LAM LAP KIN v. CHOY SI YIM (The Executor of the Estate of AU SIU LAU, Deceased) AND OTHERS

HCA 1320/2013

[2018] HKCFI 503

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1320 OF 2013

____________

____________

_______________________

J U D G M E N T

_______________________

Introduction

1.  This is yet again civil litigation among siblings involving real properties which were purchased before their parents passed away.

2.  The parties’ parents who played a role in the property concerned (a residential flat at Third Street, Western (“the suit property”)) were their late father (“Lam senior”), and their late mother (“the dec’d”) who passed away in October 2011.

3.  The plaintiff is the fifth (male) child whereas the 2^nd defendant (“D2”) is the second (female) child. The 1^st defendant (“D1”) is D2’s husband.  The two defendants were appointed (purportedly appointed according to the plaintiff) the executors under the dec’d’s will dated 8 May 2009 (about two years before the dec’d’s death (see also para 6 below)).

4.  At the beginning of the trial, the parties indicated that the plaintiff would not seek any relief against D1 or D2 in their above-mentioned capacity.  The trial is therefore effectively concerned only with the dispute between the plaintiff and the 3^rd defendant (“D3”), which is D2 (see also para 53, plaintiff’s opening submissions; para 7, 9 to 17, opening submissions of D1 and D2).  D2/3 will be referred to as D3 below for convenience.

Background

5.  Various real property transactions are mentioned in the latest version of the statement of claim (“the statement of claim” for short):

(a) the dec’d purchased a residential flat at Tsui Fung Street, Kowloon in November 1979 (the plaintiff was added as a joint tenant owner with the dec’d) (this property is admitted to have been purchased with money from Lam senior’s business).  That property was sold in August 1986;

(b) using the sale proceeds therefrom, a residential flat at Water Street, Western was purchased in August 1986 in the names of Lam senior and the plaintiff as joint tenants (“the Rockson flat”);

(c) the Rockson flat was registered in the plaintiff’s name when Lam senior passed away in 1990;

(d) the Rockson flat was sold in April 1994 (in answer to the dec’d’s desire to acquire an “ancestral house”);

(e) the suit property was purchased in April 1993. It was registered in the names of the dec’d and the plaintiff as tenants in common (4/5 and 1/5 shares respectively).  Again, the proceeds from the Rockson flat sale were used as part-payment.

6.  By her will dated 8 May 2009, (among other things) the dec’d devised her shares in the suit property to D3.

7.  Probate of the dec’d’s estate was granted to D1 and D2 in November 2012 (the dec’d having passed away in October 2011).  The suit property was subsequently transferred to D3 in December 2012.

The plaintiff’s pleaded case

8.  The plaintiff’s case (as pleaded (see below), and as confirmed in the written opening) is said to lie in:

(1) common intention constructive trust (“the constructive trust claim”);

(2) presumed resulting trust (“the resulting trust claim”).

(para 9, plaintiff’s opening submissions)

9.  According to the statement of claim, the resulting trust claim arose as follows.  At the dec’d’s verbal request, the plaintiff has been paying for the purchase (and renovation) of the suit property (para 7 and 10A(a) thereof).

10.  The constructive trust claim is pleaded as having arisen as follows.  In consideration of the dec’d’s verbal promise in April 1993 to revert her shares in the suit property to the plaintiff upon her death, (as verbally requested by the dec’d) the plaintiff paid for:

(a) the purchase (and renovation) of the suit property (para 8(a) to (c) and 10A(a) thereof);

(b) the dec’d’s living expenses and household expenses of the suit property (para 8(d) to (f) and 10A(b)(i) thereof).

(“the dec’d’s 1993 promise”) There is also a plea of estoppel which is based on the same facts as summarized above (para 10A(b)(ii) thereof).

D3’s case

11.  D3 contests this action essentially on the ground that the plaintiff’s case is not founded on proper factual evidence:

(1) in relation to the constructive trust claim, the plaintiff’s assertion that there was a common intention shared by him and the dec’d is not believable;

(2) in relation to the resulting trust claim, the whole of the evidence shows that either the suit property was mainly paid for by the dec’d out of her own resources, or that there is in any event insufficient evidence to establish the plaintiff’s alleged payments towards the suit property.

