HCA 558/2015
[2021] HKCFI 2953
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 558 OF 2015
______________
| BETWEEN | | |
| | NEW WELL MASTER COMPANY LIMITED
(Formerly known as WELL MASTER COMPANY LIMITED) | Plaintiff |
and |
| | TIDJAN ANANTO | Defendant |
______________
Before: Hon K Yeung J in Court
Dates of Hearing: 11‑13 and 15 January 2021
Date of Judgment: 30 September 2021
____________________
J U D G M E N T
____________________
A. Introduction
1. This action concerns the title in Flat B on 10/F & Parking Spaces Nos 15 & 16 on Lower Car Port Floor, Victoria Heights, 43A Stubbs Road, Hong Kong (the “Property”). The plaintiff (“P”) seeks a declaration that the defendant (“D”) held the Property on trust for it. D avers that the Property was gifted by P to him back in November 1985. He counterclaims for a declaration that he has been the legal and beneficial owner of the Property since 20 November 1985.
2. This is the trial of the action.
3. Mr Justin Lam appeared for P. Ms Deanna Law appeared for D.
B. The parties
4. P is a limited company incorporated in Hong Kong on 3 November 1978[1].
5. On 26 March 2004, P was dissolved pursuant to section 291(6) of the then Companies Ordinance (Cap 32), it having failed since 1985 to file its annual returns[2].
6. On 8 January 2015, an application was made by way of Originating Summons in HCMP 54/2015 for P’s restoration.
7. On 13 February 2015, P’s registration was restored pursuant to Court Order dated 27 January 2015.
8. On 13 February 2015, P changed its name from “Well Master Company Limited” to “New Well Master Company Limited”.
9. George Lee (also known as Gunawan Gunadi, “GG”) first became a director of P in 1984, together with his late wife. Afterwards, P’s directors had at various stages been GG, his late wife, his daughter and son, and GG’s present wife Madam Wang Kwei Chi (“Madam Wang”). P’s current directors and shareholders are GG and Madam Wang.
10. P has always been under the control of GG.
11. GG was a director of the Panin Group. D was formally also a director of Panin Group. Panin Group operated banking business in Indonesia. One company under the Panin Group was Panin International Finance Corporation Limited (“Panin Finance”). Panin Finance subsequently became Xiamen International Finance Company Limited (“XIF”).
12. GG’s brother is Mr Lie Mo Ming (also known as Mumin Ali Gunawan (“Mumin”)). Mumin was also a director of the Panin Group.
13. D, GG and Mumin used to be business associates. It is common ground that the relationship between D and GG used to be very good. I will deal with their relationship in further details below.
14. In 1994, D resigned from the Panin Group in Indonesia as director, but still owned 21.36% shareholding in PT Panin Investments, the Panin parent group in Indonesia.
15. On 19 July 2016, D commenced action in Indonesian District Court in Jakarta against certain directors and officers of PT Panin Investments (including Mumin) for, inter alia, amendment of the Articles of Association concerning the increase of share capital of PT Panin Investments.
16. On 6 March 2017, the Indonesian court handed down a judgment dismissing D’s claims in respect of the said amendment of the Articles of Association of PT Panin Investments. The judgment remains good as it was not appealed against by D.
C. The Property
17. Save specified otherwise, the facts set out in this section are also not in dispute.
18. On 13 January 1981, P purchased the Property. The purchase price was HK$2,000,000.
19. Parties cannot agree on when GG and his family first did[3], but there is no dispute that since at least 1985 or 1986 till the present:
(a) the Property has been occupied by GG and his family; and
(b) the rates, management fees, utilities expenses and proportionate restoration fees of the Property were all discharged by P, GG and/or Madam Wang.
20. In January 1981, P arranged a mortgage of the Property with Panin Finance to secure general banking facilities for HK$3,500,000[4].
21. In March 1981, P arranged a further mortgage of the Property with Panin Finance to secure further general banking facilities for HK$1,500,000[5].
22. At the material time, Panin Finance was a Hong Kong subsidiary of PT Panin Investments.
23. On 3 September 1985, those two mortgages were fully repaid, and a Deed of Release was signed by Panin Finance.
24. On 20 November 1985 the following documents (the “Conveyancing Documents”) were executed:
(a) Agreement for Sale and Purchase of the Property executed by P as vendor and D as purchaser at the stated consideration of HK$3,000,000[6] (the “1985 S&PA”);
(b) Assignment of the Property executed by P as assignor and D as assignee at the stated consideration of HK$3,000,000 (the “1985 Assignment”)[7]. Therein, P is stated as the Vendor, and D the Purchaser. Clause 1 thereof states that:
“ In consideration of the sum of [HK$3,000,000.00] paid by the Purchaser to the Vendor (receipt whereof is acknowledged) the Vendor as Beneficial Owner ASSIGNS to the Purchaser [the Property]”;
(c) Mortgage executed by D as mortgagor and borrower in favour of Panin Finance as mortgagee and lender (the “1985 Mortgage”) to secure general credit facilities[8]:
(i) Clause 2.01 thereof provides that:
“ In consideration of the sum of [HK$2,400,000.00] now made available to the Borrower by the Lender (the receipt of which the Borrower doth hereby acknowledge) the Borrower HEREBY COVENANTS with the Lender that subject as hereinafter provided, the Borrower will ON DEMAND by notice in writing of the Lender made to the Borrower PAY make good and discharge to the Lender the Secured Indebtedness …”
(ii) Clause 3.01(a) thereof provides that:
“ In consideration of the premises and with the object and intent of affording to the Lender a security for the Secured Indebtedness and the due fulfilment by the Borrower of the agreements, covenants and conditions contained in this Charge:-
(a) the Borrower as Beneficial Owner HEREBY CHARGES the Property to the Lender …”
(iii) Clauses 20 and 20.01 thereof provides that:
“ 20. PERSONAL LIABILITY
20.01 The obligations responsibility and liability on the part of the Borrower herein contained shall be personal to the Borrower and shall not be affected diminished or prejudiced by the release, discharge, surrender, variation, substitution or dissipation of all or any part or parts of the Property or the terms and conditions under which it is held from the Crown or other competent authority.”
25. In respect of the 1985 Assignment, whilst the defence is not prepared to formally admit that the stated consideration of HK$3,000,000 was not paid[9], it is common ground that no such consideration was in fact paid[10].
26. In respect of the 1985 Mortgage, again, whilst the defence is not prepared to formally admit that the stated loan was for GG’s use[11], it is common ground that D himself had not received it[12].
27. On 29 October 1991, a Receipt on Discharge of a Charge was executed by XIF for discharge of the 1985 Mortgage.
D. Parties’ pleaded cases
28. The specially indorsed writ herein is dated 17 March 2015. The amended Statement of Claim (“ASOC”) is dated 30 December 2016.
29. The ASOC is brief. It comprises only, excluding the prayer, 5 paragraphs. P pleads therein that:
(a) on 13 January 1981, it purchased the Property at the consideration of HK$2m (§2);
(b) §3, that:
“ On the 20 November 1985, [P] resolved to transfer and assign the title of the [Property] to [D] to hold the same in trust on behalf of [P] for convenience at a stated consideration of HK$3 million.”
(c) D never paid the stated consideration or any sum, never took possession of the Property or its title documents, and that P has continued to occupy the same and paid the rates and management fees as the true beneficial owner (§4);
(d) §5, that:
“ In the premises, there was a total failure of consideration for the assignment and [D] therefore held and still holds the property in implied / or constructive trust for [P].”
(e) P seeks inter alia a declaration that D held and still holds the Property in trust for P as from 20 November 1985.
30. D’s amended Defence and Counterclaim (“AD&C”) was filed on 7 September 2016. D avers therein that:
(a) D and GG at the material time held substantial shareholdings in Panin Group (§1);
(b) From 1971 to 1994, D made significant contribution to the Panin Group (§2);
(c) In acknowledgment of such contribution, GG in 1985 rewarded D by gifting the Property to D (§3);
(d) Despite the various conveyancing documents signed (including the 1985 Mortgage which described D as the beneficial owner), the Property was transferred to D in fact and in truth as a gift (§8);
(e) P’s claim has, as a result of sections 4 and 20 of the Limitation Ordinance (Cap 347), been time barred (§14(b));
(f) D will rely on the doctrine of laches to deny any alleged rights of P over the Property;
(g) D counterclaims for inter alia a declaration that he has been the legal and beneficial owner of the Property since 20 November 1985.
