LC v. LCHW AND OTHERS

FCMC 6311/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 6311 OF 2013

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JUDGMENT
(Preliminary Issue)
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The Application

1.  This is the trial on a preliminary issue regarding the beneficial ownership of the matrimonial home (“the Property”). 

2.  The petitioner in the present proceedings is the wife and the 1^st respondent the husband.  The 2^nd respondent, the younger sister of the husband, is the Executrix of the estate of their mother (“the mother”).  She is acting for the estate in the capacity as the 2^nd respondent but she is also the 3^rd respondent, pursuing a separate claim in her own capacity.

3.  For convenience, I shall refer to the wife as “P”, the husband as “R1” and the younger sister as “R3” and where appropriate if I am referring to her in terms of her capacity as the personal representative of the mother, “R2”.

4.  P’s claim, in gist, is that R1 has half of the beneficial interest in the Property but this contention is contested by R1 and R2/R3.

5.  Since the Property constitutes essentially the whole of the family assets, P and R1 agreed that the ownership of the Property has to be determined first before embarking onto FDR.

The Background

6.  The marriage in question is a Hong Kong/Mainland marriage.  P was from the Mainland and R1 is a local Chinese.  They were married in Hong Kong in November 2007.  A son was born in January 2009 and he is now 6 years old. 

7.  In May 2013 P petitioned for divorce on the ground of one year separation with consent.  As of now, decree nisi has not been granted.

Some Salient Facts

8.  R1 has 3 siblings:  an elder sister, a younger sister (ie R3) and a younger brother.  The Property was a public housing unit.  R1 and his siblings together with their parents started to live there since 1985.

9.  In 2001, the Government offered to sell some public housing units to their tenants under what was called the Tenant Purchase Scheme.  As a result, the Property was purchased on 23 May 2001 in the names of the mother and R1 as joint tenants.  It is common ground that under the scheme the only mode of legal ownership is joint tenants and tenants in common is not allowed.  The purchase price was $269,700 and the purchase was financed by a mortgage of $200,000, repayable by monthly instalments of about $2,800.

10.  Like many families in Hong Kong, when the children get married they move away and become independent.  This also applied to R1’s siblings but not for him because of his own financial problems. Thus, at the time of the purchase in 2001, all of R1’s siblings had moved away leaving him and his former wife living with his parents in the Property. 

11.  In March 2002, R1 divorced his former wife and the latter moved out from the Property. 

12.  On 23 June 2003 (ie about 2 years after the purchase), the mortgage was redeemed by the mother.  It is undisputed that the down-payment and the redemption money of $147,601.60 were paid by the mother.

13.  Again, it is also not in dispute that the mother paid on R1’s behalf his liabilities in his 2 HSBC credit cards on 10 April 2008 in the respective sums of $52,074.54 and $203,739.81, totalling $255,814.35.  Two days before this, R1 signed a homemade confirmation dated 8 April 2008 in Chinese (“the Confirmation”) waiving all his interest in the Property. 

14.  Since the Confirmation is of significance to the present dispute, I set out its contents in its entirety below:

“本人（第一答辯人）身份(sic)證號碼（XXXXXXX）		立約日期2008 / APR / 08
2003 / JUN / 23（物業名稱）之供款		HK$147,601.60
2008 / APR / 10匯豐銀行信用卡欠款
	5411-8002XXXX-XXXX	HK$52,074.54
	4921-1100-XXXX-XXXX	HK$203,739.81
	合供欠款港幣	HK$403,415.95

以上欠款都是本人之母親（XXX）身份(sic)證號碼XXXXXX（X）女士清還，本人一直沒有履行業主的責任。所以本人放棄上述的物業之業權，將它全給回我母親，而日後有關此上述之物業賣買，本人均不會收到任何利益。”
立約人 (簽署)”

15.  Meanwhile, on 8 October 2007, P and R1 were married in Hong Kong.  

16.  In about June 2010 (R3 said it was early 2010), the mother was diagnosed with cancer.

17.  Then on 24 June 2010, the mother issued a Notice to Sever the Joint Tenancy and have it served on R1 and registered at the Land Registry by her solicitors.  On the same day, the mother also executed a will appointing R2 to be her sole executrix of the will (“the Will”).  Under the Will, only R3 and the younger brother were the beneficiaries of the estate of which she was given 80% of the share and the younger brother had 20% only.

18.  On 17 August 2011, P and the son were granted residency in Hong Kong. They moved into the Property to live with R1 and his parents. However, the relationship deteriorated quickly and the couple separated on 22 March 2012, signified by P and the son moving out of the Property.  The period of P’s occupation was just about 6 months.  P’s version is that she and the son were expelled by the family.  A few days before this, the mother passed away on 19 March 2012.

19.  P then commenced the present divorce proceedings on 18 May 2012. 

20.  As for the estate of the mother, Probate was granted in favour of R2 on 3 July 2012.  Hence, as of now, R1 and R2 as the trustee of the estate of the mother, hold the Property in law as tenants in common in equal shares.

The Parties’ Cases

P’s Case

21.  P’s case is straight forward.  The Property forms part of the matrimonial assets in relation to the ancillary relief.  It is on the basis of her belief from what she had been told by R1 and the mother and also of R1’s position as 50% legal owner of the Property that she resists R2/R3’s claim.

R1’s Case

22.  In his Form E dated 25 July 2012, R1 claimed to be holding the Property on trust for the mother.  In his affirmation, he said that save for 3 monthly mortgage instalments, he had never made any contribution towards the acquisition of the Property; all the other monies were paid by the mother. In about February 2008, he owed HSBC a total of $255,814.55 and the mother paid for him.  Therefore, R1 was asked and he did sign the Confirmation acknowledging his indebtedness to the mother in the total sum of $403,739.81 and relinquishing his interest in the Property.  Thus, he was just holding the bare legal title for the mother. 

R2 and R3’s Case

23.  R2’s initial position, as has been clearly set out in her 1^st Affirmation dated 31 December 2013, is that the whole of the Property was beneficially owned by the mother.  Upon her death, the Property passed to the estate for administration and accordingly, she is personally entitled to 80% of all the beneficial interests of the estate, including the Property and her younger brother is entitled to the remaining 20%.  R1 was merely a trustee for the mother.  To that extent, her case is consistent with that of R1.

