THE COMMISSIONER OF INLAND REVENUE v. YEUNG CHUENG FOON DAVID t/a HONG KONG EMBROIDERY CENTRE AND ANOTHER

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J U D G M E N T

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Silke, V.P. :

1. We dismissed this appeal with costs and stated that we would give our reason later. This we now do. They will be handed down to save further costs.

2. In 1983 and 1984, the Commissioner of Inland Revenue - "the Plaintiff" obtained default judgments in three actions filed in the District Court claiming unpaid tax against the Defendant, David Yeung Cheung Foon. The total amount of the judgments was $104, 995 and costs. These judgments remained unsatisfied and the costs have now been increased by the expenses of unsuccessful execution.

3. In January 1988, the Plaintiff obtained three charging Orders Nisi against the property known as Flat A7, 1st floor, Viking Gardens, No 42, Hing Fat Street, Causeway Bay. The premises - "the charged premises" - is registered in the name of the Defendant and of his mother, Tin Wing Lan - "the mother" - as joint tenants.

4. Before the hearing of the application to have the Orders Nisi made absolute the mother on 25th June 1988, took out a summons in each of the actions asking for two orders: (1) that she be joined as a party (2) that the Orders Nisi be discharged.

5. These summonses were consolidated and were heard on 15th September 1988 by His Honour Judge Yeung. While the terms of the drawn up Order suggests that the several summonses were dismissed in toto in fact, in the course of the hearing, leave was given to the Applicant to join but at its conclusion the judge refused to discharge the Orders Nisi.

6. By leave granted by the trial judge on 21st October 1988, the mother now seeks to appeal against the Order refusing to discharge the Orders Nisi.

7. When the matter first came on for hearing in the District Court argument was advanced to the trial judge which clearly indicated a factual dispute. The matter was adjourned to permit the mother to be present, give evidence and be cross-examined. In neither the District Court nor in this Court has the Defendant made any appearance.

8. It was the mother's case, and indeed the basis of the submissions before us, that she was the sole provider of all of the purchase money for the charged premises. An interesting discussion ensued, on the basis that this was so, as to whether there was a resulting trust and as to whether of not there was a presumption of advancement, mother to son, which would oust such a trust.

9. The history of the matter was thin. In 1978, a hair saloon business which the mother and Yeung Chak Chuen, her husband - "the husband" - had carried on in Macdonnell Road was moved to a premises in Patterson Street, Causeway Bay. Those premises were purchased in 1978, the purchase being registered on 2nd June 1978 in the names of the husband and the mother as joint tenants. They then also lived there.

10. In 1981, the husband had had a stroke and was from thereon incapacitated in the management of his own affairs and prevented from taking part in the business with his wife.

11. In 1985, the business ceased to operate and the premises in Patterson Street was rented out. The Business Registration Certificate in the mother's name was cancelled. The charged premises were purchased in August 1985 and the Defendant and the mother were registered as holding as joint tenants on 18th September 1985.

12. The price was $370,000. An initial deposit of $10,000 was paid by cheque drawn on the mother's account with the Hang Seng Bank Limited. A further cash sum of $64,000 was paid by way of cashier order. The balance of the purchase price, $296,000, came from a mortgage of the charged premises with the Kincheng Banking Corporation. The mortgage documents were signed by both the mother and the Defendant. That mortgage was, and still is, paid in installments of $3,600 per month.

13. It was the mother's evidence that the deposit of $10,000 was her money which came from the business which had been carried on in Patterson Street. The sun of $64,000 and was made up of the deposit of $25 000 and the first rent of $9,000 received on the initial letting of the premises in Patterson Street. She topped it up from cash monies which she kept at home as she did not have much confidence in banks. She was a participant in a chit fund.

14. To assist in the repayment of the mortgage the mother opened a savings account in her own name in the Kincheng Bank. The money She paid into that account came from the rents received from the Patterson Street premises. She also paid management fees, electricity, rates and other expenses for the charged premises.

