TAM YIN LING LEWINA v. TAM CHI HUNG ALAN

DCCJ 1062/2020

[2025] HKDC 885

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1062 OF 2020

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  All prices, consideration, fees or expenses mentioned herein are denominated in Hong Kong dollars.

2.  This action arose from a dispute between siblings over a property situated at Flat C on 4^th Floor and Parking Space No 62 on Basement, Mandarin Garden, No 12 Man Fuk Road, Kowloon (“the Property”) that was purchased at $8,500,000 in October 2015 in the name of the defendant (“D”), the younger brother of the plaintiff (“P”).

3.  D entered into a provisional sale and purchase agreement (“PSPA”) on 5 January 2020 to sell the Property for $10,500,000 (the “Intended Transaction”) and received a deposit of $1,050,000 (the “Deposits”). On 13 January 2020, P, who averred to be the beneficial owner of the Property, requested D to execute a Power of Attorney (“2020 PoA”) to direct the handling solicitors to pay over the Deposits and all future remaining balance of the purchase price to P. D refused as he claimed to be the owner of the Property. Notwithstanding the disputes as to the ownership of the Property, a formal sale and purchase agreement (“FSPA”) was executed by D on 17 January 2020. However, the dispute came to the notice of the intended purchaser and the Intended Transaction of the Property fell through in April 2020.

4.  As the result of the aborted transaction, D, who executed both PSPA and FSPA as a seller, was required to compensate the intended purchaser, estate agent for damages and miscellaneous legal fees at $262,585.00 (the “Damages”).

5.  The P’s case is as follows:

(1) P had an oral agreement with D at the time of purchasing the Property that D would be holding it on trust for her (the “Trust Agreement”). D therefore signed both the provisional and formal sale and purchase agreements on behalf of P, and the Property was registered in D’s name;

(2) To protect P’s interests in the Property, a Power of Attorney was executed in October 2015 by D in favour of P to reflect the Trust Agreement (“2015 PoA”), and empowered P to deal with the leasing and other administrative matters of the Property;

(3) P provided all the money for the purchase of the Property, which included $1,500,000 from realizing her share from Full Silver Garden (“FS Gdn”) which she co-owned with D on a 50:50 basis since July 1999 together with a personal loan of $2,000,000 from Standard Chartered Bank (the “Personal Loan”) and a mortgage of $5,000,000 from the Bank of China (the “BOC Mortgage”) under which she and D were registered as borrowers;

(4) Besides the money for purchasing the Property, P averred she provided all funding incidental to the purchase, which included legal fees, estate agent commission, stamp duty and another $650,000 loan taken out from the Bank of China to renovate the Property (the “Renovation Loan”);

(5) P also acted as the owner of the Property all along as she was responsible for leasing the Property, receiving rent, paying management fees, mortgage instalments and property tax (notwithstanding D as the registered owner);

(6) Based on the above, P claims to be the sole beneficial owner of the Property, and seeks from the Court, inter alia, a declaration that D was merely holding the Property on trust for her, and mesne profits since 21 July 2020 when D moved in the Property.

6.  On the other hand, D’s averred the follows:

(1) There was never a Trust Agreement but the Property was owned by him as both the legal and beneficial owner;

(2) The purchase of the Property was suggested by P for the purpose of ‘teaching him to invest’ in property;

(3) The Personal Loan was a contribution from P and he funded the purchase of the Property by way of $1,500,000 which was the proceeds of sale of FS Gdn;

(4) The Personal Loan was meant to be repaid if and when the Property was sold in the future;

(5) To maintain the outgoing expenses and repayment of the BOC Mortgage, it was agreed between P and D that P would be renting out and managing the Property as his agent (the “Agency Agreement”);

(6) P therefore breached her fiduciary duties owing to him by interfering with the completion of the Intended Transaction, thus causing D to suffer losses;

(7) In such premise, D counterclaimed against P for the Damages and any shortfall in the market value of the Property.

