SHUN PONG LTD v. CHAN KOO KAI FELIX AND ANOTHER

HCA 255/2017

[2025] HKCFI 4540

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 255 OF 2017

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BETWEEN

(by original action)

And BETWEEN

(by counterclaim)

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J U D G M E N T

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Introduction

1.  This is the trial of the Action.

2.  The Plaintiff is the registered owner of Apartment B, 3rd Floor, Yuk Sing Building, Nos.1-9 Yuk Sau Street, Happy Valley, Hong Kong (“Property”) the subject of the present dispute.

3.  Mr Chan Hiong Sing Johnathan (“Chan Senior”) was at all material times a director and the majority shareholder of the Plaintiff, holding over 80% of its issued shares.

4.  The Defendant Chan Koo Kai Felix (“Defendant/Chan Junior”) is the youngest son of Chan Senior and his wife Chung Sui Kin Betty (“Madam Chung”). He has occupied the Property since about January 2009. At the time of the trial, he was about 50/51 years old.

5.  In its Statement of Claim, the Plaintiff seeks vacant possession of the Property and mesne profits against the Defendant for his wrongful occupation of the Property starting from 1 December 2016 at the prevailing market rent or at the rate of HK$28,000[1] per month until delivery of vacant possession.

6.  In his Defence, the Defendant accepts he has been in continuous occupation of the Property since about January 2009 and he has continued to occupy the same to this date. His main defence is that Chan Senior had on multiple occasions made assurances, representations, and/or promises to him to the effect that he could stay at the Property on a rent-free basis for as long as he wished. By his Counterclaim, the Defendant claims:

(1)  Against the Plaintiff for a declaration that it is estopped from asserting its proprietary right over the Property and a declaration that the Property is vested in the Defendant in equity as a result of proprietary estoppel; alternatively, a declaration that a life interest in the Property is vested in the Defendant as a result of proprietary estoppel.

(2)  Against Chan Senior for a declaration that Chan Senior is estopped from denying or reneging on his representations and promises as regards the Property and a declaration that Chan Senior is liable to exercise his legal powers in the Plaintiff to secure the Defendant’s interest in the Property as a result of promissory estoppel; alternatively, a declaration that Chan Senior is estopped from exercising his legal powers in the Plaintiff to cause the Defendant to be evicted from the Property.

7.  As depicted by Mr Tse for the Plaintiff and Chan Senior in his written Closing under “Overview”, this is a case where Chan Senior has allowed the Defendant to move into a family property ie the Property in about January 2009 when the latter was in financial turmoil. Since then and for years thereafter, the Defendant had enjoyed free accommodation and monthly allowance from his father. To justify his continued free stay, the Defendant claims his father had promised him that he could reside at the Property rent free indefinitely and that it would one day be his. The Defendant also blames his father for his decision to assume custody of his 2 children and his decision to forego other work opportunities and the opportunity to purchase a property under the Home Ownership Scheme. The Defendant claims these decisions were “life-changing with irreversible consequences” and were detriments caused by his father.

8.  According to the Agreed Chronology, the Plaintiff or its then solicitors had served notice on the Defendant for vacant possession of the Property 3 times ie in March, July and September 2016. On the last occasion ie 30 September 2016, the Plaintiff’s then solicitors demanded vacant possession of the Property from the Defendant on or before 30 November 2016.

9.  Upon the Defendant’s failure to comply, the Plaintiff issued the Writ herein on 3 February 2017.

The core factual background and the Parties’ pleaded cases

10.  The factual background has been set out in paras 4 to 19 of the Plaintiff’s Opening which Mr Leung says in his Opening that the Defendant accepts as “fair and accurate”.

11.  In these circumstances, this court shall set out the core factual background based on the Plaintiff’s Opening together with some undisputed or indisputable facts.

12.  Since around February 1998 (after graduating from the University of Southern California in late 1997), the Defendant began to be employed by and receive a monthly salary of around HK$20,000 from Kin Fung Stock Company (“Kin Fung Stock”), a company set up by Chan Senior[2]. The Defendant accepted he had no particular responsibilities at Kin Fung Stock and this “job” was in truth Chan Senior’s financial support and allowance to him.

13.  In around 2003, the Defendant and his Korean wife Yuki Lee (“Yuki”) got married. In around November 2008, the Defendant and Yuki were divorced. Custody of their 2 children were initially granted to Yuki. At that time, the Defendant was in financial difficulties and sought help from his father.

14.  The Defendant alleges that in or about late 2008, Chan Senior represented to, promised and assured him that “he could live and settle at the Property rent-free without worrying being ever evicted” (“First Representation”) [3]. This is disputed by Chan Senior.

15.  In January 2009, with the permission of Chan Senior, the Defendant moved into the Property rent-free and has remained there since.

