HO KWOK WING v. CHAN MEI MUI

CACV 243/2018

[2020] HKCA 522

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 243 OF 2018

(ON APPEAL FROM HCA NO. 2178 OF 2014)

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J U D G M E N T

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Hon Kwan VP :

1.  I agree with the judgment of Cheung JA.

Hon Cheung JA :

I.       Introduction

2.  The appeal was scheduled to be heard on 19 February 2020 which was during the general adjournment period (‘GAP’) arising from the COVID‑19 pandemic.  As a result the case was adjourned to be refixed for hearing. However due to the further extension of the GAP the Court directed and the parties agreed to have the appeal determined on paper which I will now do.

II.      Background

3.1     The plaintiff is the second son of the defendant.  The plaintiff and the defendant acquired a residential property (together with a car parking space) at Rose Street, Yau Yat Tsuen, Kowloon (‘The Primrose’).

3.2     The plaintiff claimed that he is one of the co-owners of The Primrose.  On the other hand, the defendant contended that she is the sole beneficial owner.  The trial was heard by Chung J.  He dismissed the plaintiff’s claim and found for the defendant.  The plaintiff now appeals.

3.3     The acquisition of The Primrose was not the only occasion when the parties acquired properties.  In order to fully understand the background relating to the acquisition of The Primrose, it is necessary to go into the background of the family and the property transactions conducted by the parties.

3.4     After the marriage of the defendant and her late husband (i.e. the plaintiff’s father), the latter set up a cloth trading business in 1978 (‘the family business’).  He and the defendant jointly held all the shares of the family business.  The defendant has four sons.  Both the plaintiff and some of his brothers worked at the family business.  The plaintiff started to work there when he was 16 years old but left and started his own business in January 2010.    

3.5     The family home was initially in Fa Po Street, Yau Yat Tsuen (‘the 1^st family home’).  The defendant was the registered owner of the 1^st family home.

3.6     The late husband passed away in 1997 leaving behind relatively huge debts.  Probably as part repayment of the said debts, the 1^st family home was transferred by the defendant to a creditor in 1997.

3.7     The defendant then acquired in her name another residential property at Fa Po Villa, Fa Po Street (‘the Fa Po Villa’) which was used as the family home. 

3.8     In 2000, a residential unit at Elite Villa, Tat Chee Avenue, Yau Yat Tsuen (‘the Elite Villa’) was acquired in the plaintiff’s name for investment purpose.  The defendant used her own savings to pay for the initial installment payment of the Elite Villa. The balance of the purchase price was financed by a mortgage (‘the Elite Villa Mortgage’) with the Kincheng Bank.  At that time, since the defendant had already taken out a mortgage for the Fa Po Villa with the Kincheng Bank, she asked the plaintiff to hold the Elite Villa on paper for her as she considered that it would be easier to obtain a mortgage in his name based on his monthly income.  She decided to ask the plaintiff instead of her other sons because at that time he was the one who spent more time at home while her two other sons were either busily dating or spending a lot of time doing business in China. 

3.9     In 2004, a residential unit at Grandeur Villa, Tat Chee Avenue, Yau Yat Tsuen (‘the Grandeur Villa’) was acquired in the names of the plaintiff and the defendant as joint tenants. The defendant used her own savings and personal borrowings to pay for the initial installment payment of the Grandeur Villa.  The balance of the purchase price was financed by a mortgage (‘the Grandeur Villa Mortgage’) with the Bank of China (Hong Kong) Limited (‘the BoC’).  

3.10     The Grandeur Villa was almost twice the value of the Elite Villa.  As the defendant still had the Fa Po Villa Mortgage with the Kincheng Bank (which merged with BoC after 2001), the BoC required another person with sufficient income proof to be a co‑mortgagor before it would grant the Grandeur Villa Mortgage.  The defendant therefore needed one of her sons to assist her in order to satisfy the requirement of the bank.  Two of her sons had in 2003 just bought their own properties and obtained mortgages from the BoC in their own names.  Another son was still young and had not begun working at the family company.  So the defendant asked the plaintiff to hold the Grandeur Villa together with her as joint tenants and to take out the Grandeur Villa Mortgage together.

