LAI CHUNG MING v. FUNG KAR LUEN CANDY

HCA197/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 197 OF 2008

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BETWEEN

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J U D G M E N T

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Introduction

1.  This action relates to a dispute between two former lovers over the beneficial interest of a property known as Unit G, 30^th Floor, Tower 1, Island Resort, No.28 Siu Sai Wan Road, Hong Kong (‘the Property”). 

2.  The plaintiff acquired the Property on 12 July 2001.  Since October 2001, he had let out the Property.  On 17 May 2004, he mortgaged the Property to Nanyang Commercial Bank.  By a deed of assignment dated 30 July 2007, the plaintiff assigned the Property to the defendant.  It is not disputed that, despite the transaction was described in the conveyancing documents as a sale, there was in fact no sale and no consideration was paid by the defendant to the plaintiff.

3.  In this action, the plaintiff seeks a declaration that the defendant holds the Property on resulting trust for him and an order vesting the legal and beneficial interest of the Property in him.  It is the plaintiff’s case that the assignment was done merely to pacify the defendant’s mother, who did not approve of their relationship, that there was no intention to pass the beneficial interest in the Property to the defendant and that the transfer was in contemplation of and on condition of their marriage, which did not materialise.  Alternatively, the plaintiff says after the parties broke up, the defendant orally agreed on about 12 October 2007 to transfer the Property back to him in return for a payment to cover her expenses in preparing for the wedding.  Acting in pursuance of the agreement, he paid $80,000 to the defendant.  The plaintiff therefore also claims a decree of specific performance of the oral agreement and the return of $80,000 as money had and received.

4.  The defendant denies holding the Property on trust. Her case is that the plaintiff, out of his love and affection for her, had made an outright gift of the Property to her.  The defendant also denies reaching an oral agreement with the plaintiff to transfer the Property back to the plaintiff. Alternatively, she contends that the agreement is unenforceable, being not made in writing.  The defendant admits receiving $80,000 from the plaintiff, but says that it is for payment of the additional stamp duty and as reimbursement of expenses for the wedding preparations.  By way of counterclaim, the defendant claims against the plaintiff the rental income from the Property since 30 July 2007, an order for delivery up of vacant possession of the Property and also mesne profits on account of the plaintiff’s occupation and use of the Property since September 2007. 

The parties

5.  In 2007 at the time when the events leading to this action first occurred, the plaintiff was aged 49 and the defendant was about 30 years old.     

6.  The plaintiff is a divorced man and has two children from his former marriage.  In 2007, he had been divorced for about seven years and his children were in their teenage.  The plaintiff received his tertiary education in Australia and holds a Master in Business Administration degree.  In 2007, he was the deputy general manager of a large holding company, responsible for its garment trading business.  He resigned from that position in January 2008 due to health reason.  A year later, he returned to work as a financial controller in a travel agency.  At the material time, apart from the Property, he also owns (through a company called Maxform Limited) another property in Happy Valley, in which he and his mother resided.

7.  The defendant is a single woman.  Her parents divorced when she was about 15 years old.  She lived with her mother and her younger brother.  Her father, nicknamed “Diamond Chan”, has remained in close contact with the defendant and her family, and would visit them at their home. The defendant received her university education in Canada.      

8.  The defendant’s mother, Frances Yu Han Lan (“Madam Yu”), is the elder sister of the plaintiff’s sister-in-law (“Agnes Yu”).  Madam Yu admittedly is vastly experienced in dealing with landed property transactions.  She has since at least 1991 been actively dealing in the sale and purchase of landed properties in Hong Kong and also in the Mainland. 

9.  Madam Yu is acquainted with Gordon Lau (“Lau”). According to Madam Yu, the two have known each other and have been friends for 10 odd to 20 years.  Lau is a conveyancing clerk.  At the material time in 2007, he worked in the solicitors firm, Messrs Lo Chan & Leung.  Lau has over the years been handling the legal formalities of the property transactions for Madam Yu.    

The facts

10.  The facts that are relevant to the dispute can be summarised as follows.

11.  In about April 2007, the plaintiff began to take to the defendant and started courting her. Before that, they had already met on some family occasions.  Towards the end of April 2007, they were going out together.  The plaintiff wrote his first love letter to the defendant on 1 May 2007.  Thereafter, their relationship developed rapidly.  They saw each other on a daily basis and had long telephone talks.  In short, they became lovers. 

12.  Throughout the month of May, there were daily love letters from the plaintiff to the defendant, in addition to emails. During this period, the plaintiff also kept a daily journal of the things he did with the defendant, including some of their conversations and discussions about their future plan.  It is common ground that the plaintiff had provided copies of his journal entries to the defendant. The defendant had also written to the plaintiff, though not as frequent.  As from June 2007, the written communications between the plaintiff and the defendant were primarily in the form of emails. The plaintiff’s journal entries and the letters and emails exchanged between the plaintiff and the defendant and those between the plaintiff and Madam Yu and Lau were in evidence at the trial.  They provide useful evidence for gauging the parties’ state of mind at the relevant time as well as assessing the credibility of the witnesses’ oral testimony.

13.  From the plaintiff’s journals and the letters and emails between the defendant and him, it is without doubt that the two were in love with each other.  However, while the plaintiff appeared to have committed himself unreservedly right from the beginning, the defendant had in the initial stage harboured some reservations about their relationship and also their future.  In her first letter to the plaintiff, which was undated but given to the plaintiff on about 13 or 14 May 2007, the defendant set out no less than nine matters that she had doubts about.  In essence, she questioned whether they were compatible, particularly in terms of their personality or with regard to their plans for the future.  Towards the latter part of May, however, it would appear that the defendant was convinced of the plaintiff’s love for her.     

