CHEUK SHU YIN v. YIP SO WAN AND ANOTHER

[English translation – 英譯本]

CACV 163/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 163 OF 2009

(ON APPEAL FROM HIGH COURT ACTION NO. 2700 OF 2006)

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BETWEEN

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J U D G M E N T

Hon Yeung JA (giving the judgment of the Court):

Introduction

1.  The two defendants Yip So Wan and Lo King Fai are husband and wife.  Their son Lo Yeuk Wai [transliteration of 羅躍偉] came to know the plaintiff Madam Cheuk Shu Yin at the end of the 1980’s and married her in August 1994 in Hong Kong.

2.  In 2006, Madam Cheuk petitioned for divorce from Lo Yeuk Wai.  The Family Court granted a decree nisi of divorce and gave the custody of their two daughters to Madam Cheuk, while matters about ancillary relief were adjourned to a later date.  Unfortunately, Lo Yeuk Wai passed away on 28 February 2010 because of illness. The divorce proceedings and the application for ancillary relief were stayed as a result.  Shortly before his demise, Lo Yeuk Wai made a new will in which he gave all assets under his name to his parents.

3.  The defendants are the registered joint owners of Unit 6, 38^th floor, Block A, Cheong Shing Court, Fanling (“the property”).  The property is a Home Ownership Scheme flat.  The two defendants made their application on a Green Form on 28 May 1999 and bought the property in April 2000 at the price of $1,214,000.  The method of payment was as follows:

(1)  Down payment $60,000 odd was paid from the joint account of Madam Cheuk and Lo Yeuk Wai;

(2)  $270,000 was transferred from the defendants’ account to Lo Yeuk Wai’s account and then paid by him;

(3)  $90,000 was paid from Lo Yeuk Wai’s account;

(4)  $800,000 was transferred from the joint account of Madam Cheuk and Lo Yeuk Wai to Yip So Wan’s account, and then paid to the Housing Authority.

The defendants, being elderly persons, had been allocated a public housing unit by the Housing Authority.  After they purchased the property by applying on Green Form status, they had to return the public housing unit to the government.

4.  Madam Cheuk alleged that the source of the money for buying the property was the joint assets belonging to her and Lo Yeuk Wai, therefore she should be the beneficial owner of the property and the defendants were just trustees.  In 2006, Madam Cheuk filed a claim with the High Court to ask for a declaration to that effect.

5.  The defendants made a counterclaim, asking the court to declare that they were full beneficial owners of the property; which was occupied by Madam Cheuk, so the defendants further asked the court to order her to deliver up vacant possession of the property.

6.  The case was heard before Fung J and judgment was handed down on 25 June 2009.  It was held that the money for buying the property originated from the joint assets of Madam Cheuk and Lo Yeuk Wai but not from the defendants, and the counterclaim was dismissed.

7.  However, Fung J refused to make the declaration sought by Madam Cheuk, namely the declaration that she was the beneficial owner of the property and that the defendants were only trustees.  Fung J also refused to order the transfer of the property to Madam Cheuk.  He pointed out that the assignment or alienation of a Home Ownership Scheme flat was governed by sections 17AA and 17B of the Housing Ordinance, Cap. 283 of the Laws of Hong Kong, and that any arrangement made about the assignment or alienation of a Home Ownership Scheme flat without the approval of the Director of Housing or without the payment of a premium was void.

8.  Furthermore, Fung J observed that from the evidence of the parties it appeared that in the course of the purchase of the property there were the following violations of the Housing Authority’s Home Ownership Scheme policy:

(1)  The assets of the defendants might have exceeded the limits applicable to the application for public housing units for elderly persons;

(2)  Lo Yeuk Wai owned a Home Ownership Scheme flat in Tai Po and might have failed to meet the requirements about applying for another Home Ownership Scheme flat;

(3)  Although the defendants had returned the public housing unit to the government, they allowed others to use the Green Form to apply for a Home Ownership Scheme flat, so someone, might have jumped the queue instead of waiting for his proper turn.