ISSUES IN DISPUTE

7.  Parties have agreed on a lengthy issues in dispute but can be succinctly summarized in the following questions:

(i) Was there the Trust Agreement and/or common understanding between P and D at the time of the purchase of the Property that D would be holding it on trust for P?

(ii) Alternatively, did D purchase the Property through the aid of P’s Contribution, the BOC Mortgage and the sales proceeds of FS Gdn, and only had the intention to let P manage the Property in the capacity of his agent?

(iii) Whether P and D co-owned FS Gdn and whether the $1,500,000 that was used to finance the purchase of the Property belonged to P or D?

Legal Principles

8.  P’s case was based on the doctrine of common intention constructive trust where she has the burden to prove first, the common intention of parties regarding their beneficial interests in the Property, secondly, her detrimental reliance on such intention, and thirdly, that it would be unconscionable for D to depart from such mutual understanding.

9.  Cheung JA in Primecredit Ltd v Yeung Chun Pang Barry [2017] 4 HKLRD 327 paragraphs 2.3-2.4 explained two scenarios that could impute the requisite intention. The first scenario is straightforward — a constructive trust arose if the Court is satisfied that an agreement, arrangement or understanding was reached between the parties on how the property is to be held beneficially. But where there is no evidence to support such a finding of an agreement or arrangement, the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention on the beneficial ownership of the property and as the conduct relied on to give rise to a constructive trust. In this regard, evidence of monetary contribution is a significant factor to be taken into account as Lord Bridge of Harwich in Lloyds Bank PLC v Rosset [1991] 1 AC 107, 132 said “direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage installments, will readily justify the inference necessary to the creation of a constructive trust.”

10.  In the event that I do not accept that a Trust Agreement was formed between P and D as to the beneficial ownership of the Property, it is important to adopt a holistic approach and look into the whole course of conduct of the parties in relation to the acquisition and management of the Property in order to ascertain any shared intentions, whether actual, inferred or imputed. While monetary contribution is said to be an important factor in Llyods Bank PLC, supra, I also bear in mind of the non-exhaustive list of factors given by Baroness Hale in Stack v Dowden [2007] 2 AC 432 (HL) when disputes arise in respect of a matrimonial home:

“[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 authorized 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.”

11.  Despite these factors were considered in the context of a matrimonial home, they are useful guidance in this case especially in the discussion of the beneficial ownership of FS Gdn, which was a property in which the siblings cohabitated for a period of time.

ANALYSIS OF EVIDENCE

12.  When I analyse the evidence of the parties, I am mindful that it is not a case of a pure commercial dispute where decisions are often driven by gains and profits. Instead, financial contributions can be made out of benevolence rather than some reciprocal motives. It is therefore pertinent to look into the nature of the parties’ relationship, their backgrounds and characteristics to ascertain their real intentions in the beneficial ownership of the Property.

Financial backgrounds

13.  P is in her early sixties and is the eldest sister of three siblings. D is the ‘middle child’ and there is a third and youngest brother who is not involved in this case. They did not come from a family of means and all three siblings started to work at a relatively young age. Without a doubt, P is a self-made woman who started working as a receptionist at a hotel at the age of 17 where she learnt some conversational English. She later switched to merchandising and eventually became a successful businesswoman in sports garments. She gave evidence that her salary was around $60,000 per month in 1999 and she took up a business partnership in around 2003 and by 2005, she made more than a million dollars per annum. The business went from strength to strength, and she made roughly four million dollars a year in 2015. With the wealth she accumulated, she invested in properties and bought around 5-6 properties between 2005 and 2020. She gave evidence that all these properties were held in her own name.