31. P’s amended Reply and Defence to Counterclaim (“AR&DC”) is dated 8 September 2016. P pleads as follows:
(a) P denies that GG made or intended to make a gift of the Property to D (§3);
(b) During the downturn of the economy in Hong Kong between 1981 and 1985, GG suffered severe financial losses in many of his investments. He was in need of refinancing to alleviate his financial difficulties. He devised means to avoid the risk of his creditors taking possession of the Property in the future (§3(c));
(c) In about September 1985, GG devised a plan (the “Plan”) to transfer the Property to D as the beneficial owner for a stated consideration. D was however not required to pay the same. P appointed D as D was not a Hong Kong citizen, not related to GG, but was “in close working and trust relation” with him. D agreed to be so appointed (§§3(d) and (e));
(d) §3(h), that:
“ In the circumstances, the assignment of legal title of the [Property] to [D] in 1985 was a voluntary transfer for the convenience of [GG] to implement his proposal and not a gift as alleged. In the premises, [D] only held and still holds the legal titles of the [Property] in trust for [P].”
(e) In defence to the Counterclaim, P also seeks to rely on the doctrine of laches and sections 4 and 20 of the Limitation Ordinance.
E. The issues
32. Quite a number of issues have been pleaded in the pleadings.
33. In the course of his oral opening, Mr Lam confirmed that despite the pleadings, P is not relying on any constructive trust, or total failure of consideration as a separate cause of action. P’s case is based on resulting trust. He is further no longer seeking to rely on any equitable or limitation defences in defence of the Counterclaim.
34. In the course of her oral opening, Ms Law confirmed that despite the pleadings, she will only seek to rely on section 20 (but not section 4) of the Limitation Ordinance. In so far as equitable defence is concerned, she will only rely on laches. She is further not relying on any doctrine of estoppel by deed.
35. In the end, counsel agree that the following 3 issues are engaged:
(a) whether D holds the Property on trust for P as contended by P, or whether the Property is an unconditional gift by P in favour of D as contended by D (“Issue 1”);
(b) whether P’s claims are debarred by reason of section 20 of the Limitation Ordinance (“Issue 2”); and
(c) whether P is barred by reason of laches from asserting its claims (“Issue 3”).
F. Witnesses
36. GG and D have each filed 3 witness statements. Those of GG are dated 28 October 2016, 28 June 2017 and 11 October 2018 (“GG/WS1”, “GG/WS2” and “GG/WS3” respectively). Those of D are dated 27 January 2017, 22 September 2017 and 27 March 2019 (“D/WS1”, “D/WS2” and “D/WS3” respectively).
37. Originally, GG and D were intended to be called to give oral evidence. Shortly before the trial, applications were separately taken out by the parties for orders that they were incompetent to be witnesses as a result of dementia and other cognitive issues. Medical evidence was adduced. On 8 January 2021, having heard parties, and having considered the evidence before me, I made the orders sought. I gave reasons in my Ruling handed down on the same day[13].
38. Upon declaring that both GG and D were incompetent as witnesses, I allowed parties to file hearsay notices to adduce the witness statements of GG and D as hearsay. I also allowed Madam Wang to be called as a witness for GG, and Mr Andreas Ananto (“Ananto”) as a witness for D. Ananto is D’s son. Madam Wang and Ananto has each filed a witness statement. Madam Wang’s is dated 15 December 2020[14] (“Wang/WS”). Ananto’s is dated 10 December 2020[15] (“Ananto/WS”). Annexed to Ananto/WS is an earlier statement of his which forms part of his statement. I call for convenience sake the attached statement “Ananto/Annexed WS”.
G. Credibility and reliability of witnesses
39. I remind myself when considering a witness’ credibility the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, with contemporaneous conduct and documents, and the internal consistency of the witness’ evidence. I need to consider the totality of the evidence. I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility.
40. On the approach in assessing credibility, counsel have referred me to a number of authorities, which include Star Glory Investment Ltd v Kai Tuo (HK) Technology Co Ltd, HCA 3523/2002, (unrep, 29 July 2005) at §12, Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 per Rogers VP at §135, and Hui Cheung Fai & Another v Daiwa Development Limited, HCA 1734/2009, (unrep, 8 April 2014) per Recorder Eugene Fung SC at §§75‑83. I have considered those authorities.
G.1. Madam Wang
41. Madam Wang gave evidence before me. She adopted Wang/WS as her evidence‑in‑chief.
42. Madam Wang used to be an editor of newspaper. She retired as such in about 1997.
43. Madam Wang said that she first knew GG in early 1980s. They got married in 1997.
44. After marriage, she lived in the Property.
45. She has never been involved in the business of GG or the Panin Group. She has no direct personal knowledge on the facts which led to the present disputes. Whatever she claims she knows in those regards were related to her by GG.
46. One important area of Madam Wang’s evidence relates to 3 documents in Chinese (the “3 Disputed Documents”) which P relies heavily on:
(a) the descriptions the 3 Disputed Documents are, according to the agreed index of the hearing bundles:
(i) “Copy Board resolution of Xiamen International Bank (XIB)” of 22 March 1986 (“GG‑2”);
(ii) “Copy particulars of the realization of collaterals and liquidation plans prepared by the debt committee of XIB” of 4 March 1987 (“GG‑3”); and
(iii) “Copy letter signed by [GG] to the Chief Executive of the Central Bank of China” of 14 March 1988 (“GG‑4”);
(b) Those documents were disclosed in P’s Supplemental List of Documents dated 5 July 2017;
(c) GG first produced those 3 documents in GG/WS2 as GG‑2, GG‑3 and GG‑4. He relies on them primarily to refute D’s case that the financial crisis he (GG) faced had been resolved by 1985[16]. GG has not in GG/WS2 explained when, how, and by whom the 3 Disputed Documents were first located;
(d) On 12 April 2019, D filed, in respect of the 3 Disputed Documents, a “Notice Refusing to Admit Documents”;
(e) When giving evidence‑in‑chief, Madam Wang said that she found the 3 Disputed Documents in a leather brief case inside the Property.