9.  Fung J adjourned the determination of Madam Cheuk’s application for the declaration that she was the beneficial owner of the property, in order to let the Housing Department respond to the questions of whether the purchase of the property was illegal and what consequences would arise from violating the policy regarding the sale of Home Ownership Scheme flats.

10.  On 22 October 2009, after hearing submissions from both parties, Fung J made the declaration that Madam Cheuk and Lo Yeuk Wai were the beneficial owners of the property and that the defendants were trustees thereof.

11.  The defendants were aggrieved by Fung J’s judgment.  They filed a Notice of Appeal on 15 July 2009 to ask the Court of Appeal to reverse the first instance decision and to order Madam Cheuk to vacate the property and to deliver up vacant possession of the property to them.

12.  On the other hand, Madam Cheuk complained that the declaration made by Fung J —— “(Madam Cheuk) and Lo Yeuk Wai are the beneficial owners of the property, while (the defendants) are the trustees thereof” —— was not sufficiently clear and that it was not stated whether she held the property in the form of a joint tenancy.  Madam Cheuk asked this court to confirm that she was the beneficial owner of the property and that the defendants were trustees, and to make an order that she could apply to the Housing Department for a change of the ownership of the property without payment of a premium.

Respective cases of the partiesandtheirevidence

13.  Madam Cheuk stated that all the money used in purchasing the property came from the savings and proceeds from stocks and shares investments belonging to her and Lo Yeuk Wai, and that all the money was paid from the joint account with HSBC held by her and Lo Yeuk Wai.  She further said that 95% of the money in the joint account belonged to her and that Lo Yeuk Wai had only 5%.  Madam Cheuk stressed that she and Lo Yeuk Wai made use of the defendants’ eligibility for applying on Green Form status and bought the property in their names.

14.  Madam Cheuk emphasized that ever since the property was purchased, it had all along served as the matrimonial home of her family, and that the management fee and the charges for water, electricity and town gas were paid by her and Lo Yeuk Wai.  She said the defendants always lived in Shenzhen and sometimes they went to Australia to stay with their daughter/daughters.  In relation to Hong Kong, they were only visitors.  They would only pay short visits to the property but rarely stay overnight.

15.  Evidence showed that in 1992 Lo Yeuk Wai bought another Home Ownership Scheme flat at King Nga Court, Tai Po (“Tai Po property”).  After Madam Cheuk and Lo Yeuk Wai married, they lived at the Tai Po property until they moved into the property in 2000.  Madam Cheuk said that she and Lo Yeuk Wai had also paid the mortgage instalments for the Tai Po property.

16.  Madam Cheuk gave detailed description of the financial position of her and Lo Yeuk Wai.  According to her, besides working in their jobs, both she and Lo Yeuk Wai invested in stocks and shares.  She deposited her earnings in the joint account, while Lo Yeuk Wai’s earnings were deposited in a separate personal account held by him, therefore most of the money in the joint account should be hers.

17.  Madam Cheuk said that in 1992 Lo Yeuk Wai undertook the operation of two Shenzhen taxi licenses.  After the first instalment was paid, the subsequent monthly instalments were paid from the taxi rental and the assets of the two of them.  Lo Yeuk Wai sold one of the taxis in 1995 and used the 500,000 Yuan proceeds to rebuild the defendants’ home in Futian.  Later, Madam Cheuk and Lo Yeuk Wai were jointly allocated with 3 units, but Lo Yeuk Wai had other units himself.

18.  Madam Cheuk asserted that in February 2000, i.e. one odd month before the purchase of the property, she sold stocks and shares of the value of about $1,500,000 and deposited the proceeds in the joint account.  After that, two cheques of the amounts of $500,000 and $300,000 respectively were deposited in Yip So Wan’s account and were converted into fixed deposits. Madam Cheuk explained that at the time the defendants worried that she might be carried away by her interest in stocks and shares investment.  If anything went wrong, there might be not enough money to pay the purchase price of the property. They therefore insisted that she should sell the shares as soon as possible. Madam Cheuk said the defendants had told her that if she did not agree to this arrangement, they would give the right to buy the Home Ownership Scheme flat to one of their daughters.

