.  The Defendant's case is that this was a gift to celebrate the birth of her daughter with the 1^st Plaintiff.  The property was purchased subject to an existing tenancy and the rental income following purchase was (and is) received by the Defendant.  The Plaintiff's case is that this rental income was the purpose behind the purchase, providing additional income to the Defendant to support their daughter.  He says there was no intention to gift the property itself.

42. The Defendant elaborated in her oral evidence (having been in effect invited to in cross examination) on the contents of her witness statement, describing specific conversations in which the 1^st Plaintiff is said to have said that the office was to be given to the Defendant as a gift.  Tim also recalled the 1^st Plaintiff saying that the office had been bought as a gift.  None of these conversations were specifically put to the 1^st Plaintiff, leading the 1^st Plaintiff to submit that these are late inventions, but the 1^st Plaintiff was clearly tackled with the proposition that this was a gift to celebrate the birth of their daughter.  He disagreed that it was such a gift.  His evidence was that the purpose was to ensure that the Defendant had sufficient money to be able to look after the baby.

43. Tim was also able to give evidence in regard to the purchase of this property and he stated that the 1^st Plaintiff had told him that he had purchased an office property for the Defendant as a present for the birth of their baby daughter.  He says that he was told that the property was in the name of a company but would be transferred to the Defendant.  The date given by him for this conversation however preceded the purchase of the property in fact and it is submitted on behalf of the 1^st Plaintiff that this timing of the conversation has been selected so as to link the purchase to the date of the birth of the baby.  In fact although the provisional agreement was signed on 12 May 2004  this was effectively contemporaneous with the birth being, I note, only about 3 weeks after the birth of the daughter.

Marina Cove

44. It is common ground that this property was purchased to provide a home for the Defendant and her daughter.  There was no question of this being purchased as any sort of investment; the decision to purchase was made at a time when the Defendant was pregnant with the 1^st Plaintiff's child and the property was intended solely as a residence.  There was some discussion in the evidence as to whether the original proposal had been for the purchase of a property elsewhere in Hong Kong, but nothing appears to turn on that evidence.  The Defendant's brother, Tim, was involved in finding the property and took part in negotiating the purchase price.  He says, and it seems not to be in dispute, that he was given a budget by the 1^st Plaintiff for this purpose as the funding came from the 1^st Plaintiff.

45. The property was assigned to the 1^st Plaintiff and the Defendant jointly as tenants in common.  The Defendant says that she was unaware of this form of tenure having been adopted.  She had understood that the property was to be held as joint tenants and recounted in her evidence discussions at the solicitor’s  office at the time that the agreement was signed relating to this. 

46. The Defendant’s recollection of the events at the solicitor’s office was that this was when the sale and purchase agreement was signed.  In the usual way this was a standard form agreement, and a copy was registered.  Both the 1^st Plaintiff and the Defendant adduced a copy of this document in evidence, but these copies did not match each other. One made specific reference to the property being held as tenants in common while the other did not.  It appears that one of these copies has been altered after the document was signed by the parties and far more likely than not, it seems to me, is that the version including the reference to tenancy in common is the “altered” version.

47. At a later stage she discovered that the assignment was as tenants in common and she complained about this to the 1^st Plaintiff, and on 3 April 2006 (about 2 years after the initial purchase) the 1^st Plaintiff and Defendant executed a Deed of Conversion by which the holding was changed from tenancy in common to joint tenancy.  That remains the position in regard to ownership of the property.

48. The 1^st Plaintiff does not dispute that a half share of the property was given as a gift to the Defendant therefore.  The gist of the Plaintiff's case is that this gift was “conditional”. In his Statement of Claim he puts it this way: “… the Defendant was given some interest as a gift provided that the Defendant would maintain the relationship with the 1^st Plaintiff and not be involved in any affairs with other failing which are interest would revert back to the 1^st Plaintiff”.