3.11     In August 2005, the defendant sold the Fa Po Villa at HK$4,080,000.00 and purchased The Primrose at HK$12,630,000.00.  The defendant intended to replace the Fa Po Villa with The Primrose as their family home.  The defendant used the proceeds of the sale of the Fa Po Villa to pay for the initial installment payments of The Primrose. The balance of the purchase price was financed by a mortgage (‘The Primrose Mortgage’) with the BoC.

3.12     At that time, the defendant was suffering from serious illness (verrucous squamous cell carcinoma of the left buccal mucosa and had excision done in 2002) which recurred in 2005 and 2006 resulting in further resections done on her.   When the defendant applied for The Primrose Mortgage, the manager of the BoC advised her to find a trusted person to hold The Primrose together as joint tenants in view of her old age and poor health condition.  She followed the bank manager’s advice and asked the plaintiff to be her joint tenant.

3.13     Like the Fa Po Villa, The Primrose was let to the family business but was used as the family home occupied by the defendant, the plaintiff and the other sons.  The plaintiff, however, moved out of The Primrose permanently on 27 April 2010.  The defendant and her two younger sons are still living there.

3.14     Like the case of the Fa Po Villa, the Elite Villa and the Grandeur Villa, the defendant was alone responsible for the mortgage repayments and all other expenses and outgoings of The Primrose which were not fully covered by the rental payments received. 

3.15     In 2007, the defendant decided to sell the Grandeur Villa for HK$8,880,000.00.  The proceeds of sale were first used to discharge the Grandeur Villa Mortgage and the balance, together with some personal savings of the defendant, was used to pay off HK$5,000,000.00 which was part of the outstanding amount on The Primrose Mortgage.  Thereafter, the defendant continued to pay the mortgage repayments until The Primrose Mortgage was fully paid off on 2 April 2013. 

3.16     In 2009, the plaintiff was gambling heavily and incurred quite some debts.  He charged The Primrose to obtain a loan from Moral Luck without the defendant’s knowledge (‘the Second Legal Charge’).  

3.17     Upon discovering the Second Legal Charge, the defendant was very unhappy and expressed her disapproval to the plaintiff.  However, she did not take any legal action against him because she was not in good health at the time.  More importantly, the plaintiff is her son and she did not think of suing him in court.  But this led to a deterioration in their relationship.  The defendant’s biggest concern then was to protect the family home.  Her youngest son, Ho Kwok Ching, told her to issue a notice of severance (‘Severance Notice’) in order to protect at least half of The Primrose.  Ho Kwok Ching told the defendant that if she was to pass away, there is a possibility that The Primrose would become solely owned by the plaintiff and then potentially by Moral Luck if the plaintiff defaulted on the loan.  The defendant took his advice and issued a Severance Notice to ensure that at least half of The Primrose would be protected in case the plaintiff failed to repay the loan and Moral Luck sought to enforce the charge against The Primrose.

3.18     In June 2010, the defendant was informed by Ho Kwok Ching that the plaintiff had again without her knowledge and consent secured another loan in his name with another bank, ‘American Wilson’, by charging his interest in The Primrose (‘the Third Legal Charge’).

3.19     The defendant was very unhappy and again expressed her disapproval to the plaintiff.  But there was nothing else that she could do (short of taking legal action against the plaintiff) as she had already issued the Severance Notice, which she thought at the time would at least protect half of her interest in The Primrose.

III.      The plaintiff’s case

4.1     The plaintiff’s pleaded case is a simple one.  The Judge summarised his claim as follows :

‘12. The principal relief sought by the plaintiff is that he be declared one of the tenants-in-common of the Primrose. Related (or ancillary) relief includes an order for the sale of the Primrose and the distribution of the net sale proceeds.

13.       The claim set out in the statement of claim can be summarized as follows:

(1)   the Primrose is registered in the parties’ names as joint tenants (para 4 thereof);

(2)   the plaintiff executed a mortgage agreement in 2009 relating to the Primrose to secure a loan granted to him.  The joint tenancy has thereby been severed (para 6 and 7 thereof);

(3)   further, by the severance notice, the defendant formally severed the joint tenancy.  Since then, the parties co-owned the residential unit of the Primrose as tenants-in-common (para 9 thereof);’

4.2     The plaintiff in his Reply claimed that he has five‑twelves interests in the shares of the family business.  He claimed that the defendant’s financial contribution towards the acquisition of the Fa Po Villa, the Elite Villa, the Grandeur Villa and the repayment of their mortgages were sourced partly or wholly from money belonging to the family company.

