LEUNG CHI MAN v. MOK SAU LIM

CACV 215/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 215 OF 2005

(ON APPEAL FROM HCMP NO. 1599 OF 2003)

____________________________

____________________________

-----------------------

J U D G M E N T

-----------------------

Hon Woo VP:

Background

1. Mr Leung Ha Chai (梁蝦仔), deceased (“the deceased”) made his last Will on 23 June 1997 (“the Will”).  He died on 11 January 1998, leaving surviving him,

(a) Mok Sau Lim (莫守廉), his lawful widow and relict, the defendant,

(b) Leung Suk Yin (梁淑燕), his natural and lawful daughter (“the daughter”),

(c) Leung Chi On (梁志安), his natural and lawful son (“Chi On”),

(d) Leung Chi Man (梁志文), his natural and lawful son, the plaintiff, and

(e) Leung Chi Wai (梁志偉), his natural and lawful son (“Chi Wai”).

2. By the Will, the deceased appointed the defendant to be the sole executrix and trustee of the Will. 

3. The dispositions made by the Will are as follows:

“3. SUBJECT TO the payment of all my debts and funeral and testamentary expenses, I give my landed properties known as ALL THOSE pieces or parcels of ground registered in the Yuen Long New Territories Land Registry as LOT NO. 3547 IN DEMARCATION DISTRICT NO. 129 and ALL THAT one moiety or half share of and in SUBSECTION 1 OF SECTION B OF LOT NO. 2841 IN DEMARCATION DISTRICT NO. 129 to my trustee upon trust to divide the same into three (3) equal shares and to stand possessed thereof upon trust: -

(1) as to one such share for my son Leung Chi On (梁志安) … absolutely;

(2) as to one such share for my son Leung Chi Man (梁志文) … absolutely;

(3) as to the remaining one such share for my son Leung Chi Wai (梁志偉) … absolutely.

4. …

5. I FURTHER direct that my residuary estate shall be distributed in accordance with the provisions of the Intestate’s Estate Ordinance, Chapter 73.”

4. Probate of the Will was granted by the Court of First Instance to the defendant on 19 May 2000.

5. The schedule of property disclosed on the death of the deceased as annexed to the grant sets out 5 items.  The first two items are two small sums of money totalling $2,189.28.  The 3^rd item consists of a “Ting” house on Lot No. 3547 in Demarcation District No. 129 (“the Ting House”) and a one-half share of and in Subsection 1 of section B of Lot No. 2841 in DD 129, referred to as “the pond property” in the Recorder’s judgment dealt with below, which was eventually resumed by government, with compensation of $3,318,292.80 paid to the estate of the deceased on or about 17 August 2000.  The 4^th and 5^th items in the schedule relate to the deceased’s interest and entitlement in the estate of Leung Kun (or Kan) deceased in various other lots in DD 129.  Up to the time of trial of the action before Recorder Edward Chan SC, the deceased’s estate had not received any payment or interest in respect of the 4^th and 5^th items.

6. By his Statement of Claim, the plaintiff claims against the defendant for a true and perfect inventory of all and singular the estate and effects and to render a just and true account of the estate to be exhibited upon oath, and various tracing reliefs.

7. After a trial lasting eight days in late January and early February 2005, the Recorder gave judgment on 23 March 2005.  Against the judgment, the plaintiff now appeals.

Findings of fact 

8. In order to understand the grounds of appeal raised by the plaintiff, it is necessary to set out the major findings of facts made by the Recorder. 

9. The deceased and his family including the defendant, the plaintiff and his siblings, had for a long time been living together in a public housing rented unit at the Ho Man Tin Estate.  The deceased, the daughter, Chi On and the plaintiff contributed towards the expenses for the household.  Eventually the daughter moved out but the deceased, the defendant and the three sons continued to live in the family.

10. The deceased was entitled to have a Ting house built, and he borrowed money from the daughter and various relatives for the construction of the Ting house, which eventually formed part of his estate, as aforesaid.

11. The daughter had provided a sum of $350,000 for the construction of the Ting House.  The understanding then was that after the Ting House was completed the daughter would be given the second floor of the Ting House.  The Ting House was completed some time in 1993 and shortly after the completion, the daughter got married and moved to live on the second floor of the Ting House.

12. Towards the end of 1996, the deceased planned to surrender the tenancy of the unit at the Ho Man Tin Estate in exchange for a right to purchase a flat under the Home Ownership Scheme for the family’s residence.  On 28 January 1997, the defendant applied to the Hong Kong Housing Authority for permission to purchase a flat under the Home Ownership Scheme.  The plaintiff was one of the persons who signed on the application. 

13. The application was not successful, and a subsequent application was made some time around the middle of 1997.  On this occasion, Charming Garden, the first choice of the family, was available as one of the choices for successful applicants. 

