WONG KIT CHEE, the Executrix of the estate of TSE LAI YING, the Deceased v. WONG SHIU KWONG

HCA 2283/2014

[2019] HKCFI 1000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2283 OF 2014

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J U D G M E N T

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1.  This action is in relation to the property known as Shop 5 and the cockloft therein on the ground floor of Kut Hing Building at Tai Wai, Shatin, New Territories (“the property”).

Background

2.  By an assignment dated 5 July 1975 the property was registered in the name of the purchasers Wong Yik Man (“the father”) and Tse Lai Ying (“the mother”) as joint tenants.

3.  The undisputed facts are that the father and the mother were the lawful and natural parents of seven children in order of their births:

(a)   Wong Shiu Kwong, the defendant (“D”);

(b)   Wong Wing Kwong;

(c)   Wong Kit Fong;

(d)   Wong Kit Chee, the plaintiff (“P”);

(e)   Rebecca Wong Kit Yee (“Rebecca”);

(f)   Wong Tak Kwong; and

(g)   Wong Kit Yung.

4.  There is also another child of the father from another woman, not the mother, namely, Wong Ho Kwong, Reginald (“Reginald”), who was the second son of the father. 

5.  Prior to 1963, the father and the mother operated a farm raising chickens in Tai Mo Shan.

6.  In about 1963 the father and the mother first operated their family business of a grocery store at rented premises in Tai Wai (“Tai Wai Store”) which was in operation from about 1963 to about 1979 when it closed down. 

7.  After the property was purchased in 1975, the father and the mother ran their business as a grocery store at the property in the name of Hung Hing Store (“Hung Hing Store”).

8.  The property was partitioned into the main shop, the middle-sized shop and the small shop with the main shop being the larger in size comprising about 50% of the property.

9.  The main shop was used for the business of Hung Hing Store which was run by the father and the mother.  The middle-sized shop and the small shop were rented out to outsiders. 

10.  The family lived in the cockloft at the property.

11.  In 1977 D married Chan Woon Lun and they moved to live in the cockloft.  At that time, Chan Woon Lun was working as an enrolled nurse at Grantham Hospital in Wong Chuk Hang, Hong Kong.

12.  By 1981, D and his wife had two children.  His wife was pregnant with her third child in 1981.  She left her employment as an enrolled nurse at Grantham Hospital and began to work at Hung Hing Store.  

13.  The father passed away in Hong Kong on 27 September 1981.  He was then 63 years of age.  As the surviving joint tenant of the property, the mother became the sole owner of the property upon the father’s death.

14.  In 1983 D and his wife purchased Flat 6, 14/F, King Tin Court, Block E, Tai Wai, New Territories (“the King Tin property”).  Thereafter, D, his wife and their children moved from the cockloft to live at the King Tin property.

15.  The mother applied to emigrate to Canada sponsored by her youngest daughter Wong Kit Yung who had earlier emigrated to Canada and was living there.  On 19 May 1988 the mother’s immigrant visa was granted.

16.  By a deed of gift dated 9 June 1988 (“the deed of gift”) the mother added the defendant as joint tenant of the property.

17.  The mother left Hong Kong and landed in Canada as an immigrant on 10 September 1988.  She went to live there with her daughter Wong Kit Yung.

18.  Before the mother left for Canada the business of Hung Hing Store was transferred by her to D’s wife.  After the mother left, D’s wife managed Hung Hing Store with D who helped out after his working hours as he was working full time at The Hong Kong and Kowloon Wharf and Godown Co Ltd (“Kowloon Wharf”).

19.  The mother was granted Canadian citizenship on 17 December 1992.  She then returned to live in Hong Kong.

20.  Between December 1992 and June 1997 the mother lived at the cockloft and also worked at Hung Hing Store without any remuneration.

21.  D applied to emigrate to Canada in 1989.  After two unsuccessful applications, D’s wife applied to emigrate to Canada with D and their children as an investor under the investment category.  This application was eventually successful in 1997.

22.  D and his family, comprising of his wife and four young children at that time, eventually left Hong Kong and landed in Canada on 30 June 1997, which was one day before the handover on 1 July 1997. When they left Hong Kong, Hung Hing Store closed down and it was no longer in operation. 

23.  The mother moved from the cockloft to live with P and her family shortly after D and his family emigrated to Canada on 30 June 1997.  From time to time, the mother travelled and visited her children in Canada and in the United Kingdom.

24.  By a notice of severance of joint tenancy dated 22 July 1997 (“the notice of severance”), the mother gave notice to D that the property held as joint tenants by the mother and D was severed with effect from 22 July 1997 and that the property would thereafter be held by the mother and D as tenants in common in equal shares.

25.  On 22 July 1997 the mother also made her last will appointing P as her executrix and trustee and bequeathing her estate to her children in equal shares, with the exception of D and Wong Wing Kwong.

26.  In 2009 the mother’s health deteriorated with several admissions to hospital.  On 25 November 2011 the mother passed away in Hong Kong. She was then 85 years of age. 

27.  On 4 August 2011 probate was granted to P as the executrix under the mother’s will. 

28.  The above facts are undisputed.

The Claims

29.  These proceedings were commenced on 11 November 2014 by P as the executrix of the mother’s estate.

30.  P claims that the half share in the property held by D was held by him on trust for the mother.  D claims that he holds the legal and beneficial interest in the half share to the property.

31.  P’s primary claim is for a declaration that P is vested with the entire beneficial interest in the property and that D holds the property on trust for P.

32.  P also seeks an order that D shall forthwith execute all necessary documents to transfer the legal and beneficial interest in the property to P free from any encumbrance within 28 days from the date of the order and that if D fails to do so, the Registrar of the High Court shall be obliged to execute all necessary documents for the said purpose on behalf of D.

33.  There is also a claim for damages.

34.  In the alternative, P claims an order for the sale of the property and an order that the net proceeds of sale be divided between P and D.

