YEUNG CHUNG CHAK v. FU MAN, the administrator of the estate of YEUNG HOI PING, deceased AND OTHERS

HCA 2240/2018

[2023] HKCFI 2298

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2240 OF 2018

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J U D G M E N T

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1.  This action concerns the ownership of the property known as Flat 10 (No. 16 Man Yuen Street)  on 12^th Floor, Man Yuen Building, Nos. 2-24 Man Yuen Street, Nos. 1-23 Man Wai Street, Kowloon (“Property”), which is registered in the sole name of the late Yeung Hoi Ping (“Father”), who passed away on 16 June 2017 intestate. The Property is the only significant asset in Father’s estate.

2.  The Plaintiff, 2^nd Defendant and 3^rd Defendant are respectively the second son, eldest son and youngest daughter of Father and his first wife, Cheung Muk Lan (“Mother”, who passed away on 27 July 2006).  The 2^nd and 3^rd Defendants are supportive of the Plaintiff’s claim, and gave evidence as the Plaintiff’s witnesses.

3.  The 1^st Defendant is the second wife of Father, whom he married in 2007, and is the sole administratrix of Father’s estate; she is sued in her capacity as administratrix.

4.  In short, the Plaintiff claims that Father held the Property on a common intention constructive trust for him, so that it does not fall into the intestate estate of Father and neither the 1^st Defendant nor the 2^nd and 3^rd Defendants would be able to share in it.

A.  THE FACTS

5.  Father and Mother were from Chiuchow, Mainland China.  They had 3 children, the 2^nd Defendant (born 1972), the Plaintiff (born 1976)  and the 3^rd Defendant (born 1983), all born in the Mainland.

6.  The parties are ad idem that the family was a very traditional Chiuchow family, with the Father being the patriarch whose decisions no one would gainsay.

7.  Some time in the 1980s, Father and his mother, Wong Chiu Tei (“Grandmother”), moved to Hong Kong.  In Hong Kong, Father, with the assistance of Grandmother, operated 2 lines of (related)  businesses. The first was a hostel business out of leased premises in Jordan, Kowloon, which clientele was mainly overseas Chinese from Southeast Asia.  The second was a business of supplying electronic goods[1] (e.g. television sets, audio equipment, rice cookers, at times even motorcycles)  to the Mainland, whereby Father would purchase electronic goods in Hong Kong, entrust them to hostel guests who were en route to visit their families in the Mainland to bring to his reseller contacts there, and these guests would bring back the cash payments to Hong Kong and be paid a commission for their efforts.  Effectively, Father arbitraged the scarcity of electronic goods in the Mainland at the time and earned a profit from these transactions.

8.  In 1987, Mother and the Plaintiff (then aged 11)  moved to Hong Kong.

9.  By then, Father’s businesses appeared to be quite established. He set up an unlimited company, H.K. Kai Yuen Trading Co, to operate those businesses. 

10.  In October 1988, Father purchased the Property – which until then he had leased for the hostel business – at a consideration of HK$578,000, and registered it in his sole name (“1988 Assignment”).  He did so with some financing from the Hong Kong and Shanghai Banking Corporation, as evidenced by an all-monies mortgage over the Property in favour of the bank (“HSBC Mortgage”). 

11.  In 1989 Father purchased another premises nearby which was partly occupied by the family as residence and partly used as hostel.

12.  After moving to Hong Kong, Mother assisted Grandmother in running the hostel business.  As for the Plaintiff, after school he would help out in the trading business, first by helping the hostel guests who had agreed to be carriers to fill out the necessary customs papers for bringing goods into the Mainland, and as he grew older, also by collecting the goods from the suppliers in Hong Kong whom Father sourced from and delivering them to the hostel guests for transit into Mainland China.

13.  It can be seen from §7 above that these businesses were essentially cash businesses.  Cash collected would be stored by Grandmother in a locked drawer in her room.  The Plaintiff also said that the cash he received from the trading business would be handed over to Grandmother.  It is said that Mother might have kept some cash for her personal use, but it appears that the larger sums were all handed over to Grandmother.  Household expenses were paid using the cash kept by Grandmother.

14.  In 1990 the 3^rd Defendant (then aged 7)  moved to Hong Kong.  The 2^nd Defendant, though the eldest, never moved to Hong Kong.  He remained in the family’s ancestral village in Chiuchow.  After graduating from high school, he never obtained formal employment, and relied on the money Father sent him and doing odd jobs to support himself.

15.  Around the time when the 3^rd Defendant moved to Hong Kong, in 1990, Father began to shift his business focus.  He sold one of the 2 properties (the one in §11 above)  and started a new business venture in the Yunnan province trading in cigarette filters.  He downscaled the hostel business to the Property, where 2 rooms were occupied by the family and the remaining 3 rooms were used as guest rooms for hostel guests.  With the down-sized hostel business the affiliated trading business was also affected – the Plaintiff confirmed that the earnings and profitability of the trading business declined between early to mid 1990s, until the trading business was ceased altogether in or around 1995.

16.  As Father shifted his attention to developing the new business in Yunnan, he was constantly absent from Hong Kong, and the hostel and trading businesses were left in the care of the family in Hong Kong.  It is a key plank of the Plaintiff’s factual case, which is disputed, that from this point onwards the trading business became his business, and ceased to be Father’s or the family’s business, such that all the profits earned therefrom became his personal assets. 

