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FCMC 8789/ 2012
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 8789 OF 2012
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BETWEEN
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LHF formerly known as LT |
Petitioner |
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and
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TWK |
Respondent |
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| Coram: Deputy District Judge I. Wong in Chambers (Not Open to Public) |
| Dates of Hearing: 19 – 21, 25 March, 9 and 16 April, 2014 |
| Date of Handing Down Judgment: 5 June, 2014 |
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J U D G M E N T
(Ancillary Relief)
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The Application
1. This is yet another ancillary relief case where the main dispute is on the ownership of a piece of property registered in a party’s name but which that party claims is beneficially owned by the parent.
2. This pair of couple is relatively young. The respondent husband (“H”) is aged 38 and the wife (“W”) 37.
3. H is a local Chinese. He is a registered nurse. W was from the Mainland. She was granted a Single Entry Permit to reside in Hong Kong in January, 2011. However, shortly afterwards their marriage irretrievably broke down when H moved out of the matrimonial home on 11 March, 2011.
4. On 18 June, 2012 W petitioned for divorce on the ground of H’s unreasonable behaviour. The petition was uncontested and decree nisi was pronounced on 13 May, 2013.
5. By an order dated 31 May, 2013 H is to pay a monthly sum of $4,500 as from June, 2013 as maintenance pending suit.
6. This is a childless marriage; hence what is left is the W’s application for ancillary relief.
The Background
7. Parties met in Shenzhen in about September, 2004 when H patronised a sauna parlour where W was working as a masseuse. According to W, about 2 weeks later, at the request of H she ceased work. H then started paying rentals for her and also gave her some pocket money. In March, 2005 H even accompanied her to return to Chongxing, her home city, to apply for a travel permit for coming to Hong Kong. As a result, W came to Hong Kong in April, 2005. Since the permit allowed her to stay in Hong Kong for one month only, at the end of the period she returned to Shenzhen temporarily, staying there for one or two weeks pending the obtaining of a new permit and then came to Hong Kong again. This practice went on until they got married on 13 July, 2006.
8. After the marriage for a year they lived in a flat at City One Shatin. This was owned by H. Then in about July, 2007, H sold the flat and they moved to another flat (“the SWC property”) owned by H’s father (“the father”).
9. Meanwhile, W suspected H had an affair with his colleague and for this reason, they quarrelled frequently. The quarrel came to a showdown when in June, 2008 W made a scene at H’s workplace that required the intervention of the police. During the scuffle W assaulted a police officer for which she was charged and sentenced to $1,000 fine and probation. By the reason of this criminal conviction, she was forbidden by the Mainland authorities to come to Hong Kong for a period of 2 years. Thus from January, 2009 to January, 2011 W was forced to reside in Shenzhen. Mr Yip, counsel for H, contended that this period of W’s absence from Hong Kong has some significance affecting the length of the parties’ marriage. I will come to this in the later part of this judgment.
10. At about the same time in July, 2008, H purchased a flat (“the GG property”) with the sale proceeds of the City One property and by way of a mortgage. The GG property was originally owned by the father. It was a 3-bedroom flat with about 660 ft² and was sold to H for $2,050,000. However, it is undisputed that the GG property continued to be occupied by the father and H’s younger brother AT.
11. On 5 January, 2011, W came to Hong Kong on the strength of a Single Entry Permit. Upon returning she continued to reside with H at the SWC property. The arrival however did not improve their relationship, as a matter of fact, at the relevant time H was maintaining a relationship with one Ms Ng (“Ms Ng”) who was already pregnant with a daughter from H.
12. As mentioned above, the parties started to separate from each other on 11 March, 2011 when H moved out from the SWC property. Since then, H has moved to the GG property.
13. Ms Ng gave birth to the daughter in September, 2011. However, according to H, he is not living with her and he has taken up the responsibility of taking care of the daughter. He is now living in the GG property with her daughter, the father and other family members and W continues to live alone in the SWC property. The SWC property is a 3 bedroom flat of about 700 ft² large.
14. It is common ground that the GG property should go into the matrimonial pot but not the SWC property. In my view, it must be correct since at no time was the SWC property ever belonged to H. As a matter of fact, except the BA property, the parties are able to agree on all the major items and the values of their assets.
15. The BA property is the property that I referred to at the beginning of this judgment. It was purchased in the names of H and his father but H claims this property in fact and in truth belonged to the father solely.
16. The BA property is located in BA, the father’s home village in Shenzhen. It was originally a 3-storey village house but was rebuilt into an 11-storey apartment building in 2012 to 2013. The units are now being rented out for a gross sum of about RMB29,000 per month. Mr Yeung, counsel for W, submitted that H owns half of the BA property and therefore his share should go to the matrimonial pot for division.
17. Another relatively minor issue is whether H owes his girl friend Ms Ng a sum of $180,000. At this juncture, I need to mention that “girl-friend” is a description used by me only. All along, H is evasive when it comes to his affairs with any third party as alleged by W and he merely refers Ms Ng as his friend notwithstanding it is obvious that they had an intimate relationship for some time (and perhaps up to now) and Ms Ng is the mother of his daughter. In cross-examination, he even claimed that he does not know whether having extra-marital sex is having “an affair” and that he was affectionate to each and every colleague of his (“我對每一個同事都有感情”).
Open Proposals
18. W asks for (i) the transfer of the GG property to her on free of mortgage basis; (ii) half of H’s BA property and (iii) a monthly maintenance of $6,000 per month or alternatively, a lump sum of $1,000,000.
19. As for H, he offers a lump sum of $1,200,000 payable by 200 monthly instalments of $6,000 each or alternatively, a lump sum of $60,000 plus a lump sum of $1,100,000 by 220 monthly instalments of $5,000 each.
Factual Issues in Disputes
20. As said, there are 2 factual issues in dispute:-
1. |
Whether H owes his girl friend Ms Ng a sum of $180,000; and |
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Whether H has any beneficial interest in the BA property. |
21. Of course, if the answer to issue no. 2 is in the positive, the issue that follows is the value of the BA property.
22. In addition to the evidence of the parties, the father also testified in court regarding the BA property.
23. I now deal with the factual issues in dispute.
The $180,000 Loan
24. H said he was in financial difficulties since about 2008 due to investment losses and for this reason, he had to take out some bank loans in early 2011. In March, 2011 Ms Ng agreed to lend him $180,000; part of the loan from Ms Ng was used to pay $61,000 to DBS Bank on 18 March, 2011 and $80,000 to HSBC on 22 March, 2011.
25. In support of his case, he produced a home-made loan agreement in Chinese dated 11 March, 2011 (“the Loan Agreement”) and his bank statement showing various sums of money which are said to be deposited by Ms Ng. It is of note that the date on which the Loan Agreement is said to have been signed was the very same day when H moved out from the SWC property. Further, the sums that are said to have been advanced by Ms Ng were in fact not exactly $180,000. They were deposited on 17, 18, 21 and 22 March, 2011 and were $50,000, $49,988, $40,000 and $50,000 respectively, totalling $189,988. In other words, the actual figures do not tally with that shown on the Loan Agreement. There was an extra $9,988.
26. His evidence in the witness box is that he discussed with Ms Ng for the loan. With the green-light from Ms Ng he therefore prepared the Loan Agreement in the presence of his younger brother AT. This happened 1 or 2 days before 11 March, 2011. He then met Ms Ng and AT some time after 6:00 pm on 11 March, 2011 for the signing of the Loan Agreement.
27. In examination in chief, he explained why Ms. Ng deposited $9,988 more was because she misheard (“聽錯”) what he said. However, according to his evidence, he had discussed with Ms Ng for several days on the loan and he had even called Ms Ng to obtain her identity card number in order to draft the Loan Agreement. The Loan Agreement clearly stated the figure of $180,000 and he further testified that Ms Ng had read the Loan Agreement for 10 to 15 minutes before putting her signature down. When being enquired by the court that given this evidence, how Ms Ng could have misheard him, H was somewhat forced to admit that there was in fact no mistake. He then explained that after the signing of the Loan Agreement he informed Ms Ng that he might need a bit more than $180,000 (“可能要18萬多少少” ) but he failed short of mentioning the exact sum required. Ms Ng then took the liberty to deposit a total sum of $189,988. Even as of now, he does not know why Ms Ng chose to deposit $9,988 more.