14. Before the making of the Will on 23 June 1997, the deceased and the defendant had a discussion with the daughter and offered to repay the daughter the sum of $350,000 plus $150,000 in consideration of her vacating the second floor of the Ting House, to which the daughter agreed. 

15. The Recorder found that it was common ground that shortly after the deceased made his Will, he had a discussion with his three sons in relation to his Will and this took place in the Ting house.  The Recorder found that the defendant was also present at this meeting.

16. At paragraph 31 of the judgment, the Recorder stated:

“31. According to the Plaintiff, what took place was that the Deceased told those present that the Ting house and his interest in the pond property would be given to the 3 sons in equal shares.  The Plaintiff further said: ‘he then specifically told us that when the properties were sold, we needed to repay the relatives with the debts which were loaned by them to build the Sha Kong Wai house.  The Deceased also told us that we needed to take care of the Defendant.  All the 3 sons agreed to the Deceased’s arrangement at the family meeting.’  However, when being questioned as to what properties he understood the Deceased was referring to when he said ‘when the properties were sold’, the Plaintiff’s answer was that he did not know what the Deceased meant and added that ‘we had 2 properties’ presumably meaning the Ting house and the pond property.”

17. On this matter, the Recorder concluded:

“122. On my finding of facts above, I am satisfied that the Deceased intended that his sons would carry out 3 things as conditions for their taking the gift of the Ting house and the pond property under the Will and the sons had agreed to carry out these conditions.  The 3 conditions were: (a) the repayment of the sum of $350,000 to the daughter plus a further sum of $150,000; (b) to maintain and support the Defendant; and (c) to jointly contribute to the purchase of a flat to be used as the family home.”

18. The deceased died on 11 January 1998.  The formal Sale and Purchase Agreement for the Charming Garden property was dated 20 February 1998.  The price for the property was $2.19 million.  Completion of the purchase took place on 30 June 1998 and the defendant and Chi On raised the amount of $2,081,070 by mortgage to complete the sale.  On 22 June 1998, the defendant and Chi On also raised a 36-month instalment loan to pay the legal fees and the stamp duty for the transaction. 

19. The Recorder found:

“49. The arrangement on the mechanics of the repayment of the mortgage was that Chi On would pay the mortgagee bank the amount of the installment each month.  For the first 3 years, he would also be paying the monthly repayments of the legal fees and stamp duty loan.  The Defendant continued to run the family household and she obtained money from both Chi On and the Plaintiff to do so.  Later on after the Plaintiff had ceased paying the Defendant any monthly payment, the Defendant ran the family out of monies obtained from Chi On and Chi Wai.  The manner of paying off the mortgagee bank did not change.”

20. While the family was about to give up their home at Ho Man Tin when the Charming Garden property was available for them to move in, the plaintiff told Chi On, in the presence of other family members, that he was not going to move to Charming Garden and that he wanted to live at the Ting House.  According to the plaintiff’s witness statement, he told Chi On that he did not want to involve himself in the Charming Garden property at all because the defendant had refused to add his name to be a registered owner of the property.  Since the plaintiff wished to move to live in the Ting House, Chi On proposed that the plaintiff should pay the defendant a monthly sum of $6,000 and he would be allowed to live in one of the storeys of the Ting House.  The plaintiff treated this monthly sum of $6,000 as either rental for his renting one storey of the Ting House and/or living expenses or contribution to the defendant.

21. The Recorder also found that towards the end of August 2000, the plaintiff, the defendant and Chi Wai met at the Ho Choi Restaurant, when the plaintiff clearly indicated that he would give up his share of the resumption money of the pond property in return for his not being required to discharge any obligation to maintain the defendant or to contribute towards the purchase of the Charming Garden property.  After the meeting, the defendant had a discussion with Chi On and Chi Wai.  They decided that they would accept the plaintiff’s proposal.  Thence, the defendant dealt with the resumption money on the basis that the plaintiff had relinquished his rights to it and to his interest in the Charming Garden property.  On the other hand, the plaintiff thereafter ceased paying $6,000 per month and made no further payment to the defendant. 

22. The Recorder concluded that the defendant had failed to furnish to the plaintiff an inventory and account of all the properties of the deceased’s estate or to verify the same on affirmation.  He made an order that the defendant was to do so within 3 months of the date of the order.  He further ordered that the defendant’s costs for the preparation of the inventory and account were to be paid out of the estate and that the costs of the copying of the inventory and account and also the costs of the verifying affirmation were to be paid by the plaintiff.

23. In respect of the tracing reliefs sought by the plaintiff, the Recorder pointed out that there was no fact pleaded to show any claim for breach of fiduciary duties in misappropriating any trust property or any property of the estate.  He noted that the only wrongful acts pleaded were (a) the failure to furnish the inventory and account, and (b) the failure to pay the plaintiff the legacies under the Will.  He held that these failures were insufficient to mean that the defendant had misappropriated the legacies or made use of the legacy for her own purposes.  He therefore refused to grant any tracing relief.

