WAN LAI KWAN v. KO LO MAN LAI

DCCJ 692/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 692 OF 2010

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BETWEEN

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J U D G M E N T

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1.  The present case concerns the property, namely, Flat No.5 on the 4^th Floor, Man Yuen Building, Nos.2-24 Man Yuen Street, Nos.1-23 Man Wai Street, Kowloon (“the Jordan Property”). Stephen Lo (“Lo”) is the registered owner. His sister Mrs Ko Lo Man Lai Patricia (“Mrs Ko”) and her late husband Ko Shan Ling (“Ko”) are his predecessors in title. Prior to his death, Leung Tin Sun (“Leung”) resided with his wife Madam Wan Lai Kwan (“Wan”) at the Jordan Property.

2.  In 2007, Lo commenced action DCCJ 5748/2007 against Wan to recover vacant possession of the Jordan Property.  In defence, Wan claims that at all material times, Ko held the Jordan Property on trust for Leung.  As the assignee from Ko, Lo likewise held the Jordan Property on trust for Leung; and still holds the same on trust for the estate of Leung.

3.  In 2010, Wan, in her capacity as the administratrix of the estate of Leung, commenced action DCCJ 692/2010 against the estate of Ko (with Mrs Ko named as the personal representative) and Lo.  The claim is a mirror image of Wan’s defence in DCCJ 5748/2007.

4.  In May 2011, DCCJ 5748/2009 and DCCJ 692/2010 were directed to be tried one after the other, with the latter being the leading action.  In both actions, Wan (in her own capacity and as the administratrix of Leung’s estate) is legally aided.

BACKGROUND

5.  One needs to go back to the late 1930’s for the background of the present case.  In about 1937, Ko’s father passed away.  The widow and Ko’s mother, Madam Chan Wai Ching (“Chan”), inherited the estate of Ko’s father.

6.  In 1947, Chan purchased the bungalow at what used to be No.3 Mui Hing Street, Happy Valley, Hong Kong.

7.  In 1956, Chan purchased another bungalow at what used to be No.4 Mui Hing Street.

8.  Leung then came to know Chan.  They started to cohabit in the early 1950’s.

9.  The bungalows at Nos.3 and 4 Mui Hing Street were subsequently demolished.  Redeveloped at the joint sites after the demolition was a new 5-storey (excluding the Ground Floor) building, namely, No.2 Mui Hing Street (“No.2 Mui Hing Street”). The occupation permit was issued on 17 July 1958.

10.  Since then, Chan and Leung had lived on the 5^th Floor of No.2 Mui Hing Street together with Chan’s mother, Madam Chan Leung Mui (“Chan Leung Mui”).

11.  In December 1966, Ko and Mrs Ko were married.

12.  Chan made a will dated 13 June 1969 (“the Will”), which contained the following terms:

“1. I APPOINT LEUNG Tin Sun … and my son KO Shan Ling … to be the executors and trustees of this my Will and they or the survivor of them or others the trustees for the time being hereof are hereinafter called my Trustees.

2. ……

3. I DEVISE AND BEQUEATH all my estate both real and personal whatsoever and wheresoever not specifically disposed of in this my Will unto my Trustees upon trust to sell call in and convert the same into money with power to postpone the sale calling in and conversion thereof so long as they shall in their absolute discretion think fit without being liable for loss.

4. I DECLARE that no sale shall be effected of my property the ground floor of No.2 Mui Hing Street, Happy Valley aforesaid during the lives of my mother CHAN LEUNG Mui … and LEUNG Tin Sun and my Trustees shall permit my said mother and the said LEUNG Tin Sun during their lives to occupy the said ground floor free of rent or if the said LEUNG Tin Sun shall survive my said mother and shall not desire to occupy the said ground floor my Trustees shall permit him during his life to receive the rents and profits thereof for his own use and benefit.

5. My Trustees shall hold the net proceeds of the said sale and conversion and my ready money upon the following trusts

(a) Upon trust to pay thereout all my just debts and funeral and testamentary expenses.

(b) Upon trust to invest the residue after such payment in their names in any investment ……

(c) Upon trust to pay out of the income of my residuary estate the sum of $1,000.00 per month …… into my mother the said Chan Leung Mui during her life and upon her death to pay the sum of $5,000.00 for her funeral expenses.

(d) After the death of my mother and the said Chan Leung Mui upon trust as to both capital and income for my son the said LO Shan Ling absolutely.”

13.  On 23 July 1969, Chan passed away.  Leung continued to reside on the 5^th Floor of No.2 Mui Hing Street with Chan Leung Mui, while the Ground Floor remained let.

14.  In the early 1970’s, Leung and Wan came to know each other.  By then, Wan had ended her 6 years of cohabitation with another person and with whom she had given birth to 2 sons.

15.  In about 1976, Wan moved to cohabit with Leung.  Leung was then about 60 years old and had retired from his job at an international banking corporation.  Leung, Chan Leung Mui and now with Wan continued to reside on the 5^th Floor of No.2 Mui Hing Street.

16.  On 28 April 1976, Chan Leung Mui also passed away.

17.  Double probate in respect of Chan’s estate was issued on 6 September 1977.  No.2 Mui Hing Street became vested in Ko and Leung in their capacities as the executors and trustees.