19.  Madam Cheuk was adamant that besides the aforementioned $800,000 used to pay part of the purchase price of the property, additional money was transferred from the joint account held by her and Lo Yeuk Wai to a personal account held by Lo Yeuk Wai, and then a cashier’s order was bought to pay the balance.

20.  Madam Cheuk said that she had discussed with Lo Yeuk Wai and that he also agreed that he would ask his parents to sign a declaration of trust to show that they held the property for her and Lo Yeuk Wai.

21.  Madam Cheuk produced a declaration of trust with the name of a solicitors firm but with no signature, the content of which showed that the defendants held the property as trustees, and that Madam Cheuk and Lo Yeuk Wai were the beneficial owners.  In the end, the defendants did not sign the declaration of trust. Madam Cheuk’s explanation was that although the money for purchasing the property was contributed by her and Lo Yeuk Wai, it was a housing unit allocated by the Government to the defendants, they therefore were willing to make a will only, with Madam Cheuk and Lo Yeuk Wai being the beneficiaries of the property.

22.  Lo King Fai gave evidence that the money for purchasing the property was entirely contributed by him and his wife.  He said he usually lived in Shenzhen.  After he and his wife retired, the two of them used their pensions to build two blocks of residential housing in Futian.  He further said that he bought two Shenzhen taxi licenses in his wife’s name at the price of 70,000 Yuan each.  He even said that he contributed $170,000 to pay for Lo Yeuk Wai the down payment for the purchase of the Tai Po property.

23.  Lo King Fai stated that he entrusted Lo Yeuk Wai with the capital he obtained from selling a taxi license for investing in stocks and shares, and the money for purchasing the property originated from the proceeds from the stocks and shares investments; therefore the defendants should be the owners and beneficiaries of the property.

24.  Lo King Fai stressed that he and his wife were the owners of the Futian properties, which had nothing to do with Madam Cheuk.  In order to demonstrate that he was well-off, he pointed out that in January 2000 he had nearly $1,000,000 fixed deposits.

25.  Lo King Fai admitted that Madam Cheuk did take him and his wife to a solicitors firm, but he did not know for what reason she did that.  He emphatically denied that he had ever indicated that he would give the property to Madam Cheuk and Lo Yeuk Wai upon his death.

26.  Lo Yeuk Wai had given evidence to support his parents’ case.  He admitted that Madam Cheuk did suggest to him that his parents should sign a trust document about the property, but he did not agree.  He admitted that he did say he would ask his parents to make a will.  However, eventually he did not ask them to do that, because the property was bought by his parents with their own money.

Findings made by the trial judge

27.  Fung J carefully analyzed the respective cases presented by the parties’ and their evidence. He stressed that at the time of the defendants’ retirement, their monthly salaries were respectively RMB 600 Yuan and RMB 1,000 Yuan, and that Lo King Fai admitted that he did not receive any pension in the form of a lump sum. Fung J found that the defendants did not have enough money to buy the Tai Po property and the taxi licences.  Since Lo King Fai did not have the capital to buy the taxi licences, his case that he sold a taxi licence, used the proceeds to invest in stocks and shares and that the money for buying the property came from his earnings from the investments in stocks and shares was totally untenable.  Fung J found that there were discrepancies between Lo King Fai’s evidence and the documents and discrepancies in Lo Yeuk Wai’s evidence.  Some documents even showed that after Madam Cheuk petitioned for divorce, Lo Yeuk Wai tried to arrange for transferring his interests in the taxi licences to Lo King Fai.

28.  Fung J specifically pointed out that if all the money for buying the property came from the defendants, Lo Yeuk Wai had no reason at all to please Madam Cheuk by saying that he would ask his parents to make a will as a substitute for the trust document.