28. It is hard to believe what H said is truth. His initial version of mishearing is utterly unbelievable; also unbelievable is his subsequent explanation that he asked Ms Ng for a bit more. The bank statement does not show an inflow of $180,000. He fails to explain why an extra sum of $9,988 appeared. It is also hard to believe that Ms Ng did not clarify with him how much he exactly required. H’s case throughout is that he owes Ms Ng $180,000 but if what he said is true, he should have owed her $189,988. To me there is simply no proof that the monies were from Ms Ng.
29. Notwithstanding that the Loan Agreement clearly has his younger brother AT’s name and identity card number printed on it as a witness, and he confirmed AT was present when the Loan Agreement was signed, AT however did not sign on the document. He explained that at that time he did not realize AT needed to sign. Again, I do not find this explanation convincing. I do bear in mind that H is a layman and legally speaking, the document does not require a witness, but if he chose to type out AT as the witness and even took the trouble of putting his identity card number down, it is hard to believe that he did not ask AT to sign on the document.
30. The Loan Agreement states that the loan will be repaid after the restructuring of the landed property (“且於處理物業資産重組後清償”). His Answers dated 11 December, 2012 further clarifies that “property restructuring” means the distribution of the matrimonial assets between him and W pursuant to the present proceedings. In evidence, he said this would include the restructuring of his own personal financial affairs. In my view, whether it includes his own personal financial affairs or not, given that it is alleged that the Loan Agreement was prepared prior to the parties’ separation and it was not until more than a year later in June, 2012 that W petitioned for a divorce, it is hard to believe that H was referring to the distribution of the matrimonial assets. I am not convinced that the Loan Agreement was prepared and signed in the manner as testified by H.
31. Though a small point, I also need to mention that the Loan Agreement contains a few lines only, to me it is perfectly unrealistic that it took Ms Ng 10 to 15 minutes to read it.
32. H was evasive as a witness. He was selective in his answers. To those questions that could be detrimental to him, he would choose to say he could not recall. For instance, He testified that on 11 March, 2011 he met Ms Ng and AT after 6:00 pm that day for the signing of the Loan Agreement but he could not recall where the meeting took place and how long it lasted. I can understand why he chose to say so. The reason being that, as I have alluded to above, that day was the very same day when H moved out from the matrimonial home (ie the SWC property), signifying the death of his marriage. It is W’s case that on that day, H told her that he was not going to return and she kneeled down and begged him not to leave. But in cross-examination H was so evasive that he said he could not recall whether or not he did this exactly on 11 March, 2011. He could only recall he had phoned W and that day was the day on which Japan was struck by a tsunami. I am sure he was astute to realize that if he admitted what he had done as alleged, he would be facing questions on the sequence of events that day, thereby running the risk of rendering his story vulnerable. However, he seemed to have forgotten that earlier on in examination-in-chief, he testified that he left the matrimonial home that day after a severe quarrel and he had told W he had to leave and asked her to take care of herself. Further, what he said in cross-examination is entirely inconsistent with what he had affirmed in para 8 of his 2nd Affirmation dated 21 October, 2013 where he clearly admitted that he moved out of the SWC property on 11 March, 2011 in order to avoid further conflicts with W. As I will illustrate below, I am able to come to the conclusion that H is clearly the type of person that is ready and willing to twist and conceal facts. His evidence therefore must be scrutinized with greatest care and caution.
33. Given that there is no proof that the monies were from Ms Ng, that there is no plausible explanation on the discrepancy of the figures and that the circumstances under which the Loan Agreement was signed is unbelievable, the alleged liability of $180,000 must be rejected.
The BA Property
34. I believe the following facts are not in dispute.
35. The BA property is located in BA of Shenzhen, the home village of H’s family. However, his whole family was at all the material times settling in Hong Kong. It was originally a small plot of land purchased by the father and registered in his sole name in 1991. The land was then put into the names of H and the father in 1992. According to the title document, commonly called the “Red Book”, issued by the Mainland authorities on 18 September, 1992 (“the 1992 Title Document”), the purchase price was RMB15,000, the father and H were stated to be the land user (土地使用者); and the land was said to have an area of 180 m², of which 84 m² was buildable area (建築占地).[1] At that time, H was merely a 17 years old student.
36. The father caused a 3-storey house to be built on the land at the costs of RMB156,000 in the following year. The house was first used by the family when they spent a trip to the home village, then later used by some relatives and was eventually rented out for about 10 years.
37. In about November, 2011, the 3-storey house was demolished and followed by the land being redeveloped into an 11-storey apartment building with 76 domestic units and installed with an elevator. According to the father’s evidence, the total redevelopment costs inclusive of the demolition costs were about RMB2,680,000, or $3,350,000 adopting an exchange rate of 1 : 1.25. After the construction was completed in August, 2013 the whole building was rented out for a gross rental of RMB29,000 or about RMB25,000 net per month.
38. As of now, the computerised record relating to the BA property containing information up to 31 May, 2009 states that each of the father and H owns 50% of the shares of “the Right of a Transferee” (受讓方權利人).[2]
39. For the purpose of financing the redevelopment of the land, what the family did was to re-mortgage the GG property and the SWC property.
40. Before the re-mortgage of the GG property on 29 July, 2011, the outstanding mortgage sum was around $1,048,189. The re-mortgaged sum was $2,331,000, hence realizing a sum of $1,282,811 for the redevelopment.
41. As for the SWC property that was owned by the father, it was re-mortgaged on 31 August, 2011 for a sum of $1,500,000 and a net sum of $1,493,625 was realised for the redevelopment. The mortgage term was for 20 years with a monthly repayment sum of about $7,400.
42. Thus, a total of $2,776,436 was realized for the redevelopment project which was then transferred to the father’s account. The shortfall for the re-development costs, about $573,564, was made up from the father savings.
43. The undisputed evidence shows that the father, H and AT are the “Borrowers” on the re-mortgage of the 2 properties.
44. Parties have obtained a valuation on the BA property from a single joint expert. The following information are stated on the report.
45. First, the present Ownership Certificate which is called the “Green Book” was issued in 2009 (“the 2009 Title Document”) but it was in respect of the old 3-storey house only. The house is permitted for mortgage and letting subject to the regulations of relevant Government authorities but sale and purchase or assignment of the property is not permitted as clearly stated on the current Green Book.
46. Secondly, the 3-storey house was demolished without being certified as a dangerous building by a registered architect or engineer. I take it to mean that the demolition was undertaken illegally.
47. Thirdly, the expert said he is so advised by the local government officials that no Green Book in respect of the new building would be issued.
48. Finally, the building is considered as unauthorized building structures as the relevant approvals for the building plans or permits have never been obtained.
49. Thus, in the eyes of the expert and it is also not disputed by the parties, the whole redevelopment exercise is an illegal venture.
H’s Evidence
50. H’s case is that he never has any interest in the BA property. He first learned of this property in May, 2009 when the father asked him for a copy of his Hong Kong identity card for the renewal of registration of a landed property with the Mainland authorities. He emphasised that he have never had any involvement in the property whether before or after its redevelopment. At no time was he asked to sign any documents in relation to the BA property. The re-mortgage exercise was merely a family arrangement so that he and AT helped the father out in order to make the father’s plan a reality. The father, who had been a renovation worker for over 20 years and retired in 2009 was not able to raise finance from the banks. The brothers therefore agreed to become “borrowers” for the re-mortgage loans at the request of the bank and he further agreed to re-finance his GG property in the manner as set out above.
51. H insists that he never made any contribution, whether to the acquisition of the land or to the house or the building on it, both before and after the redevelopment. All the development costs were paid by the father, as can be seen from the fact that it is the father who has been repaying the monthly mortgage payments and made up the shortfall by his own savings.
The Father’s Evidence
52. The father’s evidence is that since the ancestral home was not large enough for the extended family, he decided to acquire a piece of land so that his family could have a place to stay when they returned. The land was first registered in his sole name in 1991. Then in 1992, when there was a second registration, he was informed by his elder brother (“the elder brother”), who was a resident in the home village and similarly acquired a piece of land, that everyone registered in 2 names, so it would be better to have 2 names. The elder brother further said that a woman’s name (ie the wife) was not to be preferred. For the reason that H was the eldest son, so his name was used. According to the father, the elder brother also similarly registered his son’s name on the official documents. For registration, apart from submitting the names he did not need to provide any further information to the village administration. The father however conceded that the elder brother did not say a female’s name could not be registered, it was his own decision to put H’s name for registration. He then built a 3-storey house on the land in 1993.