4.3     The plaintiff pleaded that in respect of the Grandeur Villa :

‘ 2(e)(2)     prior to the completion of the Grandeur Villa Premises, the Defendant had expressly invited the Plaintiff to view the Grandeur Villa Premises and had expressly indicated to the Plaintiff that to the effect that it was purchased with the intention that it would be for the Plaintiff’s benefit to use as his own familial home in future and that the Grandeur Villa Premises would be the sole property of the Plaintiff upon the Defendant’s death;

2(e)(3)     pursuant to this intention/common understanding, the Grandeur Villa Premises was held by the Plaintiff and the Defendant as joint tenants;’

4.4     In respect of The Primrose, the plaintiff pleaded that :

‘ 2(h) save that no admission is made as to the alleged medical conditions of the Defendant and the alleged advice of the manager of the BoC, paragraph 4(14) of the Amended Defence is denied. There was never a common understanding between the Plaintiff and the Defendant that the Defendant was to be the sole beneficial owner of the Properties, and further, no such intention on the Defendant’s part (which is denied) was ever communicated to the Plaintiff. On the contrary, at all material times, the common intention and/or understanding between the Plaintiff and the Defendant was that they would hold the Properties as joint tenants and the Defendant expressly indicated that the Properties were purchased for the Plaintiff and as his own home after his marriage; and if and when the Defendant eventually passes away, the Plaintiff would inherit the Properties and become the sole beneficial owner therein. Induced by and in reliance upon the said common intention and/or understanding as conveyed by the said express indication of the Defendant, the Plaintiff had conducted himself similarly in the manner as pleaded in paragraph 2(e)(7) above in respect of the Properties; and the Defendant all along had knowledge of, and consented to, this arrangement;

...

2(k)   for the foregoing reasons, paragraph 4(17) of the Amended Defence is denied.  In particular, following the purchase of the Properties, the Defendant had, time and again, represented to the Plaintiff that the Properties would be wholly owned by him in future.  In the circumstances, from the time of its purchase up until the severance of the joint tenancy as pleaded at paragraphs 6 and 7 of the Statement of Claim, or alternatively paragraph 9 of the Statement of Claim, the Plaintiff and the Defendant were the joint beneficial owners of the Property as joint tenants.  Following the severance of the joint tenancy, the Plaintiff and the Defendant became beneficial owners of the Property in equal shares.

2(l)    for the foregoing reasons in paragraphs 2(b)(5), 2(d), 2(e)(1), 2(e)(7), 2(f), 2(h) and 2(j) above, paragraph 4(18) is denied.  The Plaintiff had made (or shall be treated as having made) financial contributions towards the acquisition of the Properties and repayment of the Primrose Mortgage by virtue of his interest in the Company money.

2(m)   further, the Defendant therefore is estopped, by convention, conduct, representations, contract or otherwise, from denying that the Plaintiff had been a beneficial joint tenant as at the date of the Second Legal Charge on 16 December 2009, or alternatively, as at the date of the Notice of Severance on 13 March 2010; and that, after 16 December 2009, or alternatively after 13 March 2010, the Plaintiff has been a beneficial tenant‑in‑common of equal share of the Properties.’

4.5     At the trial below the plaintiff put forward a case that the Severance Notice constituted a disposition of the defendant’s equitable interest in the plaintiff’s favour.

IV.      The defendant’s case

5.1     The defendant stated that she had never told the plaintiff that she was to give any share of the beneficial interest of the Elite Villa, the Grandeur Villa and The Primrose to him.  She only asked the plaintiff to hold these properties either in his sole name or as joint tenants with her for the reasons she had explained.  In the case of the Elite Villa and the Grandeur Villa, they were intended to be her own personal investments.  In the case of The Primrose, it was purchased as her family home and she had no intention to single out any of her sons to benefit.  She has never intended that the plaintiff alone would inherit The Primrose and become its sole beneficial owner to the exclusion of his brothers. 