29.  Finally, Fung J rejected the defendants’ case and found that the money for buying the property did not come from them, but came from the joint assets of Madam Cheuk and Lo Yeuk Wai.

Grounds of appeal

30.  In the Notice of Appeal the defendants reiterated that $800,000 of the money for buying the property was earned from trading in stocks and shares which they entrusted Lo Yeuk Wai to do, which was then transferred from the joint account of Madam Cheuk and Lo Yeuk Wai to Yip So Wan’s account for paying the purchase price of the property.  The remainder, i.e. $270,000 also originated from the defendants.  They asserted that they were the registered owners of the property and that they only allowed Madam Cheuk to occupy the property as their daughter-in-law.

31.  They complained that Fung J should not have refused to admit the supplemental statements which Lo Yeuk Wai applied for filing at the trial.  In these statements, the financial arrangements between Lo Yeuk Wai and his parents were set out in detail, including the agreement between them as to how to handle the monthly statements of the shares trading account.  There was also information about the source of the funds for buying the stocks and shares and about the profits earned from the transactions.

32.  The defendants insisted that the findings of fact made by Fung J were erroneous; in particular, they alleged that before Lo King Fai retired, he was an official of a listed company in Shenzhen and he held 23,000 shares of that company.  They said that both of them had invested in A shares of the Mainland and conducted foreign exchange transactions in Hong Kong.  In 2000, they had deposits of $900,000 odd and $600,000 odd respectively in the Standard Chartered Bank and HSBC.

33.  The defendants maintained that the money for buying the Shenzhen taxi licences came from Lo King Fai, and that subsequently they handed the proceeds from the sale of a taxi licence and part of their savings to Madam Cheuk and Lo Yeuk Wai, so that they could invest the money in stocks and shares for them.

34.  The defendants said that all along they were in the property and had possession of the title deeds until Madam Cheuk changed the door lock of the property.  They said Madam Cheuk illegally and forcibly occupied the property.

35.  In their Supplemental Notice of Appeal, the defendants sought to produce quite a number of fresh documents, including documents issued by the Housing Authority, bank monthly statements, cheque records and monthly statements about stocks and shares.  They asked this court to admit such fresh evidence.

36.  Regarding the defendants’ case and the fresh evidence they intended to produce, Madam Cheuk made the following criticisms: they were essentially the same though differing on minor points; the only purpose they served was to give a false account of the true facts and confuse right and wrong; they were slanderous and vicious accusations against her; they were riddled with contradictions and none of the documents could be real documentary evidence.

37.  Subsequently, the two parties accused each other of being in the wrong and both parties asked the court to admit their fresh evidence to support their respective cases.

Applications made by the parties for producing fresh evidence

38.  Both parties asked this court to allow them to produce fresh documentary evidence, it is therefore necessary to deal with their applications first.  To justify the reception of fresh evidence during an appeal, the applicant must fulfill the conditions laid down in Ladd v Marshall [1954] 1 WLR 1489:

(1)  It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;

(2)  The evidence must be such that it is not only relevant to the case but if given, it would probably have an important influence on the result of the case, though it need not be decisive; and

(3)  The evidence must be such as is presumably to be believed, though it need not be incontrovertible.

39.  The parties in this case once were members of the same family.  Their relationships had been close and a variety of financial arrangements had been in operation among them, including trading in stocks and shares, buying and selling of Shenzhen taxi licences, construction of houses in Shenzhen and transactions in real properties.  In addition, there was evidence that the defendants were authorized to deal with their daughter’s/daughters’ assets.  When the parties went to court to have their financial disputes resolved, it cannot have been easy for them to try to sort out in an orderly manner the multitudinous documents involved.

40.  The undisputed evidence showed that $800,000 of the money for purchasing the property was transferred from the joint account of Madam Cheuk and Lo Yeuk Wai by using two cheques of the respective amounts of $500,000 and $300,000 to the account of Yip So Wan, and was subsequently paid to the Housing Authority.

