THE JOINT AND SEVERAL TRUSTEES OF THE PROPERTY OF YEUNG WING SING v. YEUNG WING SING (A BANKRUPT) AND ANOTHER

HCB 1174/2019

[2021] HKCFI 2018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

BANKRUPTCY PROCEEDINGS NO. 1174 OF 2019

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J U D G M E N T

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A.  INTRODUCTION

1.  The Applicants (“the Trustees”), who are the trustees in bankruptcy of the 1^st Respondent Yeung Wing Sing, seek, pursuant to s.49 Bankruptcy Ordinance, Cap.6 (“the Ordinance”), (1)  a declaration that the transfer (“Transfer”)  by the 1^st Respondent of 50% of his interest in Flat H, 42^nd Floor, Tower 5, The Belcher’s, No.89 Pok Fu Lam Road, Pok Fu Lam, Hong Kong (“Flat 42H”)  to the 2^nd Respondent was a transaction made at an undervalue, and (2)  an order that the transaction be set aside.

2.  It is not in dispute that the 2^nd Respondent (“Madam Kwok”)  gave no consideration for the Transfer. Instead, the Respondents say that Madam Kwok was all along a 50% beneficial co-owner of Flat 42H pursuant to a common intention with the 1^st Respondent (“Mr Yeung”), and that the Transfer simply gave effect to that common intention.

3.  The Respondents say that in the event that their case of common intention constructive trust is rejected, the court should nevertheless hold that Madam Kwok has a 7.15%, alternatively 5%, interest in Flat 42H pursuant to a resulting trust, as she paid for the initial deposit for the acquisition of Flat 42H[1].

B.  THE FACTUAL BACKGROUND

4.  Unless otherwise indicated, the following facts are not disputed.

5.  Mr Yeung and Madam Kwok were married in 1990.  Madam Kwok says that they lived at Flat 1, 10/F, Yip Cheung Building, Hill Road, since that time, apart from a period in the 1990s which was spent in Singapore.

6.  Mr Yeung was a director and shareholder (either directly or indirectly)  of Coastal Holdings Limited (“CHL”)  from 1996, up to the time when CHL entered into creditors’ voluntary liquidation on 29 January 2019. He was also a director of CHL’s wholly owned subsidiary Coastal Oil (HK)  Limited (“COHK”), which was incorporated in Hong Kong in November 2004, and CHL’s wholly-owned indirect subsidiary Coastal Oil Singapore Pte Limited (“COSG”)  which was incorporated in Singapore in October 2004. These companies (“the Coastal Oil Group”)  carried on a fuel trading business based in Hong Kong and Singapore.

7.  Mr Yeung executed personal guarantees to secure the indebtedness of companies in the Coastal Oil Group.  

8.  Mr Yeung also had interests and positions in a group of companies affiliated with the Coastal Oil Group that operated a vessel and chartering business based in Singapore and Hong Kong (“the Coastal Corporation Group”).

9.  Madam Kwok was employed as a bunker trader in different entities within the Coastal Oil Group until May 2017.  She was also appointed as the company secretary of CHL between 6 March 1996 and 15 January 1997.

10.  Madam Kwok says that on 1 October 2008, she and Mr Yeung viewed Flat 42H with an estate agent, and decided that it was the “perfect place for us to spend the rest of our lives together”.  They negotiated a purchase price of HK$14,080,000 with the vendor on the same day, and Mr Yeung signed a provisional sale and purchase agreement to buy the property (“the 2008 PSPA”).  Madam Kwok says that it was she who drew a cheque for payment of the initial deposit of HK$704,000, being 5% of the agreed purchase price.

11.  Flat 42H was registered in the sole name of Mr Yeung.  The Respondents say that this was because Mr Yeung’s parents were not happy for the couple to buy the property together, as (1)  they blamed Madam Kwok for encouraging her husband to buy what they thought was an expensive property at a time when the stock market had crashed, and (2) they were unhappy that Madam Kwok had not borne a child to carry on the Yeung family line.  Accordingly, Mr Yeung and Madam Kwok discussed and agreed that Mr Yeung would register Flat 42H in his name alone, and that when the mortgage was paid off, he would immediately register Madam Kwok as a co-owner.

12.  The Respondents say that to alleviate Mr Yeung’s parents’ discontent, they deferred moving into Flat 42H, and instead rented it out. They did not move in until sometime after their tenant terminated the tenancy agreement in June 2015.

13.  In 2018, the mortgage on Flat 42H was repaid.  The Respondents say that Mr Yeung gave instructions for Madam Kwok’s name to be added to the title of Flat 42H.  This was done by way of a sale and purchase of 50% of Mr Yeung’s interest for HK$14,625,000, pursuant to an assignment dated 12 November 2018.  The stated purchase price was not in fact paid.

14.  In late 2018 or early 2019, the Coastal Oil Group collapsed. COSG entered into voluntary liquidation on 13 December 2018.  COSG had defaulted on bank loans in the sum of US$357m.  COHK and CHL entered into creditors’ voluntary liquidation on 29 January 2019.  The statement of affairs of COHK and CHL shows that they were indebted in the sums of US$352m and US$358m respectively to various bank creditors.  Mr Yeung was called upon to honour the personal guarantees which he had signed.

15.  On 1 March 2019, Mr Yeung petitioned for his own bankruptcy, and was adjudged bankrupt by the court on 16 April 2019.  The Trustees were appointed at a creditors’ meeting on 21 May 2019.

C.  TRANSACTIONS AT AN UNDERVALUE – THE STATUTORY PROVISIONS

16.  The relevant parts of sections 49 to 51 of the Ordinance which apply to transactions at an undervalue provide as follows.

“49. Transactions at an undervalue

(1)  Subject to this section and sections 51 and 51A, where a debtor is adjudged bankrupt and he has at a relevant time (defined in section 51)  entered into a transaction with any person at an undervalue, the trustee may apply to the court for an order under this section.

(2)  The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that debtor had not entered into that transaction.

(3)  For the purposes of this section and sections 51 and 51A, a debtor enters into a transaction with a person at an undervalue if —

(a)  he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration;

(b)  …; or

(c)  he enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the debtor.

51. Relevant time under sections 49 and 50

(1)  Subject to subsections (2)  and (3), the time at which a debtor enters into a transaction at an undervalue or gives an unfair preference is a relevant time if the transaction is entered into or the unfair preference given —

(a)  in the case of a transaction at an undervalue, at a time in the period of 5 years ending with the day of the presentation of the bankruptcy petition on which the debtor is adjudged bankrupt;

…

(2)  Where a debtor enters into a transaction at an undervalue or gives an unfair preference at a time mentioned in subsection (1)(a), (b)  or (c)  (not being, in the case of a transaction at an undervalue, a time less than 2 years before the end of the period mentioned in subsection (1)(a)), that time is not a relevant time for the purposes of sections 49 and 50 unless the debtor—

(a)  is insolvent at that time; or

(b)  becomes insolvent in consequence of the transaction or preference,

but the requirements of this subsection are presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by a debtor with a person who is an associate of his (otherwise than by reason only of being his employee).

