SO MAN AND ANOTHER v. NG KWOK CHING (also known as DICKSON NG, also known as NG KWOK CHING DICKSON and also known as DICKSON NG KWOK CHING) AND ANOTHER

HCA 624/2021 & HCMP 674/2021

(Consolidated)

[2024] HKCFI 687

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION. NO. 624 OF 2021

AND MISCELLANEOUS PROCEEDINGS NO. 674 OF 2021

_________________

(By Original Action)

(By Counterclaim)

(CONSOLIDATED BY ORDER OF MASTER D. TO DATED 29^TH DAY OF OCTOBER 2021)

______________

_______________

JUDGMENT

_______________

A.  INTRODUCTION

1.  In a nutshell, these proceedings have arisen out of an attempt by a judgment creditor to enforce a charging order against a real property for which the judgment debtor owns, on the face of it, half share as one of the two registered joint tenants.  The registered joint tenants used to be common law husband and wife living together with their son, but they split up in 1994 before the property was acquired in 1995.  It was not until the judgment creditor recommenced enforcement proceedings 25 years later (in 2020) that formal proceedings were brought by the ex-wife and the son (in 2021) claiming that the ex-husband never had interest but merely held his half share of the property on trust for the son, followed by the judgment creditor’s application for an order for the sale of the property. 

2.  Given the substantial delay, one may naturally approach the claim of the ex-wife and the son with caution.  That said, the Court must consider and assess all relevant evidence fairly and critically to reach a conclusion, one way or another.  If this Court accepts the claim of the ex-wife and the son, that means the judgment debtor never had interest in the property and this would be the end of the matter for the judgment creditor.  On the other hand, even if this Court is to find that the judgment debtor owns half share of the property, it remains necessary to consider other issues relevant to the Court’s jurisdiction and exercise of discretion in respect of the judgment creditor’s claim for an order of sale of the property.

B.  CORE BACKGROUND

3.  This is the trial of two actions (which have been consolidated), namely HCA 624/2021 which has been instituted by the ex-wife and the son for a claim that the ex-husband holds his half share of the property on trust for the son, and HCMP 647/2021 which has been brought by the judgment creditor for enforcement of the charging order over the property. To be precise, there are the following claims before this Court, namely:

(a)  the claims by the Plaintiffs (By Original Action) and the 2^nd and 3^rd Defendants (By Counterclaim), namely Madam So Man (“Madam So”) and Mr Leo Ng Kai Shing (“Leo”), for a declaration that Leo is the beneficial owner of Mr Ng Kwok Ching Dickson’s (“Dickson”) share (together with Madam So as joint tenants) of Flat B, 11^th Floor, Verdun Villa, No. 8 Ede Road, Kowloon Tong (“the Flat”); and

(b)  the counterclaim by the 2^nd Defendant (By Original Action) and the Plaintiff (By Counterclaim), Mr Chiu Tin Yau Lesley (“Chiu”), for an order selling the Flat to satisfy a judgment debt of HK$2.5 million with interest against Dickson in HCA 105/2004 (“Judgment Debt”), which was obtained by Chiu in the absence of Dickson in November 2009, and for which Chiu had obtained the charging order absolute in 2010 (“Charging Order”).

4.  In this connection, (i) Dickson is the judgment debtor, ex-husband and registered joint tenant of the Flat; (ii) Madam So is the ex-wife and another registered joint tenant of the Flat; (iii) Leo is their son; and (iv) Chiu is the judgment creditor. 

5.  Dickson has not filed any defence or made any witness statement in these proceedings.  He did not appear in the pre-trial review either.  Nevertheless, he attended the trial hearing and sought leave to put in an affirmation made by him on the first day of the trial as his defence.  His affirmation seeks to exhibit (i) his two letters to the court dated 15 August 2023, (ii) his two letters to the court dated 30 December 2021, and (iii) supporting documents such as court orders and a letter dated 8 August 2023 from Nanyang Commercial Bank, Limited.  In gist, Dickson alleges that he was unable to file his defence earlier due to his poor health.  On behalf of Chiu, Mr Man objects to such belated application.  He argues that the delay is substantial as the latest round of filing of pleadings took place in December 2021; Dickson has not provided satisfactory reason for the delay as he managed to write letters in December 2021 (although they were not copied to or received by other parties); Dickson must have knowledge about the trial dates; and any extension of time would have significant impact on the trial. Mr Man further points out that Dickson’s affirmation is in the nature of submission rather than a defence or witness statement, and he would have no objection if the document is used as submissions.  Having considered the matter, I agree with Mr Man’s submissions and would only allow Dickson to rely on the document as his submissions.  I also made clear that Dickson could make submissions in these proceedings.

6.  The parties (except Dickson) have lodged agreed statement of facts, chronology of events and dramatis personae.  Based on the foregoing, the salient facts may be set out as follows:

(a)  Dickson and Madam So commenced living together in Shanghai in 1975.  Thereafter, Leo was born in Shanghai on 23 June 1977.  In the late 1980s, Dickson and Madam So moved to Hong Kong, followed by Leo 2 years later. 

(b)  In about 1990, the family moved into the Flat, which was government quarters sublet from Mr Lee Chi Fan (“Mr Lee”).  In 1994, Mr Lee acquired the Flat from the Government under the Government Civil Service Housing Arrangement.  Mr Lee later agreed to sell the Flat for HK$4 million.

(c)  Meanwhile, Madam So suspected that Dickson had cheated on her in about 1993.  In late 1993, Dickson suggested separation from Madam So.  There seems to be little dispute that Dickson moved out of the Flat since October 1994.

(d)  On 16 November 1994, Leo opened an “AssetVantage” account with HSBC (“HSBC Account”).  There was about HK$4.45 million in the HSBC Account at that time.  7 days later, on 23 November 1994, Leo transferred HK$2.4 million from the HSBC Account to Dickson’s bank account.

(e)  In February 1995, Dickson and Madam So (accompanied by Leo) went to a law firm and executed a sale and purchase agreement for the Flat with Mr Lee.

(f)   On 23 June 1995, Leo turned 18.

(g)  On 12 July 1995, the purchase of the Flat was completed.  Dickson and Madam So became the registered joint tenants.

(h)  On 30 December 1995, Dickson instructed a law firm to issue a letter to Madam So to clarify that no marriage had ever been registered between Dickson and Madam So.  On the same day, Dickson made two declarations in substantially the same terms (“1995 Declarations”), both of which were witnessed by a solicitor, Poon Hon Ying, Phyllis (“Ms Poon”).  The 1995 Declarations provided inter alia that:

“… 三）而本人與蘇女士已於1994年10月分開居住，以後男婚女嫁，各不相干。

四）關於所有共同擁有之財產分配問題，本人與蘇女士 [已經達成協議，並] 已落實執行分配。…”

[English translation:

“… 3) And I and Madam So Man have been living separately since October 1994, after this the man may marry and the woman may be married independently of each other.

4) Concerning the issue of distribution all co-owned assets, I and Madam So [have already reached agreement, and] have already implemented the distribution.”]

(The words in square bracket appear in the 1995 Declaration made by Dickson with the Flat as his address, but not in the other 1995 Declaration made by Dickson with his office in Wanchai as his correspondence address.)

(i) In about 1996, Leo studied in Australia. He was later admitted by the University of Sydney but he chose to return to Hong Kong to stay with Madam So.

(j) On 28 December 1996, Dickson wrote a declaration and gave it to Leo (“1996 Declaration”) in the following terms:

“我本人欲將原同太太蘇文共同擁有的，現址為：義德道八號十一樓B座的物業名，改為有我兒子；吳佳成先生同蘇文女士二人共同擁有。

此轉名自即日起立即生效。

吳國禎敬立   身分證：[…]

一九九六年十二月二十八日

（以下空白，無字）”

[English translation:

“I, myself, desire the property originally jointly owned by me and my wife So Man, current address: Flat B on 11th Floor Verdun Villa No. 8 Ede Road, to be changed to have my son; Mr Ng Kai Shing and Madam So Man both jointly own.

This transfer will be effective immediately from today.

ID: […] By: Ng Kwok Ching

28 December 1996

(Below is blank, no characters)”]

(k)  On 5 September 1997, Madam So (accompanied by Leo) executed a mortgage of the Flat to secure a loan of HK$4 million to Dickson for his business (“Mortgage”).  The Mortgage was signed by Madam So and Dickson.  At Clause 3.01(i) of the Mortgage, Dickson declared that he was the beneficial owner of the Flat.  In about November 1997, Dickson gave Leo a cheque of HK$2 million (as return in the business for Leo).  The Mortgage was later discharged in 2002 when the loan was fully repaid by Dickson.

(l)  In 2004, Chiu commenced proceedings in HCA 105/2004 against Dickson claiming HK$2.5 million plus interest.

(m)  In late 2006, Dickson was detained in Mainland China and he was subsequently imprisoned.

(n)  On 17 September 2009, Leo attended the pre-trial review of HCA 105/2004 and told the court that Dickson was detained in Mainland China.  Leo later wrote to the court on 5 November 2009 seeking adjournment, and the court replied stating that this would be dealt with on the first day of the trial.