Discussion

49. Both the 1^st Plaintiff and the Defendant have made submissions urging me to conclude that the evidence given by the other party is unreliable.  Without doubt there are unsatisfactory aspects to the evidence of both principle protagonists, and I have approached all of their evidence with appropriate caution.  It seems to me that two interlinked factors have to be borne in mind in evaluating the evidence.  The first is that the relationship between the 1^st Plaintiff and the Defendant was primarily a personal relationship, and a clandestine one at that, meaning that the degree of commercial common sense that might be expected in a purely commercial relationship is not necessarily to be expected here. The second is that the relationship was one that could come to an end at a moment’s notice.  As the 1^st Plaintiff said in his evidence, he could not be sure whether the Defendant would stay with him.  This uncertainty has had an influence on the behaviour of both parties but that of the 1^st Plaintiff in particular.

50. By this I mean that, to an extent, the 1^st Plaintiff has used these properties to continue, and perhaps deepen his relationship with the Defendant by, in some cases in particular, seeking to achieve what might be described as a halfway house between giving and not giving.  I accept the evidence of Tim when he describes occasions on which the 1^st Plaintiff has spoken to others about his generosity to the defendant in regard to property when the evidence in fact leads me to the conclusion that he has acted in some cases with the primary intention of holding out the prospect of a gift rather than making a gift.

51. That said, for the most part I believe both principal witnesses to have given generally truthful evidence.  As appears below however I believe the Defendant has attempted to enhance her evidence in regard to the Royal Peninsula property, seeking to supplement equivocal statements made by the 1^st Plaintiff with words in more definite form.

52. Turning then to the Metro Harbour View property, the starting point must be the words used by the 1^st Plaintiff which are said to have given rise to the gift.  He is said to have used a phrase which, the Defendant accepted, is in terms of holding on to something, more than receiving it as a gift.  The 1^st Plaintiff was equivocal, I suspect deliberately, in regard to what he was intending with the property at that time.  The 1^st Plaintiff has, I accept, subsequently referred to this and other property as being the Defendant’s when it suited him to boast of his generosity.  Such comments after the purchase of the property do not convert something that was not a gift into a gift unless that is the clear intention of what was said or done subsequently, and it is not the Defendant’s case that there was any such unequivocal subsequent conferral of a gift.

53. Given the taking up of residence by the Defendant as soon as the purchase was completed I accept the 1^st Plaintiff’s explanation that the property was purchased and put in the name of the Defendant simply for that purpose and nothing more.  Given the Defendant’s evidence, and the evidence of Tim (which I accept) as to what was actually said by the 1^st Plaintiff, I do not accept that he intended, or was understood as intending that the property was to be a gift.

54. It remains necessary to deal with the fact that the Defendant undertook a liability under the mortgage, which means that she is to be taken as having made a contribution to the purchase price and, accordingly is to be taken as having a share in the property to the extent of that contribution. 

55. In the present case it seems abundantly clear to me, as described above that the 1^st Plaintiff was understood to be underwriting the Defendant’s liability under the mortgage, and did so, at least for as long as she was resident.  After the Defendant moved out it appears the property was leased and the mortgage instalments of approximately $5,000.00 per month were met from the rental income.  I accept it to have been the common intention of the 1^st Plaintiff and the Defendant that the Defendant would in fact bear no responsibility for the mortgage payments.

56. I should add for completeness that the Defendant has pleaded a proprietary estoppel against the 1^st Plaintiff by way of defence.  This was not a point taken in submissions and it suffices for me to say that the conventional requirements to establish an estoppel has not been made out.

57. It follows that this property was held by the Defendant on resulting trust for the 1^st Plaintiff.

58. Turning to the Royal Peninsula, the evidence seems to me to be clear that the property was intended to be one which would be bought and sold at a profit, with the profit shared between the 1^st Plaintiff, the Defendant and Tim.  The transaction could have been carried on through Priway rather than by putting the property in the Defendant’s name, but that does not establish, in the face of the evidence as to the intended purpose of the purchase, that the Defendant acquired a beneficial interest in the property as such.  The 1^st Plaintiff is said to have offered to help out the Defendant to take part in property speculation.  That, in my view is consistent with funding the purchase of a property for quick resale, with the intention of sharing the profit, not with gifting the whole of the property.

