FCMC 9062 / 2015
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 9062 OF 2015
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BETWEEN |
| | YKC | Petitioner |
| and |
| | LMYT | Respondent |
| and |
| | CYFO | 1st Intervener |
| and |
| | ML Ltd | 2nd Intervener |
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| Coram: Deputy District Judge K K PANG in Chambers (Not Open to Public) |
| Date of Hearing : 7, 10 & 11 April 2017 |
| Date of Petitioner’s Written Submissions : 18 April 2017 |
| Date of Respondent’s Written Submissions : 18 April 2017 |
| Date of Interveners’ Submissions : 25 April 2017 |
| Date of Handing Down of Judgment : 12 May 2017 |
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DETERMINATION
(Preliminary Issues)
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The 1st Intervener’s application
1. This is the hearing of the 1st Intervener (the “Mother”)’s Summons dated 2 October 2015 for determination as to the beneficial interest and ownership in respect of:
(1) The bank account opened with the Bank of East Asia in the name of the respondent wife (“W”) (the “BoEA Account”);
(2) The bank account opened with the ICBC Bank in the joint names of the Mother and W (the “ICBC Account”);
(3) The bank account opened with HSBC in the name of the W (the “HSBC Premier Account”);
(4) The landed property known as “Shop 9”;
(5) The landed property known as “Metro Harbour View”;
(6) Alternatively, determination and declaration that the 2nd Intervener (“ML”) or alternatively W and / or the petitioner husband (“H”) owes the Mother HK$5,121,175 together with interest thereupon, or such other sum(s) as the court may assess and / or determine.
Background
2. The Mother is W’s mother. H is a medical doctor, previously worked in public hospital and presently works in a private hospital. W was an insurance agent and investment representative and has ceased work since March 2010.
3. W and H met in about the end of 2008. They began living together in about 2009/ 2010. They were married in November 2011. There is no child out of the marriage. The parties separated in July 2014. H issued the petition for divorce in December 2014. The Decree Nisi was granted in August 2016.
The Mother and W’s case
4. The Mother said:
The Bank Accounts
(1) The Mother and W discussed and agreed that a bank account in the name of the W would be opened with the Bank of East Asia that would be used by the Mother to deposit and hold her monies and that W would act as the Mother’s nominee or trustee, pursuant to which they also agreed that the Mother would be an authorised signatory to the bank account.
(2) Pursuant to and in accordance with the aforesaid, W caused the BoEA Account to be opened and the Mother has been an authorised signatory of the BoEA Account since it was opened in February 2006.
(3) Pursuant to and in accordance with the aforesaid, the Mother had on divers dates deposited funds into the BoEA Account which were held for the Mother by W as her nominee or trustee.
(4) The Mother opened that account under W’s name as she wished that W could have access to her funds to use for and spend on her, if and when there came a time when she was not able to do so herself.
(5) She used that account mainly to earn interest on fixed deposits. That bank account had few transactions. Since 2009, there were just a few transactions for time deposits in the account because the interest rate was not attractive.
(6) The Mother and W further discussed and agreed that another bank account in their joint names would be opened with the ICBC Bank that would be used by the Mother to deposit and hold her monies and that W would act as the Mother’s nominee or trustee.
(7) Pursuant to and in accordance with the aforesaid, the Mother and W caused the ICBC Account to be opened in about March 2007.
(8) Pursuant to and in accordance with the aforesaid, the Mother had on divers dates deposited funds into the ICBC Account which were held for the Mother by W as her nominee or trustee.
(9) That account has been mainly inactive since June 2009. Similarly, the Mother opened that account so that W could have access to her funds.
(10) W caused a bank account to be opened with HSBC (“the HSBC Premier Account”) in April 2007.
(11) In about July 2007, the Mother and W discussed and agreed that the HSBC Premier Account would be used by the Mother to deposit and hold her monies and that W would act as the Mother’s nominee or trustee, pursuant to which they also agreed that the Mother would be an authorised signatory to the HSBC Premier Account.
(12) Pursuant to and in accordance with the aforesaid, the Mother had on divers dates deposited funds into the HSBC Premier Account which were held for the Mother by W as her nominee or trustee.
(13) Further or alternatively, the Mother did not at any time intend to benefit W by her deposits, transfers or other injections and in the premises the Mother was the beneficial owner of the funds deposited, transferred or otherwise injected by the Mother into the BoEA Account, the ICBC Account and/ or the HSBC Premier Account upon a default resulting trust.
(14) Further or alternatively, the same were recoverable and repayable to the Mother by W as a debt.
(15) Further or alternatively, the Mother claimed for recovery of the same on the basis of money had and received, restitution and/ or unjust enrichment.
The Landed Properties
(16) The Mother, H and W discussed and agreed that the Mother would be a co-investor contributing 40% towards and beneficially entitled to Shop 9, and that H and W would contribute 60% by way of cash payment and mortgage loan which they (and not the Mother) would cover.