47. For the following reasons, I find that Madam Wang is not an honest or reliable witness:
(a) She was cross‑examined as to when she knew that the Property was registered in the name of D. She said that initially she did not pay attention to that. At some stage, which was before the commencement of the present action, when handling some household matters (“家務事” in her words), she came across certain tax returns which showed that D was the registered owner. She however cannot recall when. She said that GG mentioned something about financial difficulties, and that the Property was transferred. She said further that she did not try to find out in details. She said that at some stage, she mentioned to GG that as he was getting old, the matter should be clarified. Ultimately, it was only in about 2013 or 2014 that she reminded GG to do something;
(b) Madam Wang has been living in the Property ever since her marriage with GG. GG describes the Property as his “only residential property in Hong Kong”[17]. Under cross‑examination, Madam Wang said the same. Madam Wang said in evidence that it was she who arranged for the payment of rates and utilities. Amongst the hearing bundles[18] are 2 demands for rates and government rent. They were issued on 19 January 1998 and 30 June 1998. Those demands were addressed to D. Madam Wang accepted that she did look at those demands and noted the addressee, but did not think of other problems. For Madam Wang to say that she did not try to find out the details when she first realized that the Property was not registered in her husband’s name, or even just the fact that D’s name appeared on those demands, is in my view inherently most improbable. Madam Wang’s evidence in this regard is not believable;
(c) In relation to the discovery of the 3 Disputed Documents:
(i) Madam Wang’s evidence in this regard is inherently improbable, vague, evasive and incredible;
(ii) Madam Wang said that after the commencement of the action, GG and her were trying to find proof that GG was in financial difficulty at the material time;
(iii) She said that she and GG were both involved in the preparation of the case;
(iv) The 3 Disputed Documents were disclosed on 5 July 2017. They must therefore have been found sometime between the commencement of the trial and July 2017, which was not very long ago;
(v) She said that she found them in a leather briefcase in which GG stored important documents;
(vi) She was however unable to give any coherent answer to questions put to her during cross‑examination as to the circumstances in which she claimed she found the briefcase or the 3 Disputed Documents;
(vii) She claimed that the briefcase was inside the study of the Property. She however gave various inconsistent answers as to where exactly inside the study that it was found;
(viii)She initially claimed that she could not remember whether the briefcase was locked when she found it[19], but later claimed that it should have been locked;
(ix) Most surprisingly, she could not even remember whether GG was in Hong Kong or was together with her when she said she opened the briefcase;
(x) When asked how she reported the find to GG, she said evasively and equivocally that if GG was in Hong Kong then, GG would have been together with her when she opened the briefcase; and if GG was not in Hong Kong then, she would have called him;
(xi) She could not recall how she communicated with GG about the find, what she said to him, or what his response was;
(xii) When asked about what else were in the briefcase, she claimed that there were some other letters between GG and his brother. She claimed she did not go through them in detail;
(xiii)But the purpose of her exercise was to find documents to show that GG was still in financial difficulty at the material time. If she had not gone through the other documents carefully, she would not have been able to tell their relevance (or irrelevance). One also has to bear in mind that GG’s brother was a co‑founder of the Panin Group, and GG’s correspondence with him could shed light on GG’s financial viability at the material time. Her evidence in this regard is inherently improbable;
(xiv)Whether in her witness statement or any of GG’s witness statements, there is no mention at all as to how she allegedly found those documents;
(xv) I find her evidence in relation to her alleged location of the 3 Disputed Documents unbelievable. I reject the same;
(d) In my view, the above matters adversely Madam Wang’s overall credibility and reliability as a witness.
G.2. Ananto
48. Ananto is D’s eldest son. He gave evidence in Indonesia via video conferencing facilities.
49. Together with him when giving evidence was an Indonesia lawyer Mr Radhie Noviadi Yusuf, and Mr Radhie only.
50. Ananto adopted Ananto/WS as his evidence‑in‑chief.
51. I have considered Mr Lam’s cross‑examination of Ananto. I have considered Mr Lam’s submissions that Ananto is not an honest witness. I do not accept those submissions:
(a) During cross‑examination, it was pointed out to Ananto that in the AD&C, it is pleaded that the Property was gifted to D as reward for his contribution to the Panin Group, but that there is no mention of any financial assistance given by D to GG to resolve his financial difficulties. It was suggested to Ananto that the version given in GG’s witness statements and Ananto/WS are not true;
(b) In reply, Ananto explained that while not explicit, the financial assistance referred to was part of the contribution pleaded in the AD&C;
(c) I find that explanation plausible, and do not find it “clearly untenable”, as submitted by Mr Lam;
(d) Ananto was cross‑examined about the family discussions he mentions at §7 of Ananto/Annexed WS. He was asked as to whether his family members asked about the sort of property the Property was, whether they could go to Hong Kong, what D intended to do with it, etc. Ananto agreed that those sort of questions were not asked, but that they did ask D why he got the Property. D answered that it was because he had helped GG out of problem financially, and the Property was gifted to him as a token of gratitude. Ananto said that that was good enough for them;
(e) I do not find those answers “contrived and non-sensical”, as submitted by Mr Lam;
(f) Ananto said that he was surprised when he read from the court documents that D had signed a sale and purchase agreement and a mortgage in respect of the Property. Ananto explained that he believed that his father knew what he did, that he had his reasons for doing those. He was not surprised that his father allowed GG and his family to live in the Property. He explained that his father treated GG as brother, and he would not have the heart to ask him to go away. As to rent, he said that it was a matter between his father and GG;
(g) I find those answer plausible.
52. In all, I find that Ananto’s evidence does not suffer from any material inconsistency, whether internal or external. His evidence is not inherently improbable. He answered questions put to him during cross‑examination spontaneously and in a straight‑forward manner. I find him in general to be an honest and reliable witness.
H. Approach when considering hearsay evidence
53. Section 49 of the Evidence Ordinance (Cap 8) stipulates as follows:
“ Considerations relevant to weighing of hearsay evidence
(1) In estimating the weight, if any, to be given to hearsay evidence in civil proceedings the court shall have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence.
(2) For the purposes of subsection (1), regard may be had, in particular, to the following—
(a) whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness;
(b) whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;
(c) whether the evidence involves multiple hearsay;
(d) whether any person involved had any motive to conceal or misrepresent matters;
(e) whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;
(f) whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight;
(g) whether or not the evidence adduced by the party is consistent with any evidence previously adduced by the party.”
54. I will assess the hearsay evidence adduced before this Court accordingly.
I. Issue 1
55. As has been clarified by Mr Lam both in opening and closing, P’s case is now based solely on the doctrine of resulting trust.
56. The question hence is whether D has been holding the Property on resulting trust for P, or whether it was a gift from P to D.
I.1. Some relevant legal principles on resulting trust
57. In Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, Lord Browne‑Wilkinson explained at page 708 the two types of resulting trust in law, and the relevant presumptions in play (with the authorities cited omitted):
“ Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter‑presumption of advancement or by direct evidence of A’s intention to make an outright transfer … (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest … Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention ...”
58. On the nature of the presumption of resulting trusts, I have been cited §§25‑001 and 25‑003 of Snell’s Equity (34th ed). I have considered them. They do not add materially to the observations of Lord Browne‑Wilkinson cited above.
59. D do not seek to rely on any “counter‑presumption of advance”.
60. Ms Law accepts that the presumption of resulting trust arises as D received the Property without consideration[20]. She further accepts that the onus is on D to rebut the same. She however submits that in modern times, the presumption of resulting trust is only a last resort. She relies on the Privy Council case of Gany Holdings (PTC) SA v Khan [2018] UKPC 21, wherein Lord Briggs explained at §17 as follows (with the authorities cited omitted):
“ It is convenient to begin with a re‑statement of the basic principles by which equity … provides for identification of beneficial interests arising from a gratuitous transfer of property. First, if either the transferor or the transferee makes a written (or oral) declaration as to those beneficial interests, or they do so together in an agreed form, that will generally be decisive, regardless of the subjective intentions of either of them … Secondly, and in default of any such declaration, the court looks for evidence from which a common intention as to beneficial ownership may be inferred. This may include evidence of statements made by either party before, at the time of or even after the relevant transfer, the parties’ conduct, and the factual context in which the transfer takes place. Sometimes, a choice between possible conclusions as to beneficial interest may properly be arrived at by a process of elimination, whereby the most unlikely conclusions are first removed, leaving the least unlikely as the correct one. Finally, recourse may be had to time‑honoured presumptions, such as the presumption of advancement or the presumed resulting trust, where there really is no evidence from which an inference as to common intention may properly be drawn. But these are, in modern times, a last resort, now that historic restrictions on the admissibility of evidence have been removed, and the forensic tools for the ascertainment and weighing of evidence are more readily available to the court.”
61. The observations by Lord Briggs are highly persuasive, which I accept.
62. The approach in the identification of beneficial interests arising from a gratuitous transfer of property is an objective one.
63. Relevant to the present discussion is Ms Law’s reliance upon the following observations by Kwan VP in Mok Hing Chung v Wong Kwong Yiu[2019] HKCA 452, at §21, that:
“ The starting point where there is joint legal ownership is joint beneficial ownership. It is assumed that equity follows the law and that the beneficial interests reflect the legal interests in this property. The onus is on the person seeking to show that the beneficial ownership is different from the legal ownership and in what way, and this is not a task to be lightly embarked upon …”
64. However, in the present case, D accepted that he had paid no consideration for the Property. The presumption of resulting trust is engaged. There is factual basis for this Court to embark upon the task of deciding whether the beneficial ownership in the Property is different from the legal ownership.