…”

17.  The Transaction took place within two years of Mr Yeung’s bankruptcy, so that it is not necessary to show that Mr Yeung was insolvent at the time, by virtue of s.51(2).

18.  The Trustees rely on s.49(3)(c)  (and on s.49(3)(a)  as a fallback position if necessary).

19.  In Joint and Several Trustees in Bankruptcy of Ding Yi v Lu Ying [2020] HKCFI 2148, Au Yeung J held that:

“36.  To establish “undervalue”, under section 49(3)(c):

(1)  The money or money’s worth of the consideration that the bankrupt received for entering into the transaction (“incoming value”)  must be “significantly less” than the value in money or money’s worth of the consideration provided by the bankrupt (“outgoing value”). This requires a comparison between the incoming value and outgoing value. Both values must be considered from the debtor’s point of view.

(2)  It is not necessary for the Court to ascribe a precise figure to the outgoing value or the incoming value, as section 49 will apply when the court is satisfied that, whatever the premise values may be, the incoming value is on any view significantly, as opposed to negligibly, less than the outgoing value.

(3)  The Court, if it considers appropriate to do so, could consider the issue of undervalue by taking from a range of possible values those which are most favourable to the party seeking to uphold the transaction.”

20.  In the present case, given that it is accepted that Madam Kwok did not pay any consideration for the Transfer, it can hardly be disputed that unless the Respondents can establish their case that Madam Kwok has all along been a beneficial owner of half of the Flat 42H, the Transfer must have taken place at an undervalue.  The Trustees have adduced evidence that as at March 2019 (a few months after the Transfer), Standard Chartered Bank’s property valuation website valued Flat 42H at HK$30.94m.  Even on the Respondents’ alternative case that Madam Kwok has a 7.15% or 5% interest in Flat 42H by virtue of a resulting trust, the incoming (nil)  value received by Mr Yeung for the Transfer is significantly less than the outgoing value provided to Madam Kwok.  Thus Mr Alan Kwong, counsel for the Respondents, accepted that if the court rejects the Respondents’ case of common intention constructive trust, the Transfer should be set aside (but that a share of any sale proceeds should be given to Madam Kwok).

D.   THE ISSUES

21.  The parties agreed that the issues to be determined are as follows.

(1)  Whether prior to the Transfer, half of the interest in Flat 42H was held by Mr Yeung on common intention constructive trust for Madam Kwok.  In this connection, prior to the Transfer:

(a)  was there any agreement, arrangement or understanding between Mr Yeung and Madam Kwok that Flat 42H was to be shared or co-owned between them equally?

(b)  did Madam Kwok detrimentally rely on such an agreement, arrangement or understanding, so that it would be unconscionable for the Trustees to renege from the same? 

(2)  If the answer to the forgoing is “no”, whether any interest in Flat 42H was held on resulting trust in favour of Madam Kwok, and if yes, in what proportion?

E.  THE CLAIM OF A COMMON INTENTION CONSTRUCTIVE TRUST

22.  The principal dispute between the parties is whether Madam Kwok beneficially owned a half interest in Flat 42H prior to the Transfer, pursuant to a common intention with Mr Yeung.

E1.   The legal principles relating to common intention constructive trust

23.  The relevant principles were recently summarised by Deputy High Court Judge A Stock SC in Leung Hang Lin and Li Kwai Fuk v Lam Mei Yung [2019] HKCFI 2819 at [7] and [8]:

“7. The principles applicable to common intention constructive trusts are set out in various Hong Kong authorities, notably: Luo Xing Juan v Estate of Hui Shui See (2009)  12 HKCFAR 1 per Ribeiro PJ at §§35-38; Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9; Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985; Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327.

8. In summary:

(1)  The starting point is that equity follows the law. There is a presumption that the beneficial interest follows the legal interest. Where the property is registered in a defendant’s name, the plaintiff bears the burden of showing, on the balance of probabilities, that the defendant held the property on trust for him or her such that the beneficial ownership differs to the legal ownership. See: Liu Wai Keung §44; Mo Ying §5.16; Primecredit §17.

(2)  The burden may be discharged by showing that: (i)  there was a common intention held by the plaintiff and the property owner at the time of the purchase (or exceptionally, thereafter)  that the beneficial ownership was to be different to the legal ownership; (ii)  the plaintiff altered his or her position in detrimental reliance upon the common intention; and (iii)  it is unconscionable for the property owner to assert ownership in reliance on the legal title. The constructive trust is constituted by the plaintiff’s detrimental reliance on the common intention and the unconscionability of the legal owner departing therefrom. See: Luo Xing Juan §38; Liu Wai Keung §46.

(3)  The approach to ascertaining common intention is objective. One looks to the intention of each party which was reasonably understood by the other party to be manifested by the first party’s words and conduct. See: Liu Wai Keung §47; Mo Ying §5.16.

(4)  The doctrine is sometimes described as having two limbs. First, where at any time prior to the acquisition (or exceptionally, at a later date), there is an agreement, arrangement or understanding reached between the parties as to how the property is to be held beneficially, based on evidence of express discussions. Second, where there is no evidence to support such a finding but the court relies on the parties’ conduct as a basis from which to infer a common intention. There is some authority that under the second limb, direct contributions to the purchase price by a party who is not a legal owner will readily justify the inference. See: Mo Ying §5.8; Primecredit §§2.3 and 2.4.

(5)  However, the modern approach is to assess the parties’ common intention by a holistic approach having regard to the context and the particular facts. The court is not constrained to consider only pure direct monetary contributions to the purchase price. 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. See: Mo Ying §§5.14 and 5.15; Primecredit §1.6.”

24.  Mr Kwong fairly acknowledges that the burden is on the Respondents to establish the common intention constructive trust for which they contend.

E2.   Legal principles applicable to the assessment of credibility

25.  There is no documentary record of the common intention claimed by the Respondents.  The credibility of the Respondents’ evidence is therefore an important consideration.

26.  In assessing such evidence, I have had regard to the principles summarised in Hui Cheung Fai v Daiwa Development Ltd, unreported, HCA 1734/2009, 8 April 2014 at [77] to [83], per Deputy High Court Judge Eugene Fung SC.  In particular:

(1)  contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2)  in deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3)  regard should be had to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence;

(4)  care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character;

(5)  witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

27.  I have also had regard to the summary of relevant principles made by HH Judge Simon Barker QC in Northampton Borough Council v Cardoza and others [2019] BCC 582:

“36. As to the considerations applicable to evaluating evidence, a useful starting point is Goff J’s (as he then was)  observation as to resolving conflicts of evidence in Armagas Ltd v Mundogas SA (The Ocean Frost)  [1985] 1 LL Rep 1 at p.57:

‘… Where there is a conflict of evidence … reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth’.

