GP Muttrie J
The plaintiff is the younger sister and the defendant is the widow of one Vincent Ma who died intestate on 28 June 1996. The defendant was appointed to represent the estate of Mr Ma for the purpose of this action, by order dated 8 April 2002.
Mr Ma was the sole proprietor of a chemical company, Johnson Trading (“Johnson”). According to the plaintiff, he had a mistress, Madam Yuen Wai Chun. The relationship is disputed, but it does not matter. In any event Madam Yuen was the registered owner of a flat at Allway Gardens, Tsuen WanSince about July 1995, the plaintiff, the defendant and their mother all lived in that flat, but then in early 1996, they all moved to a rented flat in Boundary Street, Mong Kok. The plaintiff says that there was an oral agreement that the parties should equally bear the cost of the rent and household expenses of the latter flat, which were $36,000 per month, and there was an implied term of that agreement that it should continue for as long as the tenancy agreement remained in force.
Mr Ma suffered a stroke at the end of March 1996 and was admitted to hospital. He remained in hospital until his death. The plaintiff says that he paid his share of the rent and expenses for the first two months, but nothing thereafter. She could not afford to stay in the flat at Boundary Street, so she terminated the tenancy at the end of December 1996.
Now the plaintiff claims $162,000, being the share of the rent and expenses due by the plaintiff, or his estate, up to the end of December 1996; $435,000, a loan made to Mr Ma at his request in February 1996; and $750,944.71, in respect of operating expenses of Johnson which she paid on Mr Ma’s behalf and on his request, while he was in hospital.
The defendant puts the plaintiff to strict proof of the oral agreement regarding the rent and expenses of the flat at Boundary Street. Alternatively, she says that Mr Ma was unable to give consent to any such agreement; or that it was a pure family arrangement with no intention to create a legal relationship.
The fact of the payment of $435,000 is not disputed but the defendant says that it was not a loan; it was a repayment to Mr Ma of money advanced by him to the plaintiff in 1999, to enable her to buy a property at City Gardens, Electric Road, Hong Kong (“the City Gardens property”). The plaintiff sold that property in January 1996 and repaid Mr Ma.
As to the operation of Johnson, the defendant says that the plaintiff intermeddled with the business and its accounts without the authorisation, consent or knowledge of Mr Ma, and she depleted and damaged the business from March 1996 until Mr Ma’s death. The defendant counterclaims for an account.
The defendant further says that the property at Allway Gardens was actually held on trust by Madam Yuen for Mr Ma as beneficial owner. That property was sold in 1996 for $2,500,000. Madam Yuen paid the deposit of $250,000 and the balance of $2,250,000 to the plaintiff. The defendant counterclaims for the total sale price.
The defendant further counterclaims for US$275,000 which she claims that Mr Ma lent to the plaintiff to buy a property in Beijing. She also counterclaims for the refund of the sale proceeds of the City Gardens property.
The plaintiff admits receiving $250,000 from Madam Yuen but says that she repaid it to Madam Yuen and the defendant’s son Allan Ma. She denies receiving the balance. She denies the averments of the defendant regarding the Beijing and City Gardens properties.
This is an unfortunate case, which arises out of a dispute between family members after a death in the family. It often happens. Evidence came only from the plaintiff and the defendant. Unfortunately, the defendant had little real knowledge of what had transpired between the plaintiff and her late husband. He, his wife and son had emigrated to Australia in the late 1980s. The defendant and the son thereafter spent most of their time in Australia, while Mr Ma himself spent most of his time in Hong Kong. Perhaps for this reason, the defendant has relied largely on conjecture in support of her counterclaim, and on attacking the plaintiff’s case.
The plaintiff was formerly employed by Cathay Pacific Airways Ltd. She says that when she left the company in 1998, she was the Manager, Corporate Design earning $50,000 per month.
In 1988, the plaintiff rented a company flat from Cathay Pacific at a very low rent. She lived at that time with her parents, and had a maid to take care of them. At this stage, she paid for everything, but Mr Ma contributed pocket money of $3,000 per month for the parents.
In 1990, according to the plaintiff, she decided to buy a flat. She and Mr Ma decided that she should acquire a flat with three bedrooms, for the upkeep of the parents. The company housing loan which she could obtain was not enough to cover the purchase and she was short of $400,000. She says that Mr Ma agreed to pay her a lump sum of $400,000 as his contribution to the parents’ future living expenses. With his knowledge and consent, this sum was used for the down payment on the City Gardens property. Thereafter, the plaintiff paid the mortgage repayments, and for the maid and also the household expenses. Mr Ma only paid for unexpected expenses such as the medical expenses of the parents.