53. The father testified that he never told H of his involvement in the property before 2009. It was not until then that when he asked H for a copy of his identity card that he told H of his involvement. Subsequently he was very unhappy when he saw the Green Book recorded that he and H each has 50% of the shares because he never intended that this should be the case. In the meantime, pending the conclusion of the present proceedings he has not taken any action to rectify the record with the Mainland authorities.
54. On the re-development, the father said it was his own decision. As far as the finance goes, initially he had two plans, one was to sell the SWC property and the other was to have both the SWC property and the GG property re-mortgaged for extra cash. Due to his age, the banks required H and his younger brother to be involved as guarantors. Essentially he said that after he had made the decision including the re-mortgage plan, he talked with the sons and after that he contacted the banks for the re-mortgage. He added that H did not say anything or have any particular views regarding the plan.
55. The term of the re-mortgage of the GG property would be up to 2036. The father admitted that he has no contingency plan if he is not going to live till then. He however said the rental receipts should be sufficient for the mortgage payments of the 2 properties.
56. He emphasised that it was his sole decision to re-develop the land, commission the demolition of the house and the construction of the building and he is the one who received all the rentals, whether before or after the redevelopment.
Preliminary Argument – Whether H has the Legal Title
57. To start with, Mr Yip boldly puts forward an argument that there is no documentary evidence to support the contention that H has 50% legal ownership in the BA property. Mr Yip’s ambition is clear. If he succeeds, it would be the end of the matter.
58. Mr Yip argues that though H was stated to be a “land user” according to the 1992 Title Document, there is no evidence that “land user” means “50% legal title” in the BA property. Further, it is true that H is said to have 50% right to the land on the 2009 Title Document but it is in relation to the 3-storey house which has been demolished. There is no official document which states that H has 50% legal title in the building itself.
59. The parties, in particular H, have not adduced any expert evidence on the PRC law as to the legal meaning and effect of “land user” and “50% right”. On the title documents before me, it is clear that H and the father are equal having the same rights and there is nothing to suggest that there is any other person having superior rights over them.
60. As to the argument that H’s 50% right is in relation to the demolished house only, it would appear that Mr Yip tries to detach the ownership of the building from that of the land, the implication is that even if H has a beneficial interest in the land (which is assessed by the expert as having no value) he does not have any in the building because the building belonged to the father. In Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2) [2003] 1 HKC 256, Deputy High Court Judge Lam (as he then was) faced the same argument in a similar context. In that case, the father purchased a piece of land in the name of his son and subsequently caused a house to be built by a third party, a company controlled by the father and the mother. In paras 77 to 79, the learned judge said,
“77. The present case is complicated by the fact that the land was acquired first and the building was built later. One needs to address the issue raised by Lord Upjoin in Pettitt v Pettit cited in Paragraph 70 above (see also Lewin on Trusts, 17th Edn, Para. 9-72). This is substantially the same point relied upon by Mr Chan by reference to Megarry & Wade, The Law of Real Property, 6th Edn, Para. 14-311 and Melluish v BMI (No. 3) Ltd [1996] 1 AC 454 at 473. Relying on those authorities, Mr Chan submitted that as a matter of law, when Ching Hing erected the building on the land owned by Henry, the building also became the property of Henry. Mr Yu submitted that the authorities cited by Mr Chan only referred to the legal title whereas questions relating to the beneficial ownership of the property have to be determined by reference to contributions. With respect, I do not think this is correct. Lord Upjoin was clearly dealing with beneficial ownership. So was Lewin on Trusts. Similar observations were made by Lord Cranworth in Ramsden v Dyson (1866) LR 1 HK 129 at p. 141, a case decided by reference to proprietary estoppel, hence dealing with equitable interest instead of legal title.
78. Mr Yu submitted that the problem could be overcome by looking at the Property as a whole, viz. land and building. In my judgment, whether this approach is justified must depend on the common intention of the parties instead of a presumption arising from the fact that a person had incurred the construction costs of the building on the land owned by others. In principle, insofar as contribution is concerned, there is no material distinction between the construction of a building and improvement thereto. After all, construction of a duck shed could cost much less than the cost of improvement of a large house. Hence, if the sole requirement for giving rise to beneficial interest is that the claimant have made contribution in enhancing the value of the land of the others, it is difficult to explain why improvement to property could not achieve the same result (see Pettitt v Pettitt; Lloyds Bank v Rossett). It would also be inconsistent with the requirement of representation in the context of proprietary estoppel. I am therefore of the view that the mere fact that a person had spent money on another’s land by constructing a house there cannot give rise to any equitable interest. In other words, one cannot resolve the matter by reference to resulting trust stemming from the presumed intention of the parties by virtue of contribution in this sort of situation.
79. Of course, Mr Yu did not solely rely on the fact that Ching Hing incurred the construction costs of the building. He also relied on the fact that when the land was acquired, it was clear to everybody involved that a building has to be erected thereon to satisfy the terms of the Conditions of Sale and substantial costs would be incurred by Ching Hing for that purpose. In effect, in my view, he was relying on a common intention to be inferred from these circumstantial matters. Hence, the issue which we should focus on is not the contribution by Ching Hing (although that would be part of the background which one should take into account). The focus should be the common intention of the parties and the applicable principle should be that of constructive trust (or common intention trust, see Lewin on Trusts, Para. 9-50) instead of resulting trust. (emphasis added)
61. Hence, the proper question is what the common intention of the parties is: whether the father intended to confer a beneficial interest in both the land and the building to H.
62. I therefore do not find any merits in the argument.
Mr Yeung’s Arguments
63. Mr Yeung argues that the legal title documents clearly show that H has an interest in the BA property. The 1992 Title Document stated that he was one of the 2 land users (土地使用者) and the 2009 Title Document explicitly stated that H has 50% right. They are strong evidence that H in fact holds 50% of the legal and beneficial interest in the BA property.
64. Mr Yeung’s another argument is that H has made contribution to the redevelopment. As I will refer to below, Mr Yeung tries hard to juggle the figures in order to put forward a case that H’s contribution is close to half of the redevelopment cost and that proves he has beneficial interest in the property.
65. Mr Yeung also submits that H’s case is not to be believed. The father is not able to explain why he did not register any of his other two sons as land users and put the record right when he noticed the 2009 Title Document was wrong.
Mr Yip’s Arguments
66. On the other hand, it is apparent that Mr Yip is putting forward all the arguments he can think of.
67. First, he argues that the allegation that H contributed 50% of the costs is unsupported by evidence. In any event it is the H’s case that he did not make any contribution.
68. Mr Yip’s second argument is that the father’s evidence regarding his intention is so overwhelming that the presumption of advancement is rebutted.
69. Finally, he argues that the BA property has “no commercial value”.
The Legal Principles
70. In Lee Tso Fong v. Kwok Wai Sun & Anor [2008] 4 HKLRD 270, [2008] 4 HKC 36, Deputy High Court Judge To (as he then was), said as follows,
“23. Prima facie, beneficial ownership goes hand in hand with legal ownership. If a plaintiff seeks to divorce the beneficial ownership from legal ownership and to claim the beneficial ownership in the property which he purchased and transferred to the name of another, he must bear the burden of proving his equitable right which is inconsistent with the undisputed legal title. He may discharge that burden by proving an express trust. Or, he may be assisted by the presumption of resulting trust by proving that he paid the purchase price of the property. But, like all presumptions, the presumption of resulting trust operates only in the absence of evidence to the contrary. Once this presumption is raised, the party seeking to challenge it bears the evidential, but not legal burden, of adducing evidence to displace the presumption of resulting trust. That party may adduce evidence of a contrary common intention of making a gift. If that evidence is insufficient to displace the presumption of resulting trust, the presumption prevails. But if that evidence is sufficient to displace the presumption of resulting trust, the party who has the legal burden will fail unless he can prove the resulting trust.
24. Where a parent purchases property and transfers it to his child, it is capable of raising both the presumption of resulting trust and the presumption of advancement by reason of the parent and child relationship. Bearing in mind that the legal burden is on the party seeking to prove his equitable right which is inconsistent with the undisputed legal title, the parent who purchased the property and transferred it to his child must bear the evidential burden of rebutting the presumption of advancement, which is part of his legal burden of proving the resulting trust. Thus, the legal burden is on the parent whether he is relying on the presumption of resulting trust or whether the presumption of advancement is raised against him.