65. On the other hand, Mok Hing Chung is helpful in understanding the nature of the presumption of resulting trust. As recorded by Kwan VP at §22, the trial judge noted that the correct approach is to treat any presumption of resulting trust simply as an evidential tool, which is not necessary if there is actual evidence of intention. The trial judge’s approach was endorsed by the learned Vice President (§25). In my view, that approach is consistent with the approach explained by Lord Briggs in Gany.
I.2. The approach
66. Mr Lam invites this court to start with the presumption of resulting trust. As summarised at §2 of his written closing, and developed by him in the course of his submissions, he submits that:
(a) the presumption of resulting trust is application to the transfer of the Property from P to D;
(b) both D and Ananto’s evidence should be rejected as untruthful. D therefore has no evidence to rebut the presumption, so that consequently, D holds the Property on resulting trust for P;
(c) insofar as necessary, P’s evidence should be accepted as to the true circumstances of the transfer of the Property to D, ie to enable GG to protect the Property from the risk of claims by creditors in times of severe financial difficulty.
67. On the other hand, Ms Law, relying on Gany, submits[21] that the presumption is only the last resort, and that there is sufficient positive evidence for this court to come to a finding on balance of probabilities, so that there is no need to resort to the presumption. Her other way of putting her position is that the presumption is clearly rebutted by the evidence.
68. In the present case, albeit in hearsay form, evidence from GG and D on the circumstances leading to the transfer of the Property is available. There are other undisputed facts (amongst others the Conveyancing Documents, the occupation of the Property, the dissolution of P) from which inferences can be drawn. On the law discussed above, I do not accept the approach suggested by Mr Lam of starting with the presumption. I will, applying Gany, start off by considering the evidence to decide whether an inference as to intention may properly be drawn, and that it is only in the absence of such evidence that I will have recourse to the presumption.
I.3. The undisputed (or undisputable) facts
69. It is useful to start off by grouping together those core facts which are not in dispute (or not disputable).
70. GG and D used to be in good terms. They were co‑directors of the Panin Group. Business was once very good. GG himself described D to be, at the time when the Property was transferred to D, “in close working and trust relation with myself as business partner”[22], that D“was well acquainted and well trusted by me for over 25 years”[23], and that D “at the material times were still treated as a trustworthy partner and as a director in the Panin Group”[24].
71. Their relationship did not turn sour until much later in time (after 2010).
72. In the early 1980s, GG suffered severe financial losses[25].
73. The Property was transferred to D in 1985 pursuant to the Conveyancing Documents. I have set out their material terms above.
74. There is no documentary record (or even reference) of any kind of any trust in relation to the Property between P and D.
75. Executed together with the 1985 S&PA was the 1985 Assignment. D mortgaged the Property to Panin Finance. He did not receive the loan. He on the other hand assumed personal liability of its repayment.
76. GG and his family remained in possession of the Property. They bore all the outgoings.
77. The 1985 Mortgage was discharged in 1991. D was not responsible for the redemption monies. If the payment of any redemption money was required, they were most probably settled by P.
78. It is not D’s case that he received the title documents of the Property upon discharge of the 1985 Mortgage. They were most probably delivered to P.
79. For a very long time, P, or GG, had taken no step to seek from D transfer of the registered title of the Property. GG had been contented to allow the Property to remain registered in D’s name.
80. On the other hand, and again for an equally long time, D had allowed GG and his family to remain in possession of the Property.
81. In 2004, P was struck off the registry and dissolved for failure to file annual returns. An application for its restoration was only made in 2015.
82. On 19 July 2016, D commenced action in Indonesian District Court against certain directors and officers of PT Panin Investments. One of the defendants was Mumin.
I.4. The evidence of Madam Wang and Ananto
83. I have set out above why I do not find Madam Wang to be a reliable witness.
84. The value of Madam Wang’s evidence is however limited in any event. She was not involved in the transfer of the Property by P to D. Nor had she any participation in the operation of the Panin Group.
85. As submitted by Mr Lam in the course of his oral closing submissions, which I accept, even if this court is to reject Madam Wang’s evidence, I will still have to, in deciding this issue, consider all the other evidence, including in particular that of GG.
86. In respect of the evidence of Ananto:
(a) In summary:
(i) He was also not involved in the transfer of the Property, nor the operation of the Panin Group;
(ii) He said that his relationship with D is close, and D used to share with him his experience in running the business of Panin Bank Ltd and the relationship with his business associate;
(iii) He heard from D that GG and D were close business partners and had a very good relationship;
(iv) D on various occasions told him that back in 1980s, GG was in trouble because his business in Hong Kong was in serious deficit with huge losses. D further told him that D would try his best to financially rescue GG. Ananto’s understanding is that GG’s financial crises came to an end due to the assistance provided by D in around mid‑1980;
(v) In around 1986 to 1987, during several casual family discussions, he came to know that GG gifted the Property to D as a token of gratitude for what he had done to financially assist GG;
(vi) He had never heard from D that P or GG disputed the beneficial ownership of the Property until the commencement of the present action;
(b) Ananto’s evidence (especially (ii) to (v) above) comprises principally what he had been told by D, and is therefore mostly hearsay;
(c) I bear in mind Ananto/WS was not a contemporaneous statement, not an unedited account made contemporaneously with the occurrence or existence of the matters stated, that Ananto as D’s son is potentially interested in the results of the present proceedings, and he may therefore have motive to conceal or misrepresent matters;
(d) Hence, even though I have, for the reasons set out above, found Ananto to be an honest and reliable witness, before reaching any conclusion on the weight of his evidence, I need to consider the weight of the evidence of GG and D. I need in particular to have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the hearsay evidence before me (see section 49(1) of the Evidence Ordinance).
I.5. The witness statements of GG and D — section 49(2) of the Evidence Ordinance
87. I first of all make the following observations relevant to section 49(2) of the Evidence Ordinance:
(a) As I have ruled that both GG and D have become incompetent as witnesses, it would not have been reasonable or practical for them to be produced;
(b) None of their witness statements were however made contemporaneously with the occurrence or existence of the material events stated;
(c) Most of the contents in the witness statements of both GG and D are however direct hearsay;
(d) Both GG and D have motive to conceal or misrepresent matters, they being effectively the parties to the present proceedings, and their interests are at stake;
(e) The accounts given in all the witness statements have been edited, in the sense that they were specifically drafted and prepared as witness statements for use in the proceedings;
(f) I on the other hand do not see any circumstances in which the evidence is adduced are such as to suggest an attempt to prevent proper evaluation of its weight.
88. There are little between GG and D in so far as the above factors are concerned.
I.6. The weight to the evidence of GG and D
89. For the following reasons, I place weight on D’s evidence. I do not place weight on GG’s evidence.
90. GG and D were at the material time in good terms. D was a trusted business partner.
91. Given their good relationship at the material time, a gift from GG to D is plausible.
92. There is no dispute that back to the 1970’s, the two banks in Indonesia controlled by GG and Mumin merged with the bank also in Indonesia controlled by D. The entity upon merger and restructuring was the Panin Bank Group.
93. The business subsequently became very successful.
94. In early 1980’s GG suffered severe financial losses.
95. Mr Lam challenges D’s case as being different from what has been pleaded, and on the basis that D was only a 21.6% shareholder in the Panin Group, and that there is no evidence from D to substantial the suggestion that a minority shareholder could have made any difference to the decision of the Panin Group to save Panin Finance.
96. On pleadings, I am of the view that §§2 and 3 of the AD&C sufficiently covers D’s case.
97. Whilst the percentage of D’s shareholding in the Panin Group was smaller compared with that of GG and Mumin combined[26], there is no dispute that D was indeed a shareholder of not immaterial percentage, and was also a director. In this regard, I find D’s following evidence[27] plausible:
“10. … in or around 1982 to 1984, I understood from Mumin that the business run by [GG] in Hong Kong was in serious deficit and [GG] himself also experienced severe financial losses. [GG] therefore requested the financial assistance from the Panin Group as well as to agree to certain top management level restructuring of the Panin Group. In response, being the majority of the shareholders of the Panin Group, Mumin, [Lie Tjen Liang] and I agreed to give financial assistance to HK Panin.