18.  In late 1988, Ko proposed to sell No.2 Mui Hing Street as a whole.  For such purpose, Leung agreed to surrender his life interest in the Ground Floor of No.2 Mui Hing Street under the Will and to assign the same to Ko.  The arrangement was that Leung would move to another property to be purchased.  The exact circumstances surrounding Leung’s agreement to do so and the terms of the arrangement form the core factual dispute in the present actions.

19.  Ko and Leung then executed an assent dated 14 November 1988 (“the Assent”); and Ko became the sole beneficial owner of No.2 Mui Hing Street.  As such, Ko entered into an agreement to sell No.2 Mui Hing Street 4 days later.  Completion of the sale took place on 28 December 1988.

20.  Pursuant to the sale and purchase agreement of No.5 Mui Hing Street (clause 25), Ko had 5 months until 15 April 1989 to deliver vacant possession of the property.  In other words, Leung had to move out by then.

21.  Then the Jordan Property was purchased.  By an assignment dated 10 March 1989, Ko and Mrs Ko became the joint owners of the Jordan Property.  Leung and Wan then moved out of the 5^th Floor of No.2 Mui Hing Street to the Jordan Property.

22.  In the execution of the Assent and the conveyance of the Jordan Property, Lo was the handling solicitor for Ko and Leung.

23.  2 years later, by an assignment dated 17 September 1991, Ko and Mrs Ko, by their attorney, assigned the Jordan Property to Lo in consideration of HK$700,000. Lo became the current registered owner.

24.  After about 17 years of cohabitation, Leung and Wan finally got married on 6 September 1993.  Leung was then 77 years old.

25.  On 21 March 2004, Leung died intestate.  Letter of administration of his estate was granted on 16 February 2005 to Wan.

26.  On 16 June 2007, Ko passed away in the United States.  Mrs Ko was the executor of the estate of her late husband (and was therefore named as the personal representative of the estate of Ko in this case).

27.  Upon learning about the passing of Leung, Lo requested Wan to deliver vacant possession of the Jordan Property.

28.  On 29 December 2007, as mentioned, Lo commenced DCCJ 5748/2007 against Wan as the administratrix of the estate of Leung.  On 3 May 2008, the writ was amended so that Wan was sued in her personal capacity.  The claim was for vacant possession of the Jordan Property and mesne profits for her occupation of the same since the passing of Leung.

29.  On 11 July 2008, in default of defence, judgment was entered against Wan.  Pursuant to her application, the judgment was set aside on 4 September 2008.  Defence was not filed until December 2008.  Subsequent to the grant of legal aid, her defence was replaced in April 2009.

30.  In February 2010, Wan, in her capacity as the administratrix of the estate of Leung, commenced DCCJ 692/2010.  Besides seeking a declaration of trust in respect of the Jordan Property against both Mrs Ko (estate of Ko) and Lo, Wan also asks for an order for Lo to convey the Jordan Property to her; and for equitable compensation or damages against Mrs Ko.

31.  The above background is largely evidenced by contemporaneous documents.  I find the same to be the fact.

WAN’S CASE

32.  By her current pleadings, Wan contends that under the Will, Leung was entitled for life to use and occupy the Ground Floor of No.2 Mui Hing Street free of rent; and to receive rents and profits from the same, should he survive Chan Leung Mui.

33.  Allegedly in the summer of 1988, in order to enable Ko to sell No.2 Mui Hing Street to repay the debts owed by Ko and/or Mrs Ko, Leung agreed to waive his life interest under the Will.  In consideration of that, Ko allegedly agreed to:

(1) purchase a flat by using the deposit from the intended sale of No.2 Mui Hing Street;

(2) give the beneficial title of such flat to Leung;

(3) give Leung a sum of HK$60,000 for the removal; and

(4) give Leung a monthly sum of HK$3,000 as living expenses for life.

34.  Allegedly pursuant to the above oral agreement (“the Alleged Oral Agreement”), Leung executed the Assent relinquishing his life interest in the Ground Floor of No.2 Mui Hing Street under the Will.  The Jordan Property was purchased; and Leung and Wan moved there, allegedly incurring HK$50,000 and HK$60,000 for the removal and the new furniture respectively.

35.  Afterwards, Leung was asked to attend the office of Lo with a view to signing documents for the transfer of the beneficial title to the Jordan Property to him, but only to be informed that the documents were to grant him a right to live in the Jordan Property for life.  Leung demanded to speak to Ko but to no avail.  He left the office of Lo in a fury.  Ko and Mrs Ko had left Hong Kong and could not be located.

36.  According to Wan, the fact that the Jordan Property was purchased in the names of Ko and Mrs Ko was unknown to Leung.  Nor was the fact that Ko and Mrs Ko, by their attorney, sold and assigned the Jordan Property to Lo in 1991.

37.  On this basis, Wan contends that at all material times, Ko, and now his estate, was and is liable as constructive trustee of the Jordan Property to Leung, and now his estate.  By virtue of his involvement mentioned above, Lo allegedly had notice of the interest of Leung under the trust.  By accepting the assignment of the property with such notice, Lo is said to be liable as constructive trustee as well.