14.  D was retired at the time of the trial and had worked as a bell captain in the hospitality industry since 1989 with a base salary around $12,000 per month in 1999. He averred that he received regular tips, so his total income would be at a maximum of $15,000 per month around 1999, and not more than $20,000 around 2002. He stopped working for 9 months in 2008 and resumed working in hotel’s concierge from 2015 until 2020, when he was asked to retire. He confessed under cross-examination that he never had much savings and spent all his money for his wedding when he married his wife Szeto Kwan (“Szeto”) in 1999. After moving in FS Gdn, his monthly contribution to the mortgage would be debited directly from his salary, and he had on average a few thousand dollars left for his own spending. Szeto gave evidence that her income as a bank teller was around $15,000 in around 1997, which was increased to around $17,000-$18,000 by 2002. This means the total family income of D and Szeto was at maximum of $30,000 per month at the time they married in 1999, and not more than $38,000 when their first son was born in 2002.

Living arrangement

15.  Back in around 1996 after P’s divorce, she lived with her mother in a rented place in Hung Hom. P invited D to live with them and Szeto started to spend increasingly more time cohabiting with them too. In around 1999, D intended to get married and FS Gdn was purchased at $1,360,000 in the name of D by taking the advantage of the Home Starter Loan Scheme of the Hong Kong Housing Society (“Home Starter Loan”). P moved into FS Gdn with D and Szeto until around 2006 when P rented a flat in Tsing Yi, and she invited D and Szeto to move in with her as communing to work would be easier. FS Gdn was vacated until 2009 when their youngest brother moved in and lived rent free.

16.  As P’s financial position improved, she bought a flat in The Harbourside in 2010 and invited D and Szeto, together with their children, to live with her. Later in 2011 she bought another property in The Hermitage and let D and his family to move in. Eventually, D and his family rented a flat at Metro Harbour View in 2011.

17.  In such premise, one can see the siblings had cohabited for around 15 years (1996 – 2011) and as both P and D claimed, their relationship was very good. It was not disputed that P had been a very generous sister even before her wealth grew and had always been the one who supported her family members, including her parents and siblings. It was P’s case that she lent money to D whenever he asked for it, and after 2006, when she was more affluent, she settled D’s outstanding credit card bill once and paid D’s share of the FS Gdn monthly mortgage repayment for a period of time when he was unemployed. D also admitted that P has all along been assisting him and his family financially until 2017, eg, P’s monthly subsidy of $14,800 for D’s rental at Metro Harbour View (which she claimed also included her 50% mortgage repayment of FS Gdn) and $4,000 for D’s children’s education. P also paid for D and his family’s multiple vacations to Japan. In a nutshell, the D’s family had been enjoying a living standard that they would not otherwise have but for P’s generosity.

The purchase of FS Gdn

18.  The acquisition of FS Gdn was financed 70% by a mortgage from the Hong Kong and Shanghai Banking Corporation Limited and a loan equivalent to 30% of the purchase price through the Home Starter Loan. The monthly repayment terms of the mortgage and the Home Starter Loan was $7,666.00 per month for 25 years and $3,986.00 per month for 10 years, respectively, where the repayment for the latter commenced in 2002. The total amount of the monthly repayment was therefore $11,652.00 per month from July 2002 to July 2012.

19.  Despite his sparse financial resources, D averred that the FS Gdn was purchased with his money and with the assistance of the Home Starter Loan Scheme. He said FS Gdn was chosen by Szeto and he did the maths and considered that he and his wife’s salaries could support their living and the monthly mortgage. Szeto gave evidence that D contributed to the full mortgage, and she paid other household and living expenses. D averred that the newly wedded couple invited P to cohabitate with them out of family love as they did not want P to feel being left alone. Both D and Szeto denied P had ever contributed to any mortgage payment, but any contribution would been P’s share of rent and living expenses. D denied P’s averment that she paid the deposits of FS Gdn as he claimed no deposit was required as he obtained assistance from the Home Starter Loan Scheme.

20.  On the other hand, P gave evidence that it was D who approached her asking for help with the purchase of FS Gdn. She said she went with D and Szeto to view the place, and she wrote a cheque to settle the deposit immediately. The property was registered in D’s name only because his income qualified him to get the Home Starter Loan but claimed to have a verbal agreement with D that the beneficial ownership of FS Gdn would be shared 50/50. After that, she made her monthly contribution to D and paid D’s share on many occasions when he did not have sufficient funds.