25. The above conclusion is consistent with the commonly held opinion as to the nature of the presumption of advancement vis-à-vis the presumption of resulting trust. In his Equity: A Course of Lectures, 2nd ed (1936) at 77-80, Maitland referred to the presumption of advancement as a sub-rule that qualifies the presumption of resulting trust. In Murless v Franklin (1818) 1 Swans 13 at 17; 36 ER 278 at 280, Lord Eldon referred to the presumption of resulting trust as the general rule which is subject to an exception where the purchaser was under a species of natural obligation to provide for the nominee. In Napier v Perpetual Trustee (WA) (1980) 55 ALJR 1 at 3, Aickin J also spoke of the presumption of advancement as an exception to the primary presumption of resulting trust. In Pettitt, Equity and the Law of Trusts, 6th ed (1989), the learned author refers to evidence which rebuts the presumption of advancement as reinstating the presumption of resulting trust. It therefore appears that the commonly held opinion is that the presumption of resulting trust is the basic rule while the presumption of advancement is the exception. If so, the legal burden of proof must be on the parent seeking to rely on the presumption of resulting trust to rebut the presumption of advancement. ... “(emphasis added)
71. On the rationale for the presumption of advancement, the learned judge spoke of this in paras 13 and 19 of the same judgment,
“13. This presumption of advancement is based on the father-child relationship, the child’s dependence on the father, the father’s moral obligation to give and the common experience that the father, being older and having accumulated wealth, is more likely or is commonly intended to make gifts to his child. The presumption does not apply to strangers or other relationships.
…
19. …The presumption of advancement is raised by reason of the very close family or blood relationship, ie that between parent and child. It has been extended to an adopted child, illegitimate child and exceptionally to a grandchild of a deceased child, but no further. It is restricted to immediate family members and not extended to child of a sibling or grandchild. I think the real essence behind this family relationship is the parent and child relationship, the moral obligation to provide for the child and the commonly-held intention of the parent to make gifts to the child…”
72. Further, Lewin on Trusts (18th Edn) has this to say in Paras 9-04 and 9-07,
“9-04 If the evidence establishes that the transferor did not intend to make a gift, then effect will be given to that intention, so that there is a resulting trust in favour of the transferor. If this is so the evidence of the transferor’s actual intention precisely accords with what is presumed by the presumption of resulting trust, if applicable, and operates to rebut any presumption of advancement which applies by virtue of the relationship between the transferor and the transferee. On the other hand, if the evidence establishes that the transferor did intend to make the gift, the transfer takes effect as a gift. If this is so the evidence of the transferor’s actual intention precisely accords with what is presumed by the presumption of advancement should that presumption apply and at any event operates to rebut the presumption of resulting trusts, if applicable. Thus in cases where the transferor’s actual intention is established there is no need to rely on the presumptions to show either that the transferor retains beneficial ownership or that the transfer takes effect as a gift: the resulting trust or the gift as the case may be, is established by the evidence…”
“9-07 It will be observed from what is said above that a resulting trust, whether based on a presumption, or simply on evidence, is founded on a presumption or evidence as to the transferor’s intention. There is no requirement as such for the transferee to share or participate in that intention….”
73. The crucial question is whether the father intended to make a gift of half of the BA property to H. Such intention is to be inferred from the acts and declarations of the parties before or at the time of the purchase or so immediately after it as to constitute part of the transaction. They are admissible in evidence either for or against the party who did the act or made the declaration. However, subsequent acts and declarations which reflect on the intention of the parties are also admissible to the extent that they are evidence against the party who did the act or made the declaration, but not in his favour: see Lee Tso Fong v. Kwok Wai Sun, supra, at para. 116 and Lewin on Trusts (18th Edn) at Paras 9-35 and 9-36.
74. In my view, it is useful to analyse the issue in two stages: (1) the pre-redevelopment stage and (2) the redevelopment stage.
The Pre-redevelopment Stage
75. In his 1st affirmation H said his name was used for “communication purpose” only. In his 2nd affirmation he added that it was a Chinese customary practice in his home village that only a son’s name would be registered as a land user rather than a wife. Since he was the eldest son, his father added his name as one of the land users. However, the father never expressed any intention that he would ever have an interest in the BA property.
76. The father said in his affirmation dated 21 October, 2013 that after discussing with his wife, friends and relatives, it was decided that they would follow the Chinese customary practice and register the name of H on official records so that on paper it would appear that H would succeed the land in the event he passes away. At that time H was 17 years old, AT was 14 and the youngest son TY was merely 8. As the 2 younger sons were too young, only H’s name was registered as the land user. Under cross-examination, initially the father said he put in 2 names so that if any tragic mishap should happen, H would be there to stand up for him (“有人去頂”), he then clarified it was a slip of the tongue and corrected that H’s name was added so that if anything unfortunate happens (“三長兩短”), there is someone to liaise or handle (“有個照應”). He explained that in the event of his demise, H is to in charge of the matters since he is the eldest in the family.
77. I accept that the father and the son’s evidence are not entirely satisfactory; and in this respect, I do bear in mind the caveat that I said about H’s credibility. On the other hand, I do take into consideration that since the event happened more than 2 decades ago, the father might not have a precise recollection of what was said and done. What remains crucial is whether or not the father had the intention to give.
78. It seems clear to me that the 1992 registration led to the issue of the 1992 Title Document. The subsequent 2009 Title Document was apparently the continuation or the up-dating of the 1992 registration. Thus, it is important to investigate into what happened in 1992.
79. Both H and the father’s evidence are that H was first told of his involvement in the BA property in 2009 when the father asked him for a copy of the identity card. This is not challenged. On that basis, H would have no knowledge as to what happened back in 1992 and it must have been the father’s unilateral decision to put H’s name onto the land.
80. H said that the father was following the Chinese customary practice but there is no elaboration on what it means nor is there any expert evidence in this regard. Further, it is clearly not for communication purpose, at least up to the present moment; the reason being that according to the undisputed evidence, all along it was the father who communicated with the elder brother or the village administration regarding the land.
81. That said, if H’s evidence is assessed in light of the father’s testimony, it becomes clear that his evidence is not inconsistent with the father’s evidence that if anything unfortunate happens to him, H would be there to liaise or handle. In other words, adding H’s name is for the purpose of future communication.
82. The ultimate question is whether their version is believable. This must be assessed in light of the totality of the evidence.
83. Clearly, the undisputed evidence is that all along it was the father who dealt with the Mainland authorities either directly or via the elder brother and he was the one who built the house.
84. The objective evidence is that at the time when his name was registered, H was merely 17 years old and the whole family was settling in Hong Kong. I consider it is unlikely that the father would have decided to give a piece of land that was far away from home to a 17 years old boy. In my view, it would not serve any practical purpose. The unchallenged evidence is that the 3-storey house was first used by the family of which H was a member when they returned to the home village, later used by some relatives and was eventually rented out, the rentals from which were pocketed by the father. Apart from using the land and the 3-storey house as an accommodation together with other family members, there is no evidence that H had the use or enjoyment of the property as an owner or was in a position distinctly different from or superior than his siblings. There is certainly no suggestion from Mr Yeung that H had the use of any part of the rental income. There is also no suggestion that H had played a part regarding the management of the land or the house that was commonly performed by an owner.
85. Given that the land was originally acquired for the purpose of building a family house in the home village where in the old days many people would regard as their root or having heritage significance, it is not difficult to understand why the father preferred a male who carried the family name to be registered.
86. Thus analysed, the conclusion I come to is that when H’s name was registered in 1992, it was for the purpose as said by the father and hence in law, H was merely a nominee without any beneficial interest.
The Redevelopment Stage
87. I now come to the redevelopment stage.
88. It is of note that it is not W’s case that H participated in the decision making of the redevelopment project. There is no challenge to the evidence that the relevant building contracts were made by the father without H’s involvement and all payments were paid out from the father’s account. On the evidence before me, it is clear that the redevelopment project was the brainchild of the father.
89. Mr Yeung lays much emphasis on the contribution allegedly made by H on the redevelopment project. He argues that the funds obtained from the re-mortgage of the GG property are strong evidence that H in fact holds half of the legal and beneficial interest in the BA property. Further, this fact of “contribution” would also prevent the father and H to raise a claim of resulting trust in favour of the father.
90. As said above, Mr Yeung tries his best to juggle the figures arising from the funds obtained from the re-mortgage and the monthly repayments made by H to establish his case that H’s contribution is close to 50% of the redevelopment costs.
91. On the other hand, Mr Yip argues that the contribution, if any, would never be as high as Mr Yeung suggests. It would appear that both counsels even try to adopt an exchange rate that is favourable to their case. Thus, Mr Yeung adopts an exchange rate of 1:1.2 so that the re-mortgage monies become more valuable in Reminbi and Mr Yip adopts a rate of 1:1.25. At the end, despite his utmost effort, Mr Yeung concedes that the contribution could never be exactly 50%.
