BUDDY FINANCE LTD v. LEUNG MA LEE MARY AND ANOTHER

HCMP 2333/2023

[2026] HKCFI 599

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2333 OF 2023

____________

____________

_______________

D E C I S I O N

_______________

THE APPLICATIONS

1.  This is the substantive hearing of a mortgagee action commenced by Buddy Finance Limited, the Plaintiff, by originating summons dated 7 December 2023 (the “Originating Summons”) claiming for, inter alia:

(1)   monetary judgment against Leung Ma Lee Mary, the 1^st Defendant;

(2)   an order for possession; and

(3) an order for sale pursuant to sections 2, 3 and 6 of the Partition Ordinance, Cap 352 (the “Ordinance”)

pursuant to O 88, rule 1(1) of the Rules of the High Court (the “RHC”).

2.   The application for monetary judgment is less controversial in the sense that there is no dispute that money is presently due and owing by the 1^st Defendant to the Plaintiff.

3.   The order for possession and sale relate to a property mortgaged by the 1^st Defendant to the Plaintiff known as Flat H on 29^th Floor of Tower 1, Bailey Garden, No 23 Bailey Street, Kowloon, Hong Kong (the “Property”) do directly affect Leung Lai Yi Shirely, the 2^nd Defendant.

4.   The 1^st and 2^nd Defendants are the tenants in common, with the 1^st Defendant owning 2/3 share of the Property and the 2^nd Defendant owning the remaining 1/3 share of the Property.

5.   The 1^st Defendant has never filed any acknowledgement of service.  However, the 2^nd Defendant filed an acknowledgement of service on 19 December 2023 indicating her intention to contest these proceedings.

6.   Given that there is an allegation by the 2^nd Defendant in this case that her husband Mr Huen Johnny Kwai Bun (“Mr Huen”) has an “unwritten equitable interest” in the Property, by order dated 28 April 2025, this Court gave leave for Mr Huen to file and serve a summons and an affirmation (if so advised) to apply to join in as a defendant to this case within 14 days of the order, so that all the relevant issues can be properly dealt with substantially.  This Court further ordered that the Originating Summons be adjourned for substantive argument.

7.   Subsequently, Mr Huen filed a summons on 12 May 2025 applying to be joined in these proceedings (the “Joinder Summons”).  The Joinder Summons is therefore also before this Court for determination.  

MATERIAL FACTS

8.   The Plaintiff is a licensed money lender in Hong Kong.  By the documents entitled “Mortgage Loan Agreement” and “Loan Agreement” both dated 26 January 2022, the Plaintiff and the 1^st Defendant entered into a loan agreement (the “Subject Loan Agreement”), whereunder the Plaintiff agreed to lend, and the 1^st Defendant agreed to borrow, a loan of HK$3,900,000 (the “Subject Loan”) at the interest rate of 17.8% per annum.

9.   Under the Subject Loan Agreement, the principal of the Loan and the interest were to be repaid by the 1^st Defendant by 240 instalments, with each instalment being in the amount of HK$59,590.  The first instalment was payable on 26 February 2022, and each of the remaining instalments was to be repaid on the 26^th day of each subsequent month until full payment in accordance with a repayment schedule.  

10.   The Loan is secured by a Mortgage/Legal Charge dated 26 January 2022 executed by the 1^st Defendant in favour of the Plaintiff on the same date as the Subject Loan Agreement (the “Subject Mortgage”), whereby the 1^st Defendant charged her interest in the Property to the Plaintiff as security on an “all moneys” basis.

11.   Pursuant to the Subject Loan Agreement, the Plaintiff advanced to the 1^st Defendant the Subject Loan on the same day as the Subject Loan Agreement and paid out the amount of the Loan by 5 cheques in accordance with the instructions of the 1^st Defendant.

12.   The 1^st Defendant made full payment of the first 13 monthly instalments.  

13.   However, thereafter, in breach of the Subject Loan Agreement, the 1^st Defendant failed to continue to make full and punctual repayment of the Subject Loan.

14.   Consequently, a letter of demand dated 29 August 2023 was issued by the Plaintiff’s previous solicitors to the 1^st Defendant, demanding full payments of the outstanding principal of the Loan and interests.  