17.  The next significant event took place in 1992 (the Plaintiff then aged 16).  By an assignment dated 20 August 1992, Father assigned the Property to Mother solely at a stated consideration of HK$1,300,000 (“1992 Assignment”).  On the same day, the HSBC Mortgage was discharged, and there was a new mortgage in favour of Liu Chong Hing Bank for HK$700,000, with Mother as borrower (“Liu Chong Hing Mortgage”).

18.  According to the Plaintiff, the reason why the aforesaid events in 1992 took place was because by then, Father’s Yunnan business venture failed, he became heavily in debt and returned to Hong Kong to raise funds to pay off his debts.  To that end, the Plaintiff says that Father, Mother, Grandmother and him entered into an oral agreement whereby Father agreed to assign the Property to the Plaintiff for HK$1,300,000, which Property would be held in the name of Mother on trust for the Plaintiff, and the consideration was to be discharged by the Plaintiff paying HK$300,000, Grandmother paying HK$200,000 and Mother paying HK$100,000, with the balance (HK$700,000)  raised through the Liu Chong Hing Mortgage (“1^st Family Agreement”).

19.  The Plaintiff also claims that he had since been solely responsible for the mortgage repayments under the Liu Chong Hing Mortgage, which was around HK$8,000 per month, by paying HK$10,000 each month to Mother.  The mechanism for such payment was (according to the Plaintiff)  by the Plaintiff collecting cash from the trading business and handing that over to Grandmother, from whom Mother would obtain money to pay the monthly instalments.

20.  In 1995, the Plaintiff (then aged 19)  graduated from secondary school after completing Form 5 and started working full time in the construction design business, earning around HK$12,000 per month. The Plaintiff remained in this industry until he became an insurance broker in 2005.  It appears that between 1995 and 2005, the highest salary he earned was around HK$17,100.[2]

21.  In 1996 there was another event affecting the Property.  On 19 July 1996, the Liu Chong Hing Mortgage was released, and a new mortgage with AVCO Financial Services (Asia)  Limited was entered into with Father and Mother as borrowers (“AVCO Mortgage”). The AVCO Mortgage was an all-monies mortgage and the amount advanced by the lender was not stated thereon and remains unknown.

22.  According to the Plaintiff, the reason for the 1996 events was because another business venture of Father in the Guangdong province, namely a hostel business, encountered difficulties in that after he had incurred costs in renovating the hostel the local authorities threatened to resume the land, and he needed money for a law suit against the local authorities, which the Plaintiff claimed to be in the region of HK$200,000.  Father therefore returned to Hong Kong and suggested to raise funds through refinancing the Property, which the Plaintiff agreed to, hence the AVCO Mortgage.

23.  The Plaintiff claims that the AVCO Mortgage was suggested and decided on by Father and Mother, who arranged everything.  He was not involved in the same nor had he read the mortgage documents; he did not know the loan amount, the tenor of the loan or the interest rate. He said he left everything to Father and Mother to handle. On his evidence, however, the AVCO Mortgage resulted in a reduction of the monthly repayment amount, from around HK$8,000 to around HK$6,000.

24.  The Plaintiff claims he was also solely responsible for the mortgage repayments of the AVCO Mortgage, by paying HK$8,000 monthly to Mother.  He claims that he did so by withdrawing cash from his bank account via the ATM machine monthly and paying the same to Mother until 2002, when Father moved back to Hong Kong, whereupon he handed the cash monthly to Father.  The Plaintiff has disclosed his bank statements from October 2002 to June 2005, which show that in many (but not all)  months there was a transfer of HK$6,000 (and on some occasions more and on some occasions less), either by way of ATM withdrawal, or more frequently transfer to another account No. 112-2-702572, which was described at times as “Savings/Time Deposit” but the identity of the account holder is not in evidence and remains unknown.

25.  The AVCO Mortgage was released on 12 December 2005.

26.  In 2006 there was yet another significant event affecting the Property.  On 12 July 2006, Mother assigned the Property to Father and Mother jointly at a stated consideration of HK$500,000 (“2006 Assignment”).  It is said, and it does not appear to be seriously disputed, that this was done because Mother was diagnosed of terminal cancer in late 2005 and this was put in place in preparation of her demise.

27.  The Plaintiff says that the 2006 Assignment was preceded by and for the purpose of implementing a further oral agreement, made between Father, Mother, Grandmother, the Plaintiff, and the 2^nd and 3^rd Defendants, that the Plaintiff would appoint Father as his trustee to hold the Property, and Mother would transfer half her interest in the Property to Father as joint tenant, and if Mother passed away, Father would be the remaining living trustee holding the Property on trust for the Plaintiff, and if Father were to pass away the Property would be transferred back to the Plaintiff (“2^nd Family Agreement”).

28.  By then, the Plaintiff was 30 years old, and his explanation for why he did not want to have the Property registered in his name (even though he claims Father and Mother had wanted to transfer it to him)  was that he was purchasing listed shares and warrants at the time which were high-risk investments, and he was worried that if those investments failed and he became bankrupt, he would be at risk of losing the Property.

29.  Shortly after the 2006 Assignment, on 27 July 2006, Mother passed away.  Thereafter Father became the sole registered owner of the Property.

30.  In March 2007, upon introduction Father married the 1^st Defendant in the Mainland.  The 1^st Defendant was 36 years old at the time while Father was 59.  The 1^st Defendant was educated up to Primary 3 in the Mainland and her native dialect is Hainanese; she speaks limited Cantonese, even up to now.  After they were married, Father brought the 1^st Defendant to Hong Kong, and they resided in the Property together with Grandmother, the Plaintiff, and for a short period the 3^rd Defendant (who got married in late 2007 and then moved out).