41.  The defendants admitted that they could not produce any evidence to show that they had directly paid any part of the money for purchasing the property.  Their case was that they entrusted Lo Yeuk Wai with the capital they obtained from the sale of a taxi licence for investing in stocks and shares, and that the money for buying the property originated from the proceeds of such investment.

42.  The fresh evidence which the defendants intended to produce was documents created during the time when they and Madam Cheuk still belonged to one family and they were about incomes and expenditures, including tax demand documents issued by the revenue department of Shenzhen and some bank records.

43.  We have considered such fresh evidence.  We do not think that it would probably have an important influence on the result of the case.

44.  Neither Madam Cheuk nor the defendants explained clearly why they could not produce such evidence at the trial.  There is no basis for us to admit the fresh evidence which they applied for production.

Discussion

45.  Shortly before Lo Yeuk Wai died, he made a will, giving all the assets under his name to his parents. These assets included the Tai Po property, some properties in Shenzhen and the Shenzhen taxi licences.  At the time of Lo Yeuk Wai’s death, the divorce proceedings concerning him and Madam Cheuk, the ancillary relief proceedings in particular, were not yet completed.  Under these circumstances, the disputes between Madam Cheuk and the defendants were not confined to the property.

46.  When the hearing of this appeal began on 14 September 2010, we adjourned it to a later date to give an opportunity to the parties to mediate, in the hope that they could solve all the disputes once and for all through mediation; but it was unsuccessful.  Madam Cheuk initiated recovery proceedings against the defendants in Hong Kong and in the People’s Court of Futian, Shenzhen respectively in respect of the Tai Po property, the Shenzhen properties, Shenzhen taxi licences and some deposits in certain bank accounts.

47.  We must make it clear that at the present stage this court has no power and is unable to solve all the disputes between the parties.  We can only focus on the disputes about the judgment made at the trial, namely the disputes about the ownership of the property.

48.  The defendants protested that Fung J was wrong to make the finding that the money for buying the property did not originate from their assets.  They maintained that ever since the purchase of the property they had been living there, while their son’s family of four lived in the Tai Po property.  They said Madam Cheuk changed the lock of the main door of the property in 2006 and forcibly occupied the property.  They asked this court to reverse Fung J’s decision.

49.  The defendants stressed that they were the registered owners of the property and were entitled to deal with it according to their own will, and that moreover, the property was offered under a preferential policy, so the court should not grant Madam Cheuk’s request for a court order that the property be transferred to her, without payment of a premium, after both the defendants passed away.

50.  The main factual issue of this case was the source of the fund for buying the property. Each party held fast to its own version.  Fung J, after listening to the evidence of the witnesses of the two parties and after considering relevant documents, found against the defendants.

51.  Before Fung J made his findings, he had the advantage of observing the demeanour of the witnesses when they were giving evidence.  Fung J had a sufficient basis to reject the defendants’ case and their allegation that they sold a taxi licence and then entrusted the money obtained to Lo Yeuk Wai to invest in stocks and shares for them.  That being so, their argument that the money for buying the property, being proceeds from Lo Yeuk Wai’s investments in stocks and shares, actually originated from them is untenable.

52.  The undisputed evidence showed that after the property was bought in the defendants’ names, Madam Cheuk asked them to sign a trust document.  This is consistent with her case that the money for buying the property originated from her and Lo Yeuk Wai.

53.  In many cases this court has given guidance as to the proper approach that should be taken by an appellate court to the findings of fact made by a trial judge.

“An appellate court is extremely slow to interfere with findings of fact made by the judge at the trial. The reason being that when making such findings the trial judge has a unique advantage which the appellate court does not possess. This advantage is that when the witnesses are giving evidence, the trial judge has the opportunity to personally observe their expressions, demeanour and reactions and to assess their truthfulness and intelligence, thereby facilitating the judge’s making judgment as to their credibility and reliability. The appellate court does not have this advantage.” (see Chin Hoi Yan v Lin Nai Sou [transliteration of 錢凱茵對連乃壽] CACV 409/2005, Chan Man Ling v Chan Yiu Wong [transliteration of 陳敏玲對陳耀煌] CACV 14/2003, Ho Wa Kwong v Chiu Hung Construction Co. Ltd [transliteration of 何華廣對招雄建築有限公司] CACV 345/2004)

54.  In order to persuade the appellate court that a finding of fact made by the trial judge should be reversed, the appellant has to demonstrate either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence. (See the reasons set out by Godfrey JA in paragraph 663D of the judgment of Tang Kwok Ming v Daxprofit Scaffolding Ltd [1999] 1 HKC 657.)