24.  However, in her capacity as R3, she is putting forward an alternative case.  She claims it was planned initially that the Property was to be purchased in her name and that all the monies towards the acquisition of the Property, ie the down-payment, the mortgage instalments and the redemption money were in fact paid by her, therefore she has always been the sole beneficial owner of the Property.  In other words, both the mother and R1 were her trustees holding the Property for her.

R3’s Application to Intervene

25.  Although both P and R1 did not object to R3’s application, in the callover hearing of 25 February 2014, I raised the concern that apparently not only that the younger sister was advancing 2 inconsistent cases but also that she was seeking to deprive the younger brother’s interest in the Property, there were clear conflicts of interest in her capacity as the executrix of the estate of mother and in her own capacity.  The application was therefore adjourned for parties’ further consideration.  Subsequently, the court was presented with a Deed of Family Arrangement dated 3 April 2014 whereby the younger brother waived and disclaimed all his interest in the Property.  Leave was therefore granted on 15 May 2014 for R3 to be joined.

The Legal Principles

26.  The parties agree that R1 and R2/R3’s cases are basically premised on common intention constructive trust.

27.  In Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432, the House of Lords held that where a property is acquired as a home and registered in joint names, but where there is no express declaration of trust, the beneficial ownership is also joint regardless of the contribution to the purchase price.  The Head Note of the judgment read as follows:

Held , (1) (Lord Neuberger of Abbotsbury dissenting) that where a domestic property was conveyed into the joint names of cohabitants without any declaration of trust there was a prime facie case that both the legal and beneficial interests in the property were joint and equal; that the onus of proof lay upon any party seeking to establish that equity should not follow the law; that such a party had to prove that the parties had held a common intention that their beneficial interests be different from their legal interests, and in what way; that in order to discern the parties' common intention the court should look at the parties' whole course of conduct in relation to the property; that the law had moved on from the presumption of a resulting trust and many more factors other than the parties respective financial contributions might be relevant to divining their true intentions; and that when all relevant factors had been taken into account, cases in which the joint legal owners were to be taken to have intended that their beneficial interests should be different from their legal interests would be very unusual”

28.  In the same judgment, Baroness Hale said the following:

“56. Just as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is joint legal ownership is joint beneficial ownership. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases it is upon the non-owner to show that he has any interest at all. In joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest.

…

68. The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual. Nor may disputes be confined to the parties themselves.  People with an interest in the deceased's estate may well wish to assert that he had a beneficial tenancy in common. It cannot be the case that all the hundreds of thousands, if not millions, of transfers into joint names using the old forms are vulnerable to challenge in the courts simply because it is likely that the owners contributed unequally to their purchase.”

29.  And Lord Neuberger said in paragraph 109 of the same judgment:

“109. In the absence of any relevant evidence other than the fact that the property, whether a house or a flat, acquired as a home for the legal co-owners is in joint names, the beneficial ownership will also be joint, so that it is held in equal shares. This can be said to result from the maxims that equity follows the law and equality is equity. On a less technical, and some might say more practical, approach, it can also be justified on the basis that any other solution would be arbitrary or capricious.”

30.  It should also be noted that in para 69 of Stack v Dowden, Baroness Hale emphasized on the domestic context which is “very different from the commercial world.  Each case will turn on its own facts”. Her Ladyship then went on to list out many factors other than financial contributions which may be relevant to divining the parties’ true intentions. 

“69. In law, “context is everything” and the domestic context is very different from the commercial world. Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties' true intentions. These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties' relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses. When a couple are joint owners of the home and jointly liable for the mortgage, the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is owner of the home. The arithmetical calculation of how much was paid by each is also likely to be less important. It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally. The parties' individual characters and personalities may also be a factor in deciding where their true intentions lay. In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they always take pride of place over natural love and affection. At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.”

31.  Subsequent to Stack v Dowden, the English Supreme Court in Jones v Kernott [2011] UKSC 53; [2012] 1 AC 776 clarified some the ambiguities arising from its previous decision in Stack v Dowden.  Speaking of the starting point for analysis, there is a difference between the situation where a property was acquired in joint names and the one where it was in a single name.  Lord Walker said in para 17:

“17. The starting point is different because the claimant whose name is not on the proprietorship register has the burden of establishing some sort of implied trust, normally what is now termed a “common intention” constructive trust. The claimant whose name is on the register starts (in the absence of an express declaration of trust in different terms, and subject to what is said below about resulting trusts) with the presumption (or assumption) of a beneficial joint tenancy.”

32.  It is accepted that the parties’ common intentions may be changed subsequent to the acquisition of the property.  Lord Walker said in para 14:

“14. It was also accepted that the parties' common intentions might change over time, producing what Lord Hoffmann referred to in the course of argument as an “‘ambulatory’ constructive trust”: Lady Hale, at para 62. An example, given in para 70, was where one party had financed or constructed an extension or major improvement to the property, so that what they had now was different from what they had first acquired. But of course there are other examples. The principal question in this case is whether this is one.”

33.  Thus, in considering the ownership of the Property, the court would need to look at the intention of the parties.  Inferred intention and course of dealings and conduct are all relevant:  see Ip Man Shan Henry v Ching Hing Construction Co Ltd [2003] 1 HKC 256.

34.  Locally, in Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343, it was held by Hon Lam (as he then was) that the determination of beneficial ownership under a common intention constructive trust involved a two-stage test. First, the key was to establish the parties' true common intention that the claimant should have a beneficial interest. Second, it was necessary to ascertain the extent of the parties' respective interests in the property, by adopting a holistic approach to quantification, surveying the whole course of dealing and conduct which threw light on what shares the parties must have intended.  The court could not impose its own view of what it considered fair.

Discussion

35.  There are 3 milestone dates when the common intention of the parties would need to be considered.  They are:

(1) When the Property was acquired back in 2000;

(2) When R1 signed the Confirmation on 8 April 2008; and

(3) When the mother issued the Notice of Severance on 24 June 2010.

