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HCA353/2010
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 353 OF 2010
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BETWEEN
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TAI ROSA YIN HAR (戴燕霞) |
Plaintiff |
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also known as TAI YIN HAR (戴燕霞) |
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and
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CHAN SIK MING HARRY (陳錫明) |
1st Defendant |
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NGAI OI YING (魏愛英) |
2nd Defendant |
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Before: Deputy High Court Judge Lok in Chambers (Open to public)
Date of Hearing: 10 October 2011
Date of Decision: 10 October 2011
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DECISION
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1. This is an appeal against the order of Master Levy on 28 February 2011, dismissing the 2nd Defendant’s application to set aside the default judgment obtained by the Plaintiff on 22 June 2010.
2. The 2nd Defendant appeared in person before the learned Master and she had filed 3 very brief affirmations in support of her application to set aside the default judgment. After the hearing before the learned Master, the 2nd Defendant was represented by her legal advisers. With the consent of the Plaintiff and the 2nd Defendant, the parties have filed further affirmations in the appeal proceedings, and so this court has the benefit of considering some further new evidence which was not placed before the learned Master.
Background
3. The present action is about a property known as Flat B, 6th Floor, Block 1, No. 3 Tak Hong Street, Whampoa Garden, Site 12, Kowloon, Hong Kong (“the Property”).
4. The 1st Defendant is the son of the 2nd Defendant and the Plaintiff is the 1st Defendant’s ex-wife.
5. The Property was purchased under the joint names of the Plaintiff and the 1st Defendant in 1990, about 2 years after they got married. In or about June 1998, the 1st Defendant transferred his half-share interest in the Property to the Plaintiff. According to the Plaintiff, the 1st Defendant did so after he admitted that he had developed an extra-marital affair with another woman.
6. The Plaintiff commenced divorce proceedings against the 1st Defendant in 2002 (“the Matrimonial Proceedings”). The Plaintiff and the 1st Defendant came to an agreement as to the distribution of their matrimonial assets, which was recorded in an order by consent and endorsed by Deputy District Judge Jenkins dated 17 March 2006. Under the said consent order, the 1st Defendant acknowledged that the Plaintiff was the sole owner of the Property. He also gave an undertaking that he would procure his mother, the 2nd Defendant, to vacate and deliver vacant possession of the Property on or before 30 June 2006.
7. The Plaintiff repeatedly requested the 1st Defendant to procure the 2nd Defendant to vacate the Property. However, since the Defendants ignored her requests throughout the years, the Plaintiff commenced the present proceedings against the Defendants to claim for possession of the Property.
8. Default judgment was obtained by the Plaintiff against both Defendants on 22 June 2010, and the 2nd Defendant now seeks to set aside the default judgment. The 2nd Defendant accepts that the default judgment was regularly entered, and so she seeks to set aside the default judgment based on the merits of the defence.
9. The 2nd Defendant is relying on the following grounds of defence. Firstly, since 1970, the 2nd Defendant and her family, including her 4 children, lived in a public housing unit in Wo Lok Chuen in Kwun Tong. In 1990, when the younger son Raymond She Chung Fu (“Raymond”) graduated from university in Japan and returned to Hong Kong, the 1st Defendant, Raymond and the 2nd Defendant had a family discussion about the 2nd Defendant’s future accommodation arrangement with a view to provide a better home for the 2nd Defendant for the rest of her life. It was agreed that a private residential property should be purchased for the 2nd Defendant for that purpose. Raymond then identified the subject Property. He was named the purchaser in the provisional agreement and paid the initial deposit of $5,000. Raymond then consulted the 1st Defendant who agreed that the Property would be a suitable home for the 2nd Defendant and Chung Ho. The 1st Defendant, as the eldest son and being then a successful businessman, then told the 2nd Defendant that he would buy the Property. In reliance on the 1st Defendant’s promise that the Property would be her home for the rest of her life, the 2nd Defendant contributed a substantial part of the purchase price in the sum of $400,000 out of the total purchase price $1,468,000. Since then, the 2nd Defendant has been living in the Property as her home continuously and undisturbed for 20 years.
10. In such case, the 2nd Defendant claims that she had acquired a life interest in the Property pursuant to such family arrangement. As the Plaintiff was a donee having notice of the equitable interest of the 2nd Defendant, the Property was held by the Plaintiff and the 1st Defendant on trust for the 2nd Defendant.