Witnesses’ testimony and findings of fact

12.  The following witnesses testified at trial.  On the plaintiff’s side was the plaintiff himself.  On D3’s side, the witnesses were:

(a) Lam Lop Chi, the fourth child (“LC Lam”);

(b) D1;

(c) D3.

The defence witnesses all deny the plaintiff’s claim.

13.  The approach adopted by the courts for assessing credibility has been set out in some of my earlier decisions.  See, for example, the decisions in Chiu Chi Tong v Lau Chong Sai & Another, HCA 765/2002 (para 28); Yu Ming Investment Ltd v Peng Ru Chuan, Richard, HCA 814/2002 (para 13); 林傳龍對謝巧玩 HCA 1443/2011 (19 December 2014), (para 15) and Star Glory Investment Ltd v Kai Tuo (HK) Technology Co Ltd and Others, HCA 3523/2002 (13 August 2005), (para 12). See also what appears to be a similar approach in Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439, para 135.  The above approach will be adopted in this action.

14.  Further, although the dec’d has long passed away, and she is not a party to this action, sufficient evidence can be gathered from the documentary (such as the dec’d’s diaries), and testamentary (the defence witnesses), evidence to establish her to be a lady with a strong character, and apparently was very much in charge of the family’s financial matters (the defence opening submissions describe her as “demanding (financially) and manipulative”: para 5 thereof).  The dec’d’s personality does not appear to be disputed by the parties (the plaintiff’s closing submissions describe her as a money-minded person and a person who liked to control everything: para 30 thereof); it should be a factor to be borne in mind when assessing the credibility of the witnesses’ credibility.

15.  That the dec’d has had ample financial means is also undisputed (she redeemed the suit property’s mortgage in 2002) (see also para 89 to 90, the plaintiff’s closing submissions).  Similarly, this should also be borne in mind.

16.  I agree with D3 that the plaintiff’s testimony, especially that part concerning the dec’d’s 1993 promise, should not be accepted as credible or reliable:

(1) on the plaintiff’s acceptance that the dec’d desired to acquire the suit property as an “ancestral home”, it is unlikely she would make the dec’d’s 1993 promise (that the suit property would in effect be wholly owned by the plaintiff upon her death).  There is no obvious connection between the dec’d’s intended purpose and such a transfer of the suit property’s whole ownership to the plaintiff;

(2) the plaintiff has given no satisfactory explanation why he was registered as a 20% co-owner of the suit property.  On its face, such proportion of co-ownership is too small to be consistent with the dec’d’s 1993 promise (that the plaintiff was to become the sole owner of the suit property) (by way of example, a joint tenancy of the suit property would be more consistent with the dec’d’s 1993 promise);

(3) consistent with the dec’d’s strong personality (and her apparent dominance over the family’s financially matters), the plaintiff did not directly pay for the mortgage monthly payments, nor does he have knowledge of the monthly payment amounts.  This is demonstrated by the plaintiff’s lack of knowledge (until long after the event) that the 1979 flat (para 5(a) above) was never mortgaged, and was wholly paid for by the dec’d (or Lam senior);

(4) instead, on the plaintiff’s own case, all payments he made were given to the dec’d for her to handle, and the dec’d never accounted to the plaintiff the manner in which she disposed of the money.

Taking into account all of the above circumstances:

(a) any arrangement along the lines of the dec’d’s 1993 promise would not appear to be something the dec’d would agree to;

(b) if the dec’d had in fact made the dec’d’s 1993 promise, one would expect her to either (i) make an entry of the arrangement in her contemporaneous records (such as her diaries), and/or (ii) make the arrangement known to her children (or to do both (i) and (ii)).

None of sub-para (a) or (b) above has happened.

17.  Further, the plaintiff has not mentioned the dec’d’s 1993 promise in the initial version of the statement of claim, or on several occasions where it would be natural for him to do so (such as the plaintiff’s emails dated 3 February 2012 and 26 December 2012, and his various emails from January to June 2013).

18.  Of particular importance to the assessment of credibility is a narration dated 17 April 1993 (among others) in the dec’d’s contemporaneous records.  The relevant parts read:

“… [涉案物業] $3,060,800.00, [原告人] 佔百份之二十業權‚是他用自己的錢合併,並無便宜,我佔百份之八十,再分遺産八份,將來我死了 [原告人] 不能賣樓,要八個簽名分八份,即是八個有權享用 … ”.