14.  In the beginning, the plaintiff and the defendant had kept their relationship away from Madam Yu, Agnes Yu and the other relatives. Some time towards the end of May 2007, this was found out by Madam Yu and Agnes Yu.  Madam Yu made it known to the plaintiff and the defendant that she did not approve of their relationship.  At the same time, Agnes Yu was also against it and this had given rise to some arguments and discord between the two sisters.

15.  Eventually, there was a meeting at the defendant’s home at which the plaintiff, the defendant, Madam Yu and Diamond Chan were present. The parties had referred to this meeting as the “four people meeting” (四人會議).  There is some dispute as to when this meeting took place.  The defendant’s case is that it took place on about 26 or 27 May 2007.  The plaintiff on the other hand is unable to recall the exact date of this meeting and whether Diamond Chan was present, but he believes it was around mid-June before the Dragon Boat Festival. According to him, he had two discussions with Madam Yu. The first was around 26 May 2007 (i.e. the one mentioned in his letter dated 26 May 2007 to Madam Yu and Diamond Chan), which ended at about 3 a.m. and at which Diamond Chan was also present.  The plaintiff says although Madam Yu had raised a number of concerns and questions for him, she did not mention anything about giving the defendant a property or some security. 

16.  As to what exactly were said by Madam Yu and the plaintiff at the four people meeting, there are considerable disputes.  In a nutshell, it is the plaintiff’s case that on this occasion Madam Yu demanded that he should provide something to the defendant for her to hold in her hand (揸手), whereas the defendant’s case is that it was the plaintiff who volunteered to give a property to her so as to demonstrate his love for her.   

17.  On 19 June 2007, the plaintiff and the defendant met the defendant’s paternal grandfather (“Fung”) and her maternal grandmother over a meal.  There is also dispute between the parties as to what was said during the occasion.  The plaintiff’s case is that Fung followed up on Madam Yu’s request and asked the plaintiff to provide the address of the property that was to be transferred to the defendant.  The defendant’s case, however, is that the plaintiff volunteered and reiterated his intention to give a property to her. What is common ground is that during the meal, the plaintiff wrote out the address of the Property[1] on a piece of pink coloured paper and gave it to Fung, indicating that this was the property to be transferred to the defendant.  Fung then inserted the date “Jun 19, 2007” on the document.  He later gave this document to Madam Yu, who had since kept it and, after the commencement of this action, gave it to the defendant’s solicitors.  I shall return to deal with the disputes over what happened at the four people meeting and the meeting on 19 June 2007 when assessing the evidence of the witnesses. 

18.  On 20 June 2007, the defendant emailed the plaintiff the contact numbers of Lau. The plaintiff however did not immediately get in touch with Lau.

19.  On the other hand, Madam Yu, aided by Lau, conducted a land search and some enquiries about the Property and its ownership, including the age of the building, its floor area, its market value, the date of the plaintiff’s acquisition of it and also information relating to the previous and existing mortgage.  The results of these enquiries were written down by Madam Yu on the document[2].

20.  In the afternoon of 22 June 2007, Madam Yu emailed the plaintiff, with copy to the defendant.  It is a stern and strongly worded email in which Madam Yu called the plaintiff a liar, saying he had deceived her by breaking his promise to her to transfer the Property to the defendant.  Madam Yu further stated in the email that “I am the absolute legal owner of the flat in which Candy is now living. I will revoke my licence [sic] granted to her to enter and live in my premises.”  Madam Yu concluded by telling the plaintiff to take the defendant with him and to house and provide for her as she would be his future wife.  It is Madam Yu’s evidence that she wrote this email without any assistance.  Lau in his evidence, however, said that it was written with his input and he had seen and discussed the draft with Madam.  Having regard to the legal jargons employed and for other reasons that I will come to in the latter part of this Judgment, Lau’s evidence on this point is to be preferred to that of Madam Yu.

21.  On receiving the email, the plaintiff contacted Lau, initially over the telephone and then through emails in the morning of 23 June 2007, to deal with the legal formalities for the transfer of the Property. According to Lau, the plaintiff said he wanted to make a gift of the Property to the defendant.  Lau also said that on learning the plaintiff intended to mortgage the property, he advised against effecting the transfer by way of a gift because, out of concerns about the bankruptcy law, banks were reluctant to grant mortgage over gifted property.  Accordingly, the transfer had to take the form of a sale and purchase and the plaintiff was asked to decide a price for the transaction.  As can be seen from Lau’s email at 12:56 hr on 23 June 2007, acting on his advice, the purchase price was eventually set at $1.9 million and the deposit was to be payable by cheque.  Lau stated in this email that although $1.9 million might not reflect the market value and would attract additional stamp duty, the advantage was that the stamp duty payable for the time being was $100, whereas if the purchase price were set at $2.2 million, the defendant would have to pay immediately the sum of $20,100 as stamp duty.  Lau also advised the plaintiff to apply for the new mortgage and also to obtain separate legal representation as he would be acting for the defendant in the transfer.  Towards the end of the email, Lau asked the plaintiff to revert so that he could prepare the provisional sale and purchase agreement, adding that “Madam Yu proposed it to be signed at 3:00 pm on 24^th June 2007 (Sunday)”.

22.  As is evident from this email and as accepted by Lau, he had been in contact with Madam Yu throughout the morning of 23 June 2007.  There is no doubt that Madam Yu was kept informed of the email exchanges. It is also Lau’s evidence that before the signing of the provisional sale and purchase agreement on 24 June 2007, the defendant never contacted him and she was throughout not actively involved in the transaction. Instead, all along it was Madam Yu who had been in contact with him over the transfer of the Property.

23.  It is also of significance to note that in the email from the plaintiff to the defendant on 23 June 2007, the plaintiff stated “One of the variables is solved. We will put the different parts one by me and the whole picture will show up beautifully in time. Let’s hold our hands tight and walk through the rough waters together.”     