16.  Next, the Defendant alleges that at a housewarming party held at the Property in around early 2009 probably January or February, Chan Senior represented to, promised and assured him that (a) he could stay at the Property for as long as he wished but space should be left for his children to use and stay if and when they should require it, and that (b) the Property along with a shop on the ground floor of the same building (“Shop”) would eventually be left to the Defendant as a gift or inheritance, and he could put any rental profits from the Shop towards his own use and maintenance of the Property (“Second Representation”)[4]. Again, it is disputed that Chan Senior had attended the housewarming party at all or made the Second Representation.

17.  Between September 2011 and the summer of 2014, the Defendant’s 2 children lived in Korea with Yuki. In the summer of 2014, Yuki told the Defendant that she would prefer their children to stay with him in Hong Kong and not go back to Korea.

18.  Lastly, the Defendant alleges that in 2014[5], during discussions on whether he should retake custody of the children from Yuki, Chan Senior represented to, promised and assured the Defendant that he and his 2 children could and should continue to stay at the Property (“Third Representation”). It is disputed that Chan Senior had made the Third Representation.

19.  What happened next was that the Defendant applied for and was granted custody of the children in February 2015.

20.  Soon afterwards, in around June 2015, there was a breakdown of relationship between the Defendant and his parents. In July 2015, Madam Chung applied for and was awarded temporary guardianship of the Defendant’s children in HCMP 1716/2015.[6]

21.  By a board resolution of the Plaintiff passed by Chan Senior and Kwok King Hon (“Kwok”) on 8 March 2016, it was resolved that the Property be disposed of after repossession of the same from the Defendant. Kwok was at all material times an employee of the Plaintiff and the alternate director to the other director of the Plaintiff, Chan Tak Hing, Shirley, younger sister of Chan Senior.

22.  As noted earlier, between March and September 2016, the Plaintiff had on three occasions, either by itself or through its solicitors, given notice to the Defendant to demand for vacant possession of the Property.

23.  The Plaintiff’s case is straightforward.

24.  As a registered owner, the Plaintiff had permitted the Defendant to occupy and use the Property as a licensee at will since 2009. By letters issued between March and September 2016, the Plaintiff revoked the licence and demanded vacant possession of the Property from the Defendant. Notwithstanding the aforesaid demands, the Defendant has failed to do so. Hence, the Plaintiff seeks an order for vacant possession and claims mesne profits against the Defendant from 1 December 2016[7].

25.  The Defendant’s case has been summarised in paras 21 - 24 of the Plaintiff’s Opening, which Mr Leung says in his Opening that “the Defendant accepts with much gratitude” and which is essentially this.

26.  The Defendant contends that Chan Senior had made 3 representations to the effect that he could stay at the Property rent-free for as long as he wished. The contention is based on the First, Second and Third Representations defined above (collectively “Representations”) as well as the allegation that Chan Senior had repeated them to Kwok who relayed the same to the Defendant.[8]

27.  The Defendant further contends that he was induced into believing and/or encouraged to hold the belief that he would enjoy some form of interest in the Property ie its entire beneficial interest or a life interest (“Defendant’s belief”) by reason of:

(1)  The Representations.

(2)  The alleged acts or abstinence from acting of Chan Senior/ the Plaintiff viz

i.  They had caused and paid for the redecoration of the Property to suit the Defendant’s taste and requirements, especially the pursuit of his hobby and career in yoga.

ii.  Chan Senior had, following traditions of the Chan family, given the Defendant’s brother money to purchase a property.

iii.  They had not expressly denied the Defendant’s interests in the Property before the Plaintiff’s demand for vacant possession and by then the Defendant had continuously occupied the Property rent-free for more than 7 years.

iv.  Chan Senior had encouraged the Defendant to retake custody of his children and did nothing to assert any legal right to the Property; instead, he stood by while being fully aware that the Defendant was likely to undertake detrimental reliance action on the Defendant’s belief as he was about to make the life-changing decision of adjusting his pursuit of career/interests and taking up care and custody of his children in reliance of the expected entitlement to the Property.

(collectively “Encouragements”)

28.  The Defendant contends that he had relied on the Representations and/or the Encouragements to his detriment in that he had :

(1)  Expended money in furnishing and up-keeping the Property.

(2)  Made life-changing decisions with irreversible consequences in that he had:

i.  Elected to pursue a career in yoga, forgoing other employment/career opportunities.

ii.  Forgone opportunities to participate and/or purchase a property in subsidized housing schemes including the Home Ownership Scheme, resulting in being pushed off the ladder of property ownership.

iii.  Assisted in arranging for his children to meet Chan Senior and Madam Chung for meals and family events regularly between 2009 and 2011.

iv.  Regained custody of his children in late 2014 resulting in substantial lifestyle changes and financial obligations.