92. In my view, before one starts to consider whether H has made any contribution, the relevancy of ‘contribution’ and its significance must be put in the proper perspective. Again, much guidance can be found in the case of Ip Man Shan Henry v. Ching Hing Construction Co Ltd (No 2) [2003] 1 HKC 256 that I referred to above. In paras 80 to 86, Deputy High Court Judge Lam (as he then was) said as follows,
80. In Drake v Whipp [1996] 1 FLR 826, the English Court of Appeal dealt with a case in which a woman claimed beneficial interest in a property held in the name of her former cohabitee by reference to her direct and indirect contribution. At first instance, the judge decided the case by reference to resulting trust. On appeal, the Court of Appeal held that upon proper analysis, it was a case of constructive trust rather than resulting trust. The reason being that it was a case where it was clear that there was a common intention between the parties, there was no room for the operation of resulting trust. Peter Gibson LJ said at p. 828H to 829A,
“However, [the principle of resulting trust] could not apply if (1) there was a common intention to share the property beneficially found to exist on the application of the guidance given by Lord Bridge [in Lloyds Bank v Rosset], whether by dint of a finding of an agreement, arrangement or understanding on evidence of express discussions between the partners or by ready inference from direct contributions to the purchase price by the partner who is not the legal owner, and (2) that partner has acted to his or her detriment in reliance on the common intention.”
81. To the same effect is the decision of Recorder Kotewall SC in Re Superyield Holdings Ltd[2000] 2 HKC 90 at p. 111D to F,
“In my judgment, the court resorts to the presumption of resulting trust and advancement only where there is no acceptable evidence of the actual intention of the provider or providers of the purchase money as to the vesting and apportionment of the beneficial interest. Where there is evidence of actual intention upon which the court may act and where the intention proved is not consistent with the legal title, the court gives redress, no longer under a resulting trust, in my view, but under a common intention constructive trust or an equitable proprietary estoppel.”
82. In Muschinski v Dodds(1986) 160 CLR 583, the High Court of Australia also adopted the same approach, albeit in the context of a property registered in joint names. That was also a case where land was acquired with a view that a prefabricated house would be erected thereon. The purchase price of the land was paid by one owner whilst the costs of erecting the house was intended to be paid by the other. Through no fault of either party, the house was not erected. The relationship broke down. One of the co-owners claimed that she had contributed all the purchase price of the land and hence entitled to the sole beneficial ownership by way of resulting trust. That claim was dismissed because it was found that the common intention was that both parties would have equal beneficial interest in the property. One way to look at the matter was that the presumption of resulting trust by reference to the contribution to the purchase price was rebutted. In effect the court was saying that actual intention must prevail over presumed intention. Deane J said at p. 612,
“…the presumption [of resulting trust] operates by reference to the presumed intention of the party whose contribution exceeds his or her proportionate share; it cannot prevail over the actual intention of that party as established by the overall evidence, including the evidence of the parties’ respective contributions.”
The element of common intention was highlighted by Mason J at p. 598. At p. 593, Gibbs CJ also emphasized that,
“We are concerned to discover the actual intention which the appellant had when the land was put in the names of the parties as tenants in common, and not to impute to her an intention which she did not possess …”
83. In the case of Tracy v Bifield, ibid., Templeman J found as a fact that there was an agreement between the parties to contribute their respective resources for the acquisition and improvement of the property (see p. 4 and 6 of the judgment). By implication the learned judge was giving to effect to the common intention of the parties although His Honour apparently approached the matter by reference to resulting trust. With great respect, given the finding as to common intention that should be considered as a case of common intention constructive trust.
84. Latimer v Latimerwas also a case in which the wife acquired the land with her own resource whilst the husband paid all the mortgage instalments regarding the costs of construction. The property was held in the name of the wife. The land was acquired in 1945 and the building works were started in 1952 and were completed in 1954. The Registrar found the beneficial ownership to be shared half and half between the husband and the wife, the husband appealed against that apportionment. The judgment of the Court of Appeal dealt mainly with the respective percentage of beneficial ownership. The wife did not appear to dispute that the husband had a beneficial interest. The Court of Appeal in a short ex temporejudgment held that the proportion should be one-third to the wife and two-third to the husband. On the facts as recited by Lord Denning MR, the parties had a plan to build the house on the land when it was acquired. Hence, it was not a case on contribution alone although in assessing the respective beneficial ownership, the Master of the Rolls did refer to the respective financial contribution of the parties. I do not think one can regard this as an authority for the proposition that one can just derive a beneficial ownership by reference to his contribution to the construction costs. It must still depend on the common intention of the parties. In that case, the common intention was to build a house on the land. The dicta of Lord Denning referring to the acquisition of the house by the joint efforts of the parties must be read in this light.
85. I shall therefore proceed to consider the matter by reference to the common intention of the parties instead of merely focusing on the contribution by Ching Hing to the construction costs of the building.Before I turn to the evidence concerning the intention of the parties at the material time, I need to refer to Lloyds Bank v Rosset[1991] 1 AC 107. At p. 132-3, Lord Bridge said,
“The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel.
In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do.”
86. At first glance, the approach of Lord Bridge seems to be narrower than the approach of Lord Diplock in Gissing v Gissingin the dictum set out in Paragraphs 69 and 72 above. In the absence of evidence of express discussion between the partners, Lord Bridge’s tentative view was that only contribution to the purchase price or mortgage payments could qualify as conducts leading to an inference that there was a common intention to share the property beneficially. On the facts of Lloyds Bank v Rosset, Lord Bridge was dealing with conducts which could hardly be sufficient to support an inference of common intention of joint beneficial interest. But I think it would be reading too much into the dicta of Lord Bridge to suggest that as a matter of law, a court can never draw an inference of common intention when the conducts relied upon were not payment of purchase price or mortgage instalments. After all, it is a matter of inference to be drawn from the circumstances of each case. The conducts relied upon must be examined against the background as to the dealings between the parties. In any event, although it has often been cited, Lord Bridge’s view was only a tentative one. I do not think His Lordship intended to rule out completely the possibility of establishing common intention by inference through conducts other than payment of purchase price or mortgage instalments. I prefer to read the dicta as saying that the conducts relied upon have to be as concrete and compelling as those conducts. In Gissing v Gissing[1971] AC 886 at p. 909-910, Lord Diplock made a similar point. His Lordship observed that normal contribution to household expenses could not give rise to an inference of common intention to share the property beneficially.
“For such conduct is no less consistent with a common intention to share the day-to-day expenses of the household, while each spouse retains a separate interest in capital assets acquired with their own moneys or obtained by inheritance or gift. There is nothing here to rebut the prima facie inference that a purchaser of land who pays the purchaser price and takes a conveyance and grants a mortgage in his own name intends to acquire the sole beneficial interest as well as the legal estate…”
93. Therefore, the question is whether there was a common intention between the father and H that H was to acquire a beneficial interest in the BA property by way of contribution, whether directly or otherwise. Further, whether the parties have the common intention can be inferred from the conduct of the parties and from the circumstances of the case.
94. I will now examine whether H has made any contribution to the redevelopment.
95. As said above, before the re-mortgage of the GG property, the outstanding mortgage sum was around $1,048,189, repayable by monthly payments of about $12,600 each and due to be fully discharged by 2018. On 29 July, 2011, the property was re-mortgaged for a sum of $2,331,000, hence realizing a sum of $1,282,811 for the redevelopment. The re-mortgage was for a term of 25 years, hence resulting in a lesser monthly repayment sum of about $9,100. H testified that the arrangement he had with the father was that he would continue to pay the same monthly sum according to the original mortgage up to the expiry of the original term, ie 2018. Thereafter, it would be the father’s responsibility to repay the mortgage payments until the re-mortgage is fully paid up. For this purpose, he arranged a standing instruction with his bank for a sum of $12,650 to be transferred from his bank account on the first day of each month to the father’s bank account for the fulfilment of his part of obligation. The father would then settle the monthly repayments with the bank. In support he produced the relevant bank statements, the passbook and, in trial, a letter dated 31 March, 2011 by the original mortgagee bank (Exhibit “R-1”). The exhibit shows that the monthly repayments for the original mortgage was $12,600 or thereabout.