(o)  On 10 November 2009, Leo did not attend the first day of trial and Chiu obtained judgment against Dickson (“Judgment”).

(p)  On 13 January 2010, Chiu obtained a charging order absolute (i.e. the Charging Order) against the Flat.  Leo went to the court building but did not attend the hearing.  He however submitted a letter to the High Court objecting to the charging order and enclosing the 1995 and 1996 Declarations. 

(q)  On 14 January 2010, the High Court replied that the charging order had already been made absolute before receiving Leo’s letter, and Leo was advised to seek legal advice.  Leo was later advised by a district councilor that it was unlikely the Charging Order could be discharged because Leo was not in the position to argue for Dickson.

(r)   In January 2020, Dickson was released from prison in Mainland China.  He returned to Hong Kong and lived in the Flat for a period of time.

(s)  In April 2020, Chiu re-commenced enforcement proceedings against Dickson.  On 15 May 2020, Chiu served a statutory demand on Dickson.  In June 2020, Dickson applied to set aside the Judgment and the statutory demand.  On 16 July 2020, Chiu presented a bankruptcy petition against Dickson.

(t)  On 19 March 2021, DHCJ Winnie Tsui refused Dickson’s application to set aside the Judgment.  Thereafter, Dickson applied for leave to appeal.

(u)  On 23 April 2021, Madam So and Leo commenced HCA 624/2021 claiming that Dickson holds his share of the Flat on trust for Leo.

(v)  On 29 April 2021, Au-Yeung J dismissed Dickson’s application to set aside the statutory demand.

(w)  On 14 May 2021, Chiu commenced HCMP 647/2021 for enforcement of the Charging Order.

(x)  On 27 October 2021, Chiu withdrew the bankruptcy petition.

(y)  On 29 October 2021, HCA 624/2021 and HCMP 647/2021 were consolidated.

7.  As I will explain later in the judgment, despite the criticisms which may be made against some of the evidence of Madam So and Leo, there are a few key aspects of their evidence which lend support to their case, including in particular the following:

(a)  The fact that Dickson and Madam So already split up when they acquired the Flat as joint tenants in 1995;

(b)  The transfer of HK$2.4 million from Leo to Dickson, the amount of which corresponds to 50% of the purchase price of the Flat (including premium);

(c)  The express statement by Dickson in the 1996 Declaration to transfer the title of his half share of the Flat to Leo; and

(d)  The letter by Leo to the Court on 13 January 2010 enclosing inter alia the 1996 Declaration.

C.  PARTIES’ CASES AND AGREED ISSUES

C1. The case of Madam So and Leo

8.  It is the case of Madam So and Leo that the Flat is beneficially owned by Madam So and Leo as a result of an agreement between themselves and Dickson made in late 1994 or early 1995 that (i) the Flat would be purchased and would be owned beneficially in equal shares by Madam So and Leo; (ii) Leo would contribute 50% of the purchase price; and (iii) Leo’s share in the property would be held on his behalf by Dickson.  As a matter of equity, such ownership arises either as a (i) common intention constructive trust (“CICT”) or (ii) a resulting trust as Leo advanced half of the purchase price of HK$2.4 million.  Among others, they rely on two typewritten 1995 Declarations and the handwritten 1996 Declaration by Dickson, and also the bank statements of Leo.

9.  Madam So and Leo submit that, if the Flat is found to be beneficially owned by Madam So and Leo, that is the end of the matter because there is no interest of Dickson’s to sell.

10.  They further contend that, even if the Flat is found to be beneficially owned by Dickson and Madam So, Chiu is not entitled to any order for sale because, among others:

(a)  Chiu has not brought his application under the Partition Ordinance (Cap. 352) (“PO”), being the only statutory authority to sell Madam So’s share of the Flat;

(b)  Chiu has no locus standi or the Court has no jurisdiction to sell the Flat;

(c)  The Court should not exercise its discretion to sell, given the long occupation of the Flat by Madam So and Leo, and also Madam So’s advanced age and mental health condition.

11.  Further, Madam So and Leo argue that, even if the Court exercises a discretion to sell, under s. 4(4) of the Limitation Ordinance (Cap. 347) (“LO”), Chiu is only entitled to interest on the judgment debt for 6 years from 15 May 2015 to 14 May 2021.

C2.   The case of Chiu

12.  Chiu is not privy to the alleged agreement made in late 1994 or early 1995, or the alleged contribution of half of the purchase price of the Flat by Leo.  Chiu thus puts Madam So and Leo to strict proof thereof.

13.  As part of his counterclaim, Chiu also alleges a conspiracy to defraud on the part of Madam So, Dickson and Leo. However, as pointed out by Mr Clark on behalf of Madam So and Leo, Chiu did not request for such claim to be included in the agreed list of issues.  In any event, there is force in Mr Clark’s argument that the relevant documentary evidence relied on by Madam So and Leo pre-date the loan between Dickson and Chiu in 2001 and hence logically cannot have been created to defeat Chiu’s claim.

C3.  Agreed issues

14.  The parties have lodged a list of agreed issues as follows:

“1. Who are the beneficial owners of the Flat? Are they:

(a) Dickson and So Man; or

(b) So Man and Leo?

2. Whether the Flat was purchased with the common intention between So, Dickson and Leo that:

(a) The Flat would be purchased and would be owned beneficially in equal shares by So and Leo.

(b) Leo would contribute 50% of the purchase price.

(c) Leo’s share of the Flat would be held by Dickson on Leo’s behalf.

3. Whether Leo had paid or contributed HK$ 2.4 million to the purchase price of the Flat?

4. Did So and Leo pay all outgoings for the Flat from 1995 onwards?

5. Whether Chiu is entitled to an order for sale in HCMP 674/2021?

6. If the court find Chiu is entitled to an order for sale, what amount of interest is Chiu entitled to recover?”

15.  As submitted by Mr Clark, the key issues are questions 1 and 5.  Of course, the answer to question 1 would depend on the answers to questions 2 to 4, whilst question 6 goes to the extent of recovery by Chiu if he is entitled to an order for sale of the Flat.

D.  RELEVANT PRINCIPLES

D1.   CICT (Common intention constructive trust)

16.  The law on common intention constructive trust is well settled.  The parties do not dispute that the relevant principles have been set out by the Court of Appeal in Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985 and Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327.  The parties have also referred to the summary of the legal position in Leung Hang Lin & Anor v Lam Mei Yung, HCA 1374/2017 (unreported, 22 November 2019), [8] and Tam Siu Lim William v Fung Ho [2023] HKCFI 1583, [26]-[29].  In this regard, I have also summarised the relevant principles in another decision of mine in Tang Hin Fai & Anor v Tang Hin Lung & Ors [2023] HKCFI 2637, [94].  The relevant parts are reproduced below for ease of reference:

(a)  The starting point is that equity follows the law.  There is a presumption that the beneficial interest follows the legal interest.  Where the property is registered in a defendant’s name, the plaintiff (or the counterclaiming plaintiff, as the case may be) bears the burden of showing, on the balance of probabilities, that the beneficial ownership differs from the legal ownership.  There are two stages of inquiry.  The first is whether it was intended that the plaintiff has any beneficial interest in the property at all.  The onus is upon the plaintiff to show that he has any interest at all.  If he does, the second issue is what that interest is.

(b)  The burden may be discharged by showing that: (i) there was a common intention held by the plaintiff and the property owner at the time of the purchase (or exceptionally, thereafter) that the beneficial ownership was to be different to the legal ownership; (ii) the plaintiff altered his or her position in detrimental reliance upon the common intention; and (iii) it is unconscionable for the property owner to assert ownership in reliance on the legal title.  The constructive trust is constituted by the plaintiff’s detrimental reliance on the common intention and the unconscionability of the legal owner departing therefrom.

(c)  The court is to take a holistic approach to ascertain the parties’ objective intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it.  The relevant intention is the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.  More factors than financial contributions may be relevant to drawing inference on such intention, and there is no exhaustive list.

(d)  Relevant circumstances include any discussion between the parties concerned at the time of the conveyancing, reasons why the property was acquired in joint names or sole name, the purpose for which the property was acquired, the nature of the parties’ relationship, how the purchase was financed initially and subsequently, how the parties arranged their finances, the outgoings on the property and other household expenses.

(e)  The doctrine is often described as having two limbs, i.e.: 

(i)    First limb, i.e. expressed intention which arises when, at any time prior to the acquisition, or exceptionally at some later date, there is an agreement, arrangement or understanding reached between the parties on how the property is to be held beneficially;

(ii)   Second limb: where there is no evidence to support a finding of an agreement or arrangement on the beneficial ownership of the property and the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust.

17.  Moreover, in a Chinese setting, especially for the older generations, where explicit discussions on property rights within the family was not that common, the Court has to pay more regard to circumstantial matters: see Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327, [1.6].

18.  Further, it would appear that the parties are in agreement that if Madam So and Leo successfully establish CICT, it would be appropriate to grant a declaration that the Flat is held on trust for Madam So and Leo as tenants in common in equal shares, and an order directing Dickson transfer the legal title to the Flat to Leo.  Moreover, if Dickson has no beneficial interest in the Flat, it would appear that the Court should also make an order to discharge the Charging Order.