(17) Pursuant to and in accordance with the aforesaid, ML that had 2 shares, respectively held under the names of H and W, was acquired in December 2010.
(18) ML had no independent financial means nor business and was a shell company used as a mere corporate vehicle, and all its funds and monies were derived from the Mother, W and/ or H (whether from them or by way of bank loans).
(19) ML was purchased for the purpose of holding Shop 9. The Mother hoped H and W could manage things for her because she was retired and on medication for high blood pressure, cholesterol and diabetes. As she let H and W manage Shop 9 on their behalves, she did not have any issue with them being the joint shareholders and directors. W and H had been co-habiting for over a year by that time. She thought that H loved and cared for W and was trustworthy.
(20) ML signed the Agreement to purchase Shop 9 on 30 December 2010. The down payment of HK$3.2 million, i.e. 40% of the purchase price of HK$8 million, was paid by the Mother, and the remaining 60% was paid by the parties partly with their savings and partly with a mortgage loan.
(21) H contributed HK$500,000 being the initial deposit. W contributed HK$300,000 being the further deposit and HK$319,850 being the costs and disbursements. H and W also took out a mortgage for HK$4 million. H was responsible for the repayment of the said mortgage loan.
(22) In about May 2011, the Mother received an inheritance of more than HK$2 million from her late father. She decided to invest some of the money in another property.
(23) The Mother, H and W discussed and agreed that the Mother would purchase and fully fund (100%) and be beneficially entitled to Metro Harbour View.
(24) Pursuant to and in accordance with the aforesaid, on 5 March 2012, ML signed the Agreement to purchase Metro Harbour View for HK$3,650,000.
(25) The Mother fully funded the purchase as follows:
a. HK$180,000 being the initial deposit;
b. HK$185,000 being the further deposit;
c. HK$1,460,000 being part of the balance of the purchase price;
d. HK$96,175 being the costs and disbursements;
e. HK$1,825,000 being bank mortgage to be taken care of by the Mother with the rental income of Metro Harbour View.
(26) At that time, seeing her second investment, H began to develop a taste for property investment but did not have the funds for it. The Mother told him that if he saved enough money, she would be willing to sell a share in Metro Harbour View to him.
(27) H and W were only to have 60% of Shop 9 on the condition that they paid all of the mortgage loan. H’s claim for 50% of Shop 9 is unmeritorious given that, up to-date he has only paid some HK$1,280,000 by way of mortgage repayments. As for Metro Harbour View, neither H nor W made any financial contributions towards the purchase.
(28) In the premises, the Mother was the beneficial owner of not less than 40% of Shop 9 and 100% of Metro Harbour View.
(29) Further or alternatively, the Mother did not at any time intend to benefit H, W and/ or ML by her deposits, transfers or other injections and in the premises the Mother was the beneficial owner of the monies and funds deposited, transferred or otherwise injected by her in respect of Shop 9 and/ or Metro Harbour View upon a default resulting trust.
(30) Further or alternatively, the same were recoverable and repayable to the Mother by H, W and/ or ML as a debt.
(31) Further or alternatively, the Mother claimed for recovery of the same on the basis of money had and received, restitution and/ or unjust enrichment.
5. The W’s case is in line with that of the Mother, while H is contesting the Mother’s claim for beneficial interests in the said bank accounts, Shop 9 and Metro Harbour View.
H’s Case
6. In contrast, H said:
(1) All funds of the BoEA Account in law and in equity belong to W at all material times;
(2) At least half of the funds of the ICBC Account in law and in equity belong to W at all material times.
(3) All funds of the HSBC Premier Account in law and in equity belong to W at all material times.
(4) W and H started to plan their future in mid-2010. At that time, H was planning to save money to start up his private practice. W was a successful insurance consultant. W told him that she had HK$5 million in savings that she could use for investment.
(5) W and H agreed to invest in landed property.
(6) In December 2010, they chose Shop 9, and the purchase price was HK$8 million. He sold his carpark for HK$450,000 and some stocks. He used the sales proceeds to pay the initial deposit in the sum of HK$500,000 for Shop 9. W paid the remaining purchase price and the costs and disbursements in the sum of HK$3,819,850, the breakdowns of which are as follows:
| (a) | Further deposit | 300,000 |
| (b) | Balance of purchase price | 3,200,000 |
| (c) | Legal costs and disbursements | 319,850 |
| | Total: | HK$3,819,850 |
(7) H verily believed that W used her savings to pay the said sum of HK$3,819,850.
(8) The arrangement for Shop 9 worked well. As a result, H and W planned to invest in another property. In February 2012, they viewed Metro Harbour View and the purchase price was HK$3,650,000.
