LIU KWOK WAH v. CHUNG HANG FAI NANCY

A447/89

Headnote

Domestic property bought in joint names of parties to facilitate their pre-existing intimate relationship by providing premises for that purpose and other domestic and social use. Parties intended to marry at some stage.

Plaintiff lived in the promises, paid the deposit and mortgage instalments. Defendant met most household expenses, bought some ho shold items and attended to domestic duties.

Parties never lived together permanently as do facto husbend and wife. Defendant stayed overnight in the premises several times a week only. On other nights she returned to her family home. Relationship lasted only 8 - 9 months.

Held that the defendant entitled to a ¼ share in the property.

1989, No. A447

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

_____________

BETWEEN

_____________

______________

J U D G M E N T

______________

1. The plaintiff seeks a declaration that he is the sole owner of the premises flat E, 9/f Fu King Court 18-24, Chung Wah Street, North Point.

2. They are premises he and the defendant purchased as joint tenants on the 15th November 1987. Although I was not told precisely, it seems they got possession towards the end of July 1987. The purchase price was $340,000 paid as to $68,000 by the plaintiff and the balance of $272,000 with funds from a mortgage over the property from a bank. Both plaintiff and defendant were liable under the mortgage for repayment by instalments. The plaintiff, to effect these transactions, paid broadly $12,000 costs. He has, save for a few claimed relatively minor contributions from the defendant to which I shall turn, met all mortgage instalments since.

3. The plaintiff, a taxi driver, met the defendant, a cashier at her father's restaurant, in 1985. A relationship developed between them. That relationship became intimate, although to what degree in contest, and that in turn led to the purchase of the premises with which I am concerned. It is the plaintiff's case that in May 1987, he asked the defendant to marry him and the defendant accepted with the condition that before they were married they have a place in which to live. The plaintiff then took advantage of booming prices and sold a half interest in his taxi for $150,000. The downpayment for the premises came out of that. The plaintiff says that at the time of the purchase, he discussed the matter with the defendant and it was decided to purchase the property in their joint names as it was to be their home after marriage. They agreed that he would pay the mortgage and she would meet such items as water, electricity, gas and management fees. The plaintiff claims that it was mutually understood that if a marriage did not take place "she would return the flat to me". There was no marriage. He says the defendant insisted upon too large a dowry for her mother and too grand a wedding. Troubles developed between them and by February 1988, they seldom saw each other. By April 1988 the relationship was over.

4. The plaintiff says that the defendant had stayed overnight in the premises on two occasions only. She did however use the flat 3-4 days a week. She would come on those occasions after work and do some cleaning, watch T.V., prepare a meal for herself, entertain her friends and so on. He was working long hours. During the day he had a job and when that finish he drove the taxi. He used to mostly eat dinner at his mother's place and would return to the flat about 1 a.m.. Sometimes the defendant was there and if so he would drive her home.

5. The defendant tells quite a different story. She describes a much more active intimate relationship both before and after the purchase. She flatly denies any talk about marriage and puts her case on the basis that the premises were bought to facilitate and already thriving relationship hitherto conducted whilst on holidays together, in camp sites, "love hotels" and indeed even in the plaintiff's taxi. She does say that when the property was purchased, their relationship was very close and when asked by the agent in whose names the property was to be purchased, the plaintiff said both their names. He told her he loved her very much and would marry her. For her part however, she was happy with the existing relationship which she described as a "matter of love" which she "wished to last forever". She therefore, as her evidence would have it, intended a permanent relationship. She describes their relationship differently however. It is her evidence that the plaintiff, then age 31, was dissatisfied with the cramped living conditions at his mother's home and wanted a place of his own (which the plaintiff does not contest). The inflation of taxi prices offered him a chance to raise capital anu so it was decided to buy the flat both to secure him better accommodation and to provide a place where they could be together on a regular basis. It was agreed that the plaintiff would pay the mortgage instalments and she the household expenses.