29.  In the premises, the Defendant claims the entire beneficial interests alternatively a life interest in the Property, based on proprietary and/or promissory estoppel.

30.  The Plaintiff/ Chan Senior’s principal Reply is that they deny making any of the Representations. Their case is that the Defendant only moved into the Property on a temporary basis as Chan Senior wanted to discharge his parental and moral obligations towards the Defendant who was under tremendous stress and asked for the provision of housing.

The Agreed Issues and the witnesses

31.  The Agreed issues are:

(1)  Whether Chan Senior/ the Plaintiff had made the Representations (Issue 1).

(2)  Whether the Defendant was induced into believing and/or encouraged to hold the belief that he would enjoy some form of interests in the Property by the Representations and/or the Encouragements (Issue 2).

(3)  Whether the Defendant had relied on the Representations and/or the Encouragements to his detriment (Issue 3).

(4)  Whether it would be unconscionable for Chan Senior / the Plaintiff to act inconsistently with the Representations and/or the Encouragements (Issue 4).

(5)  If the answer to all of the above is in the affirmative, the proper relief to be granted by the Court (Issue 5).

32.  At trial,

(1)  The Plaintiff called 2 witnesses: Chan Senior and Kwok.

(2)  The Defendant testified on his own behalf.

33.  Each of the witnesses has filed 2 statements for the purpose of this trial. They will be referred to as Senior 1 and 2, Kwok 1 and 2, and Junior 1 and 2.

34.  In his written Closing, Mr Leung, no doubt on instructions, has gone to great length to launch a general attack not just on Chan Senior’s credibility but also on his personality. To illustrate the point, this court shall quote some of the relevant parts of his Closing.

“12. Jonathan Chan has a clear propensity for presenting half-truths to evade a direct answer and to further his own agenda (whether it is to bolster the Plaintiff’s case or to uphold a certain personal image). As a matter of illustration:

(1) He is well-educated and presents himself with confidence. Despite his age, there is no indication that he fails to comprehend the questions posed at him, and occasionally he even made pre-emptive responses in English before the Court Interpreter translates. Nonetheless, he exhibits a persistent tendency to evade direct answers. He often tries to deduce the underlying intent of the questions and offers evasive or rhetorical replies that he perceives as favourable to the Plaintiff’s case. Additionally, he has a propensity to retract or change his answers when pressed.

(2) He is keen on minimizing the perception of his wealth, providing ambiguous and indirect answers when questioned about the long list of companies he owns and the properties held through those companies. He insists that the records speak for themselves, suggests we consult them, and refuses to give a straight answer…

…

(6) Although Jonathan Chan maintains that he did not make the Alleged Representations and despite the supposedly unequivocal evidence in his witness statement … he claims not to remember several key details central to the factual disputes. This includes the 2008 phone call with the Defendant, the method by which he communicated the allegedly temporary nature of the permission given to the Defendant to occupy the Property, the instructions given to the Defendant or Kwok King Hon, and the pivotal meeting at the Chariot Club in September 2014.

…

13. Given that Jonathan Chan has effectively treated both the Plaintiff and the Property as his own, it is evident that he has a significant interest in the outcome of these proceedings, which will determine the disposition of the Property. However, when asked in Court if he would provide a roof for the Defendant and the children, Jonathan Chan confirms, in line with his apparent concern for his grandchildren, that he would accommodate his grandchildren but not the Defendant. He seeks to justify his decision by stating that the Defendant had not been complaisant (“he doesn’t listen to me”), and he felt it necessary to impart a lesson (“If he changes his ways, I will like him”). Consequently, the Court should have no difficulty in understanding the clear motivation of Jonathan Chan: as a person with considerable means and assets at his disposal, Jonathan Chan is less concerned with recovering vacant possession of the Property than asserting dominance and exerting control over his “disobedient” son (i.e., the Defendant). Jonathan Chan’s dissatisfaction with his son drives his desire to deny the Defendant’s entitled relief and his reluctance to be truthful.” (emphasis added)

35.  These general attacks on Chan Senior are unjustified, sometimes petty, and unhelpful to this court in resolving the issues in hand. For the record, this court finds on the whole Chan Senior was forthcoming in answering questions put to him while in the box and impressed this court as a straightforward witness. He was in his mid-80s at the trial and owing to his age, his was understandably unable to recall events over a decade ago very clearly or to answer questions very precisely. Further, his dissatisfaction with the Defendant is understandable, given (i) the Defendant’s inability to support himself financially ever since he had graduated from university and (ii) his reluctance to take back his own children when Yuki expressed her inability to raise them on her own in Korea. This court is not going to infer that dissatisfaction has driven Chan Senior’s “reluctance to be truthful” as suggested by Mr Leung.