5.2     In gist, the defendant’s claim that she is the sole beneficial owner and the plaintiff has only been holding his interest on trust for her is based on, first, the parties’ understanding that The Primrose (at the time of acquisition) was the ‘family home’ of the defendant when it was acquired and, second, the purchase price (and other expenses) was paid for by the defendant only.

5.3     The defendant’s pleaded case on her interest in The Primrose is as follows :

‘ 4(19) In the premises, it is to be inferred that there was a common intention between the Plaintiff and the Defendant that they were to hold the legal title of the Properties as joint tenants on trust for the Defendant solely. The Defendant detrimentally relied upon the common intention by naming the Plaintiff as one of the joint tenants and in acting upon the common intention by the matters pleaded in sub‑paragraphs (16) and (18) above, including the making of mortgage repayments and other outgoings and expenses by herself without requiring the Plaintiff to make any financial contributions at all.’ (emphasis added)

5.4     The defendant denied that the plaintiff acquired any interest from the Severance Notice and she stated that the plaintiff’s claim on it is based on an unpleaded case.

V.      The Judge’s decision

6.  The plaintiff and the defendant gave evidence.  The defendant also called other witnesses including her other three sons.  The Judge found the defence witnesses to be truthful and reliable but did not consider the plaintiff’s testimony to be credible or reliable.  The Judge found that The Primrose was acquired with the intention (shared by both parties) that the defendant is to be the sole beneficial owner and The Primrose was paid for by the defendant from her own funds.  The Judge accepted the defendant’s contention that the plaintiff was attempting to run an unpleaded case based on the Severance Notice.  The Judge made the following findings on the Severance Notice : 

‘ 32 a) The Severance Notice was prepared and registered without the plaintiff’s prior knowledge (a fortiori the plaintiff’s consent);

b)     The Severance Notice was prepared and registered by reason of what in effect was an erroneous suggestion of the defendant’s son, Ho Kwok Ching;

c)     there is no factual basis for concluding that the Severance Notice:

(1)     was prepared with the plaintiff’s or the defendant’s intention to dispose of any interest;

(2)     was prepared as a result of the defendant’s (or the plaintiff’s) intention to create a trust in the plaintiff’s favour;

(3)     should constitute an informal declaration of trust by the defendant in the plaintiff’s favour (there being no such intention on the parties’ part to do so);

d)     The Primrose was acquired with the intention (shared by both parties) that the defendant is to be the sole beneficial owner;

e)     The Primrose was paid for by the defendant from her own funds;

f)     There is no factual basis to find any estoppel based on the Severance Notice: the plaintiff was unaware of the same until afterwards; there is no evidence of the plaintiff having relied upon the Severance Notice before this action; there is no evidence of any prejudice having been suffered by the plaintiff as a result of the registration of the severance notice.’

VI.      Grounds of Appeal

7.    Ms Eu SC (together with Mr Lee) for the plaintiff advanced the following grounds of appeal :

1)     The Judge did not deal with the question as to how a ‘trust’ arose; or any other elements of a common intention constructive trust apart from finding there was a ‘common intention’.

2)     The ‘common intention’ is not based on primary facts as to what was agreed but is based on inferences from pre and post‑acquisition conduct.

3)     The Judge relied on the defendant’s subjective intention but did not explain how such subjective intention became ‘common’ or ‘shared’.

4)     The Judge found the Severance Notice to be null and void even though it was not vitiated by duress, mistake or fraud.

VII.      My view

Common Intention Constructive Trust

8.1     The defendant’s case is based on common intention constructive trust.  The first three grounds are related to this issue.  I will address them together because some of the arguments overlapped.

1)      Principles

8.2     Ms Eu outlined the following principles in this area of the law.  The starting point or the presumption is that equity follows the law.  Where there is joint legal ownership, there is joint beneficial ownership.  The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership.  This replaces the presumption of resulting trust or advancement.  Ms Eu argued that the Judge failed to apply these principles and that he had not even referred to any of the authorities for these principles. 

8.3     In my view the fact that the Judge had not referred to these principles does not mean that he was not aware of them in the assessment of the parties’ case. These principles are well established and there was no dispute by the parties of these principles which would require an exposition by the Judge.  In fact there were discussions on these principles in the defendant’s written submissions in the court below. 