31.  It cannot be seriously disputed that the relationship between the 1^st Defendant and the rest of Father’s family was not good.  There were repeated allegations by Grandmother that the 1^st Defendant physically assaulted her, and charges were even brought against the 1^st Defendant on 2 occasions in 2008 and 2009, all of which were withdrawn or dismissed.  It is also clear that the friction was not only between Grandmother and the 1^st Defendant – on the 2 occasions when charges were brought against the 1^st Defendant, the Plaintiff and the 3^rd Defendant were also present respectively, and there were complaints by the 1^st Defendant that they were physical towards her.  By the end of 2009, Grandmother and the Plaintiff and his wife had all moved out of the Property.

32.  In 2010, Father renovated the Property and subdivided it into 4 units, with the 1^st Defendant and him occupying one unit and the remaining 3 units leased out for rent.  It appears that Father paid for the renovation cost with a HK$200,000 loan from American Wilson Finance Limited, which was secured by a legal charge over the Property dated 8 July 2010 (“AWF Charge”).  It is common ground that at all times up to his demise in 2017 Father collected and retained all rent from these units.

33.  The Plaintiff says that he knew about and consented to the renovation and subdivision, and that Father could keep the rent as his “pocket money”, but he was not aware that Father had executed the AWF Charge.

34.  The AWF Charge was discharged on 12 July 2012.  Again there is no evidence that the Plaintiff was aware of it.

35.  In around mid 2016, Father’s health began to deteriorate.  The parties explained that Father had contracted a rare disease, which they understood was serious but not immediately life-threatening.  However, unexpectedly Father’s condition deteriorated very rapidly; he was rushed to the hospital in March 2017 and was in a coma until he passed away on 16 June 2017, leaving no will.

B.  THE PLAINTIFF’S CLAIM

36.  It is clear from the above that since 2006, Father has been the sole registered owner of the Property, and the Plaintiff has never been (before or after 2006)  a registered owner of the Property.

37.  The Plaintiff’s pleaded case is that by virtue of the 1^st Family Agreement and the 2^nd Family Agreement, Father held (and now his estate holds)  the Property for the Plaintiff on a common intention constructive trust.

C.  THE LAW

38.  There is no dispute between the parties on the applicable legal principles.  Both parties refer to this Court’s earlier judgment in Woo Tat Huen v Lee Wai Ping the executor of the Estate of Tsang Kam Ho, deceased [2021] HKCFI 576, which summarized the law at §§42-46, and are reproduced for convenience here:-

“42. The starting point where there is sole legal ownership (as is the present case)  is sole beneficial ownership, and the onus is on the person seeking to show that beneficial ownership is different from the legal ownership; in other words, it is for the non-owner to show that he has any interest at all: Stack v Dowden[2007] 2 AC 432, §56.

43. The relevant principles have been conveniently summarized recently by Coleman J in Lam Ka Kui v Choi Yuen Ling [2020] HKCFI 2647; HCA 537/2017 (unrep., 23 October 2020), §§8-16:-

(1)  Where a common intention constructive trust has arisen, ownership in the property is split into legal ownership and beneficial ownership. The trustee holds the legal title on trust for the beneficiary.

(2)  Where a constructive trust is alleged to arise on the basis of the parties’ common intention, it is the intention commonly held by the property owner and the plaintiff regarding their shared beneficial interests in the property that matters. The trust is constituted by the three elements of (i)  the common intention, (ii)  the plaintiff’s detrimental reliance on their common intention, and (iii)  the unconscionability of the property owner departing from it.

(3)  The burden of proving each element of common intention, detrimental reliance and unconscionability is on the person seeking to show that the beneficial ownership is different from the legal ownership. The focus is on the intention of the parties at the time of acquisition of the asset. Contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event.

(4)  Common intention can be expressed or implied. It can be deduced or inferred objectively from the parties’ conduct. As a matter of common sense, it is easier to infer such an intention prior to the acquisition of property which results in an obvious change in legal ownership (rather than after such an acquisition where there is no change in legal ownership and a change in beneficial ownership is not otherwise apparent).

(5)  In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327, §§2.3-2.4, Cheung JA identified two situations where a common intention constructive trust may arise.

(a)  The first is where at any time prior to acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially. The finding of such an agreement or arrangement can only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been.

(b)  The second situation is where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property, and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by mortgage instalment payments, will readily justify the inference necessary to the creation of a constructive trust.

(6)  A resulting trust arises by virtue of the plaintiff’s contribution in money or in some other way towards the property's acquisition. Equity holds the legal owner to be a trustee of that property for the plaintiff in an appropriate share, giving effect to the parties presumed intention. Particularly in a domestic context, but also generally, if it is possible to resolve the matter by reference to common intention, there is no need to resort to resulting trust.

(7)  As emphasized in Stack v Dowden §§68-69, an intention to have beneficial interest different from legal interest in property is unlikely, and the task of showing that should not be lightly embarked upon. It was recognized that, in family disputes, strong feelings are aroused when couples split up which can often lead the parties, honestly but mistakenly, to reinterpret the past in self exculpatory or even vengeful terms. If a difference is to be found between the beneficial and legal interest, clear evidence will be required. Unequal contributions to the purchase price of property will not likely be enough to move away from the starting point that equity follows the law.

44. As can be seen from the above, ultimately it is a question of intention – in the case of constructive trust, the common intention of the property owner and the plaintiff; and in the case of resulting trust, the intention of the person who provided the purchase price at the time the property was acquired. Between the two, and particularly in a domestic context, if it is possible to resolve the matter by reference to common intention, it would not be necessary to resort to resulting trust at all: Primecredit §1.3.

