HAU KWAI CHOI AND ANOTHER v. HAU WAI KEUNG

DCCJ 4285/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4285 OF 2012

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JUDGMENT

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Introduction

1.  This action arises out of a dispute between a father and a son over a village house in Kam Tsin Village, Sheung Shui（上水金錢村）, New Territories (“the House”).

Factual background

2.  The plaintiffs, Hau Kwai Choi and Huang Yunxiu, are husband and wife.  They were married in 1999.  It is the second marriage for Mr Hau.  I shall refer to the plaintiffs as “the Father” and “the Second Wife” below.

3.  The Father was first married to Hau Tai Fong Mui (“the Mother”).  They had six children:-

(a) Hau Wai Kin, born in 1954 (“the First Son”);

(b) Hau Wai Keung, the defendant in this action, born in 1957 (“the Second Son”);

(c) Hau Wai Man, born in 1960 (“the Third Son”);

(d) Hau Wai Yan, born in 1963 (“the First Daughter”); and

(e) Two younger daughters who did not feature at the trial.

4.  The Father is now 87 years old.  He is an indigenous villager in Kam Tsin Village.  From around 1965 to around 1974, the family emigrated to England, with the Father being the first to settle there, followed by the rest of the family members who joined him at different times during those years.  The Father explained at trial that it was then not financially viable for the whole family to move in one go.  

5.  In England, the Father made a living as a cook in Chinese restaurants (save for a brief period when he ran his own fast food shop) until about 1981.  In that year, he acquired a Chinese restaurant called Koh Sing Restaurant.  He ran and managed the restaurant with the assistance of the Mother.  Some of his children also worked there.  The Mother died from cancer in 1988.  The following year, the Father decided to retire and sold the restaurant to the First Son.  The Father eventually came back to live in Hong Kong for good in 1996.

6.  Before the family emigrated to England, they lived in a one-storey house in the village.   The house was subsequently pulled down and the House, the subject-matter of the present dispute, was constructed in its place in the early 1980’s.  I shall refer to the land where the House now stands as “the Land” in this judgment.

7.  Since the Father came back to Hong Kong in 1996, he has been living on the ground floor and first floor of the House.  He now resides there with the Second Wife.

8.  The Land is at present registered in the joint names of the Father and the Second Wife.  The Father had inherited it from his mother and the legal title was conveyed to him in 1975 while he was in England.  By a Deed of Gift dated 31 January 2012, the Father assigned the Land to himself and the Second Wife as joint tenants.

9.  The above background facts are common ground or not in dispute between the parties.  I now turn to their respective cases in respect of the beneficial ownership of the House.

The plaintiffs’ case

10.  After the Father acquired Koh Sing Restaurant in 1981, he started to earn some good profit.  In the same year,  his uncle in Hong Kong wrote to him telling him that the village house which was then standing on the Land and which had been the family home prior to the family’s emigration to England, was in a dilapidated state and badly in need of renovation. 

11.  After some discussion with the Mother, the Father decided to demolish the old village house and build a new house of three storeys on the Land.  The intention was that he would use it as his residence when he retired and settled in Hong Kong one day.

12.  The construction of the House commenced in 1982 and was completed in 1984, under the supervision of the uncle.  During that period, the Mother, the First and Third Sons together and the Father made separate trips bringing money back to Hong Kong for the construction.  In total, a sum of £17,000 to £18,000 was brought back.

13.  The Father testified at trial that the sum came partly from profits generated from the restaurant business, partly from the income of himself and the Mother and partly from loans from friends.  He stressed that he himself made the decision to build the House.  There had never been any discussion relating to the construction of the House with the children as some of them were still very young then.  He had never asked any of the children for contribution to the costs of the construction.

14.  After completion, the second floor together with the roof of the House (referred to collectively below as “the Second Floor”) was rented out intermittently, through the arrangement of the uncle, who collected the rents for the Father.