The Acquisition of the Property and the falling-out of the siblings

21.  In 2015, P found an opportunity to buy the Property, which was a foreclosed property and being repossessed by a bank. P found the offering price attractive but was too busy to sign the agreement herself. She therefore asked D to enter into the sale and purchase agreement on behalf of her but denied having any intention to share the beneficial interest in the Property with D. She said she informed the agent her intention of having D being the title owner, and the agent told P that she would ask the conveyancing solicitors to prepare a power of attorney to ‘protect her interests’ in the Property. D later signed the PSPA, FSPA and 2015 PoA.

22.  The purchase of the Property was the tipping point at which the otherwise closely knitted relationship of the siblings turned sour. During the course of acquiring and financing the Property, P found out that first, FS Gdn was remortgaged twice in 2010 and 2012 without her knowledge or permission, and secondly, that D’s family income was more than D claimed it to be. P averred she felt that D had not been honest with her and exploited her kindness for personal gain. Despite the siblings not being as close as before, P however, did not stop all her financial supports to D at once, but reduced it to $11,800.00 per month as she was under financial pressure after purchasing the Property. The monthly subsidy eventually stopped in April 2017 as P realized D’s family income was $840,000.00 per annum and she did not see the need to give them further assistance.

23.  In order to liquidate cash for the purchase of the Property, P suggested selling FS Gdn but since D expressed his wish of moving back in the future, P proposed to D to refinance it and return her 50% share, which could settle part of the purchase price of the Property. It was P’s case that D agreed to ‘sell’ FS Gdn to Szeto in around October 2015 (“the Sale”) and P agreed to accept $1.5 million as her half share of the FS Gdn despite the ‘transaction price’ being $3.8 million. D and Szeto therefore used part of this money to settle the outstanding mortgage debt from 2012 at $706,651.84 and paid P $1.5 million. The balance of the purchase price was financed by the BOC Mortgage of $5 million repayable in 25 years as well as the Personal Loan repayable in 1 year. On top of all these, there was also the Renovation Loan taken out by P repayable in 18 months.

24.  Contrary to P’s case, D said it was P who encouraged him to invest in property and suggested to him to refinance FS Gdn and invested the realized capital of $1.5 million in the Property. D therefore ‘sold’ FS Gdn to Szeto at $3.8 million, who took out a mortgage from Dah Sing Bank Limited for $2.28 million to redeem the outstanding original mortgage of about $700,000.00 and applied the remainder $1.5 million towards the purchase of the Property. D said he therefore considered part of the ‘proceeds’ of the sale of FS Gdn to his wife was his investment in the Property. Pausing here, D agreed such sale was a transfer of legal ownership from D to Szeto with no consideration passed from Szeto to D.

25.  D said he was hesitant at first in making such an investment because he was worried about his inability to repay P, should the value of the Property depreciate in the future. P, however, affirmed that she would manage the Property for D and that D only needed to pay her back when the Property was sold with a profit. D therefore agreed to the Agency Agreement and entered into the sale and purchase agreement. D later also agreed to sign the 2015 PoA upon the request of P, but D claimed he signed it because he considered it was only a document authorising P to manage the leasing and selling of the Property.

26.  During the course of the mortgage application, P became angry when she found out that D had remortgaged FS Gdn twice and did not disclose to her his increase in salary. P, for the first time, asserted her interest in FS Gdn and told D the $1.5 million was her share. D disagreed with her as he considered “FS Gdn belonged to his and his wife”, and they had to pay back the $1.5 million plus interest to the bank. However, D said he thought P said this in a burst of anger and thus did not think too much of it.

27.  D explained in his witness statement that he never made any monetary contribution to the BOC Mortgage or tax or government rent etc for the Property because he believed the rent was enough to cover all these outgoing expenses.