36.  When it came to the closing submissions, Mr Chow, on behalf of R1, agreed that at the time of the purchase, not only that on the face of the legal title, both R1 and the mother were joint tenants, they were also beneficial joint tenants in equity.  This is a new position.  Prior to this concession, if I may call it, R1’s stance was that all along starting from day-one he was merely a trustee holding the Property for the mother.   With this concession, both P and R1 are now in agreement that at the time of the purchase and up to the time when R1 signed the Confirmation, he remained as one of the 2 beneficial owners of the Property.

37.  Further, both Ms Tsui and Mr Chow agreed that the Confirmation of 8 April 2008 has the effect of disposing R1’s interest of and in the Property in favour of the mother, albeit Ms Tsui preferred to term it as a “suspension” of R1’s interest.  I will return to this in the latter part of this Judgment.

38.  What departs Ms Tsui and Mr Chow is the legal effect of the Notice of Severance (“the Notice”).  Ms Tsui argued that the Notice has the effect of giving half of the ownership of the Property to R1 but as for Mr Chow, he argued that the Notice simply has the effect of severing the legal title of the Property, for the reason that at the time of the Notice, R1 did not have any beneficial ownership in the Property at all.

39.  It is because of this latest development that both Ms Tsui and Mr Chow agree that vis-à-vis P and R1, the stand or fall of their respective case depends on the legal effect of the Notice.

40.  As for R2/R3, I must confess that I have some difficulty in understanding her stance for the reason that her stance as R2 vis-à-vis that of R3 is inconsistent to one another. 

41.  R2’s case is that at the time of the purchase and up to the Confirmation, the mother had always remained the sole beneficial owner of the Property.  R1’s name was included as one of the registered owners simply for the purpose of obtaining a mortgage from the bank.  It follows that the Confirmation signed by R1 would have no legal effect on the beneficial ownership of the Property and as far as the Notice is concerned, it only had the legal effect of severing the legal title.  In this regard, R2 is in agreement with R1.

42.  As for R3’s position, Mr Li, counsel for R2/R3 submitted that this is merely an alternative claim.

43.  Notwithstanding the “agreement” between P and R1 as regards R1’s ownership of the Property up to the Confirmation, there are still the claims of R2/R3 which necessitate an examination of the whole course of dealings starting from the time of purchase in order to ascertain the common intention of the parties at different stages. 

44.  To start with, I will dispose of P’s evidence first.

P’s Evidence

45.  P moved to Hong Kong with the son to live with R1 and his parents in August 2011 but was expelled from home in about March 2012.

46.  As regards R1’s allegation that he always mentioned to P that he owed the mother some credit card debts, P said it was a matter of the past when R1 was in his first marriage.  She has no recollection that R1 had ever told her that any money was repaid by the mother.  She also said that she never paid much attention to and did not ask R1 how much he earned from his job.  It was during these proceedings that she came to know that R1 was earning $10,000 odd per month.

47.  She maintained she did not know R1 was addicted to gambling.  She was ambiguous as to why she said so.  At one point she vaguely said when she had moved to Hong Kong in 2011 R1 had told her that he did not have any gambling habit.   However, she admitted that before then when she came to Hong Kong to stay with the family on temporary basis, the mother had on various occasions asked R1 whether he was in debts and the answers given by R1 were in the negative.  To me, it is quite unbelievable that upon hearing this, she did not ask or express her concern on this matter and continued to harbour a belief that R1 was debt-free.  Her explanation that she gave R1 as much room as possible is quite difficult to understand.   Further, she came to Hong Kong and started to stay with the family as from August 2011.  Before she left the matrimonial home in March 2012, there was a lapse of 6 to 7 months, it is hard to believe that she was not aware of R1’ gambling habit.

48.  On the ownership of the Property, she testified from what she heard from the mother, the Property was intended to be given to R1. She gave evidence that during the marriage from time to time when she chatted with the mother about the future, the mother mentioned that the property was intended to be given to R1, and on one or two occasions, R1 was there too, but she maintained that the mother never mentioned to her on how the estate was to be dealt with upon her demise.  Further, she also said that the mother and her children were very sensitive on the issue of division of assets and they never discussed the matter in front of her.  This piece of evidence is clearly contrary to what she said in para 11 of her affirmation dated 10 March 2014 where she said the mother had mentioned to her that her estate was to be divided equally amongst the 4 children. Faced with this contradiction, P explained that this was not said to her but in fact said by the mother to a relative who then told P of this.  At one time, she said the time when she learned of this from the relative was the time when she had already left the matrimonial home and stayed in the shelter, which should be after 22 March 2012, then she changed to say it was around mid of 2011 and then finally said it was a few months after she had come to Hong Kong.  P however refused to disclose the identity of the relative.  To me, this inconsistency is fatal. There is simply no reason why there is such a discrepancy.

49.  P also gave evidence that during the marriage, on a few occasions, R1 told her that he did not have any interest in the matrimonial home.   P said she once had a heated quarrel at home with R1’s elder sister.  A social worker then tried to help by suggesting them to apply for a public housing unit but R1 delayed in lodging the application.  Then upon the guidance of the relative, P obtained a search against the matrimonial home at the Land Registry and found out that R1 was one of its owners.  Then later on, there was another heated quarrel on 22 March 2012 that necessitated the involvement of the police and R1 was called to return home from work to calm P down and it was upon this incident that P and the son moved to the shelter.  It was on that occasion that R1 informed her he did not have any interest in the Property. When R1 was being confronted by P with the Land search record, R1 did not give a reply.  Mr Li, counsel for R2, rightly pointed out that P’s affirmation made no reference at all to this event.

50.  For the reasons set out above, I do not find P’s evidence credible.  In any event, it is clear that even on her own evidence, she did not know much about R1, both before and after the marriage.  Certainly, she had no knowledge as to what happened at the time of the purchase, the Confirmation and the Notice.  Accordingly, I give little weight to her evidence.

51.  I now come to R1 and R3’s evidence.  They are discussed and analyzed in terms of the 3 milestone dates.

From Time of Purchase up to the Confirmation

R1’s Evidence

52.  According to R1, the mother had worked in some casual jobs such as working as a newspapers hawker or a cleaner.  He only knew that the mother had been engaging in investments in stocks a few years before her death but he did not know the details.

53.  R1 started to live in the Property since 1985.  That was the situation up to the purchase in 2000 when at that time R1’s former wife was also living there.