D2.   Resulting trust

19.  The law on resulting trust is also well-settled.  On behalf of Chiu, Mr Man refers to Re Superyield Holdings Ltd[2000] 2 HKC 90, at 106D-108E:

“A useful starting point is art 31(1) of Underhill & Hayton, Law of Trusts and Trustees, 15th ed., p.317 as follows:

‘When real or personal property is conveyed to a purchaser jointly with others, or to one or more persons other than the purchaser, a resulting trust will be presumed in favour of the person who is proved ... to have paid the purchase-money in the character of purchaser (as opposed to that of donor or lender)’. ”

20.  Mr Man further refers to the summary of the legal position by To J in Cheung Ping Sum v Wong Chi Hang, HCMP 1490/2016 (unreported, 6 September 2019), at [77]:

“77. Where a person purchases property with his own money and directs that the property be transferred to the name of another, in the absence of evidence to the contrary, there is a presumption that the property is held by the person to whom it was transferred under a resulting trust in favour of the person who provided the money for its purchase. The law imputes a common intention in the parties to hold the property under a resulting trust even in the absence of such intention. This presumption may be rebutted by proof of the actual common intention of the parties. The classic authority for this proposition is Dyer v Dyer.”

21.  On the other hand, Mr Clark refers this Court to the summary of the legal position by Ng J in Tam Siu Lim William v Fung Ho [2023] HKCFI 1583, [30]-[32], citing the dicta of Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708A-D as follows:

“Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer ... (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest ... Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention.”

22.  Further, the parties accept that there is little room for the operation of the presumption of resulting trust when there is sufficient evidence on actual intention at the time of the transaction.  Hence, the Court should first examine the evidence put forward by Leo and Madam So in support of their principal case of CICT and, if necessary, the fallback position of resulting trust: see Tam Siu Lim William v Fung Ho [2023] HKCFI 1583, [32]-[33]; Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327, [1.3].

D3.   Witness credibility

23.  As submitted by Mr Man, the general principles regarding fact finding and the assessment of credibility are trite and have been helpfully summarised by DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors, HCA 1734/2009 (unreported, 8 April 2014) at [77]-[83].  Among others:

(a)  Contemporaneous documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.

(b)  In deciding whether to accept a witness’ account, importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events.

(c)  Regard should be had to the consistency of the witness’ evidence with the undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.

(d)  Care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.

(e)  Witnesses’ credibility should be tested by reference to the objective facts proved independently of their testimony, and regard should be had to their motives and to the overall probabilities.

E.  WITNESSES

E1.   General Observations

24.  The Plaintiffs (By Original Action) have called two witnesses, namely Leo and Madam So, whilst Chiu has called one witness, namely Chiu himself.  In addition, Ms Poon (i.e. Ms Poon Hon-Ying, Phyllis), a solicitor, had been subpoenaed by Madam So and Leo to give evidence.

25.  In terms of the demeanour of the witnesses, I consider Leo and Madam So to be relatively straightforward and forthcoming in their answers on the whole, although there are some inconsistencies in their testimony.  They remain unshaken when cross-examined, and have largely affirmed the position of their case. 

26.  As in other cases involving claims of CICT, the case of Madam So and Leo is primarily based on alleged oral discussions and oral agreement reached in a domestic setting.  It is fair to say that, whilst there may be potential weakness in their case, one must not overlook various key aspects in the evidence which lend support to their case. To facilitate the evaluation by the Court, I would highlight some of the key evidence by Leo and Madam So further below.

27.  On the other hand, insofar as Chiu is concerned, it is fair to say that he did not have knowledge of the primary facts and a large part of his witness statement consists of commentaries or submissions.  Indeed, as conceded by Chiu in cross-examination, his witness statement was principally an analysis of the evidence prepared by his solicitors. Therefore, Chiu’s evidence is of limited assistance to the Court.  As regards Ms Poon, her role was limited to witnessing the signature of Dickson on the 1995 Declarations.  She was not the solicitor acting for Dickson at the time, and was not involved in the drafting of the 1995 Declarations.  As such, her evidence does not assist either.

28.  For completeness, I have reminded myself of the principles in Hui Cheung Fai, particularly that care should be taken in drawing conclusions about truthfulness and reliability solely or mainly from the appearance of a witness or from the assessment of a witness’ character.  Instead, I would place more emphasis in any contemporaneous documents, the inherent probabilities of a witness’ account, the consistency of the witness’ evidence with the undisputed or indisputable evidence, and the internal consistency of the witness’ evidence.

E2.   Leo

29.  Leo is the first witness testifying in court.  He has made a witness statement as well as a previous affirmation for the purpose of these proceedings.

30.  There is little challenge of Leo’s account of his personal background.  He was born in 1977 in Shanghai, and grew up and attended primary school there.  In 1987, his parents went to Hong Kong, and he joined his parents in 1989 at the age of 12.  The family moved to the Flat in 1990.  He studied Form 1 to Form 5 at New Method College.

31.  He had a regular life until he reached 16 years old in 1993.  He was then in Form 4 and Dickson wanted him to pursue study in the USA.  Meanwhile, he learned from his mother, Madam So, that Dickson had a girl friend.  Dickson started staying out, often leaving Madam So and Leo alone.  His parents had confrontations which frequently resulted in big fights and violence against his mother, leaving her weeping from time to time. He was frightened and depressed, and his school results plummeted.

32.  He knew that his father, Dickson, forced a separation on his mother, Madam So, and arranged her to purchase a new residence in the Hong Kong Island as compensation.  This is supported by a handwritten sale and purchase agreement dated 2 November 1993 executed by Leson Investments Limited as vendor and Madam So as purchaser.  According to the agreement, Madam So agreed to purchase a flat at Robinson Road (“Robinson Flat”) at the price of HK$9.2 million, and the vendor acknowledged the receipt of deposit in the sum of HK$550,000.  It would appear from the agreement that Madam So (as sole purchaser) would become the sole owner of the Robinson Flat.  Nevertheless, the deal had fallen through due to the fault of the vendor.

33.  Thereafter, Dickson changed his plan and made arrangements to acquire the Flat for Madam So.  The initial arrangement was that Madam So would be the sole owner of the Flat, and Dickson would reside elsewhere and he would bring Leo along.  The cost of purchasing the Flat was HK$4.8 million comprising purchase price of HK$4 million plus premium of HK$800,000, and Dickson would pay for all costs.  It is fair to say that Chiu has not seriously disputed Leo’s evidence in this regard. Indeed, on the basis that Dickson was prepared to purchase the Robinson Flat for Madam So, it is not surprising that Dickson was willing to purchase the Flat for Madam So (which is about half of the price of that of the Robinson Flat).

34.  It is also not in dispute that Dickson left the Flat in October 1994.  According to Leo, Dickson still called Leo up at home, and asked Leo to meet him up at the adjacent park.  Dickson suggested that Leo should stay with him, but Leo refused every time.  Leo gave a credible explanation that he considered it totally unacceptable for Dickson to leave his mother behind and live with a woman who took his father away.

35.  Leo further explained that Dickson kept pushing him to go to the USA for further study, as Dickson told him he was born there, and it would be a good idea if he was educated at his birth place.  Dickson further said that since he would have a new family to attend to and would not be around as he used to be, he would provide a lump sum as a fund for Leo’s education.  He further insisted that Leo should open a new bank account, and put the money into it, as he was wary that Madam So would marry another man and so Leo had to safekeep his money.  Therefore, in November 1994, Dickson suggested that Leo should open a premier account so that he could transfer and deposit HK$ 3 million into such account for Leo’s control and further education in the USA.  On the other hand, Madam So would also transfer the balance of HK$1.45 million in her account to Leo’s bank account.

36.  Again, Leo’s evidence in this regard has not been seriously challenged.  The fact is that Leo (accompanied by Dickson and Madam So) did open the HSBC Account on 16 November 1994.  As shown from the bank statements, there was HK$4.45 million in the HSBC Account upon account opening.  Although Leo was cross-examined on the inconsistency in his witness statement (which mentioned transfer of HK$3 million from Dickson) and affirmation (which mentioned transfer of HK$2 million following a previous transfer of HK$1 million from Dickson), it is not in dispute that Dickson transferred a total of HK$3 million to Leo.  It is also not in dispute that a sum of HK$1.45 million was transferred from Madam So’s bank account to the HSBC Account.  Whilst Leo (and subsequently Madam So) was repeatedly cross-examined as to the ownership of such funds, it is fair to say that the funds were remitted to the HSBC Account under Leo’s sole name and prima facie belonged to Leo.