(9) As agreed, W paid the sum of HK$1,825,000, the breakdowns of which are as follows:
| (a) | Initial deposit | 180,000 |
| (b) | Further deposit | 185,000 |
| (c) | Balance of purchase price | 1,460,000 |
| | Total: | HK$1,825,000 |
(10) On 21 February 2012, H paid pay the sum of HK$10,000 being part of the costs and disbursements for the purchase of Metro Harbour View.
(11) W and H took out a mortgage loan in the sum of HK$1,825,000. They were the guarantors of the said loan.
(12) H verily believed that W used her savings to pay the said sum of HK$1,825,000.
(13) H was responsible to repay the monthly mortgage repayment of Metro Harbour View, i.e. HK$9,451 per month. He paid the sum of HK$9,451, HK$28,353 (HK$9,451 x 3), HK$9,451 and HK$75,608 (HK$9,451 x 8) on 6 June 2012, 24 August 2012, 29 October 2012, and 28 May 2013 respectively, being the monthly mortgage repayment from May 2012 to June 2013. Metro Harbour View was rented out at HK$15,500 per month from October 2012 to November 2013 and from October 2014 up to present. The rental income was kept at ML’s bank account as family savings.
(14) H went to the United Kingdom for overseas training from July 2013 to December 2013. W and H agreed to use the family savings kept at ML’s bank account to meet their living expenses in United Kingdom and the monthly mortgage repayment of Metro Harbour View. In addition, after having returned to Hong Kong, to cover the monthly mortgage repayment from January 2014 to June 2014, H paid HK$60,000 in cash to W. The total amount of mortgage repayment paid by H was around HK$182,863.
(15) The funds in ML’s bank account, being the rental income of Shop 9 and Metro Harbour View, have been used to meet the monthly mortgage repayment of Metro Harbour View since July 2014. In effect, H has been using his share of the rental income to settle the monthly mortgage repayment;
(16) W and H set up ML with the intention to make property investment. The agreement between W and him was that W would pay 50% the purchase price and he would be responsible to repay the mortgage loan, i.e. the other 50% of the purchase price. As their contribution was equal, they agreed that they held the shares of ML on equal basis.
(17) ML’s funds were not derived from the Mother.
(18) If the funds were derived from the Mother (which was denied), the funds were gifts from the Mother to W.
(19) The rental income received by ML belonged to ML.
(20) At all material times, it was the common intention of H and W that ML and its assets including Shop 9 and Metro Harbour View in law and in equity belonged to H and W equally.
My view
7. H contended that the Mother and W were obliged to produce credible evidence in order to succeed in their case. I accept that the party who asserts that a fact is true or makes an allegation bears the burden of proof and the standard of proof is to show that on a balance of probabilities the assertion or allegation is more likely to be true than not true. The Mother and W have filed in court affirmations prepared by their legal representatives. They were adopted as part of their evident-in-chief. The Mother and W appeared at the trial of this case and were crossed examined. Despite that, as far as the dealings regarding the said bank accounts that were taken place between the Mother and W, H has no case of his own to present to the court, I take the view that that does not follow that the court must then totally accept the Mother and W’s case. On the contrary, where the court is dependent wholly on the evidence of self-serving witness, the court must scrutinise such evidence vigorously, see Re: Estate of Lung Nga Lai Eilly [2001] 5 HKLRD 402, at 408.
8. In the present case, however, I take notice that the Mother’s intention as to the vesting and apportionment of the beneficial interest of the funds transferred into the said bank accounts can be clearly seen in the following undisputed or indisputable facts:
(1) The Mother is a signatory to both the HSBC Premier Account and the BoEA Account;
(2) In relation to the BoEA Account, the Mother has been an authorised signatory ever since that was opened in February 2006;
(3) The ICBC Account is jointly held by both the Mother and W.
(4) The address given to each bank for the BoEA Account, the ICBC Account and the HSBC Premier Account has at all material times remained to be the Mother’s address;
(5) The Mother has received, collected and kept the bank statements for the BoEA Account, the ICBC Account and the HSBC Premier Account;
(6) There were repeated transfers between the HSBC Premier Account and the Mother’s own SCB Account. These transfers were usually for deposits and withdrawals of fixed deposits.
(7) Upon maturity of these time deposits, the funds would be returned to the Mother at her own SCB Account.
(8) The same went for the BoEA Account.
(9) The Mother would sign the relevant cheques and the time deposit application form.
9. I take the view that the matters mentioned in the above paragraph 8 (1) to (9) clearly show that the Mother operated the said bank accounts as her own. The fact that the Mother would transfer funds back into her own SCB Account also reveals that she has had no intention to make a gift to W.
10. The Mother said she opened the said bank accounts in the name of W (solely or jointly) so that W could have access to her funds. H contended that if the Mother wanted W to have access to her funds in case of emergency, she could make W an authorised signatory of the Mother’s bank account. In this regard, despite that there might be more than one way to make W have access to the Mother’s funds, I take the view the fact that she chose one but not the other is neither here nor there.
