SUEN YAT HAU v. SUEN LAP SHUN

HCA 745/2014 & HCA 746/2014

[2023] HKCFI 2272

HCA 745/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 745 OF 2014

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HCA 746/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 746 OF 2014

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JUDGMENT

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Introduction

1.  This is the trial of the 2 Actions. The parties are brothers of the Suen family and their wives.

2.  In the 1^st Action (“HCA 745”), the principal dispute concerns the beneficial ownership of Shop B, Ground Floor, Tai Wo Mansion, Nos. 4 and 6 Tai Wo Street, Wan Chai, Hong Kong (“Tai Wo Shop”). The Tai Wo Shop was part of the Ground Floor of Tai Wo Mansion.

3.  On 15 June 1988, the Plaintiff (“Plaintiff” / “Yat Hau”) and his friend CT Suen entered into the Agreement for Sale and Purchase of the Ground Floor of Tai Wo Mansion with the developer at the consideration of HK$4,480,000. The agreement between the two was that they would partition the Ground Floor into Shop A and Shop B, and then assign Shop A to CT Suen and Shop B ie the Tai Wo Shop to Yat Hau for his use as his place of business. Subsequently, by an Assignment dated 30 August 1988, and pursuant to Yat Hau’s version of the in 1988, the Tai Wo Shop was assigned to the Plaintiff and the Defendant jointly (“Defendant” / “Lap Shun”) who have since been and are the registered owners of this property. The Plaintiff is the elder brother of the Defendant. This is the lead Action.

4.  In HCA 745, the Plaintiff’s case is that he was at all material times and is the sole beneficial owner of the Tai Wo Shop and he seeks inter alia a declaration that the Tai Wo Shop was and is held by the Defendant and himself on trust for him absolutely.

5.  Lap Shun denies Yat Hau’s case. He says pursuant to his version of the Suen Family Arrangement in 1988, he is not just the legal but also the beneficial owner of the Tai Wo Shop in equal share with Yat Hau and counterclaims for a declaration to that effect. Consistently with his case, Lap Shun also says in around late 2000, their Father raised with Yat Hau that he should start paying half share of rental for Yat Hau’s use of the Tai Wo Shop as business premises. Eventually, Lap Shun and Yat Hau agreed that Yat Hau should pay a monthly rent of HK$20,000 to Lap Shun.

6.  Lap Shun also puts forward a case that pursuant to the so-called August 2002 Agreement (“August 2002 Agreement”), Yat Hau had agreed to pay Lap Shun half share of the market rental for Yat Hau’s use of the Tai Wo Shop as his own place of business. This was again premised on the basis that Lap Shun was a joint beneficial owner of the Tai Wo Shop. The payment was effected by discharging the obligation of Lap Shun’s wife (“Madam Xie”) to contribute to her half share of monthly mortgage instalments in respect of the Discovery Park Property, as defined below, which is the subject matter of the 2^nd Action (“HCA 746”).

7.  On Lap Shun’s case, from around September 2002 to March 2009, Yat Hau had honoured the August 2002 Agreement and discharged Madam Xie’s 50% contribution towards the mortgage instalments of the Discovery Park Property, which was in addition to Yat Hau’s wife’s (“Madam Wong”) own 50% contribution. Since Yat Hau has wrongfully failed to continue with the payment under the August 2002 Agreement after March 2009, Lap Shun counterclaims that he is entitled to be paid half of all monthly mortgage instalments in respect of the Discovery Park Property from April 2009 to 5 January 2013.

8.  Yat Hau disputes the existence of the August 2002 Agreement. The reason why he and/or Madam Wong took up the sole responsibility of repaying the mortgage loan for the Discovery Park Property from September 2002 to March 2009 was because Madam Xie had unilaterally refused to continue to pay her 50% contribution since September 2002.

9.  Lastly, Lap Shun claims that on 5 January 2013, Yat Hau formally denied his beneficial interest in the Tai Wo Shop by a pre-action letter demanding Lap Shun to assign his interest in the Tai Wo Shop to Yat Hau, and this act should be regarded as wrongful ouster of a co-owner. The August 2002 Agreement was thus expressly repudiated by Yat Hau. From 6 January 2013 until the date of Judgment or such other appropriate date, Lap Shun is entitled to be paid occupation rent/mesne profits at half of the prevailing market rent of the Tai Wo Shop.

10.  The 2^nd Action ie HCA 746 relates to Flat D, 7^th Floor, Block 5, Discovery Park, No. 398 Castle Peak Road, Tsuen Wan, New Territories (“Discovery Park Property”) which was and is registered in the sole name of the Defendant ie Madam Xie. This property is the subject of an oral joint venture agreement in March 1997 (“JV Agreement”) between the 1^st Plaintiff ie Madam Wong and Madam Xie. The JV Agreement was to jointly purchase the Discovery Park Property for investment purpose. The terms of the JV Agreement were that:

(a)  Madam Wong and Madam Xie would each apply for a ballot (“the Ballot”) in the sales of the properties in a development known as Discovery Park on Castle Peak Road, Tsuen Wan, New Territories (“Discovery Park”);

(b)  the person whose application by way of the Ballot was successful would:

i.  purchase a new Discovery Park Property in her sole name; and

ii.  hold half of all legal and beneficial interest and estate in the Discovery Park Property on trust for the other; and

(c)  all costs, expenses and profits in relation to the said Discovery Park Property would be shared equally between Madam Wong and Madam Xie[1].

11.  Pursuant to the JV Agreement, Madam Wong and Madam Xie each applied for the Ballot in or around March 1997 but only Madam Xie’s application was successful. Hence, pursuant to the JV Agreement, Madam Xie in her sole name entered into a Provisional Agreement for Sale and Purchase dated 27 March 1997 and a formal Agreement for Sale and Purchase dated 3 April 1997 to purchase the Discovery Park Property. By an Assignment dated 20 April 1998, the Discovery Park Property was assigned into the sole name of Madam Xie.

12.  In HCA 746, the issues are straightforward. At para 18 of her Defence and Counterclaim, it is not disputed that Madam Wong and Yat Hau are entitled to paras 1 and 2 of their prayer for relief. A slightly modified version of paras 1 and 2 is contained in Mr Khaw SC’s Closing as follows:

(a)  A declaration that the Discovery Park Property was at all material times and is held by Madam Xie on trust for Madam Wong and Madam Xie as tenants in common in equal shares.

(b)  An order that Madam Xie shall do all necessary work in transferring and/or assigning half of all legal and beneficial interest and estate in the Discovery Park Property to Madam Wong.

13.  Further, it is no longer disputed by Madam Xie that the court may grant an Order for sale of the Discovery Park Property as part of the Judgment in HCA 746. The only remaining factual issue is the existence or otherwise of the August 2002 Agreement as pleaded in para 9(8) of the Defence and Counterclaim which of course is also an issue in HCA 745.

14.  In Mr Khaw SC’s Closing, in addition to seeking paras 1 and 2 of the prayer for relief as modified, he also asks for the following reliefs to be granted by this court:

“(3) An order that the Discovery Park Property be sold in the open market;

(4) An order that the net sale proceeds of the Discovery Park Property be paid into Court pending the accounts and directions as to what is due to Madam Wong and/or Madam Xie;

(5) An order for all accounts and inquiries as to what is due to Madam Wong and/or Madam Xie be conducted by a Master;

(6) An order that each of Madam Wong and Madam Xie shall pay the amount found due to the other, if any, upon taking the said accounts and inquiries; and

(7) Liberty to apply.”

The Agreed Facts

15.  The parties have helpfully filed a statement of Agreed Facts in each Action. They are replicated as follows.

“Agreed Facts in HCA 745[2]

A. Pre-1988

1. The late Mr Suen Hin (“Father”) and the late Madam Chan Su Lan (“Mother”) (collectively “Parents”) gave birth to four sons (collectively “Siblings”), namely, in descending order of age:

(1) Suen Yat Hau (“Yat Hau”) (born in 1956), the Plaintiff in HCA 745/2014 (i.e. the Tai Wo Action), the 2^nd Plaintiff in HCA 746/2014 (i.e. the Discovery Park Action), and the husband of Madam Wong Man Yu (“Madam Wong”), the 1^st Plaintiff in the Discovery Park Action;

(2) Suen Lup Chung (“Lup Chung”) (born in 1958);

(3) Suen Lap Shun (“Lap Shun”) (born in 1960), the Defendant in the Tai Wo Action and the husband of Madam Xie Daphne Pei Wen (“Madam Xie”), the Defendant in the Discovery Park Action; and

(4) Suen Chun Shan (“Chun Shan”) (born in 1968): see Yat Hau’s 745 WS §4.

2. In around 1966, Father decided to run his own glass and mirror business, after having worked for his elder brother who ran a glass and mirror business in Wan Chai: see Yat Hau’s 745 WS §5.

3. In 1969:

(1) Father founded “King Cheung Mirror”, a business providing services of, inter alia, processing, trading and installation of mirrors (“Parents’ Business”): see 745 AD&C §3 and 745 R&DC §4(2).

(2) Mother rented the shop premises at G/F, No. 30 Tai Yuen Street, Wan Chai (“Tai Yuen Shop”) and registered the business trading name “King Cheong Mirror”, with Mother being the sole proprietor from 21 August 1969 to 2 June 1988.

(3) The Parents’ Business was carried on at the Tai Yuen Shop.

(4) Although the registration of the Parents’ Business was made under Mother’s name, it was owned and run by the Parents together as a family business until May 1988: see Yat Hau’s 745 WS §6.

4. Between 1969 and 1978, the Parents and their four children resided at the mezzanine floor of the Tai Yuen Shop. In 1978, the Parents purchased a property situated at Flat E, 9/F, Tung Hing Building in Wan Chai (“Tung Hing Property”) as the residence of the Suen family: see Yat Hau’s 745 WS §7.

5. As the eldest son of the family, Yat Hau started working for Father on a part-time basis in around 1967, when he was in Primary 5 and 6: see Yat Hau’s 745 WS §5. Upon completion of Primary 6 education in 1969, Yat Hau joined the Parents’ Business as a full-time apprentice at their request. He was promoted to become a formal skilled worker in around 1973: see Yat Hau’s 745 WS §8.

6. From about 1979 to May 1988, both Yat Hau and Lap Shun did work for the Parents’ Business: see 745 AD&C §7 and 745 R&DC §§8, 13. Lap Shun accepts that Yat Hau, being the eldest son, started working for the Parents’ Business earlier than him.