45. The modern approach to constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context. 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: Primecredit §1.6.

46. Moreover, in the assessment (whether on constructive trust or resulting trust), the court should have regard to inherent probabilities in light of the surrounding circumstances at the time the property was acquired: Primecredit §1.4.”

D.  THE ISSUES TO BE DETERMINED

39.  In this case, it is common ground that the Plaintiff is relying on the “first scenario” in Primecredit, namely there was an express agreement, arrangement or understanding between the parties that the property is to be shared beneficially.  Thus, the Court should approach the matter by:-

(1)  making a finding, on the facts, whether there was any agreement, arrangement or understanding as contended for by the plaintiff; and

(2)  if so, whether the plaintiff can demonstrate that he has acted to his detriment or significantly altered his position in reliance on the agreement in order to give rise to a constructive trust:

Chen Kam Nga v Lee Ho Yin [2022] HKCA 1150, §19.

40.  Thus, notwithstanding the list of issues prepared by the parties, the real issues falling for determination in this case are:-

(1)  Whether the 1^st Family Agreement and the 2^nd Family Agreement existed;

(2)  If so, whether the Plaintiff had (i)  contributed HK$300,000 for the purpose of the 1^st Family Agreement, and (ii)  been solely responsible for mortgage repayments under the Liu Chong Hing Mortgage and the AVCO Mortgage;

(3)  As an ancillary issue relevant to relief, whether the Plaintiff is entitled to mesne profits[3] for the use of the Property from 16 June 2017.

E.  THE EVIDENCE AND WITNESSES

41.  First, it is not disputed that the Plaintiff bears the burden of proving all elements of the common intention constructive trust.  Thus, the fact that the 1^st Defendant has no relevant knowledge of the events that took place before 2007 (a matter which was repeatedly emphasized by Ms Leung for the Plaintiff)  is irrelevant.

42.  Second, it is also not in dispute that in the fact-finding exercise, the credibility of a witness should be assessed by reference to contemporaneous documentation, inherent probabilities having regard to all the facts that are known, as well as consistency of the witness’ evidence both with indisputable evidence and internal consistency: Hui Cheung Fai v Daiwa Development Ltd (unreported, HCA 1743/2009, 8 April 2014), §§77-82.

43.  In this case, there is no documentary evidence in support of the Plaintiff’s case, save for the limited bank statements mentioned in §24 above.  All the documents disclosed are public documents (e.g. assignments and mortgages obtained from the Land Registry)  which are consistent with Father’s interest in the Property.  In other words, the Plaintiff’s case is based on his oral testimony, supported by that of his siblings, the 2^nd and 3^rd Defendants.

44.  Four witnesses testified orally, namely the Plaintiff and each of the 1^st to 3^rd Defendants.

E.1  The Plaintiff

45.  The Plaintiff gave evidence in Punti for close to one full day.

46.  I do not find the Plaintiff to be a credible witness at all. 

47.  Although he was only educated up to Form 5, the Plaintiff is clearly an intelligent and street-smart person.  It is clear that he was fully aware of the critical factual premise or “events” that hold up his case; there was a marked difference in his approach to answering what he considered to be non-critical (including merely background-related)  and critical questions – for the former he was prepared to answer in a more ready manner, whereas in the latter case he repeatedly displayed coyness, avoided the question, or provided opportunistic answers which were quite clearly made up “on the spot”, as they were not only not recorded in any contemporaneous or court documents but at times inconsistent with what he has stated in his court documents.

48.  In particular, my assessment that the Plaintiff is not a credible witness is based on the following matters.

49.  First, as mentioned above there were numerous occasions during oral testimony that the Plaintiff was quite clearly making up answers “on the spot”.  The more salient examples include:-

(1)  On the issue of whether he was solely responsible for the mortgage repayments from 1996 to 2005, it was pointed out to him that the bank statements he disclosed (from October 2002 to June 2005)  showed that for a number of months he either had insignificant balances or was in deficit such that he could not have made regular monthly payments to Father as alleged, he claimed that he borrowed money from his friends to pay Father, even though that has never been mentioned in his pleadings or witness statement.

(2)  When asked why he did not produce bank statements save for those between October 2002 to June 2005, he first claimed he did not think of obtaining other statements, and then immediately changed his answer to say those statements were lost.

(3)  Likewise for the reason he provided for the 1996 Assignment (namely Father needed money for his lawsuit in the Mainland, see §22 above), when asked whether he had sought documents concerning that lawsuit from the 2^nd Defendant (who was said to have assisted Father in that business), he first answered that he never asked for those documents, and then immediately said there was no point to ask since the 2^nd Defendant had already told him that he has none.

(4)  With respect to the 2006 Assignment and the Plaintiff’s contention that Mother wanted to transfer the Property to him in anticipation of death, the Plaintiff claimed, in the context of explaining why the 2006 Assignment was thought to be a better alternative then Mother leaving the Property to him in her will, that they had taken legal advice and was advised to that effect; but when asked who was the lawyer who provided such advice he claimed that Father engaged that lawyer and it never occurred to him (the Plaintiff)  to seek out that lawyer to testify for him. This is wholly inconsistent with his pleadings and witness statements which portrayed that the 2^nd Family Agreement was done informally and orally among family members and no lawyers were involved.

(5)  He claimed that there was a second conversation, in the 1^st Defendant’s presence, when he told her that he (the Plaintiff)  was the owner of the Property but gave her a licence to live there, which was never mentioned in his witness statement (which only referred to a conversation with Father when the 1^st Defendant was not present), and when that inconsistency was pointed out to him his answer was he has forgotten about this second conservation.