36.  What this court has done is to continue its practice ie to carefully consider the testimony, as well as the demeanour, of all witnesses at the trial and assessed it against such of the documentary evidence as there is and the known and undisputed circumstances of this case. This court has in particular considered the inherent probabilities or otherwise of the witnesses’ testimony and assessed their credibility accordingly. As a matter of longstanding practice and out of abundance of caution, this court has also reviewed its own notes taken at the trial and the official transcripts of the trial in order to refresh its memory.

37.  This court shall also remind itself of Au-Yeung J’s judgment in Tsang Wing Kwai v Wong Wing Sze Tiffany [2019] HKCFI 3148 at [38] on the approach to assess the credibility of witnesses, which should not be controversial:

“In assessing their credibility, the court is entitled to and should consider:

‘(1) whether that part of his/her testimony is inherently plausible or implausible;

(2) whether that part of his/her testimony is, in a material way, contradicted by other evidence which is undisputed or indisputable;

(3) where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(4) whether the witness has any motive for deliberately not giving truthful testimony, for example, where telling the truth may prejudice his interest or a just determination of the litigation may affect his interest.’”

Deliberation

The legal principles

38.  On the legal principles, while counsel on both sides have gone to great length to analyse the authorities on the subject, at the end of the day, this court needs only recite the following on the essential elements of proprietary estoppel and promissory estoppel.

39.  First, in Cheung Lai Mui v Cheung Wai Shing (2021) 24 HKCFAR 116 at [23], Ribeiro PJ and Gummow NPJ set out the 3 essential requirements of equity to recognise and give relief based on proprietary estoppel as (i) a representation or assurance made to the claimant, (ii) reliance thereon by the claimant, and (iii) detriment to the claimant in consequence of that reliance. Importantly, at [24] their Lordships repeated the emphasis by Robert Walker LJ (as Lord Walker then was) in Gillett v Holt [2001] Ch 210, 225D-E that (i) “the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all elements of the doctrine of [proprietary estoppel]” and (ii) “In the end the Court must look at the matter in the round”.

40.  Second, in Thorner v Major [2009] 1 WLR 776 at [15], Lord Scott of Foscote further elaborated on the 3 essential elements of proprietary estoppel when he said:

“These elements would, I think, always be necessary but might, in a particular case, not be sufficient. Thus, for example, the representation or assurance would need to have been sufficiently clear and unequivocal; the reliance by the claimant would need to have been reasonable in all the circumstances; and the detriment would need to have been sufficiently substantial to justify the intervention of equity.”

41.  Third, in Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 at [55], Ribeiro PJ explained that a promissory estoppel may be said to arise where (i) the parties are in a relationship involving enforceable or exercisable rights, duties or powers; (ii) one party (the promisor), by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the other (the promisee) that the promisor will not enforce or exercise some of those rights, duties or powers; and (iii) the promisee reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.

42.  With the above in mind, this court shall move on to examine Issue 1 ie the Representations which are an essential element of the Defendant’s case on both proprietary and promissory estoppel.

Issue 1

43.  Since it is the Defendant who alleges his father had made the Representations, this court shall first examine the Defendant’s testimony in support.

44.  In relation to the First Representation, the Defendant’s evidence is surprisingly thin - it consists of one short paragraph in Junior 1 at para 30:

“30. Sometime in late 2008, I sought further financial help from my Father. At that time, I was still receiving my salary of HK$19,000 per month at Kin Fung Stock and had some income from teaching yoga classes on the side. Over some discussions, my Father decided to let me stay at the Property for as long as I wished. He told me that since the Plaintiff owned the Property, I could be rest assured that I could live at the Property rent free for as long as I wished, but I had to pay my own utilities. My Father offered to arrange for the Property to be fixed up and decorated to my taste.” (emphasis added)

45.  In para 30, the Defendant has not been very forthcoming as to what sort of financial help he sought from his father or what discussions he had with his father – (i) did the Defendant simply ask for some money ? (ii) did he ask his father to let him live in one of his properties in Hong Kong ? or (iii) did he go so far as to ask his father for one of his properties as a gift? If it is (ii), it was unclear whether it was he who asked his father for permission to live in the Property for as long as he wished or whether it was his father who voluntarily offered to let him do so without even being asked. The complete lack of details is one of the matters that this court will have to take into account in deciding on the veracity of this First Representation.

46.  While in the witness box, the Defendant improvised a bit more.

47.  As Mr Tse pointed out in his written Closing, during cross-examination in the morning of Day 3, the Defendant said that he “sought assistance for a place to stay” and agreed to replace this with “financial help” at para 30 of Junior 1. Then almost immediately after that, the Defendant said “apart from asking him for a place to stay, I also did ask him to subsidise me in a yoga class… I did ask him for financial assistance in subsidising me to study… a degree course and also a diploma course in yoga teaching. It’s a Master’s degree, not a diploma.”