6. The defendant says it was her efforts which led to finding the flat to purchase. She had visited agents and made inspections and when she found a suitable flat, the plaintiff inspected it and it was agreed that it be bought. The defendant was described as the plaintiff's "wife" (at whose instigation is contested but it does not matter). I also noted from the documents that in the Sale and Purchase Agreement, the defendant is referred to as a "married woman". In any event, the plaintiff drew a cheque for $3,000 dated two days forward over the weekend to cover the initial deposit. The defendant claims that she withdrew $3,000 from her account and paid it to the plaintiff's bank account to provide funds to meet the cheque. The plaintiff does not accept that. He says that he gave the defendant $3,000 cash and it was therefore his money which was deposited to his account to meet his cheque. The defendant says that after they got possession, she went to the premises and stayed overnight 2-3 nights per week. She bought cooking equipment, cutlery, bowls, linen and so on. She assisted the plaintiff paint and lay some tiles in the kitchen. She cleaned, did the laundry, ironed, did the marketing and sometimes cooked for both of them.

7. The defendant denies any talk about weddings or dowry for her mother. She was happy with the existing relationship until in January 1988, she found out that the plaintiff was involved in an affair with another woman and had actually taken that woman to the premises. Their relationship thereafter deteriorated and she moved her belongings out in April 1988 and returned home.

8. On a review of the evidence I have concluded that neither plaintiff nor defendant have been absolutely honest. Each has, to varying degrees, embellished and indeed distorted the facts in a tailoring exercise to suit their own case. I do not accept, as the plaintiff claims, that there was a "mutual understanding" that if a marriage did not take place, the defendant would return the premises to him. He gave no particulars of this "understanding".   He did not say how and when it arose or what, as a fact, was said or done by both of them to create this "mutual understanding". On the other hand, I do think it likely that there had been talk of marriage and the plaintiff's claim that his marriage proposal was accepted but conditioned by the defendant upon a place to live has a ring of truth to it. It may be that the defendant is more contemporary in her approach to personal relationships than the plaintiff. Her evidence as to how she viewed their situation was spontaneous and apparently sincere. I do doubt her claim though that marriage had not been discussed at all as she said was the case. Indeed it had been her evidence, as I have said, that when they discussed in what names the property was to be purchased, the plaintiff had said he would marry her. That in itself is a statement of declared intention on the part of the plaintiff directed to her and I have great  difficulty in accepting that the defendant herself did not foresee marriage to the plaintiff somewhere done the proverbial road. I do not accept that the relationship broke off because of the defendant's insistence on a large wedding and dowry payment. Even on the plaintiff's account there was no fixed date for marriage. No concrete arrangement of any sort appear to have been made and, as both plaintiff and defendant appear to me, both as they give evidence and from their known previous conduct, are far to modern in approach to be twarted by such conventional matters as the question of a dowry or the size of a wedding. They were, after all, effectively, albeit on a part time basis, living together.

9. I have concluded that the likely truth is a blend of the two accounts i.e. that they purchased their property in a joint names for the immediate purpose of capitalizing on taxi licence prices to secure funds to purchase a property. That property would, for the time being, provide accommodation for the plaintiff and facilitate their own intimate relationship by providing premises where they could meet a few days a week and which was available to both of them for other domestic purposes and social intercourse with the intent, perhaps with varying intensity, on both their parts, ultimately to marry. I do not believe either party contemplated that a marriage would not, as an event, at some stage take place and as a consequence there was no "mutual understanding" that the property would be returned to the plaintiff if that event did not take place. I do accept however that marriage, or at the very least an on going permanent relationship akin to marriage, was the plan as I am quite otherwise enable to satisfactorily answer the question why the plaintiff would put half the property in the defendant's name. He is not a rich sugar-daddy. His means and lifestyle simply do not admit the likelihood that he would make over half of a property he purchased to his part time girlfriend. The aspect of the plaintiff's account though that I doubt is that a marriage was, in effect, on the immediate agenda and as such, the property purchased as a consequence of the defendant's demand to have a flat before that event took place.

10. An important feature of this case is that on no account did the defendant live full time in the premises. She says she went to stay in the premises 2-3 nights per week. The plaintiff put that attendance at a higher 3-4 days but he said she stayed overnight for only 2 nights altogether. Whatever be the true version, and I find more likely the defendant's, this was not a relationship which embraced living under the same roof on a daily basis as de facto husband and wife.