CASE OF MRS KO AND LO

38.  The Alleged Oral Agreement is denied.  According to Mrs Ko, when her husband proposed to sell No.2 Mui Hing Street in 1988, he offered to purchase another property of Leung’s choice for his accommodation; but there was never agreement that the property would be Leung’s.  Ko proposed to find a property in Happy Valley; but Leung eventually chose the Jordan Property.

39.  Further Lo acted according to such understanding when he handled the execution of the Assent and subsequently the purchase of the Jordan Property by Ko and Mrs Ko.  2 years after their purchase of the Jordan Property, Ko and Mrs Ko sold it to Lo, with a view to settlement in the United States for good.  It is admitted that Leung was not informed of the assignment of the property to Lo.

40.  Both Mrs Ko and Lo referred to the lack of action on the part of Leung’s estate for nearly 2 decades.  On this basis, Mrs Ko pleads laches as a defence to the claim by Wan (Leung’s estate) for equitable compensation.

THE DISPUTE

41.  The dispute apparent from the pleadings in both actions are grouped under the following major issues:

(1) Leung’s interest in No.2 Mui Hing Street;

(2) The Alleged Oral Agreement;

(3) the remedies claimed against Lo and Mrs Ko;

(4) the claim of Mrs Ko (Ko’s estate) against Madam Wan;

(5) the claim of Lo.

42.  When he opened his client’s case, Mr Ah-Weng for Wan set out the principles of constructive trust and proprietary estoppel.  The principles are said to be applicable as a result of the promise or common intention between Ko and Leung that caused Leung to sign the Assent and to move to the Jordan Property.

43.  As far as the principles are concerned, there is no dispute.  Whether the principles apply depends upon the determination of the factual dispute in respect of the circumstances surrounding the signing of the Assent and the purchase of the Jordan Property, and in particular, whether there was the Alleged Oral Agreement.

44.  To defeat the paper title of Lo in the Jordan Property and his right to possession (in DCCJ 5748/2007) as well as to hold Mrs Ko (Ko’s estate) and Lo liable (in DCCJ 692/2010), it is Wan’s burden of proof.  Mr Ah-Weng accepted that if his client fails in proving the Alleged Oral Agreement, the factual basis for her case on constructive trust and proprietary estoppel falls away.

THE EVIDENCE

45.  The dispute in respect of what was agreed between Ko and Leung that caused Leung to sign the Assent and to move to the Jordan Property has to be determined without the benefit of the first hand evidence from Ko or Leung, both deceased. Substantial part of the evidence from the witnesses was hearsay and circumstantial, which will have to be assessed against the available contemporaneous documents.

46.  Amongst the witness statements is one of Peter Ko, brother of Ko, who was supposed to testify for Mrs Ko.  According to Mr Chan for Mrs Ko, this witness passed away last year.  In view of substantial factual dispute and the lack of opportunity for Wan to test the evidence contained in that statement in court, I refuse the application for leave to read the statement into evidence.

LEUNG’S INTEREST IN NO.2 MUI HING STREET

47.  Leung’s interest in No.2 Mui Hing Street was conferred only by Will.  Wan seems to suggest otherwise.

48.  In her statement, Wan alleged that Leung had contributed towards the purchase of No.2 Mui Hing Street in 1956; though Madam Chan became the registered owner. However, such allegation is not pleaded.  As mentioned, the building known as No.2 Mui Hing Street came to exist as a result of the redevelopment at the joint sites of what used to Nos. 3 and 4.  The occupation permit of No.2 Mui Hing Street as a redeveloped building was not issued until 1958.  The allegation that Leung contributed towards the acquisition of the new building in 1956 cannot be right as a matter of fact either.

49.  Wan then suggested that Leung had financed the redevelopment by repaying the mortgage in the sum of HK$40,000 after the passing of Chan in 1969.  The documents show that the mortgage was taken out in December 1956 in the sum of HK$70,000.  If what Wan alleged was right, the mortgage would have remained unpaid to the extent of HK$40,000 some 13 years later.

50.  Clause 5(a) of the Will stipulated that the ready money of the estate should be applied to pay the just debts owed by Chan.  It was not effectively, if at all, challenged that the Ground Floor was at the time of the passing of Chan let, and remained let until 1982.  According to Mrs Ko, Leung used to collect the rent from No.2 Mui Hing Street.  Before Ko returned to Hong Kong in the 1970’s, Leung would send the rent to Ko by way of bank draft.  Before 1982, Leung would hand in the balance of the rent collected from the Ground Floor tenant to Ko at his office or to her at her office if Ko was out of town.  After the tenant of the Ground Floor moved out in 1982, Mrs Ko let it out to a new tenant and started collecting the rent herself.  Mrs Ko confirmed that all along, there was never dispute in respect of the collection of or the entitlement to the rent.  Nor was there suggestion that mortgage could not be repaid out of the rental income.

51.  Turning back to the Will, I find clause 4 is clear in confining the interest of Leung and Chan Leung Mui to their right to occupy the Ground Floor of No.2 Mui Hing Street.  If Leung survived Chan Leung Mui and he did not occupy the Ground Floor, Leung would then be entitled to receive the rent and profit from that floor.  As such, the Ground Floor as a roof above the head and that as the source of rent and profits for the benefit of Leung were alternatives.