28.  D agreed he asked the youngest brother to move out of FS Gdn in 2019 because he and Szeto sold FS Gdn in 2017 at $4,580,000.00.

The intended sale of the Property

29.  It is P’s case that she intended to sell the Property in September 2019 and had communicated this idea to D around October 2019, who did not express any objection. As a result, D acted upon P’s instruction to sign a PSPA for the Intended Transaction on 5 January 2020, and according to P, she gave a $50,000 cheque to D as rewards on the day when the two of them went to the solicitors firm intending to sign the FSPA and the 2020 PoA, which allowed the transaction money (including the first Deposits that had already been transferred to D’s bank account) to be deposited into P’s account. To P’s surprise, D refused to execute the 2020 PoA and told P that he never had so much money in his bank account, and the sibling had a falling out when P took the $1.5 million from the proceeds of the refinancing of FS Gdn. Although both P and D left the solicitors’ firm without signing the FSPA, the solicitors’ firm later informed her that D gave them the instructions to complete the Intended Transaction and executed the FSPA without informing P.

30.  D gave evidence that he and Szeto agreed to P’s suggestion of selling the Property at $10.5 million in around late December 2019, and he therefore acted upon P’s instruction to execute the PSPA. On the day when he was supposed to sign the FSPA, P gave him a cheque (which he did not cash) telling him there was no profits generated from selling the Property but only $50,000. He refused to sign the 2020 PoA because P asserted her beneficial interest in the Property and asked him to agree to a clause which allowed the proceeds of the sales to transfer directly to P’s bank account. D considered himself to be the beneficial owner of the Property because it was registered under his name. After discussing with Szeto, he decided to go ahead with the Intended Transaction and went back to the law firm the next day to execute the FSPA without notifying P.

31.  Since P’s solicitors informed the intended buyer P’s asserted third-party interests in the Property, the Intended Transaction eventually fell through, and thus incurring the Damages payable by D to the intended buyer and estate agent etc.

32.  D eventually moved in the Property in July 2020.

FACTUAL FINDINGS

33.  The crux of the case is whether P paid all the money and managed the Property in the capacity of its true owner or as an agent for D. But since D’s asserted interest in the Property stemmed from the $1.5 million contribution he made from selling FS Gdn, I bear in mind that D’s case could not be sustained if I find the $1.5 million was in fact a realisation of P’s share in the FS Gdn.

34.  There are three averred ‘oral agreements’ before me, the first was based on P’s case that FS Gdn was to be co-owned by P and D with the second one being the Trust Agreement. The third agreement was based on D’s case that P agreed to act as an agent to manage the Property. I am mindful of the fact that both P and D’s assertions are made up of bare assertions, the veracity of which I cannot gauge or test against any documentary evidence or undisputed/indisputable facts and circumstances of the case. I must therefore resort to some careful analysis of each witness’s conduct and thus assessing their respective credibility. The trite criteria for assessing witnesses’ credibility was raised in Roderick Miller v The Law Society of Hong Kong [2024] 3 HKLRD 929 in paragraph 37:

“Insofar as witnesses were concerned, the Court considers the inherent probabilities and logicality in the party’s case and whether a party’s case is contradicted in a material way by other undisputed or indisputable evidence, and whether a witness has been discredited over one or more matters to which he has given evidence using the above tests.”

35.  From the background narrated above, it is a fair observation that despite the financial positions of P and D were very different, the D’s family had been enjoying a living standard that they otherwise would not been able to support, but for P’s generosity. The consistent financial support from P to D gave rise to the possibility that P truly wanted to offer D financial assistance at her own detriment, but at the same time, it is equally possible that D mistreated all financial assistance given to him out of P’s benevolence.

36.  P gave assertive and direct answers during cross examination and struck me as a bright person. She was very clear about the amount of money she had put into the Property and FS Gdn. D on the other hand, appeared to be a simple-minded man who was not aware about the details of the monetary management of both the Property and FS Gdn. Not only did he demonstrate a weak understanding of property’s financing, but his evidence also showed his ignorance of the concept of trust, despite being legally advised, believing that it was illegal for someone to ask for another person to hold property on his/her behalf, and that as the registered owner of the Property, his beneficial interests therein would be unassailable.