7. In May 1982, Mother and Yat Hau jointly purchased Flat 12B of Lee Loy Building in Wan Chai at a consideration of $247,000. The property was subsequently sold in June 1988 at a consideration of $327,000.

8. In 1984, Yat Hau married Madam Wong. Thereafter, the Parents entrusted Madam Wong to deal with sales, customers and the accounting and clerical matters of the Parents’ Business. Madam Wong was also responsible for cooking meals for all staff members at the Tai Yuen Shop: see Yat Hau’s 745 WS §14.

9. In around September 1984, Lap Shun started an aquarium business known as “Sea Wave Aquarium”, which failed after about one year: see Yat Hau’s 745 WS §10; Lap Shun’s 745 WS §17.

10. At least until May 1988, the living expenses of the Suen family and the education expenses of Lup Chung and Chun Shan were financed by the income derived from the Parents’ Business: see 745 AD&C §11 and 745 R&DC §10(1).

B. 1988-1989

11. In around 1987 or 1988, the Tai Yuen Shop was required to be demolished for redevelopment: see 745 AD&C §15 and 745 R&DC §14, and hence the need for new premises to operate “King Cheung Mirror” arose. Father was then not in good health: see 745 ASOC §6(3); 745 AD&C §31.

12. Yat Hau was the one to look for new premises: see 745 R&DC §15. Incidentally, Mr Suen Ching Tong (“CT Suen”), Yat Hau’s childhood friend, was also looking for shop premises for his business: see 745 AD&C §16; 745 R&DC §14.

13. Lap Shun never took part in locating the shop premises for the “King Cheung Business” (i.e. “King Cheung Mirror”, King Well Glass Products Company Limited and other business entities set up by Yat Hau relating to “King Cheung Mirror” after June 1988), nor did he ever participate in inspecting the Tai Wo Shop before Yat Hau decided to purchase the same: see 745 AD&C §§19-20.

14. On 20 April 1988, Yat Hau and Madam Wong jointly purchased Flat 1306 of Tai Hang Terrace at $668,000.

15. On 2 June 1988, the Parents’ Business ceased its business registration.

16. On 8 June 1988, Yat Hau applied for registration of “King Cheung Mirror” as his business in sole proprietorship. The commencement date of this business was said to be 1 June 1988.

17. Yat Hau was intended to be, and has all along been, the sole owner of the King Cheung Business since its inception in June 1988: see 745 AD&C §§34-36. It has never been Lap Shun’s case that he was responsible for running the King Cheung Business. Lap Shun worked for the King Cheung Business as an employee from June 1988 to January 2014: see 745 AD&C §38; Lap Shun’s 745 WS §46; Lap Shun’s tax returns.

18. On 15 June 1988, Yat Hau and CT Suen entered into a Sale and Purchase Agreement to jointly purchase the Ground Floor of Tai Wo Mansion (“Head SPA”), which was later partitioned to Shop A (later co-owned by CT Suen and another person) and Shop B (“Tai Wo Shop”).

19. On 12 July 1988, Yat Hau and Lap Shun entered into a Sale and Purchase Agreement to purchase the Tai Wo Shop from Yat Hau and CT Suen. The purchase price of $2,090,000 was funded by a mortgage loan from The Kwangtung Provincial Bank (“KPB”) of $1,800,000, which, together with an overdraft facility of $100,000, were secured by the Tai Wo Shop itself and the Tung Hing Property. The Parents, Yat Hau and Lap Shun all signed on the relevant legal charge instrument dated 30 August 1988.

20. On 30 August 1988, the Tai Wo Shop was assigned to Yat Hau and Lap Shun as joint tenants.

21. The Tai Wo Shop was intended to be, and has all along been, used as the shop premises of King Cheung Business: see 745 AD&C §38.

22. Lap Shun has never made any direct financial contribution towards the purchase price of the Tai Wo Shop: see 745 AD&C §§21, 25; Lap Shun’s 745 WS §§30, 35.

23. Lap Shun has never made any payment or direct financial contribution towards the mortgage loan instalments, utilities and overheads in respect of the Tai Wo Shop: see 745 AD&C §37. The same were all paid by Yat Hau out of the income of the King Cheung Business, see e.g.

24. All mortgage instalments in respect of the Tai Wo Shop, as well as the Parents’ living expenses and those of Yat Hau and Lap Shun (and their respective families) were solely paid by Yat Hau out of the King Cheung Business’ income: see 745 AD&C §37; Lap Shun’s 745 WS §57(2).

25. On 29 December 1989, the legal charge on the Tung Hing Property in favour of KPB was released upon partial repayment of the mortgage loan from KPB, but the legal charge on the Tai Wo Shop remained in place.

C. 1990’s

26. In December 1993, Mother and Lap Shun jointly purchased Flat 11B of New Spring Garden Mansion (“Flat 11B of New Spring Garden”) in Wan Chai at a consideration of $1,338,000. Before assignment, Mother nominated Yat Hau as one of the purchasers in her stead. The property was then assigned to Lap Shun and Yat Hau as joint tenants.

27. Lap Shun married Madam Xie in 1995: see Lap Shun’s 745 WS §57(1). Shortly thereafter, both of them moved into and occupied a spare room of Yat Hau’s family residence at Ronsdale Garden and thereafter, at Phoenix Court for some 14 years between 1996 and around February 2010: see 745 AD&C §49(1); 745 R&DC §41; Lap Shun’s 745 WS §57.

28. During the aforesaid period (i.e. between 1996 and around February 2010), Lap Shun and Madam Xie did not have to pay rent to Yat Hau and Madam Wong for their living in Ronsdale Garden and Phoenix Court. All the living expenses, including utilities, meals, chores and the salaries of domestic helpers, were solely paid by Yat Hau out of the income of the King Cheung Business during that period: see Lap Shun (D)’s 745 WS §57(2).

D. 2000’s

29. On 31 July 2000:

(1) the legal charge on the Tai Wo Shop in favour of KPB was released; and

(2) Yat Hau and Lap Shun executed another mortgage over the Tai Wo Shop in favour of First Pacific Bank Limited (“FPB”) to obtain a loan from FPB to, inter alia, facilitate Yat Hau’s purchase of a property situated at Flat A, 2/F, Block 5, Phoenix Court, 39 Kennedy Road, Hong Kong (“Phoenix Court Property”), in which both the families of Yat Hau and Lap Shun later resided: see 745 ASOC §14; 745 AD&C §§40-42; 745 R&DC §§32-33.

30. Father passed away in February 2001: see 745 AD&C §47; 745 R&DC §39.

31. In about August 2002, a meeting took place in the Phoenix Court Property amongst Mother, Yat Hau, Madam Wong, Lap Shun, Madam Xie, Chun Shan and his wife to discuss matters in relation to, inter alia, the Tai Wo Shop: see 745 AD&C §53; 745 R&DC §44.

32. By a Deed of Gift dated 12 November 2003, Yat Hau assigned his share in Flat 11B of New Spring Garden to Lap Shun. Lap Shun has remained the sole legal and beneficial owner of Flat 11B of New Spring Garden since then.

33. In around early to mid-2009, Lap Shun and Yat Hau exchanged offers in relation to the Tai Wo Shop: see 745 AD&C §67; 745 R&DC §55.

34. Mother passed away in August 2009: see 745 AD&C §63; 745 R&DC §51.

35. After Mother passed away, on 2 September 2009, the Siblings met at a tea restaurant to discuss matters in relation to the family. During this meeting, Chun Shan wrote on a piece of paper, on which Yat Hau signed the initial “孙”.

36. In around late 2009, further negotiations between Lap Shun and Yat Hau took place, but they were unable to reach an agreement over the Tai Wo Shop.

37. In January 2012, the Siblings entered into a Deed of Family Arrangement, under which Yat Hau and Lap Shun agreed to relinquish their interests over the Tung Hing Property and let Lup Chung and Chun Shan fully inherit it from Mother’s estate: see 745 AD&C §§64-65; 745 R&DC §§52-53.

38. On 5 January 2013, Yat Hau, through his solicitors, sent a pre-action letter to Lap Shun, demanding Lap Shun to assign his interest in the Tai Wo Shop to Yat Hau: see 745 AD&C §69; 745 R&DC §56.

39. In around January 2014, Lap Shun ceased working for the King Cheung Business as an employee: see Lap Shun’s 745 WS §46.”

“Agreed Facts in HCA 746[3]

1. In March 1997, Madam Wong and Madam Xie entered into an oral joint venture agreement to purchase a new property at the Discovery Park for investment purpose (“JV Agreement”), with details as follows:-

(1) each of Madam Wong and Madam Xie would apply for a ballot in the sales of new properties at the Discovery Park;

(2) the person whose application by way of ballot was successful would purchase a new Discovery Park property under her sole name, and hold half of all legal and beneficial interest and estate in the said Discovery Park property on trust for the other;

(3) all costs, expenses and profits in relation to the said Discovery Park property would be shared equally between Madam Wong and Madam Xie: see 746 SOC §5; 746 D&C §3.

2. Pursuant to the JV Agreement, each of Madam Wong and Madam Xie applied for a ballot in the sales of Discovery Park properties, but only Madam Xie’s application was successful: see 746 SOC §6; 746 D&C §4.

3. In late March 1997, Madam Wong and Madam Xie orally agreed to purchase the Discovery Park Property at the consideration of $4,739,030: see 746 SOC §7; 746 D&C §4.

4. Pursuant to the JV Agreement, Madam Xie entered into a written Provisional Agreement and formal Agreement for the purchase of the Discovery Park Property at the consideration of $4,739,030.

5. On 20 April 1998, Madam Xie executed a written Assignment of the Discovery Park Property into her sole name pursuant to the JV Agreement: see 746 SOC §8(3); 746 D&C §4.

6. In reliance of the JV Agreement, Madam Wong caused Yat Hau to join with Lap Shun to obtain a mortgage loan of $3,220,000 from Chase Manhattan Bank (“CMB”) for the payment of the balance of the purchase price of the Discovery Park Property: see 746 SOC §12; 746 D&C §7. Yat Hau and Madam Xie opened a joint account with Bank of China (Hong Kong) Limited for the purpose of repayment of the mortgage loan instalments of the Discovery Park Property: see 746 SOC §13; 746 D&C §8.