(6)  In his Amended Statement of Claim the Plaintiff pleaded 2 occasions when he chased Father to transfer the Property to him, however in his oral testimony he changed his answer to 8 occasions, and not only so, he claimed to be able to identify fairly precisely when those 8 occasions took place (down to the month on some occasions).

(7)  When asked how he had chased Father to transfer the Property to him, he first said by telephone, then immediately changed it to face-to-face, and when asked which one he then said both.  It was then pointed out to him that at that time he was living with Father so why would he have to telephone Father to chase, he then changed his answer again to “sometimes over the phone”.

(8)  In answering questions on his chasing Father to transfer the Property back to him, the Plaintiff mentioned for the first time that he had consulted 2 lawyers, one during Father’s lifetime and one after he passed away, and had informed them of his beneficial interest in the Property.  When asked he claimed that one lawyer was called “Linda” and the other “Lawyer Yiu”, but was unable to provide any further particulars, or explain why these persons were not mentioned before or asked to give evidence on his behalf.  

50.  Second, he was wholly unable to provide any answer to various aspects of his case, and when those questions were put to him all he did was to repeat his assertions.  These include his contention that he had earned and saved up HK$300,000 between 1990 and 1992, when Mother and Grandmother who had been doing the same line of work for a much longer period of time did not manage to accumulate the same amount.

51.  Third, the Plaintiff is wholly unable to explain why relevant documents which are material to his assertions and which are indisputably in his possession or available to him have not been disclosed. These include (i)  bank statements evidencing his mortgage repayments (other than those referred to in §24 above)  and (ii)  statements from banks or securities firm evidencing his high-risk warrant trading in or around 2005 and 2006 (see §28 above).  With respect to (i), he gave inconsistent answers (see §49(2)  above).  With respect to (ii), he asserted that when he asked the securities firm he was told all his statements were lost.

E.2  The 2^nd Defendant

52.  The 2^nd Defendant is the eldest son of Father and Mother.  He has always resided in the Mainland, and does not have any personal knowledge on how the family businesses were operated, the transactions involving the Property, how mortgage repayments were made, or the 1^st Family Agreement other than what he claims to have been told by his family members.  He was, however, said to be a party to the 2^nd Family Agreement.

53.  I do not find the 2^nd Defendant to be a reliable witness.

(1)  His witness statement, save for those parts pertaining to his personal circumstances, is a near word-for-word reproduction of the witness statement of the Plaintiff, including those parts concerning how the 2^nd Family Agreement came about. 

(2)  With respect to the 2^nd Family Agreement, he has not been able to explain in his own words how it came about or what was said, save to say that the matters set out in his witness statement are correct.  This is most surprising if he had in fact taken part in the discussions, given the subject matter was something quite novel (holding on behalf of others; risks arising from bankruptcy)  and important (how the only significant asset of the family was to be handled)  to him, and one would have expected him to be able to provide his own perspective on what happened during those discussions.

(3)  Instead, he confirmed in cross-examination that he did not understand the concepts he mentioned in his witness statements – including what warrants are and whether a property could be held by one for another.  These seriously undermine the credibility of his assertions, which, coupled with the near identity with the relevant sections in the Plaintiff’s witness statement (and for that matter, the 3^rd Defendant’s witness statement), indicate he was simply adopting what the Plaintiff has asked him to say.

(4)  Further, the 2^nd Defendant also has a tendency of making up answers “on the spot”. When asked about his understanding of the meaning of Father holding the Property for the Plaintiff, he suddenly claimed that he has seen a document, in Chinese, in the form of a book, whereby Father was said to have held the Property for the Plaintiff.  No such document has ever been disclosed, and indeed even the Plaintiff is not contending that the trust he seeks to advance is evidenced in writing in any form. 

54.  It has been urged upon me that the 2^nd Defendant (and also the 3^rd Defendant)  has nothing to gain in the event that the Plaintiff succeeds in his claim, whereas in intestacy he (and the 3^rd Defendant)  will have a share in the Property.  I have taken that into account, but (i)  I do not find that such consideration is sufficient to outweigh the unsatisfactory aspects of the 2^nd Defendant’s evidence mentioned above, and in any event (ii)  I do not think one can discount the fact that the 2^nd Defendant (and also the 3^rd Defendant)  may be motivated by a combination of personal dislike of the 1^st Defendant and a desire to keep the Property wholly within what they perceive to be their family (i.e. without a half share going to the 1^st Defendant).

E.3  The 3^rd Defendant

55.  The 3^rd Defendant is the youngest sister. She is obviously very close to the Plaintiff, whom she grew up with in the same household after she moved down to Hong Kong at the age of 7, and the Plaintiff took care of her and paid for her books and pocket money.  She is currently working as an insurance broker under the Plaintiff.

56.  Although she does not accept her relationship with 1^st Defendant was not good, that is inconsistent with the matters in §31 above.  In fact, during her oral testimony she continued to maintain that the 1^st Defendant had physically assaulted Grandmother, and said that the 1^st Defendant had also done the same to her.

57.  I also do not find the 3^rd Defendant to be a reliable witness.

(1)  It is clear that she has no personal knowledge on the 1^st Family Agreement – she was 9 at the time, and she accepts that everything she knows about it is based on what others told her afterwards.

(2)  What she stated in her witness statement on the same, however, was (like the case of the 2^nd Defendant)  a near word-for-word reproduction of what was set out in the Plaintiff’s witness statement.