11. Even though I was not a member of Lee’s family, instead of giving up the deficit business limb of the Panin Group in Hong Kong, I still agreed to use the Panin Group’s financial means to save HK Panin, which in turn also saved [GG] from his own financial difficulties. I understood that [GG] was very grateful for my help.”
98. The foundation of GG’s case is that the transfer of the Property to D was the result of the Plan he devised to avoid the risk of his creditors taking possession of the Property in the future.
99. That foundation however lacks details, and is repugnant to inherent probability and commercial sense:
(a) GG claims that D agreed to his proposal and lent out his name to become beneficial owner and mortgagor to enable GG to implement the proposal[28]. He says further that:
“ I explained the background circumstances and the reasons for the proposed transfer of [Property] to [D] agreed to sign the assignment (but without any payment) and agreed to hold the [Property] in trust on behalf of [P].” [29]
(b) GG however provided no details as to how he explained the Plan to D, their discussion, and how D agreed to the same;
(c) I have set out the material terms of the 1985 Mortgage. The effect of P’s (and GG’s) case is that D had no interest in the Property, but otherwise agreed to shield the Property from P’s or GG’s creditors, agreed under the 1985 Mortgage to be personally responsible for repayment of the general credit facilities made available to P, and agreed to be a party to the Plan to mislead GG’s creditors;
(d) One notes that if P had remained the beneficial owner of the Property despite the 1985 Assignment, D would have had no capacity as the beneficial owner of the Property to effect the charge under the 1985 Mortgage. If the charge of the Property were invalid, D’s personal liability and exposure in respect of the general credit facilities would have become even graver;
(e) There was nothing in it at all for D to agree to be involved in the Plan;
(f) In my view, and despite the good terms which GG and D were in at that time, P’s case in this material regard is inherently most improbable;
(g) I find that D’s case in this regard is inherently much more probable:
(i) Whilst D understood the severe financial risks he might face as a result of the1985 Mortgage, he agreed to GG’s suggested arrangement because the Property was assigned to him as a gift[30];
(ii) Hence, whilst he assumed liability for a loan he did not borrow, at least the loan was secured by the Property that was gifted to him;
(iii) D says that GG had never mentioned the Plan to him, and that:
“ If I had known that this was the scheme devised by [GG] to deceive his own creditors or that this was his true intention in gifting me the Property, I would definitely have declined to participate in such a scheme, not to mention that I would certainly not have agreed to mortgage the Property as mortgagor and borrower at my own risks, taking into account of the very grave consequences if this scheme was made known to his creditors or when [GG’s] defaulted in repayment of the mortgage.”[31]
(iv) D further says and emphasizes[32] that:
“ I would have never participated in any scheme to deceive the creditors of [GG]. As a reputable and successful businessman, it is against the common sense and ethics for me to be involved in such a scheme. I would not have agreed to hold the Property if [GG’s] intent was to deceive the creditors, including XIB, [Overseas Trust Bank] and the Central Bank of the PRC Government. I would have in no circumstances put my reputation and businesses at stake.”
(v) I do not accept GG’s assertion[33] that “the purpose of transferring the [Property] was not intended to deceive (nor capable of deceiving) the Chinese creditors …”
(vi) I find D’s evidence above sensible and plausible;
(h) GG says that upon discharge of the 1985 Mortgage:
“ …with the knowledge and consent of [D], the title deeds of the [Property] was [sic.] returned to me on behalf of [P] as the true beneficial owner.”[34]
GG however has offered no details as to how D came to know about the alleged of the title documents to GG, and how D consented to the same;
(i) GG’s subsequent conduct is also inconsistent with the existence of the Plan, and is inherently improbable if the Plan in fact existed:
(i) He states[35], as part of the Plan, that:
“ In due course, the [Property] will be transferred and re‑conveyed by [D] back to [P] or to me personally.”
(ii) The 1985 Mortgage was discharged in 1991. GG’s financial position must have improved by then. But GG had until the commencement of the present action in 2015 never asked D to transfer and re‑convey the Property back to P or to him. As submitted by Ms Law[36], which in my view are justified on the evidence, for more than 29 years after the transfer of the Property, P had not once asserted its alleged beneficial interest in the Property. There was not even a pre‑action letter of demand;
(iii) GG explained that[37]:
“ … as [D] knew very well that I and my family have been residing at the [Property] since 1981 after its acquisition by [P] and by the fact of my actual possession of the [Property] and title deeds, I saw no need to “assert my rights” in respect thereof before or after 1991, when the outstanding mortgage loan was fully settled.” (Emphasis added);
(iv) I find those explanations inherently improbable and contrived:
(1) Whilst GG has been in possession of the Property and the title documents, those title documents record that D is the owner of the Property. D is on paper and to the world the legal owner. GG must realise the importance of claiming back from D the legal title;
(2) It is not GG’s case that there was, apart from himself and D, any other person who had direct contemporaneous knowledge of the Plan and D’s agreement to it. There is no documentary proof of the same. Proof of the Plan is crucially dependent upon P’s ability to prove it. With GG’s and D’s advancing age (GG coming to 78 in August 2015), there was an obvious need to restore P’s title before it became too late;
(3) One notes also GG’s case that it was part of the Plan that D would return the Property in due course. GG says D has agreed to that. It would have taken little to have P’s title restored. Yet, there is no evidence of any contemporaneous demand from GG requesting D to do so;
(v) I note and have considered Mr Lam’s submission, relying on Flying Mortgage Ltd v Chan Kuen Kwong [2010] 1 HKLRD 318 at §§27-28 (applying Warren v Gurney [1944] 2 All ER 472), that retention of title deeds and consenting for mortgages for loans were significant facts in support of a finding of resulting trust. In my view, the facts in each case are different. The full facts in each case have to be considered, balanced and weighed;
(vi) In addition to not doing anything to assert his alleged beneficial interest, P had neglected in the filing of annual returns for P between 1985 and 2014, resulting in P being struck off the registry in 2004. 1985 was the year when the Property was assigned to D. GG did not apply to have it restored until sometime in 2015;
(vii) GG explains[38] that:
“ After the transfer in 1985, I was under the mistaken belief that it was no longer useful to keep [P] in going, so I neglected to file the annual returns in the later years.”
(viii) I find those explanations inherently most improbable. GG is a sophisticated businessman. He claimed that D only held the Property in name for P to protect it from creditors. Part of the Plan was to have the Property transferred and re‑conveyed back to P or himself. At various places of his witness statement[39], he stressed that the Property remained beneficially owned by P. His alleged mistaken belief that it was no longer useful to keep P going makes no sense at all;
(ix) GG’s failure to maintain the registration of P in my view supports the only inference that he no longer believed at the material time that P or himself retained any interest in the Property.
100. In respect of the 3 Disputed Documents:
(a) I have set out in Section G.1. above the circumstances in which the 3 Disputed Documents were disclosed, and why P seeks to rely on them;
(b) In GG/WS2[40], GG has not explained why there was no signature on GG‑2 and GG‑3, and how they first came to his possession;
(c) D has in D/WS2 expressed his concern over various aspects of the contents of those documents[41], including the absence of signature on GG‑2 and GG‑3, the lack of particulars in respect of the pledges to be provided by GG, and the discrepancy between the number of pledged shares as stated in GG‑2 and GG‑3;
(d) GG fails in GG/WS3 to address directly the majority of the matters raised by D in D/WS2 in respect of the 3 Disputed Documents. He claims[42] that he “understood that the Joint‑venture agreement, the Personal Guarantee and pledging documents were regarded as highly confidential and sensitive documents …”, and “I believe this could be the reason why I was not supplied signed copy thereof”. The basis of his understanding and belief is however speculative;
(e) GG/WS3[43] on the other hand reveals GG‑2 and GG‑3 were in fact “reproduced copies”, that:
“ …As … [GG-2] and …[GG-3] are the exact format copy supplied by XIB for my reference, I never doubt its authenticity, even though they were reproduced copies without bearing any signatures.”