11. I have been referred to a number of authorities dealing with property acquired in joint names or by joint effort both as between husband and wife and as between persons who have lived together, mutually contributing, over, what in those cases, was a considerable period of time. I do not propose dealing with them individually. The point was made by Grifriths L.J. in Bernards v. Josephs (1982)1 Ch. 391 at p. 402 as follows:-

"The cases that have been decided in the last 30 years provided valuable pointers to the matters that the courts should or should not take into consideration when assessing the proportions in which the beneficial interest in the house should be divided. But here I would like to sound a note of caution. Most of the decided cases have been dealing with married people. The legal principles to be applied are the same whether thedispute is between married or unmarried couples, but the nature of the relationship between the parties is a very important factor when considering what inferences should be drawn from the way they have conducted their affairs. There are many reasons why a man and a woman may decide to live together without marrying, and one of them is that each values his independence and does not wish to make the commitment of marriage; in such a case it will be misleading to make the same assumptions and draw the same inferences from their behaviour as in the case of a married couple. The judge must look most carefully at the nature of the relationship, and only if satisfied that it was intended to involve the same degree of commitment as marriage will it be legitimate to regard them as no different from a married couple."

12. The plaintiff and defendant, from the time of acquiring the flat, had a short liven 8-9 months part time relationship. There were imprecise and uncertain plans for marriage in the future. Those plans came to an end as a consequence, more likely than not, as a result of the defendant's belief, whether justified or not does not matter, that the plaintiff was intimately entertaining yet another woman at the flat and not, as the plaintiff says, as a result of the breakdown of dowry and wedding discussions.

13. On the facts as I find them to be, it cannot be said that the part time relationship of the plaintiff and defendant involved the same degree of commitment to each other as a married couple. Such may have been intended for the future but it was not a reality for the present. To that extent this case is distinguishable from the type of case to which Griffiths L.J. referred. It need be appreciated that it is not a case involving married or unmarried couples in the conventional sense, albeit, that a resolution of the problem be approached, ultimately, along similar lines.

14. The plaintiff argues that the parties intended to get married and that the premises were purchased as an intended matrimonial home. That may, to the extent to which I have already referred, be true. The plaintiff then would have it that his act in putting the property partly in the defendant's name was a gift to his intended wife and that as there was no marriage, the interest thus given to the defendant reverts to him. That argument must fail because I have not found as a fact that there was any express or implied condition at the time of the purchase that the property be returned to him if the marriage did not take place. All the evidence, as I find it to be, points to the plaintiff and the defendant jointly purchasing a property to pursue their immediate and long term plans upon the basis that the plaintiff supply the funds for the initial deposit and thereafter the mortgage instalments whilst the defendant meets the ongoing expenses associated with their own maintenance and living costs.

15. It is a fact that the defendant is a joint tenant, and registered as such, of the property. She committed herself, significantly, to liability under a mortgage to secure funds to purchase that property. She thereafter contributed to a joint effort to the extent to which I shall turn. The evidence related to intention at the time of acquisition of the property points affirmatively to the conclusion that it was intended that she has an unconditioned interest in it. Indeed, the evidence related to events after separation (at which I may look; Bernards v. Josephs (supra) per Griffiths L.J. at p. 404 & Kerr L.J. at p. 407) also suggest the same. In that regard it is common ground that after separation there was discussion between them related to figures for which the defendant would relinquish her interest in the property although contest as to how and why those negotiations broke down. Despite the argument for the plaintiff that these talks were no more than an effort to avoid litigation, I find them rather to suggest a confirmation and recognition by him that the defendant had indeed acquired an interest in the property pursuant to the original intention in that regard at the time of acquisition.

16. Having determined that the defendant does have a beneficial interest in the property, it then falls to determine what that interest is. Fuad J.A. in Siu Chun Wah and Anor v. Malahon Credit Co. Ltd. No. 63 of 1987 at p. 10 dealt with the law relating to property of both married and unmarried couples as follows:

    "It is well settled that the beneficial ownership of the property depends on the agreement of the parties ascertained at the time of acquisition per Lord Upjohn in Pettitt v. Pettitt at p. 813F and p. 816E: per Griffiths L.J. in Bernards v. Josephs at p. 404C.

In our case, as already mentioned, the instrument assigning the flat to the joint tenants is not before us and so we must take it that it is silent on the matter and look elsewnere.

It is clear, too, that a "conveyance into joint names does not necessarily mean legal shares" per Lord Denning in Bernards v. Josephs , at p.398A.

Here, there are no special circumstances, and so, "the time at which the beneficial interest crystallizes is the time of acquisition" per Griffiths L.J. in Bernards v. Josehps, at p. 404F.