(3)  Further, it is clear from her oral evidence that what she actually knows pertains to aspects of the background – namely, the Plaintiff helped out Grandmother and Mother in the family business; that she has seen him hand over money to Grandmother; and that Father was in some financial trouble at one point – which do not show, one way or the other, whether there was the 1^st Family Agreement.

(4)  However, when she was asked for her views on the more unusual aspects of the Plaintiff’s case – for example whether she was surprised that the Plaintiff was able to pay HK$300,000 to Father in 1992 – she avoided answering the same and simply said she never thought about it.

(5)  Likewise for the 2^nd Family Agreement, which she said she was privy to and she was 23 years old at the time, she has not been able to explain in her own words or provide more “flesh” to the bare-bone contentions in her witness statement, identical in wording to the relevant parts in the Plaintiff’s witness statement.

(6)  As for the consideration that she does not “stand to gain” if the Plaintiff is successful in his claim I repeat §54 above.  Indeed, this consideration has even less weight in the case of the 3^rd Defendant given (i)  she has repeatedly emphasized that after the incidents in 2008 and 2009, she has concerns vis-à-vis the 1^st Defendant and became worried as to what would happen if Father and the 1^st Defendant got divorced or Father died, such that she thought it was better that the Plaintiff should get the Property (and she urged the Plaintiff to ask Father to transfer the Property to him as a result); and (ii)  she also mentioned repeatedly in her testimony that as the daughter in a traditional Chiuchow family, she is not entitled and has no expectation to inherit anything.

E.4  The 1^st Defendant

58.  As to the 1^st Defendant, she has received limited education, has been doing manual work all her life, and is a relatively simple person.

(1)  She does not have any personal knowledge on the events that happened before she met Father in 2007, and she frankly admits that she does not know about those events since Father never told her. 

(2)  Where she mentioned something for the first time in her testimony, she was able to back that up by evidence.  She mentioned for the first time in evidence that Father had given her some document about the Property that he asked her to place in the safe deposit box. When directed by the Court to produce the same, that turned out to be title deeds to the Property.  In other words, even though her limited knowledge makes it impossible for her to fully articulate what those documents were, she was being truthful even when she provided additional information not covered by her witness statement.

(3)  In the premises I find her to be a credible witness.  That said, her testimony has no real bearing on the factual matters I need to find.

E.5  Adverse inference

59.  For completeness, I should mention that both the Plaintiff and the 1^st Defendant attempted to argue, in closing, that adverse inference should be drawn against the other party, however both contentions are unsustainable.

(1)  The Plaintiff argues that an adverse inference should be drawn against the 1^st Defendant for failing to call Chan Yin Ping, the neighbour who lives next door to the Property and who is said to have personal knowledge of the disputes between the 1^st Defendant and Grandmother in 2008 and 2009.  In fact, Chan Yin Ping has provided a witness statement for the 1^st Defendant, but I was informed in oral opening that she did not want to give evidence in court, as a result of which counsel for the 1^st Defendant confirmed he would not rely on her witness statement, and accordingly I have not read it or placed any weight on it.  This is not a case of adverse inference at all.

(2)  The 1^st Defendant argues that an adverse inference should be drawn against the Plaintiff for failing to call the 2 lawyers he mentioned for the first time in cross-examination (see §49(8)  above).  After I queried whether this is a case of adverse inference, when the Plaintiff bears the burden of proof, such that if the failure to adduce such evidence results in the Plaintiff failing to prove his case then it is a matter of failure of proof, whereas if the Plaintiff is able to prove his case without relying on such evidence then he discharges his burden in any event, Mr Tony Chow, counsel for the 1^st Defendant, confirmed that he would not pursue this as a question of adverse inference but would confine his submissions to that of credibility (which I have already taken into account in §49(8)  above).

F.  DETERMINATION

60.  My findings on each of the issues set out in §40 above are as follows.

F.1  Whether the 1^st and 2^nd Family Agreements existed

61.  I find that the Plaintiff has failed to discharge his burden of proof, and I find as a fact that the 1^st and 2^nd Family Agreement did not exist.

62.  First, as mentioned above there is no documentary evidence in support of the Plaintiff’s contentions; his entire case is based on oral assertions only; and I have already found that he is not a credible witness whose testimony I can place weight on.  I have also found that that neither and 2^nd nor the 3^rd Defendants are reliable witnesses, such that their testimony cannot go to support the Plaintiff’s case either. 

63.  Second and importantly, there are critical aspects of the Plaintiff’s case that are inherently improbable.

64.  The first is the Plaintiff’s contention that since around 1990, the trading business was his business and all the profits belonged to him and that he managed to accumulate HK$300,000 which he gave to Father as consideration under the 1^st Family Agreement.

(1)  It is clear from the facts referred to in Section B above (including facts emanating from the Plaintiff)  that the hostel and trading businesses were family businesses operated by the family as a whole.  This was an immigrant family which was trying to sustain itself in Hong Kong, and all members of the family who were able to would have to assist in the businesses to help make ends meet.  Thus, Father and Grandmother moved to Hong Kong first and started the businesses; then Mother moved and joined in the efforts; and the Plaintiff too helped out with tasks commensurate with his age and ability.  The 3^rd Defendant did not take part only because she was much younger, and by the time she grew up the family businesses had either wound down or ceased operation altogether.

(2)  What the Plaintiff did after Father focused on pursuing his Yunnan business venture was no more than a continuation of the trading business set up by Father.  As the Plaintiff confirmed, he was sourcing goods from the same suppliers Father worked with, and the goods were delivered to resellers in the Mainland which were also contacts established by Father.  In other words, as Father decided to shift his business focus, he left his family – specifically Mother and the Plaintiff who was then growing up – to take care of the trading business which modus operandi he had already established and could be ran without the need for constant supervision by him.