15.  According to the Father’s case, the Second Son, after finishing Form 5 at school, started to work in 1976 as a floor staff at a Chinese restaurant, earning around £11 to £12 a week.  The Second Son contributed around £5 to £10 a week to the family living expenses.  He only worked intermittently for a total period of not more than one year from 1976 to around 1979 when he left England for West Germany to work at a restaurant belonging to a relative.  From then onwards, he ceased to make any contribution towards the family living expenses.

16.  The Father moved back to Hong Kong from England in 1996.  The Second Son left Germany and returned to Hong Kong in about 2000. Under the Father’s introduction, the Second Son found a job at a hospital working as a security guard.  Since he did not have any place to live, the Father allowed him and later on his family, namely the Second Son’s wife and daughter, to live on the Second Floor for free.  The relationship between them was quite good then.

17.  The Father, the Second Wife and the Second Son together invested in some property in Shenzhen in Mainland China in around 2003.  The details of the investment are not material for present purposes. What is significant about the investment is that it seems to be a turning point as far as the relationship between the Father and the Second Son is concerned. Disagreement arose between them since about 2005 and their relationship started to worsen.  In his witness statement, the Father referred to “incessant quarrels” over the Shenzhen property between him and the Second Wife on the one hand and the Second Son and his wife on the other.  The Second Son and his wife acted towards the Father in a threatening and abusive manner.  In fact, the Second Son, his wife and daughter, complained the Father, had been for some time treating him in a disrespectful way, at times hurling abuse at him.  The situation had become increasingly intolerable.

18.  Worse still, the Father heard from others in the village that the Second Son had been saying behind his back that when the Father died, he could do whatever he wanted and could kick out the Second Wife from the House.

19.  The Father admitted in cross-examination that he therefore made a decision to gift the Land to himself and the Second Wife in early 2012.  He said the Second Wife was not of a strong character and the reason behind the gift was to protect her from being evicted from the House by the Second Son when the Father was no longer around one day. 

20.  In July and September 2012, the Father, through his solicitors, issued letters to the Second Son giving him notice to terminate the licence given to him to reside on the Second Floor.  The Second Son having failed to move out, the Father and the Second Wife commenced the present action.  They now claim vacant possession of the Second Floor against the Second Son.

The defendant’s case

21.  While the plaintiffs’ factual case is fairly straightforward, I have to say that it is with some difficulty that I recount the defendant’s case below as there are quite a number of differences between how the case is presented in the pleadings, in the written evidence and in the oral evidence.  I shall set out the defendant’s case largely as outlined in the closing submissions of Mr Matthew C S Chong, counsel for the defendant, and I shall discuss the differences in more detail in the next section.

22.  The Second Son denies that he has been occupying the Second Floor pursuant to a licence granted by the Father.  He claims that he has been in enjoyment and occupation of the Second Floor pursuant to his right as a beneficial owner of the Land.

23.  The Second Son’s case is as follows.  Contrary to the Father’s evidence (see §15 above), he only studied up to Form 4 and then he started to work for the Father at the age of 15.  In 1975, he found a job in a Chinese restaurant, earning around £30 a week.

24.  In about 1981, the family found out that the old village house fell into disrepair and needed to be re-built.  The Father and the Mother asked the Second Son to make contribution towards the rebuilding costs and promised that he would get one floor out of the three when the new house was completed.  In fact, the Father and Mother on many occasions, eg, family talks during meal times, encouraged the three sons to work hard and contribute money towards the reconstruction and the parents repeatedly promised the three sons that each of them would get one floor each of the new house.  On the other hand, the daughters would not have any share in the new house according to the tradition and the customary rules of the village.  I shall refer to such requests, words of encouragement and promises, said or made repeatedly, as alleged by the Second Son as “the Alleged Promise” below. 