24. The Recorder also made an order that subject to the plaintiff’s payment of all the costs and expenses involved, the defendant do execute an assent in favour of the plaintiff in respect of a one-third undivided share of the Ting House within 3 months from the date of the order.  The Recorder advised:

“130.     … However, the parties may think it worthwhile to consider whether the vesting should be deferred until a proper deed of mutual covenant is drawn up in relation to the Ting house so that the defendant could assent to each of the sons a separate floor of the Ting house.  Of course if this is to happen, the sons would have to agree amongst themselves who is to take which floor and/or on the equalization monies (if any) on account of the difference in the value for the floors.”

25. Having found the three conditions as imposed by the deceased and agreed to by the three sons at the meeting in the Ting House shortly after the Will had been made (see para 17 above), the Recorder held that the taking of the specific devise in paragraph 3 of the Will by the plaintiff was subject to (a) the repayment of the sum of $350,000 to the daughter plus a further sum of $150,000, and (b) the condition to maintain and support the defendant to at least the same standard of living she enjoyed at the time of the meeting.  While the third condition was that the three sons were to take under paragraph 3 of the Will subject to their jointly contributing to the purchase of a flat to be used as the family home, the Recorder, however, considered that “there were some considerable uncertainties on this condition.”  The Recorder stated:

“126. Thus in my view, the Defendant was not entitled to deduct the mortgage repayments and other expenses from the legacy of the pond property on the basis that the Plaintiff’s entitlement under the Will to the pond property was subject to the condition that the Plaintiff would have to contribute to the purchase of a flat.”

26. On the other hand, the Recorder found:

“128. … that there was an agreement on the part of the Plaintiff to waive all his entitlements in the compensation monies of the pond property in consideration of his being released from the obligation to maintain the Defendant and to further contribute to the mortgage repayments of the Charming Garden property.  Alternatively I find that the Plaintiff was estopped from asserting that he has not given up his interest in the pond property compensation.”

27. Notwithstanding that, the Recorder considered that since the plaintiff had contributed a monthly sum of $6,000 towards the household expenses at Charming Garden and also the mortgage repayments, and an equitable interest in land could only be disposed of by writing under section 5 of the Conveyancing and Property Ordinance, the plaintiff had a certain beneficial interest in the Charming Garden property.  

Grounds of appeal

28. While both parties were legally represented at the trial, the plaintiff is unrepresented on this appeal.  In his Notice of Motion which is printed in Chinese, he raises four grounds of appeal to seek an order that the defendant should distribute the estate in accordance with the provisions of the Will and bear all his costs.  The four grounds of appeal can be translated as follows:

“(1) The judge (meaning the Recorder) pointed out that the Charming Garden property owned by the defendant and Leung Chi On (the defendant’s witness) did not form part of the trust property in the deceased’s estate, nor did it belong to the deceased’s estate.  The judge also disagreed that the defendant could transfer the funds in the deceased’s estate towards paying for the Charming Garden property. 

(2) The defendant alleged that she was entitled to transfer the funds in the deceased’s estate towards the payment for the Charming Garden property, in accordance with the trust; although the judge agreed with the deceitful allegation of the defendant that the plaintiff voluntarily abandoned the estate, yet the plaintiff’s agreement to do so was caused by being deceived and misled by the defendant.  Thus the judge’s acceptance of the allegation that the plaintiff had voluntarily relinquished his rights to the estate was wrong.

(3) Under the fair and just law of Hong Kong, a judge should be just and impartial in conducting the hearing of cases, and could not favour either the plaintiff or the defendant’s side.  However, the judge in this case was fully aware of the defendant and her lawyer giving untruthful evidence many times and in incessantly amending the defence, but he abused his power as a judge to lead and assist the defendant and her lawyer to amend her defence time and again during the hearing.  According to the above facts, these must not be allowed under the legal system in Hong Kong.

(4) Since the judge has pointed out that the defences raised by the defendant based on trust had not been established, he should have held that the defendant had failed in her defences and she should distribute the estate according to the Will.  I understand that the judge knew that his judgment was not based on reasons, contradictory and abusing power, etc.  Moreover, the last paragraph of the judgment (the judge wishing the plaintiff and the defendant could mediate privately) was clear proof of the above grounds of the appeal.”

29. As I understand them, the grounds of appeal are based on the Recorder’s rejection of the defendant’s alleged right to deduct the mortgage repayments and other expenses for the purchase of the Charming Garden property from the legacy of the pond property, as he found in paragraph 126 of his judgment cited above.  On the basis of this finding, the plaintiff’s major complaint is that the Recorder’s finding that the plaintiff had relinquished his rights to the resumption money paid by the government for the pond property was wrong, because the relinquishment had been made by him as a result of his having been misled and deceived by the defendant.