37. Factors relevant to the evaluation of a witness’s evidence were identified by Lewison J (as he then was)  in Painter v Hutchinson [2007] EWHC 758 (Ch)  at [3] when addressing the unsatisfactory nature of the defendant’s approach to giving evidence. These included: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure. This was not intended to be an exhaustive list, but it is important and very helpful.

38. A useful recent reminder or guidance on the approach to the evidence of factual witnesses, and expanding on the guidance given by Goff J in The Ocean Frost, was given by Leggatt J (as he then was)  in Gestmin SGPS SA v Credit Suisse (UK)  Limited [2013] EWHC 3560 (Comm). After noting that human memory is fallible and that the process of litigation and preparing for trial tends to interfere further with the reliability of human memory, particularly where a lawyer has had a hand in drafting a witness’s evidence and the witness’s memory has been refreshed by reading documents, Leggatt J concluded that the best approach for a judge to adopt at the trial of a commercial case is to base factual findings on documentary evidence and known or probable facts and the inferences to be drawn therefrom. Witness evidence, written and oral, is not without purpose; but, its principal uses are to subject the documentary record to scrutiny and to evaluate the witness’s motivations, personality and working practices.

39. In similar vein, in the recent case of Freemont (Denbigh)  Ltd v Knight Frank LLP [2014] EWHC 3347 (Ch)  reference was made to an article written by Bingham J (as he then was)  entitled “The Judge as Juror: The Judicial Determination of Factual Issues” published in [1985] 38 Current Legal Problems 1-27. Bingham J considered the approach to deciding upon the reliability of a witness’s evidence and regarded the following to be helpful indicators of where the truth lies: the consistency of the witness’s evidence with what is agreed, or clearly shown by other evidence, to have occurred; the internal consistency of a witness’s evidence; and, the consistency of a witness’s evidence with what (s)  he has said or deposed on other occasions. Bingham J considered that the credit of a witness in matters not germane to the litigation was of less assistance, and that the demeanour of a witness was on the whole not a reliable pointer to a witness’s honesty.”

E3.   The elements relied on for the claim

28.  In the closing submissions made on behalf of the Respondents, it was said that a common intention constructive trust arose because:

(1)  ever since the Respondents got married, they had a general consensus that they did not draw a distinction between each other’s assets, so that “all along the common intention … was such that they should co-own and/or share [Flat 42H]”;

(2)  there was an express discussion and/or agreement between the Respondents “in the next few days” after Madam Kwok paid for the initial deposit of HK$704,000 on 1 October 2008.  It was agreed that in the light of the hostility and objections of Mr Yeung’s parents and their discontent with Madam Kwok, her name would not be added to the registration records, but only after the mortgage loan was fully repaid;

(3)  alternatively, the Respondent’s common intention that they should own Flat 42H in equal shares could be inferred from Madam Kwok’s conduct in:

(a)  paying the initial deposit of HK$704,000;

(b)  arranging for renovation of Flat 42H and bearing the renovation expenses alone;

(c)  maintaining Flat 42H by, for example, paying for the purchase and installation of water heaters and electronic facilities;

(d)  paying for some expenses relating to Flat 42H, including government rent and rates, and management fees.

E4.   The Respondents’ evidence

29.  The Respondents sought to adduce extensive evidence regarding their background in order to support their claim of a common intention constructive trust.

E4.1  Madam Kwok

30.  Madam Kwok’s evidence in her affirmation and in oral testimony, in summary, was as follows.

Relationship with Mr Yeung and his family

31.  She had known Mr Yeung from a young age. She started dating Mr Yeung in 1978 and married him in 1990.  They lived in Yip Cheung Building, which was registered in the names of Mr Yeung and his younger brother.  Mr Yeung’s parents also lived in the building.

32.  From the time of their marriage in 1990, Madam Kwok says that the couple had shared their assets equally.  They had had a verbal agreement to that effect.  She had a half share in the money he earned, although at the same time, she did not have to share his liabilities. 

33.  Madam Kwok started working as a bunker trader since about 1982, before her marriage.  Mr Yeung worked in the family business, Ystar Limited, where his parents also worked.

34.  Originally, Mr Yeung’s parents treated Madam Kwok very well.  However, as she was unable to bear a child to continue the Yeung family line, they were very unhappy.  Mr Yeung’s father demanded that Mr Yeung should divorce Madam Kwok and marry someone else, but Mr Yeung refused to yield to his demand.

Emigration to Singapore

35.  To escape the pressure from Mr Yeung’s parents, the couple decided to emigrate to Singapore.  Madam Kwok set up a company Pou Va Pte Ltd (“PVP”)  to run a furniture shop.  However, an accountant advised that one of the directors needed to be a Singaporean resident, so Mr Yeung’s Singaporean cousin, Madam Lim Lan Hwa (“Madam Lim”)  was appointed, together with Mr Yeung as he was the one who had applied to emigrate to Singapore (with Madam Kwok as his accompanying family member).  Mr Yeung also became a 45% shareholder, but Madam Kwok did not.

36.  Madam Kwok was granted Singaporean citizenship in about 1994, and became eligible to buy a property subsidised by the Singaporean Government.  She purchased an apartment (“Flat 437”). She says she made the down payment from her savings, but it was registered in the joint names of Mr Yeung and herself.  Madam Kwok also took out a loan from the Singaporean Government and a bank loan.  Mr Yeung made some loan repayments via his Singaporean Central Provident Fund (“CPF”)  account.

37.  Mr Yeung did not spend a great deal of time in Singapore; he was working in Hong Kong.  In 1995, Madam Kwok and Mr Yeung decided to return to Hong Kong, as Mr Yeung did not speak English well and was not used to life in Singapore, and also as Mr Yeung’s parents had by then accepted that Mr Yeung would not divorce and remarry.

Involvement in CHL

38.  Whilst she was in Singapore, Madam Kwok had also worked for Mr Tan Sing Hwa (“Mr Tan”), assisting with bunker trading.  On her return to Hong Kong, Mr Tan asked her to continue assisting him and another Singaporean Mr Kenneth Chan (“Mr Chan”)  with bunker trading. Madam Kwok says that Mr Tan was impressed by her good business relationships with suppliers and customers, and he invited Madam Kwok and Mr Yeung to invest in his bunker trading business.  Madam Kwok and Mr Yeung invested a total of HK$400,000, with HK$130,000 being borrowed from Madam Kwok’s father and brother, which Madam Kwok and Mr Yeung later repaid.  This was how 400,000 shares in CHL came to be allotted or otherwise transferred to PVP.  Mr Tan and Mr Chan each also invested HK$400,000 and became shareholders in CHL. Mr Yeung, Mr Tan and Mr Chan were appointed as directors of CHL.  Madam Kwok was not, since neither Mr Tan nor Mr Chan appointed their wives as directors.  Madam Kwok acted as company secretary for a while but this responsibility was subsequently given to another, as she was busy with bunker trading.  In 1998, Mr Chan left CHL, transferring his shares to Mr Tan and Mr Yeung.

