TONG KWOK KEUNG v. TONG KWOK KEE

DCMP 2470/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2470 OF 2014

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DECISION

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1. This is the plaintiff’s application to recover possession of 1^st Floor, Grand Mansion, No 10 Playing Field Road, Kowloon, Hong Kong (“the Property”) against the defendant pursuant to Order 113 of the Rules of District Court, Cap 336.

BACKGROUND OF THE APPLICATION

2. There is no dispute that the plaintiff is the registered owner of the Property.  The main issue between the parties is whether it was the plaintiff or his father, who had put up the purchase price for the Property in 1962.

3. The plaintiff is the elder brother of the defendant.  There are seven siblings altogether in the family.

4. The plaintiff claims that he paid for the full purchase price for the Property in 1962.  The defendant is unlawfully occupying the Property without the plaintiff’s licence or consent.  On the other hand, the defendant contends that the purchase price of the Property had been provided by the father.  The plaintiff is merely a nominee or trustee of a bare trust, holding the Property for the benefits of the family.  The Property is a family home and the defendant has been occupying since childhood.

5. In 1950s, their father founded a metal business called Sam Hing Metal Company. It appeared that the father had conducted the business successfully.  He passed away on 24 December 1975.  Before he died, he had made a Chinese will (“the Will”) on 1 December 1975.  Eight landed properties including the Property had been disposed of by the father. 

6. According to the Will, the father bequeathed the Property to the plaintiff.  However, both the plaintiff and the defendant considered the Will to be not valid.  No probate of the Will has been taken out in the last 40 years.  No executor was named therein.

7. The mother passed away intestate in June 2007.  There were several sets of litigations among the siblings. 

8. In one of those litigations (HCMP 664/2011), there is an application brought up by all the seven siblings of the family for the appointment of an administrator for their mother’s intestate estate.  Apart from cash assets, it also concerns a number of landed properties in Hong Kong.  In that hearing, a professional accountant has been appointed as the administrator.

THE PLAINTIFF’S CASE

9. The plaintiff purchased the Property in sum of $113,000 in November 1962. Since after the purchase of the Property, he let his mother to live there. 

10. In about mid-2005, the mother was seriously ill.  The defendant requested the plaintiff to let him to stay in the Property to take care of the mother.  As a result, he allowed the defendant to do so.  The mother died on 14 June 2007.  The plaintiff then asked the defendant to leave the Property so that he might let out the same for rental income.  The defendant refused to move out despite repeated requests.  In July 2014, the plaintiff instructed lawyers to give notice to the defendant to vacate the Property but the efforts were in vain.  Therefore the plaintiff took out this application.

11. The plaintiff categorically denies any trust/nominee relationship in respect of the Property as alleged by the defendant.

THE DEFENDANT’S CASE

12. It is the defendant’s case that their parents stayed in the Property ever since it was purchased in November 1962 until they passed away.  The Property was purchased by the father as the family home.  The defendant grew up with the siblings in the Property.  The plaintiff is merely a nominee for their parents in respect of the Property.  The defendant said he stayed in the Property because his parents allowed him to rather than by any licence from the plaintiff. 

13. Since the court has appointed an administrator for the mother’s estate in HCMP 664/2011, the defendant understands that the administrator would be or had already been seeking directions from the court as to what he should do in respect of the father’s Will.  Even if assuming no probate would be granted for the Will, the father’s estate still has to be administered by an administrator.  The estate would in due time be distributed and forming part of the mother’s estate.

PROPER APPROACH IN DEALING WITH ORDER 113 APPLICATION

14. If the court should hold that there is some issue or question that required to be tried, or that for some other reason there ought to be a trial, it may give directions as to the further conduct of the proceedings under O 28 r 4 or may order the proceedings to continue as if begun by writ under O 28 r 8: see Hong Kong Civil Procedures 2015 at §113/8/10.

15. In Ricas Properties Limited v. Armed Forces Trading Company Limited & ors, DCMP75/2008 (29.8.2008), Lok J held that:-

“13. It is clear from such dicta [in Direk Mahadumrongkul, CACV133/1998] that O. 113 provides a summary procedure to enable an owner to recover possession of his land from squatter in a speedy manner. By reason of its summary nature, such kind of application is intended for clear and obvious case where there is no issue or question to be tried. However, if the alleged squatter cannot raise any issue should be determined in a proper trial, there is no reason why the court should not grant a possession order in favour of the owner. Hence according to the aforesaid dicta in Direk Mahadumrongkul, the approach of the court in dealing with O. 113 application is very similar to that of an O. 14 application.