11. Secondly, by reason of the representation mentioned above, the 2nd Defendant relied on the said representation and acted to her detriment, including:
(1) contributing $400,000 towards the purchase price of the Property;
(2) surrendering her public housing unit in Wo Lok Chuen which was an affordable housing that she could otherwise live in for the rest of her life;
(3) in about 1991, expending about $100,000 to renovate the Property; and
(4) in the ensuing years, expending about $150,000 by way of repairs and minor renovation works.
Hence, the 2nd Defendant is relying on the doctrine of proprietary estoppel to oppose the Plaintiff’s claim for possession of the Property.
12. The 2nd Defendant and her son Raymond have filed various affirmations in support of the 2nd Defendant’s case as mentioned above. Further, Mr Chan, counsel for the 2nd Defendant, confirms that the 2nd Defendant is only seeking to establish a life interest to occupy the Property. The 2nd Defendant is not asking for any interest in the ownership of the Property.
Plaintiff’s reply to the 2nd Defendant’s defence
13. In opposing the 2nd Defendant’s application, the Plaintiff submits that the 2nd Defendant’s defence has no real prospect of success. Firstly, the Plaintiff claims that the 2nd Defendant’s case on the alleged representation is inconsistent with the following facts, including:
(a) the Property was registered in the joint names of the 1st Defendant and the Plaintiff at the time of the purchase in 1990;
(b) the 1st Defendant transferred his half-share interest in the Property to the Plaintiff in 1998;
(c) the 1st Defendant gave an undertaking to the court and to the Plaintiff in the Matrimonial Proceedings that he would procure the 2nd Defendant to vacate and deliver vacant possession of the Property; and
(d) the 1st Defendant chose not to defend the Plaintiff’s claim in this action.
14. The 2nd Defendant claims that she was not aware, until recently, that the Property was purchased in the joint names of the Plaintiff and the 1st Defendant and that the 1st Defendant transferred his half-share interest to the Plaintiff. The Plaintiff submits that this allegation is totally unbelievable. Further, as the 2nd Defendant’s son Raymond is an educated person, he should have advised the 2nd Defendant about her rights.
15. In response to the 2nd Defendant’s claim that she had made contribution for the purchase price and the renovation expenses of the Property, the Plaintiff submits that there is no documentary proof to support the 2nd Defendant’s allegation in this regard. Further, the renovation was carried out for the enjoyment of the 2nd Defendant only and the amount of the renovation expenses was relatively small as compared with the current market value of the Property. Hence, even if the 2nd Defendant had made contribution for the renovation expenses, such expenses are offset and outweighed by the benefit that the 2nd Defendant was hearing rent-free occupation of the Property for over 20 years.
16. Further, the Plaintiff submits that the 1st Defendant’s promise to the 2nd Defendant is not enforceable against the Plaintiff as a third party. It is not the 2nd Defendant’s case that the Plaintiff knew about the 2nd Defendant’s alleged contribution of $400,000 towards the purchase price of the Property, and the 2nd Defendant only said that the Plaintiff knew about the 1st Defendant’s promise to the 2nd Defendant that she could live in the Property for life. According to the Plaintiff, that is not sufficient to defeat the Plaintiff’s claim for possession of the Property.
17. Further, the Plaintiff claims that there was a conspiracy of both Defendants to defeat the Plaintiff’s interest. According to Ms Cheung, counsel for the Plaintiff, there is evidence to show that the 2nd Defendant’s battle against the Plaintiff was orchestrated by the 1st Defendant, and the 2nd Defendant is being used as a pawn at the frontier of the battlefield with the 1st Defendant behind the scene. She draws the court’s attention to the similarity in the handwritings appearing in the 2nd Defendant’s homemade summons and affirmations, and the fact that one Madam Ivy Lau, who was the alleged girlfriend of the 1st Defendant, escorted the 2nd Defendant to attend the court hearing on 28 February 2011.