24.  In the morning of 24 June 2007, the plaintiff proposed to the defendant.  In the afternoon, they went to Madam Yu’s shop called Home Shop and signed a provisional sale and purchase agreement in the presence of Madam Yu and Lau.  The agreement provided that a sum of $300,000 was payable upon the signing of the agreement.  It is common ground that on Lau’s request, Madam Yu drew a cheque of $300,000 in favour of the plaintiff and gave it to him because the defendant did not have a cheque account.  At the same time, the plaintiff agreed to deposit $300,000 into Madam Yu’s bank account before presenting Madam Yu’s cheque for payment.  On 27 June 2007, the plaintiff did deposit $300,000 into Madam Yu’s bank account.  It was only on the following day that he presented Madam Yu’s cheque for payment.  

25.  Thereafter, the plaintiff applied on behalf of the defendant to Nanyang Commercial Bank for a new mortgage over the Property. On 25 July 2007, the Bank approved a mortgage loan in the sum of $1 million to be repayable by 180 equal monthly instalments.  Both the plaintiff and the defendant were the authorised signatories of the mortgage repayment account; either one of them could sign to operate it.  However, only the plaintiff knew the password for operating the account online.  At that time, the outstanding indebtedness under the plaintiff’s mortgage was about $1.5 million.  On 26 July 2007, Lau emailed the plaintiff telling him that the defendant had to provide $600,000 to enable the completion of the Property.  On the following day, the plaintiff paid $600,000 into the bank account of Lau’s firm, Messrs Lo, Chan & Leung (“LCL”).

26.  It is to be noted that Lau had emailed the plaintiff instead of the defendant, even though he was acting for the defendant and the plaintiff had on 3 July 2007 already appointed Messrs Tam & Partners (“TP”) to act for him in the conveyancing transaction.  TP was introduced to the plaintiff by a Mr Wong of the Bank.  This demonstrates the passive role the defendant played in the transaction.  It also shows that she was at the time not really concerned with the transfer of the Property to her. 

27.  On 30 July 2007, the plaintiff and the defendant executed the deed of assignment, and the defendant also executed the mortgage in favour of Nanyang Commercial Bank.  The legal fees of both LCL ($7,610) and TP ($3,000) were paid by the plaintiff.  It is not in dispute that the common intention of the parties at the time was that the plaintiff would be responsible for paying the monthly mortgage instalments and the outgoings of the Property.  Indeed, the plaintiff did make the monthly mortgage repayments until January 2008 when he was prevented from doing so by the defendant.  He also paid the rates, government rent, management fees and other outgoings of the Property.  On the other hand, after the execution of the assignment, the plaintiff continued to collect the monthly rental of $9,500 from the tenant of the Property.

28.  On 16 August 2007, the Commissioner of Rating and Valuation Department wrote to LCL, expressing his view that the consideration for the assignment of the Property from the plaintiff to the defendant was understated and that the value of the Property should be $2.5 million. Subsequently, by a notice dated 24 September 2007, the Commissioner demanded additional stamp duty in the sum of $37,400.  The due date for the payment was 24 October 2007, but the defendant only settled the payment on 3 November 2007, despite she had received $80,000 from the plaintiff on about 12 October 2007.       

29.  Meanwhile in about mid-July 2007, the plaintiff and the defendant decided they would get married on 3 December 2007 and this was communicated to their family members and relatives.  As they intended to use the Property as their matrimonial home, the plaintiff gave notice to the tenant on 16 August 2007 to vacate the Property by 15 September 2007.   The tenant moved out on 20 September 2007.  The plaintiff also sold his property at Happy Valley and purchased a small property in Wanchai for his mother to live in.  At about the same time, the plaintiff and the defendant were making preparation for their wedding.  They purchased the wedding rings, made bookings for the taking of the wedding photograph and also the wedding gown.  The defendant also made enquiries about possible banquet venue.  It is not disputed that the plaintiff had paid for these items and had also given $20,000 cash to the defendant.  Then on 8 September 2007, the plaintiff signed the Notice of Intended Marriage for the Marriage Registry.

30.  Amidst these wedding preparations, however, the relationship between the plaintiff and the defendant was beginning to take a downturn and was deteriorating rapidly.  It would appear from the emails (for example, the series of emails on 11 July 2007) that they had some differences over money matters.  It would also appear that the plaintiff was becoming less certain about the relationship.  As can be seen from the series of emails exchanged between 11 and 14 September 2007, the relationship was undergoing a difficult time, so much so that the defendant concluded her email dated 14 September 2007 by questioning how they could proceed further. 

31.  According to the plaintiff, by mid-September 2007, they had completely fallen out and had agreed to put an end to their relationship and to call off the wedding.  The defendant, however, says that they did not break up until the end of November 2007.  Judging from the fact that there were very few emails after September 2007, it is more probable that they had broken up in September.  Notwithstanding that, they stayed in touch and continued to see each other from time to time, albeit much less frequently. 

32.  The plaintiff said that it was around this period that he first requested the defendant to return or re-transfer the Property to him.  In response, the defendant told the plaintiff to give her $100,000 to cover the expenses of the wedding preparation and the additional stamp duty she was liable to pay.  The defendant, in her witness statement, agreed that these had been said between them. 

33.  It is also the plaintiff’s evidence that he instructed TP to prepare the legal documents for re-assigning the Property back to him and also contacted Nanyang Commercial Bank to arrange another mortgage.  He refers to an email dated 19 September 2007 with the subject line “Legal papers”, in which he wrote:

“Have not been able to get hold of the legal firm to prepare the documents yet, I try to have it to prepare whatever paper is necessary and we can just go and sign them once and for all to save the trouble, will get back to you in due course. …”

It is the plaintiff’s case that the legal documents mentioned in this email were the documents for re-assigning the Property to him.  When being cross-examined, the defendant disagreed and said that this was about finding a legal firm for the purpose of signing some papers for their marriage.  In my view, the defendant’s version is plainly untenable having regard to the plain words and also the series of emails that preceded this email.    