14. I agree with such approach. However, O. 113 application is, in substance, a different procedure as compared with O. 14 application. As I see it, if there is some degree of truth in the defendant’s allegation, or that the defendant has raised an issue which should be further investigated at the trial, then the court should not dispose of the case by way of O.113 procedure.” (my emphasis)

DISCUSSION

(i)   Beneficial ownership of the property

16. According to the land search, the plaintiff bought the Property in consideration of $113,000 without the need to take out a mortgage in November 1962.

17. The plaintiff’s affirmation is silent on how the Property came to be acquired by him and how he financed the purchase.   I am fully aware that it is difficult to find the documentary proof due to the long lapse of time since 1960s.  However, his version was based on mere assertions only.  He even made no mention of his age when he bought the Property.  I note that the defendant was only 11 years old in 1962.  There is no evidence of the seniority of the seven siblings.  Therefore I find the age of the plaintiff is important because it goes to whether I should accept that he managed to buy the flat in 1962.  

18. Mr Cheung for the defendant had helpfully refers me to an affirmation of Tong Wai Lin, who is the plaintiff’s elder sister, filed in the application for HCMP 664/2011.  Mr Ho for the plaintiff has no objection for the court to make reference to the said affirmation to find out the plaintiff’s age.  It shows that the plaintiff was 68 years old when that affirmation was made.  By simple deduction, the plaintiff was 19 years old in 1962.  Being the age of a school leaver, it strikes me at once on how the plaintiff managed to get such a huge amount to buy a flat without mortgage.  Even if he is unable to produce any contemporaneous documents of payments to the purchase of the Property, he should at least elaborate in his affirmation on the source of those payments. The plaintiff failed to do so.

19. The plaintiff’s case should not be taken at its face value. Under such circumstances, the court will have to decide whether the defendant’s version of events is to be accepted.

(ii)  Defendant has been living in the Property

20. I note from the Certificate issued by the Registrar of Persons exhibited in the affirmation of the defendant that he was accompanied by the father to obtain the Hong Kong identity card for the child in 1963.  It also shows that the address used in the registration with the Immigration Department was that of the Property since 1968.  Between 1972 and 2014, the defendant filled in and used the same address in all his subsequent applications with the Immigration Department.

21. This public record therefore supported the defendant’s allegation that he has been living in the Property since childhood.  In this regard, I find that this is a matter for determination by the court at trial. 

 (iii)  The Will

22. The plaintiff does not dispute the genuineness of the Will. 

23. In my view, it is an important piece of evidence to show that the father regarded that the Property belonged to him.  It is not as obvious as the plaintiff had put forward to the court that he paid for the entirety of the purchase price of the Property. It is possible that the father owned the beneficial interest of the Property and now it may fall within the mother’s estate.

IS SUMMARY JUDGMENT APPROPRIATE? 

24. On the evidence adduced before the court, it appears that there are substantial factual disputes as to whether the beneficial interest lies with the plaintiff.  I am satisfied that the factual assertions made by the defendant are believable.  Given my analyses above, I should not dispose of the case by way of Order 113 procedure.  The evidence does not clearly and obviously transpire that the defendant unlawfully occupying the Property. 

POSSESSION ORDER POSSIBLE EVEN BY ACCEPTING THE DEFENDANT’S CASE?

25. Mr Ho for the plaintiff accepts all the matters above may be in issues. He argues that summary judgment can still be obtained even by putting the defendant’s case to its highest. 

26. The defendant has obviously raised issues to be determined in a proper trial which makes O.113 inappropriate. In these circumstances, it is not incumbent upon the court to dwell further and make ruling on law on the disputed facts. In any event, I shall deal with the grounds briefly in deference to Mr Ho’s argument.  However, the legal arguments could only be assessed on the basis put forward by the defendant as below:-

(i) the plaintiff is the registered legal owner of the Property;

(ii) the beneficial interest in the Property formed part of the father’s estate;

(iii) no administrator/executor has ever been appointed to the father’s estate;

(iv) the father’s un-administered estate forms part of the mother’s estate;

(v) an administrator for the mother’s estate has been appointed by the Court of First Instance in HCMP664/2011 and has yet to complete the administration of her estate; and

(vi) the plaintiff and the defendant together with their 5 siblings are the beneficiaries to the estates of the father and the mother.