37.  What follows is Leo’s evidence that, during a rant and fierce exchange with his father on 22 November 1994 (when Dickson lambasted his outlandish behaviour in siding with Madam So even though he had paid all his education fees, rampantly required Leo to live with him, challenged Leo as to what would happen if Madam So got married, and told Leo he would have no place to turn to if Madam So’s new partner moved in), he was furious and told Dickson that he did not think the same way and he would purchase half of the Flat with his money.  Leo then went to the HSBC office the next day on 23 November 1994 to transfer HK$2.4 million to Dickson to acquire a half share of the Flat, being half of the purchase price plus half of the premium payable to the Government, and Dickson contacted Leo and told him that he would agree to the arrangement, and that he would purchase the Flat in joint name with Madam So and hold half of it for Leo as Leo was not of full age, and he would revert the title to Leo when he reached full age; further Madam So agreed to this arrangement (“Oral Agreement”).  Leo further explained that his decision to take up half of the interest in the Flat is also due to his decision not to go to the USA for his study, and he would go to Australia which was cheaper and closer to Hong Kong so he could easily come back when his mother wanted him to.  On Leo’s case, in accordance with the Oral Agreement, he accompanied Madam So (and Dickson) to a law firm in February 1995 to execute a sale and purchase agreement for the Flat, and the purchase was completed in July 1995 on such basis.

38.  Chiu hotly disputes the Oral Agreement.  Whilst Leo did pay HK$2.4 million to Dickson, Chiu does not accept that the payment had anything to do with the purchase of the Flat.

39.  Among others, it was suggested to Leo during cross-examination that the payment was made in November 1994 which was 3 months ahead of the execution of the sale and purchase agreement.  Leo explained that Dickson knew the purchase price earlier and measurements had been carried out for assessing premium.  Leo was also cross-examined as to why he did not complete the sale and purchase in his name, when he had already reached 18 in June 1995.  Leo explained that he had left for a bridging course in Australia (before studying year 12 in Australia in 1996) and hence he was not in Hong Kong during completion in July 1995.  This appears to be a minor discrepancy from his witness statement which only mentioned his pre-university study for one year in 1996.  That said, there is no serious challenge of Leo’s evidence in this regard; nor is there any evidence to suggest that Leo was present during the completion process.

40.  According to Leo, he came back to Hong Kong in December 1996.  He discovered that his mother’s heart disease was getting worse, she suffered from severe depression and talked about suicide.  He believed that his mother could not take care of herself and no one was around to support her and take care of her.  As a result, he decided to ditch his education in Australia and stay with and take care of his mother in Hong Kong.  Leo’s evidence is corroborated by an admission offer which he later received from the University of Sydney in January 1997.  It is fair to say that this is an attractive offer, and plainly Leo had made personal sacrifice as a faithful son by turning down such offer and staying in Hong Kong to take care of his mother.  As a matter of fact, Leo has not pursued any further study and has stayed in the Flat with his mother thereafter.

41.  According to Leo, it was against such background that, on 28 December 1996, Dickson got him out to the adjacent park.  Leo reminded Dickson that he was 18 years old, and he should transfer the Flat to him.  Dickson pacified him and wrote the 1996 Declaration, promising to transfer the Flat to him and his mother forthwith.  Leo has all along kept the 1996 Declaration, and he has produced the original upon inquiry by the Court during cross-examination.  As explained by Leo during cross-examination, he had followed up with his father because, upon his return to Hong Kong in December 1996, he had seen the cover letters from his father’s law firm and the 1995 Declaration.

42.  As I will explain later in this Judgment, the 1996 Declaration is an important contemporaneous document, and there is no challenge of the authenticity of such document.

43.  Leo has also given evidence about the execution of the Mortgage in September 1997, his starting to trade in foreign currencies, stocks and funds since 1998, his father being detained and later imprisoned during 2006 to 2020, the Judgment obtained by Chiu in November 2009, the Charging Order obtained by Chiu in January 2010, and his payment of the outgoings of the Flat for nearly 30 years.  In relation to the Mortgage, it is Leo’s evidence that he received a share of profit by a HK$2 million cheque from Dickson in November 1997, and he had also made several mortgage repayments (albeit without any documentary proof as pointed out by Mr Man).

E3.   Madam So

44.  Madam So is the second witness testifying in court.  She has made a witness statement as well as a previous affirmation for the purpose of these proceedings.  The account given by Madam So mirrors that of Leo.

45.  There is little challenge of Madam So’s account of her personal background.  She was born in Zhejiang Province, the region below Shanghai, China, in 1950.  She was born in a relatively well-off family at the time when Mainland China underwent tremendous changes. She was educated and did some embroidery work at home after her school.

46.  In 1974, Madam So met Dickson in Hangzhou who, as far as she knows, was born in the USA at or about the time when the World War II ended.  He was born into a family of medical practitioners in about 1945. His parents and siblings are doctors and he was a doctor as well in the 1970’s and he worked in a hospital in Shanghai.

47.  Since 1975, Dickson and Madam So cohabited in Shanghai, and lived together as (common law) husband and wife.  In 1977, Leo was born.  At that time, Dickson practised as a doctor and Madam So dedicated herself to taking care of household work and the family.  Their attempt to register their marriage was unsuccessful due to the then restrictions on residence registration in the Mainland China.

48.  In 1987, Dickson and Madam So migrated to Hong Kong, and Dickson started a new life of businessman.  Between 1987 and 1989, Leo was taken care of by relatives of Madam So in Shanghai, and Madam So travelled back and forth between Hong Kong and Shanghai to take care of Leo and Dickson in both places.  In 1989, Leo joined them in Hong Kong and continued his education in New Method College.

49.  In 1990, they moved to the Flat, a civil servant quarter.  At that time, the Flat was rented by Mr Lee who sublet the Flat to Dickson.  Mr Lee acquired the Flat from the Government in 1994 with a discount.  Therefore, there was a restriction of resale unless Mr Lee pays back a premium to the Government.

50.  In 1993, Madam So discovered that Dickson had an extra-marital relationship with a young girl.  They brawled over this many times, and the confrontation frequently resulted in mortifying, terrible chide and violence against Madam So, who suffered from heart disease, insomnia and depression since then.

51.  In late 1993, Dickson suggested separation from Madam So.  In an attempt to pacify her, he proposed to purchase a flat for her.  He planned to move Madam So out so he could stay in the Flat with his girlfriend and Leo.  He paid Madam So HK$600,000 to make a down payment for the purchase of the Robinson Flat at the price of HK$9.2 million, and he promised to foot the balance of purchase price provided that she left the family, which meant he would have custody of Leo.  She proceeded to pay a deposit of HK$550,000 but the deal had fallen through.  Madam So’s evidence in this regard was not challenged by Chiu.  It is also supported by the sale and purchase agreement of the Robinson Flat.

52.  In 1994, they had more intense confrontation, and Dickson proposed that he moved out the Flat with Leo and lived with his girlfriend and he would acquire the Flat in Madam So’s name by way of maintenance.  According to Madam So, in order to persuade her that they were not married and did not have a future, he wrote an undated declaration to her entitled “完全永遠分手聲明” [English translation: “Complete and Permanent Separation Declaration”] (“1994 Declaration”) which stated inter alia as follows:

“… 因此雙方同意，由於大家彼此沒有婚姻註冊手續。自即日開始，永遠不再同住香港九龍義德道11B [i.e. the Flat]。完全永遠分手。兒子吳佳成歸吳國禎帶領撫養，特此立憑，責任由吳國禎完全負責。各自歸領各自的財產。永不再有任何瓜葛。”

[English translation: “…Therefore the two sides agree, since we do not have marriage registration procedure, beginning from today, forever not to co-habit at 11/B Ede Road Kowloon Tong, Hong Kong. Completely and permanently separate. The son Ng Ka Shing will be raised by Ng Kwok Ching, and hereby confirm, all responsibility will be borne by Ng Kwok Ching. Each will take each’s own assets. Forever there will not be any connection.”]

53.  As I will explain later in this Judgment, the 1994 Declaration has significant bearing because given the clear intention to separate from each other, it is inherently improbable that Dickson and Madam Ho would purchase the Flat as joint tenants in 1995, but for the Oral Agreement which helps explain why Madam So was prepared to do so for the benefit of Leo.  Echoing this, Madam So also emphasised time and again during cross-examination that she would not have agreed to purchase the Flat with Dickson as joint tenants but for the arrangement for Dickson to hold half share of the Flat on trust for Leo.

54.  Madam So went on to explain that Dickson had moved out of the Flat when he made the 1994 Declaration, and that Dickson had to scoop up a total of HK$4.8 million (comprising purchase price of HK$4 million and premium of HK$800,000) to acquire the Flat to Madam So.  She also gave evidence of Dickson encouraging Leo to further his education in the USA, where Dickson was born, and that Dickson transferred HK$3 million to Leo’s HSBC Account as his education fund in November 1994, whilst she also deposited the common fund owned by Leo and her into the same.

55.  Madam So gave evidence that Leo decided to go to Australia instead of the USA and in order to secure the Flat as residence for him and Madam So, he transferred HK$2.4 million to Dickson’s bank account as payment of his half share of the Flat.  She went on to give evidence on the execution of the sale and purchase agreement for the Flat in February 1995, the completion in July 1995, and the receipt of the 1995 Declaration in December 1995.  According to Madam So, Dickson was wary that she might marry again, and if she did, her new partner might not be willing to accommodate Leo anymore, and Dickson therefore had no hesitation to hold the Flat jointly with her for Leo and herself.