34.  According to the plaintiff, on about 12 October 2007, he and the defendant reached an oral agreement on the transfer of the Property from defendant to him (“the Oral Agreement”).  It is to the effect that the defendant would re-assign the Property to him at the stated consideration of $1.9 million; and that the plaintiff would pay the defendant $80,000 to $100,000 cash.  On 12 October 2007, the plaintiff withdrew $80,000 from his bank account and gave it to the defendant.  There is a dispute as to the place where they met to hand over the money.  The plaintiff said this was downstairs the defendant’s office whereas the defendant said this took place downstairs where she lived.  Nothing really turns on this.  What the defendant also said is that when they met, the plaintiff again requested her to transfer the Property back to him, but she refused because the Property was a gift to her.

35.  On 16 October 2007, TP wrote to LCL stating that they were instructed that the plaintiff and the defendant had agreed to purchase and sell the Property upon the terms set out in the letter, which included, inter alia, a purchase price of $1.9 million with completion to take place on or before 31 October 2007.  LCL gave a holding reply, followed by a letter dated 23 October 2007, which stated that they had no instruction to act for the defendant.  According to Lau, he had asked the defendant about TP’s letter and the re-assignment and was told she did not agree to re-assign it to the plaintiff.  The defendant in her witness statement explained this was because the plaintiff had initially agreed to purchase the Property back from her at $1.9 million, hence when she learnt that he was not going to pay her the sum, she did not give instruction to LCL to deal with it.   

36.  Thereafter, the plaintiff continued to ask the defendant to complete the formalities for re-assigning the Property to him.  In an email dated 10 November 2007, the plaintiff wrote as follows:

“At the same time, I do not mean to push you but I do need to settle the outstanding matter about the change of name. I do not mind you find a lawyer to execute the papers but you do not seem to have time to do so. I know you do not mean to hold up the process but it has already been a couple of months and I urgently have other arrangements (rental, tax, mortgage …) to put in place. The longer the matter drags on, the more complicated it will be to me.

I have already got all we need to do arranged, papers are ready, lawyers for you and me are ready, all you have to do is to sign a couple of names or the lawyer can even come for you to sign the papers. I wish you can help and allow me to get the things done in a simple way.

Can you please just have the papers signed? …”

The defendant did not respond to this email.

37.  By then the plaintiff had already obtained vacant possession of the Property from the tenant, redecorated it and moved to live in it.

38.  Then on 28 November 2007, the plaintiff and the defendant met for dinner.  In the end, they parted unhappily.  According to the plaintiff, it was because he refused to accede to the defendant’s request for the payment of a further sum of $150,000 as expenses for retaining a lawyer to represent her in the re-assignment, that the defendant was angry and left the restaurant.  The defendant, on the other hand, says that the plaintiff again asked her to transfer the Property back to him, which disappointed and saddened her.  She therefore cried and left the restaurant.    

39.  In about mid-December 2007, the defendant went on a trip to Canada.  She returned to Hong Kong on 2 January 2008.  On 4 January 2008, she closed the mortgage repayment account and set up a new repayment account which can only be operated by her alone.  Since then, the defendant has been responsible to pay the mortgage instalments.  Up to 31 May 2010, the payments made by her totalled $186,934.33.

40.  On 4 February 2008, the plaintiff issued the Writ in this action.

41.  By a letter dated 7 April 2008, the defendant’s solicitors demanded the plaintiff to deliver up vacant possession of the Property.  In the evening of 17 July 2008, the defendant went to the Property together with a locksmith and attempted to gain entry to the Property by breaking up the lock.  She was dissuaded by the police officer who was called by her to the scene.  She left subsequently, leaving behind on the corridor some furniture that she had brought there with the assistance of Madam Yu.  When being cross-examined on why she did this, the defendant claimed that she had fallen out with Madam Yu and had to move out, and since she had no place to live in, she therefore intended to move into the Property.  What is inherently inexplicable in this explanation is that Madam Yu had accompanied the defendant and helped her to deliver the furniture there, which is incompatible with the defendant’s assertion that she had fallen out with Madam Yu.        

The plaintiff’s claim

42.  The plaintiff’s primary case is that he never intended to pass beneficial interest to the defendant and that the assignment to was conditional upon their getting married, which had not materialised, such that the Property is held by defendant on a resulting trust in favour of him.   The plaintiff’s alternative case is that the defendant acted in breach of the oral agreement made on about 12 October 2007 to re-transfer the Property to him and the $80,000 he gave her is money had and received by her. 

43.  The plaintiff therefore seeks a declaration that the defendant holds the Property on trust for him, an order under section 45 of the Trustee Ordinance, Cap.29, vesting the legal and beneficial interest of the Property in the plaintiff, subject to the plaintiff reimbursing the defendant the expenses she had incurred for the Property, and damages for breach of trust. The plaintiff also claims the sum of $80,000 together with interest thereon.  Alternatively, the plaintiff claims a decree of specific performance of the oral agreement, alternatively, damages in lieu of specific damages, and damages for breach of agreement.           

44.  The Re-Amended Statement of Claim contains a plea of undue influence in respect of the transfer of Property to the defendant.  On the second day of the trial, the plaintiff through Mr Mak indicated that the plea would not be pursued.  There is further a claim for the return and delivery up of the wedding rings.  Subsequent to the commencement of these proceedings, the defendant had though her solicitors returned the wedding rings to the plaintiff’s solicitors.  It is therefore no longer necessary to adjudicate on the claim.  The plaintiff has also not led evidence on his claims for damages.