39.  PVP’s shares in CHL were transferred to Mr Yeung in 1999.

40.  Mr Yeung gradually became more involved with CHL’s operations, which expanded to the owning and operation of barges.

41.  Madam Kwok says that her salary at CHL was one-third lower than that of other employees because Mr Tan believed that she could receive dividends from CHL through Mr Yeung.  She would not have been willing to accept lower wages than other employees if she could not have enjoyed profits from CHL with her husband.

Purchase of Flat 42H

42.  Even before getting married, Madam Kwok and Mr Yeung had wanted to buy a joint matrimonial home.  They had “always” wanted to buy a flat at The Belcher’s (or at least, ever since it was built), which was just a block away from Cheung Yip Building.  They often visited flats at The Belcher’s, and had decided to choose a flat facing the northeast early on.

43.  When the property market fell in 2008 after the Lehman Brothers incident, the couple decided to take advantage of the opportunity to buy a flat at The Belcher’s which they had wanted “for many years”.  They discussed this with Mr Tan, who suggested that they take US$1m in dividends from CHL.  This eventually enabled them to make the down payment for Flat 42H.

44.  An estate agent showed Flat 42H to Madam Kwok on 1 October 2008.  Mr Yeung was in the mainland during the day.  When he returned, Madam Kwok immediately contacted the agent to take them to see the flat.  It was the night of the annual National Day fireworks display. They “loved the view so much that night that [they] decided 42H was the perfect place for us to spend the rest of our lives together”.  They had extensive negotiations with the vendor that evening and agreed on the price of HK$14,080,000.  To avoid the vendor changing her mind, Madam Kwok immediately went home and drew a cheque on her Bank of China account for HK$704,000 to pay the deposit.  Madam Kwok and Mr Yeung were very happy to have bought their first and only marital home in Hong Kong.

45.  However, when they told Mr Yeung’s parents, the latter did not share the couple’s joy, but instead criticised Madam Kwok for encouraging Mr Yeung to buy what they thought was a very expensive property at a time when the stock market had crashed by 70%.  Madam Kwok thought that they were still unhappy about the fact that she had not produced a child for the family.  They were not happy to let the couple buy the property together. Madam Kwok and Mr Yeung discussed the matter.  They worried that if property prices dropped again, and Mr Yeung’s parents were proved right, Madam Kwok would be subject to even more criticism.  For the sake of family harmony and to save Mr Yeung from the “enormous pressure”, Madam Kwok agreed with Mr Yeung’s suggestion of only registering his name as the owner of Flat 42H, initially. He promised her that when the mortgage was paid off and his parents could no longer say that she had caused him loss, he would immediately arrange to register her as a co-owner.  Madam Kwok accepted this arrangement, knowing that it “was only a stop-gap measure”.

46.  To alleviate her in-laws’ discontent with the purchase of Flat 42H, Madam Kwok and Mr Yeung delayed moving into the flat, and instead rented it out, using the rental income to pay the mortgage.

47.  Madam Kwok considered that Flat 42H was purchased with money which she had “earned together” with Mr Yeung and that she was beneficially entitled to a half share of Mr Yeung’s dividends from CHL.

Purchase of Flat 41H

48.  In January 2011, Flat 41H in the same building (“Flat 41H”)  was purchased in Mr Yeung’s name.  Madam Kwok said that she and Mr Yeung purchased it for investment purposes.  The purchase was funded by mortgage and also by a second mortgage on Flat 42H.  As with Flat 42H, Flat 41H was also rented out, and the income used to pay the mortgage.

Purchase of Flat 441B

49.  Meanwhile, the Singaporean Government had told Madam Kwok and Mr Yeung that Flat 437 was to be repossessed and that they could select either to receive compensation or to receive partial compensation and the right to purchase another property.  Madam Kwok and Mr Yeung chose the latter option and in 2011, purchased a new flat, for which they had to pay S$147,180.35 in addition to the compensation received.

Moving into Flat 42H

50.  In 2015, the tenant of Flat 42H told Madam Kwok and Mr Yeung that they would not be renewing the lease.  Madam Kwok arranged for renovation work and paid for the renovations.  She would not have done so, she says, if there had not been an agreement that Flat 42H was jointly owned with Mr Yeung.  The couple went shopping together for various items for the flat, and Madam Kwok cannot remember who paid for the items.  “It has never mattered whether he or I paid for our home expenses.  We were just excited to decorate our first home together in Hong Kong after our long marriage, creating a place where we could live in comfort for the rest of our lives.”

Sale of Flat 41H

51.  Flat 41H was sold for $31,700,00 on 23 May 2018. The sale proceeds were used to repay the mortgages on Flat 41H and Flat 42H.  Mr Yeung instructed Messrs Yung, Yu, Yuen & Co to arrange for the repayment of the mortgage on 42H and at the same time to register Madam Kwok as a co-owner.

Household expenses

52.  Since her marriage, Madam Kwok had always paid for household expenses, including government rent, rates and management fees from her salary and savings.

E4.2  Mr Yeung

53.  Mr Yeung filed affirmation evidence in support of the Respondents’ case, but chose not to attend court to be cross examined on such evidence.  Mr Kwong accepted that accordingly, little weight could be placed on such evidence.

E4.3  Lim Lan Hwa

54.  Ms Lim is Mr Yeung’s cousin. She lives in Singapore.  Her mother helped Madam Kwok rent a neighbouring apartment when she emigrated to Singapore.  Madam Kwok frequently joined Ms Lim’s family for meals as Mr Yeung spent little time in Singapore, being tied up with the family business in Hong Kong.

55.  Ms Lim said that she helped Madam Kwok incorporate PVP.  She recalls that the accountant involved advised that it was necessary to have a Singaporean acting as local director, and she was happy to act as director and shareholder.  Whilst in her affirmation she had said that Mr Yeung rather than Madam Kwok was appointed as another director as he was the one who had obtained permission to emigrate, in oral evidence she said that she did not recall any advice as to whether Madam Kwok could also have acted as director.

56.  Ms Lim said that when Madam Kwok became a citizen of Singapore in 1994, she became eligible to purchase a government-subsidised apartment.  She said in her affirmation that Madam Kwok made the down payment and loans from her own money and from renting out rooms in the apartment, although she accepted in oral evidence that she did not have personal knowledge as to whether Madam Kwok did indeed use her own money.