Legal principles
18. It is trite law that for the 2nd Defendant to set aside the judgment regularly entered, the 2nd Defendant has to establish a defence which has a real prospect of success. The major consideration is whether the 2nd Defendant has shown a defence on the merits, one that has a real prospect of success. To do so, the 2nd Defendant has to satisfy the court that her case and evidence adduced is potentially credible and carries some degree of conviction. Thus, the court must form a provisional view of the probable outcome of the action. However, when a provisional view cannot sensibly be formed without the assessment of the witnesses, the court asks itself whether the witnesses or the defendant’s version “could well be believed at trial”. If the defendant’s case could well be believed at trial, it follows that the defendant’s defence has a real prospect of success (see: Morigood Development Limited v Sunny Trading Company [1999] 2 HKC 710 at 716 and El Vince Limited v Wu Wen Sheng [2001] 3 HKLRD 445 at 456).
Assessment of the merits of the defence
19. After considering the submissions and the evidence presented by the parties, I am satisfied that the 2nd Defendant has discharged the burden of establishing a meritorious defence at this stage. The purchase of the Property was made about 20 years ago, and so it is quite understandable that the 2nd Defendant cannot produce any documentary proof about the contribution of the purchase money. Ultimately, the court has to make a determination at the trial whether to believe the 2nd Defendant’s evidence in this regard.
20. I have also taken into account the 1st Defendant’s conduct in relation to his dealing of the ownership of the Property, his admission of the contribution of the purchase price of the Property in the Matrimonial Proceedings and the fact that he did not choose to defend the present proceedings. However, I do not think that the credibility of the 2nd Defendant’s case has been destroyed by these observations. If the 2nd Defendant’s case is to be believed, the purchase of the Property was made pursuant to a family arrangement. Because of the tense relationship between the Plaintiff and the 1st Defendant, there might be a lot of reasons as to why the 1st Defendant behaved in the way as mentioned above. The 1st Defendant might simply have sacrificed the interests of his mother. In any event, such matters should be properly investigated at the trial, and it is very difficult for the court to conclude that the 2nd Defendant’s case could not well be believed at the trial.
21. In my judgment, there is also another piece of evidence which indicates that the purchase of the Property was made pursuant to the family arrangement as alleged by the 2nd Defendant. There is no dispute at this stage that the 2nd Defendant’s younger son Raymond was named as the purchaser in the provisional agreement for the purchase of the Property and that he paid the initial deposit of $5,000. If the purchase of the Property was fully financed by the 1st Defendant and that the Property was acquired as an investment of the Plaintiff and the 1st Defendant as alleged by the Plaintiff, why was Raymond involved in the transaction? Hence, such piece of evidence carries some degree of conviction that the purchase of the Property was made pursuant to an arrangement made between the family members of the 1st Defendant. Further, the Property has been continuously and exclusively occupied by the 2nd Defendant as her home for about 20 years and, prior to the present action, the Plaintiff has not purported to exercise any right of ownership over the Property, even after she became the sole legal owner of the Property after 1998. Hence, there is some basis for the 2nd Defendant to say that the Plaintiff must have notice, or ought to have notice, of the 2nd Defendant’s life interest in the Property.
22. I am also not impressed by the other arguments advanced by Ms Cheung. Firstly, the Plaintiff is a donee herself and she is not a bona fide purchaser without notice of the interest of the 2nd Defendant, and hence it is not permissible for the Plaintiff to say that her interest has priority over that of the 2nd Defendant. Further, it is certainly arguable that the Plaintiff was aware of the 2nd Defendant’s equitable interest in occupying the Property for the rest of her life. By not taking any action to enforce her right as the owner of the Property, it is certainly arguable that the Plaintiff was aware of the 2nd Defendant’s equitable interest to occupy the Property for the rest of her life. I am also of the view that the similarity of the handwritings in the various documents and the fact that the 1st Defendant’s alleged girlfriend was escorting the 2nd Defendant to the court in the hearing on 28 February 2011 are insufficient for the court to conclude that there was a conspiracy of some sort against the Plaintiff. Ultimately, if the court is to believe that the 2nd Defendant had made contribution of $400,000 for the purchase price of the Property, the 2nd Defendant may well have a good case of establishing a life interest to occupy the Property.
23. By reason of the aforesaid, I allow the 2nd Defendant’s application to set aside the judgment and allow the appeal.
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(David Lok)
Deputy High Court Judge |
Ms Karen Cheung, instructed by Messrs Angela Lau Law Office, for the Plaintiff
1st Defendant, in person, absent
Mr K.C. Chan, instructed by Gallant Y.T. Ho & Co., for the 2nd Defendant
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