11. H also disputed the Mother’s case that she could earn higher interest rate by transferring her funds between different bank accounts. In illustration, a Table of Deposits was attached to the Closing Submissions filed on behalf of H. I take the view that the Table of Deposit does not lend support to H’s disputation. For example, on 16 January 2009, the Mother transferred HK$2 million from her SCB Account to the HSBC Premier Account to open a 6-month fixed deposit at the interest rate of 0.825% p.a. In accordance with the Mother’s case, she would get higher interest rate at the HSBC Premier Account than what she would have got if she had opened a 6-month fixed deposit with the same money at the SCB Account. To show whether the Mother’s case was right or wrong, it is required to know how much interest she could have earned if she opened a 6-month fix deposit with the said HK$2 million at her SCB Account at that time. However, there is nothing in the Table of Deposit that can show whether the Mother was right or wrong.
12. H further contended that the presumption of advancement between mother and daughter suggested that the Mother’s transfers of funds into the said bank accounts were gifts to W.
13. About the presumption of resulting trust and the presumption of advancement, in Au Yuk Lin v Wong Wang Hin Eddy [2013] 4 HKLRD 373, the Hong Kong Court of Appeal stated:
16. We were told that there are conflicting first instance decisions on the applicability of the presumption of advancement in terms of a transfer of property from a mother to her son: Lee Tso Fong v Kwok Wai Sun [2008] 4 HKLRD 270 contra Suen Shu Tai v Tam Fung Tai (unrep., HCA 1466/2010, [2013] HKEC 1287).
17. It is not necessary for us to decide in this appeal whether there is any presumption of advancement under such circumstances. The Judge proceeded on the basis that there was such a presumption but found on the evidence that the presumption had been rebutted by the plaintiff.
18. Even assuming that the presumption is capable of application to a transfer from other to son (and we do not decide that is so as a matter of law), as observed by Godfrey JA in Overseas Trust Bank Ltd v Lee See Ching John [1999] 3 HKC 197, 201, it only applies where the intention of the transferor cannot be resolved by relevant and admissible evidence and even then, it:
… is … a device “whereby the courts are entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence about it … It describes the readiness of the courts to draw inferences from common human experience … In reality it is no more than a slightly grandiose term for the ordinary process of judicial reasoning about facts” … It follows that if there is evidence, even if only slight evidence, militating against the operation of the “presumption”, the court is at liberty to treat the “presumption” as displaced.
See also Lavelle v Lavelle [2004] 2 FCR 418, 422-424.
19. Thus, when there is sufficient evidence to enable the court to resolve the question of intention of the transferor, there is no need to resort to the presumption of advancement, see also Drake v Whipp [1996] 1 FLR 826 and Yuen Yat Shan Fiona v Sit Hin Kau [2005] 4 HKC 170, [20].
26. In the context of rebutting the presumption of advancement, it is the intention of the transferor, viz the plaintiff, that is relevant, see Lewin on Trusts (18th ed., 2008) paras. 9-07 and 9-08. It is not necessary for the plaintiff to establish that the defendant shared such intention.
14. The court would only resort to the presumption of advancement where there was no acceptable evidence of the actual intention of the providers of the purchase money as to the vesting and apportionment of the beneficial interest. In the present case, I have taken the view that the Mother has had no intention to make a gift to W, the presumption of advance has no application.
15. In the circumstance, I accept the Mother’s case in this respect and find that save as to the HSBC Premier Account, as both the Mother and W recognise, when the Mother took over the HSBC Premier Account, W had an interest of HK$681,183.53, the Mother holds 100% beneficial interest in the BoEA Account, ICBC Account and the HSBC Premier Account.
The Landed Properties
16. The Mother’s case is that she beneficially owns not less than 40% of Shop 9 and 100% of Metro Harbour View. On the other hand, H contended that W and H beneficially own 50% and 50% of Shop 9 and Metro Harbour View respectively.
17. H said his case should be preferred, taking into account of the followings:
ML
(1) H and W acquired ML on 21 December 2010. They were the only two shareholders of the company. H and W each had 1 share of and ML. The Mother did not have any share in ML.
Shop 9
(2) Shop 9 was purchased on 17 February 2011. The Agreement for Sale and Purchase was signed on 30 December 2010. The purchase price was HK$8 million.
(3) There was a Mortgage dated 17 February 2011. The mortgage loan was HK$4 million.
(4) H and W were the guarantors of the mortgage loan. The Mother was not a guarantor.
(5) ML was responsible for payment of the property tax.
(6) Under Clause 5.01 of the Mortgage, ML represented and warranted that Shop 9 was beneficially owned by ML free from any Charge, and ML had good and marketable title to Shop 9.