57.  Mr Yeung introduced Ms Lim to his family friend, a Mr Fan Song Jiang.  Mr Yeung offered Mr Fan a directorship in PVP to assist him in applying for a work permit in Singapore, which Mr Fan sought for the purpose of his cocoa butter trading business.  Ms Lim arranged for the share capital of PVP to be increased and for Mr Fan to be registered as a director.  Mr Yeung and Ms Lim transferred shares to Mr Fan such that he held 54,000 out of 120,000 shares in PVP.  Mr Fan’s application for a work permit was not successful and he eventually transferred his shares in PVP back to Mr Yeung.

E4.4  Zhang Yi

58.  Ms Zhang works for A/S Dan-Bunkering Ltd, which had previously supplied bunkers to COHK.  Ms Zhang says Madam Kwok was the only representative of COHK which dealt with her and A/S Dan-Bunkering Ltd, and that she took her work seriously.  There were substantial transactions between COHK and A/S Dan-Bunkering Ltd.  The amount of business declined after Madam Kwok’s retirement as Ms Zhang did not know the traders from COSG.  Ms Zhang did not know whether Madam Kwok had any directorship or shareholding in any of the Coastal Oil companies.

E4.5  Chui Siu Poo Stanley

59.  Mr Chui worked for Fratelli Cosulich (Hong Kong)  Limited, and subsequently its subsidiary Fratelli Cosulich Bunkers (HK)  Ltd Company.  On behalf of these companies, he purchased bunkers from COHK through Madam Kwok. Madam Kwok was his main contact at COHK, and was reliable and provided good service.  Mr Chui did not know whether Madam Kwok had any directorship or shareholding in any of the Coastal Oil companies.

E4.6  Stella Luk Wai Fan

60.  Ms Luk is a clerk at Messrs Yung, Yu, Yuen & Co.  She says that she was instructed by Mr Yeung to handle the purchase of Flat 42H.  She explained the conveyancing documents to Mr Yeung and arranged for him to sign the relevant documents.  She helped him to handle the mortgage for Flat 42H from DBS Bank.  She was similarly instructed to handle the purchase and mortgage of Flat 41H.

61.  She says that in early May 2018, Mr Yeung informed her that he had signed a provisional sale and purchase agreement to sell Flat 41H, and instructed her to assist with the sale and the mortgage repayment.  He also instructed her to assist with the discharge of the mortgage of Flat 42H and to register Madam Kwok as a co-owner.  Ms Luk suggested to Mr Yeung that he should transfer half of the interest in Flat 42H by way of sale and purchase, as this was the usual practice.  The mortgage on Flat 42H was discharged in October 2018.  In November 2018, Ms Luk arranged for the memorandum of sale and purchase, and the assignment, of a half interest in Flat 42H to Madam Kwok.

62.  In cross examination, Ms Luk said that in 2008, when Mr Yeung purchased Flat 42H, he did not mention that Madam Kwok would own any beneficial interest in the property.  She confirmed that the amount of the loan from DBS Bank secured by the mortgage on Flat 42H at the time was HK$4.224m.

63.  As regards Flat 41H, Mr Yeung equally did not mention that Madam Kwok would have any interest in the property.  In 2018, when Mr Yeung instructed Ms Luk to deal with the sale of Flat 41H, he said that the proceeds of sale should be used redeem the mortgage on Flat 42H, and then the name of Madam Kwok should be added.  He did not mention that there had been any trust arrangement made earlier with Madam Kwok regarding Flat 42H.  Ms Luk’s understanding of Mr Yeung’s instruction was that she should arrange for the transfer of half of his interest in the property to Madam Kwok.  She would have told Mr Yeung that there were two methods of effecting the transfer – either by gift or by way of sale and purchase.  With the former method, it would not be possible to mortgage or sell the property within five years.  Mr Yeung chose the latter method.

E5.  The Trustees’ evidence

64.  Two witnesses gave evidence on behalf of the Trustees.

E5.1  John Howard Batchelor

65.  Mr Batchelor is one of the Trustees, and produced various documents relating to the Transfer.  Of course, Mr Batchelor had no personal knowledge of the arrangements between Madam Kwok and Mr Yeung as regards Flat 42H.

E5.2  Nicholas Gronow

66.  Mr Gronow is involved in the administration of the property of Mr Yeung, under the supervision of the Trustees.  He is also one of the liquidators of CHL and COHK, and is involved in the liquidation of COSG.

67.  Mr Gronow says that Mr Yeung played a significant role in both the Coastal Oil Group and the Coastal Corporation group of companies.  It was Mr Yeung who attended meetings of creditors of CHL and COHK to respond to creditors’ queries regarding the collapse of the companies.

68.  Mr Gronow made an affirmation to respond to the claim by Mr Yeung and Madam Kwok of a common intention to share the beneficial ownership of Flat 42H.  He had no personal knowledge of the arrangements between Madam Kwok and Mr Yeung.  In addition, he set out circumstances which led him to conclude that Mr Yeung had anticipated the liquidation of CHL, COSG and COHK, and some time prior to then started arranging his financial affairs accordingly.  He says that given his position, Mr Yeung should have seen the financial statements of COSG and COHK and should have known that they referred to fictitious receivables.

E6.   Analysis of the evidence

69.  I do not find the claim that of a common intention by Madam Kwok and Mr Yeung to share the beneficial interest in Flat 42H to be a credible one.

E6.1  Signatory to the 2008 PSPA

70.  It is the Respondents’ case that they decided to buy Flat 42H as a joint matrimonial home, and that Madam Kwok paid the initial deposit for the purchase of Flat 42H.  They were delighted to be making the joint purchase.  Yet the 2008 PSPA was signed by Mr Yeung alone.  The disapproval of Mr Yeung’s parents cannot explain this, because it was only a few days later, when the Respondents told them about the purchase “with much delight”, that they discovered their disapproval.

71.  When asked about this, Madam Kwok said that she did not really pay attention to this point, as she and her husband were focusing on whether the owner would be willing to reduce the asking price.  When asked further, she said that the agent just said, “offhand”, to put one name down, and she and Mr Yeung went along with this because they did not really know whether the owner would be selling the flat.

(1)  This explanation does not make sense. Whether or not the seller would be willing to sell the flat would not have affected Madam Kwok’s and Mr Yeung’s choice as to who should be buying, in the event that the seller did sell.

(2)  It is difficult to believe that given all the hardships and delay Madam Kwok and Mr Yeung had endured (as Madam Kwok described it)  before having the opportunity to jointly purchase their dream matrimonial home, when they finally came to do so, it did not occur to them to think about the identity of the purchaser.

(3)  Furthermore, if Madam Kwok were the one who paid the initial deposit, one would have thought it more natural that even if just one name were to be used on the 2008 PSPA, it would be hers, not Mr Yeung’s.