7. In early 1998, Madam Xie executed a written Declaration of Trust (“Declaration of Trust”) in respect of the Discovery Park Property in favour of Yat Hau as Madam Wong’s nominee: see 746 SOC §§9-10; 746 D&C §5. According to the terms of the Declaration of Trust:-

(1) Madam Xie declared that the Discovery Park Property was held by her on trust for “the Beneficiary”, which was defined as Yat Hau and Madam Xie as tenants in common.

(2) At the request of “the Beneficiary”, Madam Xie would assign, transfer or otherwise dispose of the Discovery Park Property to “the Beneficiary” or to such other person or persons at such time or times and in such manner as “the Beneficiary” shall direct or appoint.

8. Between June 1998 and August 2002, both Madam Wong and Madam Xie made contributions to the monthly instalments of the mortgage loan for the Discovery Park Property but the exact amounts of their respective contributions are in dispute: see 746 SOC §13; 746 D&C §8(1).

9. In March 2009, Madam Wong and Madam Xie had a disagreement over a proposed sale of the Discovery Park Property. Thereafter, Madam Wong refrained from making further contributions towards the repayment of the mortgage loan of the Discovery Park Property owed to CMB: see 745 AD&C §§58-62; 745 R&DC §49.

10. It is common ground between the parties to the Discovery Park Action that, by virtue of the JV Agreement and the Declaration of Trust, Madam Xie holds half of the legal and beneficial interest and estate in the Discovery Park Property upon trust in favour of either Madam Wong or Yat Hau: see 746 D&C §18(1).

11. On such basis, the parties are in agreement that §§(1) and (2) of the Prayers for Relief in the 746 SOC should be allowed: see 746 D&C §18(1).”

HCA 745 - deliberation

16.  At trial, Yat Hau testified for himself whereas Lap Shun called 3 witnesses viz himself, Madam Xie and Chun Shan, the youngest of the 4 Suen siblings.

The Core Issue

17.  As explained in Mr Khaw SC’s Executive Summary of his Closing, HCA 745 comes down to one core issue ie whether there was a common intention within the Suen family, in particular, between Yat Hau and Lap Shun, that Lap Shun was holding his share of the Tai Wo Shop on trust for the benefit of Yat Hau until the Tung Hing Property was redeemed?

18.  This core issue is elaborated in para 1 of the Joint List of Issues as follows: What was the Family Arrangement in respect of the purchase of the Tai Wo Shop in 1988, given that:

(a)  according to Yat Hau’s case, the Family Arrangement was that (i) he would be solely responsible for the whole purchase price of the Shop, (ii) Lap Shun would be named as an additional owner on record for the purpose of providing additional assurance and/or peace of mind to the Parents that the Tung Hing Property would be redeemed and released without any risk of enforcement actions being taken by the mortgagee against the property, and (iii) Lap Shun’s name would no longer be necessary as an additional owner and he would have no beneficial interest in the Shop once the Tung Hing Property was redeemed or released upon Yat Hau’s repayments of the mortgage loan;

(b)  according to Lap Shun’s case, the Family Arrangement was that (i) the down payment of the Shop would be paid by or sourced from the Parents, (ii) the Shop shall be registered under the names of Yat Hau and Lap Shun under a joint tenancy and each of them shall hold an equal share having regard to the efforts and contributions made by them to the business of “King Cheung Mirror”, and (iii) the remaining balance of the purchase price for the Shop shall be paid by raising a mortgage loan from Kwangtung Provincial Bank (“KPB”) as secured by both the Shop and the Tung Hing Property?

19.  Just to re-cap,

(a)  the Tung Hing Property was purchased by and registered in the names of Father and Mother in 1978 as the residence of the Suen Family;

(b)  in 1988, at the request of KPB, it was used as additional security (additional to the Tai Wo Shop) to secure a mortgage loan of HK$1.8m to fund the purchase of the Tai Wo Shop as well as an overdraft facility of HK$100,000;

(c)  on 29 December 1989, the legal charge over the Tung Hing Property in favour of KPB was released upon partial repayment of the KPB mortgage loan but the legal charge over the Tai Wo Shop remained in place;

(d)  on 31 July 2000, the legal charge over the Tai Wo Shop in favour of KPB was released;

(e)  also in 2000, Yat Hau and Lap Shun executed another mortgage over the Tai Wo Shop to secure a loan to, inter alia, fund Yat Hau’s and Madam Wong’s purchase via Bloomec International Limited (“Bloomec”) of the Phoenix Court Property;

(f)  the Phoenix Court Property later became the residence of the families of both Yat Hau and Lap Shun.

20.  Since both the Plaintiff and the Defendant have put forward their version of a common intention and an express agreement among themselves and the Parents on the beneficial interests in the Tai Wo Shop, the focus of the trial should be to ascertain as a fact what the actual intention and express agreement of the parties was: Leung Siu Man and Others v Leung Yiu Tai [2019] HKCFI 1971 at [25].

21.  In Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 at para 1.6, Lam VP (as he then was) observed that since Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776, as far as Hong Kong is concerned, the modern approach on constructive trust is to assess the common intention of the parties by a holistic approach having regard to the context.

22.  In Chen Kam Nga v Lee Ho Yin [2022] HKCA 1150 at paras 19-20, Kwan VP elaborated on the two situations in which common intention constructive trust might arise:

“19. The first situation is where there is evidence of an agreement, arrangement or understanding between the parties that the property is to be shared beneficially, at any time prior to the acquisition or, exceptionally, at some later date. The finding of such an agreement, arrangement or understanding can only be based on evidence of express discussions between the parties, however imperfectly remembered and however imprecise the terms. This is independently of any inference to be drawn from the conduct of the parties. Once a finding to this effect is made, the party asserting a beneficial interest has to show 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.

20. In contrast to the above is the situation where there is no evidence to support a finding of an agreement or arrangement to share, and the court must rely entirely on the conduct of the parties, both as the basis from which to infer a common intention to share the property beneficially 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 payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust.”

23.  In Chan Sang v Chan Kwok [2015] 3 HKLRD 131, a case cited by Mr Khaw SC for illustration purposes, the subject matter was a shop in which the plaintiff ran an electrical business. The shop was assigned to the plaintiff and the defendant, who were brothers, as tenants-in-common in equal shares and the two had, for some 32 years, been and still were the registered co-owners of the shop at trial. The plaintiff’s case was that he was the sole beneficial owner of the shop, and the defendant has all along been holding his half share in it on trust for him. The Plaintiff’s case came down to one issue viz whether there was a common intention as between the plaintiff and the defendant that the defendant would hold the half share in the shop on trust for the benefit of the plaintiff until the latter’s repayment of a loan of HK$60,000 which he obtained from their father to finance the purchase of the shop.

24.  At [38] - [39], Chow J (as he then was) held that, as a matter of principle, there was no reason why the doctrine of “common intention constructive trust” can have no application outside the “domestic consumer context”, although the context can be relevant in considering the common intention of the parties as regards the beneficial ownership of a property purchased either in their joint names or in the sole name of one of the parties. Further, since the plaintiff’s case was based on an express agreement that he allegedly made with the defendant, if the court should conclude that the alleged agreement was in fact made such that it was agreed that the defendant’s name would be removed as soon as the plaintiff had repaid the loan to their father, there was no reason in principle why the court should not or would not give effect to that agreement upon full repayment of the loan by the plaintiff.[4]

25.  In the present case, there is no doubt that Yat Hau and Lap Shun are the two main protagonists. But this court would like to make a few observations on Madam Xie’s and Chun Shan’s evidence first.

26.  Madam Xie’s testimony does not touch on the Family Arrangement reached in 1988 and has little if any probative value on the common intention of the parties back in 1988. After all, she married Lap Shun only in 1995.

27.  Her testimony is largely limited to repeating Lap Shun’s case that (i) Yat Hau had promised to pay Lap Shun HK$20,000 per month as his share of rental payment for the Tai Wo Shop from November 2000 and (ii) the Alleged August 2002 Agreement. Further, her evidence on those 2 subjects is mostly hearsay. For instance, at para 9 of her witness statement, she said: “I learnt from both my mother-in-law and my husband that my parents-in-law had put the Tai Wo Property under the joint names of my husband and Yat Hau in equal shares.” At para 11, she said: “In about November 2000, I learnt from my father-in-law that he had brought up with Yat Hau the issue of Lap Shun’s entitlement to half share of the rental of the Tai Wo Property since the mortgage loan previously borrowed for the purchase of the property had been fully repaid.”

28.  Hence, if this court accepts Lap Shun’s testimony, Madam Xie’s evidence adds little of value. On the other hand, if this court rejects Lap Shun’s testimony as incredible, this court cannot see how Madam Xie’s repetition of what Lap Shun says can be accepted as credible.

29.  Chun Shan’s testimony is equally of limited value if not worse than Madam Xie’s.

30.  As pointed out in Mr Khaw SC’s Closing at para 115, during cross-examination, Chun Shan was very reluctant to accept that Yat Hau has been the sole proprietor of the King Cheung Business since June 1988. This is so even Lap Shun himself accepts he had no interest in the King Cheung Business and was not entitled to share the profits of that business. The relevant parts of his cross-examination are:

“Q. Mr Suen, according to Lap Shun’s own evidence, there was in fact another meeting in 1988 for another family arrangement who decided who should take over the business. And in fact, according to Lap Shun’s evidence, after that meeting regarding the business, steps were taken for the deregistration of the old King Cheung and the registration of the new King Cheung. Now, first of all, were you aware of such a meeting in 1988?

A. I should not be there. I only learnt that from others.

Q. Learnt from whom?

A. From my father and my mother.

Q. Now, again, it is Lap Shun’s evidence that at that meeting on the business, it was decided that Yat Hau alone would take over the business. Is that what you gathered from your parents?

A. There’s some difference.

Q. I see. So what would you say the parents told you about the business at that time?

A. Regarding the business, it will be given to Yat Hau and Lap Shun for them to do the business.

Q. That still remains your understanding even as at today, is that correct?

A. Can you please put it more directly?

Q. Your understanding of the business today is still that both Yat Hau and Lap Shun were jointly running the business?

A. Should be initially.

Q. So what do you mean by “initially”?

A. Should be at the time in 1988, at the time when dealing with the Tai Wo Street property, my parents did mention about it.

