CHENG YUEN FAI (a mentally incapacitated person suing by his son and next friend CHENG KWOK WAI) v. CHENG KWOK LEUNG

DCCJ 2929/2018

[2020] HKDC 62

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2929 OF 2018

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DECISION

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Introduction

1.  Cheng Yuen Fai (“the Father”) is the lawful and natural father of Cheng Kwok Leung (“the Son”). By summons dated 30 January 2019 (“the Summons”), the Father applies for summary judgment against the Son for, among other things, an order for delivery of vacant possession of a property and an injunction restraining the Son from trespassing and remaining in the property.

2.  The property is situated at Ground Floor, Section B of Lot No.7 in D.D. 6, Tai Po, New Territories, Hong Kong (“the Property”). The parties herein were also parties to a matrimonial lawsuit under FCMC 5XXX of 2011[1] (“the Divorce Proceedings”). The beneficial interest in the Property was the subject matter in an application for ancillary relief (“the S17 Application”) in the Divorce Proceedings under section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“the MPPO”).

3.  Judge Own (“the judge”) heard the S17 Application. By the Decision dated 26 September 2017 (“the Decision”), the judge as a preliminary issue ruled, among other matters, that the beneficial interest in the Property be vested in the Father. The Decision is a confidential document and not in the public domain.

Background facts

4.  By way of background, the following facts are gleaned from the Decision.

5.  The Father married Madam Chow under the traditional customary marriage in the 1960s. Out of wedlock, six children including the Son, Cheng Chee Hong (“CCH”), Cheng Sau Ying (“CSY”) and Cheng Kwok Wing (“CKW”) were born.

6.  The Father is an indigenous villager of the New Territories with “Ding” rights (丁權). He was entitled to apply for a licence from the District Lands Office to construct a small house on a piece of land in the New Territories. Eventually, upon exercise of the rights, the Father acquired the piece of land and constructed a 3-storey small house (“the House”) comprising the Property.

7.  In January 1992, the Father married Madam Li in Mainland China after a few years’ cohabitation. Cheng Kwok Wai (“KW Cheng”) is their only child. The family resided at the Property.

8.  By two separate Deeds of Gift both dated 8 February 1994 (“the 1994 Deeds”), the Father assigned the 1^st Floor of the House to the Son and CCH as tenants in common in equal shares and the 2^nd Floor of the House to Madam Chow and CKW as joint tenants.

9.  There is another Deed of Gift dated 16 February 2011 (“the 2011 Deed”) purportedly executed by the Father whereby he assigned the Property to the Son as the sole owner.

10.  On 5 May 2011, Madam Li commenced the Divorce Proceedings and on 7 June 2011, she made the S17 Application to set aside the 2011 Deed. The Son and CCH joined as interveners (collectively “the Interveners”) to oppose the application.

11.  During the hearing of the S17 Application, the Father was found to be unable to comprehend the evidence by reason of his mental condition and eventually on 27 April 2015, KW Cheng was appointed as the Father’s guardian ad litem for the purpose of the S17 Application and is now the next friend of the Father suing on his behalf in these proceedings. Madam Chow passed away shortly before the resumption of the hearing of the Application.

12.  The Interveners’ case in the S17 Application was outlined in the Decision as follows. Prior to the construction of the House, in around 1980, the Father, Madam Chow and CSY entered into an agreement (“the Agreement”). It was agreed that the latter two would fully pay for all the construction and renovation costs of the House with some payments from CCH and the Father would hold the House as a trustee. It was also agreed that the Father would transfer the legal title to each of the storeys of the House to the male children.

13.  The Interveners then said that the 1994 Deeds and the 2011 Deeds were the performance of the Agreement by the Father.

14.  The Judge identified the key factual issue was whether the Agreement existed. He formulated the claim of the Interveners to be based on the doctrine of constructive trust or common intention trust.