96. H accepts that by 2018, the father would be 74 years old but the GG property would only be redeemed 18 years later, ie 2036; by then the father will be 92 years old if he lives so long. He admitted there was no discussion between them as to what the arrangement would be if the father does not live until 2036.
97. Mr Yeung argues that H’s explanation of the re-mortgage arrangement could not stand up to scrutiny. His arguments are as follows.
98. To start with, H deposed to in his Form E dated 1 November, 2012 that after the re-mortgage he had to pay a monthly instalment of $9,100 which was the same as that before the re-mortgage. For the sake of completeness, I set out what he wrote in Para 105 below.
99. Then in his Answers dated 11 December, 2012 that were provided in response to W’s Questionnaire and Request for Particulars, H stated that out of his monthly transfer of $12,650 to the father after the re-mortgage, $9,100 was the monthly instalment and $3,550 was the monthly rent for the occupation by W of the SWC property.
100. Then later on H tried to ‘correct’ his earlier position by deposing to in his affirmation dated 12 April, 2013 that there was a mistake on his part and that the monthly instalment of the original mortgage was $12,650 and therefore he continued to transfer $12,650 to the father after the re-mortgage.
101. Mr Yeung challenges that the bank statement shows the monthly instalment for the original mortgage was in fact $12,600 only and not $12,650. He argues that H’s explanation that he added an extra $50 upon the recommendation of the bank staff to cover the fluctuation on interest rate is wholly unbelievable. On that basis, Mr Yeung argues that the extra $3,550 ($12,650 - $9,100) may well be H’s contribution by way of instalments towards the construction costs of the building. As far as his argument goes, together with the $1,282,811 that H raised from the re-mortgage and formed part of the contribution, these would add up to close to half of the redevelopment costs.
102. Whilst I accept that H’s version is highly suspicious and as such it merits close scrutiny, in my view, for the reasons that I am going to set out, Mr Yeung’s argument is standing on a shaking ground.
103. I think it is important to understand why H could have committed the “mistake”, that is to say, whether the mistake was committed deliberately and if so why he did that. This does not call for an easy answer and counsel from both sides have not proffered any plausible explanation.
104. I believe the reason can be inferred from the documents filed by the parties.
105. The first document in the series was H’s Form E dated 1 November, 2012. There H stated that he owns the GG property, and at the part on mortgage (Part 2.2), he stated as follows,[3]
“（註：2011年7月29日前，答辯人就此物業每月須償還之按揭約為港幣$9,100，供款期至2018年。2011年7月29日，曾XX (the father)、曾XX (AT) 及答辯人就此物業加按，每月須償還之按揭維持約港幣$9,100，供款期至2036年。答辯人與曾XX (the father)及曾XX (AT) 協議加按款項歸曾XX (the father)及曾XX (AT)所有，而答辯人將繼續每月償還此物業之按揭約為港幣$9,100至2018年（即未加按前的原有供款期），及後至2036年此物業之按揭則由曾XX (the father)及曾XX (AT)負責，但答辯人仍持有此物業之100%實益權益，而曾XX (the father)及曾XX (AT) 就此物業不佔有任何實益權益。）”(emphasis added)
106. It can be seen he explicitly stated that before the re-mortgage the monthly repayment sum was $9,100; and after the re-mortgage the sum continued to remain at $9,100 (“每月須償還之按揭維持約港幣$9,100”). He also set out the agreement that he would continue to pay the monthly sum up to 2018.
107. As for the SWC property, he admitted that it was the matrimonial home but it is owned by the father. Again, on the part on mortgage (Part 2.1) he reiterated he has no interest in it. He wrote as follows, [4]
“（註：於2011年8月31日由曾XX (the father)、曾XX (AT)及答辯人就此物業加按。曾XX (the father)、曾XX (AT)及答辯人協議加按款項歸曾XX (the father)所有，並由曾XX (the father)獨自償還按揭，曾XX (AT)及答辯人就此物業不佔任何實益權益。）”
108. In Part 4.1 (Current Monthly Expenses) of the same document, he again stated the $9,100 mortgage payment as his monthly expense and he further stated a sum of $3,550 as the rentals he paid to the father for W’s occupation of the SWC property.
109. It is important to note that he did not say in his Form E a single word about the purpose of the re-mortgage of the 2 properties, and of course, he did not mention the BA property.
110. It is also important to note that attached to the Form E are also H’s bank statements, the earliest one being October, 2011, that clearly show he had a standing instruction in place to transfer $12,650 on monthly basis to the father.
111. The Form E was followed by W’s Questionnaire and Request for Particulars dated 28 November, 2012. W specifically inquired of the reasons for the re-mortgage of the GG property. To do justice to H, I set out his answer in full,[5]
“The (GG property) was re-mortgaged so as to obtain funds for the financial investment of the Respondent’s father Mr TCF and his brother TWKA. As stated clearly in the Respondent’s Form E filed on 1st November, 2012, it was agreed between them that the said re-mortgage would not affect the beneficial interest of the Respondent in respect of (the GG property) and the Respondent shall continue paying (sic) the monthly repayment of the mortgage in the sum of HK$9,100 until 2018, i.e. the original term of repayment of the mortgage if there is no re-mortgage of the same. (emphasis added)
112. Following on H’s allegation of rentals, W also asked about the mode of payment by which the rentals of $3,550 were paid. H’s answer was that the rental was paid out from the monthly $12,650 transferred to the father.[6]
113. Finally, W asked of H’s involvement in the BA property. H’s answer was as follows,
“The Respondent has never had any beneficial interest in (the BA Property). The Respondent’s father Mr TCF bought (the BA Property) by himself and subsequently rented (the BA Property) for generating rental income. The Respondent neither contributed to the purchase price of (the BA Property) nor received any rental income from the same. The Respondent was registered as one of the owners of (the BA Property) on 31st May, 2009 solely because with this arrangement, the Respondent may assist his father Mr TCF to manage (the BA Property), if necessary.”
114. The final document in the line was H’s affirmation of 12 April, 2013 where he corrected the mistake. He attributed the mistake to his wrongful recollection on the amount of monthly payment of the original mortgage.
115. Clearly, the mistake is more serious than he would like to have put it. By implication, it means that there was never any rental in respect of the SWC property as alleged in the Form E and the Answers. I find it hard to believe what he said.
116. The Form E must be read as a whole. H is not a man of low-education. He is clearly a man with a rational mind and educated. He is not only qualified as a registered nurse but also has been working as such at all times. As is evident from the Form E and the bank statements, he must be fully aware that he was paying a total of $12,650 per month to the father. Again as is evident from his subsequent correction, he was clearly telling a lie when he stated on the Form E that he was paying $3,550 rental out of $12,650.
117. In my view, the two mistakes could not sit well with each other. If H knew he was not paying any rental, there was no way that he could have committed the mistake about the amount of the original mortgage. In other words, it is utterly impossible for H not knowing why he was paying $12,650.
118. The question is why he chose to tell lies. In my judgment, the reason can be inferred from what assets H thought were in issue.
119. At the time of Form E, there were only 2 assets on the table, namely, the GG property and the matrimonial home, ie the SWC property. For the reason that before their separation the couple was occupying the matrimonial home rent-free, and after separation, it was solely occupied by W, H must have a fear that W would also try to lay a claim on the SWC property. Furthermore, it is glaringly apparent that at that time he was mistaken that W was not aware of the BA property, what he did therefore was to split the $12,650 into two portions in order to show that he did not have any interest in the SWC property. His logic must be that if he had to pay rentals, it must follow that he did not have any interest in the SWC property. Support for this inference can be drawn from the fact that H was careful enough not to mention the purpose of the re-mortgage in both his Form E and the Answers. Subsequently, when it was apparent that W has no argument over the SWC property then H chose to tell the truth that would lend support to his version that he had an agreement with the father. Thus, my conclusion is that he did this for the purpose of preventing the potential claim on the part of W on the SWC property. It is blatantly a deliberate lie and probably an offence has been committed. This is also the reason why I said in earlier part of this judgment that H is the type of person that is ready and willing to twist and conceal facts.
120. With this conclusion, I proceed to deal with the ultimate issue, ie whether H has made any contribution to the redevelopment costs. If he did, then even if originally he was merely a nominee, the contribution he made would entitle him to a beneficial interest to the property if there was such a common intention. Alternatively, if H did contribute to the redevelopment costs, it tends to prove that H from the very beginning was one of the beneficial owners of the property. This is Mr Yeung’s argument.