54.  At the time of purchase in May 2000, the mother was already retired.  He said that since the mother was old and did not have a job, his name was added as a purchaser because he was younger and had a job.  This helped in obtaining a mortgage.   The mother told him of this intention shortly before the purchase: ie for applying for mortgage but he added that this was also the requirement of the Housing Authority: they needed a younger owner. He knew he was not the beneficial owner of the Property at time of purchase.

55.  R1 agreed that at the time of purchase, the mother paid for him debts of about $40,000.  He did not know this was R3’s money at that time.  He only learned of this when the mother paid the credit card debts for him in 2008 which led to the signing of the Confirmation.  Nevertheless, he agreed that the repayment of this $40,000 was to facilitate his application for mortgage loan.

56.  He cannot now recall whether there was any family meeting on the purchase and he further said the mother informed him of her decision after she had made up her mind to buy and discussed with him on buying the property in joint names.  

57.  Arrangement was made for the monthly instalments to be paid by way of auto-pay from R1’s bank account.  It would appear that the account was specifically opened for this purpose. 

58.  However, R1 just paid about 3 instalments at the very beginning but then because he had no money, the mortgage instalments were paid by the mother.  Apart from these 3 instalments, all the monies for the acquisition of the Property were from the mother.  He has no knowledge of R3’s alleged financial contributions towards the acquisition of the Property and in his affirmation of 10 February 2014 he affirmed that it was in the present proceedings that he first heard of these allegations.  In the same affirmation, he put R3 to prove her case

59.  On the 3 instalments that he paid, R1 gave evidence in court that the mother in fact did not require him to pay the mortgage payments, she just asked him to reserve his contribution to meal costs (伙食) for mortgage payments.  The mother told him that he could just deposit the meal costs into the account and she would then use the money for mortgage payments.  To him, he regarded these monies as meal costs.

60.  He did not ask the mother whether he had an interest in the Property.  He had not thought of that and he added that right from the beginning he had known that the Property belonged to the mother entirely. However, he agreed that at that time he understood the meaning and effect of joint tenancy.  Finally, under cross-examination he agreed that on the face of it the arrangement was that he was to pay the mortgage payments; and later on, he even agreed that the mother’s intention was for him to be responsible for mortgage payments. 

61.  Initially he said that subsequent to the said 3 instalments, he did not pay any further but then he changed to say he paid less.  In most of the months, he paid just $1,000 to $2,000.  If that is the case, it is not the case where he failed to pay mortgage payments entirely but just not in full.  He testified that even after the redemption of the mortgage he continued to pay in the region of $1,000 to $2,000.  When it was put to him that he did not usually have dinner at home and therefore did not incur any meal costs, he changed to say the money was treated as his rent.

62.  Under cross-examination, he agreed that he had been paying about $2,000 to $3,000 to the mother since he started working at about 18 years old (ie in 1982).  There were about 6 to 7 occasions that he ceased payments for several months when he was unemployed.

63.  R1 gave evidence that the mother decided to obtain a release of the mortgage because of his debts and the mother wanted to regain the entire ownership of the Property.  However, under cross-examination he also agreed that because he had no money, the mother decided not to rely on him so she paid off the mortgage in one go.  She had savings anyway.

64.  R1 said he never heard from the mother that they originally wanted to buy the Property in the name of R3.  He never knew that monies for the purchase came from R3 as alleged.  Even before the death of the mother, R3 never mentioned that she had an interest in the Property. Also, he never heard from the mother that she was saving up all the money given to her by R3 as alleged.  Other siblings also gave the mother money but he did not know the purpose.  He believed that R3 paid the most to the mother amongst the siblings because she has had a stable job and better income.  But R1 did not know exactly how much she paid.  He never had the title deeds.   He did not know that mother gave the title deeds to R3.

65.  In cross-examination, R1 agreed that the mother had no real intention to ask him to leave.  In fact, he never did.

R3’s Evidence

66.  R3 is now 41 years old.  She is the third in the family.  Same for R1, she had been living in the Property since the family moved into it in 1985.  She was then about 12 years old.  She moved out in 1998 when she got married.  Hence, at the time of the purchase she was not living at the Property.

67.  After having completed Form 5, she worked as a receptionist for a few months before joining the police.  She is now a senior police constable.  She started giving money to the mother as soon as she started working.   She stressed that she gave money to her parents out of her care for them.

68.  She affirmed that when the family learned of the Government’s plan, her parents discussed about the purchase with her because throughout the years she had given them a lot of money.  She reckoned that from August 1992 to April 2001, she had given about $1,314,000.  Her parents asked her to hold the title of the Property and they assured her that the Property would be left to her in the future.  She accepted the suggestion and indicated that she intended to take up the mortgage.   However, later on, upon inquiry, she realised that it was not appropriate for her to become the owner for the reason that she was already in receipt of housing benefit as a government employee. It was then agreed that R1 was to hold the Property for her.  In order to enable R1 to obtain a mortgage for the purchase, she paid $40,000 to settle R1’s debt in early 2000.

69.  She emphasized that she gave money to the mother continuously ever since she started working.  While as a receptionist, she gave $2,000 and she increased the sum after becoming a police officer.  The mother indicated that she would save up the money and invested in stocks for her.  She conceded that the mother could use the money for 2 purposes.  First, if the mother was short of cash, she could use it and secondly, the mother saved up the money for R3.  She however admitted that no specific or special account was set up to keep the savings.  There was also no mention of what would happen if the mother had spent all the money nor was there any agreement on how much was to be saved up.  As a matter of fact, the mother did not tell her how much money was left on a monthly basis and there was no calculation or reckoning of that sort and that both the mother’s and her money were deposited into one single account.  She did not care how much the savings were and she never asked the mother.  Even before the purchase, the mother did not tell her how much she had saved up for her.  Further, she accepted that the elder sister also had been giving the mother money and that the mother might have given her money to R1. 

70.  When her son was born in 2000, just as what the mother did to her other grand-children, the mother helped in taking care of her son but she did not pay more for this.  At that time she was giving the mother $4,500 per month.  After the purchase of the Property, she increased it to $7,000; the increase was specifically mentioned by her for the purpose of mortgage payments.  She said that upon the redemption of the Property, the mother handed over the title deeds to her for safe custody.