APPLICABLE PRINCIPLES

15.   The approach of the court to summarily dispose of an originating summons issued under  O.88 of the RHC has been stated by the Court of Appeal in Golden Rich Finance Ltd v Lam Sau Fa [2018] HKCA 952 at §2:

“At the hearing of the originating summons, the matter may be disposed of summarily where the Court is satisfied that there are no triable issues.  As pointed out by the authorities, this is akin to an application for summary judgment under Order 14, namely, once the plaintiff’s entitlement to summary judgment is demonstrated on the face of the evidence, the burden falls on the defendant to show that she has a credible defence to the claim.   This is to be tested against the evidence adduced in the case such as whether the defence is inconsistent with the contemporaneous documents or the defendant’s previous admissions and stand.  The Court should also consider the inherent probability of the defence.  But what is not permitted is for the Court to conduct a mini‑trial of the case on the affidavit evidence.”

of RHC  

16.   On compliance, the Subject Loan Agreement contains a memorandum with the terms as required under section 18(2) of the Money Lenders Ordinance, Cap 163 (“MLO”) being set out (and a declaration as to the place of negotiation and completion of the Loan Agreement was provided under clause 23 of the document entitled “Loan Agreement”.  The Subject Loan Agreement also contains a repayment schedule and a summary of Part III and IV of the MLO in compliance with section 18(1)(b).

MONEY JUDGMENT AGAINST THE 1^ST DEFENDANT

17.   I have no doubt that the 1^st Defendant has breached the Subject Loan Agreement by her failure to pay punctually and fully the monthly instalments for the Subject Loan.  The Plaintiff is entitled to claim against the 1^st Defendant for the outstanding principal of the Subject Loan and the interest accrued.  

18.   The 1^st Defendant chose to be absent in the present proceedings and does not advance any defence to her outstanding obligations vis-à-vis the Plaintiff.  As to the amount, the Plaintiff has provided the updated calculations of the outstanding principal of the Subject Loan and interest up to the date of Ip 3^rd (i.e. up to 4 December 2025).  The total sum that the 1^st Defendant is liable to pay, up to 4 December 2025, is HK$5,741,855.75, of which HK$3,875,251 is the outstanding principal.

19.   From 5 December 2025 onward to the date of full payment, interest at the contractual rate (i.e. 17.80% per annum) should continue to apply.  The daily interest payable on the outstanding principal, namely,  HK$3,875,251.00 is HK$1,889.85 per day.

ORDER FOR VACANT POSSESSION

20.   Pursuant to Clause 6.01 of the Subject Mortgage, where an event of default has occurred, it shall be lawful for the Plaintiff to enforce the Subject Mortgage by, amongst other, entering into and taking possession of the Property, selling the Property, and exercising any powers or rights incidental to the ownership of the Property.

21.   I agree that, as a matter of legal rights, the Plaintiff is entitled to seek vacant possession of the Property. 

ORDER FOR SALE

22.   The 2^nd Defendant is neither a party to the Subject Loan Agreement nor the Subject Mortgage.  She has been made a party to these proceedings because of her co-ownership of the Property.  After the sale, the 2^nd Defendant will be entitled to her 1/3 of the sales proceeds.   

23.   Mr Huen is also not a party to the Subject Loan Agreement nor the Subject Mortgage.  

24.   According to sections 2, 3 and 6 of the Ordinance, a “person interested” has the locus standi to apply for an order for sale, whether the property in question is held by two or more persons as joint tenants or tenants in common.  It has been held that where, as here, a mortgagor under a legal charge/mortgage has defaulted in repayment, a legal chargee or mortgagee of a partial interest is entitled to apply for an order for sale or partition of the entire land: Law Chun Wai v Chu Suk Har [2016] 1 HKLRD 224 at §§22-23.  Thus, I am satisfied that the Plaintiff has the locus standi to apply for a sale of the Property.

25.   The remaining question is whether court should exercise its discretion under the Ordinance.  The principles relevant to the exercise of such discretion has been summarised by Recorder Jospeh Fok SC (as Fok PJ then was) in Wong Chun Kei Johnny & Ors v Poon Vai Ching & Ors [2007] 1 HKLRD 825 at §§18-19:

(1)   A co-owner has a basic right to rid himself of the shackles of co-ownership and, if he has no other remedy, ask for an order for partition of sale;

(2)   When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner(s)) that such an order will not be beneficial to all the co-owners; and

(3)   Whether an order for sale is beneficial to all the co-owners is not determined by the dissent of the opposing co-owners or the assertion by them that it is not beneficial.  It has to be determined by the court objectively.

