ROWENA MARY SMITH v. THELMA WATSON AND ANOTHER

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No. 46
(Civil)

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J U D G M E N T

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Mortimer, V.-P. :

1. This is an appeal against a decision of Yam J in which he gave judgment for the plaintiff against the defendant and dismissed a counterclaim brought by the defendant against her mother and brother.

2. The plaintiff in the action below was the mother of the appellant. The mother I will call Mrs Watson and the appellant, Rowena. The action concerns a flat at 2E, No. 2-8A Happy View Terrace. That flat was owned by Rowena and her then boyfriend Malcolm. They had purchased the flat at 2E and a small flat above it on a roof space had been created. This was known as 3E.

3. In about 1989 there were discussions between Rowena, her mother Mrs Watson and Malcolm about the sale of Malcolm's half share in the property to Mrs Watson. The arrangement was that Mrs Watson would pay $500,000 for the half share and that she would continue to make the mortgage repayments on which there was then outstanding $800,000. Mrs Watson was to move in and live at Flat 2E.

4. The transaction was completed. Mrs Watson moved in to 2E. The conveyance was made not to Mrs Watson but to Rowena.

5. In the court below, evidence was introduced about a number of other transactions between these three and Rowena's brother, Christopher. But most of that evidence which was heard and argued about below was quite irrelevant to the issue.

6. The issue was simply this.There was a dispute between mother and daughter as to the nature of the transaction. Rowena's case was that Malcolm's half share in the flat was intended as a gift by Mrs Watson to her. A gift which was made in order to avoid estate duty; to give to Rowena something from mother's estate in advance of her death. She supported that by evidence about her mother's transfer of assets to her brother, Christopher and his power of attorney over his mother's estate or over part of it. It appears that the $500,000 purchase money came from a sum of $1m over which Christopher had a power of attorney.

7. Mrs Watson's case was quite different. She said that there was never any intention of a gift to daughter. It was intended always that she should have an interest in the property, that is she should have the beneficial interest of Malcolm's half share. She understood originally that it would be conveyed to her and that she would continue with the repayment of the mortgage. In fact, as I have said, she moved in to Flat 2E and continued paying the mortgage repayments.

8. So it was a dispute on the facts. The judge heard the evidence and assessed it. He came to the conclusion that he was unable to accept the evidence of Rowena and Malcolm. He found the evidence of Rowena and Malcolm quite confused, vague and that at times evasive, and therefore unreliable. He gave his reasons for that.

9. On the other hand, he found Mrs Watson to be an impressive witness. He found her evidence reliable and he accepted it. He supported his findings by the contents of two letters written by Rowena to her mother in 1990. It was at a time when Rowena, Malcolm and Mrs Watson were involved in the purchase of property in the United Kingdom. On 6 June 1990 Rowena wrote a letter to her mother in which she said:

"if we cannot finance the purchase and renovation of this house, can we sell our flat in Hong Kong because we can really make money on this one".

10. There was a further letter on 7 June in which Rowena writes:

"Malcolm wants his money from the sale of our flat in Hong Kong to you. I agree to give him another $300,000"

So in those two letters, she writes using the words "can we sell our flat", "because we can really make money". She referred in the second letter to the sale of "our flat in Hong Kong to you" meaning to Mrs Watson.

11. The nature of the transaction which the judge found can - as Mr Merry has to concede - only be found in the judgment by deduction. A clear finding of facts is absent. But it is clear that the judge found that the version advanced by Mrs Watson was the correct version. It follows from that that the action had to fail and that Rowena's contention that the transaction involved a gift to her of the half share in the flat had to fail. There is here after all no presumption of advancement between mother and daughter. The issue was one strictly of credibility.

12. Rowena faced her obvious difficulties but was unable to demonstrate to this Court any matter upon which we could say that the judge's decision on the facts was in any way in error. He had seen and heard all the witnesses and considered what they had to say about the relevant documents.

13. In those circumstances I would dismiss the appeal.

Godfrey, J.A.:

I agree that we must dismiss this appeal, but out of respect to the appellant Rowena Mary Smith (who I shall call "Rowena") I will add a few words of my own.