(f) As submitted by Ms Law[44] which I accept, GG has not in GG/WS3 explained, amongst other matters, the circumstances in which he originally obtained them, how they had since been kept and retained, and where the originals were;
(g) Apart from the highly unsatisfactory evidence in relation to the circumstances in which GG first obtained possession of the 3 Disputed Documents, he has failed in any of his statements to explain when, how, and by whom they were first located for the purpose of these proceedings;
(h) I have set out above Madam Wang’s evidence on the alleged discovery of 3 Disputed Documents. I find that her evidence in those regards is highly unsatisfactory, and is not reliable. I have explained above why;
(i) I am prepared to accept Mr Lam’s submission, based on Redstone Mortgages Limited v B Legal Limited [2014] EWHC 3398 (Ch) at §§57-58, that all P is required to do is to provide evidence as to the provenance of the documents, and to demonstrate that the evidence is not on its face so unsatisfactory as to be incapable of belief;
(j) Given the evidence outlined above, I am not satisfied that P has proved the provenance of the 3 Disputed Documents;
(k) In addition to the above is the failure on P’s part to call Mumin;
(l) As have been mentioned above, GG relies on the 3 Disputed Documents to refute D’s case that the financial crisis he (GG) faced had been resolved by 1985;
(m) It is GG’s own evidence, in the context of the 3 Disputed Documents, that Mumin had direct knowledge of his financial position, that[45]:
“ During those years, [D] was well informed by me and my brother in Indonesia about the formation of the joint‑venture XIB and the re‑structuring of [Panin International Finance Company] and [Macau International Bank], on the special terms that I have to provide collaterals from my personal assets to XIB. The main purpose of the joint‑venture was to save [Panin International Finance Company] and [Macau International Bank] from collapsing, but only at my expenses that I might have to forego my pledging assets.”
(n) Mumin’s name was in fact mentioned on the face of GG‑2, 3 and 4;
(o) Mumin could have given direct evidence on the issue as to whether the financial crisis GG faced had been resolved by 1985;
(p) Mumin has not been called;
(q) Mumin could have been called. According to Madam Wang, Mumin is alive (“健在” in her words);
(r) When asked why Mumin was not called, Madam Wang claimed that she knew more about the matters than Mumin. I reject that explanation. Mumin had on GG’s case direct and contemporaneous knowledge on the financial crisis which GG faced in the 1980’s. Madam Wang’s knowledge if any is at best based on hearsay;
(s) On the primary evidence before me, Ms Law invited this court, on the authority of Kao Lee & Yip v Koo Hoi Yan [2003] 3 HKLRD 296, at §34 per Ma J (as the ex‑Chief Justice then was), to draw the adverse inference against P that Mumin’s evidence, if Mumin had been called, would not have supported P’s case on the issue of GG’s financial crisis and when it was resolved;
(t) I am satisfied that the primary evidence before me justifies the drawing of that adverse inference, and I draw the same;
(u) For the above reason, I place no weight on the 3 Disputed Documents.
101. Mr Lam relies heavily on D’s failure to claim back possession of the Property from P and GG:
(a) D explains[46] in that regard as follows:
“ … I must repeat that [GG] and I were all along good business partners. I treated him as my brother with trust reposed in him. As explained in [D/WS1], I allowed [P] to retain the title deeds of the Property and permitted [GG’s] family to reside in the Property because of the harmonious relationship with [GG]. I therefore saw no necessity to do anything in relation to the Property — I received the Property as a gift and I was the sole legal and beneficial owner of the Property. I have never imagined that [GG] would renege on his promise or use me as a disguise to deceive his creditors until the present proceedings were commenced against me. When [GG’s] ulterior intention became clear, I had no alternative but to defend my legitimate interests and to assert my rights over the Property.”
(b) D is according to the title documents the legal and beneficial owner of the Property. His interest is express. This is unlike the position of P and GG, where their alleged interest in the Property is unwritten;
(c) That distinction is in my view important when considering the conduct of the parties after the transfer. Given the unwritten nature of P’s alleged interest in the Property, I find P and GG’s explanations for failing to assert their interest for some 30 years, and for failing to keep the registration of P, repugnant to inherent probability. On the other hand, D’s interest in the Property to the outside world is apparent from title documents. I find in the circumstances his explanation that “I had always believed that it was discourteous for me to seek possession of the Property and the return of the title deeds”[47] credible;
(d) Related to this point is the payment by GG and his family outgoings in respect of the Property. Given their occupation of the Property, I find their payment of outgoings at best equivocal.
102. I come back to the evidence of Ananto. Ananto’s evidence is materially consistent with the undisputed facts and GG’s evidence. I place weight on Ananto’s evidence. I place weight in particular on his evidence that he had never heard from D that P or GG disputed the beneficial ownership of the Property until the commencement of the present action.
103. Mr Lam asks rhetorically that if the transfer were a gift, why the Conveyancing Documents were executed, why GG would have gifted to D his only residence in Hong Kong, and why, if the creation of the 1985 Mortgage was to facilitate GG to have more cash flow (as D has said[48]), GG did not simply sell the Property.
104. D’s explanations on the creation of the 1985 Mortgage are that GG had at that stage just overcome his financial difficulties. GG had promised to take care of the repayment of the mortgaged loan. He agreed to the arrangement as the Property was gifted to him. Given the overall circumstances of the case and all the other evidence before me, I find those explanations plausible.
105. I have further and in any event considered those rhetorical questions. I do not consider them or any other matters separately and independently. I have considered them in the round. In my view, those matters which Mr Lam relies on are at best circumstantial evidence which go into the balance. There are however many other factors at play. I have weighed them together with all the other circumstances and other evidence. In my view, they are not of sufficient weight to upset my overall consideration of the evidence before me.
106. For the above reasons, having considered all the facts and all the relevant circumstances, and having considered sections 49(1) and 49(2) of the Evidence Ordinance, I place weight on the evidence of D. I accept and place weight in particular on his evidence at §§13 and 14 of D/WS1 that GG told him that he rewarded the Property to D as a gift in acknowledgment of his significant contribution to the Panin Group all along since 1973, and his assistance in resolving his and Panin Finance’s financial crisis from 1982 to 1985. I also place weight on Ananto’s evidence. I refuse to place weight on the evidence of GG.
I.7. Conclusion on Issue 1
107. For the above reasons, I find and infer that the common intention of GG and D at the time of the transfer of the Property in 1985 was that the Property was a gift by GG and P to D. If necessary, I also conclude that any presumption of resulting trust has been rebutted.
J. Issue 2
108. Issue 2 asks whether P’s claims are time‑barred by reason of section 20 of the Limitation Ordinance.
109. Given my conclusion on Issue 1, Issue 2 is not engaged.
110. In deference to the submissions that have been made, I express the following views.
111. Sections 20(1) and (2) of the Limitation Ordinance provide as follows:
“ Limitation of actions in respect of trust property
(1) No period of limitation prescribed by this Ordinance shall apply to an action by a beneficiary under a trust, being an action—
(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use.
(2) Subject as aforesaid, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Ordinance, shall not be brought after the expiration of 6 years from the date on which the right of action accrued:
Provided that the right of action shall not be deemed to have accrued to any beneficiary entitled to a future interest in the trust property, until the interest fell into possession.”
112. The issue therefore is whether P’s present claim is one “to recover from the trustee trust property … in the possession of the trustee”.
113. That issue entails two sub‑issues:
(a) whether D is for the purpose of section 20(1)(b) in possession of the Property (“Issue 2.1”); and
(b) whether D, being a trustee qua resulting trust, is within the scope of section 20(1)(b) (“Issue 2.2”).
114. If I had answered Issue 1 in favour of P:
(a) The legal estate in the Property would by virtue of the Conveyancing Documents have been held by D, and the equitable interest by P by virtue of resulting trust;
(b) Subject to Issue 2.2, the Property would in the circumstances have been for the purpose of section 20(1)(b) “in the possession” of D qua resulting trustee — see Liu Wai Keung v Liu Wai Man [2013] 5 HKLRD 9, G Lam J (as he then was) at §§119-120;
(c) I would have answered Issue 2.1 in the affirmative.
115. The answer to Issue 2.2 hinges on the meaning and scope of the word “trustee” in section 20(1)(b) of the Limitation Ordinance.
116. Section 2(1) of the Limitation Ordinance provides relevantly that “trust” and “trustee” have the same meanings respectively as in the Trustee Ordinance (Cap 29).