The defendant’s defence and counterclaim

45.  The defendant’s case is that the transfer of the Property from the plaintiff to her is an outright gift and all the interests in the Property had been passed to and vested in her.  She denies the existence of an oral agreement to re-transfer the Property to the plaintiff and further contends that such an agreement, being not made in writing, is unenforceable by reason of section 3(1) of the Conveyancing and Property Ordinance.   Cap.219.  The defendant further denies being liable to return $80,000 to the plaintiff as it was a payment to cover the additional stamp duty for the assignment of the Property to her and the expenses incurred in the wedding preparations. 

46.  The defendant has in her pleadings referred to section 17 of the Conveyancing and Property Ordinance and contends that, in the absence of a contrary intention, the assignment from the plaintiff operates to assign all the interest in the Property to her.  She also relies on section 5(1)(b) of the same Ordinance to say that any declaration of interest would fail as it is not in writing signed by her.  Counsel has however not advanced any arguments on these aspects.   

47.  In her counterclaim, the defendant seeks vacant possession of the Property, payment of mesne profits at prevailing market rent to be assessed until delivery up of vacant possession and payment to her of rental income from the Property that the plaintiff had collected since 30 July 2007 together with interest.     

48.  Although this is not one of the relief sought in the counterclaim, counsel are in agreement that if the plaintiff were successful in his claim, the defendant should be given credit for the mortgage repayments she had made since January 2008 and an accounting exercise will have to be carried out.

Issues

49.  The broad issues to be resolved in this trial are:

(1) What was the intention of the parties when the property was assigned from the plaintiff to the defendant, whether it was intended that the beneficial interest in the Property would pass to the defendant absolutely.

(2) Whether the Property is held by the defendant on resulting trust for the plaintiff.

(3) Whether there was an oral agreement between the parties for re-transferring the Property from the defendant to the plaintiff.

(4) If there was such an agreement, whether it is enforceable having regard to section 3(1) and (2) of the Conveyancing and Property Ordinance.

(5) Whether the defendant is liable to return to the plaintiff all or part of the sum of $80,000 as money had and received.

The witnesses and their evidence

50.  Before dealing with the issues, it is necessary to deal with the differences in the evidence of the witnesses.  A total of five witnesses had testified.  Apart from the plaintiff and the defendant, there are also Madam Yu, Lau and Fung.

51.  The major areas of dispute in the evidence of the plaintiff, on the one hand, and that of the defendant, Madam Yu, Fung and, to a lesser extent, Lau, relate to the four people meeting, the meeting on 19 June 2007 and the issue of an oral agreement to re-transfer the Property.   

52.  Concerning the four people meeting, the plaintiff’s evidence is that during the meeting, Madam Yu analysed the situation for him, pointing out that he was of an advanced age, had a past history of ill health, was a divorcee with children and had an aged mother to look after.  Hence, if he really wanted to be with the defendant, he should provide some protection for her.  Madam Yu demanded that the plaintiff provide something to the defendant for her to hold in her hand, so as to give her some protection. She went on to say that the protection could be in the form of cash or landed property, and if it is landed property, it should not be held in joint names but should be in the sole name of the defendant, and it should be conveyed by way of a sale and not in the form of a gift.  The plaintiff said he told Madam Yu he would think about it. 

53.  According to the plaintiff, he understood the concern of Madam Yu and her demand for giving something to the defendant to hold in her hand to be that he should put up some protection for the defendant so that after they were married, in the event their relationship broke down or if he were to pre-deceased the defendant, the defendant’s position would be secured and she would not have to worry about disputes over the plaintiff’s estate.  The plaintiff said it was not his understanding that he was to make an outright gift to the defendant.  Neither did he intend to make an outright gift to the defendant.  The plaintiff denied he had said that he would give the defendant a property to show his love for her was true.

54.  As to the meeting with Fung on 19 June 2007, the plaintiff’s evidence is that Fung repeated Madam Yu’s request that the plaintiff should provide something, either in the form of cash or a landed property, for the defendant to hold in her hand.  Fung also said that it was right that he should provide the defendant with something to hold in her hand. The plaintiff then told Fung he would transfer the Property to the defendant so as to ease Madam Yu’s opposition.  On Fung’s request, he provided the address of the Property and wrote it on the pink coloured paper.  Out of inadvertence, he put down the name of the housing estate as “South Horizon” instead of “Island Resort”.  He denied having told Fung that in order to show his love for the defendant, he was giving her the Property.         

55.  The plaintiff explained that it was purely to satisfy Madam Yu’s request that he agreed to assign the Property to the defendant.  He also added that as they were then contemplating getting married and had intention to use the Property as their matrimonial home, he was prepared to transfer the Property to the defendant if that would serve to silence the opposition from Madam Yu.  The plaintiff further said that it was also the defendant’s understanding that he would remain to be the sole beneficial owner of the Property and that the transfer was merely to ease Madam Yu’s opposition and to satisfy her request.  The plaintiff stated that after the meeting with Fung, the defendant told him that the Property still belonged to him.

56.  The plaintiff also referred to an email written by the defendant on 28 June 2007, in which she said:

“For some reason, when I was talking with you last week and asked you to sell the property for the future, I remembers that you appeared to be very insistent that you did not want to do that no matter what; rather you would choose to keep that for our future use or base in HK. You did give me a few reasons for why we shall do that, so I agree with you back then (from the way it looks, at least it will have to be kept for a few years) and I thought your mind was set. Now that you’re telling me a cheque is placed in front of you and asking whether we shall sell it. I don’t know what to say … Chung Ming, I find it exceptionally uncomfortable and rather difficult to accommodate the capricious mind of yours [sic]. Am I supposed to know that there is a cheque waiting? Am I supposed to tell mother now?

I find it scary sometimes – the capriciousness of yours, I mean, I do not have a problem If you were to sell the property or you did whatever you wish to it, I guess that was why I told you what I thought and the best way to do it last week, but why why and why did you not take my advice and had to wait until now – after a week – that when my mind is all set to coincide with yours, and you list all these other options?