55.  In our judgment, Fung J had sufficient reasons to find that the money for buying the property came from the joint assets of Madam Cheuk and Lo Yeuk Wai, but not from the defendants.

56.  However, the determination of the issue about the source of the money for the purchase of the property does not mean that the issue about the ownership of or interests in the property can be disposed of automatically.

57.  Relying on the fact that the money for purchasing the property came from her and Lo Yeuk Wai as the factual basis, and using resulting trust as her legal justification, Madam Cheuk asked the court to declare that she was the beneficial owner of the property and that the defendants were just trustees. She further asked for an order from this court that she had the right to apply to the Housing Department after the death of both defendants for transferring the property to her, without payment of a premium.

58.  We cannot overlook the fact that the property is a Home Ownership Scheme flat, that the defendants had relinquished the public housing unit allocated to them and that the purchase of the property was a result of their successful application on Green Form status in accordance with a scheme under which they enjoyed certain priorities.

59.  Section 17B of the Housing Ordinance provides that:

“(1) Where —

(a)(i) land in an estate is sold under section 17A; or

(ii) land in respect of which the Authority is authorized to nominate purchasers is sold and the person selling the land acts without the written permission of the Authority; and

(b) the person to whom the land is sold purports to mortgage or otherwise charge the land or to assign or otherwise alienate it; and

(c) that person acts in breach of —

(i) any term or condition of the agreement for sale and purchase or any covenant in the deed of assignment relating to the land; or

(ii) in the case of such a mortgage or other charge, any term authorized under paragraph 4(a) of the Schedule as regards the mortgage or other charge,

the purported mortgage, other charge, assignment or other alienation, together with any agreement so to mortgage, charge, assign or otherwise alienate, shall be void.

(2) Where —

(a) land described in subsection (1)(a)(ii) is sold with the written permission of the Authority; and

(b)(i) the person to whom the land is sold purports to mortgage or otherwise charge the land and has not the written permission of the Authority so to mortgage or otherwise charge; or

(ii) the mortgagee or the person in whose favour the charge is executed acts in breach of any of the terms on which the mortgage or other charge was authorized under paragraph 4 of the Schedule,

the purported mortgage or other charge, together with any agreement so to mortgage or otherwise charge, shall be void.

(3) For the avoidance of doubt it is hereby declared that subsection (1) is not to be construed as operating to invalidate a disposition by will (or codicil).”

60.  Home Ownership Scheme flats are flats sold under a government subsidized-sale programme aiming to help people who meet certain financial criteria to buy their own homes.  The Housing Department gave some priority to public housing tenants in buying Home Ownership Scheme flats and allowed them to apply on Green Form status.  The purpose was to encourage public housing tenants to give up their public housing units to buy Home Ownership Scheme flats instead, but any Home Ownership Scheme flat bought had to be used as the home of the buyer.

61.  In order to prevent the misuse of government resources and to deter people from breaking the rules, section 27A of the Housing Ordinance criminalizes unlawful alienations. Any unlawful mortgage, charge, assignment or other “alienation” created and any unlawful agreement entered into which relates to a Home Ownership Scheme flat is void; the parties thereto commit an offence and are liable to a fine of $500,000 and to imprisonment for 1 year.

62.  In Ling Wing Fai & Others v Ling Shui Fai & Others [2010] 5 HKLRD 247, there is thorough discussion about the legal consequences of the buying of a Home Ownership Scheme flat by a qualified person with money contributed by someone who was not qualified.