P’s Case

35.  D was added as a joint tenant of the property by the deed of gift. 

36.  It is P’s case that D had planned to emigrate to Canada and that, in order to enhance his chance of success in his application for emigration, D requested the mother to add his name to the title of the property and the business of Hung Hing Store.  D represented to the mother that he had no intention to own the property.  It was under those circumstances that the deed of gift was executed.

37.  P’s case is that D held the legal title as joint tenant of the property in trust for the mother.

D’s Case

38.  It is D’s case that he reached an agreement with the mother whereby he and his wife would take over the business of Hung Hing Store and repay all of Hung Hing Store’s debts and that in return, the mother would add D’s name as joint tenant of the property.

39.  D’s case is that pursuant to the agreement he made with the mother, the mother executed the deed of gift.

40.  D’s case is pleaded at para 3(c) and (d) of the defence which pleads:

“(c) It is further averred that before [the mother] emigrated to Canada in 1988, it was agreed between [D] and [the mother] that [D] and his wife would take over the business of Hung Hing Store and repay all of Hung Hing Store’s debts. In return, [the mother] would give the [property] to [D] by adding [D] as joint owner of the [property] as a reward for his efforts in running Hung Hing Store business since 1960s and bearing its debts (‘the Agreement’). Both [the mother] and [D] were aware that their co-ownership was in the form of joint tenancy, that is, when [the mother] passes away, [D] would become the sole owner of the [property].

(d) Pursuant to the Agreement, [the mother] executed [the deed of gift] on 9 June 1988 making [D] and herself the only 2 co‑owners of the [property] holding the same as joint tenants.…”

41.  D’s case is that he was the legal and beneficial owner of the property as joint tenant with the mother until he received the notice of severance after which he held the property with the mother as tenants in common.

The Main Issue

42.  The main issue is whether the mother added the name of D as joint tenant of the property for the purpose of enhancing D’s chance for emigration to Canada or whether she added D’s name as joint tenant of the property to reward him for his efforts to run Hung Hing Store and to repay the debts of Hung Hing Store.

43.  There is also an issue as to whether Hung Hing Store was heavily in debt when the father passed away.

The Applicable Legal Principles

44.  The starting point is that equity follows the law.  There is a presumption that the beneficial ownership of the property is held in the same way as the registered legal title.

45.  By the deed of gift, D’s name was added to the title of the property as joint tenant with the mother.  There is a presumption that the mother and D held the property for themselves as beneficial joint tenants.

46.  The burden of proof is on P to establish, on the balance of probabilities, that the deed of gift had no effect in conferring any beneficial interest in the property to D.  It is for P to establish that D held the property as joint tenant by the deed of gift as trustee for the mother.

47.  P has to prove that the mother did not intend to confer the beneficial interest in the property to D at the time the deed of gift was executed.  This is a question of fact.

48.  A constructive trust is one imposed by operation of law, rather than through the express or presumed intention of the owner of the property to create a trust or to retain any beneficial interest for himself (para 21-021, Snell’s Equity, 33^rd ed).

49.  In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 705 Lord Browne-Wilkinson helpfully summarized the principles as:

“(i) Equity operates on the conscience of the owner of the legal interest. In the case of a trust, the conscience of the legal owner requires him to carry out the purpose for which the property was vested in him (express or implied trust) or which the law imposed on him by reason of his unconscionable conduct (constructive trust).

(ii) Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of the legal interest being affected, he cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience, i.e. until he is aware that he is intended to hold the property for the benefit of others in the case of an express or implied trust, or, in the case of a constructive trust, of the factors which are alleged to affect his conscience.

(iii) In order to establish a trust there must be identifiable trust property. The only apparent exception to this rule is a constructive trust imposed on a person who dishonestly assists in a breach of trust who may come under fiduciary duties even if he does not receive identifiable trust property.

(iv) Once a trust is established, as from the date of its establishment the beneficiary has, in equity, a proprietary interest in the trust property, which proprietary interest will be enforceable in equity against any subsequent holder of the property (whether the original property or substituted property into which it can be traced) other than a purchaser for value of the legal interest without notice.”

50.  It is not disputed that if P discharges the burden of proof and establishes that the mother intended to add the name of D to the title of the property solely for the purpose of helping D in his plans for emigration to Canada and not for any other purpose, then D would be holding his share of the property in trust for the mother.

The Witnesses

51.  I heard evidence from P, Rebecca and Wong Tak Kwong.  I also heard evidence from D.

52.  P had suffered a stroke in 1991 when she was pregnant with her child.  The stroke affected her speech and she spoke slowly when giving evidence.  I found her to be an honest, truthful, credible and reliable witness.

53.  I also found Rebecca and Wong Tak Kwong to be honest, truthful, credible and reliable witnesses.

54.  I found D to be an evasive and untruthful witness. He was neither a credible nor a reliable witness.

55.  Where D’s evidence is at variance with the evidence of P, Rebecca and Wong, I prefer the evidence of P, Rebecca and Wong Tak Kwong, which I accept, to the evidence of D, which I reject.

The Evidence and Findings

56.  D was the eldest child of the family.  He was born in 1948 in the Mainland. 

57.  D and his brother Wong Wing Kwong were left behind in the Mainland when the father and the mother came to live in Hong Kong.

58.  Reginald was also born in the Mainland.

59.  D’s other siblings were born in Hong Kong.

60.  When he was about 13 years old, D came to live in Hong Kong with the rest of the family.  He entered into Hong Kong illegally having being smuggled in.

61.  D had a difficult childhood living in the Mainland.  There was a famine in the Mainland and D said that in those days when there was a famine, he was starving.

62.  Wong Wing Kwong and Reginald also came to live in Hong Kong but at different times. 

63.  D went to school in Hong Kong from about 1963 to 1968.  He then went out to work in about 1969.

64.  D worked full time at Kowloon Wharf as a security guard.  He worked full time for the same company from 1969 to 1995 although in different departments.  He usually worked at Tsim Sha Tsui in the area where Harbour City is now located.