56.  She also explained that Leo came back from Australia and spent Christmas with her by the end of 1996, when he learned of her illness and decided to take care of her in Hong Kong and ditch his education in Australia.  She mentioned that on about 28 December 1996, Leo showed her a handwritten note (i.e. 1996 Declaration) by which Ng declared he would transfer the legal title of the Flat to Leo.  She said she trusted Dickson that he would arrange the transfer.  Since then, Leo stayed with her at the Flat and paid every expense of the household.

57.  She further gave evidence of her execution of the Mortgage in 1997, Dickson’s imprisonment in Mainland China, Chiu’s proceedings against Dickson, and Dickson’s return since 2020.

F.  ANALYSIS

F1.   The claim of CICT

58.  Having considered the totality of the evidence, and adopting a holistic approach, I am ultimately convinced that Madam So and Leo have discharged the burden of establishing their claim of CICT.  In particular, I am satisfied on a balance of probabilities that the Oral Agreement was entered into, and Leo had paid HK$2.4 million to Dickson for acquiring half of the Flat.  In my view, whilst there may be criticisms against some of the evidence given by Leo and Madam So, there is ample circumstantial and evidential support for their case.

59.  First of all, there is incontrovertible evidence that the relationship between Dickson and Madam So had broken down irretrievably since late 1993, Dickson had moved out of the Flat since October 1994, and they had split up permanently.  This is supported by the following:

(a)  The evidence of Leo and Madam So in this regard (which is not seriously challenged);

(b)  The 1994 Declaration, including the very strongly worded statements by Dickson forever not to co-habit with Madam So at the Flat; that they would completely and permanently separate; and forever there will not be any connection;

(c)  Paragraph 3 of the two 1995 Declarations stating that Dickson and Madam So had been living separately since October 1994.

60.  Against such background, it is inherently improbable that Dickson and Madam So would still agree to purchase the Flat as joint tenants in 1995, as if they remained husband and wife, or they would continue to co-habit at the Flat.  To the contrary, it is crystal clear that they had separated and would not live together.  This gives strong support to the case of Leo and Madam So that such arrangement was only made pursuant to the Oral Agreement such that Dickson holds half of the Flat on trust for Leo, and Dickson himself does not retain any beneficial interest in the Flat.  Instead, the intention was for Leo and Madam So to jointly own the Flat and live together at the Flat, which also explains why Madam So was willing to put her name down alongside Dickson as joint tenants.

61.  The above is supported by Leo’s evidence during cross-examination that his father agreed to hold half of the Flat on trust for him, and that was why his mother agreed to have his father’s name put down.  As explained by Leo, without such agreement, his mother would not have consented to have his father’s name put down because, in November 1994, his father had given a piece of paper to his mother (i.e. the 1994 Declaration) stating it was a clean break.  In a similar vein, Madam So gave evidence during cross-examination that Dickson left her home (i.e. the Flat) in October 1994; all the way up to February 1995, 4 months had passed and it would be absolutely impossible to have her name put down with Dickson’s name, and she only agreed because Dickson would hold the half interest for his son and transfer the interest back to his son when he reached full age.

62.  Secondly, it is beyond dispute that the initial arrangement was for Dickson to acquire a flat in Madam So’s sole name as compensation or maintenance for her.  In late 1993, Dickson already agreed to purchase the Robinson Flat for Madam So, which was intended to be acquired in Madam So’s sole name.  This is borne out by the sale and purchase agreement dated 2 November 1993 which recorded the payment of deposit of HK$550,000 by Madam So as the sole purchaser.  Chiu has not challenged Madam So’s evidence that Dickson gave Madam So HK$600,000 and agreed to pay the balance of the purchase price, provided Madam So would leave the Flat and let Dickson have custody of Leo.  There is also little dispute that, after the deal had fallen through, Dickson changed his mind in 1994 and planned to purchase the Flat, again in the sole name of Madam So. 

63.  Against such background, namely that Madam So was offered the entire interest of the Robinson Flat (being double the value of the Flat) and subsequently the entire interest of the Flat, it is inherently improbable that Madam So would agree to be given only half interest in the Flat as her compensation or maintenance, but for the Oral Agreement whereby the remaining half interest of the Flat would be owned by her son Leo (albeit held by Dickson on Leo’s behalf).

64.  Thirdly, the case of Leo and Madam So is supported by the 1996 Declaration, which is a contemporaneous document made not long after the purchase of the Flat in 1995, bearing in mind that Leo was studying abroad in Australia in 1996 and, apparently, during the latter part of 1995 (since June or July 1995) as well.  For all practical purposes, this is likely to be the first occasion when Leo had an opportunity to meet Dickson and raise the issue after the completion of the purchase of the Flat.

65.  By the 1996 Declaration, Dickson expressly stated his intention to change the name or transfer the title (物業名) of the Flat from the joint ownership of Dickson and Madam So to the joint ownership of Leo and Madam So, and that such change or transfer should be effective immediately from the date of the 1996 Declaration. As submitted by Mr Clark, this shows that Dickson considered Leo to be entitled to the Flat – hence his intention to transfer the title to Leo. Properly analysed, in the absence of evidence of any consideration provided by Leo in December 1996 or any change of circumstances at that time, the 1996 Declaration gives strong support that there was a previous agreement or understanding to confer ownership of half of the Flat on Leo.  Without such previous agreement or understanding, it is inexplicable why Dickson would suddenly write such declaration in favour of Leo on 28 December 1996. Importantly, the 1996 Declaration corroborates the case of Leo and Madam So that, throughout the period of nearly 30 years, the common intention was for the Flat to be jointly owned by Leo and Madam So, rather than Dickson and Madam So.  As a matter of fact, there is no dispute that, ever since the purchase of the Flat in 1995, Dickson did not reside at the Flat (until after 2020); nor did Dickson pay the expenses and outgoings pertaining to the Flat.

66.  On behalf of Chiu, Mr Man argues that the 1996 Declaration made no reference to the Oral Agreement in late 1994 or early 1995, but seemed to suggest that the Flat was jointly owned by Dickson and Madam So up to the date of the 1996 Declaration.  Whilst there is some force in Mr Man’s submissions, one must not forget that, as at the date of the 1996 Declaration, the Flat did remain in the joint legal ownership of Dickson and Madam So as registered joint tenants.  Bearing in mind that the 1996 Declaration focused on the change of name or transfer of title, I do not consider this aspect to be fatal or critical.  On the whole, the document lends overall support to the case of joint ownership by Leo and Madam So.

67.  Mr Man also argues that the 1996 Declaration did not record the payment of HK$2.4 million by Leo.  In my view, whilst it would be in the favour of Leo to record that, the fact that the 1996 Declaration made no reference to the payment seems to be a neutral factor.  It does not, without more, undermine Leo’s case.  In a way, a layman may well consider it sufficient for the written declaration to reflect the status of ownership, without necessarily going into the underlying basis of the same.

68.  Fourthly, there is undisputed evidence that Leo paid HK$2.4 million to Dickson on 23 November 1994.  This is also an agreed fact. 

69.  To begin with, the evidence by Leo and Madam So that Dickson had given HK$3 million to Leo in November 1994 as his education fund for studying in the USA has not been seriously challenged by Chiu.  Bearing in mind that Dickson was born in the USA, it is indeed not surprising for Dickson to have encouraged Leo to pursue further study in the USA, and the amount of HK$3 million appears to be commensurate with the costs of studying in the USA for a few years.  There is in any event no challenge by Chiu that the costs of further study in the USA is not in the region of such figure.  On the premise that the sum of HK$3 million was transferred by Dickson into Leo’s HSBC Account for Leo’s education, it would appear that the transfer was in the nature of a gift by Dickson (as a father) to Leo (as a son).  To say the least, prima facie the funds belonged to Leo upon being deposited into a bank account in Leo’s sole name.  In the circumstances, when Leo transferred HK$2.4 million to Dickson 7 days later on 23 November 1994, this constituted payment by Leo to Dickson. 

70.  I should also mention that according to the bank statement of the HSBC Account, a sum of HK$4.45 million was placed on 7-day fixed deposit on 16 November 1994 with a maturity date of 23 November 1994.  If the suggestion is that Dickson merely transferred HK$3 million to the HSBC Account to earn interest for some time, there is little reason why upon the maturity date, such fixed deposit could not roll over for another 7 days – indeed that was what happened to the remaining HK$2 million which was placed as fixed deposit for several 7-day periods consecutively.  On the other hand, if the suggestion is that the money belonged to Dickson and is to be returned, there is little reason why Leo did not transfer the entirety of HK$3 million back to Dickson as opposed to the amount of HK$2.4 million, which corresponds exactly to half of the purchase price and premium for the Flat.

71.  Whilst Chiu contends that the payment had nothing to do with the purchase of the Flat in 1995, one must not forget that Dickson was acquainted with Mr Lee who had sub-let the Flat to him since 1990.  One should also bear in mind the undisputed evidence that Dickson already planned to purchase the Flat from Mr Lee for Madam So in 1994, and it is not surprising if they had already agreed the purchase price and ascertained the premium payable by November 1994.  It is also an agreed fact that, prior to entering the sale and purchase agreement in February 1995, Mr Lee agreed to sell the Flat for HK$4 million.  There is in any event no evidence as to other alleged purpose (if any) which might be served by the payment of the HK$2.4 million by Leo to Dickson. 