26.   Subject to the defences advanced by the 2^nd Defendant and Mr Huen which will be addressed hereinbelow, I am of the view that on the facts of the present case, an order for sale should be granted.  If the 1^st Defendant were to put her 2/3 interest on sale in the market, there is nothing to stop her from doing so.  

27.   First, I agree that it is unrealistic for the Property to be physically partitioned into two separate flats; such partition would also entail creating two entrances for the two sub-units, the feasibility of which is questionable.  Moreover, such partitioning could also potentially be in breach of the Deed of Mutual Covenant and/or in violation with the relevant building regulations.  

28.   Secondly, even assuming that the physical partition of the Property is possible, partitioning of the Property could devalue the Property, and prejudice the 2^nd Defendant’s financial interests.  The 2^nd Defendant does not advocate for a partitioning of the Property into two units.

29.   Thirdly, the 2^nd Defendant is now residing in Canada.  Mr Huen, however , lives in the Property, and I appreciate that Mr Huen told this court that he is of advance age and it will cause him prejudice if he were to be forced to live “on the street”.  However, that really depends on whether Mr Huen has an equity or beneficial interest in the Property. This is  an important issue which will be addressed below.  Mr Lam for the Plaintiff also submitted that the 2^nd Defendant (as a 1/3 co-owner) would be entitled to her pro rata share of the sale proceeds so that she should not be financially worse off than before.

30.   Finally, given the inability of the 1^st Defendant to repay her outstanding loan, I agree that the Plaintiff would not be able to recover or fully recover the outstanding sums unless an order for sale of the Property is granted.  The Plaintiff would also suffer prejudice by any further delay of repayment.  

31.   According to the latest valuation report of the Property dated 1 December 2025adduced by the Plaintiff, the value for sale under repossession of the Property is HK$5,530,000.  As such, it is proposed that the Property be sold with such value as the reserve price (i.e. HK$5,530,000).

THE 2^2ND DEFENDANT AND MR HUEN’S OBJECTIONS

32.   First, the 2^nd Defendant submitted that the Plaintiff has breached or failed to comply with the guidelines in Schedule 2 of the Anti‑Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615) (“AMLO”).  Basically, what the 2^nd Defendant said is that the Plaintiff has failed to verify and check how the 1^st Defendant applied the loan she borrowed from the Plaintiff.  It is not clear as to whether the said sum was paid to discharge the previous moneylender’s loan to the 1^st Defendant.  

33.   I am of the view that this is not a relevant consideration.  It appears that the previous moneylender’s debt must be paid off before it would discharge its legal charge over the Property.  

34.   In any event, even if there are breaches of the AMLO on the part of the Plaintiff, it may attract legal consequences including criminal penalties.  However, this, by itself, does not have the effect of negating the repayment obligations of the 1^st Defendant vis-à-vis the Plaintiff.

35.   Mr Lam for the Plaintiff reminds this Court that in Ko Wang Ming v Hong Kong Forex Investment Ltd & Anor (unrep., HCA 2320/2008, 27 December 2013), Deputy High Court Judge Sakhrani (as he then was) referred to with approval at §100 the following observation made by Deputy Judge Pow SC in the DBS Bank (Hong Kong) Ltd v San‑Hot HK Industrial Co Ltd & Another [2013] 4 HKC 1 (at §216) in respect of the Code of Conduct for persons licensed by or registered with the SFC:

“The Code was promulgated and published pursuant to s399(1) of SFO.  The stated objectives of the Commissioner’s power to publish codes and guidelines are for providing guidance:- (1) for the furtherance of any of its regulatory objectives; (2) in relation to any matter relating to any of the functions of the Commission…; (3) in relation to the operation of any provision in the Ordinance.  Section 399(6) specifically provides as follows:-

‘A failure on the part of any person to comply with the provisions set out in any code or guideline published under this section that apply to him shall not by itself render him liable to any judicial or other proceedings, but in any proceedings under this Ordinance before any court the code or guideline shall be admissible in evidence, and if any provision set out in the code or guideline appears to the court to be relevant to any question arising in the proceedings it shall be taken into account in determining that question.’[emphasis added]