65.  In his witness statement D tried to minimize his other siblings’ participation in the running of the family business but he later accepted in evidence that they all helped out in the business in between their schooling and their work.  D also helped out but, as he was a full time employee of Kowloon Wharf, he could only help out in between his working shifts.

66.  Although D said that after work he would go back to Hung Hing Store to work seven days a week, I do not believe him.  He has, in my view, exaggerated his role in the running of the business. He usually had to commute from Tai Wai to Tsim Sha Tsui for his job and in the 1970s and 1980s, it was a much longer commute between Tsim Sha Tsui and Tai Wai than it is today.

67.  P said, and I accept, that it was Wong Kit Fong and herself that assisted the parents the most since the early 1970s.

68.  Apart from D, the other siblings also assisted the father and the mother in running the business of Hung Hing Store.

69.  Wong Wing Kwong returned to live in the Mainland in about 1976 but before then, he also assisted his parents in the operation of Hung Hing Store.

70.  Reginald went to study in Canada in 1974 and returned to live and work in Hong Kong after graduation in 1981.   He emigrated to Canada in 1983 but before then, he also offered his assistance to the father and the mother in the store.

71.  Wong Kit Fong got married in 1979 and lived in Hong Kong until 1985.  During that period she also went back to help out at the store from time to time.  She emigrated to the United Kingdom in 1985 but she did come back from time to time to assist in the store.

72.  Wong Tak Kwong went to study in Canada in 1977 and returned to live and work in Hong Kong in 1981.  He emigrated to Canada in May 1988 but before then, he also assisted his parents in running the business of Hung Hing Store. 

73.  From 1981 until she retired in 2013, P worked at the Hong Kong Jockey Club in handling and also managing off course betting branches.  She got married in 1987.  She frequently returned to Hung Hing Store to assist in the running of the business. 

74.  In my view, D was trying to give the impression that he alone helped his parents in managing the business but in fact, as he accepted later in evidence, all the siblings played their part in helping their parents operate Hung Hing Store when they had free time to do so from their studies or their work.  I so find.

75.  There is no dispute that when D married his wife in 1977, it was the father who paid for all of the expenses for his wedding banquet.

76.  In 1981, D’s wife quit her nursing job at Grantham Hospital and thereafter she worked at Hung Hing Store. 

77.  There is a dispute of fact as to whether she left her employment because she was then pregnant with her third child or whether she left because the father’s health deteriorated in 1981 and he could not handle the chores at Hung Hing Store.  It matters not, in my view, as there is no dispute that from 1981 onwards she went to work at Hung Hing Store with the father and the mother. 

78.  There is also no dispute that in the summer of 1981 the father and the mother went to the USA and Canada for a visit.  D tried to give the impression in his witness statement that they went on this trip to Canada for the purpose of visiting his brother Wong Tak Kwong who was involved in a serious traffic accident in Canada.

79.  Wong Tak Kwong gave evidence, which I accept, that he was indeed involved in a traffic accident in April 1981 in Canada but that he was not seriously injured. He was discharged from hospital on the same day as his admission. He only sustained minor injuries.

80.  Wong Tak Kwong was a student in Canada at that time.  He returned to live and work in Hong Kong after his father’s death but later emigrated to Canada in May 1988.

81.  On the evidence of Wong Tak Kwong, which I accept, I find that the father and the mother in about July or August 1981 went on a tour of the USA and Canada to visit, not only Wong Tak Kwong in Canada, but also their other relatives.

82.  I am satisfied that the mother and the father joined a tour which took them first to the USA taking in Honolulu, Los Angeles, New York, Niagara Falls and then Toronto. This was a two to three–weeks’ tour which covered a number of different flights and cities.  This must have been a hectic tour.

83.  I do not believe that the father’s health at that time was as bad as D suggested.  The father was well able to travel on the extensive and hectic tour to the USA and Canada.  The father also made enquiries about purchasing a home in Toronto during that visit.  P said, and I accept, that the father did not have any symptoms of serious illness before this trip.

84.  The father passed away in Hong Kong on 27 September 1981.

85.  After the death of the father, P was responsible for looking after the mother.  The mother continued operating Hung Hing Store with the help of D’s wife who started working there in 1981 before the father’s death.

The Deed of Gift

86.  The deed of gift was executed on 9 June 1988.

87.  There is a serious dispute of fact between the parties as to the circumstances leading up to the execution of the deed. 

88.  In May 1988, D was still working at Kowloon Wharf as a security guard. He did not have any professional qualifications.

89.  D’s wife was then working full time at Hung Hing Store. They had four young children at that time.

90.  By May 1988, some of D’s siblings had already emigrated.  Wong Kit Fong had gone to the United Kingdom.  Reginald, Wong Tak Kwong and Wong Kit Yung had already emigrated to Canada.

91.  The mother had also applied to emigrate to Canada with the sponsorship of Wong Kit Yung.  The mother’s immigrant visa was granted on 19 May 1988 and she was going to depart Hong Kong for Canada after that. 

92.  P said that D had also planned to emigrate. 

93.  In view of the hardships that he had faced as a young child in the Mainland, the fact that most of his siblings had already emigrated, the fact that the mother was about to emigrate, and the fact that he had a very young family to look after, it is hardly surprising that D would also want to emigrate at that time.  He accepted in evidence that he was also keen to emigrate at that time.

94.  P said that in about May 1988 the mother told her that D also wanted to apply for emigration to Canada and that he wanted the mother to transfer the business of Hung Hing Store to him and to add his name to the property so as to enhance his chance of emigration.  The mother also told her that D had no intention of owning the property and that he requested the mother to add his name to the title of the property only for the purpose of enhancing his chance of success for emigration.