(3)  This is bolstered by the fact that (as confirmed by both the Plaintiff and the 3^rd Defendant)  cash received from these family businesses would be handed over to Grandmother for centralized safekeeping, and this same fund would then be used to pay for household expenses and mortgage repayments.

(4)  It is also telling that the Plaintiff confirmed he did not keep a record of the cash he received, and he in fact did not know how much he had made.  When asked how he knew he could contribute HK$300,000 in 1992, he claimed that that was what Grandmother took out of the drawer, which he then regarded as the profits he had made and belonged to him.  This is simply inconsistent with the trading business being his own business, but is wholly consistent with it being the family business and Grandmother taking up the treasury role with control over the family finances. 

65.  The second is that the HK$300,000 (as well as the HK$100,000 and HK$200,000 said to have been attributed to Mother and Grandmother respectively)  is clearly a contrived figure put forward by the Plaintiff to justify the 1^st Family Agreement, and is completely at odds with the Liu Chong Hing Mortgage.

(1)  The 1992 Assignment, which should be viewed together with the Liu Chong Hing Mortgage (since they were dated the same date), was a transfer within the family, from Father to Mother, for a consideration of HK$1,300,000.

(2)  At the time, there was still an extant HSBC Mortgage, made 4 years ago, when the Property was valued at HK$578,000.

(3)  The loan Liu Chong Hing Bank agreed to advance was HK$700,000.

(4)  Thus, it is clear that the HK$1,300,000 stated in the 1992 Assignment was to justify the HK$700,000, to show that the then value of the proposed security would more than justify the loan sought (around 53%).

66.  The third is that all decisions relating to Property after 1^st and 2^nd Family Agreements were made by Father and Mother or Father alone – including the change from the Liu Chong Hing Mortgage to the AVCO Mortgage, the AWF Charge and its discharge, the subdivision of the Property and choice of tenants – without reference to the Plaintiff, and the Plaintiff did not bother to find out details on the same.  This is wholly inconsistent with the Plaintiff being the beneficial owner of the Property at all times.

67.  The fourth is that the Plaintiff’s story about the 1^st Family Arrangement simply does not make sense, for he claims that both Mother and Grandmother had contributed funds (in the same total amount as he did), and yet neither of them received any interest in the Property.  The Plaintiff claims in oral testimony that Mother and Grandmother had gifted their shares to him; quite apart from the fact that this (that they were intended to have a share but somehow they agreed to gift that to the Plaintiff)  was never mentioned before and is different from the version put forward by the Plaintiff, it begs the question why when there were 3 siblings in the family (and the 2^nd Defendant is a son and also the eldest), Mother and Grandmother would single out the Plaintiff and gift their shares to him, effectively cutting out all other children.  The Plaintiff might have helped in the family businesses but others had not; but there is no evidence that they deliberately chose not to help out, and to rely on the Plaintiff having helped out for 7 years during his teens to cut out the other children (in circumstances where there is no evidence that the relationship between Father and Mother and these other children was not good)  does not make sense.

68.  The fifth is that the Plaintiff’s own conduct is also completely inconsistent with him being the sole beneficial owner of the Property (which he claims to have been clearly established since 1992).  It he had been the sole beneficial owner, one would have expected that after the events in 2008 and 2009 he would have asked Father and the 1^st Defendant to leave the Property, instead of him, his wife and Grandmother moving out.  After all, what beneficial ownershjp means is that the Property is his – even during Father’s lifetime.  The fact he, his wife and Grandmother had to move out after the relationship turned sour is a clear indication that the Property did not belong to him but to Father.

69.  Third, there are also substantial inconsistencies in the Plaintiff's evidence, see Section E.1 above.

F.2  Whether financial contribution

70.  I also find that the Plaintiff has failed to discharge his burden of proof on this issue, and I find as a fact that (i)  the Plaintiff did not make contribution of HK$300,000 in 1992; and (ii)  he was not solely responsible for the mortgage repayments since 1992, and to the extent that he has made contributions towards mortgage repayment, that was part and parcel of his supporting his parents in their general livelihood and not by way of an obligation under the 1^st Family Agreement.

71.  First, I have already dealt with the HK$300,000 in §§64-65 above.

72.  Second, on the mortgage repayments:-

(1)  Between 1992 and 1995 (when the Plaintiff graduated and started working full time), it was clear from the Plaintiff’s own evidence that mortgage repayments were made out of the family “pot” safekept and controlled by Grandmother.

(2)  Between 1995 and 2002, during which the Plaintiff claims he would withdraw cash to give to Mother on a monthly basis, there is simply no evidence whatsoever to substantiate this, other than the Plaintiff’s bare assertion.  Moreover, at the time the Plaintiff claims to be earning around HK$12,000 (and no more than HK$17,100 at its peak), whereas the sums he claims to have given to Mother ranged from HK$8,000 to HK$10,000, which, after taking into the HK$500 he claimed to give to the 3^rd Defendant, would mean he basically was left with little to nothing to pay for food, transportation, clothes and other essentials.

(3)  In any event, to the extent that the Plaintiff had paid money to Mother, I consider that to be consistent with the family dynamics described in §64(1)  above, at a time when the Plaintiff was still relatively young, living at home, and not having started his own family. 