…”         

57.  What happened was before signing the provisional sale and purchase agreement, the plaintiff had put up the Property for sale with estate agent for some time.  As they were contemplating getting married, the plaintiff and the defendant had discussed about their future plan, including where they would reside, and about what to do with the Property. In the end it was decided that the Property would be used as their matrimonial home. In this email, the defendant complained that notwithstanding these discussions and even after they had signed the provisional sale and purchase agreement, the plaintiff was still thinking about whether to sell the Property.

58.  The plaintiff pointed out, and I agree, that it is evident from this email that she regarded the plaintiff as the owner of the Property and she did not regard the Property as belonging to her.  It is also clear that she acknowledged that it was entirely up to the plaintiff to decide whether to sell the Property.  This, the plaintiff says, demonstrates that it was their mutual understanding that despite the transfer of the Property to the defendant, he remained the sole beneficial owner of it.  There is, in my view, considerable force in this contention.

59.  On the other hand, the evidence of the defendant and Madam Yu is that at the four people meeting, Madam Yu made known her objections to the plaintiff and the defendant developing a relationship. According to Madam Yu, this was because of their familial relationship, the poor health and advanced age of the plaintiff and also the plaintiff’s relationship with other women.  She also had doubts over the genuineness of the plaintiff’s love for the defendant and was further worried about their relatives would pass adverse comments on the defendant.  Hence at this meeting, she put to the plaintiff six areas of concerns and questions.  She also specifically asked the plaintiff how he could prove his love to be true and serious?  In consequence, the plaintiff said he would give a property to the defendant as security and to show that his love towards the defendant was genuine.  Madam Yu said she was taken aback and asked the plaintiff whether he had thought about it clearly, but the plaintiff repeatedly promised to make a gift of a property to the defendant and to complete the procedures within one month.  She denied she had demanded the plaintiff to provide the defendant with something to hold in her hand or required the property to be conveyed in the form of a sale and purchase.

60.  According to Madam Yu, she was upset when she received the plaintiff’s letter dated 28 May 2007, which suggested that she had approved of the plaintiff and the defendant going out together.  She therefore emailed the plaintiff on 5 June 2007 and later on 13 June 2007 to make clear her objection.  Nevertheless, she recognised that the defendant was deeply in love with the plaintiff and there was nothing she could do. Then in about middle of June, she told Lau about the plaintiff’s promise to give a property to the defendant and asked him to take care of the legal formalities.  She also gave the contact numbers of Lau to the plaintiff and told him to contact Lau directly.  

61.  In cross-examination, however, Madam Yu said that at that time she did not think or contemplate that the plaintiff and the defendant would get married.  Madam Yu denied she was keen to bring about the transfer of the Property and claimed that it did not bother her whether the plaintiff give the defendant the Property.  She claimed that she only wrote the email dated 22 June 2007 to show the defendant that the plaintiff was truly a liar since he had not completed the transfer of a property to the defendant within one month as he promised at the four people meeting.      

62.  As to the meeting on 19 June 2007, it is the defendant’s case that it was initiated by the plaintiff as he would like to meet Madam Yu to and Fung’s evidence is that the plaintiff confirmed to Fung that he would discuss the gift of a property.  But because Madam did not want to go, Fung was asked to go instead.  Both Fung and the defendant testified that the plaintiff reiterated that he would give a property at Island Resort to the defendant as a gift. He then wrote down the address on the pink coloured paper and gave it to Fung so that it could be passed to Lau to follow up. 

63.  The defendant denied that the transfer of the Property was merely to satisfy or appease Madam Yu.  She explained that she was by then deeply in love with the plaintiff and was quite prepare to ignore and go against Madam Yu’s views and advice. The defendant also said that the giving of the Property to her was unrelated to their getting married because at the early stage of their relationship, the plaintiff had already indicated they were going to live in the Property after they married.            

64.  The defendant stated it was her understanding that the Property was transferred to her as a gift subject to a mortgage, but she did not have to pay the mortgage instalments as the plaintiff had promised to be responsible for the repayments.  She also said she had no objection to the plaintiff arranging a mortgage over the Property.  When being cross-examined why she opened a new mortgage repayment account and took over the mortgage repayments in January 2008, the defendant explained that she did not want the plaintiff to have access to the account as she was afraid he might not continue with the repayments or might do something illegal to the account.     

65.  It is relevant at this stage to mention one aspect of Lau’s evidence.  When being asked why he asked Madam Yu to issue on behalf of the defendant a cheque of $300,000 for the deposit, he answered, after some prevarications, that this was safer for it was afraid that the plaintiff would change his mind.  He explained that the cheque and the plaintiff’s deposit of $300,000 into Madam Yu’s account could act as some support for an alternative case of the plaintiff making a cash gift to the defendant for buying the Property (送唔到樓都可以送錢).  He concluded by saying that with a cheque payment, it would put everyone’s mind at ease (安心少少).  

66.  Having regard to the evidence of the witnesses and the letters and email communications between them, I have come to the view that the plaintiff’s account is to be preferred.  He is a relatively straightforward and less worldly person, especially when compared to Madam Yu and Lau.  Indeed, even though he is more mature in age than the defendant, he is less sophisticated than the defendant.  There is a ring of truth in his evidence that although he and the defendant were deeply in love and committed to each other, they were not small kids (兩小無猜) and could not just run away from their families; they had to act responsibly.  He was therefore concerned about the oppositions coming from Madam Yu and felt pressured to accede to her demand to provide something for the defendant to hold in her hand as a security.  Much of what he said is also supported by the contemporaneous letters and emails that he wrote to the defendant. It is clear that he, as well as the defendant, saw the only obstacle ahead of them was Madam Yu’s opposition and, to a lesser extent, the noises from their relatives.