59. Once again a mortgage was taken out by the Defendant for $1 million with, in addition, the purchase being partially funded by a loan from Priway.  At the time of purchase, which is the date on which any trust would crystallise, I find that the intention of the parties was that this would be a short term proposition which was to be funded by the 1^st Plaintiff.  There was no actual intention that the Defendant would acquire an interest in the property wider than an entitlement to a share in the profit by undertaking this responsibility.  She remained out of employment at this time and unable to meet mortgage obligations without the assistance of the 1^st Plaintiff.

60. So far as Cheuk Nang is concerned the position is rather different.  The Defendant has recounted clear words which show that a gift was intended and this is corroborated by her brother Tim.  To an extent that evidence did not clearly emerge until her cross examination however, and was not put to the 1^st Plaintiff in terms.  Nevertheless, in my view the 1^st Plaintiff’s own evidence suggests that he had a rather different mindset in relation to this property.  His intention was to make provision for his new-born daughter which intention I understand to be long term rather than short term.  Separate provision has indeed been made by the 1^st Plaintiff for an education fund for his daughter; the question is what was intended to be achieved by putting Cheuk Nang into the Defendant’s name?

61. The 1^st Plaintiff accepts that there was an element of gift, but says that it was the rental income only.  It is submitted on behalf of the Defendant that the only logical explanation for executing the Nomination and putting the property into the name of the Defendant was that it was intended to be a gift of the whole of the property. The Defendant accepted that the rental income was a factor in the decision to purchase this property, but submits that there was little obvious sense in transferring the property and putting it in the name of the Defendant, for it then to be held on trust for the 1^st Plaintiff (or Priway) simply so that the Defendant could receive an additional monthly income of $5,000.00, the amount of the rent.  It would have been far easier to simply increase her monthly allowance.  Much the same submission as to the lack of any obvious commercial sense is made in regard to Metro Harbour View and the Royal Peninsula.  Unlike those properties however nobody suggests in the case of the Cheuk Nang property that there was any temporary or short term purpose to this transaction.  Viewed objectively it seems to me that the 1^st Plaintiff’s actions are consistent with an intention to make additional provision for the upkeep of his daughter.  He offered no real explanation as to why this purchase mechanism was adopted rather than simply increasing the Defendant's monthly allowance.

62. In my view, in this instance the 1^st Plaintiff was intending more than simply providing rental income or a monthly supplement of $5,000.00.  There was no discussion of speculation in regard to Cheuk Nang, and the 1^st Plaintiff described in his reply witness statement is motivation as deriving from his being a responsible father who thought that it was necessary to make arrangements for the Defendant to have sufficient money to look after the baby.  The evidence overall suggests to me therefore that the 1^st Plaintiff intended the transfer of this property to the Defendant primarily for the benefit of his daughter over the long term.  I do not accept that he intended to retain an interest in this property.

63. Finally, Marina Cove.  This property is clearly in a separate category to the others.  Not only was it not purchased for either income or speculation but it was intended as a family home for the 1^st Plaintiff, the Defendant and their daughter.  This remains true notwithstanding the fact that their relationship was such that the 1^st Plaintiff would not regularly live there.  The 1^st Plaintiff made the conscious decision to put this property in joint names, ultimately as joint tenants.  There is no doubt that this was a gift made by the 1^st Plaintiff and the only issue is as to whether there was a condition attached to the gift.