48.  Then, shortly afterwards, when it was specifically put to the Defendant that he had no plan to stay at the Property forever, the Defendant said that he did have such a plan and he told his father so. Again, shortly afterwards, he agreed that he did not mention the term “forever”. When this court asked the Defendant again what he told his father, the Defendant said:

“A. I told him that I was in great difficulty. You gave me a place to stay. You have to look after me. I was in great difficulty.”

49.  Mr Tse submits that based on the Defendant’s oral testimony, all that he had requested from Chan Senior at the time was a shelter owing to his financial difficulties. There is simply no reason why Chan Senior would volunteer to let the Defendant to stay at the Property indefinitely.

50.  But quite apart from the Defendant’s oral testimony, there is no credible explanation as to why Chan Senior would let the Defendant stay at the Property “for as long as he wished”.

51.  All that the Defendant did in the earlier parts of Junior 1 was to go on about inter alia (i) the background of the Chan family starting with his paternal grandparents who were big property developers in the 1960s and had accumulated a vast amount of wealth and real estate in Hong Kong, (ii) the Plaintiff is one of the many companies set up by his paternal grandparents to hold their properties including the Property, (iii) Chan Senior is the eldest son of his paternal grandparents and was eventually given control of the bulk of the family assets including the Plaintiff, (iv) Chan Senior was a rich man with about HK$300 million assets under his control who led an extravagant lifestyle and spent about HK$10 million in cash annually, (v) the Defendant had had a good relationship with his father before he fell out with his parents in about 2015 and (vi) lastly, his father had a habit of providing substantial financial support to his mistresses.

52.  All such non-essential background concerning Chan Senior’s lavish lifestyle and his treatment of his mistresses etc seems to pave the way for the Defendant’s contention at para 29 of Junior 1 that:

“29. All these instances clearly demonstrated that a gift of residential property or monetary subsidy to his family, friends, and acquaintances is nothing substantial to my Father. After all, my Father had plenty of assets at his disposal and could make as many extravagant gifts as he pleased, even if gifts to some acquaintances would seem extraordinary such as supporting one’s mistress’s boyfriend. It was in this context that I was not surprised at all when he offered to let me live in the Property for life and to leave me the Property when he passes and I felt I could place heavy reliance on his representations and assurances.” (emphasis added)

53.  In this court’s view, this contention is such a non sequitur that it cannot be taken seriously enough to support the existence of the First Representation or to refute Chan Senior’s account of what happened in late 2008.

54.  Chan Senior’s testimony in Senior 1 at para 10 is that around December 2008, the Defendant had just got divorced and, although he did not have to live with his two children, he was still in a bad financial situation. Struggling financially and under great pressure, the Defendant asked him to provide a place for him to live and as his father Chan Senior agreed to help. But the help was limited to agreeing to let the Defendant live in the Property by way of a temporary licence that may be terminated at any time, without having to pay anything to the Plaintiff.

55.  It seems to this court that a very rich person who had a lavish lifestyle and many mistresses can spend as much as he pleases and on whom as he pleases. But that does not mean that the moment one of his sons[9] had obtained a divorce and asked him for help, he would necessarily agree to give him a property to live in indefinitely or even as a gift. The one does not follow from the other.

56.  At para 31 of Junior 1, the Defendant speculated that Chan Senior’s motives as “a mix of fatherly love and continuation of the family practice to distribute properties” coupled with the fact that he was at the time finalising his divorce with Yuki whom Chan Senior had disapproved. Further, at para 32 of Junior 1, the Defendant said Chan Senior then fixed up the Property and redecorated it to his specific taste, including installing large mirrors on the walls of the living room. But then, the Defendant said he had to replace the refrigerator and air conditioners, installed a washing machine and dryer etc at his own costs of around HK$100,000.

57.  As para 31 is merely the Defendant’s guess, this court is not prepared to place any significant weight on what he claims to be Chan Senior’s motives. But what militates against the Defendant’s guess of “fatherly love” is that if Chan Senior was generous enough to give him the Property to live indefinitely for free, why did the financially struggling Defendant who claims to have a good relationship with his father had to buy such basic appliances as a refrigerator, air conditioners, a washing machine and dryer at his own costs?