Sub-section (8) then states that ‘any code or guideline published under this section is not subsidiary legislation’.  In the Explanatory Notes of the Code, it is stated that:-

(1)   The Commission will be guided by this Code in considering whether a licensed or registered person satisfies the requirement that it is fit and proper to remain licensed or registered;

(2)   To reflect the realities of today’s markets, the Commission recognizes that conduct of business principles should be flexible enough to differentiate between professional and non-professional investors and some provisions of the Code need not be observed in the case of professionals;

(3)   The Code does not have the force of law and should not be interpreted in a way that would override the provision of any law.

In Ever-long Securities Co Ltd v Wong Sio Po, Cheung JA accepted, albeit obiter, that the Code did not have the force of law.  Furthermore, under s 1.5 of the Code, a failure by any person to comply with any provision of the Code that applies to it shall not by itself render it liable to any judicial or other proceedings and the wordings in s 399(6) of SFO were reiterated.  In my view, the Code was primarily promulgated for the purpose of determining whether a person is a fit and proper person to be or to remain as a licensed or registered person under SFO. Section 399(6) does not make the Code admissible in all proceedings.  Only in proceedings under SFO is the Code admissible.  And in such proceedings, the Code may become relevant to certain issues arising therein.”

36.   Section 7(4) of the AMLO also contains a provision similar to s 399(6) of the SFO, which concerns the guidelines in Schedule 2 of the AMLO:

“A failure by any person to comply with a provision in any guideline published under this section does not by itself render the person liable to any judicial or other proceedings but, in any proceedings under this Ordinance before any court, the guideline is admissible in evidence; and if any provision set out in the guideline appears to the court to be relevant to any question arising in the proceedings, the provision must be taken into account in determining that question”

37.   Secondly, the 2^nd Defendant referred this Court to a clause of representations and warranties and suggested that the 1^st Defendant had misrepresented to the Plaintiff that she has exclusive possession of the whole of the Property.  However, Mr Lam for the Plaintiff is correct to point out that the relevant document relied upon by the 2^nd Defendant is not the one signed by the Plaintiff and the Plaintiff is not a party to it.  

38.   In any event, I do not see how a representation of such nature can negate the 1^st Defendant’s obligation to repay the outstanding loan to the Plaintiff or vitiate the subject legal charge.  The representation was made by the 1^st Defendant to the Plaintiff.  The Plaintiff is the recipient of such representation, but it is not relying on it or suing on the breach of the same.  

39.   Thirdly, the 2^nd Defendant also submitted that the Plaintiff has breached section 25 of the MLO and as such this Court should reopen the transaction as it is an extortionate transaction.

40.   I can appreciate the 2^nd Defendant and Mr Huen’s grievance on the predicament they are in by reason of the conduct of the 1^st Defendant.  However, to be fair, it cannot be said that the present transaction is extortionate.  The interest charged by the Plaintiff is 17.8% per annum.  This is within the statutory limit.  There are also no exorbitant payment terms in any other parts of the Subject Loan Agreement.  

41.   The 2^nd Defendant also submitted that the 1^st Defendant was aged 68 and did not have financial capability to repay the monthly repayment.  However, there is no legal restriction on men or women of 68 to raise a loan and a mortgage.  That by itself cannot be said to be unconscionable.  As to assessment of repayment capabilities, that is a matter of risk management for the Plaintiff.  

42.   As to the complaint that the 1^st Defendant lacked the capacity to understand complex legal and financial documents and that she did not receive any explanation or legal advice in respect of the Subject Loan Agreement, the difficulty faced by the 2^nd Defendant and Mr Huen is that there is no evidence to such an effect.  

43.   There is no evidence by the 2^nd Defendant or Mr Huen of any recognisable vitiating factors (e.g. duress, undue influence or non est factum) which would render the Subject Loan Agreement and the Subject Mortgage unenforceable.