25.  Based on the Alleged Promise, the Second Son agreed to make as much contribution as he could.  During the period from 1975 to 1981, he contributed about £5,000 in total towards the construction costs. His contribution mostly took the form of a weekly sum of around £20 to £30.  He would hand over the weekly sums to the Mother.  The First and Third Sons also made contributions from their weekly salaries to the Mother.

26.  Based on the above factual case, the Second Son says that the Father and Second Wife’s claim for vacant possession must fail because he has a beneficial interest in the Land.  In his pleading, he counterclaims a number of reliefs, including, most importantly, a declaration that he is entitled to a beneficial interest in the House to the extent of his contribution to the building costs and that he is entitled to exclusive occupation and possession of the Second Floor.  There are other reliefs sought in the prayer of the counterclaim. 

27.  However, in his closing submissions, Mr Chong put forward a substantively revised list of reliefs.  I shall not list them out in full but would only record that the Second Son now claims, amongst other things, a declaration that he is entitled to one-third of the beneficial interest in the Land, and, that he is entitled to one-third of the legal interest in the Land upon the death of the Father; and, an order that all legal and beneficial entitlement of the Second Son shall vest in him absolutely upon the death of the Father.  The revision, in particular the new reference to the death of the Father, is not understood.  But the question of relief would of course only arise if I find in favour of the Second Son’s factual case and it is not necessary to deal with them here.

28.  Separately, in his closing submissions, Mr Chong submitted that the Land is “an ancestral property intended to be succeeded through the male line of the family” and that it can reasonably and readily be inferred from the inheritance of the Land by the Father “a common intention that upon acquisition [the Father] has already been holding the Land for the benefit of his male descendants, namely his 3 sons, equally according to the custom and tradition of their home village”.  It is not entirely clear whether this is an alternative submission relied upon by Mr Chong in an attempt to establish the first element of a common intention constructive trust – see §38 below.  In any event, no attempt was made to lead evidence on such custom and tradition of the village, whether prior to or during the trial.  The issue was not explored at all in either the written statements or the oral testimony of any of the witnesses.  In the circumstances, Mr Chong’s submission in this regard, which was made for the first time at the closing stage, must fail.

The witnesses

29.  In the course of these proceedings, the Father and the Second Wife had previously filed witness statements from (1) the Father, (2) the First Son, and (3) the Third Son.  The witness statement of the First Son in general supports the Father’s case and denies the Second Son’s case. 

30.  The trial of this action in fact took place for the first time in April 2014.  Just before the trial, however, the Second Son took out a summons to amend his pleading and to adduce further witness statements.  One of them was a second witness statement of the First Son, in which he stated that he had been misled by the Father to sign his first witness statement.  He claimed that he did not know the content of that statement as it was all in English and he could not read English.  He therefore made the second statement to correct that and make clear his position, namely, that he supports the Second Son’s case and denies the Father’s case.  He added at the end that he would not “act against [his] heart and be [the Father’s] witness”.   

31.  As a result of that last minute application and its appeal, the trial was adjourned and the present trial before me is the restored trial of the action.

32.  At the present trial, the Father gave evidence. He also called as his witness a legal clerk of his former solicitors who sought to explain how he had liaised with the First Son in relation to the signing of his first witness statement.  The evidence of the legal clerk is, in my view, not material for it does not really shed much light on whether the First Son did or did not understand the content of his first statement.

33.  For the Second Son, apart from himself, he called his two siblings as his witnesses, namely, the First Son, who changed sides and adopted only his second witness statement at trial, and the First Daughter.

34.  In gist, it is the testimony of the Father alone against the opposite testimony of his three children. 

Legal principles

35.  Although the Second Son’s case, as pleaded, relies on “the principles of express trust, resulting trust, common intention constructive trust and/or proprietary estoppel”, Mr Chong stated in his closing submissions that if the Second Son “cannot succeed on constructive trust he will fail on express trust, resulting trust and/or proprietary estoppel as well in the circumstances of the present case”.  It is therefore only necessary to proceed to identify the legal principles governing common intention constructive trust. 