2)      Basis of the Judge’s decision

8.4     Ms Eu contended that the Judge did not analyse the case from the starting point that where there is joint legal ownership, there is joint beneficial ownership. The onus is on the person seeking to show the beneficial ownership is different from the legal ownership. 

8.5     In my view this is precisely what the Judge had done.  The Judge found that The Primrose was acquired with the common intention that the defendant was the sole beneficial owner.  This clearly displaced the starting point of the enquiry. Although the Judge did not refer to the issue of onus, looking at the judgment as a whole, he clearly had not wrongly imposed any onus on the plaintiff to show that he has a beneficial interest in The Primrose.  The Judge had clearly accepted that the plaintiff had already done so by reason of the fact that he is one of the registered co-owners of The Primrose.  The Judge’s analysis of the evidence clearly showed that he accepted that the onus was on the defendant and she had discharged it and the common intention was not of joint beneficial ownership but a beneficial ownership belonging to her only.  

8.6    Further the Judge gave five reasons for rejecting the plaintiff’s evidence and accepting the defendant’s evidence.  Apart from the first reason which deals with the motive of the plaintiff in instituting this action, the remaining four reasons are relevant to the common intention of the parties in the acquisition of The Primrose.  These reasons amply support the defendant’s case that she is the sole beneficial owner.

(1)     The defendant’s conduct both before and after the acquisition of The Primrose was inconsistent with her having an intention to ‘share’ it with the plaintiff.  For the pre‑acquisition conduct, first, the defendant has a history of using the plaintiff’s name in acquiring properties namely, the Elite Villa and the Grandeur Villa so as to facilitate the obtaining of a mortgage; and, second, the defendant has financially assisted her other sons to purchase their own flats by providing the initial installment of about HK$700,000 and requiring each of them to take out a mortgage in their own names and be solely responsible for the repayment of the mortgage installments.  As for the post-acquisition conduct, the defendant had looked for suitable accommodation for the plaintiff more than once, which she would not have done if she had already gifted The Primrose to the plaintiff as alleged.

(2)     The plaintiff’s evidence was internally inconsistent and ‘tailored’ to suit his own interests.  In particular he wavered back and forth on whether it was his case that he had an interest in the Elite Villa.  It was inherently improbable on the plaintiff’s case that the defendant promised to give him both the Grandeur Villa and The Primrose.  The plaintiff contradicted himself in cross‑examination on whether he had an interest in the Elite Villa and changed his testimony to assert that he had interests in both the Elite Villa and the Fa Po Villa because he had contributed to the profits of the trading business.  The plaintiff’s oral testimony that the Grandeur Villa was purchased ‘for his marriage, for earning rent or for whatever’ contradicted his witness statement where he alleged an express indication by the defendant that it was purchased for him as his familial home.  Apart from admittedly concealing his marital status from the defendant, the plaintiff falsely stated in his witness statement that he was not married at the time when The Primrose was acquired, and had no satisfactory explanation for the misstatement.  He was constrained to admit that he understood ‘breaking up’ was not the same as ‘divorcing’, and this contrived explanation put forward by him in his supplemental witness statement was completely incredible.  The plaintiff changed his version of when the defendant allegedly promised to give him The Primrose from at the time of purchase (in his witness statement) to after The Primrose was purchased and repeated afterwards from time to time (during cross-examination).

(3)     It was inherently improbable that the defendant would have intended to ‘share’ The Primrose with the plaintiff in view of his (undisputed) gambling addiction, and more probable that it was intended to be a ‘family home’ in replacement of the Fa Po Villa.

(4)     There were objective circumstances to explain why The Primrose was also registered in the plaintiff’s name.  In particular, it was upon the advice of the bank manager who was of the view that the defendant was getting old and her health was poor and also to facilitate the obtaining of a mortgage to finance the purchase of The Primrose, the repayments of which were all made by the defendant alone.

3)      Agreement versus Inference

8.7     The finding that the common intention of the parties was that the defendant was to be the sole owner of The Primrose is a finding of fact.  In order to upset this finding the plaintiff must show that this finding is plainly wrong.

