Ip Man Shan, Henry v Ching Hing Construction Co Ltd

Judgment Date04 February 2005
CourtCourt of Appeal (Hong Kong)
Judgement NumberCACV183/2003
Subject MatterCivil Appeal
CACV000183/2003 IP MAN SHAN, HENRY v. CHING HING CONSTRUCTION CO LTD

cacv 183/2003 & CACV 184/2003

cacv 183/2003

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 183 of 2003

(on appeal from HCA NO. 3675 of 1985)

_________________________

BETWEEN

  IP MAN SHAN, HENRY Plaintiff
  and
  CHING HING CONSTRUCTION COMPANY LIMITED Defendant
(By Original Action)

AND BETWEEN

  CHING HING CONSTRUCTION COMPANY LIMITED Plaintiff
  and  
THE PERSONAL REPRESENTATIVES 1st Defendant
OF IP MAN SHAN, HENRY 2nd Defendant
IP TIN CHEE, ARNOLD
YIP MAN HOI MARION, 3rd Defendant
IP MAN SUM ROSEANNA and
IP MAN HING HENRIETTA,
EXECUTRICES OF THE ESTATE OF
IP CHING PING (Deceased)
(By Counterclaim)

_________________________

cacv 184/2003

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 184 of 2003

(on appeal from HCA NO. 11768 of 1995)

_________________________

BETWEEN

  IP TIN CHEE, ARNOLD Plaintiff
  and  
  CHING HING CONSTRUCTION 1st Defendant
COMPANY LIMITED
YIP MAN HOI MARION, 2nd Defendant
IP MAN SUM ROSEANNA and
IP MAN HING HENRIETTA,
EXECUTRICES OF THE ESTATE OF
IP CHING PING (Deceased)

_________________________

Before: Hon Rogers VP, Le Pichon JA and Sakhrani J in Court

Dates of Hearing: 18-19 January 2005

Date of Judgment: 19 January 2005

Date of Handing Down Reasons for Judgment: 4 February 2005

_________________________

REASONS FOR JUDGMENT

_________________________

Hon Rogers VP:

1. I agree with the reasons for judgment of Le Pichon JA.

Hon Le Pichon JA:

2. These are appeals from the orders of Deputy High Court Judge Lam (as he then was) dated 15 January 2003 made in HCA 3675 of 1985 (“the first action”) and HCA 11768 of 1995 (“the second action”). The first action was brought by the late Ip Man Shan, Henry (“Henry”) against Ching Hing Construction Company Ltd (“Ching Hing”) for possession of a property comprising a large family residence erected on Lot No. 1940 in S.D.2, Fei Ngo Shan. For convenience the land and the residence erected on it are hereinafter referred to as “the property”. Henry died in 1988. His executors executed an assent vesting the property in Henry’s son Arnold in 1995. The second action which was brought by Arnold against Ching Hing in 1995 was also for possession of the property. The judge dismissed both claims and also the counterclaims by Henry’s personal representatives and by Arnold in the first action. At the heart of this family litigation is the ownership of the property. At the conclusion of the hearing, the appeals were dismissed with costs with written reasons to be handed down later which we now do.

Background

3. Ching Hing is a construction company founded by the late Ip Ching Ping (“ICP”) and his wife, the late Madam Wong Miu Sim (“WMS”). ICP married WMS in 1931. They had two sons and five daughters. Three of the children, namely, Henry, Loretta and Sammy were born between 1931 and 1935. After a gap of 7 years, they had another four children, Roseanna, Maimie, Marion and Henrietta who were born between 1941 and 1947. At the time of his marriage, ICP was a clerk in the Public Works Department. It would appear that in the 1930s, ICP acquired a qualification in engineering and began to be engaged in the construction industry before the Second World War. For her part, WMS contributed substantially to the family wealth through her hard work and acumen as a property agent. The judge found ICP and WMS to have been self-made entrepreneurs. They acquired land which they developed and ICP operated a construction firm by the name of Ching Hing. From about 1944, the family lived in various properties which had been developed by Ching Hing. Typically, the family would occupy one storey of the building and the other storeys would be let out for rent.

4. By 1950, ICP and WMS had become active property developers with considerable accumulated wealth. They developed a property in Tai Po Road called Park Mansion and in about 1950 moved there, occupying the two units comprising the ground floor which had been converted into a single residence and leasing out the upper floors.