67.  There is also credence in his evidence that he was prepared to transfer the Property to the defendant so as to ease the mind of Madam Yu and to remove her opposition because they had contemplated getting married, a fact that is plain from their letters and emails, and they had envisaged using the Property as the matrimonial home, which is common ground. Miss Ng suggested that if indeed the plaintiff was only intending to transfer the legal title to the defendant, it is strange that he did not mention this at all in the many letters and emails that he wrote, in which he made a detailed record of the daily activities between him and the defendant.  The plaintiff had explained that as he and the defendant were enjoying a very close relationship and the transfer was merely to satisfy Madam Yu, it never occurred to him that he should reduce into writing the fact that the Property was not a gift to the defendant, or what should happen in the event they did not get married, or that the Property was only holding the Property in name.  I find this a candid and credible explanation. 

68.  On the other hand, if indeed the plaintiff was very forthcoming and had volunteered to make a gift of the Property to the defendant so as to prove his love was true, it would be most improbable that he made no reference of this at all in his love letters and emails to the plaintiff.  A reading of them will readily show that he had no hesitation in declaring his love and affection for the defendant and citing instances which he believed demonstrated his love and passion for the defendant. 

69.  Further, being so deeply in love with the defendant, if it was his avowed intention to make a gift to the defendant, it would be most odd that he did not take any step to effect the assignment until after receiving Madam Yu’s stern email of 22 June 2007.  Not only had he not contacted Lau, but he had also taken no step towards re-arranging the mortgage with Nanyang Commercial Bank, when it must be obvious to him that he needed to do something about the mortgage if he were to assign the Property to the defendant.                      

70.  Another matter that supports the plaintiff’s account on the issue of his intention is the mistake he made about the address of the Property when he wrote out the pink coloured paper for Fung.  It is unlikely that he would have made the mistake if he had all along intended to make a gift to the defendant and the meeting was, as the defendant said, to discuss the details of effecting the gift.  The fact that he made a mistake goes to show that the writing out of the paper came about as a result of Fung following up on Madam Yu’s demand for security for the defendant.

71.  As to the oral agreement to re-transfer the Property, the emails that the plaintiff wrote to the defendant on 19 September and 20 November 2007 are very telling and go a long way to support his evidence that as soon as they decided to call off the wedding and to break up, he asked for the Property to be conveyed back to him and that the defendant had been trying to delay the process.  The timing of the payment of $80,000 and the letter from TP to LCL is also supportive of his account that the payment was in pursuance of the defendant’s oral agreement to transfer the Property back to him.  It is of significance to note that the defendant had not written back to the plaintiff to refute what he said.  She had neither asserted that as the Property was given to her as a gift and she was the owner, there was no question of transferring the Property back to the plaintiff, nor denied she had agreed to transfer the Property back to him.  Even when the plaintiff indicated that all the documentation was ready and awaiting execution, she did not say she would not sign them.            

72.  In my view, the evidence of the defendant is much less convincing.  She came under considerable difficulties in cross-examinations.  When she was asked about the email she sent on 28 June 2007 (see paragraph 56 above), she was not able to explain why she wrote it and in such a way if indeed the plaintiff had indicated he was giving the Property to her as an outright gift and she believed and considered that the Property was or was, pending the execution of the assignment, going to be hers. 

73.  The defendant was at pain to say that her mother’s opposition was not an issue and she was not bothered by it.  She even claimed that Madam Yu had told her not to accept the Property from the plaintiff.  When she was asked about the plaintiff’s email dated 18 June 2007 in which he mentioned “the day we resolved your mother’s trouble”, she claimed this was not a reference to Madam Yu’s opposition to their close relationship, but was referring to the court case that Madam Yu was facing and the plaintiff was merely saying he had helped by giving her some advice on it.  Having regard to the rest of the sentence (i.e. “and the day we promised that we shall be speaking with each other gently and lovingly …”) and the rest of the email, this account is simply incredible.         

74.  In relation to Madam Yu’s email dated 22 June 2007, the defendant suggested that when Madam Yu wrote “If she does not want to take anything from you as I wished, it is her right not to do so and I would not interfere with it”, she meant that she did not wish the defendant to accept the Property from the plaintiff.  She was plainly twisting the meaning of the words.  When she was asked why then did Madam Yu called the plaintiff a liar in this email, the defendant said that was because during the four people meeting, the plaintiff had promised that the completion would take place within a month, but this did not come about.  Not only was this answer difficult to reconcile with her evidence that Madam Yu did not want her to accept the Property, it also shows that she was quite prepared to make up her evidence as she went along.  And when she was further asked why Madam Yu would accuse the plaintiff of breaking his promise when it was only three days after he gave the address of the Property and 2 days after she gave him Lau’s contact numbers, the defendant answered that it was because Madam Yu then realised that the plaintiff was being serious and she did not want the plaintiff to go out with the defendant, so she wrote the email to tell them to break up.  This is an inherently unconvincing answer.    

75.  Very often, the defendant would not give a direct answer to even a simple question.  For example, when she was asked was she the one who made an appointment with Fung for dinner on 19 June 2007 or whether it was Madam Yu who told her to contact Fung, she went round in circles until she had time to think about the answer that she finally said it was she who called Fung.  Another example was when she was asked about her demand for $100,000 from the plaintiff in October 2007, whether this means she was in total asking for $120,000 reimbursement from the plaintiff since she had previously received $20,000 from the plaintiff.  The defendant went round and round in her answers to avoid answering it because she knew the amount she had asked for was excessive and she would not be able to justify it.    

76.  The defendant’s testimony on the 19 September 2007 email (see paragraph 33 above) and the incident on 17 July 2008 (see paragraph 41 above) are further illustrations of the unreliability of her evidence.