E6.2  Delay in adding Madam Kwok’s name to title

72.  Madam Kwok says that Mr Yeung promised her that as soon as the mortgage on Flat 42H was discharged and her parents-in-law no longer had basis to criticise her for encouraging Mr Yeung to buy an expensive property in a falling market, he would “immediately” arrange to register her as a co-owner of the property.  She trusted Mr Yeung because he had “always kept his promises” to her.  The arrangement (of Mr Yeung being the sole owner)  was only a “stop-gap” measure.

73.  However, the Respondents’ conduct is inconsistent with this claimed arrangement.

74.  First, instead of using available funds to repay the mortgage on Flat 42H, Mr Yeung spent them on other acquisitions, incurring further debt in the process.

(1)  In January 2011, Mr Yeung purchased Flat 41H for HK$18.7m, and funded it in part through a second mortgage on Flat 42H. Thus not only did Mr Yeung not use available funds to repay the mortgage on Flat 42H, he in fact increased the borrowing secured by Flat 42H.  Madam Kwok’s explanation of this was that since they could not pay off the first mortgage on Flat 42H (two years not yet having passed since the time of that mortgage), Mr Yeung decided that he should instead take out a second mortgage on the property – an answer which in itself strains credulity.

(2)  In 2012, Mr Yeung purchased a Porsche for HK$1m, with Madam Kwok’s blessing. Madam Kwok explained that HK$1m was not used to pay off the mortgages on Flat 42H as it would not have helped to speed up discharge that much, some HK$9.5m being outstanding on the mortgages of both Flat 41H and 42H together.  This explanation makes little sense in the context of the Respondents’ avowed desire to place Flat 42H in their joint names as soon as the mortgages on Flat 42H could be discharged.

75.  Second, by 2009 or 2010, that is, within one or two years after the purchase of Flat 42H, property prices had increased.  Madam Kwok accepted that by this time, Mr Yeung’s parents’ concern about falling property prices was no longer valid. Furthermore, Mr Yeung’s father passed away in 2016 and his mother, by then almost 90, no longer criticised Madam Kwok for causing Mr Yeung to purchase Flat 42H.  Yet despite the objections of Mr Yeung’s parents falling away, no steps were taken to register Madam Kwok as a joint owner of Flat 42H.  Her explanation was that it could not be done before the mortgages were paid off – which makes it only more inexplicable that the borrowing secured on Flat 42H had been increased in the first place.

76.  Third, Madam Kwok accepted that the property market continued to go up after 2010, and Flat 41H was eventually sold in May 2018 for HK$31.7m, yielding a gain of about HK$13m.  Flat 41H could in fact have been sold earlier had the Respondents wished to redeem the mortgage on Flat 42H.  Madam Kwok’s explanation was that they were waiting for an ideal price to earn money for retirement.  This is inconsistent with the claim of Mr Yeung’s sole ownership being a “stop-gap” measure and the agreement to add Madam Kwok’s name to the title as soon as Mr Yeung’s parents no longer had a basis to criticise Madam Kwok for encouraging Mr Yeung to buy an expensive property in a falling market.

77.  The delay in seizing the opportunity to enable Madam Kwok to be registered as a co-owner of Flat 42H is particularly inexplicable given the Respondents’ case that it was their long-cherished ambition to jointly own a matrimonial home and that Flat 42H was their dream home.

78.  When asked whether she had any timeline in mind as to when the mortgage on Flat 42H would be paid off given Mr Yeung’s promise to add her name upon repayment, Madam Kwok said that since her name was not on the title, there was no point for her to be aware of the timeline or to pay attention to it.  When it was pointed out that on her case, she had contributed HK$704,000 to the purchase, so that it would be surprising if she was not concerned as to when she could become a registered owner of the property, she said that she should have been concerned, but was so angered at her father-in-law’s refusal to lend funds to assist in the purchase that she was no longer rational.  If Madam Kwok had eagerly anticipated becoming a joint owner of Flat 42H, it is surprising that she did not have a clearer idea of when this might happen.

E6.3  Delay in moving into Flat 42H

79.  According to Madam Kwok, Flat 42H was the “perfect place for us to spend the rest of our lives together”. Madam Kwok and Mr Yeung had been looking for a matrimonial home since 1990.  Flat 42H was purchased in 2008.  Yet they did not move into the property until 2015, and they did so only because the tenant of the property had indicated that they would not be renewing the lease. Madam Kwok’s explanation in cross-examination was that since they were in debt, they decided to earn rental income first to repay the mortgage.  However, if debt was the obstacle to their moving into their dream matrimonial home, it is difficult to understand why they decided to incur further debt (and an additional mortgage on Flat 42H)  by acquiring Flat 41H.

E6.4  New claim of general agreement to share assets

80.  In the affirmations filed in these proceedings, the Respondents had advanced their case for a common intention on the basis of express discussions taking place after the signing of the 2008 PSPA, upon the disapproval expressed by Mr Yeung’s parents.  These discussions related specifically to the purchase of Flat 42H, the couple’s dream matrimonial home.

81.  In Mr Yeung’s 6^th affirmation of 20 May 2020, he also made a general statement “We had already been sharing all our assets” in relation to a property which he and his brother purchased in 1991, occupied by his brother’s family.  In Madam Kwok’s oral evidence, she expanded on this to say that there had been a verbal agreement between her and Mr Yeung, since the time of their marriage in 1990, that all of their assets would be shared on an equal basis, although at the same time, she did not have to share his liabilities.  Accordingly, she owned half of the amounts standing to Mr Yeung’s credit in his bank accounts.  This agreement was then also relied on to support her claim to a half-share in Flat 42H; Madam Kwok further said expressly that it was because of this verbal agreement that she was willing to pay the initial deposit for the purchase.

82.  However, I do not find this claim of a verbal agreement in 1990 to be credible, whether in itself or as an alternative basis for claiming a common intention regarding the ownership of Flat 42H.

(1)  In Mr Yeung’s statement of affairs, in which he listed out the balances in his various bank accounts, he claimed to own 100% of the amounts held in the accounts.  Notably, Mr Yeung and Madam Kwok held a joint account, so it is not as if the couple were not aware of the possibility of jointly holding funds by this means.  Furthermore, in the same statement of affairs, Mr Yeung declared (1)  furniture and belongings as being jointly owned with his wife, and (2)  a property in Jaffe Road registered in his name as being jointly owned with a third party.  If there were a verbal agreement as claimed by Madam Kwok, there is no reason why Mr Yeung would not have declared Madam Kwok as owning 50% of the amounts in his bank accounts.  Indeed, as submitted by Mr Nip, it is inherently improbable that Mr Yeung would give an inflated declaration of his assets.

(2)  The claimed agreement is contrary to Madam Kwok’s evidence that the funds for the payment of the deposit for Flat 42H were hers alone.  She was unable to explain why the money which she earned was not subject to the agreement of mutual asset sharing, whilst the money which Mr Yeung earned was so subject.