52.  The Will did not provide for Leung’s entitlement to reside at No.2 Mui Hing Street, though on another floor, and to receive rent and profit from the Ground Floor at the same time.  Being one of the executors and trustees under the Will, Leung must be taken to have accepted the occupation of the 5^th floor as the exercise of his right (to occupy) under the Will.  Leung could not claim any entitlement to the rent or profit from the Ground Floor as well.  Insofar as Wan suggested otherwise (in her previous affirmation, current pleadings and witness statements), the suggestion cannot be right.

THE ALLEGED ORAL AGREEMENT

53.  In respect what allegedly happened then, Wan has stated her case in the following documents:

(1) affirmation in DCCJ 5748/2007 dated 23 July 2008;

(2) letter to the court re DCCJ 5748/2007 dated 3 September 2008;

(3) defence in DCCJ 5748/2007 dated 19 December 2008;

(4) amended defence in DCCJ 5748/2007 dated 7 April 2009 (which was reproduced as her claim in DCCJ 692/2010);

(5) witness statement and supplemental witness statement filed in both actions.

54.  In particular, the witness statements of Wan contained not only her illustration of what allegedly happened, but also her verbatim recital (or in her words “引述”) of the conversations between the parties involved (that were invariably set out between pairs of quotation marks).  She managed to do so, because she was allegedly present when the conversations took place.

55.  Wan verified the truth of her statements of fact both in writing and in court.  But the truth and reliability of such evidence were soon called into question at the trial.  Both Mr Chan for Mrs Ko and Mr Lam for Lo submitted that Wan’s case is unreliable, if not inherently implausible.

The proposal to sell No.2 Mui Hing Street

56.  The Alleged Oral Agreement was allegedly reached between Ko and Leung during the former’s visit to the latter on the 5^th Floor of No.2 Mui Hing Street in 1988.  On the contrary, Mrs Ko understood that her husband and Leung discussed the arrangement at her husband’s office at East Town Building then in Wanchai in 1988; and recalled no visit by Ko to Leung at No.2 Mui Hing Street for such purpose.

57.  In both her pleadings and statements, Wan alleged that Ko proposed to sell No.2 Mui Hing Street in order to resolve the financial difficulty as a result of his substantial loss from margin trading.  In her statement, Wan also stated that it was well known that Mrs Ko speculated substantially on margin trading and had lost a lot of money.  However, as pointed out by Mr Chan and Mr Lam, Wan has given various versions of whether according to Ko, it was he or his wife or both who had incurred debts as a result of substantial loss in margin trading.

58.  The undisputed fact was that Ko was an architect by profession.  According to Mrs Ko, her late husband focused on his practice and never traded in shares.  She also denied having engaged in margin trading, let alone financial loss or difficulty as a result.  According to her, she has worked for her father’s brokerage firm before becoming a business manager of other sectors in Hong Kong prior to her emigration to the United States.  She admitted having occasionally invested in shares but never on margins.

59.  Lo confirmed that at his father’s request, he has also worked for his father’s brokerage firm for about 6 years before 1976.  But he has never heard of his sister ever engaged in margin trading or her having financial difficulty as a result.

60.  When confronted in court, Wan eventually admitted that as far as she knew, Ko did not invest in shares.  It also transpired that what she described as well known about Mrs Ko in the same respect was no more than rumour allegedly overheard during meal at the Jockey Club; and there was never verification of its truth before she now stated that as fact known to her.

61.  According to Mrs Ko, Ko wished to sell No.2 Mui Hing Street in early 1988.  Upon being told, Madam Lo solicited the help of Lo in search of potential buyer.  In about October 1988, a company expressed interest to buy the property at about HK$5 million.  That eventually did become the purchaser.  Ko then talked to Leung, as the latter had a life interest in the property under the Will and was a trustee.

The arrangement

62.  Wan alleged that Ko proposed to purchase another property of about 500 sq. ft. for Leung, if he would surrender his life interest in and move out of No.2 Mui Hing Street, which was about 1,300 sq. ft..  The Jordan Property eventually purchased was about 500 sq. ft.

63.  According to Mrs Ko, Ko promised to purchase a property of Leung’s choice.  Ko had suggested finding a property in Happy Valley (where No.2 Mui Hing Street was). Only that the Jordan Property was eventually chosen by Leung.

64.  Contrary to her previous verified statements of fact, Madam Wan accepted in court that actually neither Ko nor Leung specified the value or size of the property to be purchased.  It was Leung and she who went to find the Jordan Property; and informed Ko of their choice thereafter.  Though substantially smaller, Mrs Ko understood, and Wan also admitted in court, the Jordan Property was chosen partly because it was near to Wan’s mother who lived in Kowloon then.

65.  Offering to purchase another property of Leung’s choice for his accommodation for life, in my view, was in line with the primary objective of exchange for his life interest in No.2 Mui Hing Street under the Will, which had so far taken the form of actual occupation.  That, according to Mrs Ko, was also her understanding at the time.

66.  Wan’s pleaded case is that Ko allegedly promised that after the purchase of the property, he would “give the beneficial title” of it to Leung.  Ko allegedly failed to “assign the title” of the Jordan Property to Leung.  That, according to Wan, was discovered, when Leung together with her attended the office of Lo in June 1989.  Lo allegedly presented Leung with a document for the purpose of granting the latter a mere life interest in the Jordan Property.