72.  All in all, in the absence of evidence challenging the nature (or pointing to a different nature) of (i) the payment of HK$3 million by Dickson to Leo as his education fund and (ii) the payment of HK$2.4 million by Leo to Dickson for acquiring half of the Flat, I find on a balance of probabilities that Leo had made payment of HK$2.4 million to Dickson for acquiring half of the Flat.

73.  I should mention that Chiu has attempted to challenge this by questioning Leo’s ownership of the funds in the HSBC Account.  However, I note that other than the payment of HK$2.4 million by Leo to Dickson, there is never any formal claim by Dickson or Madam So over the balance of funds in the HSBC Account.  Insofar as Madam So is concerned, whilst she said that she had transferred common fund of about HK$1.45 million into the HSBC Account, she has not continued to assert her right of ownership thereafter.  In any event, there is little reason why Leo could not be regarded to have made the payment of HK$2.4 million out of the HK$3 million education fund which prima facie belonged to him.

74.  For the avoidance of doubt, even if Leo was not the beneficial owner of some of the funds deposited into the HSBC Account, if Leo had indeed made the payment of HK$2.4 million ostensibly for acquiring half of the Flat, this remains a factor which may be taken into account in assessing the claim of CICT, adopting a holistic approach.  One must not forget that we are not dealing with a claim of resulting trust yet, and it is not strictly necessary to prove that Leo had paid a sum of HK$2.4 million owned by him to Dickson.  Rather, the focus is on the overt act of payment itself which is a factor that may be taken into account.

75.  Fifthly, Leo had written to the court on 13 January 2010 to object to the making of the Charging Order by enclosing inter alia the 1996 Declaration.  On the one hand, this demonstrates that the 1996 Declaration must have come into existence before 2010 – as a matter of fact Chiu has not challenged the authenticity of the 1996 Declaration and hence the Court will proceed on the basis that it was executed by Dickson on 28 December 1996 in any case. On the other hand, by enclosing the 1996 Declaration, Leo manifested his intention and understanding that the Flat was owned jointly by Madam So and himself as a basis for objecting to the making of the Charging Order.  This means that, although Leo and Madam So only brought proceedings in 2021, Leo had asserted his ownership of half of the Flat much earlier since at least 2010.

76.  On behalf of Chiu, Mr Man has cross-examined Leo as to his failure to mention his contribution of HK$2.4 million in his letter to the court.  Again, whilst it would be in Leo’s favour to put on record such contribution, a layman may well consider the 1996 Declaration to be a sufficient proof of the status of ownership without going into the basis of the same, and thus I do not consider such omission to be fatal or material.

77.  Sixthly, it is the evidence of Leo and Madam So that, since the purchase of the Flat in 1995 (and in any event after Leo’s return to Hong Kong from Australia in 1996), Leo had paid all the household expenses and outgoings pertaining to the Flat.  There are also numerous documents showing payment of outgoings pertaining to the Flat by Leo throughout the years. 

78.  On behalf of Chiu, Mr Man submits that there is no clear evidence to support that Leo had contributed to these expenses and outgoings from his own money, because the seed money for Leo’s investments throughout the years originated from money previously given by Dickson.  In my view, such submissions are far-fetched given that there is no claim of ownership of funds in the HSBC Account by Dickson.  There is little to suggest that the money given by Dickson was not in the nature of gift to his son, or sharing of profit (as in the payment of HK$2 million to Leo in November 1997).  Coupled with the passage of time for over 2 decades without any claim of ownership from Dickson, it seems unrealistic to ask the Court to question Leo’s ownership of the money.

79.  Mr Man further submits that contributions to household expenses may not be sufficient to raise the inference of a common intention.  Nevertheless, he accepts that financial contribution is always a relevant factor for considering common intention, albeit stressing that it is only one of the factors to be taken into account: see Mo Ying v Brillex Development Ltd [2015] 2 HKLRD 985, [5.16(5)].  In my view, bearing in mind that Leo gave up his education in Australia and lived with Madam So at the Flat for nearly 3 decades, his contributions to household expenses and outgoings of the Flat is a material factor in support of the inference of an intention to share beneficial ownership with Madam So.

80.  In reaching the above conclusion, I have also borne in mind the criticisms made by Mr Man against the evidence of Leo and Madam So.  In my view, however, such criticisms are far from fatal or material. Without being exhaustive, I will address the main criticisms below.

81.  First of all, Mr Man raises question as to why Leo did not ask anyone from the law firm in February 1995 about the transfer of title by Dickson or the date of completion, given that Leo would turn 18 on 23 June 1995 and the trust arrangement was supposed to be a stop-gap measure.  There is some force in Mr Man’s submissions but one must also bear in mind that, in February 1995, Leo was still a minor and given the turmoil and emotional stress at the time, the logistics of the transfer was probably not Leo’s primary focus or concern.  Moreover, there is not much challenge of Leo’s evidence that he was already in Australia at completion in July 1995.  Thereafter, the first opportunity when Leo could raise the issue was in December 1996 when Dickson wrote the 1996 Declaration purporting to transfer the title of the Flat to him and Madam So with immediate effect.

82.  Secondly, Mr Man argues that there is nothing to prevent Dickson from protecting Leo’s interest by putting down the Oral Agreement or stating the contribution by Leo or his beneficial interest in writing, and the lack of such paper record militates against Leo’s case.  However, it is not entirely accurate to suggest that Leo’s case is not backed up by paper record. It is true that the paper record is not complete.  For instance, the 1995 Declarations merely stated that, concerning the issue of distribution all co-owned assets, Dickson and Madam So had already reached agreement and had already implemented the distribution, but without going into any details let alone the agreement and distribution regarding the Flat.  Nevertheless, one must not overlook the fact that there is paper record in support of (i) Dickson’s recognition of Leo’s entitlement to half of the Flat (i.e. 1996 Declaration) and (ii) payment of HK$2.4 million by Leo to Dickson (i.e. the bank statements of the HSBC Account).

83.  Thirdly, Mr Man submits that it is unclear and nebulous whether the money in the HSBC Account belonged to Leo or whether Leo had sole control over it.  However, as noted above, it is part of the agreed facts that Leo paid HK$2.4 million to Dickson on 23 November 1994, which seems to presuppose that it constitutes payment (as opposed to a mere transfer) by Leo to Dickson.  Moreover, as mentioned above, there is no formal claim of ownership by Dickson or Madam So over the balance of the funds in the HSBC Account.  Most importantly, even if Leo was not the beneficial owner of some of the funds in the HSBC Account, the Court may still take into account Leo’s overt act of payment as a factor in support of the alleged common intention.

84.  In any case, the points made by Mr Man appear to be rather trivial or immaterial.  For instance, he argues that if the schoolings in the USA would be arranged by Dickson, this does not sit well with the arrangement of injection of money into Leo’s HSBC Account which presumably was to give Leo some leeway to let him arrange schoolings by himself.  With respect, this is not necessarily a conflict because Dickson could still make arrangements whilst Leo can attend to payment at his end.  Mr Man also questions the ownership of the sum of HK$1.45 million deposited by Madam So into Leo’s HSBC Account.  However, even accepting that Leo and Madam So might have different understandings, the fact remains that the money was in Leo’s bank account and prima facie he had ownership or control over it. In any case, there is no reason why Leo could not be treated to have made payment of HK$2.4 million out of his education fund, putting aside any uncertainty over the ownership of the funds transferred from Madam So.

85.  Fourthly, Mr Man submits that the written declarations by Dickson are not sufficient to establish the alleged common intention.  With respect, whilst I accept that the declarations dealt with different matters, they remain important circumstantial and contemporaneous documents as analysed above.  The main thrust of attack is that they did not mention the Oral Agreement or Leo’s contribution.  However, as explained above, whilst any such reference would be in Leo’s favour, the lack of such reference is not fatal or material.  In particular, the 1996 Declaration set out Dickson’s express intention to transfer half of the Flat to Leo.  In the absence of evidence of any consideration paid by Leo or change of circumstances in December 1996, such declaration lends strong support to the existence of a prior agreement or understanding as alleged by Leo and Madam So.

86.  Fifthly, Mr Man relies heavily on the Mortgage executed in September 1997 whereby Dickson and Madam So declared that they were beneficial owners of the Flat.  The argument is that both Madam So and Leo were present in a law firm and the contents of the Mortgage should have been explained to them. 

87.  Whilst there is force in such argument, I bear in mind the evidence from Leo that, in August 1997, Dickson told him that there was an opportunity in business (investment project in Henan Province), and wanted him to join the venture with him, as a result of which Leo agreed to mortgage the Flat so Dickson could obtain a loan from a finance company to invest further in the project for which he promised and guaranteed great return within months; as a matter of fact in November 1997, Dickson did give Leo a cheque of HK$2 million representing Leo’s share of profit.  Such evidence has not been seriously challenged by Chiu. 

88.  As such, it is fair to say that Leo agreed to the Mortgage, not only for his father, but also for his own business concern and interest (and Madam So thus agreed for Leo’s benefit as well), and to some extent this does water down Mr Man’s criticism that Leo did not demonstrate an owner-like attitude or that he has any interest in the Flat.  In a way, the fact that Leo did have his own business concern and interest to serve is also borne out by his professed willingness to pay for mortgage repayments (albeit without documentary support as noted by Mr Man).