(3)  Had there been such a verbal agreement, there would have been no need for any express agreement to be made in 2008 regarding the beneficial ownership of Flat 42H and deferral of registration of Madam Kwok’s title. The effect of the verbal agreement (that Madam Kwok owned half of anything that Mr Yeung owned)  would have done away with the necessity for formal joint ownership (and indeed, on Madam Kwok’s case, did do away with the necessity for formal joint ownership of Mr Yeung’s other assets).

(4)  In the Respondents’ affirmations, it is the 2008 agreement relating specifically to Flat 42H, rather than the 1990 agreement relating to general asset sharing, that is relied on as the basis for the common intention regarding the ownership of Flat 42H.

(5)  There has been no real explanation as to why the conveyancing documents of 2018 effecting the Transfer did not refer to Madam Kwok’s existing interest in the property pursuant to any such verbal agreement (or indeed pursuant to the subsequent agreement relating specifically to the property).

(6)  In re-examination, Madam Kwok’s differing answers as to whether or not she claimed an interest in various assets listed in Mr Yeung’s statement of affairs showed that there could not have been a coherent agreement for her to own half a share of all of Mr Yeung’s assets.

83.  Mr Kwong submitted that the co-ownership of Flat 437 could be explained by this verbal agreement.  However, the thrust of Madam Kwok’s evidence was that the agreement enabled her to share assets which were ostensibly owned by Mr Yeung (and not that it operated in respect of assets which were already in joint names).  The submission highlights the nebulous nature of the claimed verbal agreement.

84.  In my view, the alternative basis for claiming a common intention only serves to further undermine the credibility of the claimed express agreement of a common intention claimed in relation to Flat 42H.

E6.5  Payment of the initial deposit and various expenses

85.  At the trial, some emphasis was placed on an alternative case that the Respondents’ common intention regarding the ownership of Flat 42H could be inferred from conduct, namely Madam Kwok’s payment of the initial deposit of HK$704,000, and her payment of various other expenses (for renovation in 2015, some household items such as water heaters, and government rent and rates and management fees).

86.  I accept that the cheque for the initial deposit was drawn on Madam Kwok’s account, as that the cheque number written on the 2008 PSPA matches that of a stub from Madam Kwok’s cheque book, although a copy of the actual cheque has not been produced.  However, I do not agree that Madam Kwok has established that the payment gives rise to the inference that there was a common intention that Madam Kwok and Mr Yeung would jointly own the beneficial interest in Flat 42H.

(1)  Whilst the cheque was drawn on Madam Kwok’s account, it is also Mr Yeung’s evidence that he would pay her household expenses – from time to time whilst she was still working, and HK$60,000 per month after she left the Coastal Oil Group companies.  It is unclear to what extent the funds may have been supplied by Mr Yeung.

(2)  More importantly, the drawing of the cheque should not be considered in isolation, but as part of the overall conduct of the parties.  When taken into consideration along with the other matters referred to above, including the fact that (as the Respondents knew)  the 2008 PSPA bore only Mr Yeung’s name as the buyer despite the provision of the deposit cheque by Madam Kwok, and at a time when there was no reason for Madam Kwok’s name not to be included as joint owner, I do not agree the Respondents have established that there was a common intention to share the beneficial interest in Flat 42H.

87.  As regards payment of renovation expenses, Madam Kwok says that she paid various expenses in 2015 to get Flat 42H ready for occupation, and that she would not have paid such expenses if there had not been an agreement that Flat 42H was a jointly owned property.  In cross-examination, however, she limited herself to saying that she would not have paid such expenses if she had not had the right to live in the property.  Furthermore, there is no independent evidence that the expenses were in fact paid by Madam Kwok.  She produced a quotation and two invoices from the contractor which were addressed to her, but no corresponding receipts.  Her solicitors had written to her bank asking for copies of cheques issued for payment of the invoices, but the bank’s response was that it could not locate such records.  In any event, it is not clear what the source of funds would have been even if the cheques had been drawn by Madam Kwok, given Mr Yeung’s evidence that he paid her for household expenses.

88.  As regards payment for household items, it was Madam Kwok’s evidence that she could not remember whether she or Mr Yeung had paid for them, and that in any event it had never mattered whether either of them paid for such expenses.  Therefore, the payment could not constitute conduct from which one could infer any agreement regarding the beneficial ownership of Flat 42H.

89.  As regards payment for government rent and rates and management fees, it was Madam Kwok’s evidence that she had always paid for these since getting married – which, on her case, was well before any prospect of a jointly owned property ever came up.  Again, therefore, such payment could not constitute conduct from which one could infer any agreement regarding the beneficial ownership of Flat 42H.

E6.6  The documents effecting the Transfer

90.  I turn to the legal documents which effected the Transfer.  I agree with the submission of counsel for the Trustees, Mr Norman Nip (Mr Adrian Wong appearing with him), that the documents are significant in the present case given that unlike the typical case, here the legal owner of Flat 42H (Mr Yeung)  joins with the person asserting a beneficial interest (Madam Kwok)  in denying the legal position created by the documents.

91.  The Transfer was structured as a sale and purchase of half of Mr Yeung’s interest to Madam Kwok.  The legal documents (a memorandum of sale and purchase of 12 November 2018 and an assignment of the same date)  did not make any reference to the claimed common intention of the Respondents.  On the contrary, their terms contradict the claimed common intention, the Transfer being structured as a sale and purchase by Mr Yeung as the beneficial owner.

92.  In this regard, Ms Luk’s evidence was that when Mr Yeung gave instructions in 2008 (when Flat 42H was purchased)  or in 2018 (when the Transfer took place), no mention was made of Madam Kwok’s interest in the property pursuant to any trust arrangement.  Her suggestions as to how the Transfer should be structured were no doubt made on that basis.  Had there been a common intention as claimed by the Respondents, one would have expected that Mr Yeung would have told Ms Luk about this and about Madam Kwok’s interest in the property, so that he could be properly advised as to the appropriate way to give effect to it.

E6.7 General credibility of Madam Kwok

93.  On the whole, I did not find Madam Kwok to be a reliable witness.  I have given some examples above of the inconsistencies in her evidence, the changes which she made to her evidence, and the incredibility of some of the matters which she asserted. I will mention here a few further examples.

94.  Madam Kwok sought to portray PVP (which held shares in CHL which were later transferred to Mr Yeung)  as her company, so as to give the impression that she had some sort of interest in CHL.  However, she admitted in cross-examination that she did not pay for any shares in PVP, and the funds for running the furniture business were paid by Mr Yeung. Her lack of shares in PVP may be contrasted with Mr Fan’s position – he did not have any involvement in PVP’s business, yet was transferred shares in PVP to support his application for a work permit.