64. Just as it is incumbent on the Defendant to establish a gift in circumstances in which the funding for the purchase of a property was provided by the 1^st Plaintiff so it is in my view incumbent on the 1^st Plaintiff to establish the condition said to attach to the gift in this case.  While the 1^st Plaintiff puts it as having been a “common understanding” or a “consensus” that some such condition would attach to the share in the property, the Defendant not only denies that there was any such understanding or consensus, but also points to the differing formulations of the understanding advanced by the 1^st Plaintiff.

65. The way in which the holding of the property was arranged and later amended seems to me to be inconsistent with an arrangement such as the 1^st Plaintiff suggests existed.  There is no explanation why the 1^st Plaintiff was concerned about the form of tenure if, as he now says, the Defendant had undertaken to return her share in the event that the relationship ended.  I believe it was the 1^st Plaintiff that instigated and arranged the assignment of the property as tenants in common, and I believe this was inconsistent with the common understanding he alleges. 

66. The gist of the 1^st Plaintiff’s case is not that the share in the property would last only as long as the relationship between he and the Defendant should last, but rather than her share would end if or when the Defendant became involved in an affair with another man.  The nearest to a precise formulation was in his cross examination when he said:

“On a daily basis we had talked about this. I would ask her: well if I buy a property and put in your name and then you go away with another man, what do I do? She said I won’t leave you. You are treating me so well. You help me like God when I was in despair. Why would I leave you. I would not leave.”

67. To my mind that does not establish a consensus that the share in the property was conditional.  It is no more than a request for reassurance that the Defendant did not intend to leave the 1^st Plaintiff. I am not persuaded that there was any common understanding of the sort the 1^st Plaintiff alleges and I am not persuaded that the gift of the half interest in Marina Cove was subject to a condition.

68. For completeness I note that the Defendant submits that any such condition in relation to land must be in writing and moreover must not be illegal or otherwise contrary to public policy.  It is submitted that a condition which operates in restraint of marriage would be void as being contrary to public policy.  In the circumstances I do not find it necessary to consider either submission.

Royal Peninsula rent and profits

69. The Plaintiff submits that should I find in favour of the 1^st Plaintiff in terms of beneficial ownership but find that the Plaintiff had an intention to give rental income or potential profit to the Defendant then I should also find that each item of monthly income or potential profit should be taken as a separate gift.  Moreover, it is submitted, I should hold that such gifts of potential profits not yet realised have been revoked by the writ, and that intended gifts of profits yet to be realised are “mere promises” which are incomplete.  As such the Plaintiff, as a donor, should not be obliged to perfect those gifts.

70. This appears to me to be something of an afterthought on the part of the 1^st Plaintiff, which applies in light of my findings above only to the Royal Peninsula.  I have accepted the undisputed evidence that this property was purchased with a view to resale for profit.  The question appears to turn on whether the gift of the share of the profit to be made on resale of that property is to be considered as an incomplete gift.  The point was barely argued at the hearing and while I accept the principle that courts will not step in and perfect an imperfect gift, in my view the 1^st Plaintiff has done all that was necessary on his part to complete this gift by placing the property in the name of the Defendant. Accordingly the Defendant is entitled to a share of the profit, if any, on resale of the property.

Disposition

71. In light of my findings and holdings above it appears to me that the 1^st Plaintiff is entitled to the order which he seeks for account and inquiry as to the net sale proceeds obtained by the Defendant from the sale of Metro Harbour View Property, and for an order for payment upon such account and inquiry.

72. The 1^st Plaintiff is also entitled to a declaration that the Defendant holds her legal title in Royal Peninsula Property on trust for the 1^st Plaintiff, from which it follows that there is also an entitlement to an order directing the Defendant to assign or vest her legal title in Royal Peninsula Property to or in the 1^st Plaintiff, and, so far as necessary, to an order directing the Defendant to execute all necessary instruments for that purpose.  Any such order must however recognise the Defendant’s entitlement to a share in any profits arising on sale of this property.

73. In the event that the parties are unable to agree either as to the appropriate provisions for costs arising from the above, or the appropriate forms of orders for the above, directions will be given for submissions to be made.