95.  P said that the mother told her that she agreed to hand over the business as she was emigrating.

96.  P also said that after the deed of gift was executed in K C Yung & Co’s offices, she met D at the property.  She said that D told her that he and the mother had just executed the document to add his name to the title of the property. He emphasized to her that it was done to boost his qualification for emigration and that he would not take a penny from the property.  I believe her and accept her evidence.

97.  Of particular importance is the evidence of Rebecca who also gave evidence of the circumstances leading up to the execution of the deed of gift.  I found her to be an impressive witness who also gave credible and reliable evidence. 

98.  Rebecca said that D knew that the mother’s immigrant’s visa had been granted.  D had always begged the mother to help him to emigrate.

99.  Rebecca was also living at the cockloft of the property in about end May 1988.  She said that she was in the cockloft on an occasion at about the end of May 1988 when she overheard a conversation the mother had with D in the main shop below.  She heard them quarreling in the shop. 

100.  Rebecca said that D knew that the mother was about to leave Hong Kong.  D begged the mother to help him by transferring the business to his wife’s name and also adding his name to the property to help him in applying for emigration.  She said the mother disagreed because the property was hers and her children lived there.  There was no reason to add his name to the property as that would be unfair to the other siblings.  Rebecca said that the mother was angry with D and went upstairs to the cockloft where Rebecca was. 

101.  Rebecca also said that she spoke to the mother at the cockloft. She told the mother that her landing papers for Canada had been granted and that as she was about to leave, she would either have to close down the business or sell it to get some money to take with her to Canada.  She further told the mother that if she sold the business it would cause a hardship on D’s family as D’s wife would have to go out to work and that D did not earn much from his job.

102.  In relation to whether the mother should add D’s name to the property to help him in applying for emigration, Rebecca said that she told the mother that the property was hers and it was for her to decide.  She told her to think about it.

103.  Rebecca said that the mother thought about the matter while resting in the cockloft and later agreed to have the business transferred to the name of D’s wife and to add D’s name to the property to help him.  The mother then went back downstairs to the main shop and spoke with the defendant.

104.  Not long after, D went up to the cockloft and spoke with Rebecca. D told her that after quarrelling with the mother for a long time, the mother was unwilling to transfer the business and add his name to the property but that she agreed to do so after speaking to her.  D assured Rebecca that transferring the business and adding his name to the property was simply for enhancing his chance of success in applying for emigration and that he had no intention of getting a penny from it. 

105.  D denied that he had the conversations with the mother and with Rebecca. He also denied that he spoke to P after the deed of gift was executed and told her that his name was added to the title of the property simply to boost his chance of emigration and that he did not intend to take a penny from it.

106.  I would observe that in the deed of gift the consideration stated therein is:

“In consideration of her natural love and affection towards [D]…”

107.  It is no part of D’s case that it was in consideration of the mother’s “natural love and affection” that the deed of gift was executed. 

108.  D’s case is as pleaded at para 3(c) and (d) of the defence as set out above at para 40.

109.  It is pleaded by D that it was agreed between the mother and D that D and his wife would take over the business of Hung Hing Store and repay all of Hung Hing Store’s debts. In return, the mother would give the property as a reward for his efforts in running the business of Hung Hing Store and bearing its debts. Pursuant to the agreement the mother executed the deed of gift.

110.  In evidence, D said that prior to the mother’s emigration in 1988, he and his mother reached an agreement that he and his wife would take over Hung Hing Store and repay all of the debts of Hung Hing Store and in return the mother would add his name to the property.  He emphasized that in return for him and his wife taking over the store and repaying all of the debts of the store, the mother would add his name to the property as a joint owner.  D was adamant that had it not been for the mother’s agreement to make him an owner of the property, he and his wife would not have agreed to take over Hung Hing Store and repay its debts.

111.  D made it clear in evidence that the agreement was that on his part, he and his wife would take over Hung Hing Store and repay all the debts of Hung Hing Store and on the mother’s part, she would add her name to the property so that he would become a joint tenant. 

112.  On D’s case and on his evidence, it was pursuant to the agreement that the deed of gift was executed and not in consideration of the mother’s “natural love and affection”. 

113.  On this dispute of fact, I prefer the evidence of P and Rebecca, which I accept, to the evidence of D, which I reject.  I believe P and Rebecca and disbelieve D.

114.  It is clear from the schedule of the mother’s assets and liabilities attached to the probate granted to P that her interest in the property was the only asset of the mother.

115.  In June 1988, D and his wife already owned their own property, namely the Kin Ting property.

116.  I have found that all the siblings of D assisted the father and the mother in one way or another in the operation of Hung Hing Store over the years when they had time to do so from their studies or their work.  There was no suggestion that the mother was on bad terms with her other children.  I do not believe that the mother would simply give the property to D to the exclusion of all her other children. 

117.  The mother died in 2011 at the age of 85 years. In June 1988 the mother was 62 years old.  D was 40 years old at that time.  It was more likely than not that D would survive his mother.   By adding him as a joint tenant would mean that on her death the entire property would vest in D as the survivor.   As a joint tenant D would inherit the whole property on the mother’s death and no part of her only valuable asset would have been left to the mother’s other children.

118.  It is, in my view, inconceivable that in June 1988 the mother would simply give the only valuable asset she owned to D to the exclusion of all her other children.

119.  I am satisfied and find that when the mother added the name of D to the property her intention was simply to assist him in his intended emigration application as D had requested and her intention was not to give the property to him as joint tenant with her. 

120.  I find that D held the legal title to the property on trust for the mother.  After her death he has held it in trust for the estate of the mother.

Was Hung Hing Store heavily in debt?

121.  D’s pleaded case is that Hung Hing Store was heavily in debt to its suppliers and vendors when the father passed away in 1981. It is also pleaded that D did eventually repay the debts with the income from the business of the store as well as his own and his wife’s personal income and savings (para 2(i) of the defence).