(7) Under Clause 5.02 of the Mortgage, ML represented and warranted to and undertook that the foregoing representations and warranties would be true and accurate throughout the continuance of the Mortgage from time to time.
(8) The Audited Accounts of ML for the period from 2 December 2010 to 31 March 2012, signed by H and W, did not show that the Mother had any interests in ML. Nor did it show that ML was indebted to the Mother.
Metro Harbour View
(9) Metro Harbour View was purchased on 23 April 2012 in the name of ML. The Agreement for Sale and Purchase was signed on 14 March 2012. The purchase price was HK$3,650,000.
(10) There was a Mortgage dated 23 April 2012, and H and W were the guarantors for the Mortgage loan of HK$1,825,000. The Mother was not a guarantor.
(11) ML was responsible for payment of the property tax of Metro Harbour View.
(12) From May 2012 to June 2013, H paid the monthly mortgage repayment of Metro Harbour View in the sum of HK$9,451 per month.
(13) The remarks about ML’s shareholding and the mortgage and Audited Accounts of Shop 9 applied mutatis mutandis to Metro Harbour View.
(14) About Shop 9 and Metro Harbour View, no declaration of trust was executed by ML in favour of the Mother. Nor was there declaration of trust made in favour of the Mother that any share in ML was held on her behalf.
(15) W and the Mother were unable to produce any contemporaneous evidence in support of their case.
(16) The presumption of advancement between mother and daughter worked in favour of H.
18. The documentary evidence relied upon by H as set out in the above no doubt shows that ML, of which W and H are the only directors and shareholders, is the paper owner of Shop 9 and Metro Harbour View, but the thrust of the Mother’s claim for interests is under common intention constructive trust pursuant to oral discussions and agreements taken place among H, W and her, and/or default resulting trust.
19. About the legal principles in this respect, the UK Supreme Court decision in Jones v Kernott [2012] 1 AC 776 was summarised by Mostyn J. in Bhura v Bhura & Others [2015] 2 FCR 353 in particular at 358-359 §8:
The applicable legal principles concerning a property dispute such as this are tolerably clear and have most recently been re-stated by the Supreme Court in Jones v Kernott [2011] UKSC 53, [2012] 1 AC 776. In summary I think they are as follows:
i) If there is an express declaration of beneficial interests then that is, almost invariably, the end of the matter. Such an express declaration can only be displaced if it has been procured by fraudulent conduct. …
ii) If there is no express agreement about the beneficial interests then there is likely to be (at least) a tacit understanding. This is hardly surprising as one would expect that when people enter into what may very well be the most important economic transaction in their lives – buying a home – they would have a pretty clear understanding of who owned what share of it. In determining whether there was such a tacit understanding, and if so what it was, the court will look at all the evidence holistically and will examine the whole course of the parties’ conduct in relation to the property.
iii) In the rare case where the evidence does not reveal a tacit understanding about ownership the court can reach for the presumptions. An obvious presumption is that beneficial ownership is the same as legal title (see Jones v Kernott at paras 17 and 51(1)).
iv) Another is the presumption of the resulting trust. In Pettitt v Pettitt [1970] AC 777 at 824 Lord Diplock doubted that it was of much relevance in the modern era. In his view it would be “an abuse of the legal technique for ascertaining or imputing intention to apply to transactions between the post-war generation of married couples ‘presumptions’ which are based upon inferences of fact which an earlier generation of judges drew as to the most likely intentions of earlier generations of spouses belonging to the propertied classes of a different social era.” Some commentators believe that the doctrine has a medieval origin. The principal problem with it is that that it allows the “solid tug of money” (as Woodhouse J evocatively put it (echoing George Eliot) in Hofman v Hofman [1965] NZLR 795 at 800) “to submerge any faint suggestion that other [non-financial] contributions play a valuable part in the acquisition of family assets”.
v) A further presumption is the presumption of advancement but this can be regarded as being on its death-bed given that it is abolished by s199 Equality Act 2010, which is awaiting implementation.
vi) But presumptions are only presumptions. In a memorable dictum Lamm J in Mackowick v Kansas City St. J. & C.B. Ry., 196 Mo. 550, 571, 94 S.W. 256, 262 (1906) stated that “presumptions may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts”.
vii) “Actual facts” are those which suggest that a result steered by a presumption is unfair. Although there are different degrees of emphasis and nuance all of the Justices in Jones v Kernott accepted that where a tacit agreement could not be found by a process of inference the court could impute to the parties a fair agreement which they never in fact made but which they should ‘be taken” as having made (see paras 45, 60, 72, 85(2)). Of course, as Woodhouse J pointed out, this involves a “fictional attribution of intention”, but the process has a long pedigree. One only needs to remind oneself of Lord Denning MR’s statement in Appleton v Appleton [1965] 1 WLR 25 at 28 to see how the wheel has turned full circle. There he said ‘A judge can only do what is fair and reasonable in the circumstances. Sometimes this test has been put in the cases: What term is to be implied? What would the parties have stipulated had they thought about it? That is one way of putting it. But, as they never did think about it at all, I prefer to take the simple test: What is reasonable and fair in the circumstances as they have developed, seeing that they are circumstances which no one contemplated before?” I cannot see any difference between that statement and that of Lord Wilson in para 87 where he rhetorically asked “where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair?”