58.  After all, the Defendant claims that a gift of residential property or monetary subsidy to his family, friends and acquaintances is nothing substantial to his father. The Defendant also claims his father had a tendency to make gifts to those he liked or those who pleased him such as regularly giving out HK$100 bills to whoever simply acknowledged him as “doctor” in public. On the other hand, the Defendant said he was only making HK$19,000 a month at Kin Fung Stock and had some unquantified income from teaching yoga classes. In the witness box, the Defendant testified that he was “in great difficulty”. So either the Defendant’s guess of “fatherly love” and his claim of having a close relationship with his father is unfounded, or his claim to have spent HK$100,000 on basic home appliances cannot be believed. Either way, the Defendant’s credibility is in serious doubt.

59.  For all these reasons, this court agrees with Mr Tse that it is inherently improbable that Chan Senior had made the First Representation as alleged. Nor does this court find the Defendant a credible witness in light of the way he improvised his oral testimony in the witness box. This court thus rejects the Defendant’s testimony on the First Representation and finds as a fact that the Defendant did not ask and Chan Senior did not promise that the former could stay at the Property rent-free for as long as he wished. In other words, this court finds the First Representation not established on the evidence.

60.  In coming to this finding of fact, this court has not overlooked Mr Leung’s submissions at para 20 of his written Closing, especially his criticism of the testimony of Chan Senior. But this court agrees with Mr Tse that the matters relied upon by Mr Leung are either irrelevant or misconceived. These matters include (i) Chan Senior’s stance as to whether he disapproved of the Defendant’s marriage with Yuki whose occupation was allegedly that of a Mama-san; (ii) Chan Senior’s alleged desire to exert control over the Defendant and to be involved in the lives of the Defendant’s children; (iii) Chan Senior’s stance on the alleged phone call during which the First Representation was said to have been made; and (iv) the absence of contemporaneous documentation, such as board minutes of the Plaintiff which would have substantiated the alleged temporary licence.

61.  To this court (i) is wholly irrelevant to whether Chan Senior had made the First Representation, (ii) is a bare assertion on which there is no evidence in support; (iii) neither the Defendant nor Chan Senior have suggested in their witness statements that the First Representation was made during a phone call; and as to (iv), given that the burden of proof is on the Defendant, the lack of contemporaneous documentation is a point against the Defendant, not the Plaintiff.

62.  That disposes of the Defendant’s case on the First Representation.

63.  In relation to the Second Representation, the Defendant’s evidence is equally thin - it consists of one single paragraph in Junior 1 at para 33:

“33. After I had settled in, I held a small housewarming gathering in about January or February 2009. My Father and one of his mistresses Penny attended. There, my Father once again reassured me about the Property. He told me that I could stay at the Property indefinitely, and the Property together with the a shop unit on the ground floor of Yuk Sing Building would be left to me as a gift or inheritance eventually so I will be able to put any rental profits from the said ground floor pet shop towards my own use in raising the Children and maintaining of the Property. My Father asked me to allow him to be more involved in the Children’s upbringing and, in exchange for practically gifting me the Property, made me promise to leave space for the Children to use in the three-bedroom Property for the future.” (emphasis added)

64.  Chan Senior’s testimony is that he had never attended the Defendant’s housewarming party in early 2009 and had never made the Second Representation. He did accept that on an afternoon in early 2009, he went to the Property to see how the Defendant and his two grandchildren were doing.

65.  Mr Leung made only 3 points in his written Closing on the Second Representation and he basically asks this court to accept the Defendant’s testimony and reject Chan Senior’s. His main theme is that Chan Senior had a propensity to prioritize and provide for his grandchildren, which renders the Defendant’s testimony more plausible than Chan Senior’s. This court disagrees.

66.  First, this court has already rejected the Defendant’s testimony on the First Representation and found Chan Senior had not made the First Representation. This court has also found the Defendant not a credible witness. As Mr Tse submits, given that there is no evidence of any material change of circumstances between the alleged making of the First and the Second Representations, it is inherently improbable that Chan Senior would, within a month or two, suddenly offer of his own volition to let the Defendant stay at the Property indefinitely and, what is more improbable, further offer to make a gift of the Property and the Shop to the Defendant.

67.  Second, in January or February 2009, there is no evidence Chan Senior knew whether the Defendant or Yuki would ultimately be given custody of the Defendant’s 2 children[10]. In Senior 1, Chan Senior only said in November 2008, the Defendant and Yuki got divorced and initially, they agreed that custody of the 2 children would be with Yuki.

68.  If Chan Senior did not know which of them would ultimately have custody of the 2 children, it would be premature for Chan Senior to make the Defendant promise to leave space for the 2 children to use in the three-bedroom Property in exchange for what the Defendant alleged to be the father’s promises in the Second Representation. If Yuki was eventually granted custody of the 2 children, which she was, they would stay with their mother. In Junior 1 at para 36, the Defendant admitted that since the divorce and until Yuki left Hong Kong for Korea, Madam Chung had been subsidizing Yuki’s rental expenses and providing financial assistance to her for the sake of the 2 children. So that arrangement could simply carry on without Chan Senior making the Second Representation at all.

