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HCA 1106/2011
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1106 OF 2011
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BETWEEN
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LIU WAI KEUNG (廖衛強) |
Plaintiff |
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and
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LIU WAI MAN (廖衛民) now known as LIU HIU NAM VIKKI (廖曉嵐) |
Defendant |
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| Before: Hon G Lam J in Court |
| Dates of Hearing: 16-19 and 22-23 April 2013 |
| Date of Judgment: 30 September 2013 |
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J U D G M E N T
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INTRODUCTION
1. The plaintiff and the defendant are a brother and sister aged 58 and 57 respectively. The defendant was the registered owner of a property, namely, Flat D9 on 6th Floor, Kut Cheong Mansion, 217 Tsat Tsz Mui Road, North Point, Hong Kong (“the Property”), until it was sold earlier this year for redevelopment. By this action, the plaintiff seeks a declaration that the defendant held the Property and now holds its net sale proceeds on trust for him absolutely.
COMMON GROUND
2. The family of the plaintiff and defendant was one of modest means. Their parents had worked for many years as minor staff (with the mother being a janitor) in Pui Kiu Middle School, which I shall call “the school”. They had three children including the plaintiff, the defendant and a younger son. Initially the family lived in staff quarters inside the school in Happy Valley.
3. The plaintiff started working in 1972 after graduating from the school. Later he studied radio technology and obtained professional qualification as a radio officer. The defendant began her first job in the Sheung Shui branch of the Kwangtung Provincial Bank (which I shall call “the bank”) in December 1974. The plaintiff changed his job and became a seaman (radio officer) in April 1977.
4. The mother retired from her job in 1976. She had a chronic liver illness and by the late 1970s, if not before, she was in poor health.
5. Towards the end of the 1970s, it was rumoured among the school staff that the school campus would be redeveloped into residential property, the school would be relocated, and there would be no staff quarters at the new campus.
6. The father retired from his job in the school in about August 1980. Also in around 1980, the family moved out of the staff quarters inside the school campus to certain premises situated beneath a flyover immediately outside the school entrance.
7. In April 1981, the mother died suddenly of head injury after a fall at home.
8. The Property was purchased in mid 1981 in the name of the defendant with the help of a mortgage loan from the bank, where the defendant was an employee. Specifically, in around June 1981, an agreement was entered into in the name of the defendant to purchase the Property for the price of $295,000. A sum of $28,500 was paid to the solicitors, Messrs. Philip K H Wong & Co, on 29 June 1981 for making a part payment to the vendors. It is probable that $1,000 had been paid earlier, perhaps when the preliminary agreement was signed, which together with the sum of $28,500 amounted to 10% of the total purchase price. The source of that money is in dispute. Because of the long lapse of time no bank records could be found showing the source and movement of funds.
9. The assignment to the defendant was dated 27 July 1981 and so was the mortgage deed. The mortgage loan drawn down was in the sum of $235,000. An additional sum of $39,980 was paid to the solicitors on 20 July 1981 which, it can be inferred, was for payment of the balance of the price to the vendors and to cover the expenses of the purchase. Again, the source of this sum of $39,980 is in dispute.
10. The Property was a flat slightly over 400 square feet in size with two bedrooms. It became the family home for the plaintiff, the defendant, their younger brother Liu Wai Kong and their father.
11. The mortgage loan was initially advanced on preferential terms available to staff of the bank. It was for the duration of 20 years and at a concessionary interest rate. The monthly repayment instalments up to around October 1983 were paid on the 22nd day of each month by automatic transfer from the defendant’s account with the bank. The source of such money in the defendant’s account is in dispute.
12. At the end of October 1983, the defendant left her employment with the bank. On 14 November 1983 she went to the United Kingdom to further her studies. As a result, the preferential mortgage loan terms would no longer be available, and a deed of variation of the mortgage was entered into (which, though dated 18 November 1983, was signed by the defendant before she left Hong Kong). This stated that the term of the loan would be reduced to 10 years and interest would be charged at 16.5% p.a. On this basis the monthly repayment instalment would steeply increase to around $4,000.