15.  The following are the factual findings of the judge after hearing the evidence including that of the Son.

(1)  The construction costs of the House were not paid by Madam Chow, CSY and CCH as alleged;

(2)  There was no detriment on the part of the Interveners;

(3)  The Agreement did not exist;

(4)  The Father disposed of his legal and beneficial interest in the Property by the 2011 Deed;

16.  On such factual findings, the disposal by the 2011 Deed being within the 3-year statutory presumption under the MPPO was liable to be set aside. The Property should be included in the family pot for computation of family assets of Madam Li’s ancillary relief.

17.  The judge went on to point out that the explanation given by the Father as to why he executed the 2011 Deed was preferred on balance of probabilities and that the version of the Son was unbelievable and repugnant to common sense or logic. The Father said in early February 2011, he discovered that the Son had stolen the title deeds. The Son then asked him to go to the office of a firm of solicitors to sign certain documents so as to get back the title deeds. The Father said that he was cheated. The judge observed that it was not a surprise to him that the Father was cheated given his senility (aged 80 at the material time).

18.  At last, the judge ordered that the 2011 Deed be set aside and the Property be taken as the asset of the Father as if it were undisposed.

19.  There is no appeal against the Decision. The factual findings in the Decision are not open to challenge by the Son in these proceedings.

The Father’s pleaded case

20.  Understandably, the Father relies heavily on the Decision in his Statement of Claim. He alleges that in or about February 2010 or 2011, the Son took away the title deeds of the Property and he further entered into possession of the Property in July 2015 when the Father moved to an elderly center due to his health condition. 

21.  As the registered owner of the Property having the beneficial interest in the same, the Father seeks to stop the unauthorized occupation and possession of the Property by the Son, which amounts to a trespass to the Property and he asks for the return of the title deeds, which are also his personal properties.

The Son’s purported defence

22.  In his Defence, the Son accepts that the Father is the registered owner of the Property but he avers that the Property is subject to proprietary estoppel based on the following allegations.

23.  First, the Son repeats his allegations about the 2011 Deed. When the Father executed the 2011 Deed, he allegedly told the Son “I will return these to you all.”

24.  The Son and his family since then took care of the Father’s household duties, including but not limited to cooking, cleaning and paying water bills. New furniture and electrical appliances were also bought to improve the living standard of the Father.

25.  In reliance of the Father’s promise in 2011 to return the Property to the Son and his brothers, the Son and his family took the opportunity to renovate the Property after his promise on a continuing basis as and when renovation and decoration was needed including in 2016, after the Father was sent to an elderly home for care. The renovation works included re-painting the Property, wiring, fixing the water hose and the toilet.

26.  The Son denies entering into and remaining in possession of the Property without the authorization of the Father. He avers that after the Father left the Property for an elderly home in February 2016, he entered into the Property “with his permission and /or pursuant to the understanding giving rise to the proprietary estoppel”.    

27.  The Son maintains that the Decision does not affect his claim of proprietary estoppel in these proceedings.

28.  Ms Lee, for the Son, now accepts the Father’s legal title to and beneficial interest in the Property. Therefore, the Son has changed his stance and no longer insists on the validity of the 2011 Deed.

The purported defence – issue estoppel and/or an abuse of process?

29.  The Father’s major objection to the purported defence as submitted by Ms Seto, for the Father, is based on issue estoppel.

30.  Ms Seto acknowledges that this is not a striking out application for the defence be struck out by reason of its being an abuse of process. Ms Lee accepts that summary judgment can be entered against the Son if this court finds his defence to be strike-outable.

31.  Ms Lee submits that whilst in the S17 application, the judge was seized with the question of the beneficial ownership of the Property, in these proceedings, the Son only seeks to prevent the Father from exercising his right to possession by the doctrine of proprietary estoppel. Thus, the Son now makes a new plea which was not made and could not have been made in S17 Application.