67.  As far as it is allegedly agreed that the property would be purchased and then the “beneficial title” of it would be assigned to Leung, that makes sense only if the parties understood that the property would not be purchased in the name of Leung.  However, had the intention been to benefit Leung with the absolute interest in the Jordan Property, the property indeed would have been purchased in Leung’s name from the outset.  There was no good reason why Ko had to purchase the property with a view to assigning the ‘beneficial title’ to Leung afterwards.

68.  In her letter to the court in September 2008 (above), Wan explained that Leung and Ko had viewed the Jordan Property before proceeding together to the estate agent in April 1989 to complete the formalities.  However, the fact was that the formal agreement for the purchase of the Jordan Property was dated February 1989; and the completion of the purchase took place in March 1989.  Time-wise, what Wan alleged cannot be right.

69.  In any event, the formalities involving the estate agent after viewing of the property, in the normal course of events, could only be the signing of provisional agreement for the purchase of the property.  In the circumstances, one wonders how the fact that Leung was not named as the purchaser of the Jordan Property was unknown or concealed.

70.  Wan’s evidence in respect of the alleged visit to Lo’s firm was also questioned.  To begin with, one wonders why Ko would bother to arrange legal documentation for granting Leung a right to live at the Jordan Property, had the Alleged Oral Agreement been nothing but deceptive from the outset (as Wan alleges).

71.  Indeed Mrs Ko confirmed that she and Ko had never instructed Lo to prepare any document for the purpose of granting to Leung a life interest in the Jordan Property to Leung.  Mrs Ko managed to recall that the bill for costs from his brother’s firm in connection with the purchase of the Jordan Property contained no item such as the drafting of a document for granting life interest to Leung. Lo confirmed that he had received no such instruction either.

72.  Wan further alleged that on the day in question, she sat in the sofa near the entrance of Lo’s firm; nevertheless managed to overhear what happened inside Lo’s room. She heard the quarrel between Leung and Lo.  In support, she produced a simple sketch of internal layout of Lo’s firm and her position at the time.  The sketch was drawn by her neighbour, Mr Ma.

73.  That met with the denial of Lo.  Indeed to make things clear, Lo too produced his sketch of his office at the time in some detail.  Essentially he pointed out that Wan’s evidence is inherently implausible with reference to the true layout of his firm at the time.  He also questioned the reliability of her evidence in respect of what was over-heard, even assuming such a meeting took place the way she alleged.

74.  Lo of course should be in the position best, or at least better than Wan, to tell what his office was like.  Mr Ma confirmed that his sketch did not come from his actual observation of the office.  As his interpretation of Wan’s recollection of the layout of Lo’s firm on the occasion she allegedly visited 2 decades ago, the sketch, in my view, had doubtful evidential value.

75.  Again, Wan’s evidence in respect of what allegedly happened on that occasion also came in more than one version.  Her affirmation filed in DCCJ 5748/2007 in late July 2008 suggested that on that occasion, Leung had an argument with Ko.  Knowing his fault, Ko then persuaded Leung to return home so that the document could be rectified for Leung to execute later.  However no news had been heard from Ko ever since.  Wan’s presence was not mentioned.  Nor was the argument on that occasion allegedly between Leung and Lo.

76.  Slightly more than a month later, Wan wrote to the court in September 2008.  According to the letter, that was done after consultation with friends; and she found it necessary to write out what had happened afresh.  In the letter, Wan referred to the alleged meeting between Leung and Lo at the latter’s office on 20 June 1989.  The argument was referred to as one between them; and Leung allegedly asked to get Ko to talk to him.  Upon that, Lo allegedly replied that Ko could not be located.  This version differed materially from what she stated in her previous affirmation.

77.  When it came to her statement filed in July 2011, Wan repeated her version as stated in the above letter; but specifically stated that upon Leung’s demand to get Ko to talk to him, Lo simply made no response at all.  Wan was given the opportunity to explain the yet another version of her evidence; but she did not manage to come up with one satisfactorily.

78.  As to the allegation that Ko could not be located, Mrs Ko also found that strange.  Wan apparently suggested that she and Leung had no idea that Ko and Mrs Ko had emigrated.  But it is her own pleaded case that this was made known to Leung as what was behind Ko’s proposal to sell No.2 Mui Hing Street.

79.  Further, Mrs Ko believed that Leung knew that she and her husband had yet to leave Hong Kong by the time of the alleged meeting between Leung and Lo in late June 1989.  Ko and Mrs Ko did not depart for the United States until the following month.  She then returned to Hong Kong one week later for her employment here did not expire until late August 1989.  By the time of her departure for good in August 1989, Leung had visited her at her office several times; but no complaint of the sort as Wan alleged now was made.

80.  In court, Wan admitted that she had no idea whether Ko had left his contact information with Leung.  That Leung had met with Mrs Ko before she left Hong Kong again in August 1989 was not contradicted effectively, if at all.