71.  As for the amount of money that she alleged to have given to the mother throughout all these years, R3 admitted she is merely based on her recollection and she has no records.  She paid in cash because the mother preferred to receive cash.  When being asked by Ms Tsui on why they did not open a joint account for keeping her savings, R3’s reply was that because the mother helped her to save and to invest in stocks.  She said that the stocks belonged to her and the mother.  To me, this does not answer the question.

72.  R3 admitted that at all times she discussed with the mother only on the ownership issue and the arrangement regarding mortgage payments and never held any discussions between her, R1 and the mother.  There was no discussion with R1 on when or how the Property was to be returned to her. She knew R1’s account was used for mortgage payments.  She had not thought of obtaining some documentary proof from R1 for the reason that the mother handled for her.  That said, R3 claimed that R1 all along knew that the beneficial interests of the Property belonged to her because from what she heard from the mother, the mother had told R1 before the purchase that the money came from R3 and R3 paid the mortgage payments for him (“用你個名，阿妹同你供”)

73.  When being asked if she did not believe in R1 why she would have agreed to have R1 registered as one of the owners, her answer was that R1 was the only one available.  She was then living in police quarters and both the elder sister and the younger brother had their own reasons.  She confirmed that she never told R1 that the mother was the trustee of the Property for her.  When being asked of why she did not tell R1 at the time, her answer was because she had already talked to the mother and she confirmed there was no discussion at all between her and R1.  However, this is in stark contrast to what she affirmed in her affirmation dated 31 December 2013, where she said, “… My mother had told me that she had discussed with ( R1) for using his name to hold the property with her.  (R1) had assured me that it would be no problem.” I find she has no reasonable explanation on this discrepancy.

74.  She gave evidence that the mother disliked R1 because he did not contribute any meal costs and frequently asked the mother for money.  That is the reason why the mother demanded him to move out of the Property.  She further said that the mother and the son had very little communication with each other.  From what she heard from the mother, R1 did not give $2,000 to the mother.

75.  Ever since childhood she seldom talked with R1; it was not necessary for her to talk to him.  She also mentioned that R1 once did something that made her very unhappy.

Discussion

76.  R3’s case essentially boiled down to this: she discussed with her parents before the purchase, the mother agreed to purchase the Property for her, and that all monies for the purchase were made by the mother using the money she had given to her over the years.

77.  My initial observation is that if R3’s version is true, it may amount to a fraud on her employer.

78.  My second observation is that given that the monies were already given to the mother, it does not necessarily mean that what were left must be R3’s monies.  

79.  I agree with Ms Tsui that R3 has no proof at all of her contribution to the purchase price and/or the monthly instalments.  R3 said after the purchase, she increased her monthly payments to the mother by $2,500.  It is to be noted that first of all the said sum of $2,500 was not sufficient for the monthly instalment and secondly, the money did not go directly to repayment.  It would be more logical that if it was her property, she would have wanted to make sure that the monthly instalments would be paid on time without any hiccups by depositing the money into R1’s account or by having some arrangement in place so as to ensure that the money would go to repayment.  The fact that the mother redeemed the mortgage about 2 years after the purchase is also contrary to R3’s case of paying an extra sum of $2,500. If there was such an agreement, there was no need for the mother to do so.  To this, Mr Li accepted that R3 has no explanation.

80.  On the evidence before me, I find that the monies were the mother’s monies.

81.  On the other hand, as for R1, notwithstanding that he tried to down-play his role in the purchase by the portrayal of a passive role in the transaction and by saying that he made little or no contribution to the monthly instalments, it is clear that the arrangement was for him to be responsible for the mortgage payments.

82.  Ms Tsui submitted that the mother’s initial intention was to have R1 to pay the mortgage payments and at the end upon her demise, he would become the sole owner.  I agree.

83.  The fact that the mother arranged a new bank account opened in R1’s name for the payment of monthly instalments together with the fact that she asked R1 to deposit the money (whatever label it was, whether it was “meal costs” or mortgage payments) are telling.  It shows the common intention of the mother and the son. The intention clearly was that the Property was purchased with both the mother and R1 as beneficial joint owners.  The mother funded the initial down payment and R1 would be responsible for the monthly mortgage instalments.  This would guarantee that R1 brought money home and would not spend elsewhere. 

84.  The burden is on R3 to establish that there was a “common intention” constructive trust.  However, she admitted that she had never had any discussions with R1.  

85.  On the evidence of R3, there was no discussion at all between her and R1 over the ownership or interest in the Property, whether before or after the purchase.  It is clear that R1 was not aware of R3’s claim of her interest.  His Form E filed on 25 July 2012 stated that the mother has 100% interest in the Property.  R3’s version that she relied entirely on the mother to deal with the matter is utterly unbelievable. 

86.  It is clear that R3 has had a very dim view on R1 if not to the extent of dislike or loathing.  She mentioned she was very angry when knowing that he owed banks $200,000 though she denied she was very angry when she learned that the mother used their money (ie mother and R3’s) to repay for R1.  It is also clear that R3 had little communication with R1.  When she was to prepare the Schedule of Property for the purpose of obtaining the Probate, she communicated through the elder sister to obtain the loan figure from R1.  In my view, under such circumstances, it is unbelievable that she would have allowed R1 to be her trustee.

87.  Thus analysed, on the evidence before me, R3 failed to establish that there was a common intention that she should have a beneficial interest in the Property at the time of its purchase.

88.  In my judgment, if R3 fails to establish that she was the sole beneficial owner of the Property at the time of the purchase, her alternative case must fail because there is no suggestion on her part that there was subsequently a change in the common intention of the parties.

The Confirmation

89.  R1 confirmed in his affirmation dated 18 October 2013 that it was at his request that the mother paid off his debt of $255,814.35 on 10 April 2008 for him.  This was part of the reason for the Confirmation.

90.  He initially testified in court that the Confirmation was written by him.  Before doing this, he did not seek any advice from solicitors or indeed from anyone.  During cross-examination, he had a slip of the tongue that in fact it was given by his elder sister and he finally admitted that he was telling lie and the truth was it was drafted by his elder sister and was given to him to sign.