20. Notwithstanding that there is the presumption that the beneficial owner is the same as the paper ownership, in the present case, it is worthy of noting that all parties said that there were discussions and agreements about the beneficial ownership of Shop 9 and Metro Harbour View. H said that at all material times it was the common intention of H and W that ML and any assets held by it should belong to H and W equally. According to H, while W and he were planning their future in mid of 2010, W told H that she had HK$5 million savings. Upon having agreed that they should invest in landed property, H and W acquired ML in December 2010 for the purpose of property holding. The Mother did not participate in the negotiation of investment. Although W told the Mother about the plan of H and W to invest, the Mother did not have interest in ML.
21. I take the view that the purported factual foundation of H’s case is that W told him that she had HK$5 million to invest in landed property, so much so H believed that she used her savings to pay:
(1) In respect of Shop 9, the further deposit of HK$300,000, the balance of purchase price of HK$3,200,000 and the legal costs and disbursements of HK$319,850; and
(2) In respect of Metro Harbour View, the initial deposit of HK$180,000, further deposit of HK$185,000 and the balance of purchase price of HK$1,460,000.
22. In this regard, I take notice that:
(1) As set out in the above, W’s interest in the HSBC Premier Account as at December 2008 was only HK$681,183.53. Since then (when the Mother took over the Account), she did not deposit any money into that account, apart from the deposit of HK$46,800 dated 6 December 2011;
(2) As at 3 December 2008, W’s balance at her HSBC Passbook Account was HK$51,365.38;
(3) As an insurance agent and investment representative, W’s income was modest. Her salary was respectively HK$18,849.91, HK$24,272.22 and HK$17,607.02 in February, March and April 2006;
(4) Since March 2010, W has ceased work; and
(5) After she ceased work, W carried on a soap-making business that was never profitable.
23. On the evidence, it is clear to me that: - (1) W could not have HK$5 million savings; and (2) there is no reason why W would lie to H as he said she did. During cross-examination, H actually accepted there was no evidence showing that W could save up even HK$2 million, not to mention HK$5 million.
24. After having carefully considered, I do not accept H’s evidence that W told him that she had savings of HK$5 million. Both parties accept that W and H had discussion and agreement about the purchase of Shop 9. Take into consideration the undisputed fact that the Mother funded the purchase as to 40%, I take the view that more likely than not the Mother participated in the discussion and agreement between H and W about the purchase of Shop 9. I have taken the view that the Mother had no intention to make a gift to W in relation to the said bank accounts. I see no reason why the Mother would have a change of heart in the discussion on the purchase of Shop 9. In the circumstance, I regard that it was natural that the Mother asked for 40% interest of Shop 9. After having carefully considered, I accept the Mother and W’s case that it was discussed and agreed among H, W and the Mother that the Mother would have 40% of the interest of Shop 9.
Metro Harbour View
25. The Mother said that in about May 2011, she received an inheritance of more than HK$2 million from her late father and she decided to invest some of the money in another property. According to the Mother, she proposed that her next purchase could also be held in the name of ML so that H and W could also manage it on her behalf. The Mother W said that there was an agreement among the three of them that the Mother would have 100% beneficial interest of Metro Harbour View.
26. In regard to the undisputed fact that the Mother funded the purchase as to 50%, as one would expect that, when the Mother enter into what may very well one of the most important economic transaction in her live, she would take part in the transaction. I take the view that the Mother probably participated in the discussion on the purchase of Metro Harbour View. I did not accept H’s case that the Mother was not involved.
27. I further take notice the undisputed fact that H deposited money in multiples of HK$9,451 into the joint account under the name of H and W as follows :
DATE | DEPOSIT (HK$) |
| 06/06/2012 | 9,451 |
| 24/08/2012 | 28,353(9,451 x 3) |
| 28/10/2012 | 9,451 |
| 28/05/2013 | 75,608(9,451 x 8) |
TOTAL: | 122,863 |
28. H said that:- (1) The said HK$122,863 was his monthly mortgage repayment for the months from May 2012 to June 2013; (2) H and W agreed to use the rental income kept at ML’s Account to cover the monthly mortgage repayment for the period from July 2013 to December 2013 during which H and W went overseas; (3) After he had returned to Hong Kong, he paid W HK$60,000 in cash to cover the monthly repayments from January to June 2014; (4) Since the parties separated in July 2014, he has been using his share of rental income to meet the monthly repayments.