89.  What I do accept, however, is that both Leo and Madam So appeared to have taken a carefree approach, when the Mortgage did suggest, contrary to the Oral Agreement, that Dickson and Madam So were beneficial owners of the Flat.  Nevertheless, Leo’s evidence is that he had been explained the contents of the Mortgage for about 10 minutes, which may not be said to be a very long duration.  Moreover, there is evidence from both Leo and Madam So to suggest that Dickson was a man of substantial means at that time (or at least that was their belief at the time), which may help explain the carefree approach on their part. 

90.  Sixthly, Mr Man challenges Leo’s failure to mention his contribution or attach the bank statements of the HSBC Account in his letter to the court on 13 January 2010.  However, whilst it may be said that Leo could have done more, the fact remains that Leo did assert his ownership of the Flat by attaching the 1996 Declaration to his letter to the court.

91.  Seventhly, Mr Man criticises the delay to have the Flat transferred into Leo’s name on various occasions.  This is a fair criticism, although I do not consider it to be fatal or critical.  Among others, I bear in mind the following:

(a)  Dickson had made the 1996 Declaration which, on the face of it, stated that Dickson intended to transfer the Flat into the joint names of Leo and Madam So and that such transfer will be effective immediately from the date of the 1996 Declaration on 28 December 1996;

(b)  Dickson had been incarcerated for a long duration from 2006 to 2020; and

(c)  Leo has asserted his right of ownership of the Flat in his letter to the court dated 13 January 2010.

92.  On the whole, whilst I fully acknowledge the force of Mr Man’s arguments, I do not consider them to be fatal or critical.  Instead, the underlying circumstantial evidence and contemporaneous documents do suggest that the Oral Agreement was reached and, indeed, it is inherently improbable that Dickson and Madam So would have agreed to purchase the Flat as joint tenants to the effect that they would beneficially own the Flat despite their permanent separation and Dickson’s moving out of the Flat in October 1994.  All in all, I am satisfied on a balance of probabilities that the answers to questions 2, 3 and 4 in the agreed list of issues are in the affirmative.  Therefore, my answer to question 1 is that Leo and Madam So are the beneficial owners of the Flat in equal shares.

F2.   Resulting trust

93.  In view of my finding on the claim of CICT, it is not strictly necessary for me to consider the alternative claim of resulting trust.  Nevertheless, given my finding that Leo had paid HK$2.4 million to Dickson for the purchase of half interest in the Flat, and the fact that such figure corresponds to half of the purchase price and premium of the transaction, I am also satisfied on a balance of probabilities that the claim of resulting trust has been established.

94.  For the sake of completeness, whilst there is no evidence as to the arrangement for payment of stamp duty and legal costs, it would appear from the evidence that Dickson had assumed the burden of paying for such expenses at least for the benefit of Madam So, and he had not sought to recoup the same from Leo.  In my view, as there is no evidence of the quantum, and the amount involved is likely to be insubstantial when compared with the purchase price and premium, this should not affect my conclusion on the claim of resulting trust (or similarly the claim of CICT).

F3.   Chiu’s claim for order of sale of the Flat

95.  In view of my finding that the beneficial owners of the Flat are Leo and Madam So (rather than Dickson and Madam So) on the basis of CICT or alternatively resulting trust, Dickson does not have any beneficial interest in the Flat and there is therefore no basis for Chiu to claim any order of sale of the Flat.  It follows that Chiu’s counterclaim should be dismissed in any case.  Nevertheless, in deference to the arguments advanced by the parties, I should briefly deal with Chiu’s claim in case I were wrong in my conclusion on the issue of beneficial ownership of the Flat.  I will proceed with my analysis in this part, on the assumption that Dickson and Madam So are beneficial owners of the Flat.

96.  As noted above, on behalf of Leo and Madam So, Mr Clark objects to Chiu’s claim on 3 grounds and he further submits that Mr Chiu’s claim of interest should be limited to a duration of 6 years.  I will briefly deal with each ground in turn.

97.  First of all, Mr Clark submits that Chiu has not brought his application under the PO, being the only statutory authority to sell Madam So’s share of the Flat.

98.  In this regard, it is of importance to note that Chiu is seeking an order of sale of the Flat, as opposed to an order of sale of Dickson’s beneficial half share in the Flat. This is clear from the Defence and Counterclaim of Chiu, in which Chiu’s prayers for relief at paragraphs (6) to (7) are for an order of sale of the Flat and for all necessary and consequential directions for the execution of the order for sale of the Flat.  In the Closing Submissions for Chiu, Mr Man submits that Chiu should be entitled to an order for the sale of the Flat.

99.  Yet, as rightly observed by Mr Clark, Chiu has brought his application under Order 50 rule 9A and Order 88 of the Rules of the High Court, and the Charging Order only overs Dickson’s beneficial interest in the Flat, but not Madam So’s beneficial interest in the Flat, and the Court does not have the power under these provisions to sell Madam So’s interest (which would, however, be required for the sale of the Flat).

100.  In the premises, I accept Mr Clark’s submissions that, in order to sell the entire property (i.e. the Flat) and without prejudice to Mr Clark’s further argument on locus, an application should have been made under s.6 of the PO.  However, such claim has not been pleaded by Chiu in his defence and counterclaim.  Indeed, Mr Man has not made any reference to s.6 of the PO at all in the Opening and Closing Submissions for Chiu.

101.  In my view, this is not merely a technical failure because the purpose of pleadings is to set the scope of the dispute and fairly inform the other side the points or claims which may be advanced.  Moreover, as noted by Mr Clark, s.3(2) of the PO further provides that in any proceedings brought under the PO the Director of Lands “shall be served with such documents relating to the proceedings as may be prescribed by the Partition Rules”, and s.4 of the PO requires the Director of Lands to be served with all court documents related to the matter, including pleadings, affidavits and any interlocutory applications.  Yet, presumably as a result of Chiu’s omission to plead a claim under s.6 of the PO, no documents in these proceedings have been served on the Director of Lands.

102.  Chiu has not provided any answer to such ground of objection.  Instead, Mr Man only submits in general term that it all boils down to whether it is in all the circumstances equitable to make an order for sale, praying in aid the decision in Union Finance Ltd v Leung Wai Ling, HCMP 3757/1999 (unreported, 24 January 2000).  However, that hardly assists because that decision simply confirms that if joint owners of a property are both judgement debtors and there is a charging order over both their beneficial interests, an order for sale can be made.  The present case is plainly different as the Charging Order only covers (at most) the beneficial interest of Dickson.  In my view, Chiu’s counterclaim should be dismissed on such ground alone.

103.  For the avoidance of doubt, Chiu does not seek an order of sale of Dickson’s beneficial share of the Flat, and Mr Man has not made submissions to such effect.  In any case, even if such claim were made, as a matter of practice it is rare for such charging order to be enforced by a sale of the charged beneficial share, and the Court has refused to exercise discretion to make such order on previous occasions: see e.g. Golden Connection Finance Limited v Chan Tat Man Simon [2019] HKCFI 1932.

104.  Secondly, even putting aside Chiu’s failure to plead a claim under s.6 of the PO, Mr Clark submits that Chiu has no locus standi to seek, and/or the Court has no jurisdiction to make, an order for the sale of a property under s.6 of PO in Chiu’s capacity as an equitable chargee.  In support of such proposition, Mr Clark relies on Chan Ching Kit, Katherine v Lam Sik Shi & Anor, HCMP 2239/2000 (unreported, 24 June 2002), [44] per Kwan J (as she then was); Fortis Bank Asia HK v Yu Kam Hoi Herman & Anor [2004] 2 HKC 314, [62] per Reyes J; Chan Chui Mee v Mak Chi Choi Nelson [2009] 1 HKLRD 343, [14] per Johnson Lam J (as he then was).

105.  It may be of interest to note that, in Golden Connection Finance Limited v Chan Tat Man Simon [2019] HKCFI 1932, the plaintiff sought an order for sale of the 1^st defendant’s 1/3 interest in a property, such that after the sale (if so ordered), the purchaser of the 1/3 share would then be entitled to apply for partition of the property under the PO, which the plaintiff currently lacks locus to do (at [15]).  As rightly observed by Mr Clark, this is an acknowledgment by DHCJ Stock SC that, prior to such sale, a mere equitable chargee of a partial beneficial interest has no locus to apply under the PO for an order of sale of the entire property.

106.  Chiu has not disputed the above in his Opening and Closing Submissions.  In the premises, I am of the view that, even if it were open to Chiu to bring a claim under s.6 of the PO, Chiu has no locus standi to make such application in any case.

107.  Thirdly, Mr Clark submits that, in any event, the Court should not exercise its discretion to sell (which I agree).  In this regard, Mr Clark seeks to draw an analogy with Fortis Bank where Reyes J considered whether to exercise a discretion in case he was wrong on the jurisdiction point, and he declined to do so because (i) the remaining beneficial owners have lived in the property for a long time and the bank would have had notice not just of their interest but also that they were in actual occupation of the property as their home; (ii) it would be inequitable to turn the remaining beneficial owners out of their residence when they had no involvement in the transactions which have led to the other beneficial owner’s default; and (iii) the remaining beneficial owners appear to have modest financial means and might not be able to acquire similar premises in replacement.