32.  Ms Lee first refers to Fung Oi Ha v Fung Pui On (unreported, HCA17/2012, 6.6.2016) in which Recorder Lisa Wong SC (as she then was) set out the following elements of proprietary estoppel (at §107):

(1)  a representation or assurance made to the claimant;

(2)  reliance on it by the claimant; and

(3)  detriment to the claimant.

33.  Ms Lee then underscores the differences in the consequences of a proprietary estoppel and those of a common intention constructive trust by reference to the following dictum of Lord Walker of Gestingthorpe in Stack v Dowden [2007] 2 AC 432 at p.448 cited with approval by Ribeiro PJ in Luo Xing Juan v Estate of Hui Shui See (2009) 12 HKCFAR 1 (at §65):

“Proprietary estoppel typically consists of asserting and equitable claim against conscience of the “true” owner. The claim is a “mere equity”. It is to be satisfied by the minimum award necessary to do justice (Crabb v Arun District Council [1976] CH 179, p.198). Which may sometimes need to know more than a monetary award. A “common intention” constructive trust, by contrast, is identifying the true beneficial owner or owners, and the size of their beneficial interests.”

34.  This court would readily accept that there are differences between these two doctrines and their remedies without delving into the authorities. Nevertheless, for the purpose of the present application, the focus should be whether there were overlapping factual issues raised by the Son in the S17 Application to lay the foundation of his claim of a common intention constructive trust and in these proceedings to make out his case of proprietary estoppel.

35.  Central to the two claims of the Son based on these two different doctrines is the alleged promise made by the Father to the Son. The Son did in his affirmation filed in the S17 Application (§§26-29) made the same allegation of the Father’s promise to transfer the legal title to the Property to CCH and then the Son by way of background facts leading to the execution of the 2011 Deed.

36.  The judge in the Decision refused to accept the Son’s evidence and preferred the Father’s version of events. The judge believed that the Father was misled into executing the 2011 Deed in his attempt to recover the title deeds from the Son. It must mean that the judge rejected the alleged promise to return the Property to the Son and the alleged assertion of the Father made to the Son “I will return these to you all”.

37.  In the circumstances, I agree with Ms Seto that in light of the Decision, the Son is precluded from raising the allegation of such a promise again in the present proceedings as a matter of res judicata, and to be precise, issue estoppel. I cannot accept Ms Lee’s submission that the different contexts in which the same allegation was raised can make any difference. In my view, so long as a factual allegation has been rejected by a judge in previous proceedings, it cannot be allowed to be revived in a subsequent action involving the same parties. 

38.  Without the alleged promise, the plea of proprietary estoppel cannot get off the ground and the purported defence is bound to fail.

39.  Ms Lee further submits that the alleged promise is not the only assurance that the Son relied on. The execution of the 2011 Deed and his acceptance of the survice and maintenance provided by the Son and his family were also assurances.  The rejection of the due execution of the 2011 Deed by the judge aside, I have reviewed his pleading and his evidence and I cannot accept that this is his case.

40.  Lastly, Ms Lee reminds this court that the three elements of the doctrine of proprietary estoppel should not be treated as three or four watertight compartments and in the end the court must look at the matter in the round: see Gillet v Holt [2001] Ch 210 at 225C-E per Lord Walker.

41.  In general terms, her submission must be right. However, in this particular case, the Son made a specific allegation of the alleged promise and when the alleged promise has already been rejected by the judge, I fail to see how he can still make out a case of proprietary estoppel with one of the essential elements is glaringly missing.

42.  Despite her vigilant effort, Ms Lee fails to convince this court that the alleged promise was not a determinative issue in the S17 Application and the present proceedings. 

43.  On this ground alone, I am satisfied that the purported defence advanced by the Son is not bona fide and raises no triable issues.

44.  Ms Seto next submits that the Son should be barred from making his present allegations of acts of reliance and detriment in the form of renovation and decoration works by Henderson v Henderson issue estoppel since these allegations did not appear in the S17 Application.