Q. And when was that changed?

A. Later, I heard my father say that my eldest brother requested to change the names...

Q. When did he...

A. ...change it to his sole name for him to run the business.

Q. When did he tell you that?

A. Should be also in 1988.

Q. Did your father tell you that it was decided that Yat Hau would be the only person who would run the business, starting from 1988? Did he tell you that?

A. Because at that time...

Q. No. Focus on my question...

A. ...Yat Hau told my father.

Q. ...Mr Suen. Don’t try to give your own speech.

A. Because I just looked back the facts only.

Q. Did your father, in 1988, actually tell you that it was decided that Yat Hau alone would manage the business?

A. It cannot be put like that, saying that for one person to do the business.

Q. So your father never told you, in 1988, that the business would be taken over by Yat Hau only? Is that what you’re trying to tell us?

A. Correct, that’s violating his own intention because his own intention was to give it to the two brothers.

Q. All right. Did Lap Shun actually tell you that in fact there was a family arrangement that Yat Hau, it was decided within the family, that Yat Hau alone would continue to run and manage the business?

A. I was not told by Lap Shun. It should be from the communications that I had with my parents, I learnt it from them.

Q. Right. Let me just try to understand a bit more. Earlier on, when I asked you whether your father, in 1988, actually told you that, well, the business would be taken over by Yat Hau only, your answer was that you disagree.

A. Right, disagree. Because the original intention was not like that.

Q. But now you are trying to tell us that through some communications with your parents, your parents did tell you that the business would be taken by Yat Hau?

A. Yes, because there’s a reason.

Q. Right. So am I correct in saying that in the year 1988, you knew from your parents that the business would be taken over by Yat Hau?

A. Yes, in the end.

Q. Yes. And from then onwards, you were also aware that Yat Hau would be the only proprietor of the business, Lap Shun would not have a share in it. Would you agree?

A. It cannot put like that.

Q. So are you now telling us that both Yat Hau and Lap Shun had their share in the business?

A. How can I put it? In fact, regarding the business, my father entrusted my eldest brother to manage it.

Q. And?

A. The original intention was for the two brothers, the reason why the name on the business registration only my eldest brother’s name was there, because my eldest brother said to my father, for the matters concerning the business transactions and also signing the cheques, when two persons were required to sign the documents, it will be not that convenient, and eventually my father accepted his suggestion, so eventually my eldest brother was entrusted to manage this family business, and at the same time, Suen Yat‑hau, my eldest brother, guaranteed to my father that he would not ill-treat my third brother, that is, Suen Lap‑shun, and asked my father to ease his mind.

Q. You seem to have a very good memory of Lap Shun’s evidence, Mr Suen. Because, just now, you were just...

A. Because it’s a fact.

Q. Yes. Now, so what you just told us about this discussion as to who eventually should take over the business, the discussion between parents and Yat Hau and Lap Shun, you never attended any of those discussions, correct?

A. Because normally when such meetings were held, it would be held at Tung Hing building, and I was living together with them.

Q. So are you now telling the court that when Yat Hau, Lap Shun and your parents talked about who should take over the business, you were there? You witnessed what they said?

A. Regarding this, I’m not very clear, because this kind of discussion should have been held more than once.

Q. If you’re not clear about whether you -- if you are not even clear about whether you attended any of those meetings, how could you be sure that this happened more than once?

A. Because I always heard my parents say.

Q. So -- sorry. My last question on this topic: so are you now telling the court that what you knew about the discussions on who should take over the business came from what your parents told you?

INTERPRETER: Came from the parents...

Q. Came from what your parents told you?

INTERPRETER: Thank you.

A. Yes.

Q. Now, another very simple question, Mr Suen: despite the fact that the new King Cheung has been registered under the sole name of Yat Hau, are you telling us that both Yat Hau and Lap Shun should have their shares in the business?

A. You can say that.

Q. So in view of your understanding, both Yat Hau and Lap Shun will be entitled to the profits earned from this business?

A. That should be the case.”

31.  That part of Chun Shan’s cross-examination demonstrates 2 things. First, he shows a distinct bias towards Lap Shun to the extent that he is even prepared to embellish his testimony and go further than Lap Shun’s own case. Second, Chun Shan impresses this court as an evasive and unhelpful witness.

32.  Further, Chun Shan’s understanding of what happened in 1988 was mostly hearsay evidence of what he claims to have learned from the Parents. The same is true of his evidence about Yat Hau’s payment of rental to Lap Shun in 2000. At para 21 of his witness statement, he said: “I learnt from my parents before they passed away, Lap Shun and his wife Daphne Xie that Yat Hau began to pay rent in respect of Tai Wo Property (“the Shop’s Rent”) to Lap Shun in about 2000, after the mortgage loan for the purchase of Tai Wo Property was fully repaid.”

33.  Just like Madam Xie’s testimony, if this court accepts Lap Shun’s testimony on the Core Issue, Chun Shan’s evidence adds little of value. On the other hand, if this court rejects Lap Shun’s testimony as incredible, this court cannot see how Chun Shan’s corroboration of what Lap Shun says can be accepted as credible.

34.  Since the common intention and the express agreement were not recorded in writing, the credibility of Yat Hau and Lap Shun becomes of vital importance to the adjudication of the Core Issue. Yat Hau accepts he bears the burden of proving that the beneficial ownership of the Tai Wo Shop is different from the legal ownership. The focus is on the intention of the parties in the context of the Family Arrangement (separately put forward by Yat Hau and Lap Shun) in 1988.

35.  This court has carefully considered the testimony of all witnesses and assessed it against such of the documentary evidence as there is and the known and undisputed surrounding circumstances of this case. This court has also considered the inherent probabilities or otherwise of the parties’ respective contentions, and assessed the witnesses’ credibility accordingly. Lastly, this court would also take note of the well-established general approach on fact-finding and assessment of credibility as summarised in Hui Cheung Fai v Daiwa Development Limited unrep, HCA 1734 of 2009, 8 April 2014, DHCJ Eugene Fung SC at [77] - [83], a case cited by Mr Law. The approach is really all common sense but it is perhaps worth reminding oneself of the following:

(a)  Contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.

(b)  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.

(c)  In determining a witness’ credibility, it is also important to have regard to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence, which is to be tested by a comparison between the witness’ oral testimony and his witness statement.

36.  This court starts with the Agreed Facts. The parties have also produced a Combined Chronology which helpfully set out what facts are and what facts are not in dispute.

37.  In around 1966, Father founded “King Cheung Mirror”, a business for the processing, trading and installation of mirrors. This was the so-called Parents’ Business although it was the Mother who had registered herself as the sole proprietor the business “King Cheong Mirror” from 21 August 1969 to 2 June 1988. The business of “King Cheong Mirror” was owned and run by the Parents as a family business ie the Parents’ Business until around May 1988.

38.  As the eldest son of the family, Yat Hau, upon completion of Primary 6 education in 1969, joined the Parents’ Business as a full-time apprentice. He was promoted to become a formal skilled worker in around 1973. According to Yat Hau, since around 1982, ie 9 years after he became a formal skilled worker, the Parents entrusted upon him to manage the Parents’ Business by dealing with customers directly for orders, giving quotations, procuring materials and hiring employees or part-time workers. While this was originally disputed by Lap Shun in the Combined Chronology, he admitted the same during cross-examination in the morning of Day 4. Lap Shun also admitted that the Parents wanted him to focus more on the actual physical work.

39.  Anyway, this court does not see anything improbable that the aging Parents would want to hand over more managerial responsibility to their eldest son who had worked in the business full-time for 13 years since 1969. This is also consistent with the Agreed Facts that after Yat Hau got married in 1984, the Parents further entrusted Madam Wong to deal with sales, customers and the accounting and clerical matters of the Parents’ Business.

40.  On the other hand, Lap Shun only began to work for the Parents’ Business from about 1979, alongside Yat Hau. While Lap Shun alleged that he worked full time for the Parents’ Business, this is disputed by Yat Hau. As an example, Yat Hau points out that in around September 1984, Lap Shun started an aquarium business known as “Sea Wave Aquarium” which failed after about one year. This is an agreed fact.

41.  Pausing here, it seems to this court that Lap Shun’s case is inherently improbable in so far as it alleges the Tai Wo Shop shall be registered in the names of Yat Hau and Lap Shun under a joint tenancy and each of them shall hold an equal share having regard to the efforts and contributions made by them to the business of “King Cheung Mirror”. The efforts and contributions made by them to the Parents’ Business are vastly different and cannot logically be a reason for Lap Shun to have an equal share of the Tai Wo Shop which he did not pay for.

42.  In around 1987 or 1988, the Tai Yuen Shop where the Parents’ Business was operated was to be demolished for redevelopment and hence the need to look for new premises to run the mirror business. Yat Hau was the one who looked for and eventually found the new premises for that purpose.

43.  In early 1988, Father was about 65 years old and was not in good health while Mother was about 55. According to Yat Hau, Father and Mother decided to retire and cease the Parents’ Business. They asked Yat Hau to run a mirror business in the name of “King Cheung” after the cessation of the Parents’ Business. This is disputed by Lap Shun whose case is that Father actually wanted both Yat Hau and Lap Shun to take over the mirror business but Yat Hau objected. Eventually, the Parents conceded and let Yat Hau take over the mirror business in his sole name.

44.  Anyway, the indisputable facts are that (i) on 2 June 1988, the Parents’ Business ceased to operate according to its business registration record and (ii) on 8 June 1988, Yat Hau applied for the registration of “King Cheung Mirror” as his own sole proprietorship business (“King Cheung Business”). The commencement date of this business was stated to be 1 June 1988. It was Yat Hau who “succeeded” the mirror business as a sole proprietor while Lap Shun was only an employee of the King Cheung Business.

45.  Lap Shun never took part in locating the new shop premises for the “King Cheung Business”. Nor did he inspect the Tai Wo Shop before Yat Hau decided to purchase the same. The Tai Wo Shop has all along been used as the shop premises of “King Cheung Business”.

46.  It has never been Lap Shun’s case that he was responsible for running the King Cheung Business. Lap Shun worked for the King Cheung Business as an employee from June 1988 to January 2014 and received a salary from Yat Hau. On top of that, his family’s living expenses were all paid for out of the King Cheung Business.