63.  The facts of that case can be summarized as follows:

The parties belonged to the same family; they included the mother, her two sons and their wives (i.e. the plaintiffs were husband and wife, and the defendants were also husband and wife).  The defendants bought a Home Ownership Scheme flat in 1983/1984 for $200,000 odd and became the registered owners of the flat.  The plaintiffs claimed that the family members entered into an agreement which stipulated that:-

(1)  To increase the chance of success in the drawing of lots, two applications for the purchase of a Home Ownership Scheme flat would be lodged with the Housing Authority, one in the name of the mother and the other in the names of the defendants.

(2)  The down payment and other expenses for the intended purchase would be paid by the mother.

(3)  The balance of the purchase price would be financed by a mortgage over the flat.

(4)  Members of the family who were to occupy the flat would have to pay for the monthly mortgage instalments and recurring expenses, such as rates and utility expenses.

(5)  Those family members who had contributed to the purchase price would have pro tanto beneficial interest in the flat to the extent of their respective contributions.

64.  The plaintiff argued that although the flat in question was purchased in the names of the defendants, the money required for the purchase was contributed by them and their mother, therefore they and their mother were the beneficial owners of the flat and that the defendants, in relation to their proportionate share of the flat, were only their trustees.

65.  The dispute in that case gave rise to certain questions of law which called for the Court of Appeal’s consideration, including:

(1)  Whether the family agreement and arrangement, for the purposes of section 17B of the Housing Ordinance, constituted an agreement to alienate and/or a purported alienation of the beneficial interest in the property in favour of the plaintiffs in breach of the terms, covenants and conditions of the Schedule to the Housing Ordinance.

(2)  Whether the payments made by the mother and the plaintiffs towards the purchase of the property with the intention of acquiring the beneficial interest in the property were void because the giving of effect thereto would result in an alienation or effective alienation of the beneficial interest in the property in favour of the plaintiffs in breach of the terms, covenants and conditions of the Schedule to the Housing Ordinance.

66.  After very carefully examining the meaning of the word “alienation” and the relevant laws and authorities, the Court of Appeal held that the family agreement amounted to “alienation” under section 17B of the Housing Ordinance and was void, and that the beneficial interest which the plaintiffs claimed they had acquired pursuant to the family agreement was also void and unenforceable.  In Leung Wai Chi v Leung Lai Ching [2010] 2 HKLRD 812, the Court of Appeal held that a contract for the letting of a Home Ownership Scheme flat was void and that the owner was not entitled to recover arrears of rent from the tenant, because such tenancy agreement was in contravention of section 17B of the Housing Ordinance.

67.  In this case, Madam Cheuk claimed that she held certain interests in the property.  Her position is no different from that of the plaintiffs in Ling Wing Fai.  Although the property was bought in the names of the defendants with money contributed by Madam Cheuk and Lo Yeuk Wai, Madam Cheuk’s claim that she was the beneficial owner of the property is a claim against the law.  The arrangement which, according to her, entitles her to hold the beneficial interests in the property is void under the law and is unenforceable.

68.  The finding made by Fung J that Madam Cheuk and Lo Yeuk Wai are the beneficial owners of the property and that the defendants are the trustees is wrong in law and should be overruled.

69.  We allow the appeal of the defendants and reverse the decision of Fung J.  We order that Madam Cheuk shall deliver up vacant possession of the property to the defendants.

70.  We remind Madam Cheuk again that if she wants to claim for any relief for herself and her two daughters from the assets under Lo Yeuk Wai’s name, she has to apply to the Court of First Instance under the Inheritance (Provision for Family and Dependants) Ordinance, Cap. 481 of the Laws of Hong Kong for an order for the making to her out of the net estate of Lo Yeuk Wai of the payments she needs on the ground that his will did not provide for the provision of reasonable financial provision to her and her two daughters.

71.  We make no order as to costs in respect of this appeal.

Translated by the Judgment Translation Unit of the Judiciary and approved by Mr. P. Y. Lo, Barrister-at-law.