81.  The impression the court got was that whilst confirming the truth of her statements of fact in the court documents, Wan gradually back-tracked and qualified that she might not remember what were stated to be accurate or not.  She was not in a position to give first hand evidence of all the events that allegedly took place.  She confessed that Leung might have told her certain things, but not others.  She confessed that she might not be around all the time when the alleged conversation took place between Leung and Ko.  As to those allegedly learned from Leung, she had no way of verifying its truth and accuracy. Material parts of what she stated were in fact hearsay and included in the statements without verification.  At one stage, she even stated in the court that she would simply repeat what was heard (or in her words “人咁講，我咁講”).  She repeated that she would remember a thing one moment; and forget about that the next.  She might even say what was not actually intended.  At times, Wan was simply evasive.

82.  Confronted with the inconsistencies in her case, Wan repeatedly resorted to asserting during the trial that she was suffering from mental depression.  That, if true, may be an explanation.  Not intending to be unforgiving, I do not find that that assists to elevate the credibility or reliability of her evidence.  Quite on the contrary, that simply reinforces the danger of relying on her evidence.

83.  Wan called his son from her previous relationship, Mr Kwong, as a witness.  He was supposed to testify in respect of what he heard from Leung and Wan about the Jordan Property.  It transpired that his knowledge about the history of the matter was so limited that his brief evidence carries little corroborative value.

84.  The other side of the scale is that Mrs Ko and Lo managed to give evidence in a straight forward and fair manner.

85.  As mentioned, the purchase of the Jordan Property was completed on 10 March 1989. By then, Leung had slightly over a month to move there from No.2 Mui Hing Street.  Denying the allegation that Ko promised the removal expenses under the Alleged Oral Agreement, Mrs Ko explained that Ko in fact engaged a contractor and paid the gutting and remodelling of the Jordan Property in accordance with Leung’s specifications.  Ko also paid for the removal expenses and the installation of new telephone lines.  He also reimbursed Leung for the expenses on some appliance and furniture.  Mrs Ko managed to produce various receipts dated between March and April 1989 in support.

86.  In line with the arrangement, it was she and Ko who have been paying the rates for the Jordan Property.  But they have never received demand notes for the government rent.  Wan did not deny that Leung and she had never paid any rates for the Jordan Property, though they were the occupiers.

87.  When the Jordan Property was assigned to Lo, Ko and Mrs Ko entered into a sale and purchase agreement as well.  Clause 6 of the agreement provided that the Jordan Property was “sold subject to the life interest of Leung Tin Sun”.  This was in line with the understanding of the parties pursuant to the arrangement between Ko and Leung.

88.  However Mr Ah-Weng highlighted the fact that the sale and purchase agreement was never registered.  Therefore the provision as to his life interest in the Jordan Property was kept from him.  Nor was the assignment to Lo disclosed to Leung.  Mrs Ko and Lo never shy away from those facts.  According to Mrs Ko, and confirmed by Lo, that was the conscious decision to avoid any unnecessary concern on the part of Leung that his status in the property might be affected.  Lo also explained that Leung’s life interest was not referred to in the assignment for reason.  He wanted to avoid the need to adduce formal proof of death of Leung, to whom Lo is not related, and thus cessation of his life interest when the property had be sold further.

89.  It may be arguable whether strictly that clause in the sale and purchase survives the assignment in the absence of a similar exception in the latter.  Whether the concern expressed by Lo when excluding the exception from the assignment was strictly correct may also be arguable.  But irrespective of all those, what in my judgment is clear is that the parties to that deal were mindful of the life interest of Leung in the property when it was assigned to Lo; and their intention was to recognise instead of denying it.

90.  Mr Ah-Weng went further and suggested a conspiracy to keep Leung in the dark that Ko acted contrary to the Alleged Oral Agreement.  At one stage Wan even put that in terms of fraud.  Counsel must have realised the pre-requisite for actual pleading of fraud and decided not to go so far by way of pleading.

91.  The conspiracy theory has no merits.  There would have been no need for even the reference to any interest of Leung in the Jordan Property at all in any written form or the agreement between the parties to that sale in the first place.  The suggestion of putting on record something whilst withholding the same from registration with a view to preventing Leung from knowing it defies common sense.

What happened afterwards

92.  The assignment of the Jordan Property to Lo was seemingly questioned as to whether it was a genuine sale.  According to the documents, the Jordan Property was purchased at HK$620,000 in March 1989; and sold to Lo at HK$700,000 in September 1991.  The difference, which was an increase in value, was not so much the kind that cries out for explanation.

93.  It was also the evidence of Lo that Ko and Mrs Ko also undertook to pay the expenses such as rates in respect of the Jordan Property while the same was being occupied by Leung.  According to Lo, part of his intention was to help his sister and late brother in law in taking up the property upon their plan for settlement abroad as mentioned above.  He also took it as a sound investment.

94.  No action has ever been taken in respect of the alleged interest of Leung’s estate in the property until Lo recovered possession of the property in 2007.  Mr Chan relied on the defence of laches to the claim for equitable remedies.  This will be discussed below.  This, both Mr Chan and Mr Lam submitted, was inconsistent with the assertion that Leung believed that he had been wronged.

95.  It is common ground that Leung was well educated and knew English.  Before his retirement and cohabitation with Wan, Leung worked at an international banking corporation.  He maintained a certain social lifestyle.  That a regular table at the restaurant of the then Royal Hong Kong Jockey Club was reserved for him reflects that.  Like Mr Chan and Mr Lam, I have no reason for suspecting any lack of capability or intelligence to take action or to seek advice, if Leung indeed believed that he was wronged by Ko.