47.  In cross-examination on Day 4, Lap Shun said he was not expected to and had never made any financial contribution towards the purchase price of the Tai Wo Shop. Nor has Lap Shun made any financial contribution towards the mortgage loan instalments, utilities and overheads in respect of the Tai Wo Shop. The mortgage loan instalments were, according to Yat Hau, all paid out of the income of the King Cheung Business. This was accepted by Lap Shun in cross-examination on Day 4. It is an agreed fact that all mortgage instalments, utilities and overheads in respect of the Tai Wo Shop, as well as the Parents’ living expenses and those of Yat Hau and Lap Shun (as well as their respective families) were solely paid by Yat Hau out of the King Cheung Business’ income.

48.  Pausing here again, it seems to this court that Lap Shun’s case is also inherently improbable in so far as it alleges that because the down payment of the Shop would be paid by or sourced from the Parents, he should have a joint beneficial interest in the Tai Wo Shop. Even assuming for the sake of argument, as submitted by Mr Law in his Closing, that some of the down payments and initial expenses (stamp duty and conveyancing costs) were sourced from the Parents, that would still not readily explain why Yat Hau would agree that Lap Shun should have a joint beneficial interest in the Tai Wo Shop. It is one thing for Yat Hau to respect and address the Parents’ concern by adding Lap Shun’s name to the Tai Wo Shop, it is another thing for Yat Hau to agree to effectively give away for free “half” of the beneficial ownership of the Tai Wo Shop when he had provided all (according to Yat Hau) or at least the bulk (as accepted by Lap Shun) of the funding for its purchase.

49.  In terms of figures, the consideration for the Tai Wo Shop was HK$2.09 million. Yat Hau, in the name of his King Cheung Business, had obtained an instalment loan of HK$1.8 million[5] to fund the purchase according to the KPB’s facility letter dated 4 August 1988. As can be seen from the Combined Chronology, Lap Shun’s case is that the Parents funded HK$59,355 as stamp duty and conveyancing costs and HK$165,000 as balance of purchase price of the Tai Wo Shop.

50.  On these facts alone, it is wholly improbable that there was a common intention or express agreement among the Parents and the 2 brothers that Lap Shun should be given a joint beneficial interest in the Tai Wo Shop with Yat Hau. In the event, for instance, Yat Hau passed away before Lap Shun, that would mean the entire Tai Wo Shop would pass to Lap Shun. Agreeing to Lap Shun to become a co-owner only makes sense if the arrangement is temporary. On the facts, the Tung Hing Property was released as security for the KPB mortgage loan in December 1989, slightly over 1 year after the mortgage loan was granted.

51.  On the other hand, Yat Hau’s testimony was that, in June / July 1988 when he applied for a mortgage loan to fund the purchase of the Tai Wo Shop and for an overdraft to support the King Cheung Business, KPB required him to put up further security in addition to the Tai Wo Shop. He therefore asked his Parents who agreed to use the Tung Hing Property as further security.

52.  The Parents, for reasons of their own, were concerned about using the Tung Hing Property as security. This led to the Mother’s suggestion of adding Father as a co-owner of the Tai Wo Shop, so as to give them some peace of mind that the Tung Hing Property would be redeemed and released “without any hiccup”, whatever that might mean to them. In Yat Hau’s 1^st witness statement at para 23, he said:

“…I believe that my Parents might have thought that in case the business did not do well and should I ever encounter difficulty in discharging the repayment obligations of the KPB loan, my Father (if he was named as one of the owners) might be able to oversee things so as to ensure that my Parents’ Tung Hing Property would not be affected. Their concern was probably not justified, given that the business was doing well at that time with an average turnover of about HK$2.5 million a year but I could well understand why my Parents still wanted to have more assurances that things would not go wrong…However, it was understood clearly between me and my Parents that the Property would be purchased by me and it was intended to be my own property which would be used for the continuation and further development of the King Cheung Business and I would be responsible for paying all the costs and expenses in relation to the purchase of the Property and taking up all future financial obligations (including mortgage repayments) in connection with the same.”

53.  Upon further discussion within the family, the Parents decided not to add Father’s name because of his advanced age and deteriorating health. They then considered Lup Chung who refused and Chun Shan who was too young to be a co-owner of the Tai Wo Shop. Lap Shun was thus the only available candidate as an additional legal owner of the Tai Wo Shop.

54.  It was in these circumstances that the Parents, Yat Hau and Lap Shun agreed and intended as a family arrangement that:

(a)  Tai Wo Shop would be purchased and solely owned by Yat Hau;

(b)  Lap Shun would be registered as an additional owner on record for the purpose of providing additional assurance and/or peace of mind to the Parents as aforesaid;

(c)  Lap Shun’s name would no longer be necessary as an additional owner and he would have no beneficial interest in the Tai Wo Shop once the Tung Hing Property was released.

55.  As submitted by Mr Khaw SC in his Closing, Lap Shun, during cross-examination on Day 4 afternoon, unequivocally admitted that the reason why it was considered necessary to have an additional registered owner for the Tai Wo Shop was to provide some assurance or peace of mind to the Parents that the Tung Hing Property would be redeemed. Further, Lap Shun admitted that (i) it was the understanding and arrangement in the family that once the Tung Hing Property was redeemed or discharged, the additional name would no longer be necessary; and (ii) it was eventually decided that his name would be used after Father’s name and Lup Chung’s name were considered but were not used.

56.  The relevant parts of the transcript on Day 4 are as follows:

“Q. Did parents actually tell you whether they had any concern arising from this need to provide Tung Hing property as additional security?

A. Yes.

Q. Did they tell you their fear that once the property was put up as additional security there will be some risk that it may not be discharged?

A. Yes.

Q. In fact, at that time the reason why it was considered necessary to have an additional name registered for the Tai Wo Shop was that it would provide assurance or some peace of mind to the parents that the Tung Hing property could be redeemed?

A. Yes.

Q. And in fact it was also the understanding and arrangement in the family that once Tung Hing property was redeemed or discharged, this additional name would no longer be necessary?

A. Right.

Q. And for this purpose, father’s name was first considered, do you remember?

A. Yes.

Q. But in view of his age and health, the name of Lup Chung was then considered?

A. Yes.

Q. But as Lup Chung was at that time planning to reside overseas, it was finally decided that your name would be put as the additional owner on record?

A. Yes.” (emphasis added)

57.  In re-examination on Day 5 afternoon, Lap Shun tried to backtrack on his answers during cross-examination the day before. The result, in this court’s view, is to further undermine his own credibility for contradicting himself.

58.  The transcript on Day 5 setting out the relevant parts of his Re-examination are as follows.

“ MR LAW: Okay. I would.

Q. So Mr Suen, I want to ask: altogether, how many meetings the Suen family had over these family arrangements before the shop, Tai Wo Shop, was purchased?

A. One.

Q. I’ll move on. You once answered Mr Khaw, in 1988, the understanding within the family was that once the Tung Hing mortgage is discharged -- no, sorry. I’ll say that, sorry -- yesterday, you gave the following answer: once the security of Tung Hing property is discharged, the additional name over Tai Wo Shop will no longer be required. You answered, “right” to this proposition.

A. No.

Q. So are you now saying you actually disagree with this proposition?

A. Right.

Q. And following that proposition, Mr Khaw said father was first considered to be the additional name over Tai Wo Shop.

A. Yes.

Q. You again answer “yes” to that.

A. Later on, I did make a correction. That is, to add my name there.

Q. Listen carefully, please. In your evidence-in-chief, ie the witness statement, you said the shop was originally intended to be the four brothers’ names.

A. Yes.

Q. Later on, the decision was Yat Hau and yourself?

A. Yes.

Q. Now, yesterday, you said father was first considered to be the additional name over the shop.

A. Yes.

Q. So which was the truth?

A. To add my name.

Q. No...

A. And also Suen Yat-hau’s.

Q. Now, the outcome was Yat Hau and you, nobody dispute, all right?

A. Yes.

Q. The question is about what was the original idea before this outcome. I’ll ask you again: four brothers or father?

A. Four brothers.

Q. Then why did you, yesterday, answer the father’s name was first considered to be added?

A. Perhaps I misheard the question.

Q. You also at one stage said Lup Chung, Lup Chung only, not all four brothers, were suggested to be the additional owner.

A. I misheard.

Q. You also said Lup Chung ultimately was not chosen because he went overseas.

A. Yes.

Q. Did you remember you said that yesterday?

A. Yes, I remember.”

59.  In sections C1 to C3 of Mr Law’s Closing entitled “Issue 1: Family Arrangement over the Tai Wo Shop”, he has made extensive attacks on Yat Hau’s credibility by pointing out some changes made to his case on why an “Additional Owner on Record” was needed, including the minor amendment to para 6(2)(b) of the Amended Statement of Claim. This court has considered those attacks but does not find them sufficient to dent Yat Hau’s credibility to any significant extent.

60.  At the end of the day, the reason why an “Additional Owner on Record” was required was because of the agreement for the Parents to provide the Tung Hing Property as further security and their need for some peace of mind. Whether this additional Owner on Record was supposed to take up the repayment obligations of Yat Hau in case of his business being unsuccessful or whether he was supposed to ensure the Tung Hing Property would be redeemed without risks of enforcement action against the Tung Hing Property does not really matter. What matters is what the Parents would accept as something that gave them peace of mind. As submitted by Mr Khaw SC in his Closing, Yat Hau has all along been addressing the same concern that the Parents had when they agreed to put the Tung Hing Property up as additional security ie in case of default on the KPB mortgage loan, the Tung Hing Property might be at risk. In fact, given Lap Shun’s relatively meagre salary while working as an employee of King Cheung Business, if that business faltered, it was inherently improbable that Lap Shun himself could take up the repayment obligations to KPB. In his Supplemental Witness Statement, Lap Shun accepted that he could not afford to repay the mortgage instalments of the Tai Wo Shop to KPB. While one may question the logic of the Parents’ idea of adding Lap Shun as an additional owner on record, this is not in itself sufficient to reject Yat Hau’s case.