122.  In his witness statement D said that when the father passed away Hung Hing Store was left with heavy debts and he took up the full responsibility of repaying the debts.  He said that using the income from the business of the store as well as his wife’s and his personal income and savings, he ultimately repaid all the debts owed by Hung Hing Store.

123.  P denied in evidence that Hung Hing Store was heavily in debt when the father passed away in 1981.  She also said that the father had never mentioned to her that Hung Hing Store was heavily in debt.  P also said that after the father’s death, D had never mentioned to her that Hung Hing Store was heavily in debt and that he and his wife had repaid the debts with the income from Hung Hing Store and with D and his wife’s own personal income and savings. 

124.  In my view, P would have a much better idea than D as to whether Hung Hing Store was heavily in debt or not.

125.  On the undisputed evidence, P was the person who prepared the accounts and ledgers of Hung Hing Store. It was P who prepared and filed the tax returns for the store.  This continued from the time Hung Hing Store started its business at the property in 1975 until 1988 when the business was transferred to D’s wife on the mother’s emigration to Canada.

126.  On this dispute of fact, I also prefer P’s evidence, which I accept, to the evidence of D, which I reject. 

127.  I reject D’s evidence that Hung Hing Store was heavily in debt at the time of the father’s death and that he and his wife repaid all of the debts with their own income and savings. D has not produced any documentary evidence to show that he and his wife repaid debts of Hung Hing Store.

128.  In evidence, D said that before the father and the mother’s trip to Canada in 1981 he had suggested to the father to sell the property to repay the debts the father owed as he did not want to be burdened with the debts of his father.  I do not believe him.  This was not even mentioned by him in his witness statement.

129.  D explained that his father had incurred debts for the down payment of the purchase price of the property and the mortgage for the property which had not been fully repaid at that time. 

130.  There is no dispute that the purchase price of the property in 1975 was $332,500.  There was a mortgage obtained from a bank in the sum of $200,000 for seven years.  The father and the mother paid the remaining balance of $132,500. 

131.  P said that the property was purchased out of profits earned from Tai Wai Store which was in operation at that time and with a mortgage obtained from the bank. 

132.  D, however, said that the father obtained financial assistance from his friends as well as a mortgage from the bank to enable him to purchase the property in 1975. 

133.  On this dispute of fact, I prefer the evidence of P to the evidence of D.  I find that the property was purchased out of profits earned from Tai Wai Store and with the mortgage from the bank.

134.  I would also observe that the father was able to afford to pay for the entire wedding banquet when D got married in December 1977.  Although D said that he later repaid his wedding expenses to his father, he also said that the father immediately gave the same amount to his wife.  D also accepted in evidence that for the weddings of some of his siblings, the father gave them jewellery as gifts.

135.  There was also rental income received by the father from renting the middle-sized shop and the small shop.

136.  I also accept the evidence of Wong Tak Kwong who said that the father never told him that he was in debt or that Hung Hing Store was heavily in debt at any time. 

137.  D elaborated in evidence that the father had incurred debts when operating the farm raising chickens in the early days before Tai Wai Store was in operation. He also mentioned that the father had about $200,000 in debts which included the financial assistance from his friends when purchasing the property, the mortgage taken out on the property, loans for supporting his younger brother’s studies overseas and the loss the father sustained in business ventures with others. 

138.  D also mentioned that in 1974 when Reginald went to study, a loan of $50,000 had been obtained. He said that he suggested to his father to sell the property to repay this loan first.  He also said that there was a loss of $50,000 in a business venture that the father had with other people in a clothing factory. He also mentioned that the father had another business venture with others in a candle processing factory but that he did not know how much of a debt the father owed in that business.

139.  D was evasive when giving evidence about these matters.  I would observe that these matters were not mentioned by D in his witness statement.  They were mentioned by him for the first time in evidence.  I do not believe him.

140.  P said, and I accept, that apart from small sums which were outstanding to suppliers, Hung Hing Store was not heavily indebted at the time of the father’s death. I so find.

141.  I reject D’s evidence that there were heavy debts of Hung Hing Store as well as the estimated $200,000 debts of the father which he mentioned in evidence. In my view, D has made up his evidence of the father and Hung Hing Store being heavily in debt when the father passed away in order to bolster his case. 

142.  D accepted in evidence that he never spoke to his siblings about the debts of the father. It seems to me that if there were heavy debts incurred by Hung Hing Store and by the father, it would have been natural for him to mention these matters to his siblings and to seek their assistance as well.

143.  D also said that in 1988 when he reached the agreement with the mother pursuant to which the deed of gift was executed, the estimated $200,000 debts of the father had not been paid off. He further said in evidence that up to the time that he was giving evidence, the amounts owed by the father at the time of his death had not been repaid by D.   There is no evidence that he was ever asked to repay the same.

144.  There is no dispute that the mortgage on the property was fully discharged well before 1988.  This was a seven years’ mortgage which was obtained in 1975 when the property was purchased. P said, and I accept, that she was the person who dealt with the mortgage repayments from the father’s monthly deposits for repayment of the mortgage.  The mortgage was fully discharged, although D said that it was discharged in 1983.

145.  By the time of the deed of gift in June 1988, the property was a valuable asset of the mother which was no longer encumbered by a mortgage.  The value of half share of the property according to the Rating and Valuation Department’s letter was $1,500,000 thereby making the value of 100% of the property at that time to be $3,000,000.  This was the only asset of the mother and it is inconceivable that she would simply give D the property in return for him agreeing to pay the debts of Hung Hing Store.  D estimated that the debts of the father at the time of his death was $200,000.  It is implausible that the mother would simply agree to give him the valuable property in return for him agreeing to pay off debts of about $200,000.  

146.  D’s evidence is neither credible nor reliable and I do not believe him.  I reject his evidence on these matters.

147.  In evidence D also said that after the mortgage was discharged in 1983, he handed the financial matters over to the mother. The mother was in charge of the business and D said that he did not look at the accounts after the mortgage was discharged in 1983.  As he was no longer involved in the financial matters of Hung Hing Store after 1983, his evidence that he agreed to take over the debts of Hung Hing Store in reaching the agreement with the mother in 1988 is not credible.  I do not believe him. 