44.   Further, Mr Lam for the Plaintiff is correct that even if the 1^st Defendant has suffered from some mental illness, for the Subject Loan Agreement or the Subject Mortgage to be set aside, one has to show that the 1^st Defendant’s medical conditions were apparent and obvious to the Plaintiff at the relevant time (Brave Sky Mortgage Ltd v Chan Yuk Ping Agnes [2025] HKCFI 2665 at §20).  There is, however, no evidence that the Plaintiff was aware of the 1^st Defendant’s alleged mental incapacity at the material time.

45.   Fourthly and I am of the view that the real issue in the present case is whether the 2^nd Defendant and/or Mr Huen has some “equity” or unregistered beneficial interest in the Property to which the Plaintiff should be bound by the same.  

46.   At the last hearing, the 2^nd Defendant orally submitted that her husband, Mr Huen paid for most of the mortgage payments and as such has a beneficial interest in the Property.  As such, I allow Mr Huen to take out an application to be joined as a defendant to make good his claims.  

47.   I find Mr Huen to be very honest.  He said that before 2023, he had no idea of how the beneficial interest of the Property is divided between the 1^st Defendant and the 2^nd Defendant.  He paid for the mortgage payments as the 1^st Defendant refused to pay and he paid the same to help his wife without addressing the issue of beneficial interest in his mind.  

48.   In such circumstances, his mortgage payments were either a gift or a loan to the 2^nd Defendant.  There is no evidence of any discussion about transfer of any beneficial ownership of the Property to Mr Huen.  

49.   Mr Lam for the Plaintiff is correct that there was never any discussion or common understanding prior to the acquisition of the Property that Mr Huen would have beneficial interest in the Property.  On the contrary, it is Mr Huen’s own evidence that:

(1)   The purchase of the Property was intended as a joint enterprise/investment of 1^st and the 2^nd Defendants only:

“梁瑪利及我的太太以 100 萬港元合資作首期購買碧麗花園物業，梁瑪利佔70％業權而我的太太…出資 30 萬港元佔 30％業權…”

“梁瑪利(D1)與本人之妻(D2)，共同購入碧麗花園物業，本人對其購買細節及業權分配毫不知情。然而，梁瑪利(D1)不久後即失業，無力償還樓宇貸款。 在D1及D2之請求下，本人承擔全部按揭債務。”

50.   Prior to these proceedings, the 2^nd Defendant never discussed with Mr Huen about the beneficial ownership of the Property:

“…一直以來太太没有與我相議有關物業權益分配事宜。”

51.   Mr Huen did not even know the details as to how the Property was purchased:

“本人不知道她們購買物業的詳情…”

52.   Insofar as Mr Huen or the 2^nd Defendant is seeking to assert a beneficial interest over the Property by reason of his payment of the mortgage instalments for since around 1998 (i.e. two years after the purchase of the Property), I agree that the evidence must support an inference that there was a fresh agreement as to beneficial ownership before the court can give effect to a post-acquisition common understanding, meaning that there must be some evidence to infer that the original beneficial owner of the Property have agreed to give up some of their interest in the property in favour of the other party, and such evidence must be compelling. 

53.   In Ip Man Shan Henry v Ching Hing Construction Co Ltd [2003] 1 HKC 256 at §74, Deputy High Court Judge Lam (as Lam PJ then was) referred to the conceptional distinction between pre-acquisition common intention/understanding and post-acquisition common intention/ understanding.  DHCJ Lam (as he then was) said:

“…If the common understanding was arrived at prior to the acquisition of the property, the beneficial ownership had not yet been crystallized and one may infer a common intention more readily. On the other hand, if the common understanding were only formed after the acquisition of the property, this would imply a change in the beneficial ownership of the property. The evidence must support an inference that there was a fresh agreement as to beneficial ownership before the court can give effect to the common understanding. In other words, in that situation, there must be some evidence to infer that the original beneficial owner has agreed to give up some of his interest in the property in favour of the other party.” (emphasis added)

54.   However, Mr Huen and the 2^nd Defendant have not put forward any evidenceto show or support an inference that the 1^st Defendant has agreed to give up her interest in the Property in favour of Mr Huen.  That, in fact isnot Mr Huen’s evidence.

55.   Mr Lam for the Plaintiff also pointed out that on the evidence, the 1^st Defendant all along considered herself as a beneficial owner of her 2/3 share of the Property:

(1)   Clause 3.01 of Subject Mortgage executed by the 1^st Defendant expressly states that she was charging the Property to the Plaintiff as the beneficial owner.