29. In contrast, the Mother said that the monthly mortgage repayment was all along covered by the rental income, and H deposited the said HK$122,863 in the manners aforesaid because he hoped that one day the Mother would sell a share in Metro Harbour View to him, in view of that she once told H that if he saved enough money, she would be willing to sell a share in Metro Harbour View to him.
30. The Mother also said that, was the said HK$122,863 mortgage repayment, H would have deposited the said sums to ML’s bank account instead of the joint account under the name of the parties. In this regard, H explained that he deposited the said sum to the joint account under the name of the parties instead of ML’s bank account because:
(1) Both his paying account and the joint account of the parties were opened at HSBC.
(2) ML’s Account was opened with a different bank.
(3) It is more convenient for him to make transfers between accounts in the same bank than between different banks.
(4) He knew that rental income kept at ML’s Account was enough to cover mortgage repayment.
After having carefully considered, I accept his explanation.
31. I take the view the fact that the deposit made by H into the joint account were in HK$9,451 or multiples of HK$9,451, i.e. the exact amount of the monthly repayment of the mortgage of Metro Harbour View suggests that H’s deposits are in fact the monthly repayments of the mortgage of Metro Harbour View, and the fact that H took it upon his responsibility of the mortgage repayment suggests that there has been an agreement between the Mother, W and H that he was responsible for the mortgage of Metro Harbour View.
32. In the circumstance, despite that I have accepted that the Mother participated in the discussion on the purchase of Metro Harbour View, I do not accept that she had an agreement with W and H that she would have 100% of Metro Harbour View. Given that she funded 50% of the purchase, the remaining 50% was funded by the mortgage, to which H was responsible, I take the view that probably the agreement reached at that time was that the Mother would have 50% interest in Metro Harbour View.
33. In summary, about the claim under common intention constructive trust, I find that the Mother is the 100% beneficial owner of the BoEA Account, the ICBC Account and the HSBC Premier Account, save to the said sum of HK$681,183.53, and that she has 40% beneficial interest in Shop 9 and 50% beneficial interest in Metro Harbour View.
Default resulting trust
34. I now turn to the Mother’s claim under default resulting trust.
35. A useful summary of the law of resulting trust can be found in Re Superyield Holding Ltd [2000] 2 HKC 90:
Miss Wong made very helpful and detailed submissions on the law of resulting trust. The propositions I set out hereunder I have drawn heavily on her written and oral submissions;
1. A useful starting point is art 31(1) of Underhill & Hayton, Law of Trusts and Trustees (15th Ed) p 317 as follows:
When real or personal property is conveyed to a purchaser jointly with others, or to one or more persons other than the purchaser, a resulting trust will be presumed in favour of the person who is proved … to have paid the purchase-money in the character of purchaser (as opposed to that of donor or lender).
2. The better view is that this is a rebuttable presumption of law in that:
(a) It applies as soon as the fact of contribution to the purchase price is proved; and
(b) In the absence of other evidence, it is conclusive for the party in whose favour it operates and for the purpose for which it operates.
3. The fact being presumed is that of the intention of the parties (or more precisely, the providers of the purchase-money) in the absence of evidence of their actual intention. That being the case, the presumption can be rebutted by:
(a) The application and non-rebuttal of the presumption of advancement;
(b) Evidence of an actual intention on the part of the purchaser to benefit the holder of the legal title.
4. The principle is applicable to different combinations of factual circumstances:
(a) Where one person pays the whole of the purchase price and title is taken in the name of another, it is presumed, unless the contrary is shown, that it was intended that the property be held in trust for him.
(b) Where two persons contribute to the purchase price in equal shares and title is taken in the name of one only, it is presumed, unless the contrary is shown, that it was intended that the registered owner holds the property in trust for the other person to the extent of 50%.
(c) Where two persons contribute to the purchase price in unequal shares and title is taken in the name of both as joint tenants or tenants-in-common in equal shares, it is presumed, unless the contrary is shown, that it was intended that the property be held in trust for both of them as tenants-in-common in proportion to their respective contributions.
5. The material intention is that of the provider of the purchase money. See Calverley v Green (1984) 155 CLR 242, per Gibbs CJ at 251 and per Mason and Brennan JJ at 261.
6. The implied trust arises at the time of the purchase so that the contributor acquires an equitable interest at the outset and such interest corresponds to the share he or she paid for at the time of purchase. See Underhill & Hayton at 321.
7. The time to take stock of the respective interest taken by the parties is the time of acquisition.
8. It follows that the time at which the respective contributions are to be calculated for the purpose of fixing the parties’ respective interest is also the time of acquisition. See Crisp v Mullings [1976] 2 EGLR 103G-K and Calverley v Green at 252 and 262.