(“the Apr 1993 diary”) The Apr 1993 entry is consistent with the dec’d intending the suit property to be an “ancestral home”, and inconsistent with the dec’d’s 1993 promise.  It also contradicts the plaintiff’s assertion to the effect that unspecified contributions towards mortgage payments (especially those relating to the suit property) have been made by him over the years.

19.  The plaintiff’s explanation for the Apr 1993 diary is that the dec’d hated him.  But he has some difficulty with when the dec’d began to do so.  In his witness statement the plaintiff suggested that the dec’d’s hatred against surface since 2006, when the dec’d allegedly suffered from dementia and delirium.  If that is true, then there is no valid reason to view the Apr 1993 diary as either untruthful or unreliable.

20.  His explanation for the Apr 1993 diary when he was cross-examined about it, was that the dec’d made it up so as to avoid the other siblings feeling that she had unduly favoured the plaintiff.  Here again the explanation is unconvincing; there is no undue favour if the plaintiff had in fact paid for the price of the suit property.  In fact, he would have been unduly prejudiced in that case because his registered interest is only 20% of the co-ownership of the suit property.

21.  The plaintiff’s testimony regarding his alleged monthly contributions to mortgage payments is equally dubious:

(1) para 14, 15, 16(2) to (4), and 18 to 20 above are repeated;

(2) the plaintiff used to live together with the dec’d in the suit property (until 2006), and he has to pay for his living expenses during that period.  Further, as is not uncommon in Hong Kong, the dec’d was paid by her children (including the plaintiff) either monthly or from time to time (they were intended to become the dec’d’s money).  These payments were therefore in the nature of gifts.

This part of the plaintiff’s testimony should not be relied upon either.

22.  Further, the accuracy of the Apr 1993 diary regarding the plaintiff’s monetary contributions may find support from an email sent by the plaintiff on 1 January 2007 (to D3).  The relevant parts read:

“In 1993, we [bought the suit property] …

… During the buying process I had contributed HK$ 240,000 to it. [The dec’d] said I deserved the 1/5 legal right because [I] had contributed the sum already together with the total sum [I] had paid for [the Rockson flat] monthly. So the total sum was roughly HK$500,000 to be my 1/5 share”.

(“the plaintiff’s 2007 email”) The plaintiff has failed to satisfactorily explained why the contents of the plaintiff’s 2007 email should not be regarded as accurate.

23.  By reason of the above findings, there is no need to go into the details regarding the precise amounts of monthly contributions (or what percentage of those amounts should be attributed to the mortgage payments).

24.  On the other hand, despite the plaintiff’s criticisms (especially at para 80 to 87, plaintiff’s closing submissions (concerning the initial refusal of the plaintiff’s access to the suit property after the dec’d’s death)), I find the defence witnesses to be truthful and reliable.

25.  Accordingly, the findings of fact which should properly be made in the view of the evidence accepted to be truthful and reliable are:

(a) the dec’d’s 1993 promise was never made;

(b) there is therefore no proper evidential basis to support the constructive trust claim;

(c) the plaintiff’s total financial contributions towards the purchase of the suit property did not exceed 20% of its price;

(d) there is therefore no proper evidential basis to support the resulting trust claim;

(e) because there is no dispute the plaintiff has been the 20% co-owner of the suit property, he should be responsible for paying the rates and management fees thereof to that extent.

Conclusion

26.  By reason of the above matters:

(1) the plaintiff’s claim is dismissed;

(2) there will be an order in terms of para 1 of D3’s re-re-re-amended defence and counterclaim.

The parties are to attempt to agree to the period and rate of interest within 21 days, failing which they are at liberty to lodge with court and serve their respective written submissions thereon within 21 days thereafter.

Other matters

27.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the judgment and its easier comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order nisi

28.  The plaintiff and D3 agree that costs of this action between them are to follow the event.  Such costs are thus to be paid by the plaintiff to D3 to be taxed if not agreed. 

29.  There may however be a dispute as to the basis of taxation (D3 seeks a more generous basis).  For this reason, directions are given for the parties to address on the basis of taxation:

(a) D3 be at liberty to lodge with court and serve submissions on basis of costs taxation within 14 days from today;

(b) the plaintiff be at liberty to lodge with court and serve submissions on basis of costs taxation within 14 days thereafter.