108.  In my view, these considerations apply similarly in the present case.  I should add that there are further factors militating against Chiu, namely (i) there is delay on Chiu’s part as the Charging Order was obtained in 2010 but Chiu only sought enforcement in 2021 – in this regard Dickson’s absence is not an excuse as Chiu was able to obtain the Judgment and the Charging Order in Dickson’s absence anyway; and (ii) Madam So is of an advanced age (being about 74 years old now) and she has suffered from heart disease and mental illness in the past – hardship is likely to be caused if she is forced to surrender the Flat.

109.  Fourthly, Mr Clark submits that Chiu is only entitled to interest on the Judgment Debt for 6 years from 15 May 2015 to 14 May 2021.  Given my finding on the issue of beneficial ownership of the Flat and my view that Chiu is not entitled to an order for sale of the Flat, it is not strictly necessary for me to deal with such issue (i.e. question 6 of the agreed list of issues) and I express no conclusive view on the matter.  Nevertheless, in deference to the submissions made by the parties, it may be helpful to set out my preliminary observations.

110.  Mr Clark relies on s.4(4) of the LO which provides as follows:

“(4) An action shall not be brought upon any judgment after the expiration of 12 years from the date on which the judgment became enforceable, and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of 6 years from the date on which the interest became due.”

111.  Mr Clark submits that the effect of s.4(4) of the LO is that interest may only be claimed in enforcement proceedings of a judgment debt for a period of 6 years before the enforcement proceedings are brought.  He relies on the dicta of Barma JA in Re Li Man Hoo [2013] 4 HKLRD 247, [33]:

“33. … The effect of the second part of section 4(4) of the Ordinance is to bar the recovery of interest on a judgment debt more than six years after it becomes due. As interest accrues from day to day, the effect of the provision is that only interest accruing due within six years of the date of commencement of proceedings can be claimed. Thus, for example, where it is sought to enforce (or bring bankruptcy proceedings founded upon) a judgment debt within six years of the judgment in question, the whole of the principal and accrued interest may be recovered or relied upon. Where, however, enforcement (or bankruptcy or winding-up) proceedings are brought more than six (but less than 12) years after the judgment, the principal judgment debt may be recovered (or relied upon), along with the most recent six years’ of interest, but not interest accruing earlier than six years previously. Where enforcement (or bankruptcy or winding-up) proceedings are brought after the lapse of 12 years, they will be barred absolutely. In my view, once all forms of enforcement or proceeding on a judgment are barred, this must extend also to any attempt to recover interest on the judgment debt, which arises out of the judgment.” [Emphasis added]

112.  Mr Clark also submits that, insofar as there is any difference under English law, in Re Li Man Hoo the Hong Kong Court of Appeal explicitly decided not to follow English case law and, instead, gave the reference to “action” in the LO their ordinary English meaning which should cover proceedings to enforce a charging order.

113.  Further or alternatively, Mr Clark relies on ss.19(1) and 19(5) of the LO which provide as follows:

“(1) No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on property, or to recover proceeds of the sale of land, after the expiration of 12 years from the date when the right to receive the money accrued.”

“(5) No action to recover arrears of interest payable in respect of any sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of land, or to recover damages in respect of such arrears, shall be brought after the expiration of 6 years from the date on which the interest became due …”

114.  He submits that the ordinary and plain meaning of s.19(5) of the LO is that only 6 years of interest can be recovered, and there is no practical difference between s.4(4) of the LO (which the Hong Kong Court of Appeal has held to limit interest to 6 years) and s.19(5) of the LO.  He argued that English case law is different given that in England, a secured creditor can take action 14 years after the security is created.

115.  On behalf of Chiu, Mr Man disagrees.  He contends that, other than the capacity of a judgment creditor, Chiu may also rely on his capacity as a secured creditor under the Charging Order, to recover all the money and interest due to him.  He submits that neither s.4(4) nor s.19(5) of the LO is applicable, and relies on Orakpo v Ezekiel [1997] 1 WLR 340, where the English Court of Appeal considered the effect of s.20(5) of the Limitation Act 1980 (the Hong Kong equivalent of s.19(5) of the LO) and held that the plaintiff’s application to enforce the charging order was not an action on the judgment debt or enforcement of execution of that judgment, but action to recover what was due to him as a secured creditor, and that there was nothing in the Limitation Act 1980 restricting a secured creditor from recovering more than six years’ interest out of the proceeds of enforcing his security.  Mr Man further relies on Chevalier Property Management Ltd v Yu Chau Yeung [2007] HKCLRT 667, where Cheung JA applied the principle in Orakpo v Ezekiel to a claim by a property management company for outstanding management fees and interest at [24]:

“24. Under Clause 2(1) of Paragraph E of the DMC, if an owner fails to pay the relevant fees within 30 days of the date on which a demand for payment is made by the management officer, the owner shall pay interest at the rate of 1.5% per month (18% per annum) on the outstanding amount. Clause 3 of the same paragraph of the DMC provides that the arrears and interest shall be a charge. In other words, the Plaintiff may charge the Defendant’s property as security not only for the Defendant’s payment of management fees but also for the payment of interest. Therefore, the Plaintiff is protected by the security when he recovers the interest on the arrears. Pursuant to the principle in Ezekiel v. Orakpo [1997] 1 WLR 340, the Plaintiff is not only a “judgment creditor” but also a “secured creditor”. He is seeking recovery of the interest on the basis of the security (i.e. the charge) but not by way of civil action. The Plaintiff of course has to apply to the court for an order for vacant possession and sale of the unit, but this does not mean that he needs to recover the arrears by civil action. Therefore, regarding the Plaintiff’s claim for interest, section 19(5) of the Limitation Ordinance does not apply.” [Emphasis added]

116.  The nub of Mr Man’s argument is that the enforcement of a charging order, by not being a civil action to recover any debt, is not subjected to the provisions of ss.4 and 19 of the LO.

117.  In my tentative view, Re Li Man Hoo is primarily concerned with the construction of s.4(4) of the LO and whether the reference to “action” is wide enough to include bankruptcy proceedings.  It is not concerned with proceedings for enforcement of a charging order.  Whilst bankruptcy proceedings could understandably fall within the meaning of an action brought upon a judgment, it seems reasonably arguable that an application to enforce a charging order is not an action on the judgment but an action to recover what was due to him as a secured creditor.  This appears to be accepted by Cheung JA in Chevalier Property Management Ltd at [24], where he characterised similar proceedings as “seeking recovery of the interest on the basis of the security (i.e. the charge) but not by way of civil action”.  The apparent result is that neither s.4(4) nor s.19(5) of the LO would apply, and there is no particular time limit to the recovery of interest (i.e. it may even exceed 12 years).

118.  Alternatively, in Chevalier Property Management Ltd, Cheung JA emphasised at [24] that under the relevant provision of the deed of mutual covenant, the arrears and interest be a charge, such that the plaintiff may charge the defendant’s property as security not only for the defendant’s payment of management fees but also for the payment of interest.  Therefore, even one is to assume that s.19 of the LO is applicable, the applicable provision should be s.19(1) rather than s.19(5), and hence the time limit should be 12 years rather than 6 years.  Of course, I must stress that this is not the primary view of Cheung JA as he appeared to proceed on the basis that neither s.19(1) nor s.19(5) of the LO would apply.

119.  In the present case, the Charging Order provides that the interest of Dickson in the Flat do stand charged with the payment of HK$2,500,000.00 together with interest at judgment rate from the 19^th day of January 2004 until the 10^th day of November 2009 and thereafter at judgment rate until payment.  As such, even if one is to assume that s.19 of the LO is applicable, it may be argued that the applicable provision should be s.19(1) and hence there should only be a time limit of 12 years.

120.  As mentioned, I do not intend to express any final view on the matter.  On a provisional basis, I tend to agree with the submissions of Mr Man for the above reasons.

121.  Last but not least, I should mention that I have considered the submissions made by Dickson, including his 1-page written closing submissions, subject to the caveat that he is only allowed to put forth submissions, as opposed to a defence or a witness statement; and I have remained of the same view after considering such submissions.

G.  Conclusion

122.  For the above reasons, I find in favour of the claim of Madam So and Leo, and dismiss Chiu’s counterclaim. Accordingly, I make the following orders:

(a)  A declaration that Dickson has no beneficial interest in the Flat;

(b)  A declaration that the Flat is held by (i) Dickson on trust for Leo and (ii) Madam So, as tenants in common in equal shares;

(c)  An order directing Dickson to enter into a transfer vesting his legal interest in the Flat in Leo within 28 days;

(d)  An order discharging the Charging Order; and

(e)  An order dismissing Chiu’s counterclaim.

123.  I also make a costs order nisi that the costs of these proceedings be paid by Chiu to Madam So and Leo, with certificate for counsel, to be taxed if not agreed.

124.  It remains for this Court to thank Mr Clark for Madam So and Leo and Mr Man and Ms Ho for Chiu for their submissions and assistance rendered to the Court.