121. As said above, in trial, H produced a bank statement (Exhibit “R-1”) proving that the monthly payment of the original mortgage was $12,600 or thereabout. I say “thereabout” because there is a slight difference in the amount in each and every month. It would therefore appear that the $12,650 is to answer the H’s obligation in relation to the agreement with the father. Mr Yeung submits it is just a mere co-incidence for the two figures to be close to each other and on that footing, he goes on to argue that the extra $3,550 was H’s contribution. With respect, I consider that his argument of “co-incidence” is too far-fetched. On the basis of the evidence before me, in particular in light of the bank statement (“R-1”) and with the conclusion I reached on why he chose to fabricate a monthly rental for the SWC property, I find that on the balance of probability, the sum of $12,650 paid to the father corresponds to the monthly sum of the original repayment sum. With this conclusion, I also find that on the balance of probability there was an agreement or arrangement between H and the father that H was to pay according to the original mortgage up to 2018. I accept that the rental incomes should be sufficient for the post 2018 monthly mortgage payments. With these findings it is also my conclusion that H did not make any monetary contribution to the redevelopment costs.
122. Finally, it is true that H’s making use of his GG property for raising finance could be a contribution if there was a common intention to acquire but there is no such evidence. On the basis of the evidence before me, I do not think the totality of evidence allows me to draw an inference that there was such a common intention.
123. H’s name does not appear anywhere in the bank documents that show the payments of monies for the construction of the building. All payments were made by the father using his own bank account. The contract for the construction of the building was entered by the father. There is a lack of involvement on the part of H in the construction of the building.
Conclusion as to Whether H has any interest in the BA Property
124. Looking at the entire history since the 90’s, the father has been the mastermind behind the use of the land, both before and after the redevelopment. The land was clearly purchased by the father for him and the family to enjoy as a vacation home, and the subsequent rental incomes were taken solely by the father. The present building again is the father’s investment. The evidence that H has never been in possession of the title document and the rental incomes, whether before or after the redevelopment, is unchallenged. I agree with Mr Yip’s submission that the father has at no time intended that H should have any benefit in the BA property.
125. Based on the above analysis, I am able to reach the conclusion that H does not have any beneficial interest in the BA property. Hence, the presumption of advancement is rebutted.
126. With the findings that I have reached, strictly speaking I do not need to come to a conclusion that whether or not the BA property has any commercial value and if it has, what its value is. For the sake of completeness and deference to counsel, I will deal with these two points briefly.
127. On the first point, I do not agree with Mr Yip’s submission that the BA property has no commercial value. The single joint expert explicitly stated in his report that buyers interested in the market of such properties similar to the BA property are normally aware of and understand the risk and restrictions of buying these properties with unauthorized or illegal building structures and imperfect transfer of legal title and ownership.[7] Hence, it is clear that according to the expert the BA property has a commercial value. There is simply no reason for me not to accept the assessment.
128. The second point is the value of the BA property. The single joint expert assessed the market value of the BA property in its existing state subject to tenancy is RMB2,500,000. Again, there is simply no reason why this assessment is not to be accepted.
The Applicable Legal Principles
129. The jurisdiction of the Court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides:-
“4. Financial provision for party to a marriage in cases of divorce, etc.
(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of section 25(1), make any one or more of the following orders, that is to say-
(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;
(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;
(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.
(2) Without prejudice to the generality of subsection (1)(c), an order under this section that a party to a marriage shall pay a lump sum to the other party-
(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;
(b) may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court.”
130. In deciding on how to exercise its power in this regard for a party to the marriage, the court is bound to consider section 7 (1) of MPPO which provides,
“7. Matters to which court is to have regard in deciding what orders to make under sections 4, 5 and 6
(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-
(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;
(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”
131. The principles upon which this case is to be considered are the conventional ones, namely those set out in section 7 of MPPO. Those principles are to be interpreted in the light of the Court of Final Appeal judgment in LKW v DD, (2010) 13 HKCFAR 537. I will follow the steps set out by Ribeiro PJ in that judgment in the consideration of the application before me. As the parties have no dispute over the principles and steps to be applied, I do not think I need to set them out here.
Financial Resources of the Parties
132. With both the $180,000 liability and the BA property being excluded, the parties are in reality in agreement on the assets and their values with the exception of H’s credit card liabilitiy. They are as follow,
|
Assets of the Wife |
|
|
Description |
Amount (HK$) |
| 1. |
Cash |
900 |
| 2. |
Jewellery |
26,000 |
| 3. |
MPF |
4,273 |
|
Sub-total |
31,173 |
|
Assets of the Husband |
|
| 4. |
Cash |
32,867 |
| 5. |
Insurance |
81,960 |
| 6. |
Car |
28,000 |
| 7. |
MPF |
273,924 |
| 6. |
Net Value of the GG property |
2,930,600 |
| 7. |
Credit card liability |
(1,974) |
|
Sub-total: |
3,345,377 |
|
Total |
3,376,550 |
133. I have included H’s credit card liability. It is of negligible amount and has not been subject to challenge in trial. Hence, the total family assets are about $3,376,550.
W’s Financial Needs
134. W is now 37 years old. She received education up to about Form 3 in the Mainland. Before moving to Shenzhen, she worked in a kindergarten in her home village and in Chongxing. While in Shenzhen she worked as a cashier in a restaurant and then in the massage parlour where she met H.
135. She testified that after separation she worked in a convenient store but she had to resign within a month because of lack of strength to move heavy objects. She also worked in a fast food restaurant for about a month but was dismissed because she was not able to read the menu.
136. She managed to compete a 3-month course for nursing assistant and after that, she was employed to work as such by the Hospital Authority for a couple of months but unfortunately she was not able to meet the physical demand and was asked to resign, which she did in early 2012.
137. W said she also enrolled for a course in phlebotomy in February, 2012 but she withdrew before it started because she feared that she lacked the required proficiency in English.
138. She claimed that she is not able to find a proper job due to her ill health. She has been suffering from back pain which is a problem left from an operation she underwent when she was about 10 years old. She is mentally upset by her relationship with H, and this further gives rise to some gynaecological symptoms.
139. Since June, 2013 she has been living on the maintenance pending suit of $4,500 per month from H. She also works as a part-time domestic assistant at a rate of $80 per hour. This gives her on average an extra sum of $640 per month.
140. Thus, according to W, her situation is that she has not been in any full-time employment since early 2012.
141. It seems clear to me that W had been in gainful employment before she met H. Her work as a masseuse would certainly as a matter of commonsense require a reasonable demand of strength but no doubt this is not W’s case that she was not able to perform her duties.
142. Further, despite her assertion that she has various medical issues and has been receiving treatment from doctors, Chinese medicine practitioners and physiotherapists, there is not a shred of documentary evidence in support of her contention.
143. Whilst H agrees that W is not able to carry heavy objects, he said there is in fact another type of nursing assistant position that W may apply. This position in terms of salary is several hundred dollars less than W’s previous position but its duties are mainly on carrying out documentation and manual work and does not require her to work in ward.
144. In my view, whether what H said is true or not, the objective fact that W managed to pass the nursing assistant course clearly shows she has the required academic ability to do the job, a job that is not open to anyone in the street. She testified that she just worked as a nursing assistant for 3 months. However, her HSBC bank statements show that she received salaries from the Hospital Authority from October, 2011 to March, 2012, the first and the last month being in part. Hence, the evidence is that she worked for a total of 5 months.
145. Given that W is relatively young, that she was at all times in gainful employment before meeting H, and that she has a reasonable academic ability, on the evidence before me, I am quite sure that she has seriously underutilized her earning capacity. To me, there is simply no reason why she does not engage herself in any meaningful gainful employment. I am also sure that she should be able to earn a reasonable level of income, say $9,000 per month, which may increase in time. I have no doubt that in time W should be able to achieve financial independence.
146. As for her living expenses, W stated in her Affirmation dated 22 October, 2013 that she requires $7,440 per month, but previously in her Form E dated 9 November, 2012 she gave a figure of $6,400 only. This discrepancy has attracted some criticism from Mr Yip. Be that as it may, as of now W is occupying the SWC property rent-free. This situation certainly cannot be sustained in the long run. It means that she has to find an alternative accommodation, thereby entailing some additional expenses. Doing the best I can and taking a board brush approach, my experience would lead me to place a figure of $10,000 per month as her living expenses.
H’s Financial Needs
147. H is at present 38 years old. He has been working with the Hospital Authority since 1997 and is now earning about $45,830 per month. Though H has been suffering from bipolar affective disorder in manic circumstances since 1994, there is nothing to suggest that this affects his job as a nurse or his earning capacity. I have no doubt that H is enjoying a stable job and income and will be so in the years to come.