In the same case, Griffiths L.J. at p. 402B - D refers to a passage from the speech of Lord Upjohn in Pettitt v. Pettitt (pages 813 - 814) and says:-

"The task of the judge is to look at all the evidence and decide whether it indicates an intention by the parties that the beneficial ownership of the house should be held in other than equal shares. It is only in the somewhat unlikely event that nothing in the evidence provides a pointer to the intention of the parties that the judge should decide the case upon the basis that the equitable title follows the legal title or to use another maxim that equality is equity.

17. In this case there was no express agreement between the parties at the time of the acquisition of the property as to what their respective shares were to be. The parties are not an "unmarried couple" akin to a married couple because of their part time and, in the event, short lived, relationship. In my view, however, the same sort of principles as presently exist regarding such relationships ought be followed, with the adjustments to which I shall refer, in this case in a determination of their respective shares in the property.

18. Lord Denning M.R. in Bernards v. Joesphs at p. 398 said:

"As Between husband and wife, when the house is in joint names and there is no declaration of trust, the shares are usually to be ascertained by reference to the respective contributions-just as when it is in the name of one or other only. The share of each depends on all the circumstances of the case, taking into account their contributions at the time of acquisition of the house; and, in addition, their contribution in cash or in kind, or in services-up to the time of separation. In most cases the shares should be ascertained at that time. But there may be some cases where later events can be considered."

19. It is clear for the above that the operative date at which to calculate the shares of the parties is the date of separation (see also Kerr L.J. at p. 407).

20. I accept the defendant's evidence that it was she who finance the initial deposit to the agent of $3,000. There are 3 ETC withdrawals each of $1,000 from her bank account on the 25th of May 1987. This supports her story as to how she withdrew the parcels of money in succession on the Monday following the payment of this deposit to get the funds to cover the plaintiff's cheque written on the 23rd but post dated to the 25th of May 1987. I do not accept that the plaintiff paid the defendant back the agency fees of $3,400 that she paid by cheque on the 25th of May 1987 to the agent. I also believe the defendant as to her paying the $500 electricity meter fee on the 27th of May 1987.

21. The position therefore is that, in terms of outlay to acquire the property, the plaintiff contributed a total of $77,830 and the defendant $6,900 i.e. approximately 9% of the total sum paid.

22. The evidence does not reveal with precision when the defendant finally quit the premises save that it was sometime in April 1988. I will assume, for the purpose of calculations, that that was towards the beginning of April 1988. The parties were therefore jointly in possession of the premises from the end of July 1987 to early April 1988 i.e. broadly 8 months.

23. The plaintiff supplied details of the payments he has made off the mortgage to the present time. He is only entitles however to have a credit for payments made to April 1988 i.e. separation. He paid 8 instalments of $2,379.90. I accept the defendant's evidence however that she paid, as particularised, a total of $3,800 by contributions to the September and November 1987 and February 1988 payments. She did this as the plaintiff was short of cash due to commitments with the taxi. The plaintiff is entitled to a credit of $15,232 ($19,032 - $3,800).

24. The initial agreement was that the defendant pay the outgoings. I accept that, by and large, she did, and, as regards those matters in dispute, I prefer her evidence. I accept her explanation that she left the receipts in the flat. I find that she paid $1,365 in management fees, $405 as rates, $239 as telephone charges and $166 for gas. I accept her evidence that she paid the electricity charges save for one payment of $88 on the 16th of September 1987 paid by cheque by the plaintiff. I note that had he paid the other electricity bills as he claims, it would be likely that he paid them also by cheque. The defendant therefore paid $1,165 for electricity ($1,253 - $88). I accept that she paid $230 for paint and an equipment as she claims. These expenses total $3,570 i.e. approximately $446 per month.

25. The defendant also says in addition to these items she spent money on food, household items, equipment, linen and so on. In all, including the items particularised, she estimated that she spent somewhere in the region of $1,200 per month. That would mean that she spent something like $754 for these unparticularised items.