61.  After observing Lap Shun in the witness box for a couple of days, this court finds him to be a confused and unreliable witness who kept changing his evidence between his pleaded case, his witness statements, his cross-examination and re-examination. Some examples of these can be found, for instance, in section B2 of Mr Khaw SC’s Closing which this court agrees. Further, Lap Shun appears to this court to have harboured a strong sense of acrimony towards Yat Hau for not sharing the King Cheung Business and the Tai Wo Property with him. This is encapsulated in his repeated answers on Day 5 in cross-examination, just before lunch time, that he did not know whether Yat Hau treated him as a brother or a worker. The relevant parts of his cross-examination are as follows:

“Q. Going back to my question, my question was simply after Yat Hau took over the business, you remained an employee and also a worker in the business, or try to have your contribution, but as far as your role is concerned, you remained an employee and a worker?

A. Well, I don’t agree with that.

Q. So are you now telling us that you should actually be regarded as a boss?

A. I don’t know whether Suen Yat-hau regarded me as a brother or a worker or an employee.

…

Q. Right. Mr Suen, now, can you tell us honestly, were you not content with the fact that you all along remained an employee in the business?

A. Yes, I was discontented.

Q. So all along, since your brother took over the business, you have been feeling not content with this position?

A. Correct.

Q. All along you had this thinking that, “Hey, why should you be the proprietor of the business? I should have a part of it”?

A. Yes.

Q. But you were paid your salary...

A. Yes.

Q. ...after Yat Hau took over?

A. I received my salary for a period of time.

Q. Well, at least you tell us that in this action, you have had no complaint whatsoever about payment of salaries?

A. Right.

Q. And Yat Hau, after he took over the business, according to your case, also took the responsibility for paying the living expenses of the whole family, correct, including your family?

A. Yes.

Q. And you were never asked to be responsible for any outgoings, expenses, for the business?

A. Right.

Q. But you have been feeling not content because you believe that you should be entitled to the profits of the business, is that right?

A. Yes.

Q. And that was the thinking you had from years since Yat Hau took over?

A. No.

Q. So since when did you have the idea that you should be entitled to the profits of the business?

A. Ever since my parents had suggested that Suen Yat-hau, that he should take over the business, then I did not have such a thinking.

Q. Now, Mr Suen, so you are now telling us that, well, since Yat Hau took over the business, you have never had any idea that you would be entitled to the business profits, is that what you’re now telling us?

INTERPRETER: I’m sorry, I can’t hear you.

MR KHAW: Sorry.

Q. Since Yat Hau took over the business in 1988, you have never had any idea that you should be entitled to the business profits?

A. Right.

Q. Then why did you just now tell us that since Yat Hau took over the business, you have been feeling not content with your role as an employee?

A. It’s because I don’t know whether he regarded me as a brother or a worker.” (emphasis added)

62.  Lap Shun’s acrimony towards Yat Hau is most unfortunate.

63.  In December 1993, the Mother and Lap Shun jointly purchased Flat 11B of New Spring Garden Mansion (“11B New Spring Garden”) in Wan Chai at a consideration of HK$1,338,000. Before the assignment, Mother nominated Yat Hau as one of the purchasers in her stead. The property was then assigned to Lap Shun and Yat Hau as joint tenants. On 12 November 2003, Yat Hau executed a Deed of Gift to assign his interests in 11B New Spring Garden to Lap Shun.

64.  During the 14 years between around 1996 and 2010, Yat Hau’s family and Lap Shun and Madam Xie were sharing the same residence and Lap Shun did not have to pay rent to Yat Hau. Further, all the living expenses, including utilities, meals, chores and the salaries of domestic helpers, were paid by Yat Hau out of the income of the King Cheung Business. Meanwhile, Lap Shun had been received rental income from 11B New Spring Garden.

65.  Looking at the matter in the round and taking a holistic approach to the evidence, this court accepts Mr Khaw SC’s submission that Yat Hau’s case and his testimony is credible, inherently probable and should be believed. On the other hand, Lap Shun’s case and his testimony should be rejected as incredible.

66.  That determines Yat Hau’s case on the Core Issue. The other main sub-issues will follow logically from this court’s aforesaid ruling since their determination mainly depends on whether Lap Shun has or has not a beneficial interest in the Shop and can be dealt with briefly.

Payments of rental from Yat Hau to Lap Shun since November 2000?

67.  Given this court’s acceptance of Yat Hau’s case that Lap Shun had no beneficial interest in the Tai Wo Shop, Lap Shun’s case that he was entitled to rental and Yat Hau’s alleged agreement to pay such rental to him must also be rejected.

68.  In what follows, this court shall briefly express its views on the parties’ submissions on this Issue.

69.  Just to re-cap, the KPB mortgage was discharged on 31 July 2000, to be replaced by a mortgage loan from FPB on the same day. The FPB Mortgage over the Tai Wo Shop was executed by Yat Hau and Lap Shun. What happened later that year was that Yat Hau, through Bloomec, purchased the Phoenix Court Property in which both the families of Yat Hau and Lap Shun later resided.

70.  It is Lap Shun’s case that in around late 2000, the Father raised with Yat Hau that he should start paying half share of rental for Yat Hau’s use of the Tai Wo Shop for his business. Eventually, Lap Shun and Yat Hau agreed that Yat Hau should pay a monthly rent of HK$20,000 to Lap Shun (“Late 2000 Agreement”) At para 45 of the Amended Defence and Counterclaim, it was pleaded that in about November 2000, Yat Hau began to pay the first HK$20,000 rental.

71.  Lap Shun has produced copies of 5 cheques for rental payments in support of his case. Other than the 5 cheques, Lap Shun’s case is not supported by any contemporaneous documentary evidence. Particulars of the 5 cheques were as follows:

(a)  The first cheque was dated 5 March 2001 in the sum of HK$15,000. The Chinese characters “1月份.租.” were written by Lap Shun on a copy of the cheque but Mr Law, in his Opening, told this court he did not place any reliance on these 4 characters. This is not surprising since in Lap Shun’s witness statement, he said Yat Hau did not pay him the monthly rental for January 2001 directly so the cheque was on his own case not payment for January rental.

(b)  The second cheque was dated 5 May 2001 in the sum of HK$15,000.

(c)  The third cheque was dated 22 April 2002 in the sum of HK$10,000.

(d)  The fourth and fifth cheques were dated 11 June and 2 August 2002 respectively in the sum of HK$20,000 each.

72.  Mr Khaw SC submits and this court agrees that the 5 cheques do not establish any pattern of monthly payments by Yat Hau. Further, none of the cheques support the payment of a monthly sum of HK$20,000. Based on Lap Shun’s own witness statement, between June 2001 and March 2002, Yat Hau failed to pay any rental to him at all. From April to around August 2002, Yat Hau paid him at the rate of HK$10,000 per month ie the third to fifth cheques added together. Lastly, on the face of the 5 cheques, it is not clear which month’s rental payment did each of them correspond to.

73.  In this court’s view, Lap Shun’s testimony on the nature of the 5 cheques is simply not believable.

74.  First, if Lap Shun thought he was entitled to half share of the rental for Yat Hau’s use of the Tai Wo Shop for his business, he did not have to wait until 12 years later for the Father to ask Yat Hau to pay him HK$20,000 as rent in late 2000. Just to recap, Lap Shun was born in 1960.

75.  Second, prior to the purchase of the Phoenix Court Property in 2000, Lap Shun and Madam Xie had been residing with Yat Hau’s family free of charge, without payment of household expenses, for some years. They continued to do so after 2000. Meanwhile, Lap Shun was able to earn some rental income from 11B New Spring Garden. Further, Yat Hau was all along paying for the living expenses of inter alia Lap Shun’s family after he had taken over the mirror business as sole proprietor in 1988. Even if requested by the Father, it is improbable that Yat Hau would agree to pay the HK$20,000 to Lap Shun on top of paying his living expenses and his wages for working in the mirror business.

76.  Third, the KPB Mortgage Loan was only refinanced in July 2000 by a mortgage of the Tai Wo Shop in favour of FPB. It was not as though Yat Hau was completely relieved of all mortgage payments obligations after the KPB Mortgage had been discharged. The total amount of the FPB facilities was HK$5.5 million. The Father was aware of the FPB mortgage. It is rather inconceivable that the Father would suddenly tell Yat Hau to pay rent on the ground that the KPB Mortgage Loan had been fully repaid. It is even more inconceivable that Yat Hau would have agreed to it.

77.  For all the above reasons, Lap Shun’s case about the alleged Late 2000 Agreement and the alleged rental payments by Yat Hau is rejected.

78.  Mr Khaw SC submits that the 5 cheques in question should be treated as pre-payments of Lap Shun’s wages. While that was what Yat Hau said in his supplemental witness statement, during cross-examination on Day 3, he also said they were loans and subsequently borrowing of wages which applied to all employees. And then, in re-examination, Yat Hau said he was referring to pre-payment of wages, loans and borrowings of wages as the same thing.

79.  In this court’s view, whether Yat Hau described the amounts of the 5 cheques as pre-payment of wages, loans or borrowings of wages does not really matter. Different employers may describe pre-payment of wages not yet earned as such, or as employees’ loans or as borrowings of wages. The substance of the payments is the same - they were payments not yet earned. The important thing is that Yat Hau is adamant they were not rental payments as alleged and this court is satisfied that Yat Hau’s testimony is credible. As long as this court rejects Lap Shun’s testimony that Yat Hau agreed to pay rent for the use of the Tai Wo Shop in late 2000 for the reasons alleged by Lap Shun, that is sufficient to dispose of this issue.

Did the Alleged August 2002 Agreement exist ?

80.  Lap Shun’s case is pleaded at paras 52 to 57 of the Amended Defence and Counterclaim:

“The family meeting in about August 2002

52. The issue of the Plaintiff’s default and delay of payment of the Defendants’ share of rental ultimately led to a discussion among the family members with a view to properly resolve the matter.

53. On an occasion in about August 2002, a meeting took place among the family members at Phoenix Court Property (“the August 2002 meeting”). In the meeting, the Mother, the Plaintiff and his wife, the Defendant and his wife, Chun Shan and his wife were present.

54. As urged by the Mother and after discussion among the family members, the Plaintiff finally agreed to regularly pay rental to the Defendant. However, instead of agreeing to pay directly to the Defendant his share of rental, the Plaintiff was only prepared to pay such share of rental by way of discharging the responsibility of monthly mortgage repayment in respect of Discovery Park Property on the part of the Defendant’s wife. Under the joint venture, the Plaintiff’s wife and the Defendant’s wife each had been responsible for paying one half of the monthly mortgage instalment for Discovery Park Property at the material times.