8.8     Ms Eu submitted that the Judge has not specified any particular word or conduct of the parties and how such word or conduct gave rise to a common intention.  At most it can be said that the Judge believed the defendant when she claimed she never told the plaintiff that she was making a gift of half of The Primrose to him.  Or that she thought he understood.  But silence is insufficient to give rise to a common intention constructive trust.  There must be some manifestation of word or conduct that has to be reasonably understood by the other party.  Without that, unilateral thoughts cannot turn into common intention.  And this cannot give rise to any reliance or detriment on the part of the defendant, nor any unconscionability of the plaintiff to rely on the legal position.

8.9     In my view it is clear from the defendant’s pleaded case that she was not relying on express agreement but rather on inference to be drawn from the surrounding circumstances to show that she is to be the sole beneficial owner of The Primrose.  To establish common intention constructive trust by inference from surrounding circumstances is clearly permissible.  As Lam VP stated in Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 :

‘ 1.6 Since Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776, as far as Hong Kong is concerned, the modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context, see Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985. In a domestic context, particularly in relation to a matrimonial home, the court is not constrained in that exercise by pure direct monetary contributions to the purchase price, see the judgment of Baroness Hale at [69] in Stack v Dowden. In a Chinese setting, especially for the older generations, where explicit discussions on property rights within the family are not that common, the court has to pay more regard to circumstantial matters.’

4)      Test to challenge findings based on inference

8.10     Ms Eu then argued that if the finding of the common intention is based on inference then this appeal does not involve overturning primary fact findings. She referred to Singh Harjit v Determination Business Ltd (unrep., CACV 68/2015) and submitted that where inference is drawn entirely or almost entirely from undisputed primary facts, the appeal court is in just as good as position as the trial judge to make the decision.  In Pang Ketian Sally v Tam Yuk Hung Annie (unrep., CACV 147/2013, Cheung CJHC (as he then was)) stated:

‘ 31. This “plainly wrong” test, in other words, is applicable unless the finding of fact is based purely on inferences, or otherwise has nothing to do with the witnesses’ demeanour or the trial judge’s having received the evidence at first hand.’

8.11     The findings in the present case is not based solely on inference.  As Cheung CJHC explained :

‘ 28. ...... In fact, unless the contrary is expressly said, one proceeds on the basis that demeanour or credibility did play some part in the finding of fact made by a trial judge, irrespective of whether the judge made any observation with regard to credibility or not Ting Kwok Keung, para 39.’

8.12     Likewise, in the present case the drawing of inference from surrounding circumstances does not preclude in the first place an assessment of the credibility of the parties.  The findings of fact by the Judge in this case involves both an assessment of credibility and drawing of inference from the primary facts.  Therefore the plainly wrong test in Ting Kwok Keung applies.

5)      Consideration of the evidence

8.13     Mr Wong SC (together with Mr Phang) for the defendant submitted that the objective circumstances relied upon by the defendant include :

1)       the purpose for which The Primrose was acquired, i.e. as the family’s home to replace the Fa Po Villa, and not as the plaintiff’s own familial home;

2)       the reason why The Primrose was registered in joint names, i.e. to facilitate the obtaining of a mortgage and upon the advice of the bank manager in view of the defendant’s age and health, and not as a gift to the plaintiff; and

3)       how the purchase of The Primrose was financed, i.e. by the defendant from her own funds, without any financial contribution whatsoever from the plaintiff (who attempted to argue that he contributed through helping the trading company make profits).

8.14     Accordingly, he submitted that the common intention found by the trial judge was evidently inferred from disputed primary facts which he resolved in the defendant’s favour.  It was not based ‘purely on inference’ drawn from undisputed primary facts.  The plaintiff must therefore show that the findings by the trial judge were ‘plainly wrong’.

8.15     Ms Eu submitted that circumstances 2) and 3) were never ‘common’.  They were never communicated to the plaintiff at the time.  As for circumstance 1), it is plainly a misdirection to find that ‘it is unlikely the defendant would ‘share’ The Primrose with the plaintiff’ when it was intended to be a family home. There is no reason to assume and it is not substantiated by any evidence that a single parent cannot intend to beneficially co‑own a ‘family home’ with one of her children.  In short, none of the fact or circumstance as found give rise to a common intention constructive trust. 