26. I find it likely that the defendant was spending the time at the premises that she says she was. She only claims to have cooked for the plaintiff sometimes. I accept his assertion that he had his evening meal on a more regular basis at his mothers. The plaintiff had said that he did the marketing. In view of his long hours at work and the defendant's comings and goings to the flat, I think that unlikely although I would accept that he too would make household contributions from time to time. Bearing in mind that the defendant was only at the premises at best half the time, I regard her overall claim of $1,200 per month as recurring outgoings high. I would, admittedly arbitrarily, regard $1,000 per month, inclusive of gas, electricity etc. as reasonable. She is therefore entitled to a $8,000 credit as her overall contributions to the household during the period in relief of the plaintiff whilst he attended to the mortgage payments.

27. Arithmetically, in terms of total financial contributions both before and after purchase and to separation, the plaintiff contributed approximately $93,000 (86%) whilst the plaintiff contributed approximately $15,000 (14%). That is not the end of the matter however because the defendant is entitled to have her more intangible contributions taken into account. She had made the initial inspections of the properties, she had undertaken some minor repairs, had helped with painting and thereafter devoted energy and time to the premises. There is little doubt in my mind in this regard and when taxed as to why she did the laundry, cleaning, ironing and so forth she replied "Because I loved him and I felt I had a part in the flat. I wanted to try to keep it in a perfect state because I thought it a world of our own and we would be happier if we kept it better". On the other hand, of course, she was not living full time with the plaintiff and nowhere, in clear terms, in her evidence, did she herself say she intended to do so. Her efforts in looking after the property and its occupants therefore do not attract the reward that they might otherwise have done had the the parties indeed been living as an unmarried couple in the full sense of that expression as referred to in the authorities. Bearing also the relatively short time the couple were together in mind, she is nonetheless entitled to an enhancement of the beneficial share that would be hers arrived at by a strict arithmetic route.

28. Griffiths L.J. in Bernards v. Joesphs at p. 404 said, in relation to calculating the parties interests:-

"The contributions must be viewed broadly by the judge to guide him to the parties unexpressed and probably unconsidered intentions as to the beneficial ownership of the house. There is of course an air of unreality about the whole exercise, but the judge must do his best and only as a last resort abandon the attempt in favour of applying the presumption of equality which may so often give an unfair result."

29. Conscious of that "air of unreality" I am of the view that the defendant ought to have the strict contribution percentage entitlement of 14% enhanced, because of her other contributions, to 25%. She is therefore entitled to a 1/4 share of the beneficial interests in the property.

30. The matter does not stop there. Both plaintiff and defendant took a somewhat "do or die" approach to this case. The plaintiff claimed:-

1. An order that the defendant shall attend ----------, Solicitors for the plaintiff ------ and assign all the interests in the premises back to the plaintiff.

2. A declaration that the plaintiff shall be the sole registered owner of the premises and that the Land Office shall register the same."

31. Both those claims fail.

32. The defendant simply denied that the plaintiff was not entitled to the relief claimed. There was no counterclaim.

33. If I am to make any orders in this case, I do so under the umbrella of the plaintiff's prayer for "Such further and/or other relief as this Honourable Court may deem fit". Counsel for the plaintiff argues that I should make a declaration or order that upon payment by the plaintiff to the defendant of a particular sum of money calculated with reference to beneficial share entitlement, the defendant be sole proprietor of the property. I agree however with counsel for the defendant. That cannot be done in these proceedings as, if for no other reason, accounts to the present time would have to be taken. I cannot, unlike as in England, in these proceedings made an order for sale. The parties will, perhaps unsatisfactory, have to either resolve the finances themselves or come back to the court in the event of a sale. I will have at least determined their beneficial share entitlement.

34. The plaintiff has failed in his express claim for the whole. It is argued that he has however substantially succeeded in the action because the product is that he would have won a declaration, in the event, that he is entitled to a ¾ share in the property. The defendant has successfully resisted the plaintiff's claim, however phrased, for the whole beneficial interest. The defendant has, without expressly claiming any share by way of counterclaim, practically succeeded in that she has a declaration that she is entitled to a 25% share in the property - although it may be a lesser share than she would have wished.

35. Costs usually follow the event. Here however it is difficult to determine who has "won" in the customary sense. That aside however, I am of the view that this is a case where each party should bear their own costs and I exercise my discretion in that regard accordingly.

36. There will therefore be a declaration that the plaintiff is entitled to a 3/4 share and the defendant a ¼ of the beneficial interest in the property. There will be an order nisi that each party pay his or her own costs. The order nisi for costs will be absolute within 21 days unless application is made within that period to the contrary.