13. An early partial repayment of the mortgage loan was made on 22 November 1983 in the sum of $106,234.07, which reduced the outstanding amount of the loan to the sum of $110,000. The monthly repayment instalments were reduced to about $2,000. From then onwards until the mortgage loan was fully repaid in 1991, the monthly repayment instalments were paid by automatic transfer from the father’s account with the bank. The precise source of such money is in dispute.
14. In July 1987, the plaintiff quit being a seaman and returned to Hong Kong permanently, and began living in the Property on a long-term basis.
15. In late 1987, the defendant returned to Hong Kong after completing her studies in the United Kingdom and lived in the Property.
16. In 1989, the plaintiff married his wife, who moved in to live in the Property with him.
17. In May 1990, the defendant gave birth to a son. She and her son continued to live in the Property.
18. In 1990 or 1991, the younger brother moved out of the Property to live with his then girl friend and her family.
19. On 22 July 1991, the mortgage loan was fully repaid.
20. In July 1992, the plaintiff’s wife gave birth to a son in Canada. Before they returned to Hong Kong, the defendant moved out of the Property with her young son to live in a rented suite.
21. Thereafter the plaintiff’s own family lived in the Property with his father, who passed away in 1998. The plaintiff, his wife and their children lived in the Property until 2012.
22. In 1997, the defendant bought a flat in her own name in Hoi Kwong Street, Quarry Bay. She let this flat out and moved to live in another rented apartment.
23. In December 2005, a property agent wrote to all the owners of units in the building in which the Property is situated about the potential of the building for redevelopment.
24. In 2006, the defendant took steps to obtain a formal release of the mortgage on the Property. In August 2006, the bank executed a formal discharge of the mortgage.
25. The plaintiff issued the writ in this action on 4 July 2011.
26. In February 2012, the developer who had acquired a majority interest in the building applied to the Lands Tribunal for an order for the compulsory sale of the building. By an agreement between the plaintiff, the defendant and the developer, which was completed in April 2013, the Property was sold and assigned to the developer. These proceedings have therefore become a contest for the right to receive the proceeds of that sale.
THE PARTIES’ RESPECTIVE CASES
The plaintiff’s case
27. In this section I shall briefly outline the parties’ respective contentions. The plaintiff’s case is that, right at the outset when he started working, as a responsible eldest son, he would hand over the bulk of his income to his mother. She told him she would save up the surplus for him after meeting household expenses, for his future use in getting married and buying a property. The mother also stressed that she wanted to live with him.
28. The plaintiff says that when he embarked upon a career as seaman (working as radio officer on ocean-going vessels) in April 1977, he achieved a substantial increase in his income. His wages in those days compared favourably with those of other jobs. (For example, the plaintiff was paid $2,700 per month when he worked on the Oceanic Liberty in 1977 and $4,700 per month when working on the “Energy Courage” in 1980, while the defendant earned $2,000 to $2,500 a month as a bank officer in 1979.) The plaintiff continued to pay a large portion of his income to his mother.
29. During his career as a seaman, the plaintiff would typically only return to Hong Kong once or twice a year, each time for a couple of weeks. While he was at sea, he maintained contact with his family through brief long distance telephone conversations and through a radio which he had installed at home.
30. Starting from about 1978, there were rumours that the school’s existing campus would be acquired by developers and that the new campus to which the school would move would comprise no staff quarters. In September 1979 when the plaintiff returned to Hong Kong, these rumours were confirmed. It was decided and agreed among the plaintiff, his parents and the defendant that the plaintiff would fund the purchase of a property for the new family home, using the preferential staff’s mortgage terms available to the defendant who was by then working in the bank.
31. There were discussions about this subject again when the plaintiff returned to Hong Kong in August 1980. By then, the money that he and his mother had saved up for the purchase of property amounted to about $80,000 to $90,000.
32. The plaintiff says that it was the common understanding of the family that although it was to be the family home, the property to be acquired would belong to the plaintiff as he was the one who would be funding the purchase.
33. In July 1981, the father informed the plaintiff, who was at sea, that a flat...
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