(2)   In the document entitled “Loan Agreement”, the 1^st Defendant also by Clause 5 expressly warranted and undertook to the Plaintiff that she was the beneficial owner of the Property and that she is entitled to charge the Property as security for the due payment of the Subject Loan.

56.   Additionally, I agree that Mr Huen’s claim for beneficial interest in the Property is inconsistent with the 2^nd Defendant’s previous case on the beneficial interest of the Property.

57.   In relation to the 2^nd Defendant’s case on the beneficial interest of the Property, Mr Lam for the Plaintiff submitted that the 2^nd Defendant and Mr Huen alleged that the 1^st Defendant “does not actually possess full 2/3 shares of the [Property] as indicated on the Land Registry” because the funds used by the 1^st Defendant to pay for 2/3 of the down-payment of the Property actually originated from the sale of a property in Mong Kok belonging to the 1^st and 2^nd Defendants’ mother (the “Late Mother”), and the said funds were entrusted by the Late Mother to the 1^st Defendant by way of a Will (the “Will”) for the 1^st Defendant to hold or use on behalf of all the children of the Late Mother (i.e. the 1^st and 2^nd Defendants and their 4 siblings).

58.   The 2^nd Defendant and Mr Huen further claim that according to the Will, the funds entrusted by the Late Mother should be divided among the 1^st and the 2^nd Defendants and their siblings in specific proportions, and given that the “trust funds” were used by the 1^st Defendant to pay for 2/3 of the down payment of the Property, the beneficial ownership of the 2/3 share of the Property registered in the 1^st Defendant’s name should also be divided between the 1^st and 2^nd Defendants and their four siblings (the “Siblings”) in accordance with the Later Mother’s instructions as to how the “trust funds” should be divided.

59.   Specifically, the 2^nd Defendant and Mr Huen claim that the division of the beneficial ownership of the 2/3 share of the Property held by the 1^st Defendant should be divided as follows “as determined by the [Late Mother]”:

60.   As to the 1/3 share of the Property registered in the 2^nd Defendant’s name, it is the 2^nd Defendant’s position that such share of the Property was fully owned by her beneficially because she contributed to 30% of the down-payment of the Property.

61.   In other words, according to the 2^nd Defendant and Mr Huen, overall speaking, the beneficial ownership of the whole of the Property is owned by the 1^st and 2^nd Defendants and the Siblings in the following proportions:

   (collectively “Trust Arrangement 1”)

62.   However, inconsistently, the 2^nd Defendant and Mr Huen also alleged that Mr Huen should have beneficial interest in the Property on the basis of resulting trust or constructive trust by reason of him having paid for the mortgage instalments of the 1996 Mortgage from around 1998 until the discharge of the said mortgage in 2005 (“Trust Arrangement 2”).

63.   I agree that the two Trust Arrangements cannot sit comfortably together.

64.   Mr Lam for the Plaintiff is entitled to make the submission that despite alleging repeatedly that the Property is subject to the “equitable interest” of Mr Huen, neither the 2^nd Defendant or Mr Huen has been able to articulate what proportion of the beneficial interest in the Property is owned by Mr Huen, and how Trust Arrangement 1 and Trust Arrangement 2 are reconcilable with each other.

65.   Further, insofar as Trust Arrangement 1 is concerned, Mr Lam submitted that:

(1)   There is no evidence of when the Will was created.

(2)   There is also no evidence that the Will was ever propounded or given effect to.  Nor is there any evidence that any probate has ever been granted in respect of the Late Mother’s estate on the basis of the Will.  In this regard, it is of note that in a letter written by one of the Siblings (i.e. Leung Chi Kit), which is exhibited to Huen 3^rd, Leung Chi Kit said that he was not even aware that the Later Mother had made the Will before these proceedings.

(3)   As explained in Snell’s Equity (35^th ed) at §2-012, where a person dies, all his property vests in his personal representative who hold as beneficial owners.  It is said that the beneficiaries entitled to the estate of the deceased person do not take immediately equitable interest in it. Any or all of the estate may be needed by the personal representative to pay the debts and liabilities of the estate.  Even if the estate is obviously solvent, the person entitled to the reside cannot know until the administration is complete which particular assets will constitute residue available for the final distribution.  It is said that beneficiaries’ main rights are to hold the personal representatives accountable for the due administration for the estate, and to receive the reside as and when it is ascertained.  Their rights only crystallise as equitable interests over particular assets once the personal representatives have made an effective assent.  Only then do the beneficiaries acquire rights to compel the personal representatives to pay over or deliver up the assets due to them.