37.  Szeto gave evidence to support D’s case. Her evidence, both oral and in her witness statement, was in line with D’s. She had no personal knowledge of any oral agreements between P and D of the Property and her evidence on this topic was merely hearsay evidence. The only relevant takeaway from her testimony was that while she and D had a joint account for the household expenses, she did not contribute directly to the mortgage repayment for FS Gdn which was debited directly from D’s salaries. Overall, I do not see how her evidence could improve D’s case on the facts.

38.  I bear in mind that when FS Gdn was purchased in 1999, P was still a salaried employee, despite her earning power being much stronger than D’s. She was paying the full rent (between $6,000-$7,000 monthly) of the premises where her mother, D and Szeto lived. D confessed that he spent all his money on his wedding and Szeto gave evidence that she contributed to the ‘living expenses’ instead of ‘mortgage repayment’ of FS Gdn. Given that his monthly base salary was at $12,000 back in around 1999 (plus few thousand dollars tips in cash), the monthly mortgage was $7,666.00 for the first three years, increasing to $11,652 from the 4^th year, amounted to 80% of his base salary. Thus, the purchase of FS Gdn was no doubt a great burden for him who had been living with his sister rent-free for years.

39.  During the trial, D was cross-examined on his unthrifty spending habits which gave rise to occasions where he could not pay the mortgage on time but sought help from P. I do not consider this to be an important aspect to be examined as the money left after paying the full mortgage would be so little, even for a person living a frugal life, let alone D had an increase in expenses from the first son who was born in 2002, followed by the outbreak of SARS in 2003 which caused a downturn in the hospitality industry.

40.  Notwithstanding his financial position, D averred that he invited P to live with him without giving evidence of any kind of discussion as to the amount of rent or contributions his sister needed to pay. I consider that offer unrealistic and improbable.

41.  Conversely, P’s explanation was more probable that D invited her to live together and thus sharing the burden of mortgage repayment. Bearing in mind that P’s wealth only started to build in around 2005, it made perfect sense to me that the siblings decided to co-own a three-bedroom flat in FS Gdn and share the burden of monthly mortgage.

42.  I did not lose sight of the fact that FS Gdn was left vacant between 2006-2009 when D and his family moved into P’s rented flat in Tsing Yi. D was unemployed for around 9 months in 2008, his eldest son was around the age of 5-6 generating expenses, and there was no evidence from Szeto, who was making around $20,000 at that time, contributed to the monthly mortgage of FS Gdn. Considering D’s evidence that he has never had much savings throughout his life, I found it extremely odd why D, as the sole owner of FS Gdn as he claimed, did not let out FS Gdn to generate rental income but to keep it as their ‘storage’ between 2006-2009, and let the youngest brother to move in from 2009 rent free. I consider the only reasonable explanation to this arrangement is that P, who had half the interest in FS Gdn, decided to let the youngest brother to move in FS Gdn and at the same time, been paying half of the monthly mortgage (or more on occasions) and extra subsidies for D so that D and his family did not have to worry about their living.

43.  D averred it was P’s first-time asserting half of her interest in FS Gdn when she realised it was re-mortgaged twice without her knowledge, but he did not put much thought to it, as he considered it was simply an outburst of anger. His nonchalance was incredible if he truly considered himself to be the only legal owner of FS Gdn. In fact, I considered all along that he was well aware of P’s 50% interest in FS Gdn, but simply never expected his sister would ask him to re-finance the property and to give her back $1.5 million, based on her past generosity.