(4)  As for the period 2002 to 2005, which the Plaintiff claims he withdrew cash and paid the same to Father for mortgage repayment, (i)  as pointed out in §49(1)  above, the bank statements available showed that this was not done regularly on a monthly basis, and indeed at times the bank account simply did not have enough balance for payment at all; (ii)  the amounts withdrawn were not invariably HK$6,000, but fell within a range from HK$5,000 to HK$10,000; and (iii)  the majority of the withdrawals shown were in favour of a bank account (described at times as “Savings/Time Deposit”: see §24 above)  whose account holder is unknown.  In her closing Ms Leung alleged that this was Father’s account; but there is simply no evidence to substantiate that, and as pointed out by Mr Chow, the schedule of assets attached to Father’s letters of administration does not show that this was an account in Father’s name.  In light of the above, there is no basis for me to conclude that the payments the Plaintiff identified in these bank statements were payments made to Father for mortgage repayments.

(5)  I should also point out that this was not a case where the family had no income other than that of the Plaintiff.  On the evidence of the Plaintiff and 2^nd and 3^rd Defendants Grandmother and Mother continued to operate the hostel business until 2000, and that Father was operating some (unspecified)  business in the Mainland until he moved back to Hong Kong in 2002, whereupon he took up a job as a caretaker.  Thus, even without financial contributions from the Plaintiff, Father, Mother and Grandmother appeared to be able to discharge mortgage repayments by themselves.

73.  In light of my findings above, I reject the Plaintiff’s case on the 1^st and 2^nd Family Agreements and his financial contributions pursuant thereto.  The Plaintiff’s claim on common intention constructive trust thus fails.

F.3  Mesne profits[4]

74.  In light of my findings on the common intention constructive trust, this issue does not arise. However for completeness, I will make the following findings.

75.  Any mesne profits could only have arisen from Father’s death on 16 June 2017, there being no suggestion that Father and the 1^st Defendant’s occupation of the Property, or Father’s retention of the rental proceeds, prior thereto was without the knowledge or consent of the Plaintiff.

76.  As mentioned above the Property has since 2010 been divided into 4 units, with one unit occupied by Father and the 1^st Defendant, and the remaining 3 leased out.

77.  There is evidence on the state of occupancy of the 3 leased units since June 2017 as well as the amount of rental generated (up to 31 December 2020).  I see no reason why mesne profits should not be assessed by reference to the actual receipts, there being no suggestion that the 1^st Defendant has deliberately withheld these units from lease.  Based on the agreed figures placed before me, the actual receipts for these 3 units from 17 June 2017 to 28 February 2023 were HK$605,073.33, and I assess the mesne profits for these units accordingly.

78.  As to the remaining unit occupied by the 1^st Defendant, both parties have adduced expert evidence on the market rental, the main difference between the experts being whether market rental should be valued on the basis that the Property is a single dwelling or 4 subdivided units (on the basis that the latter appeared to have been done without permission under section 14 of the Buildings Ordinance (Cap. 123)).

(1)  It seems to me that the Property having in fact been subdivided and occupied / leased out on that basis, there is no reason why when one assesses mesne profits, one should not proceed on the same basis.  There is no question of the Court condoning any unauthorized building works, that not being in issue before the Court and there being incomplete evidence concerning the same in any event.

(2)  Only the Plaintiff’s expert has provided a valuation on the 4-unit basis, at HK$8,000 per month. I will adopt this valuation, and the agreed figures place before me show that the total market rental for this self-occupied unit between 17 June 2017 to 28 February 2023 would have been HK$547,733.33, and I will so find.

G.  CONCLUSION

79.  Accordingly I will order that the Plaintiff’s claims against the 1^st Defendant be dismissed.

80.  As to costs:-

(1)  I see no reason why costs should not follow the event. I make a costs order nisi that the Plaintiff pays the costs of this action to the 1^st Defendant, to be taxed if not agreed.

(2)  Where an application is for the benefit of the estate and the beneficiaries, whether the application is brought by the executor or a beneficiary, the costs of all parties are regarded as incurred for the benefit of the estate, and would be ordered to be paid out of the estate on a solicitor and client basis (the Buckton (1)  and (2)  situations): In re Buckton [1907] 2 Ch 406, 414-415, approved in Cheung Pui Yuen v Worldcup Investments Inc (2009)  12 HKCFAR 31, §§56-57.

(3)  I see no reason why, to the extent that the 1^st Defendant is unable to fully recover her costs from the Plaintiff, she should not be allowed to recover the same from Father’s estate.  I do not accept the Plaintiff’s contentions that (i)  the 1^st Defendant acted unreasonably in defending the action, where there is no contemporaneous documentary evidence that supports the Plaintiff’s case, and for the reasons given the Plaintiff’s case is mired with inherent improbabilities; or that (ii)  she has acted for her own benefit, when she is but one of the beneficiaries entitled on intestacy.

(4)  I am not prepared to accede to the 1^st Defendant’s submissions that the 2^nd and 3^rd Defendants should be jointly and severally liable with the Plaintiff to pay the 1^st Defendant’s costs.  The 2^nd and 3^rd Defendants were joined as parties on the basis that they are beneficiaries in the intestacy and it is desirable that any findings to be made by this Court would bind them too.  It is true that they are supportive of the Plaintiff’s position and have given evidence for the Plaintiff, but I do not consider that they have crossed the line of being mere witnesses, or that there is conduct on their part which justifies the exercise of discretion to make them personally liable for the 1^st Defendant’s costs.

(5)  As to the scale of costs, I see no reason why it should not be on the High Court scale, for while this action appears to have straddled the coming into effect of the amendment to the District Court Ordinance (Cap. 336)  on 3 December 2018, the Plaintiff has not attempted to transfer the matter down to the District Court thereafter, and has been content to litigate the matter in the High Court.