8.16     I disagree.  The argument on circumstance 1) goes only to weight and the arguments on circumstances 2) and 3) lose their force once it is recognised that the common intention in this case is not established by agreement or discussion but rather by inference from the surrounding circumstances of the case. 

8.17     Ms Eu then argued that since the defendant’s case is that the intention was formed at the time of acquisition and never changed, the material time is to consider the parties’ intention at that time and the following contemporaneous conduct being a more reliable guide :

1)       The unchallenged evidence of the fourth son was that after the death of the plaintiff’s father, the family had to repay a substantial amount of his debts.  The plaintiff, who was then 21, played an important role in dealing with the father’s creditors and assisting the defendant in managing his father’s estate; and the plaintiff was bolder and more courageous than the eldest son.

2)       The plaintiff was then in a very good relationship with the defendant who trusted him very much.

3)       The defendant never alleged that she said or did anything to suggest any trust or that the plaintiff would be half owner in name only.  There was no word or conduct to displace the starting point that equity followed the law.  This is fatal to a claim for common intention constructive trust.

4)       The first time the defendant raised ‘trust’ was in her letter dated 5 July 2014 made in response to the plaintiff’s assertion that he is a co‑owner of The Primrose.  It made no reference to the Severance Notice.  This is a classic example of mind changing in the light of subsequent events.

8.18     Mr Wong submitted that these factors had already been advanced and considered by the Judge.  As stated by this Court in China Gold Finance Limited v CIL Holdings Limited and others, CACV 11/2015 the mere assertion that the finding of the Judge is against the weight of the evidence or that the Judge should have reached another conclusion because of points advanced in the closing submissions below are not palpable errors which warrant intervention from this Court.

8.19     Ms Eu also argued that the Judge misdirected himself as to the effect of certain circumstantial evidence which he held to be supportive of the defendant’s case when in fact such evidence is at most neutral or equivocal, or even against the defendant’s case, namely her pre-acquisition conduct of using the plaintiff’s name to hold or partly hold investment properties; her financial assistance of other children; her post‑acquisition conduct that she ‘looked around for a suitable accommodation for the plaintiff for more than once’; her alleged fear of the plaintiff’s gambling problems apparently at the time of acquisition and her intention that The Primrose was to be a ‘family home’.

8.20     Again the arguments are all related to the weight to be attached by the Judge to the evidence.   The question of weight is a matter for the trial judge.  The Judge having considered the whole of the circumstances of the case was entitled to come to the findings that the common intention of the parties was that the defendant is to be the sole owner of The Primrose.  In my view the plaintiff has failed to show that the findings on common intention constructive trust is plainly wrong.

6)       Severance Notice

8.21     Ms Eu first argued that the Judge failed to find that the Severance Notice confirmed the starting point and declared to the rest of the world including the plaintiff, that the plaintiff does and did have half of the beneficial interest.  Such voluntary and unilateral conduct was inconsistent with the defendant’s ‘trust case’ that she was and is at all times entitled to the entirely of the beneficial interest.

8.22     It is a question of weight as to how one should consider the Severance Notice.  This is again within the province of a trial judge.  In this case the Judge has considered all the circumstances relating to the acquisition of The Primrose and he has also considered the events leading to the service of the Severance Notice.  He accepted the evidence of the defendant and attached no importance to the Severance Notice.  As Mr Wong has submitted, the Judge found that the Severance Notice was prepared and registered by reason of what in effect was an erroneous suggestion of Ho Kwok Ching and there was no evidential basis to assert that it was prepared with the benefit of legal advice.  Based on these findings of primary fact against which there is no appeal, the Severance Notice could not have been a confirmation by the defendant that the plaintiff and the defendant were holding The Primrose as beneficial joint tenants when the Judge also made express findings that the defendant is the sole beneficial owner.  The Judge cannot be faulted.   

8.23     Ms Eu then argued that it is well established that, except for a claim of rectification, the legal implication and the intention of a severance notice are determined by an objective construction of the terms of the notice itself, and the defendant’s express declarations of subjective intent as to the meaning or purpose of the Severance Notice are inadmissible in aid of construction, see Mannai Investment v Eagle Star Life Assurance [1997] AC 749 at 779F‑780G. The Severance Notice itself provides sufficient factual basis for the Judge to make the finding that the plaintiff has been a beneficial tenant‑in‑common since the date of that notice. 