44.  D in his witness statement explained that the $1.5 million was the realisation of his partial capital of FS Gdn because it was obtained through the refinancing for which he and his wife needed to pay interest. However, this does not sit well with the fact that P paid the stamp duty and legal expenses for such refinancing. If the refinancing was the means which allowed D to fund the purchase of the Property, then D offered no reasonable explanation as to why P needed to pay all the outgoing expenses for the conveyancing exercise. In my view, the only reasonable inference is that P paid them because she gave instructions to D to ‘sell’ the house and give her back the 50% of shares, and thus the stamp duty was part of the purchase expenses for the Property.

45.  Based on the above, I therefore found P’s version of facts in relation to FS Gdn more probable than the version given by D and Szeto. I am convinced that there was a common intention, if not oral agreement between P and D before the purchase of FS Gdn, that the beneficial interest of FS Gdn would be shared between the siblings, and such agreement and/or understanding and/or intention was supported by P’s detriment, ie her monthly contribution to D which partly was applied to the mortgage repayment of FS Gdn. In such premise, the $1.5 million injected in the Property was the realised capital of P’s shares from FS Gdn.

46.  It was D’s pleaded case that P wanted to ‘teach’ him about property investment by purchasing the Property. D’s counsel however urged the Court not to focus on the aspect of ‘learning’, but it was a case where P wanted to help D to make profit using her skill and financial assistance. It was an obvious shift of D’s pleaded case and I do not accept it. I agree with P’s counsel Mr Tsui (“Mr Tsui”) that such explanation was inherently improbable because there was not an iota of evidence showing what D has learnt from the purchase of the Property, and the conduct of the parties subsequent to the purchase defies any logic of agency.

47.  Besides the $1.5 million which was claimed to be invested in by D, it was not disputed that P took out and had repaid the Personal Loan in full with interest, and the expenses incurred from stamp duty, legal fees, commission and cost of renovation totaling at $837,987 were all settled by P. Documentary evidence before me also showed that all administrative matters from conveyancing to leasing the Property were managed by P without D’s involvement.

48.  D explained in his witness statement that it was unnecessary for him to make any monthly mortgage repayment because the rent income was used to pay off the monthly mortgage instalment. Such belief demonstrated that D never reviewed the rental performance or any financial status of the Property as breakdowns prepared by P showed that the annual rental income was not always sufficient to support the total expenses incurred from the Property, such as property tax, rates and management fees. Such shortfalls totaling not less than $300,000 (between October 2015 to March 2020) had always been paid by P out of her own pocket. In short, D only sat passively for over 4 years in a risk-free environment without making any further contribution, oblivious of the shortfalls that P had been paying as well as the Personal Loan and the Renovation Loan P took out and repaid with interests. Quoting Mr Tsui’s submissions, D’s attitude was ‘to be awaken when the value of the Property rose and to make a gain’.

49.  When D was asked during cross-examination how he was to repay all these monies that were advanced by P, he said that could be “computed and make deduction” when the Property is to be sold. Bearing in mind D never at any point of time between 2015 and 2020 asked P for any information about the financial status of the Property, I am unimpressed with his answer and do not see the slightest intention of such from his evidence. Should D have any genuine intention of treating P as his mere agent, it is logical to assess how much he owed P when he decided to sell the Property, thus to appreciate how much profit he could make from the sales. In fact, D never asked P before the commencement of these proceedings the amount she advanced, and has not, whether on pleading or in evidence, made out a case of an intention in repaying P the advanced money after the intended sale. D’s intention was simple – he believed he has invested $1.5 million in the Property and can get $10.5 million back, as if all the monies contributed were gift from P.

50.  D’s counsels submitted that it was unbelievable that P was ‘too busy’ to sign the PSPA and/or FSPA when acquiring the Property in 2015 thus asked D to enter into the agreement on behalf of her. P explained she had two groups of customers at the material time, hence could not find time to deal with the conveyancing matters. P gave evidence that she did not trust others when dealing in business, and considered business is more important than buying property. To protect her interests in the Property, she believed the 2015 PoA could provide her the power to exercise rights as the true owner and since the BOC Mortgage was taken out in both P and D’s names, she would not have to worry about D redeeming the mortgage as this could not be done without her authorization.