69.  If the Defendant was eventually granted custody of the 2 children, there was no necessity to make the Defendant promise anything either – the Property was a three-bedroom apartment and there was enough space for them in the Property anyway. Unless the Defendant told his father he would abandon his 2 children in that event, he would naturally have to let the 2 children live in the Property without Chan Senior making the Second Representation in exchange for the Defendant’s promise to do so.

70.  On the other hand, if in January or February 2009, Chan Senior already knew Yuki had been granted or would very likely be granted custody of the 2 children, it would be even more premature and improbable for him to give the promise in the alleged Second Representation. Madam Chung could just continue to subsidize Yuki’s rental expenses and provide financial assistance to her for the sake of the 2 children.

71.  Regarding Mr Leung’s main theme that Chan Senior had a propensity to prioritize and provide for his 2 grandchildren, that is refuted by Mr Tse in this way: all along, it was Madam Chung who wanted more say in the 2 children’s lives. In this regard, the evidence shows it was Madam Chung who (i) subsidized Yuki’s rental expenses in Hong Kong and provided financial assistance to her from their divorce in 2008 to 2011 when Yuki went back to Korea with the 2 children, (ii) had disagreements with the Defendant regarding the care of the 2 children, (iii) in July 2015, commenced proceedings in HCMP 1716/2015[11] as a result of which the 2 children became wards of Court and (iv) in 2016, took out legal proceedings to continue the wardship.

72.  On the other hand, there is no evidence at all that Chan Senior had complained to the Defendant about Yuki obtaining initial custody of the 2 children in November 2008 by agreement with the Defendant or about the 2 children’s relocation to Korea with Yuki in 2011.

73.  Lastly, this court notes that in the Defendant’s Counterclaim, he has sought no relief in respect of the Shop which is part and parcel of the Second Representation.

74.  In these circumstances, this court has no difficulties in rejecting Mr Leung’s main theme and the Defendant’s bare assertion about Chan Senior’s so-called “demonstrated” concern for his grandchildren as reasons to justify the making of the Second Representation. Chan Senior may or may not have concern for his grandchildren. However, for all the above reasons, this court is of the view it is inherently and in fact highly improbable that he had made the Second Representation as alleged and shall find that he had not. This court’s finding on the Second Representation further undermines the Defendant’s credibility as a witness.

75.  In relation to the Third Representation, the Defendant’s testimony in Junior 1 is this:

“38. In the summer of 2014, Yuki told me that she would prefer that the Children stay with me in Hong Kong and not go back to Korea. This would mean putting myself up to taking care of the Children full time. At that point, my career in yoga was beginning to take off and I was becoming increasingly occupied as a yoga teacher. It would have made more financial sense if the Children remained based in Korea.

39. Being presented with this dilemma, I discussed the future of the Children with my parents. I remember this conversation took place back in about September 2014 at the Chariot Club. My Father had all along wanted a bigger involvement in Kyle’s upbringing and supported the idea of the Children coming back to live in Hong Kong. There, my Father said I would first need to get custody of the Children. I expressed my worry that I would not be financially capable of giving the Children the best standard of care, considering among others that technically I had not had a property in my name and a good portion of my income would possibly end when my Father passed away. He then reassured me that, as I raised the Children, I could continue to stay rent free and indefinitely in the Property, which would eventually be left to me…” (emphasis added)

76.  According to Chan Senior, it was not so much due to Yuki’s “preference” but to her financial difficulties that she could no longer afford to raise the 2 children in Korea and had to give custody back to the Defendant. This is not contradicted by the Defendant in Junior 2.

77.  Mr Leung first submits that this court must approach the Third Representation with the understanding that Chan Senior was undoubtedly aware of the Defendant’s contemplation and eventual decision to reclaim custody of his children.

78.  To start with, Mr Leung’s submission is not borne out by the Defendant’s testimony quoted above which clearly demonstrates he was reluctant to take back his own children because he was becoming “increasingly occupied as a yoga teacher”. This is so despite Yuki’s financial difficulties in raising the 2 children herself which was known to him.

79.  Second, as expected, Mr Leung again emphasises Chan Senior’s “demonstrated” interest in the upbringing and well-being of his grandchildren.

80.  For the reasons already given in relation to the Second Representation, this court rejects Mr Leung’s submission based on Chan Senior’s so-called “demonstrated” concern for his grandchildren and the Defendant’s bare assertion that his father wanted a bigger involvement in Kyle’s upbringing.