27. As appeared from the defendant’s case, the trust arises by the operation of law, not by an express trust.  The father alone provided the purchase monies for the Property and that accordingly the plaintiff held the same on trust for the father. 

28. In paragraph 21 of Mr Ho first skeleton, he submits that even if the purported trust did exist, it is established law that the trustee (as legal owner of the trust assets) has the exclusive power to deal with the property falling within the trust, such as the power to initiate claims in respect of the trust property (despite such action being contrary to the wishes of the beneficiary), unless and until the trust is collapsed: see Snell’s Equity (32 ed) at §§29-025, 29-026.  It is, therefore, impermissible for the defendant to dictate the plaintiff as trustee could or should do with the trust property.

29. To say “the trustee has the exclusive power to deal with the property falling within the trust” is quoting the learned author out of context.  At §§29-025, 29-026 of Snell’s Equity (32 ed), the learned author explained that:-

“In carrying out his duties, a trustee must be guided by the trust instrument and the rules of equity. In the exercise of any power or discretion which is confided to him, he is bound and entitled to use his own judgment, and ordinarily he is not obliged to consult the wishes or accede to the importunities of the certuis que trust….

Although the beneficiaries cannot, in general, control the trustees while the trust remains in being, or commit them to a particular dealing with the trust property, they can, if sui juris and together entitled to the whole beneficial interest, put an end to the trust and direct the trustees to hand over the trust property as they direct… In order words, if an accumulation is directed exclusively for the benefit of the beneficiary, the moment he is sui juris he may put an end to it and demand the property. A man who is sui juris may do what he likes with his own property.”(my emphasis)

30. It is trite law that the trustee in whom property is vested is compelled in equity to hold the property for the benefit of the beneficiary, or for some legally enforceable purposes other than his own. In the case of trust arising by operation of law, the trust is imposed upon the trustee to prevent him from benefiting unconscionably from his ownership of the property: see Snell’s Equity (32 ed) at § 21-001. 

31. In my view, when the plaintiff is exercising his power as a trustee, the question depends on whether what he proposes to do is in furtherance of the trust or in breach of his fiduciary duties.  It is the defendant’s case the Property was used as a family home since it was purchased by the father in 1960s. He has been living there since childhood.  If that is the case, the eviction of the defendant out of the Property is obviously against the benefit of the defendant as a beneficiary. The plaintiff indicated that he might let out the Property for rental income after the defendant moves out. I do not see at this stage, with the evidence put before the court, exists any legally enforceable purposes other than promoting the plaintiff’s own personal interest.

32. Mr Ho further puts forward the following arguments in his third skeleton submission:-

(i) Title to property under Hong Kong law is relative.  The plaintiff, as registered legal owner of the Property, has a better right of title to the Property than the defendant who is merely a potential legatee under the father’s estate. Therefore he is entitled to an order for possession of the Property against the defendant: The Law of Real Property by Megarry & Wade, (8^th ed 2012) at §§4-008 and 4-026;

(ii) The defendant asserts his interest as a putative legatee under the parents’ estate. He has no legal and/or equitable interest in the Property: Re Yuen Kiu Kwan [2009] 3 HKLRD 371 at §30 and 周順鏞對徐玉蓉, CACV 34/2005 (3.3.2006) at §35; and

(iii) The fact that the defendant being the occupier is a potential beneficiary under the father’s estate.  It does not confer on him any right of occupation of the Property: Hui Kew Nui v Lui Sau Wah, HCMP 699/2009 (17.6.2011) at §§32 and 33.

(i)    A better title

33. This is undeniable that the plaintiff holds a better title than the defendant.  However, I am not persuaded by this argument.  If the plaintiff’s proposition is correct, then any application under O.113 would be rendered unnecessary as the registered owner would automatically recover possession without the need to consider the factual background and merit of the case.  This cannot be right.  In the present case, the basis put forward by the defendant (as stated in §26 above) has to be taken into consideration. The defendant and the other five siblings are entitled to share the intestacy estate of the father.  In my view, the matter could only be properly dealt with at the trial to examine exactly what type of interest that the plaintiff has over the Property.

 (ii)  Putative legatee

34. A putative beneficiary has no legal or equitable interest in the assets comprised in the estate. His only right is to have the estate duly administered by the administrator in accordance with law: Re Yuen Kiu Kwan [2009] 3 HKLRD 371 as per Kwan J (as she then was) at §30.