91.  R1 said he signed the Confirmation in front of the mother and the elder sister on 8 April 2008.  That was at the request of the mother to confirm his liability.  The Confirmation was kept by the elder sister and he was not given a copy after signing.  He only asked for a copy of it when he had to prepare the Form E for the present proceedings. 

92.  R3 said she was not aware of the Confirmation.  No one had ever mentioned to her about this Confirmation.  I take her to mean this also includes the mother.  The authenticity of the Confirmation has not been challenged by Mr Li.  It is clear that the Confirmation and the settlement of the credit cards liabilities are so intertwined that they could be considered as one transaction but the mother did not inform R3 of this.  If she was the sole beneficial owner right at the beginning, there was no reason why she was not involved in the incident.   The mother would certainly have asked her to handle the incident instead of asking the elder sister.  This incident clearly shows that the mother was using her own money

93.  It should be noted that the Confirmation did not state R1 needs to repay the money but R1 insisted that it has been his understanding that he needs to repay though he never did.  

94.  As Ms Tsui rightly pointed out, if R1 did not have any interest in the Property, there was no reason why he had to be held responsible for the whole of the redemption money; and if R1 did not have any interest in the Property right at the beginning there was nothing for him to waive or forego in the Confirmation.   I agree with Ms Tsui that there must be an agreement between the mother and R1 about the outstanding mortgage, otherwise, it would not have been included in the Confirmation as a debt.  This also reinforced the initial agreement that R1 was to be responsible for paying the mortgage at the time the decision to purchase was made.  The Confirmation is a piece of strong evidence to prove the common intention at the time of the purchase that R1 would be both a legal and beneficial owner.

95.  The next question is the legal effect of this Confirmation.  The simple fact is, as Mr Chow argued, by the time when R1 signed the Confirmation he had already waived and accepted that he did not have any beneficial interest in the Property.  I accept that the common intention of the mother and R1 to share the Property had changed in 2008 as evidenced by the clear wording of the Confirmation.  The beneficial interest of the Property had been solely owned by the Mother since then.

Notice to Sever

R1’s Evidence

96.  R1 gave evidence that the mother from time to time had asked him to move out after she had repaid the credit cards liability for him but he did not because he could not afford to do so.  In any event, he accepted the mother was not serious in having him vacated.

97.  He said that before the Notice the mother did mention to him once or twice about the transfer of the Property to her sole name.

98.  R1 received the Notice by post in end of June 2008. Upon receipt of it, he did not ask the mother what the document was but instead he asked the elder sister; then he changed to say he did not open it but he knew it was English and it was from a firm of solicitors.  To me, it is inconceivable that he did not open it yet he knew it was in English and did not ask. Subsequently, he did ask the mother who replied that notwithstanding that he had half of the share in name, it did not necessarily mean that he had a share in the ownership.  He however said he did not ask the mother why she had to issue the Notice.

99.  Shortly after the Notice was issued, the mother mentioned to him that in future after her demise, she would decide who would be given the Property.  He agreed there was no specific mention of or reference to R3 but he thought it should be R3.   

100.  After P had moved in upon obtaining her single entry permit in 2011, the mother expressed that she disliked P and wanted them to move out.  The mother even indicated that she could provide financial support for him to rent an accommodation.  However, he did not do so because he had no money so the mother allowed them to stay. 

101.  R1 admitted that even when P was still living in the Mainland, he had quarrels with P from time to time over mainly money matters.  Their relationship did not improve but in fact further deteriorated after P had moved to Hong Kong with the son though he never thought of divorce.  His parents were also aware of his discord with P.

R3’s Evidence

102.  After the mother was diagnosed with cancer, she discussed with R3 on the arrangement of the estate.  She was told by the mother that 80% of the assets would be given to her and the remaining 20% would go to the younger brother since the younger brother had given her about $400,000 to $500,000 over the years.  For this the mother sought R3’s permission.  The mother also asked R3 to look for a solicitors firm to do the formalities to implement her arrangements.

103.  R3 affirmed that after seeking legal advice, she and the mother understood that any arrangement against the Property under the Will would be defeated by the doctrine of survivorship.  As R1 had no beneficial interests in the Property, the mother did not intend to leave the Property under R1’s sole name.  Further, given R1’s bad financial records, the mother worried that R1 would incur other debts in the future which might jeopardise R3’s interests in the Property.  R3 further said that the mother intended to take back all the shares of the Property at that time and leave the Property to her and the younger brother by will.  The mother therefore made enquiry with the Housing Authority but was informed that R1 had to move out of the Property first before approval would be considered.  Since R1 did not have the means to move out, the mother gave up this idea.  She also said that the mother had also considered seeking other remedies in court at that time.  She and the mother were advised that if the joint tenancy was severed, the Property would not be left to R1’s sole name through the doctrine of survivorship.  At the end, the mother decided to deal with the estate by way of the Notice and the Will.  R3 confirmed that the mother had been well advised in arranging her assets when she was dying and was fully aware of the implication of a joint tenancy.  On her part, she also fully understood the legal effect of the Notice: it is that 50% of the share would go to R1 under the law.  She accepted that the Notice would not enable her to reclaim the Property but she stressed that its purpose was not to give half of the share to R1.  It was to ensure that he would not be able to get the whole of the Property upon the death of the mother and to render him unable to borrow money on the security of the Property. 

104.  She admitted that she did not ask the mother to demand R1 to move.  She also did not make such a demand after the death of the mother.  R1 would have nowhere to go so she permitted him to stay.

105.  She agreed it is possible that the mother saved up her money in investing in stocks.  It was only at the later stage, in about 2010, after the mother was diagnosed with cancer that she was able to operate the mother’s bank account and her shares account.  Nevertheless, she insisted that at the time of purchase, the mother did ask her to make mortgage payments.  

Why did the Mother issue the Notice to Sever?

106.  R3 admitted that she was with the mother when the latter went to the solicitor.  Before that, the mother also had discussion with her on the matter.  R3 said after having sought advice from the solicitor and after having enquired with the Housing Authority on transferring the Property to the mother’s sole name, the mother had once considered paying the premium for the transfer but eventually had given up this idea as the premium would be of substantial amount.  Again, I do not find this credible.  The undisputed fact is that the estate was worth well over $3,200,000, mainly comprised of listed stocks which were of high liquidity.  The mother could have just sold some of the stocks for the payment of premium.