55. In August 2002, one half of such monthly mortgage instalment amount was of the magnitude of about $8,000 only...

56. Although with reluctance over such further rental reduction by the Plaintiff, the Defendant accepted the payment method as proposed by the Plaintiff in the August 2002 meeting. At that time, the Defendant thought that receiving rental at reduced rate in a stable and regular manner would be better than letting the situation of default and delay of rental payment go on indefinitely. The Defendant also believed that the Plaintiff should have an incentive to see that the mortgage repayment for Discovery Park (which his wife had half share under the joint venture) would not run into default.

57. Pursuant to the agreement as reached between the Plaintiff and the Defendant in the August 2002 meeting as pleaded in Paragraphs 52 to 56 above, from about September 2002 onwards and until about March 2009, the Plaintiff had been paying half of the monthly mortgage instalment in respect of Discovery Park Property on the behalf of the Defendant’s wife each month.”

81.  It can be seen that what led to the August 2002 meeting was Yat Hau’s default and delay in paying Lap Shun the HK$20,000 monthly rental under the alleged Late 2000 Agreement. Further, the alleged August 2002 Agreement was meant to replace the late 2000 Agreement by a different mode of payment and at a reduced sum.

82.  On the other hand, Yat Hau’s testimony in his witness statement at para 42 is that the reason why the August 2002 Meeting took place was because Lap Shun and Madam Xie requested Yat Hau to remunerate Lap Shun for being an additional owner of the Property. In order to avoid any unnecessary arguments, Yat Hau invited the Mother, Chun Shan and his wife to come to the Phoenix Court Property where Yat Hau and Madam Wong reiterated his version of the Family Arrangement. No agreement was reached at that meeting to pay Lap Shun. In September 2002, Madam Xie claimed she lacked funds and unilaterally refused to pay her half share of the monthly mortgage instalments for the Discovery Park Property, then at HK$8,000.

83.  As a preliminary remark, given this court’s finding that Lap Shun had no beneficial interest in the Tai Wo Shop and its rejection of Lap Shun’s case (i) that he was entitled to rental payment from Yat Hau and (ii) the existence of the alleged Late 2000 Agreement, it is only consistent that Lap Shun and Madam Xie’s testimony on the alleged August 2002 Agreement should also be rejected.

84.  Further, since the alleged August 2002 Agreement was not documented, the credibility of the 2 main protagonists Yat Hau and Lap Shun becomes of vital importance. In deliberating on the Core Issue, this court has already explained why it does not find Lap Shun a credible witness. His credibility is further significantly undermined by producing the 5 cheques and asked this court to accept they support his case that Yat Hau had agreed in late 2000 to pay him HK$20,000 a month as rental.

85.  On the other hand, Mr Law, in section G1 of his Closing, tries to mount an attack on Yat Hau’s credibility by referring to some inconsistencies between his witness statement and his oral testimony.

86.  The gist of Mr Law’s attack goes like this.

87.  In his witness statement, Yat Hau said that Lap Shun asked for “remuneration” for being an additional owner of the Tai Wo Shop on record in the August 2002 Meeting. Yet, during cross-examination, both Yat Hau and Madam Wong admitted that the request for “remuneration” in the August 2002 Meeting was in fact a request for “rent” of the Tai Wo Shop and that Yat Hau expressly confirmed that the so-called request for “remuneration” in August 2002 was actually “rent” in disguise. Mr Law then makes the submission that the two were playing with words in order to hide the truth of Lap Shun’s beneficial ownership over the Tai Wo Shop.

88.  It seems to this court the so-called inconsistencies are fairly minor and the criticism that Yat Hau was using the term remuneration to disguise Lap Shun’s request for rent in August 2002 in order to hide the truth of Lap Shun’s beneficial ownership over the Tai Wo Shop is unjustified.

89.  It is true that during Yat Hau’s cross-examination on Day 3, Yat Hau did say in 2002, Lap Shun asked him to pay rent, as quoted in para 101.1 of Mr Law’s Closing. But on several occasions after that, he was asked about Lap Shun’s request for remuneration for his being an additional owner of the Tai Wo Shop and Yat Hau answered accordingly. What that shows is that Yat Hau had not been careful with words and treated the term remuneration and rent interchangeably. This was made very clear during Yat Hau’s cross-examination in the Discovery Park Action on Day 9[6].

“Q. Now your wife also said in court in around August 2002, Lap-shun and Madam Xie were asking for rent.

A. Yes.

Q. Regarding Tai Wo shop.

A. Yes.

Q. Now in your own evidence for 745, you use a different term, called “remuneration for being an additional owner”.

COURT: Mr Law, can I have the reference, please.

MR LAW: Of course. Bundle B, page 93.

COURT: Thank you.

MR LAW: Paragraph 42(?).

COURT: Thank you.

Q. My question is are you and Madam Wong actually talking about the same thing here?

A. Should be the same.”

90.  In this court’s view, it is just far-fetched to conclude from the cross-examinations of Yat Hau and his wife quoted in Mr Law’s Closing that the two were trying to disguise Lap Shun’s case that what he had requested in August 2002 was rent. If that was what they were trying to do, they would not have used the term rent in answer to Mr Law’s questions. It is even more far-fetched to suggest that, just by using the term remuneration instead of the term rent in his witness statement, Yat Hau intended to and was able to hide Lap Shun’s alleged beneficial ownership over the Tai Wo Shop.

91.  In section G2 of his Closing, Mr Law suggests there was a discrepancy between Yat Hau at para 43 of his witness statement and Madam Wong at para 14 of her witness statement as to why they started paying for Madam Xie’s half share of the monthly mortgage instalments for the Discovery Park Property from September 2002 onwards. In fact, there is no discrepancy at all - the simply reason was that Madam Xie unilaterally refused to pay. That is clear from Yat Hau’s witness statement. That is also clear from Madam Wong’s witness statement if one reads paras 12 and 13 first before moving on to para 14.

92.  For ease of reference, the office translation of paras 12 to 14 of Madam Wong’s witness statement are set out below.

“12. I remembered clearly that the Defendant [ie Madam Xie] and I had duly and punctually made mortgage repayments in relation to the Property at Discovery Park until the end of August 2002. Until then, neither the Defendant nor her husband raised any queries or objections to my husband or me as to the repayment responsibility towards the mortgage loan. Nonetheless, in about early September 2002, the Defendant indicated that she would stop paying the mortgage repayments immediately and unilaterally as her funds were tight.

13. Since the Defendant refused to continue her mortgage repayments, I immediately headed to the estate agency to enquire about the market price of the Property at Discovery Park. I discovered the then market price had dropped for around 50%, that is around HK$1,900,000 to HK$2,000,000. As we still owed the bank approximately HK$3,000,000, the property became a negative asset. If we sold it out, we would still owe the bank HK$1,000,000. If we defaulted in repayment, the bank would surely chase after the main borrower, that is, my husband. We would not wish to have any bad credit record in the bank which could affect my husband’s liquidity of business fund, we had no alternative but to continue to repay all outstanding mortgage repayments (including the part that the Defendant should have borne).

14. I remembered that in the morning 2 days before the September 2002’s repayment fell due, I reminded the Defendant and her husband again that they needed to contribute to the mortgage repayments, but they still indicated they could not afford to do so. As I thought their expenses were increased due to their newborn daughter, I therefore told them that we could settle the mortgage repayments on their behalves temporarily and we hope that they could continue to make this part of repayments as soon as possible, I also told them that the sum we paid on their behalves had to be counted and repaid to us if the property was sold in the future. They promised to do so.” (emphasis added)

93.  Mr Law then goes on in his Closing about who initiated the request for Madam Wong/ Yat Hau to pay Madam Xie’s share of mortgage repayments of the Discovery Park Property and suggests that Madam Wong had given contradictory answers.

94.  Even if Madam Wong had contradicted herself as to who initiate the idea of Madam Wong/ Yat Hau paying Madam Xie’s share of mortgage repayments as from September 2002, that does not justify Mr Law’s submission that Madam Xie’s cessation of payment for mortgage instalments of the Discovery Park Property was agreed between the parties pursuant to the alleged August 2002 Agreement. In this court’s view, that submission, in the circumstances of this case, is unreal.

95.  Lastly, in section G3 of his Closing, Mr Law comes up with all sorts of other reasons as to why the alleged August 2002 Agreement existed. This court has considered those reasons but is not satisfied with their cogency.

96.  First, it is said that Yat Hau has failed to point to any event which prompted Lap Shun to suddenly ask for remuneration/rent in August 2002. If it was about money, there had been various better opportunities for Lap Shun to request for money before 2002.

97.  In this court view, that question should be directed at Lap Shun - it is not for Yat Hau to second guess.

98.  Second, all witnesses from both sides confirmed the Mother’s active participation in the August 2002 Meeting who did raise the HK$500,000 owed by Yat Hau to Lup Chung in this meeting and asked Yat Hau to repay it. If Mother indeed convinced Lap Shun that he did not have any beneficial interest in the Tai Wo Shop, it is inherently improbable that she did not go further to request Lap Shun to remove his name as owner from the Tai Wo Shop.

99.  The short answer is Yat Hau could not control or necessarily explain what the Mother did or did not do. His evidence is simply he could not remember if the Mother, on this occasion, requested Lap Shun to remove his name from the Tai Wo Shop, as stated in para 117 of Mr Law’s Closing.

100.  Third, Yat Hau and Madam Wong both asserted that Madam Xie’s unilateral cessation of payment for the mortgage instalments of the Discovery Park Property was an act of retaliation, but they continued to allow Lap Shun’s family to reside with them rent-free and pay for the living expense of Lap Shun’s family. In fact, Yat Hau and Madam Wong could have taken a lot of action to push for payment or repayment by Madam Xie from September 2002 to March 2009 but they had not done so. The 3 examples given are:

(a)  demanding Lap Shun and Madam Xie to move out of their residence or pay rent;

(b)  stopping payment for the living expenses of Lap Shun and Madam Xie; and

(c)  deducting the mortgage payments of the Discovery Park Property from Lap Shun’s salary.

101.  The fact that Yat Hau did not take these drastic actions against Lap Shun and his family serves only to support Mr Khaw SC’s characterisation of Lap Shun as an ungrateful person.