(4)   As such, even assuming that the Will is valid and enforceable, in the absence of any evidence that probate has been obtained in respect of the Will and that the administration of the Late Mother’s estate is completed, neither the 2^nd Defendant nor the Siblings can rely on the Will to assert any immediate beneficial/equitable interest over the 2/3 share of the Property held in the 1^st Defendant’s name, as their alleged beneficial/equitable interest has yet been “crystallised”.

(5)   Furthermore, even also assuming that the Late Mother did entrust the sale proceeds of a property in Mong Kok (whether by way of a valid will or otherwise) to the 1^st Defendant, there is no evidence to support the 2^nd Defendant’s claim that the 1^st Defendant did used such sale proceeds (as opposed to her own financial resources) to pay for the down-payment of Property.  I agree with Mr Lam on this point.  

(6)   Further, in any event, even if (a) the Late Mother did properly entrust the sale proceeds of the property in Mong Kok to the 1^st Defendant by way of the Will; and (b) the 1^st Defendant did use these sale proceeds to pay for the Property, there is no suggestion from the 2^nd Defendant (or Mr Huen) that the Plaintiff should have notice (whether actual or constructive) of the content of the Will or the fact that the 1^st Defendant used the trust money to pay for the Property.  

66.   I agree that there is nothing to put the Plaintiff into inquiry about the existence of the Will.  I am satisfied that the Plaintiff is a bona fide purchaser/mortgagee for value without notice of the Will and the distribution of beneficial interest thereunder.

67.   For the sake of completeness, I shall also mention that Mr Lam for the Plaintiff also referred this Court to a previous judgment by Deputy District Court Judge George Lam in Maxcolm Finance Limited v Leung Ma Lee Mary and Leung Lai Yi Shirley [2024] HKDC 492 (§§17, 21) where the 2^nd Defendant advanced yet a third trust arrangement that she is the sole beneficial owner of the Property.  In §21, the learned Judge said:

“However, no formal claim has yet been made by the 2^nd defendant against the 1^st defendant. The instant messages disclosed by the 2^nd defendant made no mention of the alleged family arrangement but merely sought the 1^st defendant’s consent to sell the Property during the favourable market conditions a few years ago. It also did not appear to support the 2^nd defendant’s case.”

68.   The 2^nd Defendant submitted that it was because her siblings decided to transfer all their beneficial interests to her that she then claimed the full beneficial ownership of the Property.  Whilst that may be the truth, there is no evidence before this Court on such transfer of beneficial interests of the Property to the 2^nd Defendant.  Further, it is inconsistent with the case advanced by the 2^nd Defendant in the present case that her husband, Mr Huen has beneficial interest in the Property.  

69.   Fifthly, on the case of resulting trust which may arise as a result of Mr Huen’s payment of the mortgage instalments and other expenses including government rates and rent, I am of the view that Mr Lam is correct that even if Mr Huen did pay for the mortgage instalments after the purchase of the Property, Mr Huen’s case on resulting trust cannot get off the ground.

70.   First, resulting trust arises at the time of acquisition, and so the time to take stock of the respective interest taken by the parties is at the time of acquisition (see Re Superyield Holdings Ltd [2000] 2 HKC 90 at 107E‑F).

71.   Secondly, as the learned editors of Lewin on Trust (20^th edn) have explained at §10-087:

“In a case where property is acquired on mortgage, the money borrowed and applied in the purchase will, where the resulting trust analysis applies, be taken as being a contribution to the purchase by the person who is obligated at the time of purchasing to repay the loan. It will not be taken as a contribution by a person who subsequently pays mortgage instalments…” (with emphasis added)

72.   Thirdly, in Hashem v Shayif & Anor [2009] 1 F.L.R. 115, Munby J (as he then was), also explained that:-

“For someone may provide money used in the acquisition of a property without thereby acquiring any interest in that property. It all depends upon the character in which the money is provided. Was the money provided by way of gift, by way of loan or in the character of purchaser? Only in the last case will there be any question of a resulting or constructive trust. If there was in truth a gift, the donor has no claim at all. If there was a loan, the lender has a claim for the repayment of his money with interest but no claim to, or any interest in, the property (save insofar as the loan is secured by a charge or mortgage of the property)…” (Emphasis added.)