117. Section 2 of the Trustee Ordinance stipulates that, subject to one exception which is not applicable here, “trust” and “trustee” extend to implied and constructive trust.
118. On the natures of a trust in general and a resulting trust in particular, Mr Lam has cited to me Green v Russell [1959] 2 QB 226 at 241 and Westdeutsche (above). As explained in Underhill and Hayton, Law Relating to Trusts and Trustees (19th ed) at §25.9, the parties’ equitable interests under resulting trusts are fixed at the time they purchased the property by paying the purchase price.
119. In Lewin on Trusts (20th ed)[49], the learned authors state that:
“ Resulting trusts are not expressly included in the definition of ‘trust’ in the 1980 [Limitation] Act but it is scarcely possible that they were meant to be excluded; indeed, there is authority that they are not …
… since the [the first type of resulting trust explained by Lord Browne‑Wilkinson in Westdeutsche] is based on the payer’s presumed intention, we consider that … section 21(1)[50] will preclude a defence of limitation to claims within its wording. In the latter case, where the transferee has taken property as express trustee at the outset, we consider it obvious that the trust is likewise to be treated …”
120. In High Commissioner for Pakistan in the UK v Prince Mukkaram Jah [2016] EWHC 1465 (Ch), Henderson J observed at §125 that:
“ It has been clear law for a long time that a claim by a settlor or transferor to recover money held on a resulting trust falls within the scope of section 21(1) of the 1980 [Limitation] Act, and is therefore not subject to any statutory limitation period.”
121. In The Annotated Ordinances of Hong Kong — Trustee Ordinance (Cap 29) at [2.18], it is explained that the term “implied” is used to cover situations where a trust is not expressly created. In that sense, the term “implied trust” includes resulting trust and constructive trust. It is also stated that;
“ For practical purposes, it is settled that the Trustee Ordinance applies to resulting trust: see for example, Wong Kwok Learn Baldwin v International Trading Co Ltd [2010] 3 HKC 296 (CA).”
122. Wong Kwok Learn concerned certain shares transferred without consideration to third parties in order to defraud creditors. Whilst the applicability of the Trustee Ordinance to a resulting trust was not expressly argued and addressed, the Court of Appeal made in relation to those shares a vesting order under section 52 of the Trustee Ordinance. I accept Mr Lam’s submission that the Court of Appeal had necessarily accepted that resulting trusts fall within the definition of “trust” for the purpose of the Trustee Ordinance[51].
123. Ms Law has endeavoured to distinguish some of the above authorities on divers grounds. I have considered those submissions of hers. Despite her efforts, I am of the view, both from first principle given the nature of resulting trust, and on the strength of authorities, that in respect of a claim based on resulting trust (and assuming the satisfaction of the other necessary conditions), section 20(1)(b) of the Limitation Ordinance precludes a defence of limitation.
124. Both in her opening and closing, Ms Law refers to a line of authorities[52] which distinguish two types of constructive trusts for the operation of section 20(1)(b) of the Limitation Ordinance[53]. I accept Mr Lam’s submissions[54] that that distinction is necessary in the context of constructive trusts because of the diverse meanings which the terms “constructive trusts” carries. In the context of resulting trust, there is no need for similar distinction to be made, and both types of resulting trust (as explained by Lord Browne‑Wilkinson in Westdeutsche) are considered to be within the scope of section 20(1)(b) of the Limitation Ordinance — see Lewin on Trusts (20th ed)[55].
125. Ms Law relies on Rose Palace Ltd v Jung Christopher Lam [2013] 1 HKLRD 158. The facts in that case are very different. That case was not concerned about A and B (borrowing and adopting the terminology used by Lord Browne‑Wilkinson in Westdeutsche in respect the first type of resulting trust.) In Rose Palace, A (Wu) and B (Chui) agreed to purchase a property in 1988. They both contributed towards the purchase price. The property had subsequently been sold a number of times, and ultimately to the plaintiff in 1993. An issue arose as to whether Wu had divested his beneficial interest under resulting trust, and whether the plaintiff could be regarded as a trustee of Wu for the purpose of section 20(1)(b) of the Limitation Ordinance. It was on those facts which Louis Chan J found that the plaintiff only become liable to be declared a trustee for Wu upon the plaintiff entering into the subsequent agreement to purchase the flat in 1993 (and not before), and applying Peconic, the plaintiff was not within the scope of section 20(1)(a) of the Limitation Ordinance. Rose Palace in my view does not assist D.
126. For the above reason, if necessary, I would have held that P’s claim herein falls within section 20(1)(b) of the Limitation Ordinance, and is not time‑barred.
K. Issue 3
127. This issue asks whether P is barred by reason of laches from asserting its claim.
128. Again, given my conclusion on Issue 1, Issue 3 is not engaged.
129. Again, in deference of submissions made, I make the following observations on Issue 3.
130. I have considered the authorities Ms Law has cited on the applicable principles. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, Sir Barnes Peacock observed at §§239-240 that:
“ Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”
131. In Erlanger v New Sombrero Phosphate Co (1873) 3 App Cas 1218, Lord Blackburn, having cited the observations by Sir Barnes Peacock in Lindsay Petroleum above, explained at §1279 that:
“ I have looked in vain for any authority which gives a more distinct and definite rule than this; and I think, from the nature of the inquiry, it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it. The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.”
132. Mr Lam in his written closing cites Frawley v Neill, unrep, CHANF 97/1573/3, 1 March 1999 for what he calls the modern restatement of the principles of laches: the inquiry should require a broad approach, directed to ascertaining whether it would in all the circumstances be unconscionable for a party to be permitted to assert his beneficial right. He cites further Snell’s Equity (34th ed) at §5‑011, where it is explained that the doctrine of laches:
“ …is not based, however, on the mere fact of delay. Something more than mere delay, more even than extremely lengthy delay, is required before B will be denied equitable rights under the doctrine of laches, as the question is whether the lapse of time has given rise to circumstances that now mean it would not be inequitable to deny relief to B.”
133. Ms Law is however not relying on mere delay. She is relying on the loss of D as a witness in the light of his mental incapacity as a witness[56]. She cites Watt v Assets Co, Limited[1905] AC 317, per Earl of Halsbury LC held at 333 and Man Yuet Fong & Others v Man Kam Cheung Richard[2019] HKCFI 89, per Deputy Judge Richard Khaw SC at §§45‑47. She also relies on the loss of opportunity to cross‑examine GG[57].
134. I have considered Mr Lam’s submissions[58] in opposition. For the following reasons, I would if necessary hold that the defence of laches as now framed by Ms Law is not made out:
(a) Equitable defences must be specifically pleaded, and full details given — see Hong Kong Civil Procedure 2021, Vol 1, §18/8/10;
(b) That rule makes perfect sense. Mere delay is not sufficient. Even “extremely lengthy delay” may not be sufficient. There has to be more. An inquiry (albeit with a broad approach) is required. Circumstances vary. Unless the defence has been properly pleaded and particularised, P would not know what matters in addition to mere delay D is seeking to rely on, and what matters the inquiry should focus on;
(c) D pleads at §14(c) of the AD&C as follows:
“ Further and/or alternatively, [D] will also rely on the doctrine of laches to deny any alleged rights of [P] over the Property (which is denied).”