8.24     In my view the principle on construction is well established but the issue at this stage is not on the construction of the nature of the document but rather on how the Severance Notice came into the being in the first place. 

8.25     Ms Eu argued that in the absence of any plea of mistake or rectification on the part of the defendant, neither the defendant’s evidence nor the Judge’s finding provides any viable basis for setting aside the Severance Notice.  Reference is made to Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 and Ms Eu submitted that the Judge ought to have asked, but had failed to ask :

‘ [I]s that a sufficient basis, without the plaintiffs alleging anything more, for holding that the documents signed were therefore invalid’

8.26     I have already stated that the Severance Notice did not have the legal effect of constituting a ‘confirmation’ that she and the plaintiff were beneficial joint tenants of The Primrose.  As the Judge had found the defendant is the sole beneficial owner of The Primrose, he was correct to hold that that the Severance Notice, ‘insofar as it purported to sever any beneficial joint tenancy of The Primrose’, was null and void.  The Judge’s decision was on the premises that the plaintiff never had any beneficial interest in The Primrose.  His decision must be understood in that context. 

8.27     Ms Eu then argued that irrespective of whether there was a ‘common intention’ when The Primrose was purchased in 2005, the Judge ought to have found that the plaintiff shall from the date of the Severance Notice become a beneficial tenant‑in‑common.  There is no basis for setting aside or declaring that the Severance Notice to be null and void. 

8.28     The argument of Ms Eu is that the Severance Notice can have the dual legal effect of both severing a joint tenancy, whether legal or beneficial and further transferring the beneficial interest to a tenant‑in‑common as in Singla v Brown [2008] Ch 357.  In Singla, a property was initially held by Mrs M‑B and her partner Mr B as joint tenants.  Later Mrs M‑B signed and gave Mr B a severance notice which stated that ‘the property would thereafter be held by them as tenants‑in‑common in unequal shares, 99% for her and 1% for him’.  Despite the lack of words such as ‘transfer’ in such notice, the judge held that the notice shall take effect as it stands, transferring 49% of the beneficial interest held by Mr B to herself.

8.29     This is part of the argument raised by the plaintiff in the court below which the Judge described as being based on an unpleaded case.  Ms Eu submitted that this argument is not based on an unpleaded case.  She submitted that the Judge failed to have regard to the plaintiff’s pleading of estoppel and his alternative case that he had become a beneficial tenant‑in‑common since the date of the Severance Notice.

8.30     I disagree with the submission of Ms Eu in respect of the pleading point. The common ground of the parties was that the relevant time for ascertaining the intention of the parties is at the time of the acquisition of The Primrose. The plaintiff’s case as pleaded is that he has been a beneficial joint owner of Primrose since it was acquired by reason of the fact that he was a registered co‑owner and the joint tenancy was covered by the Severance Notice.  There was never any pleaded case that in any event he acquired a beneficial interest after the Severance Notice was served.  The Judge was clearly right when he held that this was an unpleaded case.  Further, Singla does not assist the plaintiff because Mrs M‑B and Mr B were already the beneficial owners of the property and the transfer of interest in that case must be considered in that context.   

8.31     The Severance Notice in this case is in these terms :

‘ NOTICE OF SEVERANCE OF JOINT TENANCY

To : HO KWOK WING（何國榮）

(Address)

Pursuant to Section 8 of the Conveyancing and Property Ordinance Cap. 219, I hereby give you notice that the joint tenancy of the Property described as set out in the Schedule hereto be and is hereby severed both to law and in equity to the effect that the said Property shall henceforth be held by us as Tenant‑in‑Common in equal shares both in law and in equity.’

8.32     The wordings of the Severance Notice are clear.  It is simply a notice to sever the joint tenancy into tenancy‑in‑common between the plaintiff and the defendant.  But as there was no joint tenancy in the first place, the Severance Notice could not have the effect of severing any beneficial joint tenancy or transfer any interest to the plaintiff.

VIII.   Conclusion

9.  In my view, there is no merits in the appeal and I would dismiss the appeal.

IX.     Costs

10.  I would make an order nisi that the defendant is to have the costs of the appeal with certificate for two counsel.    

Hon Au JA :

11.  I agree.