148.  I would observe that apart from the income from Hung Hing Store, it is agreed that the mother was also in receipt of rental income from the middle-sized shop for the period from 10 September 1983 to 9 September 1986 at the monthly rental of $4,500.

149.  D’s wife who worked at Hung Hing Store in 1981 shortly before the father’s death would have been in a position to know whether Hung Hing Store was heavily in debt at the time of the father’s death. She would also have been able to give evidence as to whether or not her own savings were used to repay the debts of Hung Hing Store. She continued working at Hung Hing Store after the father’s death and was still working there when the deed of gift was executed in June 1988.  She would also have been in a position to know whether Hung Hing Store was in debt at that time. D’s wife was not called to give evidence for D.

150.  Where a person without explanation failed to call as a witness a person who he might reasonably be expected to call, it was open to the court to draw an inference that that person’s evidence would not have helped that party’s case (Li Sau Keung v Maxcredit Engineering Ltd & another [2004] 1 HKC 434 at 443E–444C).

151.  In my view, an adverse inference can and should be drawn against D that if his wife had been called to give evidence, her evidence would not have supported D’s allegations that Hung Hing Store was heavily in debt when the father passed away and that he and his wife repaid the debts with the business of the store as well as his and his wife’s personal income and savings.

152.  D also tried to minimize the mother’s role in the running of the business of Hung Hing Store by saying that she was illiterate and had to rely on his wife to write receipts and to write cheques.

153.  P gave evidence that although did not receive formal education, the mother was not illiterate.  She could read and write and she also read newspapers. P said that the mother was able to and did write out invoices and receipts when running Hung Hing Store. The mother also learnt simple English before going to Canada and which she used to communicate when living in Canada. 

154.  On this dispute of fact, I prefer P’s evidence to D’s evidence. I find that the mother was not illiterate and that she was well able to write invoices and receipts when running the business of Hung Hing Store.

D’s Emigration to Canada

155.  The documents in evidence in relation to D’s emigration to Canada were listed in P’s list of documents but they were not disclosed by D.  P said that those documents were supplied by Reginald who assisted D in his emigration application to Canada. 

156.  The documents produced show that D first applied for permanent residence in Canada as an immigrant through his Canadian lawyers in September 1989.

157.  D said that he only applied after the 4 June 1989 Tiananmen Square incident.  No doubt, what happened in Tiananmen Square spurred him into action by making the formal application shortly thereafter.  

158.  There is no dispute that D first applied for emigration in the independent category as a skilled worker namely, a private investigator, according to the documents produced.  His first application was rejected by the Canadian Government in November 1989.  He was, however, informed by a letter to him dated 14 November 1989 that as he had indicated that he had a relative in Canada who would assist him, it was suggested that he could decide to proceed with an application on that basis.

159.  As a result, D asked Reginald to sponsor him as his relative to apply for permanent residence for D and his family.  This was on the basis that he was being sponsored by his brother, a Canadian citizen, and this was, in effect, D’s second application for emigration.

160.  D was informed by a letter dated 16 April 1991 that he would have to attend a personal interview and he was given an appointment for 18 October 1991 at the Canadian Consulate in Los Angeles.  Among the documents that he was asked to produce was proof of financial assets.

161.  It was after the letter dated 16 April 1991 that a valuation of the property was obtained so that it could be used for the purpose of immigration.  There is no dispute that the valuation report dated 8 June 1991 produced in evidence was used by D for the purpose of his emigration.

162.  The second application was also rejected. D was informed by letter dated 13 November 1991 that he failed to meet the requirements for acceptance in the assisted relative category.

163.  D and his family were determined to emigrate to Canada and a third application was later made in the name of D’s wife under the investment category.  This time the application was successful.

164.  The immigration documents also show that for the time that D’s wife worked at Hung Hing Store she did receive a salary. The completed form at pg 19 of Bundle B (“B19”) shows that from 1987 to July 1988 she received a salary of $2,500 as a saleswoman and from 1988  to “present” she received a salary of $5,000 as a shop‑keeper. 

165.  As part of the work history of D’s wife, it was stated therein that she worked from 1972 to 1979 as an enrolled nurse earning $4,000 and from 1979 to 1987 as a senior enrolled nurse earning $4,500.  I would observe that although it is undisputed that she left her employment at Grantham Hospital in 1981 to work at Hung Hing Store, it was stated in this form at B19 that she worked at the hospital until 1987. 

166.  The form was signed by both D and his wife.

167.  The information set out in the form shows that D’s wife received salary working at Hung Hing Store in the sums mentioned.  

168.  Hung Hing Store was able to afford to pay her a salary whilst she worked there although it is doubtful that she received the full amounts mentioned in the form at B19.  I would observe that in the profit tax computation at pg 78 of Bundle B for the year 1987/88, the salary paid to the mother as the sole proprietress of Hung Hing Store was $28,200, which was less than the salaries said to have been paid to D’s wife by Hung Hing Store as set out in the form at B19. 

169.  D was evasive when giving evidence on the work history of his wife as set out in the form at B19. He even said that he was not sure about his wife’s information on the form.  It seems to me that he and his wife exaggerated her salary and her work history in order to bolster her immigration application.

170.  It was submitted on behalf of D that he did not apply for emigration until 1989.  It was also submitted that the immigration documents do not show that D had made use of the property in his first application.  I accept that D did not immediately proceed with an application to emigrate after the execution of the deed of gift.

171.  The evidence shows that as proof of financial assets D did get a valuation of the property in June 1991 to enhance his second application for emigration.  D said in evidence that he did use the property in his application for immigration. 