148. According to H, he is not living with Ms Ng. As said, he refers to Ms Ng as a friend. He is living at the GG property with the father, his step-mother, AT, the youngest brother and the daughter who is now 2 ½ year old. The daughter is now attending a kindergarten close to home. He is responsible for the maintenance of the daughter and is hiring a nanny to take care of the daughter. He estimates the costs for the daughter is less than $10,000.
149. His Form E dated 1 November, 2012 gave a sum of $45,450 as his monthly expense. Though this sum has not been subject to any challenge in trial, I have no doubt that there is a room for adjustment for the reason that this sum already includes $6,000 pocket money that H is paying the father. I am sure that with the receipts of rental income from the BA property, this $6,000 is not essential for the father’s maintenance. Further, this sum also includes the $4,500 maintenance pending suit that will no longer be payable in the future.
The Sharing Principles
150. In light of my conclusion that both have earning capacity and that in time W should be able to achieve financial independence, I should be able to apply the sharing principle to the matrimonial assets.
Whether there are Good Reasons for Departing from Equal Division
151. Both counsels take the view that there should be a departure from equal division.
152. I t can readily been seen that by her proposal W is effectively claiming substantially more than half of the matrimonial assets. Though it is possible that in an appropriate case justice requires that a party to the marriage should be entitled to do so, Mr Yeung, however, has not explained to me why this case warrants this outcome.
153. In my view, there is in reality one factor that merits consideration as to whether there should be a departure from equal division and that is the duration of the marriage.
154. Mr Yeung does not take issue that the pre-marriage relationship should be taken as part of the duration of the relationship. He accepts that the duration of the marriage is 4 years and 8 months, ending on the date when H moved out from the matrimonial home on 11 March, 2011 but argues that it is not a short marriage.
155. On the other hand, whilst Mr Yip agrees to the length of the marriage he contends that the 2 year period from 2008 to 2011 during which W was barred from the Mainland authorities to come to Hong Kong should not be included so that in reality it is a marriage of 2 years and 8 months. He argues that the fact that the parties were geographically separated and that H simply visited her during this period 2 to 3 times per week shows that the parties were not “living together”.
156. As has been pointed out by Cheung JA in PLTO v KLK, CACV 48/2012 (date of judgment: 25 March, 2013) the time of separation is a question of mixed fact and law: see Para. 50.
157. On the meaning of ‘living apart’, Cheung JA in that case referred to the English authorities,
52. In Santos v. Santos [1972] 2 WLR 889 the parties, apart from short periods, had physically lived apart in England and Spain respectively. The English Court of Appeal reviewed the earlier cases and held that at 896 and 897 the phrase ‘living apart’ when used in a statute concerned with matrimonial affairs normally imports something more than mere physical separation. As to this additional element, it held that :
‘ it must be an element capable of being unilateral: and it must, in our judgment, involve at least a recognition that the marriage is in truth at an end—and has become a shell, to adopt a much-used metaphor.’
53. Sachs LJ at 900 concluded that :
‘ Therefore, “living apart” referred to in grounds (d) and (e) is a state of affairs to establish which it is in the vast generality of cases arising under those heads necessary to prove something more than that the husband and wife are physically separated. For the purposes of that vast generality, it is sufficient to say that the relevant state of affairs does not exist whilst both parties recognise the marriage as subsisting.’
158. Further, Rayden & Jackson on Divorce and Family Matters, Vol. 1(1) (18th Edn) has this to say at para. 9.57,
“…‘Living apart’ does not exist so long as both parties bona fide recognize the marriage relationship as continuing even though the husband and wife are separated. The relationship does not end by reason of a separation brought about by the pressure of external circumstances such as absence on professional or business pursuits, or in search of health, or, it may be, even of pleasure. Sexual intercourse, dwelling under the same roof, society and protection, recognition in public and in private, correspondence during separation may be regarded separately as different elements the presence or absence of which go to show more or less conclusively that the marriage relationship does or does not exist, the weight of each of these elements varying with the health, position in life, and all the circumstances of the parties…”
159. In evidence, H admitted that whilst W was living in Shenzhen he kept on visiting her because she was still his wife and she needed his financial support. W cooked meals for him and he felt like visiting family members. He even admitted that these 2 years were just like normal family life. He failed short of telling whether they maintained sexual relationship but for what he said I think it is safe to presume that they did. Thus, the parties were clearly not living apart from each other. I do not find any merits in Mr Yip’s argument.
160. Therefore, the term of the marriage is 4 years and 8 months. Whilst I accept this is not a short period of time, to me equally it is not a long period either. Together with the fact that this is a childless marriage and even taking the pre-marriage relationship into consideration, I consider this is a relevant factor that warrants a departure from equal division.
161. Finally, before I conclude, I need to add that the source of an asset may provide a reason for excluding the asset in whole or in part from the matrimonial pot. In the present case, even if H has an interest in the BA property, it is fair to say that the acquisition of this asset was not the joint efforts of the matrimonial partnership. It was independently acquired prior to the marriage from a wholly external source, ie an advancement from the father. In any event, there is nothing to suggest that W enjoyed a higher standard of living while staying with H such that she had in any real sense enjoyed this asset. Further, the redevelopment was undertaken after the separation of the parties. Last but not the least, the redevelopment is undoubtedly an illegal undertaking and therefore a risky venture. The implication is that its owners may face enforcement actions from the relevant authorities and even criminal sanctions in the future. In my view, even if H has an interest in the BA property, fairness would require that the whole or a substantial part of it, say 90% be excluded from the sharing principle.
Deciding the Outcome
162. The matrimonial assets in the present case are essentially owned by H. They are mainly in the form of the net value of the GG property which is not the matrimonial home of the parties. In my assessment, fairness requires that W should be entitled to 35% of the matrimonial assets. Since the total matrimonial asset is $3,376,550 and W is retaining $31,173, it means that she is entitled to $1,150,619.50 (($3,376,550 X 35%) - $31,173). I will round it down to $1,150,000.
163. Mr Yip submits this is an appropriate case for the court to consider a lump sum order so as to achieve a clean break. With the conclusion I reached that both have earning capacity and that W should be able to achieve financial independence in time and also considering that both are relatively young, I agree that a clean break is an appropriate solution. However, I disagree with Mr Yip’s suggestion that the lump sum is to be paid by 200 monthly instalments ie over a period nearly 17 years.
164. Parties should get on with their lives and to start afresh. I see no benefit for both of them to continue to deal with each other for the next 17 years. Mr Yip suggests that H at the moment does not have the financial resources to pay upfront a sizeable lump sum and that it is beneficial for the daughter and the father to continue to live in the GG property. With respect, I do not see any logic in the suggestion. First, there is no evidence in support of the contention that the father needs to reside in the GG property. Secondly, it does not necessary follow that the daughter and the father must live in that unit but not in another unit in the same estate. What H can do is to liquidate the GG property for cash in order to satisfy the lump sum payment and to rent another unit in the same estate for accommodation. I will give H a period of 6 months’ time to pay after the issue of the decree absolute. Though there is no formal application on the part of H, I consider it is fair that W should move out from the SWC property within 2 months upon the receipt of the lump sum.
Order
165. I therefore give an order that H do pay a lump sum of $1,150,000 to W within 6 months of the granting of the decree absolute and that W shall vacate the SWC property within 2 months upon the receipt of the lump sum. H should continue to pay the maintenance pending suit until the payment of the lump sum.
Costs
166. For the reason that the lump sum ordered herein is less than the sum offered by H, it would appear that H should be given the costs. I give an order nisi that there be no order as to costs before and including the 2nd FDR hearing dated 31 May, 2013 and that W do pay the costs of the ancillary proceedings with counsel certificate after the 2nd FDR hearing including all costs reserved (with counsel certificate), to be taxed if not agreed. W’s own costs to be taxed in accordance with Legal Aid Regulations.
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( I. Wong )
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Deputy District Judge |
Representation
Mr Dominic Yeung, instructed by Fung & Fung, Solicitors for the petitioner on the instructions of the Director of Legal Aid
Mr Samuel Yip, instructed by Fairbairn Catley Low & Kong, Solicitors for the respondent
[1] Page 200 of the Bundle
[2] Page 204 of the Bundle
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[4] Page 9 of the Bundle
[5] Page 136 of the Bundle
[6] Page 139 of the Bundle
[7] Page 367 of the Bundle
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