15. It was her claim throughout that all the were her sole monies. Her son never lived in the charged premises which were inhabited since 1985 by herself, her husband and her youngest daughter. In 1970, the son had cohabited with a woman described as his "wife", an arrangement which was not to the mother's liking. The son had assisted her in finding the charged premises and he, the husband and herself had gone to look at it. The son's name appeared in the assignment because it was necessary to procure the mortgage upon which his name would, of course, also appear and, as both she and her husband were old, the bank might not agree to provide mortgage facilities unless there was a younger person involved. She went on that apart from signing the formal documents for the mortgage the son had nothing to do with h the premises and that at the time they were purchased she had no intention of giving him a share.

16. The son to now in West Germany where one of the six daughters of the family had recently contacted him. As a result of this contact, the son executed a deed under seal before the British Vice-Consul in Frankfurt Am Main which deed was produced at trial. It purports to he on behalf of the son as trustee declaring that all his share and interest in the charged premises are held in trust for the "cestui que trust", the mother. It undertook to assign to the cestui que trust his share and interest at her request.

17. Three issues were framed by the trial judge. These were:

"(1) Whether the mother was the sole contributor of the purchase money of the said property.

(2) If so whether by having the son as a joint tenant she intended to advance the said property to him as a gift.

(3) Whether the presumption of advancement applies in the circumstances in the present case."

18. The trial judge, as we have said, heard a great deal of argument, as indeed have we, on the issue of the presumption of advancement applying as between the mother and the son. He followed the aged decision in Pennett v Bennett [1879] 10 Ch D 474. There was further argument as to whether there was a resulting trust of the son's share in the charged premises in favour of the mother.

19. The judge found the evidence of the mother unconvincing. Mr Erik Shum, who appeared for the mother both here and below, attacks that basic finding and in particular the judge's finding, and the reasons grounding it, that he doubted the entire purchase money to have come from the mother. Mr. Shum accepts that unless can show the mother to have been the sole contributor to the purchase of the charged premises then he will have no case.

20. The mother's cheque for $10,000 deposit was paid against another cheque deposited in her account on the day prior to its being drawn. There was no evidence before the trial judge as to the provenance of that cheque. When the order for $64,000 was issued there had been total deposits of $79,000 paid into the account which funded that order. Included in the total were five cash deposits, one in the sum of $45,000. This at the time the business was disposed of.

21. In the absence of any positive evidential basis for his submission Mr. Shum falls back on a presumption of advancement arising from the relationship of husband and wife and that which he terms "the transfer" of the monies into the mother's hands. But this would he to raise a presumption against an invalid husband unable to handle his own affairs without assistance. The effect of this would be to deny him any rights over the property which he jointly owns with the mother and to assume that he had, without any explicit act, abrogated those rights in her favour.

The mortgage repayment money comes solely from the rent of the Patterson Street premises.

Mr Shum's submissions entails the proposition that there must be a Presumption of advancement in favour of the wife emanating from the husband which made all the monies from the Patterson Street premises and the closing down of what had once been their joint business those of the mother. The money became hers. On the evidence we think it incontrovertible that while the mother may have been dealing with the money as if it were her own she was in fact dealing with it on behalf of her husband, under a duty to protect the latter's interest, and managing the affairs of the family.

The judge was criticised for a further finding that this family was a traditional and close knit Chinese family. We do not think this is criticism to be justified. There were seven daughters of the family, six of whom were married. The Defendant was the only son. The transaction entered into and the methods used to effect it are, in our judgment, strongly indicative of the parents seeking to ensure thewelfare of their son upon their deaths.

We consider the trial judge was entitled, and indeed could hardly have done else, to come to the conclusion he did on the evidence. We reject Mr. Shum's submission.

Despite being asked by Mr. Hinchen, who appeared on behalf of the Commissioner, to express our views upon issue of advancement and the application of Bennett v Bennett to Hong Kong Circumstances, we decline, with respect, to do so. Such consideration is unnecessary to our decision. We would expressly leave the issue of whether the terms of an ancient Chancery decision can, in 1989, have application to the circumstances of Hong Kong.