5. Ching Hing was incorporated in 1954. The shareholders were ICP, WMS and the 3 older children – Henry, Loretta and Sammy. Of the 150 issued shares, ICP and WMS were allotted 40 shares each and were the permanent directors. Together they held just over 53% of Ching Hing. Henry and Sammy were allotted 30 shares each and Loretta 10.

The facts

The property – acquisition of the land and subsequent construction

6. Henry who was the eldest of the seven children graduated from the University of London with a degree in engineering in 1957. He returned to Hong Kong in the latter part of that year. Prior to his return, ICP and WMS had taken the daughters and some relatives to visit a vacant site at Fei Ngo Shan and informed them that a new family residence would be built there although the land was yet to be acquired. This visit appeared to have taken place when the sons were still studying in England.

7. The auction of the land which was a vacant site took place on 14 November 1957. Henry had, by then, returned from England to live with the family at Park Mansion. He attended the auction with ICP. The land was successfully bid for. The memorandum of agreement dated 14 November 1957 was signed by Henry and witnessed by ICP. The premium of $121,000 was settled by a cheque issued by Ching Hing. On the same day, ICP deposited $121,000 into Ching Hing’s bank account.

8. The lease conditions contained a building covenant requiring that a sum of not less than $175,000 be expended on the erection of a building within 24 months such sum to exclude monies spent on site formation, foundations, access roads and other ancillary works. Special Condition 25 was in these terms:

“The Purchaser shall not be allowed to erect any buildings on the lot except one private dwelling house of not more than two storeys with outbuildings proper there to. The new lot and all structures thereon shall be used for private residential purposes only. No apartment development will be permitted.”

9. The construction of the property took a great deal longer than the two years allowed for under the lease conditions. Extensions had to be obtained from and penalties paid to government. The delays were largely due to the rejection of plans submitted as not complying with Special Condition 25. It was not until January 1963 that the plans were approved, the mansion comprising four separate wings or units. Building work was mainly undertaken in 1963 to 1964. The occupation permit was issued in February 1965. Ching Hing was involved in the project from inception: apart from issuing the cheque for the premium, it carried out the construction and the construction costs and related expenses totalling $1,014,566 were booked as Ching Hing’s expenses. The title deeds were retained by the parents and kept in their safe at the office of Ching Hing. Whilst the building was recorded as a fixed asset in Ching Hing’s books, the land cost was not included.

Events occurring between 1957 and 1965

10. Approximately 6 months after the acquisition of the land, on 23 May 1958, Henry granted a power of attorney in favour of his mother. WMS was authorised, inter alia, to build on, to take possession of, to manage, demise or let, to mortgage or charge, to sell and “… to convey or assign by way of gift …” the property as she should think fit. A more comprehensive set of powers would be difficult to devise.

11. A year later, Henry married Cecilia. At about the same time, on 1 June 1959, he started his own business – Henry Engineering & Construction Company. It will be convenient to digress at this point to mention Henry’s matrimonial home as from 1959. It changed several times. It was initially in Estoril Court and then in Henry’s Mansion which had been built by Ching Hing. Arnold was born in 1962 and around the time of his birth, Henry and his family moved to an upper unit in Park Mansion. Henry and his family never lived in the property at any time after it became habitable. Instead, in late 1965/early 1966 they moved to Brewin Court and lived there until 1972 when they moved to Grenville House. Henry and Cecilia divorced in 1980 after which Henry lived in Shouson Hill.

12. Returning to the events of 1959, it is to be noted that the younger daughters became shareholders of Ching Hing in April 1959. The shareholders thus comprised ICP, WMS and their seven children albeit that the shares allotted to the sons were double those allotted to the daughters. Henry was made a director of Ching Hing in May/June 1959.

13. Later the same year, Roseanna and Maimie were sent to study abroad, followed by Marion and then Henrietta. By September 1963, the four younger daughters were all studying in England.

The property as the family residence

14. As mentioned above, the family mansion consisted of four separate wings or units. ICP and WMS moved into unit B during the first half of 1965, shortly after the occupation permit was issued. This became the family residence. It was accepted that ICP intended the property to be occupied by members of his family. When the younger daughters returned during the summer holidays in 1965, they stayed with their parents in unit B except for Henrietta who stayed in unit C. When Sammy returned from London in late 1965/1966, he occupied unit C and did so until his death in November 1997. All 4 units have from time to time been occupied by members of the family.

15. At about the...

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