102.  Fourth, it is suggested Madam Wong said in cross-examination on Day 8 afternoon that, in around March/April 2009 when she had a row with Madam Xie about an intended sale of the Discovery Park Property at HK$3 million and whether they should split the net proceeds equally[7], a figure of HK$8,000 was said to have been uttered by Madam Xie. Mr Law then submits that the figure of around HK$8,000, as a half share of the contribution to the mortgage instalments for Discovery Park Property, was the prevailing figure in around August 2002. He then concludes that:

“Madam Wong’s evidence that Madam Xie mentioned $8,000 as in March/April 2009… plainly is an admission that Discovery Park Property was discussed in August 2002 and there was the August 2002 Agreement.”

103.  What Madam Wong said about the Madam Xie’s utterance of the figure of HK$8,000 is taken completely out of context. What Madam Wong actually said in cross-examination on Day 8 afternoon is this:

“Q. Going back there to paragraph 16 first, now, at page 63, last but one line, you mention “由於被告人的立場非常不合理”, and this position was a reference to a request to equally share the HK$600,000.

A. Yes.

Q. My question to you is: did Madam Xie give you an explanation why she want to divide this sum in equal shares?

A. She said that because Tai Wo Street, that property, had Suen Lap-shun’s name there, just several thousand dollars, you might as well regard it as rental to him.

Q. Pausing here. What do you mean by “several thousand dollars”?

A. Because each of us had to make a mortgage repayment around $8,000.

Q. Wait. How did you arrive at the figure of 8,000 as at April 2009?

A. It’s a rough amount, $8,000. Regarding this utterance, it was uttered by Xie Pei-wen.

Q. But you and her were talking about the proceeds, the sale proceeds of HK$600,000?

A. It’s not the sale proceeds. It’s the sum regarding the money that our side had paid is $1 million-something.

Q. Wait. We are still referring to around March 2009 when you and Madam Xie discussed the distribution of a sum of HK$600,000.

A. Yes.

Q. You said Madam Xie referred to a sum of HK$8,000 per month, right? Correct?

A. She didn’t say $8,000, she just said, just several thousand dollars a month.

Q. Then who said 8,000? You used the word “8,000” just now.

A. $8,000? It’s initially when we made a mortgage repayment, each of us had to pay $8,000.

Q. Then why would -- now, first of all, was 8,000 mentioned by anyone in this conversation?

A. No.”

104.  This fourth point is a complete non sequitur - even if Madam Wong had said Madam Xie uttered the figure of HK$8,000 in March/April 2009, how could that possibly prove the existence of the alleged August 2002 Agreement?

105.  This court has set out at length Mr Law’s submissions on the alleged August 2002 Agreement in order to demonstrate 2 points. One is that the attack on Yat Hau’s credibility is feeble. Two is that the submissions as to why the alleged August 2002 Agreement existed are wholly unconvincing.

106.  The only other matter which this court wishes to deal with is a minutes of the meeting at a tea restaurant held on 2 September 2009 at around 10pm. The minutes was drafted by Chun Shan and initialled by Yat Hau and signed by the other 3 siblings.

107.  It is Lap Shun’s case that, during this meeting, the four siblings had discussed not just the distribution of the Mother’s estate ie 1^st paragraph of the minutes regarding 9/F Tung Hing Building, but all the matters (totalling 4) set out in the minutes. Mr Law submits that in relation to the 2^nd paragraph of the minutes, the alleged August 2002 Agreement was recorded and Lap Shun’s ownership of and entitlement to rental of the Tai Wo Shop was also impliedly acknowledged.

108.  Yat Hau’s case is essentially that after all four brothers agreed that Lup Chung and Chun Shan would inherit the Tung Hing Property, Chun Shan wrote a line reading “9/F 東興大廈 E座 业权同意由 孫立忠 孫俊生 擁有。无異议。” on a piece of paper. Yat Hau then told his younger brothers that he had to go home because he did not feel well and had to take an early rest for Mother’s funeral on the following day. Before he left, Chun Shan asked him to sign at the bottom of the piece of paper, which he did by writing his initial “孫” underneath Chun Shan’s signature.

109.  Mr Law submits that Yat Hau was in fact making a very serious allegation of fraud and/or forgery against Chun Shan and Lap Shun. According to Yat Hau’s case, Chun Shan must be intentionally leaving the large blank between the first line and his signature, and lured Yat Hau to sign after him, for the purpose of filling in the 2^nd to 5^th paragraphs afterwards.

110.  This court does not agree. The fact that there is some blank space between the 1^st paragraph and Chun Shan’s signature is equally consistent with Yat Hau’s case that he left early while the 3 brothers decided to stay behind as they still had other matters to talk about.

111.  What is important for the present purpose is whether the alleged August 2002 Agreement was recorded in the 2^nd paragraph and Lap Shun’s ownership was acknowledged. In this court’s view, what was recorded in the 2^nd paragraph is far from being supportive of Lap Shun’s version of the alleged August 2002 Agreement and his alleged beneficial ownership of the Tai Wo Shop.

112.  First, it refers to “Discovery Park - Lap Shun paid 5-year loan, from G/F Tai Wo Street interest’s rental payment”. While it does refer to the Tai Wo Shop’s rental payment, the reference to Lap Shun paying 5-year loan is inconsistent with Lap Shun’s case that under the alleged August 2002 Agreement, it was Yat Hau who had discharged Madam Xie’s contribution to the mortgage instalments from September 2002 to March 2009 ie more than 6 ½ years.

113.  Second, if the 2^nd paragraph was intended to record Lap Shun’s alleged beneficial ownership of the Tai Wo Shop and the alleged August 2002 Agreement, why not set them out more clearly and more fully? There is no explanation of this by Lap Shun. After all, according to Lap Shun, the underlying premise of the alleged August 2002 Agreement was Yat Hau’s acknowledgment of Lap Shun’s beneficial interest in the Tai Wo Shop.

114.  Third, the 2^nd paragraph was in relation to the Discovery Park Property which did not concern the Mother’s estate or Lup Chung or Chun Shan. Prima facie, there was no reason for it to be brought up at that meeting. Lap Shun explained in cross-examination the reason why he raised this topic of the Discovery Park Property at that meeting was because Yat Hau had failed to pay him rental for the Tai Wo Shop and he wanted Lup Chung and Chun Shan to know about Yat Hau’s behaviour. If so, why was Yat Hau’s default not recorded as such in the 2^nd paragraph? Instead, it said “Since May 2009, Kitty Wong stopped paying instalment.”

115.  For these reasons, even assuming for the sake of argument that Yat Hau did sign on the minutes after all the items had been discussed, this court is far from persuaded by Mr Law that the minutes is such an important document as to support the existence of the alleged August 2002 Agreement and to acknowledge Lap Shun’s beneficial interest in the Tai Wo Shop. In this court’s view, the minutes is just a very incomplete record of what was discussed at the meeting and what was not recorded there is in fact a reflection against Lap Shun’s case.

116.  To conclude, this court does not find Lap Shun’s testimony credible and should be rejected. Similarly, Madam Xie’s testimony to corroborate him must be equally rejected. In these circumstances, this court is not satisfied the alleged August 2002 Agreement did exist and shall so find.

Other minor issues

117.  Given this court’s findings on the Core Issue and the 2 main sub-issues, no useful purpose can be served by dwelling on the other minor issues and the submissions made by the parties eg what happened at a family meeting before the Mother’s passing away in August 2009[8], and another family meeting held after the tea meeting of 2 September 2009. These events took place decades after 1988 and this court is not at all convinced that such subsequent conduct of the parties can shed any useful light on what was the Family Arrangement agreed back in 1988 or the common intention of the parties at that time.

Disposition and costs order nisi

118.  For the aforesaid reasons, this court finds for the Plaintiff and grants the following relief sought by him:

(a)  A declaration that the Tai Wo Shop was at all material times and is held by the Plaintiff and the Defendant on trust for the Plaintiff absolutely;

(b)  A declaration that the Plaintiff was at all material times and is the sole beneficial owner of the Tai Wo Shop; and

(c)  An order that the Defendant shall join with the Plaintiff and do all necessary acts in transferring and/or assigning all legal and beneficial interest and estate in the Tai Wo Shop to the Plaintiff in his own name as the sole legal and beneficial owner of the Tai Wo Shop.

119.  The Defendant’s Counterclaim is hereby dismissed.

120.  There shall be an order nisi that costs of the Action, including the Counterclaim, be to the Plaintiff, to be taxed if not agreed, and paid by the Defendant forthwith. Certificate for 2 Counsel.

HCA 746 - deliberation and disposition

Deliberation

121.  As stated earlier, the only remaining factual dispute of this action is whether the August 2002 Agreement existed. This court has decided in HCA 735 that it did not and shall so find in this Action.

Disposition and costs order nisi

122.  There shall be Judgment in favour of the 1^st Plaintiff as follows:

(a)  A declaration that the Discovery Park Property was at all material times and is held by the Defendant on trust for the 1^st Plaintiff and the Defendant as tenants in common in equal shares;

(b)  An order that the Defendant shall, within 28 days, do all necessary works in transferring and/or assigning half of all legal and beneficial interest and estate in the Discovery Park Property to the 1^st Plaintiff; all legal costs and disbursements of the transfer and/or assignment be shared equally by the 1^st Plaintiff and the Defendant;

(c)  An order that the Discovery Park Property be sold in the open market with vacant possession; upon the expiry of the current tenancy agreement, the Defendant shall not renew it or enter into any new tenancy agreement;

(d)  An order that the net sale proceeds of the Discovery Park Property be paid into Court pending the accounts and inquiries as to what is due to the 1^st Plaintiff and/or the Defendant;

(e)  An order for all accounts and inquiries as to what is due to the 1^st Plaintiff and/or the Defendant, including interest, be conducted by a Master;

(f)  An order that each of the 1^st Plaintiff and the Defendant shall pay the amount found due to the other, if any, upon taking the said accounts and inquiries; and

(g)  Liberty to apply.

123.  Regarding the Defendant’s Counterclaim, since they are already covered by paras 122(e) and (f) above, no Order shall be made.

124.  There shall be an Order nisi that costs of the issue of Order for Sale be to the 1^st Plaintiff, to be taxed if not agreed, and paid by the Defendant forthwith. Certificate for 2 Counsel. Application to vary the Order nisi shall be made by summons within 14 days.

125.  As for detailed directions for the Sale of the Discovery Park Property, since the parties are unable to reached an agreement, the same shall be dealt with at a hearing before this court on a date to be fixed, 1 hour reserved.