45.  I cannot accept the explanation proffered by Ms Lee as to why these allegations could not be made due to lateness. Moreover, I do not accept her foregoing submission that these allegations of reliance and detriment were of no relevance to his case of common intention constructive trust in the S17 Application.

46.  The Son made an effort to intervene the S17 Application so as to prevent the Property from being part of the matrimonial assets upon which Madam Li could lay her hand for ancillary relief. There is no reason why the Son should and could not, in addition to his claim for beneficial interest in the Property on the strength of the 2011 Deed and/or the alleged common intention constructive trust, make his present case of proprietary estoppel in the S17 Application to assert his right in respect of the Property, to which the claim of Madam Lee should be subject.

47.  In the premises, I agree with Ms Seto that the purported defence of the Son should be rejected by reason of Henderson v Henderson issue estoppel.

48.  Now I turn to the issue of trespass. The Son alleges that he has stayed at the Property when the Father moved to the elderly home with his permission in February 2016. Neither his pleading nor his evidence discloses any particulars of the alleged permission and its nature. There is no allegation as to how long the permission would last.

49.  The Father could not give evidence to rebut the allegation due to his mental incapacity. However, Ms Seto rightly points out that the Father was found by the Official Solicitor to be a mentally incapacitated person (“MIP”) within the meaning of the Mental Health Ordinance, Cap. 136 in September 2014 in the course of the S17 Application. Therefore, the Son must know the mental incapacity of the Father and the Father could not have given a valid consent to the Son to stay at the Property in February 2016.

50.  Ms Lee submits that even if the Father was a MIP at the material time, the court would only get involved in his major property transactions and the Father should still be capable of granting the alleged permission to the Son.

51.  I cannot accept her submission. The Father was a MIP at the material time and by definition the Father did not have the mental capacity to manage and administer his own assets including granting any rights in relation thereto. The Son did not in his evidence denies his knowledge about the mental incapacity of the Father. The Father could not have granted any valid licence or any other enforceable right to the Son in respect of the Property after he had become a MIP and in any event such a permission is voidable at his option and he was entitled to set aside the permission.

52.  After the commencement of these proceedings, it must be clear that any permission previously given must be set aside/withdrawn on his behalf and the Son could have no further right to remain in possession of the Property. The trespass started from the date of the writ.

Return of title deeds

53.  Being the rightful owner of the Property, the Father no doubt has the proprietary right to possession of the original title deeds of the Property. The Son could assert no such right by his plea of proprietary estoppel or otherwise.

54.  The Son now denies having taken away the title deeds without the consent of the Father at all. It should be noted that the judge in the Decision expressly accepted that the Father executed the 2011 Deed to get back the title deeds stolen by the Son as promised by him. It means that the judge accepted as a fact that the title deeds had indeed been stolen by the Son and the Son offered to return them to the Father after the execution of the 2011 Deed. The Son should now be barred from making denial of his wrongful appropriation and present detention of the title deeds by issue estoppel.

55.  In the circumstances, I can see no reasonable defence to the claim of the Father for the return of the title deeds.

Conclusion and order

56.  By reason of the foregoing analysis, the Son fails to raise any triable issues and advance any reasonable defence in light of the Decision. The Father is entitled to summary judgment and I accede to his application. I shall make an order in terms of the Summons save that I would allow the Son 28 days to give vacant possession of the Property from the date of this decision and that there be an assessment of mesne profits and/or damages for his trespass from 6 July 2018 to the date of delivery of vacant possession.  

57.  Costs should follow the event and the Father should have his costs of and occasioned by the Summons, to be paid forthwith by the Son with certificate for counsel. This is a costs order nisi. The Father’s own costs should be taxed in accordance with Legal Aid Regulations.

58.  Lastly, it remains for me to thank both Ms Seto and Ms Lee for their helpful and comprehensive submissions.