107.  Further, if it is really R3’s case as alleged that both the mother and R1 were her trustees, she could not have agreed to the terms of the Will, allowing the younger brother to have 20% of half of the interest in the Property.  This is contradictory to her case that she is the sole beneficial owner of the Property right from the beginning.  R3 also could not have agreed to the severance of the joint tenancy without any declaration of trust and not even telling the solicitor handling the Will and the Notice that she was the one who paid the purchase price and she was in fact the sole beneficial owner of the Property.

108.  It is hard to believe that when her late mother was dying soon, R3 would still have believed that she should not need to protect her interest if she really was the sole beneficial owner.  Once the mother was gone, she would have to rely on R1 alone, bearing in mind she never told R1 that he was her trustee. 

109.  As regards R1, he testified in court that he only learned of the mother’s cancer in 2011 and he was not aware that the mother had been to the solicitors for the Notice and the Will.  He knew it afterwards.  However, this is contrary to what he affirmed in his affirmation.  To this, he did not have an explanation.

110.  At the material times R1 was living with his parents, it is not possible that he was not aware of the mother’s illness and his evidence regarding his response upon the receipt of the Notice is unbelievable. I am sure that R1 knew the mother had been making arrangements in case she did not survive the illness.  I do not believe that he only learned of the Notice upon the elder sister’s explanation.  His version as to how he got the Notice is also wholly unbelievable.  In any event, at the end, R1 agreed that the mother was worrying that his debts might affect the Property so the mother issued the Notice so that he may continue to live in the Property but could not have it sold.

111.  In my view, it is correct for Ms Tsui to point out that R1’s family, whether it was his former marriage or this marriage, his wives and the son were living there.  Despite the request by the mother for him to move out, he has been living in the Property incessantly since 1985.  He even admitted it was his intention to continue to live there.

112.  In his Form E dated 25 July 2012, he stated that he owes the estate $403,415.95.  This is exactly the same amount stated on the Confirmation and also on the Schedule of Assets and Liabilities annexed to the Probate but according to his own evidence the indebtedness has already been set off by the Confirmation.  In such case, there is no way that he could have put in this sum.

113.  At the material times, the mother was advised by her solicitor and acted through her solicitor regarding the Notice.  R3 was at the relevant time with the mother.  R3 said she was not aware of the Confirmation until the present proceedings.  What I can infer from this is that the mother at that time did not disclose the Confirmation to her solicitor or informed the solicitor the fact that R1 had renounced or waived his interest in return for the settlement of his liabilities.  If R3’s version is true, the mother should have disclosed the Confirmation or the waiver to the solicitor seeking advice on what further steps could be taken in order to protect R3’s beneficial interest in the Property.  The fact that the mother did not disclose these materials to her solicitor is significant in casting light onto the mother’s intention.  It clearly shows that the mother intended that R1 is to have an interest in the Property.  As Ms Tsui has validly pointed out, a severance needs not be in 50% and 50% equal shares.  It could be in any shares or proportion.  However, the wording of the Notice, which was executed on the same date as the Will and was prepared by the same firm of solicitors who are also the solicitors acting for R2/R3 in the present proceedings, is clear:

“I, (name of the deceased) hereby give you notice of my desire to sever as from this day the joint tenancy in equity of and in the property described in the Schedule hereto now held by you (ie R1) and me as Joint Tenants both at law and in equity so that the said property shall henceforth belong to you and me in equal shares” (emphasis added)

114.  Given R3’s acknowledgement that the mother was fully aware of the legal implications of the Notice, on the above analysis it seems obvious to me that the mother was to ensure that P had an interest in the Property. 

115.  As mentioned above, Ms Tsui preferred to use the term “suspension” to describe the effect of the Confirmation.  She submitted that R1’s interest in the Property might have been “suspended” for a certain period of time between the Confirmation and the Notice.  His interest might have been “suspended” when he agreed to abandon it because of the debt owed to the mother.  However, it is abundantly clear that by means of the Notice, the mother in fact gave half share of the legal and beneficial interest of the Property to him as a gift.  In my view, whether it was a suspension or not is immaterial nor is it relevant with the conclusion that I have come to regarding the effect of the Notice.

116.  Mr Chow argued that R1 was not personally involved in the preparation of the Notice.  The act to sever was obviously not an act commonly agreed by R1 and the mother.  The simple fact is, as Mr Chow argued, by the time when P signed the Confirmation; he had already accepted that he did not have any beneficial interest in the Property any more.  Hence, the Notice would have the effect of severing the legal title only.  I am not able to agree with Mr Chow.  The wording of the Notice is clear: the Property is to be belonged to the mother and R1 in equal shares.  In my view, taking the entire course of events into consideration, in particular the fact that the mother chose not to disclose the Confirmation to her solicitors when it came to devising a scheme for arranging her assets upon her demise, the intention of the mother as evident from the Notice is clear.  The Notice is an unequivocal intention that she wanted R1 to have nothing but 50% of the legal and beneficial interest of the Property.  That accords with the mother’s original intention that R1 was to have an interest in the Property.  Since the intention of the mother is clear there is no need to resort to the presumption of advancement.  I agree with Ms Tsui’s submission that this is a valid gift.  Lewin on Trusts (18^th 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….” (emphasis added)

117.  Further, Mr Chow in his closing submissions suggested that by the Notice, it does not necessary mean that the mother had to leave half of the interest in the Property to R1, a life-interest might equally have been created for R1 to live in the Property after the demise of the mother.  Again, I cannot agree with him on this point.  Clearly, this is not the wording of the Notice.  There is no evidence that such a life-interest has been created. 

Conclusion

118.  The Notice and the subsequent acknowledgement of R1 after the death of the mother that he owes the estate $403,415.95 inclusive the full amount of the redemption money is telling.  It is unbelievable for R2/R3 to say that she did not know what the amount of $403,415.95 was for when she filled out the Schedule of Assets and Liabilities for the purpose of obtaining the Probate.  If R3 was the one who paid all the monies in the acquisition of the Property, she would not have allowed the redemption money to be included as a debt owed by R1 on the Schedule of Assets and Liabilities.  It must be clear to R3 that R1 took up the responsibility of the mortgage payment and this is consistent with the original common intention between the mother and him that R1 was one of the owners.  The mother issued the Notice to ensure that this happened.