77.  As for Madam Yu, her evidence is equally unreliable and unconvincing.  She is a clever, alert and assertive person.  It is evident from her evidence that she was trying to seize every possible opportunity to portray a dim picture of the plaintiff, as someone who would casually form a relationship with woman. At the same time, she was evasive and reluctant to commit herself on critical matters.  One example was with regard to whether, at the four people meeting and in June 2007, the plaintiff and the defendant were already contemplating getting married, even though the questions that she admittedly put to the defendant at the meeting suggested that this must be the case.  Her evidence that at that time she did not contemplate or think that the two would get married is simply not credible.

78.  Throughout her evidence, she was keen to give an impression that she was did not really care whether the plaintiff was to give a property to the defendant.  In my view, this is because she was trying to show that she had not demanded the plaintiff to provide some security for the defendant and that it was the plaintiff who volunteered to make a gift to the defendant. However, there is overwhelming evidence that she was very much involved and concerned to see that the assigned of the Property to the defendant was accomplished.  What she wrote in the 22 June 2007 email is one clear example.  Her reason for writing it, namely, to tell the defendant the plaintiff was a liar, was just not believable.  The fact that she kept the pink coloured paper for so long and conducted land search and enquiries about the Property, and that she nominated the date and time and place for the signing of the provisional sale and purchase agreement are further examples. 

79.  In my view, being a caring mother, an experienced business lady and an alert and assertive person by nature and in light of her many reservations about the plaintiff, it is only natural that Madam Yu was anxious to ensure that the defendant was provided with some security if she were to marry the plaintiff.  It would be artificial and contrary to common sense that she did not care about whether the plaintiff was assigning any property to the defendant.  Her conscious efforts to play down her involvement and interest in the matter show that she had not been candid in her evidence as to what in fact was said by her at the four people meeting.

80.  As for Fung, as the grandfather of the defendant, he will no doubt have the interest of the defendant in mind when giving evidence and much of what he knows about the case would have come from the defendant and Madam Yu or Diamond Chan.  I have doubts as to his evidence that the plaintiff told him at the 19 June 2007 meeting that the Property was a gift to the defendant.

81.  Coming finally to Lau, much of his evidence is not controversial.  Clearly, he is the person who had been providing advice and suggestions to Madam Yu and the defendant with regard to the assignment of the Property to the defendant.  As evidenced by the $300,000 cheque, Lau was having the interest of the defendant in mind and was on the same front as Madam Yu and the defendant.  In my view, the fact that he considered it necessary to build in extra safeguard for the defendant goes some way to negative the defendant’s case that the plaintiff had clearly indicated an intention to make a gift to the defendant.

The intention of the parties

82.  I now turn to the findings of the case. 

83.  On the issue of the intention of the parties when the Property was assigned to the defendant, I accept the evidence of the plaintiff.   I find that he had not volunteered to make a gift of the Property to the defendant.  The transfer was merely to ease the mind of Madam Yu and to satisfy her demand that something be provided to the defendant to hold in her hand as a security.  There was no intention on the plaintiff’s part to transfer the beneficial interest in the Property to the defendant. I also find that this was also the understanding and intention of the defendant.

Resulting trust

84.  It follows from the finding on the parties’ intention and the fact that the intended marriage did not materialise that the Property is held by the defendant on resulting trust for the plaintiff. 

Oral agreement

85.  On the basis of the plaintiff’s evidence, I find that there was indeed an oral agreement between the parties for the re-transfer of the Property as described by the plaintiff.

86.  This agreement, not being in writing, will be unenforceable by reason of section 3(1) of the Conveyancing and Property Ordinance, unless the plaintiff can pray in aid section 3(2).  Section 3 of the Ordinance reads:

“(1) Subject to section 6(2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.

(2) This section applies to contracts or other dispositions whenever made and does not affect the law relating to part performance or sales by the court.” 

87.  It is the plaintiff’s argument that there had been part performance of the oral agreement in that: (i) the plaintiff had paid $80,000 to the defendant; (ii) the plaintiff had instructed TP to prepare the necessary documentation to effect the re-assignment; and (iii) the plaintiff had taken possession of the Property in about November 2007.

88.  The law is trite that the doctrine of part performance can only be invoked if the acts relied upon are done in furtherance of the agreement and are clearly referable to more than a contemplated transaction: Steadman v, Steadman [1976] AC 536; New Hart Builders v Brindley [1975] 1 Ch 342; and Shun Lin Weaving Factory Ltd v. Siu Cheng Yee Wah Eva [1980] HKC 605 and. 

89.  I agree with Miss Ng that the instruction to TP was no more than preparatory act in contemplation of an agreement and did not amount to part performance.  In respect of the taking possession of the Property, it was on the plaintiff’s evidence clearly not done in furtherance of the oral agreement. 

90.  As for the payment of $80,000, although the purpose of it was to cover the additional stamp duty and the wedding preparation expenses incurred by the defendant, it did not detract from the fact that this was a payment sought by the defendant in return for re-assigning the Property to the plaintiff.  The reasons given to justify the request do not mean that the money was not paid in pursuance and in furtherance of the oral agreement. I am therefore of the view that there had been part performance of the oral agreement and the same is enforceable notwithstanding section 3(1) of cap 219.     

The payment of $80,000

91.  On the basis of the above finding, the defendant will be liable to repay the plaintiff the balance of the $80,000, after taking into account the additional stamp duty and the expenses incurred by the defendant in preparation for the aborted wedding.

Conclusion

92.  For the above reasons, the plaintiff is entitled to judgment on his claim and the counterclaim is to be dismissed.

93.  I will ask that the plaintiff, in consultation with the defendant, draws up a draft order for the court’s approval.  The draft order is to be lodged with the court within 14 days.

94.  There is an order nisi that the plaintiff’s costs of the claim and counterclaim be paid by the defendant, to be taxed if not agreed.