9. Where land is purchased to be built on, the extent of the parties’ interest would be fixed at the conclusion of the activities of purchase, building and improvement. See Tracy v Bifield (1998) 23 Fam LR 260, a decision of the Supreme Court of Western Australia.
10. Where some or all of the purchase price is borrowed, the acceptance of a personal liability as against the lender to repay, for instance, by the execution of a mortgage containing a personal covenant to repay, constitutes a contribution to the purchase. Where the covenants to repay the lender is joint and several, each party to the covenant to repay is taken to have contributed half of the sum raised for the purchase. In addition to Crisp v Mullings and Calverley v Green, a number of other Australian cases discussing this proposition were referred to. I need not go into the details of these cases. I touch on
[2000] 2 HKC 90 at 108
some of them later on in another context. Most of them are, as to be expected, decisions on their own facts.
11. The better view is that post-completion unequal contributions to mortgage repayments, whether by prior agreement or otherwise, cannot affect the quantum of interest taken by the respective parties at the date of acquisition under, I emphasise, a resulting trust. Such contributions may, however, have a bearing on the remedies which may be available under what is now usually referred to as a common intention constructive trust or under some form of proprietary estoppel. See again, for instance, Crisp v Mullings; Calverley v Green pp 252 and 257-258; Piper v Knowles (Equity Division, Supreme Court of New South Wales, Ref 1784/1986, 31 January 1989, unreported) and Ammala v Sarimaa (1993) 17 Fam LR 529, a decision of the Federal Court of Australia.
12. The fact that the mortgage debt was not repaid by the parties equally may, however, be relevant to an equitable accounting between the parties. See Calverley v Green, Piper v Knowles and Jancso v Vuong (1988) 12 Fam LR 615, a judgment of Young J delivered on 4 October 1988.
13. The burden falls upon the party asserting, in I believe Miss Wong’s words, or perhaps not, that ‘the equitable right is not at home with the legal title’. See the similar sentiments in Crisp v Mullings at 103F-G.
14. These principles are not restricted in their application to persons within any particular category of relationships.
36. In terms of contribution for Shop 9:
(1) The purchase price of Shop 9 was HK$8 million.
(2) H paid the initial deposit of HK$500,000, i.e. 6.25%.
(3) W paid the further deposit of HK$300,000, i.e. 3.75%.
(4) The Mother paid HK$3.2 million, i.e. 40%.
(5) ML took out the mortgage loan of HK$4 million, i.e. 50%.
37. The Mother’s contribution was 40%, and H and W were responsible for the other 60%, i.e. 10% (6.25% + 3.75%) by way of cash and 50% by way of mortgage loan on the basis that H and W pay for the mortgage repayment.
38. In terms of contribution for Metro Harbour View:
(1) The purchase price of Metro Harbour View was HK$3,650,000.
(2) Initial deposit of HK$180,000, further deposit of HK$185,000, part of the balance in HK$1,460,000 were paid with transfers from the HSBC Premier Account, the sum of which is HK$1,825,000, i.e. 50% of the purchase price.
(3) The remaining 50% was covered by the mortgage loan of HK$1,825,000 taken out by ML. I have found that H was responsible for the mortgage repayment.
39. The material intention is that of the provider of the purchase money. In this regard, I have taken the view that the Mother has had no intention to make a gift to W. The time at which the respective contributions are to be calculated for the purpose of fixing the parties’ respective interest is the time of acquisition. To this end, I have found that the Mother has contributed 40% of Shop 9 and 50% of Metro Harbour View. Accordingly, default resulting trust arises in favour of the Mother as to 40% of Shop 9 and 50% of Metro Harbour View.
40. I again take notice that there is no question of presumption of advancement even assuming the presumption applies in the present case. Such presumption is displaced by the view that I have taken that she has had no intention to make a gift to W.
41. In light of my findings in the above, I regard that it is not necessary to deal with the alternative case of debt, money had and received, restitution and/ or unjust enrichment.
Disposal
42. In conclusion, it is determined that the Mother is the beneficial owner of 40% of Shop 9 and 50% of Metro Harbour View and 100% beneficial owner of the BoEA Account, the ICBC Account and the HSBC Premier Account, save to the said sum of HK$681,183.53.
Costs
43. It is ordered nisi that H shall pay the Mother and W’s costs of the preliminary issues, including reserved costs, with certificate for Counsel’s attendance. The costs order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order.
44. I am most grateful for Counsel’s assistance.
| ( K K PANG )
|
| Deputy District Judge |
Mr Enzo WH Chow, instructed by Pauline Wong & Co, solicitors for the Petitioner
Mr Jeffrey Li, instructed by Haldanes, solicitors for the Respondent
Mr Jeremy SK Chan, instructed by Stevenson, Wong & Co, solicitors for the Interveners