30. In my view, this ground of appeal is bound to fail.  The Recorder in his 56-page judgment dealt with the allegations of the parties and the witnesses in great detail.  He made findings of fact, not only relying on his observation of the demeanour of the witnesses but mainly based on the inherent probabilities in light of all the circumstances of the case.  The Court of Appeal is, under the circumstances, not entitled to reverse the Recorder’s findings of fact.  See para 59/1/48 of Hong Kong Civil Procedure 2006, Vol 1.

31. The present allegation of the plaintiff that he had been deceived or misled into agreeing to relinquish his rights towards the resumption money for the pond property has never been pleaded, and he is not allowed to raise such serious allegations on appeal.

32. Furthermore, the Recorder’s finding of the plaintiff’s relinquishment of his rights to the resumption money for the pond property came with the following connected findings and cannot, in my judgment, be faulted:

(a) There was a secret trust whereby the plaintiff’s right to the properties under the Will to which he was entitled was subject to the condition that the plaintiff would, jointly with his two brothers, contribute towards the reasonable maintenance of the defendant for her life.  As the tenancy at Ho Man Tin was to be surrendered and the family was applying for a Home Ownership Scheme flat, reasonable maintenance for the defendant must include providing accommodation for her.

(b) The plaintiff’s relinquishment was in consideration of his no longer being required to contribute towards the maintenance of the defendant or towards the instalment payments for the Charming Garden property where the defendant was to be accommodated.

(c) The plaintiff’s contribution of a monthly sum of $6,000 up to August 2000 had resulted in he having a certain beneficial interest in the Charming Garden property, which he had not relinquished.

33. The plaintiff also argued before us that the Recorder’s holding that he relinquished his rights in the estate was unreasonable and wrong because in August 2000 (when he was held to have made the relinquishment) he had not yet received a copy of the grant of probate with the schedule of property annexed to it, without which he could not have known what he was relinquishing.  This argument has no substance in view of the facts found by the Recorder that in the beginning of 2000, the defendant had received a letter from the Government confirming that the pond property would be resumed and that the offer of compensation of about $3.3 million was made known to the family members including the plaintiff (see paragraph 58 of the judgment).  These facts as found clearly demonstrate that the plaintiff knew exactly what he was relinquishing.

34. As far as the Recorder allowing the defendant to amend her defence is concerned, the defence was amended twice, first on 24 July 2004 pursuant to the Order made by Master Lung dated 21 July 2004, and secondly on 3 February 2005 (re-amendment) pursuant to the Order of the Recorder.  3 February 2005 was the last day of the hearing before the Recorder.  The plaintiff’s complaint cannot be in respect of the amendment made on 24 July 2004, and could only be directed at the re-amendment.  Having checked the re-amendment, I must say that the amendments are minor in nature, which mainly replaced the plea of the plaintiff’s agreement to waive all his further claim, interest and benefit of and in “the estate of the deceased” by “the government compensation in respect of the land and the Charming Garden property”.  This is a reduction of the scope of the alleged waiver or relinquishment by the plaintiff, rather than an expansion of it.  I do not see anything prejudicial to the plaintiff so as to justify this Court’s interference with what undoubtedly is the trial judge’s discretion to allow, in order that all true controversies between the parties should be raised and disposed of at the trial.  There is no justification for the emotive allegations now made by the plaintiff that the Recorder had abused his power at the trial in allegedly leading and assisting the defendant to amend her defence.

35. In the concluding paragraph of his judgment, the Recorder said:

“136.     Further, I would mention that although with the view of saving costs, I have endeavoured to resolve the conflicts between the parties as much as possible, I can see that there are still many issues that may arise between the parties on the administration of this estate.  For instance, of the various debts owed by the Deceased, only the amount due to the daughter was resolved in this action and the Plaintiff has expressly reserved his position on the amounts owed to other creditors.  There is also the outstanding question of whether the debts of the Deceased were payable out of the residuary estate.  The present litigation is lengthy and wholly unjustified from the point of view of the amount in dispute.  In the event of any conflict in the future, I would suggest that the parties do consider mediation.”

36. I consider the Recorder’s comment in the penultimate sentence and his suggestion in the last sentence fully justified, reasonable and, if heeded, helpful to the parties.  There is absolutely no substance in the fourth ground of appeal, nor is there anything in this concluding paragraph of the judgment to show that the judgment was not based on reason, or was contradictory or amounting to an abuse of power as the plaintiff suggests. 

Conclusion

37. For the above reasons, I would dismiss the appeal.  I had ascertained from the parties that they would not argue against the normal rule that costs should follow the event.  I would therefore order that the plaintiff pay the costs of the appeal to the defendant.

Cheung JA:

38. I agree.

Yuen JA:

39. I agree.