95.  Madam Kwok’s evidence generally sought to emphasise her importance in the Coastal Oil Group companies and to downplay her husband’s role, to the extent where one might be forgiven for having the impression that Madam Kwok was a joint investor with Mr Yeung, and had a more, or at least equally, important role[2], even though it was Mr Yeung who was a director in the companies and a shareholder of CHL.  Again, this was in support of her general theme that her claimed interest in Flat 42H was consistent with her substantial contributions to the couple’s wealth.

(1)  In fact, as Madam Kwok accepted in cross-examination, Mr Tan invited only Mr Yeung, not Madam Kwok, to invest in the Coastal Oil Group, and it was because of his acumen and experience as a businessman.

(2)  She was never a shareholder in CHL but claimed that Mr Tan believed that she would receive dividends along with Mr Yeung. Accordingly, she received a lower salary than others with similar experience to her.  However, she was unable to explain this arrangement coherently in cross-examination.  In re-examination, she claimed that she had asked for a salary increase, but did not obtain one; she accordingly considered changing jobs but she did not do so because this would lead to collapse of Coastal’s business in Hong Kong.  Her claim to have been a key person on the one hand but to have been ill-paid on the other is not credible.

(3)  The evidence from Ms Zhang and Mr Chui did not take the matter any further as they simply dealt with Madam Kwok for bunker trading.

96.  Madam Kwok’s evidence also exaggerated the vulnerability of the couple to pressure from her parents-in-law.  In her affirmation, she said that she agreed to have Flat 42H registered in Mr Yeung’s name only in order to save him from the “enormous pressure”.  However, in cross-examination, she accepted that Mr Yeung exercised his own judgment in matters relating to business or to her, rather than simply blindly following his parents’ wishes.

97.  When it was put to Madam Kwok that her parents-in-laws’ concern about the purchase of Flat 42H being a bad investment could not be assuaged by registering the property in Mr Yeung’s name alone, she said that in fact, the reason for their not wanting to have her name added was because they had to lend money to assist in the purchase.  This new claim as to the source of funds for the purchase had not been mentioned in either Madam Kwok’s or Mr Yeung’s affirmations, even though it would have been important to the Respondents’ case to explain why they say the legal title to Flat 42H did not reflect the true beneficial interests in the property.

98.  Madam Kwok claimed that for Flat 41H, as with Flat 42H, she was a joint owner also.  When asked why her name was not registered as such, she gave three differing explanations.

(1)  First, she said that the flat was purchased as an investment and was to be sold within a short period of time. In fact, it was not sold until 2018.  In any event, even if the flat was to be sold within a short period of time, this is not a reason why Madam Kwok was not registered as a joint owner.

(2)  When it was pointed out that the first reason was not a good one, Madam Kwok gave a second, different explanation as to why she was named as a joint owner: that she was not too bothered to be named as a joint owner of a property in which she was not living.  This cannot be a good reason either: establishment of one’s ownership of a property is surely important irrespective of whether one is living in it.

(3)  When it was pointed out that by the time of purchase of Flat 41H, the property market had recovered so that the objection which Mr Yeung’s parents had supposedly given to the naming of Madam Kwok as a joint owner at the time of purchase of Flat 42H (namely, that she had encouraged her husband to buy property in a falling market)  did not apply to Flat 41H, Madam Kwok gave a third reason, which was that she and Mr Yeung did not dare to provoke their in-laws any further.  It is not clear why the purchase would have given them any provocation given that the earlier source of provocation (the falling market)  was no longer the case.

E6.8  Common intention not established

99.  I therefore find that there was no common intention as claimed by the Respondents for Madam Kwok to own a beneficial interest in Flat 42H.  The Respondents’ claim of a common intention constructive trust fails.

E6.9  No detrimental reliance or unconscionability

100.  In view of my finding that there was no common intention between the Respondents that Flat 42H was to be jointly owned, it must follow that the payments said to have been made by Madam Kwok (for the initial deposit, renovation expenses, household items and government rent and rates and management fees)  were not made in reliance on such a common intention.  In any event, as set out above, the evidence of Madam Kwok, at least as regards the latter three payments, was not that they were made in reliance on the alleged common intention.

E6.10 Drawing of adverse inferences

101.  Mr Yeung chose not to attend court to be cross-examined on his affirmations.  As mentioned above, Mr Kwong readily acknowledged that accordingly, little weight could be placed on his affirmation evidence.

102.  Mr Nip submitted that adverse inferences should be drawn against Mr Yeung given his failure to testify.  Mr Kwong submitted that this should not be done as there were explanations for his absence, namely, (1)  his frail health, and (2)  the police investigation against Mr Yeung had not closed, so he did not wish to “run any risk of complicating the matter and jeopardizing the investigation”.

103.  I have placed little weight on Mr Yeung’s evidence in the light of his failure to testify.

104.  I have not considered it necessary to go further to draw any adverse inferences from Mr Yeung’s failure to testify.

(1)  Insofar as the Trustees seek the drawing of an adverse inference that Mr Yeung would not have evidence to rebut the Trustees’ case that he was actively dissipating his assets in anticipation of the collapse of the Coastal Oil Group, and that the Transfer was part of this dissipation: the Trustees’ stance is that whether or not this was so is not a necessary part of their case.  I will therefore not draw any inferences (or make any findings)  in this regard.

(2)  Insofar as the Trustees seek the drawing of an adverse inference that Mr Yeung would not have evidence to rebut the Trustees’ case that there was no common intention between Madam Kwok and Mr Yeung that Madam Kwok would have a 50% interest in Flat 42H, it is not necessary for me to do so, having regard to my findings above.

D.  THE CLAIM OF A RESULTING TRUST

105.  In Wong Chor Cheung v Wong Hark Chung [2020] HKCFI 3162 at [13], Recorder Stewart Wong SC said:

“When a person (A)  provides all or part of the purchase price of a real property but the legal title is put in the name of another person (B)  only, then it is a matter of the subjective intention of A as to whether he is to have a beneficial interest in the property to the extent of his contribution, held on trust for him by B. The Court will seek to ascertain this intention by reference to the actual evidence adduced regarding the transaction, and will apply the presumption of resulting trust, or the presumption of advancement, as the case may be, only if there is no sufficient evidence for it to make a finding of intention…”

106.  Given my findings above in relation to the Respondents’ claim of a common intention, there is no room for the operation of the presumption of resulting trust in the present case.  Furthermore, it is not Madam Kwok’s case that she paid the initial deposit for Flat 42H with a view to obtaining a 5% interest in the property.

E.  CONCLUSION AND DISPOSITION

107.  The Trustees have therefore established that the Transfer falls within the terms of s.49(3)(c)  of the Ordinance.

108.  I therefore declare that the Transfer was a transaction made at an undervalue, and order that it be set aside.

109.  I further make an order nisi that the Trustees’ costs be paid out of the estate of Mr Yeung, with certificate for two counsel.