35. In the absence of a grant, a purported beneficiary does not have the locus to sue on behalf of the estate. It is trite that a party cannot purport to sue on behalf of an intestate estate unless and until that person is granted the letters of administration:  Re the Estate of Luk Kim Ying [2008] HKLR743 per Poon J at §22.

36. A party claiming a relief in his personal capacity on behalf of a deceased person’s estate without joining the personal representative is irregular and such a claim is susceptible to be struck out (Ip Cheung- kwok v Sin Hua Bank Trustee Ltd [1990]1HKLR 497, followed by the Court of Appeal in周順鏞及徐玉蓉 (unrep.) (CACV 34 of 2005)): see Hui Kew Nui (supra) at §7.

37. The plaintiff is one of the beneficiaries of an un-administered estate of the father.  Adopting the above principles, he cannot bring an action in his own personal capacity in relation to assets which belong to the estate beneficially. His position is the same as that of the defendant.  He is merely a nominee holding the Property.  He is also not conferred with any legal or beneficial interest.  He has no locus to take out this application.  The court will not afford him any relief for his claim, in his personal capacity, for any asset in the estate.

38. Mr Cheung for the defendant submits that by initiating this application, the plaintiff gets an asset of the father/mother’s estate by the side wind. He is not permitted to do without the involvement of the personal representatives of the father and mother. I accept his submission.

39. In my view, there is another reason that ought to have a trial. If the court were to rule in plaintiff’s favour at this present stage, there may be a likely contest between the administrator of the father/mother’s estate and the plaintiff for the rights over the Property. As a result, the possession order by this court does not serve any meaningful purpose.  The matter will just be continued until the beneficial ownership of the Property has been determined.

 (iii) Defendant’s right of occupation of the Property

40. Mr Ho relies heavily on case of Hui Kew Nui.  In this case, the plaintiff was the registered legal owner of the property.  The defendant, the alleged lawful wife of the plaintiff’s deceased father, had resided in the property.  Therefore the plaintiff instituted the proceedings against the defendant.  The defendant defended the claim and further claimed that the deceased is in fact the true beneficial owner of the property, while the plaintiff is a mere bare trustee.

41. It appears that the circumstances of the case of Hui Kew Nui are similar to those of our present case.  However, it is distinguishable.  The case concerns the defendant applied for a representation order appointing herself to represent the deceased’s estate.  Master Levy had made clear that the legality and justification of the defendant’s occupation of the property will be a matter to be resolved at trial (at §35).  In my view, this case is of little assistance to the plaintiff.

CONCLUSION

42. All the above analysis on law is premised on the limited facts put forward in the defendant’s affirmation.  The evidence itself has not been tested in cross-examination and adjudicated by the court. In my view, there are factual disputes as to who put up the purchase price for the Property.  That will go to who is the true beneficial owner of the Property.   I find that the issues of fact and law raised cannot properly be investigated without proper pleadings and a trial.  I cannot accept that it is a clear and obvious case where there is no issue or question to be tried.  

43. For the reasons aforesaid, I refuse to grant a possession order in favour of the plaintiff. 

44. Before the commencement of the hearing, Mr Cheung has indicated that the defendant would apply to transfer the case to the Court of First Instance and consolidate it with HCMP 664/2011 if the court allows this case to continue as if was begun by writ. I do not agree.  I find that the fact of the present case would be clarified only after the filing of the pleadings.  Besides, the court has no information on what are the issues in dispute in HCMP 664/2011.  Only after the pleadings in the present case are crystallized, by then the defendant should consider if there is reason to transfer to the High Court and if so make an application again.

ORDER

45. The parties have no objection that if the court refuses to make a summary order for possession, the proceedings to continue as if it have been begun by writ under O 28 r 8. 

46. I therefore make the following order nisi that:-

(i) the case do proceed as if the same has been commenced by writ;

(ii) the plaintiff do file and serve the Statement of Claim within 28 days from the date when this order is made absolute;

(iii) the defendant do file and serve the Defence within 28 days thereafter;

(iv) the plaintiff do file and serve the Reply within 28 days (if any) thereafter; and

(v) the costs of the Order 113 application be costs in the cause of the action with certificate for counsel.

The order nisi shall be made absolute 14 days after the date of this decision.