14. It is clear that Rowena's mother Thelma Watson (who I shall call "Thelma") put up the money for the purchase of Malcolm Sage's half share in the Happy Valley flat with which we are concerned. But this half share was assigned to Rowena, not Thelma. This, without more, is consistent with a gift by Thelma to Rowena, whether genuine, or merely for estate duty purposes . It is however equally consistent with an intention on the part of Thelma to acquire the beneficial interest in this half share for herself, in the absence of any contrary evidence.

15. When there is evidence available for the resolution of questions such as this, which unfortunately arise all too frequently, the court has to consider that evidence, and decide where the truth lies. There are factual presumptions which can sometimes assist the court in resolving these questions, such as the presumption of advancement (i.e., gift). However, since there is no equitable obligation on a mother to advance a daughter, there is no presumption of advancement when a mother makes a purchase of property in the name of her child : see Bennet v. Bennet (1879) 10 Ch. D. 474. Rather, in the absence of other evidence, there would in such a case be a presumption of a resulting trust, that is to say, that the property purchased belonged to the mother, as to the person who paid for it, no matter in whose name it was taken. And, where it is said that money was advanced for the purchase of a property by way of gift to a donee, the donee has to prove that that was the case. The burden of proof that a transaction was intended to be by way of gift rests on the donee : cp. Seddon v. Davidson [1968] 1 WLR 1083.

16. The question here then was whether, on the evidence, Rowena had established that the property taken in her name came to her by way of gift from Thelma. The judge thought not. His findings of fact are not clearly expressed but, on a fair reading of his judgment, it is clear that he found that Rowena's case that the property was put in her name because Thelma intended to make a gift to her had not been made out.

17. We are now concerned with Rowena's appeal. An appeal to this court is by way of rehearing, but this does not mean that this court will retry the case. We will not usurp the function of the trial judge, whose task it is to find the facts. We certainly will not disturb his findings of primary fact when these are based on the credibility of the witnesses, or the preference of the evidence of one witness over that of another, unless there was something which the judge overlooked. It is not enough to allege (as here) that "the learned judge erred" in 28 different ways in his findings of fact. When a notice of appeal or "skeleton" argument does this, the only if unlikely conclusion is that "the learned judge" could not have been "learned" at all. It is always a sign of weakness in an appellant's case when such a course is taken.

18. There was here, as Mortimer V-P has noted, much irrelevant and inadmissible evidence received by the judge, which makes it difficult for us in this court to focus on the real issue; but in the end we are concerned only with the question whether or not, on the evidence, Rowena has proved that Thelma intended to make a gift to Rowena. It is important to recall the rule relating to the admissibility of evidence in this sort of case (which, if the rule is ignored, can go on, for days on end, for no useful purpose, and at hideous cost). The rule is that the acts or declarations or the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence, either for or against the party who did the act or made the declaration; but subsequent acts and declarations are only admissible in evidence against the party who made them and not in his favour : see Shephard v. Cartwright [1955] A.C. 431, per Viscount Simonds at p.445.

19. The judge placed some reliance here on two letters written by Rowena to Thelma, on 3 June 1990 and 7 June 1990, which he read as accepting that the property belonged to Thelma and not to herself.

20. I must say that, for my part, I do not think that these letters bear the weight which the judge put on them. They are at best ambiguous. Nevertheless, although I have some misgivings about it, I do not think there is anything like enough here to enable this court to interfere with the decision of the judge, based, as it was, on findings of primary fact which were themselves based on his assessment of the credibility of the witnesses who gave evidence before him.

21. For these reasons I too, as I have said, would dismiss this appeal.

Rogers, J.A.:

I agree with the judgments which have just been delivered.

22. Whilst it seems that the findings of fact have to be deduced and are not patent on the face of the judgment, the Judge has clearly found in favour of the Plaintiff and the evidence which she gave.

23. Whether I would have come to the same decision as that to which the Judge came I do not know. Sitting at the Court of Appeal I do not see a way in which the acceptance of the Plaintiff's evidence by the Judge and the finding of the Defendant's evidence was unreliable can be challenged.

24. I would add that I would not necessarily have put the same meaning on all the evidence as the Judge has done and in particular I would draw attention to the letter of 3rd June to which I might well have given a different interpretation.

25. Doubts though I may have in respect of some of the aspects, I do not see that this is a case in which grounds have been made out to allow this appeal.

26. I would therefore dismiss this appeal accordingly.

Mortimer, V.-P.:

The appeal is therefore dismissed. The costs of the appeal will be to the 1st respondent.