(d) No details or particulars have been provided thereunder;
(e) The matters Ms Law now seeks to rely on (the deteriorated mental capacity of GG and D) developed principally post-writ, and after the filing of the AD&C;
(f) No amendment has been made to the AD&C on the issue of laches to put P on notice;
(g) As things turned out:
(i) D only took out a summons on 11 September 2020 for leave to file and serve the witness statement of Ananto as per the draft attached thereto;
(ii) But even at that stage, as I have recorded in my Ruling refusing that application[59], there was still no final decision as to whether D would be called;
(iii) It was only subsequently on 10 December 2020 when a further summons was taken out for inter alia leave to file hearsay notices out of time so that, in the light of D’s medical conditions, his witness statements could be adduced during the trial[60];
(h) In the course of her oral closing submissions, Ms Law called the above a pleading point, and submitted that it would be surprising if the Court were to reject the defence on that basis;
(i) With respect, that is not a mere technical pleading point. As I have commented above, circumstances which may ground a defence of laches vary. It is important that the defence be properly particularised so that the inquiry can be meaningfully undertaken;
(j) In addition, it should be noted that both Watt v Assets and Man Yuet Fong which Ms Law relies on concerned deceased witnesses. In the present case, Ms Law relies on the loss of mental capacity of D and GG as witnesses. The distinction is a material one for the present purpose. As Mr Lam has submitted[61], which I accept, steps could have been taken by D to address the perceived prejudice. Mental capacity of the parties in the present case could not have deteriorated overnight. An application could have been taken out under Order 39 rule 1 for a deposition to be taken, both in respect of D and GG’s evidence. As has been explained at §39/1/3 of Hong Kong Civil Procedure 2021, Vol 1:
“ … the usual grounds on which the order [under Order 39 rule 1] is made for examination are (and always have been) that the witness is too old and decrepit to attend a trial or might die before the trial, or so ill that there is no prospect of his being able to attend the trial …”
(k) I see force in Mr Lam’s submission[62], that there is no reason why P should be “punished” for D’s own failure to preserve his evidence.
135. I have considered the very long delay on the part of P in initiating the present proceedings. In my view, the delay has been inordinate and unreasonable. I reject Mr Lam’s submission to the contrary. I reject in particular his submission[63] to the effect that the delay during the time when there was no dispute between the parties should not be counted against P. The reality is that GG had not until the present action sought to assert his alleged interests, and until he did so, he could not say that there had been no dispute between the parties. The case of Tsun Wai Man v Cheung Yung, HCA 14202/1999, (unrep, 9 August 2001) (applying Williams v Greatrex [1957] 1 WLR 40) Mr Lam relies on does not assist P. In those cases, the plaintiffs had not been sleeping on their rights. In the present case, P had in my view been sleeping on its rights (assuming that it has been proved).
136. However, unless one factors in the alleged prejudice relied upon by Ms Law (but which could have been addressed in ways as discussed above), the delay, albeit long, inordinate and unreasonable, is in my view not sufficient to ground the defence of laches. Nor is abandonment relied upon or proved.
137. Mr Lam, drawing an analogy from the approach applicable to limitation defences under the Limitation Ordinance, submits that there should in effect be a cut‑off line drawn on the date when the Writ was issued, and as D’s loss of mental capacity occurred after that, D’s case based on laches is unsustainable.
138. I am not convinced that there should be such a hard and fast cut‑off line. Laches operate differently from the limitation regime under the Limitation Ordinance. As explained in Halsbury’s Laws of Hong Kong, Vol 37, §245.130, which Ms Law relies on, in respect of for example a claim within the scope of section 20(1)(b), although there is no applicable limitation period, the equitable doctrine of laches may still bar the plaintiff from his action.
139. In respect of that cut‑off line, Mr Lam relies further on Re Jarvis [1958] 1 WLR 815 at §819. I am not persuaded that Jarvis establishes that. Even in respect of the part of the claim concerning the lease which Upjohn J rejected the defence of laches, the learned judge observed that post-writ delay could be relevant where the court is asked to exercise a discretionary remedy. In the present case, P does seek a declaration, which is a discretionary remedy.
140. However, principally for the reasons set out in §134 above, on balance, and had I answered Issue 1 in P’s favour, I would not be persuaded that it would be practically unjust to give P a remedy. The other way to put it is that I would not be persuaded that it would in all the circumstances be unconscionable for P to be permitted to assert its beneficial right.
L. Disposition
141. For the reasons set out above, I dismiss P’s claim, and allow D’s counterclaim.
142. I make the following Order:
(a) P’s claim be dismissed;
(b) There be a Declaration that D is the legal and beneficial owner of the Property since 20 November 1985;
(c) P shall deliver vacant possession of the Property within 56 days from the date hereof;
(d) P shall pay mesne profits for the period from 7 September 2016 until the delivery of vacant possession of the Property in the sum of HK$120,000 per month[64]; and
(e) there be an order nisi that there be interest on these mesne profits at 1% above the best lending rate of HSBC from 7 September 2016 until the date of this judgment, and thereafter at the judgment rate until full payment.
143. On costs, I make a costs order nisi that P shall bear the costs of and occasioned by the claim and counterclaim, to be taxed if not agreed.
144. Unless an application is made in the meantime, all orders nisi shall become absolute 14 days after the handing down of this judgment.
| | (Keith Yeung)
|
| | Judge of the Court of First Instance |
| | High Court |
Mr Justin Lam, instructed by Charles Wong & Co, for the Plaintiff
Ms Deanna Law, instructed by Alex To & Co Solicitors, for the Defendant
[1] [C/500].
[2] See the affirmation of Gunawan Gunadi of 30 December 2014 filed in support of an application for P’s restoration, at §11 [C/497].
[3] P says since purchase, whilst D says since about 1985 or 86.
[4] [C/664-681].
[5] [C/682-689].
[6] [C/695-711].
[7] [C/712-718].
[8] [C/719-749].
[9] See §5(b) of the Amended Statement of Agreed Facts.
[10] §25 of Ms Law’s written opening.
[11] See §5(c) of the Amended Statement of Agreed Facts.
[12] §§15 and 16 of D/WS1.
[13] [2021] HKCFI 122.
[14] [C/824-828].
[15] [C/757-823].
[16] §14 of GG/WS2.
[17] §16 of GG/WS1.
[18] At [B2/486].
[19] The briefcase was inspected in Court. It has two 3-dial combination locks.
[20] §7.2 of her written closing.
[21] Section C.1 of her written closing.
[22] §11(iii) of GG/WS1.
[23] §15 of GG/WS2.
[24] §7 of GG/WS3.
[25] §10 GG/WS1.
[26] 18% vs more than 50% according to GG’s own case (§4 of GG/WS1).
[27] §§10 to 11 of D/WS1.
[28] §12 of GG/WS1.
[29] §8 of GG/WS2.
[30] §16 of D/WS1.
[31] §17 of D/WS1.
[32] §6(3) of D/WS2.
[33] §6 of GG/WS3.
[34] §15 of GG/WS1.
[35] §11(iv) of GG/WS1.
[36] §92 of her written closing.
[37] §16 of GG/WS2.
[38] §18 of GG/WS1.
[39] See for example §17 of GG/WS2.
[40] Whereby he first disclosed the 3 Disputed Documents.
[41] §7 of D/WS2.
[42] §5 of GG/WS3.
[43] Also at §5.
[44] §49 of her written closing.
[45] §13 of GG/WS2.
[46] §9(4) of D/WS2.
[47] §41 of D/WS1.
[48] §15 of D/WS1.
[49] At §§50-089–50-090.
[50] of the Limitation Act 1980, which is equivalent to section 20 of Limitation Ordinance.
[51] And see also Tan Chin Hoon v Tan Choo Suan [2015] SGHC 306 at §§247-251.
[52] Which include Timmerton Co Inc v Equity Trustee Ltd[2015] 1 HKLRD 247, per Chu JA at §15, Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400, per Millet LJ at 408j‑409a, and Peconic Industrial Development Ltd v Lau Kwok Fai (2009) 12 HKCFAR 139, per Lord Hoffmann NPJ at §19.
[53] Related to this point is Mr Law’s submission that P’s case in the ASOC is based on failure of consideration. I refer to P’s AR&DC, wherein P has made clear that its case is based inter alia on voluntary transfer and trust — see §3(h) thereof.
[54] At §§41-43 of his written closing.
[55] At §§50-089–50-090, ibid.
[56] §§100.3 to 100.5 of her written opening.
[57] §100.6 of her written opening.
[58] At section H of his written closing.
[59] [2020] HKCFI 2460.
[60] See my 2nd Ruling delivered on 8 January 2021 [2021] HKCFI 122.
[61] §14(d) of his supplemental written opening.
[62] At §14(d) of his supplemental written opening.
[63] §55 of his written closing.
[64] Both the commencement date and the amount per month are agreed — see joint letter of 10 March 2017 at [C/754-755].