51.  I found that P’s answers were unshaken and logical. I accept her explanations.

52.  It defies logic that a mere agent would continuously make financial contribution to her principal without asking for or expecting repayment. In contrast to D’s nonchalant approach to the financial affairs of the Property, I have found the financial contributions made by P together with her management of the Property subsequent to the purchase as strong evidence from which I can infer a common intention that the true beneficial ownership of the Property has always been held by P with D being the title holder. It would be unconscionable for D to depart from the common intention that he was holding the Property on trust for P.

53.  D further claimed he was induced by P into signing the PSPA which contained an unfavourable provision that the estate agent did not explain to him. In fact, the PSPA was a standard template from the Ricacorp Properties Limited and the so-called ‘unfavourable provision’ was simply the standard clause which governed the ‘compensation of commissions’ in the event of defaults from either party. D also pleaded that he was not aware and was not told by his solicitors that the FSPA contained a clause to the effect of his declaring there was no claim from third parties, and that he would be liable for damages if as a result of any such claim, the sale and purchase fell through. Again, the requirement to prove good title free from encumbrances is basic necessity in property conveyancing transactions, and such clause is just another standard clause to be found in most, if not every, sale and purchase agreement.

54.  Notwithstanding all these allegations made against the law firm and estate agent, no formal complaints were made to the Law Society nor the Estate Agents Authority. There was simply no basis to these bare allegations and I dismiss them without a doubt. In any event, it is trite that a contract will not be held unenforceable simply because the person who signed it claimed he did not read or understand the content. D’s pleadings in this regard must therefore fail.

55.  D moved in the Property in or around July 2020 and has filed evidence proving that he has paid monthly mortgage instalments since up to June 2022 with missing payments in September 2020, May and September 2021 and April 2022. The total amount he deposited for the mortgage is $447,000.00. He also produced receipts of paying monthly management fees at $1,700 from July 2020 to July 2022 with missing payments in July 2021, December 2021 and January 2021. The total amount of management fees paid was $37,400.00.

56.  According to the expert report of C S Surveyors Limited, the market rental for the Property was $18,100.00 per month between 20 July 2021 and 19 July 2022, $17,500.00 per month between 20 July 2022 and 19 July 2023 and $16,900.00 per month between 20 July 2023 and 19 July 2024.

57.  There is no evidence before me showing if further mortgage payments and management fees were made by D after June 2022. Should this be the case, the amounts D paid towards the mortgage, management fees and rates/government rent should be deducted for the purpose of calculating the total mesne profits payable to P.

CONCLUSION

58.  For the above reasons, I find that a constructive trust arose between P and D where D was holding the Property on trust for P. P is the sole beneficial owner of the Property and is entitled to possession of the premises. D’s counterclaim must also be dismissed. P is entitled to recover the Property.

59.  I shall therefore make the following order:

(i) P has been the sole beneficial owner of the Property since the acquisition, and that D held and continue to hold the same on trust for P;

(ii) D’s counterclaim be dismissed;

(iii) D do deliver vacant possession of the Property to P within 91 days from the date of this Order or any other period to be agreed between parties;

(iv) D shall pay P mesne profits of the Property from July 2020 based on the figures provided under the expert report until the delivery of vacant possession with deduction to be made in respect of payments D made for the mortgage, management fees and government rents and rate of the Property;

(v) Interest shall accrue on the mense profits up to the date of the Judgment herein at 1% above prime rate from 18 March 2020 onwards up to the date hereof, and thereafter at judgment rate until full payment;

(vi) On a nisi basis, P should have her costs of this action including any costs previously reserved, to be taxed if not agreed, with certificate for counsel;

(vii) There be liberty to apply in relation to the matters of the declaration mentioned in paragraph (i) above to facilitate registration with the Land Registry, if necessary; and

(viii) There be liberty to apply in relation to matters of calculations of the mesne profits as mentioned in paragraph (iv) above based on the Court’s findings in this judgment.