96.  Wan repeated that Leung had a big ego (or in her words “大男人”) and would not bother.  But Leung and Wan bothered to go through the legal marriage in 1993 only after 17 years of cohabitation. Though not explored during the trial, it had to be the conscious decision of theirs.  Whilst one side of Wan’s story was that Leung had no intention of taking action, the other side of her story was that Leung became depressed as a result of the feeling of having been wronged by Ko.

97.  Any reservation on the part of Leung should have ceased to bother Wan after the death of Leung.  Nevertheless she had taken no action for her husband’s estate since 2004.  In her letter to the court dated 3 September 2008, Wan explained that if she had known that the Jordan Property was assigned to Lo in 1991, steps would have been taken then.  That hardly explains, because Leung allegedly discovered that the Jordan Property was not purchased in his name well before Ko and Mrs Ko sold the property to Lo in 1991.

98.  I would be slow in believing that Wan was as ignorant as she claimed.  In her statement, Wan revealed that she was educated up to primary 6; and had worked only briefly in some simple job during her teen age.  In her further statement, Madam Wan corrected herself; and added that she was a partner of pub business for years in the 1970’s, first at Tsimshatsui and later at Wanchai.  She could at least seek help, if she was minded to do so.

99.  According to Mrs Ko, she telephoned Wan with a view to informing her of the passing of Ko in June 2007.  It was then when Mrs Ko came to know from Wan that Leung passed away in 2004.  Upon knowing that, there had been discussion of when Wan could move out of the Jordan Property.  Wan acknowledged that she would have to do so, but asked Mrs Ko to take into consideration of her recent fall and injury as well as his financial situation.  Mrs Ko offered to assist her in the sum of HK$20,000 if she would be moving out in 2 months.  Despite that and the subsequent follow up by Lo in July or August 2007, Wan had yet to indicate when she would be moving out.

Conclusion

100.  Everything considered, including those discussed above, I am convinced that it is dangerous to rely on the evidence of Wan.  On balance, I prefer the evidence adduced on behalf of Mrs Ko and Lo.  Considering all the circumstances, I find what Mrs Ko and Lo said to be what in fact happened.  The contention by reference to proprietary estoppel and constructive trust and thus the liability of Mrs Ko (Ko’s estate) and Lo lack the requisite factual bases.

THE CLAIM AGAINST MRS KO AND LO

101.  The claim for an order that Lo conveys the Jordan Property to Leung’s estate goes no further, upon the failure of the contention that Lo was a constructive trustee of the property for the benefit of Leung’s estate.  Nevertheless it is argued that the court may still find against Mrs Ko somehow so that she would be liable to compensate Leung’s estate.  I cannot see how.

102.  The claim for equitable compensation and damages is also confusing.  The two are claimed as alternatives; and by pleadings, the former is not particularised while the latter is said to represent the removal expenses and monthly allowances promised under the Alleged Oral Agreement.  However when it came to his submission, Mr Ah-Weng apparently blurred the two and effectively grouped them all under equitable compensation.  This is wrong.  The alleged entitlement to the removal expenses and monthly allowances arose out of the alleged express promise by Ko, not the alleged trust.  They could only be claimed as damages for breach of the Alleged Oral Agreement.

103.  The claim has other problems as well.  First, aggregating the amount as claimed, the amount of compensation, equitable compensation or damages as it may be called, clearly exceeds the jurisdiction of this court.

104.  Second, the compensation for the loss of the Jordan Property suffered by Leung’s estate, as admitted by Mr Ah-Weng, is not supported by any valuation evidence. It is noted that in October 2011, Wan somehow verbally applied for leave to adduce expert evidence on the market value of the Jordan Property on a date one month before the trial.  Not surprisingly, an application made in such manner at such stage was refused by the master.  The suggested value of HK$700,000 is nothing but arbitrary.

105.  Third, Mrs Ko pleads laches on the part of Wan (Leung’s estate) to claim equitable remedies.  The court should enquire whether there has been unreasonable delay by Leung’s estate; and any consequent prejudice or injustice to its opponents. It is the balance of justice or injustice in taking the one course or the other: see Spry, The Principles of Equitable Remedies (8^th ed) at 235-236.

106.  As discussed above, the inaction on the part of Leung and, after his death, Wan until Lo recovered possession of the Jordan Property in 2007, in all the circumstances, reflects badly on the credibility of the assertion that Leung took the view that he had been wronged in as early as 1990-1991.  Had his belief differed from what Ko promised, he and later Wan clearly have been dilatory in initiating a claim or pursuing rectification.  Instead, in all these years, Leung and Wan, though occupying the Jordan Property, have been letting Lo undertake the liability to pay the rates and government rent.

107.  As mentioned, the claim consists of that for the removal expenses promised in 1989 and the monthly allowance accruing during the period between 1989 and 2004. Except for the allowance allegedly due for the single month of March 2004, the common law claim for all the sums accrued earlier would have been time-barred pursuant to section 4 of the Limitation Ordinance, Cap.347.

THE CLAIM OF MRS KO (KO’S ESTATE)

108.  Mrs Ko’s counterclaim (in DCCJ 692/2010) is based on the agreement between Ko and Leung; and the assignment of the Jordan Property between her and Ko and Lo.  As mentioned, Leung was entitled to occupy the Jordan Property for life.  It is said that the continued occupation of the Jordan Property by Wan after the passing of Leung constituted breach of the agreement on the part of Leung’s estate.

