CHEUNG MEI FONG v. DOE YAT FAN AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an application by originating summons under the Partition Ordinance, cap. 352, for the sale of business premises at 2/f., Lai To Building, 364, 366 and 368, Shanghai Street, Kowloon. The plaintiff is the former co-habitant of the 1st defendant and the 2nd defendant is the wife of the 1st defendant. Both plaintiff and the 2nd defendant have been aware of each other's status in the 1st defendant's domestic and business arrangements.

2. The premises were originally a ballroom operated by the 1st defendant, who employed the plaintiff and later entered into an informal partnership with her in the venture. In 1973, the premises were bought in the joint names of all three parties to this action. In 1988 and by deed of severance, the parties severed the joint tenancy and declared the property to be vested in them in common and in equal shares. This appears to have resulted from a breakdown in the relationship between plaintiff and 1st defendant commencing in 1984.

3. The defendants, who are unrepresented, resist the plaintiff's application for partition. In essence, the first defendant maintains that he provided all the purchase money for the property and that the plaintiff accordingly holds her share on a presumptive trust in his favour. He contends that she is not therefore the beneficial owner and has no right to seek the partition of the premises.

4. The presumption of trust is of course rebuttable and anyway depends on acceptance of the 1st defendant's evidence that he paid all the purchase price. The plaintiff denies this and maintains that she paid an initial $8,000.00, and helped the 1st defendant at other times when he needed money for the business.

5. For the reasons which follow, I do not find it necessary to resolve this conflict as to the origin of the purchase price. It is important to note that the plaintiff and the lst defendant were cohabiting for many years. In 1961 they had a son, Doe Sai Hong, and they continued living together until 1983, according to the lst defendant's own evidence.

6. In the 1st defendant's "Statement of defence" at paragraph 4(g) and (h) he denies that the plaintiff paid any money for the premises, but continues in reference to the original transaction when the joint tenancy was created-

"in 1973 for the purpose of protecting the future life of the plaintiff the 1st and 2nd respondents, the 1st respondent went to a solicitors firm and added the names of the plaintiff and the 2nd respondent herein as partners and had their names added in the title deeds."

I find that these words and circumstances create a presumption of gift in the plaintiff's favour in respect of the transfer of the interest in the property into her name. That she was not his legal wife does not dissuade me from this finding. She was his long term domestic partner and the mother of his child. Moreover, both expressly and by implication of conduct he accepted a duty to care for her.

7. Like the presumption of trust, the presumption of gift is rebuttable, although the evidence admissible to this end is strictly limited. The relevant principles were acknowledged by Lord Simonds in Shephard v. Cartwright [1953] AC 431 at 435 in adopting a passage from Snell's Principles of Equity.

8. These authorities establish that acts and declarations of the parties at or around the transaction in issue are admissible for or against either party. Subsequent acts and declarations are however admissible only against the party making them. The 1st defendant may therefore seek to rebut the presumption of gift in the plaintiff's favour only by his own acts or declarations forming part of the transaction, or by subsequent acts or declarations of the plaintiff against her own interest. He may not adduce his own subsequent acts or declarations in his own favour.

9. Within these rules of admissibility, I find nothing in favour of the 1st defendant's contentions, and the presumption of gift stands unrebutted. It is however more than merely unrebutted, it is re-inforced by the severance in December 1988 when the joint tenancy was converted to a tenancy in common stated to be in equal shares.

10. Although long after the initial failure of the relationship between plaintiff and lst defendant in 1984, the 1st defendant did not at the time of severance seek to clarify in his own favour the appearance of the original purchase. On the contrary, he perpetuated the appearance of a gift and went further by identifying the precise one third interest in the plaintiff.'

11. I therefore find that the 1/3 share in the premises is beneficially, as well as legally, owned by the plaintiff, who therefore has the status to bring these proceedings. There remains the issue of her application for sale and there is little point in perpetuating ownership in common between parties with apparently irreconcilable differences. Nor is partition of the property desirable or even feasible.

12. I therefore make an order under section 6 of the Ordinance that the premises be sold. However, to do justice to the two defendants, I direct that it first be valued by an independent valuer appointed by agreement, failing which by the court. Thereafter the 1st and 2nd defendants, or either of them if the other declines, shall have an option to purchase the plaintiff's share at 1/3 of the valuation, such option to be exercised within 14 days of the valuation.

13. Failing the exercise of this option and in default of agreement between the parties within a further 28 days as to mode of sale, the property will be sold by public auction conducted by estate agents either agreed or appointed by the court. The proceeds, net of encumbrances and debts, will be divided in equal thirds amongst the plaintiff and the two defendants.

14. Finally, there will be liberty to apply for directions in case of intervening difficulty. Costs will be to the plaintiff with a certificate for counsel, which will also be awarded for the adjourned hearing of 22nd February 1991.