81.  On the other hand, Mr Tse submits that Chan Senior had shown no interest in getting involved in Kyle’s or the other child’s upbringing. In this regard, Mr Tse reiterates his submission that Chan Senior could have but did not (i) subsidize Yuki rental expenses or provide financial assistance to her when the 2 children lived in Hong Kong with their mother in order to exert more influence over them; (ii) complain about Yuki obtaining custody of the Children in late 2008 and there is no evidence that he wanted the then custody arrangement to be varied at the time; and (iii) complain about the 2 children’s relocation to Korea in 2011 when he believed that they would never return to Hong Kong.

82.  There is force in Mr Tse’s submission.

83.  In this court’s view, even if Yuki could not afford to raise the 2 children in Korea and notwithstanding the Defendant’s reluctance to take them back in Hong Kong, there were other ways to keep the 2 children from being homeless. Just to name a few examples: (i) Madam Chung could have continued to provide financial assistance to the 2 children either in Korea or in Hong Kong (by sending them to a boarding school if necessary) (ii) Chan Senior could have allowed the 2 children (and their father) to live in the Property rent free until they reached 18 or 21 years old, (iii) Madam Chung and/or Chan Senior could have sent the 2 children to study abroad (just like the Defendant himself who was sent to the US to attend the last section of high school and then university).

84.  The point is that there were many options available to help raise the 2 children other than for Chan Senior to let the Defendant stay indefinitely rent free in the Property and eventually to give it to him, as alleged by the Defendant. The main theme of Mr Leung’s submission is that Chan Senior was concerned about the upbringing of the 2 children. Even assuming that is so, there is no suggestion that Chan Senior was concerned about the Defendant having free housing for life.

85.  In fact, the Defendant did not believe he would have free housing for life. On his own evidence in Junior 1, in 2014 or 2015, he had seriously considered buying a property at Lung Tak Court (龍德苑) in Stanley which was a development under the government’s Home Ownership Scheme. After all, he was over 40 years old by the time of the Third Representation. Chan Senior understandably was dissatisfied with his way of life and his dependence on his father’s financial support over the years.

86.  For these reasons, this court is of the view that it is inherently improbable and in fact highly improbable that Chan Senior had made the Third Representation as alleged and shall find that he had not.

87.  To conclude, this court finds as a fact that Chan Senior had not made any of the Representations to the Defendant. If so, this court must also find as a fact that the Plaintiff had not made any of the Representations to the Defendant.

88.  In view of the above, it is unnecessary to go into detail the question whether or not Chan Senior, as a director, was authorised to make any representation on behalf of and binding on the Plaintiff in relation to the Property. This court only wishes to note that as a matter of general company law, a company acts by its board of directors as a whole and a single director has no authority to do anything which binds a company, unless he has previously been authorised by the board to do so or his act was subsequently ratified by the board. This court notes that at the material time, the Plaintiff had 2 directors viz Chan Senior and his sister Shirley Chan (Kwok being her alternate director). There was no evidence of any board resolution which authorised Chan Senior to make any representation or promise to the Defendant concerning the Property or which subsequently ratified his doing so.

89.  That disposes of Issue 1.

Issues 2 to 5

90.  The resolution of Issue 2 is dependent on whether Chan Senior/ the Plaintiff having made the Representations. If they had not, it would be futile for the Defendant to try and argue that he had been induced into believing and/or encouraged to hold the belief that he would enjoy some form of interest in the Property. In this regard, the so-called “Encouragements” did not consist of standalone acts or omissions of Chan Senior/ the Plaintiff from as such – they followed on from the alleged Representations and would only have the alleged effects on the Defendant if Chan Senior/ the Plaintiff had indeed made the Representations.

91.  Given this court’s findings of fact on Issue 1, Issue 2 must fall away and this court must answer Issue 2 against the Defendant.

92.  For the same reasons, Issues 3 and 4 must also fall away and likewise this court must answer Issues 3 and 4 against the Defendant.

93.  Lastly, in view of the above, Issue 5 must also be decided against the Defendant and no relief should be granted to him.

Disposition and costs order nisi

94.  There shall be an Order for delivery of vacant possession of the Property by the Defendant to the Plaintiff within 3 months from the date hereof or within such other period as agreed between the parties.

95.  Regarding mesne profits under para (2) of the prayer for relief in the Statement of Claim, as accepted by Mr Tse during oral Closing on Day 5, the same shall be assessed by a Master in the absence of agreement by the parties. Interest on the said mesne profits shall also be left to the Master upon the completion of assessment or agreement by the parties as the case may be and paid by the Defendant to the Plaintiff forthwith.

96.  The Defendant’s Counterclaim is hereby dismissed.

97.  There shall be an Order nisi that costs of the entire Action including the Counterclaim be to the Plaintiff and Chan Senior, to be taxed if not agreed and paid by the Defendant forthwith, certificate for 2 counsel. The Defendant’s own costs be taxed in accordance with Legal Aid Regulations.