172.  I am satisfied that by May 1988 when the mother’s immigrant visa was granted and with most of his siblings abroad, D was also keen to emigrate to Canada and was planning to do so.  Although D did not apply for emigration shortly after the deed of gift was executed in June 1988, it is clear, and I so find, that D was at that time keen to emigrate and would have wanted to enhance his chances for success as best as he could. It matters not that he did not include the property when he first applied in September 1989. The representation he made to the mother was that he wanted her to help him to enhance his chance of success in his emigration by adding his name to the property and it was for that purpose that she added his name relying on his representation. 

The Rental Income

173.  It is undisputed that even after the execution of the deed of gift in June 1988, the mother received the rents from the middle-sized shop and the small shop exclusively for her own use.

174.  P was in charge of the tenancy matters and the rents received from the middle-sized shop and the small shop were remitted by P to the mother after the mother emigrated to Canada.  None of this rent was given to D for the period after the execution of the deed of gift in June 1988 until the time D and his family left for Canada in June 1997.  This is not disputed.

175.  P said that D had no say in this arrangement and that he did not complain about not receiving any part of the rent for that period. D accepted that he did not receive any part of the rent for that period of about nine years.  He said that out of filial piety for the mother, he agreed to give the portion of rent that he was entitled to as a contribution for her daily expenses. 

176.  On this dispute of fact, I believe P and accept her evidence.  I disbelieve D and reject his evidence.  I find that the mother received all the rents received from the property for the whole of the period from the date of the deed of gift to the time D emigrated to Canada.  I find that D did not have a say in this matter and reject his evidence that he agreed to give the mother a portion of the rent for her daily expenses.  I do not believe him.

177.  P said that before D’s emigration to Canada, D had a change of attitude. D told her that his application for emigration had been approved and that he wanted to have half of the rentals of the property paid to him.  I believe her.

178.  It seems to me, and I so find, that for about nine years, D kept his word to the mother, P and Rebecca that he did not intend to take a penny from the property when he spoke to them at about the time of the deed of gift. Prior to his leaving for Canada in June 1997, his attitude changed. 

179.  P said that the mother acceded to D’s request and agreed to pay half of the rentals to D as D had a young family to care for in Canada. The mother was worried that his family might need money for their living there so she agreed to share the rent with D.

180.  A summary of the tenancy agreements and the rental income for the main shop, the middle-sized shop and the small shop shared by P and D after D emigrated to Canada is contained in Annex 2 to D’s written opening submissions.  Annex 2 is an agreed document.

181.  There is no dispute that the mother and, after her death, P shared the rental income with D as set out in Annex 2.

182.  It is not disputed that there were a number of family discussions over the years about whether the property should be sold so as to divide the proceeds among the siblings.  P said, and I accept, that these discussions did not proceed further as D opposed selling the property. 

183.  There is no dispute that until about 2003, P was in charge of rental matters for the property.  In about 2003, P was replaced by D’s cousin for the rental matters on D’s insistence and since 2009, D’s daughter, who was living in Hong Kong, took care of the rental matters for the main shop and the middle-sized shop.  It is not disputed that the rental incomes were deposited by the tenants directly into the accounts of P and D thereafter. 

184.  It was submitted on behalf of D that the rental arrangements between P and D show that D is beneficially entitled to the half share in the property.  I disagree.

185.  As I have said, D had a change of attitude when he was about to emigrate to Canada and he wanted a half share in the rentals. For about nine years prior to that, he did not in fact ask for or take a share in the rents received.  In my view, this supports P’s case that D had represented to the mother, P and Rebecca in May or June 1988 that he would not take a penny from the property and that the addition of his name in the property was to enhance his chance of emigration.

186.  The mother acceded to his request for a share in the rent as D was emigrating and had to support his young family.  He did not in fact have any meaningful employment in his time in Canada. The mother agreed to share the rent with him out of concern for him and his young family.  That position continued right up until the time the mother passed away in 2011 and up to the time these proceedings were commenced. 

The Notice of Severance and the Will

187.  The notice of severance of the joint tenancy is dated 22 July 1997. 

188.  The notice of severance and the mother’s will also dated 22 July 1997 were prepared by Norman M K Yeung & Co.  They were prepared after D had landed as a permanent resident in Canada.

189.  The notice of severance was served on D on 22 September 1997 when he was in Canada.

190.  P gave evidence that she accompanied the mother to the solicitors’ firm and was present when she executed the notice of severance and the will.

191.  She said that the mother told her that the property was hers and that for all those years up to 1997 D had not shared in the rent and the mother was concerned that he was asking for a share in the rent. The mother asked P to help her find a law firm to help her prepare a will. P said that the mother wanted to leave the property to all her children in equal shares.

192.  As a result, P and the mother went up to the offices of Norman Yeung & Co for the purpose of preparing the mother’s will. 

193.  P said that the mother went to the said solicitors to make a will to bequeath her estate including the property to her children in equal shares but she was advised that she could not do so as the property was held by her and D as joint tenants. She was advised that if she wanted to recover the whole property she would have to commence proceedings against D.  Another option was to sever the property and to prepare a will to have the property bequeathed to all the children. She was also told that if D disputed the severance he could also commence legal proceedings against her.

194.  P said that the mother did not want to immediately commence proceedings against D as he had just emigrated and required subsidy. She did not want to affect his family.  D was also facing litigation in Canada in relation to the investment that they made for emigration which turned out to be a failure and a loss of money for D.  P said that the mother decided to sever the property first and to prepare the will. 

195.  P also said that her brother Wong Wing Kwong was not named as a beneficiary in the will as he was living in the Mainland and had mental problems.

196.  I believe P and accept her evidence. 

The Title Deeds

197.  P gave evidence that she accidentally handed over the title deeds to the property to D’s wife when she visited her in Hong Kong in 2009. 

198.  Prior to that time, the title deeds were kept by the mother. The mother had moved to live with P shortly after D and his family emigrated to Canada in June 1997.  The mother was then living in the cockloft and several days later, P invited the mother to go and live with her and her family at her home so that it would be easier for her to take care of the mother.