36.  The principles are not in dispute.  Leading authorities in this area of law were cited at trial, including Stack v Dowden [2007] 2 AC 432 and the recent Hong Kong Court of Appeal decision in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985.

37.  The Land being registered in the name of the Father and the Second Wife, the burden is on the Second Son to show, on the balance of probabilities, that prior to the gift made in 2012, the Father held the Land on trust for the Second Son as to one-third of the beneficial interest.

38.  It is incumbent on the Second Son to prove:-

(a) There was a common intention between him and the Father that the Second Son was to share in the beneficial ownership of the Land in that he was to own one-third of the beneficial interest;

(b) The Second Son altered his position in detrimental reliance upon such common intention; and

(c) It would be unconscionable for the Father to assert ownership in reliance on his legal title to the Land.

39.  In respect of the first element, the Second Son relies on the Alleged Promise, or, alternatively, the fact of the contribution allegedly made by the Second Son to the construction costs of the House in the late 1970’s and early 1980’s – see §25 above.  It should be noted that this case is a post-acquisition common intention case in that the alleged common intention was only formed in around 1981, ie, after the Father acquired the legal title of the Land in 1975.

40.  In respect of the second element, the Second Son relies on the fact of the contribution and the fact that he returned to Hong Kong in 2000 and started to live on the Second Floor at the same time paying for utilities and maintenance.

41.  In respect of the third element, Mr Chong did not make explicit in his submission as to how that has been satisfied. 

42.  In any event, however, on the whole, if the court accepts the Second Son’s factual case, I do not think there is any dispute that all the three elements are made out on those facts.  In other words, the outcome of the action would be dependent on which side’s factual case is to be believed.

Discussion of the evidence

43.  The material events took place during the period from about 1975 to about 1984, which is more than 30 years ago.  In the present case, there is no contemporaneous document against which the witnesses’ evidence can be tested or gauged.  Ultimately, the court has to decide whose evidence is credible and whose is not.  Where there are inaccuracies or discrepancies in a party’s evidence, the court needs to be mindful of the possibility that they may arise owing to the long lapse of time since the event in question took place.

44.  In my view, the Father’s factual case is coherent, consistent and accords well with inherent probabilities.  As a witness, the Father was firm, confident and straightforward.  Despite his old age, he had an excellent recollection of events which took place a few decades ago and was able to recount the events articulately and in detail.  He remained completely unshaken in cross-examination. 

45.  I consider that the Father’s case is inherently plausible for the following reasons.

46.  In his oral evidence, the Father portrayed himself as the dominant head of the family.  While he might discuss matters with the Mother from time to time, it was him who made the important decisions for the family, eg, emigration to England and acquisition of the restaurant.  He had no received no formal education.   But through his hard work and skill and ability, he managed to support his family and raise his six children in a new and unfamiliar country of which the language he did not really speak.  I do not think that the three children who gave evidence against him at trial can dispute this. 

47.  The hard fact is that the Father had earned his living in England by initially working as a cook and later running his own restaurant business and since then has been a man of adequate means – that is evident by, amongst other things, the fact that he had the capital to invest in the Shenzhen property  (see §17 above).   There was an allegation in the First Son’s second witness statement that the Father “likes to gamble” and he needed to seek the Second Son’s help financially.  It was also put to the Father during cross-examination that he gambled a lot.  In reply, the Father asked rhetorically if indeed he had been gambling as alleged by the children, how it was possible for him to achieve so many things in his life.  I accept the Father’s evidence in this regard.  The incredibility of the gambling allegation throws doubt on the credibility of the First Son as a whole.

48.  Against the above factual backdrop of the Father’s dominant role in the family, I consider it inherently probable that he made the decision to build a new house on the Land in 1981, without discussing the matter at all with his children.  I also consider that it is inherently probable that where the Second Son made a weekly contribution to the Mother, such money was given towards the family living expenses.  It ought to be borne in mind that at that time the other siblings of the Second Son were still young and at school.