73.   I agree that, in the present case, even if Mr Huen did pay the mortgage instalments:

(1)   The resulting trust doctrine does not assist Mr Huen because under a resulting trust analysis, the time to take stock of the respective interest taken by the parties is at the time of acquisition, and post-acquisition conduct is not relevant.

(2)   The payments (if any) made by Mr Huen towards the mortgage repayments cannot as a matter of law be regards as “contribution” for the purpose of resulting trust.

(3)   There is also no evidence that Mr Huen made such payments (if any) with the intention that he would acquire a beneficial interest in the Property or in the character of a purchaser.

(4)   Rather, as explained by Queen Au-Yeung J in Chen Lily v Yip Tsun Wah Alvan (unrep., HCA 1695/2013, 7 December 2015) at §52:

“In a matrimonial or family context, financial contributions of the joint owners may vary over the period of their relationship due to temporary inability (e.g. loss of job or personal accident) or ability (e.g. a spouse rejoining the workforce or receiving a bonus) One spouse/cohabitee may support the other who is temporarily in financial difficulty.  It is not something so unusual as would call for re-distribution of the beneficial ownership of a property…” 

74.   On the facts of the present case, given that the 2^nd Defendant (i.e. the wife of Mr Huen) is a co-owner of the property, it is very natural for Mr Huen to help with the mortgage repayments for the Property, especially as it is Mr Huen’s evidence that the 2^nd Defendant did not have a full-time job and only had limited income for a large period of time (so that she would need the financial support of Mr Huen), and that Mr Huen was allowed by the 1^st and the 2^nd Defendants to reside in the Property.  This accords with the submissions and evidence of Mr Huen.

75.   Thus, any contribution made by Mr Huen towards the mortgage repayments is not something so unusual as would call for re-distribution of the beneficial ownership of a property.  Depending on the facts and evidence, Mr Huen may have a claim against the 1^st Defendant.

76.   Sixthly, in view of the above factual rulings of this Court, I do not need to find it necessary to deal with the issue of constructive notice.  The issue of constructive notice only arises if the 2^nd Defendant or Mr Huen has some beneficial interests in the Property which is inconsistent with the registered legal interests of the Property.  However, I do not find, on a summary judgment standard, the 2^nd Defendant and Mr Huen have persuaded this Court that there are bona fide triable issues on the issue of beneficial ownership of the Property.  

JOINDER SUMMONS

77.   As I find that Mr Huen does not have any beneficial interest in the Property, it follows that the Joinder Summons should be dismissed with costs.  

DISPOSITION

78.   For all the reasons stated above, I make an order in terms of the draft Order presented to this Court and an order to dismiss the Joinder Summons.

79.   As far as costs, Mr Lam for the Plaintiff asked the costs of the Originating Summons to be paid by the 2^nd Defendant and the costs of the Joinder Summons to be paid by Mr Huen on an indemnity basis.    

80.   It is submitted that they mounted a completely unmeritorious challenge against what should otherwise be a very straightforward mortgagee action, which has led to the incurrence of a lot of unnecessary time and costs on the part of the Plaintiff, and a wastage of judicial resources. .  

81.   However, each case depends on its own facts.  The 2^nd Defendant and Mr Huen are not legally represented.  They advanced what they genuinely believe to be valid grounds of opposition and they lost.  I do not think they should be penalised on that.  

82.   Accordingly, I make a gross sum assessment of the costs at HK$300,000.  

83.   As far as the costs against the 1^st Defendant is concerned, the Plaintiff is entitled to tax the same on an indemnity basis pursuant to Clause 17.01(ii) of the Mortgage.

84.   Finally, I like to thank Mr Lam for the Plaintiff for his most helpful and professional assistance to this Court.

85.   I have also registered my wish that the Plaintiff can, in good faith, negotiate some suitable arrangements with the 2^nd Defendant and Mr Huen so that they will still have a roof over their heads in their advanced age.