119.  The mother knew her children very well and took care of them in different ways.  She knew exactly what she wanted and the way to achieve this.  She knew that R1 had limited means and was financially irresponsible; she therefore decided to give him the security of a place to live but not money to spend.  It was with such an intention in mind that she made him pay for the mortgage payments so that he would not have spent money elsewhere.  No doubt, R1 let her down but not only that R1 never moved out, as a matter of fact, he could freely bring in his former wife and P and the son to come and reside with him and the parents.

120.  I agree with Ms Tsui’s observation that the mother must have been a very clever and careful person.  By the Notice, it was the mother’s attempt to ensure that R1 would have a place to live but he would not end up “losing” the Property due to his vice habits or debts. He would not be able to raise money out of the Property which otherwise he could have been able to do if he were the sole owner of the Property upon the demise of the mother.

121.  If the whole purpose of the mother for seeking the services of the solicitor was to make arrangement for her assets to be fairly and properly distributed after her death, it would be meaningless if the mother would not have minded at protecting the beneficial interest of R3 in the Property if R1 was a bare trustee as alleged by R3. 

122.  When the mother was approaching her last days, she made the Will to fairly distribute her assets.  Consistent with her intention to give R1 the security of a place, she severed the joint tenancy to make R1 a tenant-in-common sharing the legal and beneficial interest of the Property equally with R3 and the younger brother.  In this connection, to me, it is rather touching that, as a matter of fact, the mother even bought a niche at a privately run columbaria for keeping R1’s ashes after his future demise, to be kept together with his parents.  This is uniquely prepared for R1.  It shows how caring and thoughtful the mother was for him.  In trial, when it came to this piece of evidence, R1 broke into tears.  If the mother was thoughtful enough to ensure that her eldest son’s ashes would have a place to go, it is hard to believe that she would have decided not to give him a place to live when he is alive.

123.  The distribution under the Will reflects the mother’s acknowledgement of financial contributions from her various children in a fair proportion.   This is also consistent with R3’s allegation that the mother saved up money for her.  It is to be noted that the mother left about $3,223,000 worth’s of stocks in the estate.  This is the value agreed by the parties as at the date of death of the mother and is no doubt a substantial investment. 

124.  On the above analysis, the conclusion that I am able to reach is that R1 owns half of the beneficial interest in the Property.

Costs

125.  There is no reason why costs should not follow the event.

126.  Ms Tsui, for P, asked for her client’s costs to be paid by R3 on indemnity basis.  She submitted that R3 should have abandoned her claim for 100% beneficial ownership of the Property if not earlier than after the opening submissions of P on the 1^st day of the trial hearing. What happened on that day was that after the conclusion of P’s openings, the court was informed that P and R1 were minded to arrive at a global settlement without the involvement of R2/R3 and in the circumstances, Mr Li indicated to the court that R2/R3 would withdraw from the trial but then when it came to the costs, fearing that R2/R3 might have to bear the costs occasioned by her joining in, she retracted and decided to continue with the trial.  This is on this basis that Ms Tsui asked for costs on indemnity basis.  She referred me to the judgments in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 and IGAL DAFNI v CMA CGM SA, HCA No. 1185/2008 (date of Judgement:  7 March 2014) for the relevant principles.

127.  Mr Li, for R2/R3, was not quite prepared to argue on the issue notwithstanding that P’s claim for costs was clearly set out in her written closing submissions.

128.  The court’s discretion on costs is broad.  As has been said by Mr Recorder H Wong, SC in IGAL DAFNI v CMA CGM SA at para 11:

“11. Accordingly, the Court’s discretion to order costs on an indemnity basis is not fettered beyond the requirement of appropriateness.  The epithet of “appropriate connotes fairness.  It is difficult to imagine how a costs order (on whatever basis) can be appropriate if not fair having regard to the circumstances.  Subject to this, the Court’s discretion is unfettered”.

129.  Thus, the overriding requirement is what is appropriate or fair in the circumstances.

130.  O 62, r 5 (1)(e), RHC provides that the court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account of the conduct of all the parties.  And under sub-paragraph (2) of the same Order, the conduct of the parties includes (a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; and (b) the manner in which a party has pursued or defended his case or a particular allegation or issue.  

131.  I agree with Ms Tsui that there are features in this case that it is fair for R2/R3 to indemnify P’s costs on indemnity basis. First, as I have alluded to above, R3’s case is not only inconsistent but indeed in conflict with her case as R2.  I fail to see how she could have properly raised two conflicting claims or versions of facts in the alternative. This is relevant to O 62, r 5(2)(a), RHC.  Secondly, she continued to fight only because of the likely adverse costs consequences.  I incline to agree with Ms Tsui that this is a deliberate conduct to waste the court’s time and costs and this is relevant to O 62, r 5 (2)(b), RHC.  For these reasons, I consider that R2/R3 should bear the costs on indemnity basis as from the point when she decided to continue with her claim in the afternoon of the 1^st day of trial.  For taxation purpose this is to start as from the afternoon session of the hearing on 8 July 2014.

132.  I give an order nisi that:

1. The 1^st respondent and the 2^nd respondent do pay the petitioner the costs of the summons dated 21 October 2013;

2. There be no order as to costs between the 1^st respondent and the 2^nd respondent in respect of the summons dated 21 October 2013;

3. The 3^rd respondent do pay the petitioner and the 1^st respondent the costs of the summons dated 31 December 2013;

4. The 1^st respondent do pay the petitioner the costs of this trial;

5. The 2^nd and the 3^rd respondents do pay the petitioner the costs of this trial, the costs as from the afternoon session of the hearing on 8 July 2014 are on indemnity basis;

6. There be no order as to costs of this trial between the 1^st respondent and the 2^nd respondent;

7. The 3^rd respondent do pay the 1^st respondent the costs of this trial, the costs as from the afternoon session of the hearing on 8 July 2014 are on indemnity basis;

8. The petitioner and the 1^st respondent’s own costs to be taxed according to the Legal Aid Regulations; and

9. The above costs are to be taxed if not agreed, with counsel certificates.