49.  In his oral evidence, the Father said that if the children gave a sum of £10 or more to the Mother, the Mother would certainly have told him about it.  The Father explained that it was just how things were between the couple, the Mother being an unsophisticated person and always deferring to the Father as head of family.  I consider that this accords well with inherent probability.

50.  Mr Chong made a number of attacks to the Father’s case and suggested that he was not credible.  For instance, he said that it would be more probable that the Father had discussed the rebuilding with the family and that they had made a collective decision.  This is because at that time the two elder sons were already working and the relationship between the family members was good.  Mr Chong also suggested that it is inherently improbable that the Father would raise loans from friends in order to finance the construction of the House.  Given that the two elder sons were working, it would have been more likely that the Father would seek their help financially rather than from some outsiders.  I do not consider that there is much force in these suggestions, given that I have come to the view that the Father was a dominant character in the family.  The Father’s case remains, in my view, a reasonably plausible one.

51.  On the contrary, the Second Son’s case is tainted with inherent improbabilities and extensive inconsistencies and notable contradictions.  When these were put to him in cross-examination, he was not able to give any explanation at all.  Whenever it was pointed out to him that his oral evidence contradicted directly his written statement, he would say either that he had remembered wrongly or that he did not have anything to add. The worst part is that sometimes he would even insist that the contradicting versions were both correct.  The only conclusion one can draw is that he had not been telling the truth and he was therefore not able to reconcile all the discrepancies, inconsistencies and contradictions that arose in his case.

52.  As to inherent improbabilities, there are two major ones:-

(a) First, based on the Alleged Promise, each of the three sons would get one floor of the House upon completion.  There being only three floors in the House, that would leave nothing for the Father (unless it is suggested that he can live on the roof).  The Second Son had no explanation when cross-examined on this.

(b) Secondly, the First Son’s evidence was that when he started working, he earned a wage of around £17 a week in a Chinese restaurant and there would only be a small increase in his wage of about £2 to £3 a year.  It seems to be inherently improbable that when the Second Son started to work, he would be able to save up and contribute as much as £20 to £30 per week, as he now alleges.

53.  As for the inconsistencies or contradictions in the Second Son’s evidence, I do not propose to set them out in full below.  I would only select a few examples as illustration.

54.  First, the Second Son’s pleading has been amended twice.  There are significant and inexplicable differences between the first version and the second one.

55.  In the first version, it was pleaded that:-

(a) In about 1975, the Father agreed with the Second Son that a house would be built on the Land, that the latter was to contribute to the costs of the construction, and, that upon completion the Second Son “would be entitled to occupy the [Second Floor] for his and his family’s own use” (emphasis added). 

(b) The Second Son contributed a total sum of HK$5,000 towards the building costs.

(c) The House was completed in 1975 and since that year the Second Son had been in exclusive occupation and possession of the Second Floor.

56.  The second version amended all the matters as highlighted in italics above and set out the present case, as put forward by counsel in his closing submissions.  The discrepancies are significant because the first version sounds like a completely different story from the case currently run by the Second Son.  The previous plea that the Second Son had been in occupation of the Second Floor since 1975 is obviously and totally wrong as the House was not even built in 1975 and the undisputed fact is that the Second Son was in England at that time and moved to West Germany a few years later and only returned to live in Hong Kong in 2000.

57.  Secondly, the Second Son’s oral evidence on when he first learnt about the Father becoming the registered owner of the Land directly and irreconcilably contradicted his earlier written evidence:-

(a) He said in cross-examination that he did not know about the succession until about 2012 or 2013, that is, 10 years or so after he returned to Hong Kong for good.  He said that at that time, ie, in 1975, the Father did not mention about the succession.