199.  P said that the mother then went to live with her taking all her belongings including the title deeds which the mother had kept in the cockloft.

200.  P said that it was at about the time that the mother was admitted into hospital in 2009 that D’s wife went to collect her family’s documents which they had left behind when D and his family emigrated to Canada.

201.  P said that she had placed all of the mother’s documents and as well as the documents and photos of D’s family which had been left behind in the cockloft into a large plastic bag.  She had not realized at that time that the mother’s documents and the title deeds had not been removed from the large plastic bag so she accidentally handed them to D’s wife when she came to retrieve her family’s documents from her.  P emphasized that she accidentally handed the title deeds to D’s wife without realizing that they had been kept in the large plastic bag handed over to her. 

202.  Para 18 of the statement of claim pleaded, inter alia, that the title deeds were accidentally handed over to D’s wife in 2009 when she attended P’s premises to get back “the old stuff they (ie the Defendant and his wife) left behind before emigrated to Canada”. 

203.  At para 15 (a) of the defence D admitted that P had handed over the title deeds and documents of the property to D’s wife.  The defence was accompanied by a statement of truth signed by D.

204.  Contradicting the admission he made in the defence, D said in his witness statement that the title deeds were in his possession at all times after going through the procedures when the deed of gift was executed.  He said that it was not true that P had handed over the title deeds to his wife in 2009.  He said that P only handed over some documents relating to the property to his wife in 1999 but not the title deeds which were always in his possession all along, save for a brief period when in 1996 or 1997, the mother had asked him to lend her the title deeds which she returned to him. He also said that he took the title deeds to Canada when he emigrated.

205.  I do not believe D. His evidence directly contradicts his own admission made in his pleading filed almost two years before his witness statement was prepared.

206.  I believe P and accept her evidence that the title deeds were accidentally handed over by her to D’s wife in 2009.

207.  D’s wife has not been called to give evidence.  I draw an adverse inference that if she were called she would not have supported D’s case on this as well.

208.  P said that in 2009 the mother was determined to commence proceedings.  P said that the mother told her and Wong Kit Yung that she wished to give the entire property to all her children in equal shares and that she was determined to commence legal proceedings against D for the other half share of the property.

209.  P said that on 3 July 2009 she attended Norman Yeung & Co’s offices with the mother and Wong Kit Yung where the mother confirmed her instructions to seek recovery of the entire property from D. 

210.  I believe P and accept her evidence.

211.  P also said that shortly after that the mother’s health deteriorated and she was unable to commence the proceedings.  The mother was admitted to hospital on numerous occasions. 

212.  The mother’s health deteriorated and she eventually passed away on 25 February 2011.

213.  It was submitted that in the schedule of assets and liabilities of the mother annexed to the probate granted to P there was no mention of the mother being the owner of the other half share of the property in D’s name.  It was also submitted that this supported D’s case that he was the owner of the half share in his name.  I am unable to accept this submission.

214.  When P was cross-examined on this matter, she said that she was not aware that she could have put down in the schedule that the mother was the owner of the whole property.  I believe her.

215.  I would observe that at para 8 of the schedule of the assets and liabilities of the mother it is stated:

“8. LAND AND BUILDINGS

(Please copy the exact description of the property as per the Land Registry records)”

216.  What was set out under para 8 was the mother’s half share in the property as shown in the Land Registry records.  The mother was registered as the legal owner of only a half share of the property.

217.  In my view, the fact that the schedule did not state that the whole property belonged to the mother does not support D’s case on the main issue.

218.  P also said that she had been looking after the mother all those years and also during the mother’s ill health.  At the same time, she also had to look after her own son who has health issues.  

219.  As I said, P suffered a stroke in 1991 when she was pregnant.  Her adult son is now about 29 years old and is autistic. He was in hospital at the time of trial. P said that he needs to go in and out of hospital.   It must have been challenging and difficult for P to care for the mother and her own son at the same time. 

220.  The fact that the mother and P have delayed bringing this action against D is not a bar to relief.  There is no plea of delay or laches raised on behalf of D.

Conclusion

221.  On the main issue, I have found that when the mother added the name of D to the property by the deed of gift her intention was simply to assist D in his intended emigration application as he had requested and her intention was not to give the property to him as joint tenant with her.

222.  I have also found that D held the legal title to the property on trust for the mother and that after her death, he has held it in trust for the estate of the mother.

223.  I am satisfied that P is entitled to the relief she claims on her primary claim. 

224.  On P’s claim for damages, Mr Chan, for D, rightly submitted that there was no order for a split trial of liability and damages. Mr Leung, for P, submitted that he was not asking for a split trial on the question of damages and asked the court to assess damages.

225.  The claim for damages is for the rental income received by D.  It is not disputed that the mother and after her death, P permitted D to share the rental income.  They agreed to do so.

226.  In his closing submissions, Mr Leung submitted that P was seeking to claim damages only from the issue of the writ and asked the court to assess damages.  He was, however, unable to point to any evidence to show that D did in fact receive any rent from the property after the issue of the writ.

227.  There is no evidence that D received rent after the issue of the writ.  In the circumstances, P is only entitled to nominal damages in the sum of $1,000.

228.  I give judgment to P against D for:

(i)   a declaration that P be vested with the entire beneficial in the property and that D holds the half share of the property on trust for P;

(ii)   an order that D shall execute all necessary documents to transfer the legal and beneficial interest of the property to P free from any encumbrance within 28 days of being requested by P to do so and that if D fails to do so, the Registrar of the High Court be nominated to execute all such necessary documents on behalf of D on such terms or conditions as the Registrar of the High Court shall think fit; and  

(iii)   damages in the sum of $1,000.

229.  I also made an order nisi that D do pay P’s costs of this action, such costs to be taxed if not agreed.