109.  Mrs Ko contends that both Ko (now his estate) and she were bound by the covenant of title in respect of the Jordan Property that was implied into the assignment to Lo by virtue of Part I(A) of Schedule 1 of the Conveyancing and Property Ordinance, Cap.219.  As a result of the occupation by Wan and thus breach of the agreement on the part of Leung’s estate, Ko’s estate and Mrs Ko are exposed to liability for breach of such covenant of title owed to Lo being the assignee of the Jordan Property.  On this basis, and on behalf of Ko’s estate, Mrs Ko asks for a declaration that Wan (Leung’s estate) shall compensate her and Ko’s estate for any loss and damage as a result.

110.  The counterclaim of Mrs Ko is put forward on top of the success of her defence to Wan’s claim.  However the reality is that there is not a hint of claim by Lo against his sister or the estate of his brother in law on the basis as now contended by her.  Nor is there suggestion of any loss and damage incurred along that line. The claim for a declaration of a right to damages was red herring.  At the trial, it does not seem that the counterclaim was indeed pressed on either.

THE CLAIM OF LO

111.  The counterclaim of Lo in DCCJ 692/2010 reflects his claim in DCCJ 5748/2007.  In view of the above conclusion, it is not the estate of Leung but Wan that is in possession of the Jordan Property.  It follows that Lo is entitled to vacant possession of the Jordan Property from Wan, not the estate of Leung.

112.  In her statement, Wan actually reported to be residing at Cheung Sha Wan, Kowloon.  I would make an order for possession of the Jordan Property in DCCJ 5748/2007; but propose to make no order in respect of his counterclaim for the same in DCCJ 692/2010.

113.  Lo claims mesne profits for Wan’s occupation of the Jordan Property since 21 March 2004, i.e., when Leung passed away.  According to the pleadings, the estimated current market rental value of the Jordan Property is said to be HK$6,000 per month.  Lo claims mesne profits at this rate.

114.  In his submission, Mr Lam asked for judgment for mesne profits or damages to be assessed, probably because of his awareness of the lack of evidence in this respect.  This cannot be right.  There has never been direction for split trial of liability and quantum.  According to the court’s record, the master noted in the direction hearing on 25 October 2011 that Mrs Ko and Lo elected not to adduce expert evidence on quantum of damages or mesne profits.  Lo should know better that he has to take it from there.

115.  The fact is that there is no proper evidence in support of the estimated current market rental value of the Jordan Property being HK$6,000.  The entitlement of Lo to mesne profits, in my judgment, is beyond doubt.  Failing to substantiate the rate, I am only prepared to make an award at the nominal monthly rate of HK$10.

116.  As to the period, Leung’s life interest in the Jordan Property ceased upon his passing on 24 March 2004.  That, as I accepted above, was unknown to Mrs Ko or Lo until June 2007.  But the reality was equally that Lo never consciously kept track of the status of occupation of the Jordan Property prior to then.  If Lo can be said to have been wrongfully deprived of the use and enjoyment of the Jordan Property, this reasonably happened when Madam Wan failed and refused to accede to his request to deliver vacant possession in July 2007.

117.  Lo also claims for an order that Wan pays any outstanding Government rent, rates and management fee up to the delivery of vacant possession of the Jordan Property. Though there is evidence that Lo had settled certain outstanding owners’ contribution to the management committee of the building (where the Jordan Property is situated) in 2007, he did not actually get to substantiate the claim for any other accrued liabilities as a result of default on the part of Wan or wrongful occupation.

ORDER

118.  In respect of DCCJ 5748/2007, I order that:

(1)             Wan shall deliver vacant possession of the Jordan Property to Lo within 60 days from today;

(2)             from July 2007 until the delivery of vacant possession of the Jordan Property, Wan shall pay to Lo mesne profits at the nominal monthly rate of HK$10 exclusive of outgoings;

(3)             interest on the above accrued sum runs at the judgment rate until full payment.

119.  In respect of DCCJ 692/2010, I order that:

(1)             the claim of Wan is dismissed;

(2)             the counterclaim of Mrs Ko (Leung’s estate) is dismissed;

(3)             there be no order in respect of the counterclaim of Lo.

120.  Following the above event, Mrs Ko (Ko’s estate) and Lo should have their respective costs of the 2 actions.  Notwithstanding the order in respect of the counterclaim of Mrs Ko and Lo in DCCJ 692/2010, no time was materially wasted on the “proof” of such counterclaim that could be distinguished from the trial of their defence and that of the claim of Lo in DCCJ 5748/2007.

121.  It is not suggested that there is any other beneficiary of the estate of Leung except for Wan.  Practically her counterclaim in DCCJ 5748/2007 and her claim in DCCJ 692/2010 serve her personal purpose only.

122.  I therefore order that Wan in her personal capacity shall pay the costs of Mrs Ko (Ko’s estate) and Lo, including any costs reserved.  Costs shall taxed, if not agreed, with certificate for counsel.  The own costs of Wan shall be taxed subject to legal aid regulations.  This costs order is nisi; and shall become absolute in the absence of application within 14 days to vary.