(b) His first witness statement, however, stated as follows:-

“8. It had been my Father’s and Mother’s wishes to buy or build a house in my home village in Kam Tsin Village. I remember clearly that they always said the whole family especially the boys must work hard to earn money and save the money for the construction of the house in the home village because it was where they would return and settle down when they retire.

9. In or about 1975, my Father returned to Hong Kong and received from my Grandmother through succession a piece of land and an old village house (the “House”) in Kam Tsin Village by way of succession. …

10. The whole family was very excited and happy because our dream came true. The problem was that the House was very old and needed to be rebuilt.” (emphasis added)

(c) It the Father had not told the family about the succession at that time (this being the oral evidence), how could the whole family have become “very excited and happy” because a long-desired dream had come true (this being the written evidence)?

58.  Thirdly, the Second Son’s oral evidence on when and how he came to know of the timing of the construction, again, directly and irreconcilably contradicted his earlier written evidence:-

(a) He said in cross-examination that he was first informed by his peers in the village about the completion of the House.  That conversation with his peers took place during one of his visits to Hong Kong after the completion but he could not remember exactly when.

(b) His first witness statement, however, stated as follows:-

“18. My Father returned to Hong Kong in about 1982 to rebuild the House into a new small village house of 3 floors of about 500 sq. ft. each floor (the “New House”).

19. Before he left England, my Father told me that he was going back to Hong Kong to rebuild the House with my contributions as part of the re-building costs. He promised me that I would be entitled to one floor of the New House.” (emphasis added)

(c) It the Father had told the Second Son about the construction work before he left for Hong Kong in 1982 (this being the written evidence), how would it have been possible for the Second Son to find out about the construction only for the first time from his peers much later on (this being the oral evidence)?

59.  As noted above, there are other inconsistencies and discrepancies throughout the Second Son’s case, which I shall not set out here.  For instance, there is a discrepancy with regard to the exact period during which the Second Son made the contributions. 

60.  Mr Chong accepted in his closing submissions that there were “discrepancies or inconsistencies among the [Second Son’s] evidence in writing, namely in his pleading and witness statement, and that in his oral testimony” but he submitted that “those are mainly confusions as to time when events happened or when events came to his knowledge”.

61.  I do not agree.  Given the extensive and serious nature of the discrepancies and inconsistencies and the fact that they arose not only at the trial but also at the earlier stage of pleadings, I conclude that they can only be explained on the basis that the Second Son was not giving a truthful account.  I am therefore unable to accept the Second Son’s factual allegations.

62.  I also do not accept the evidence of the First Son and the First Daughter.  While I recognise that the First Son may not be fluent in English, I find it hard to believe that he did not understand English at all.  I also find it equally hard to believe that he would put his signature on the first witness statement without even taking a look at it or asking someone to explain the content to him first, given his background of having run a restaurant in England – he took over Koh Sing Restaurant from the Father (see §5 above).  As for the First Daughter, she gave evidence corroborating the Second Son’s case of the Alleged Promise.  Given my view above, I reject her evidence in this regard.

63.  In conclusion, having considered the inherent probabilities and plausibility of the parties’ cases, the consistency of their evidence and having observed the witnesses at the trial, I am firmly of the view that the Father’s account of events is truthful and I accept his case as set out in §§10 to 20 above. Where the Second Son’s case is in conflict with it, it must be rejected. 

Orders

64.  For the above reasons, the Second Son’s case of common intention constructive trust fails.  The Father and the Second Wife having given notice to terminate the licence, the Second Son has no defence to their claim as legal owners in this action.  Accordingly, I make the following orders:-

(a) The defendant do forthwith deliver vacant possession of the Second Floor to the plaintiffs; and

(b) The counterclaim of the defendant be dismissed.

65.  I further make an order nisi that the defendant pay the plaintiffs’ costs of the action and the counterclaim, to be taxed if not agreed, with certificate for counsel.