The plaintiff says that in about 1995, Mr Ma’s health was deteriorating and he suggested that the plaintiff, their mother (their father by this time having died) and her maid should move in with him at the Allway Gardens property. As far as she knew, this property belonged to Madam Yuen. Thereafter the plaintiff paid for the maid’s wages and the household expenses and Mr Ma paid for the utilities.
In November 1995, the plaintiff mortgaged the City Gardens property. She paid off her company housing loan and also bought a house in Beijing. Mr Ma and Madam Yuen were also buying houses in the same development in Beijing. The plaintiff through her solicitors paid the balance remaining after paying off the housing loan to Mr Ma so that he could pay for the plaintiff’s property in Beijing on her behalf. She did not borrow money from her brother for the purchase of this property.
The plaintiff’s claim for rent and expenses
In early 1996, the plaintiff and Mr Ma, whose health was deteriorating, decided to move out of Allway Gardens. They moved to a flat in Boundary Street. According to the plaintiff, it was agreed that she and her brother would contribute equally to the rents, maid’s wages, utility bills, and food and sundries, totalling $36,000 per month. In other words, each had to pay $18,000 per month. Mr Ma paid his share of $18,000 per month for the two months before he suffered his stroke.
The plaintiff says that she would not have rented this flat for herself and her mother. She did not need such a large flat. Also, she could not afford it. After Mr Ma died, she had to get out of the lease before the “break lease” clause became effective and she had to pay a penalty in order to do so.
The defendant, it appears, has no real knowledge about this arrangement and cannot give any factual evidence about it. It was put to the plaintiff that the arrangement was a purely family arrangement and not intended to be legally binding. She never admitted that, although she agreed that it was morally binding. She agreed that it was a normal family arrangement.
Ms Lam for the defendant contends that the arrangement was simply a continuation of the previous family arrangements for taking care, first of the father and mother, and then of the mother. It was simply a matter of moral obligation. There was no written agreement; and further the lease was in the name of the plaintiff and not in joint names.
Of course, a family arrangement to look after aged parents may never be intended as a legal contract. The parties may never intend to enter into a legal relationship. Very often that is what happens. Where that happens, the courts will not enforce the agreement. See Balfour v. Balfour  2 KB 571. But there is no presumption that this must be so, simply because the agreement is within the family. The intention of the parties is a question of fact and to be inferred from the terms of the agreement and the surrounding facts and circumstances. See Parker v. Clark  1 WLR 286 and Tanner v. Tanner  1 WLR 1346.
Here the agreement was for the benefit of the plaintiff and Mr Ma as well as their mother. Mr Ma lived in the flat. He occupied a room, be it the master bedroom or, as the defendant says, something smaller. It does not matter. I accept that the plaintiff would not have rented that flat, if Mr Ma had not intended to occupy it as well; that she could not afford it (on her salary of $50,000 per month) and she did not need that much space. She relied on the agreement, to her own detriment.
The plaintiff seemed to me to be a perfectly straightforward witness. There is no direct evidence to contradict what she says. I have no doubt from her evidence as well as the surrounding facts and circumstances that she and Mr Ma intended their agreement to be legally binding. I accept that it is obvious that there would have been an implied term that the agreement would last as long as the lease lasted. Mr Ma was liable to pay his share and his estate continued to be liable after his death. This head of the plaintiff’s claim succeeds.
The loan of $435,000
The plaintiff says that when she sold the City Gardens property, it was for a price of $5,350,000. She received an initial deposit of $100,000 and a further deposit of $435,000 to make up the 10% deposit. Before the Chinese New Year in 1996, Mr Ma asked her to lend him some money to pay off his suppliers; so she lent him the latter sum.
The defendant’s case is that this payment, which is not disputed, represents a repayment of the sum of $400,000, which the plaintiff put down on the City Gardens property. It was not a contribution to the maintenance of the parents, but a loan; and the plaintiff was paying it back, with interest.
Needless to say, the plaintiff in cross-examination did not accept this. The defendant had no direct evidence to support her contention. Indeed, it appeared in her witness statements, which she adopted, as a mere suspicion. She says that Mr Ma could have borrowed the money, if he needed a loan, from his bank, or alternatively he could have asked her and she would have lent it to him. But the simple fact is that, as appears from the account statement, Mr Ma’s money was held on a fixed deposit in the kind of account which permits an overdraft up to a percentage of the fixed deposit. If he had taken an overdraft, he would have had to pay interest. If he had asked his wife, she was in Australia. His sister and her money were on hand, and the loan was interest free.
Again, the plaintiff was quite straightforward. There is no factual evidence to contradict what she says. It was suggested that a note she wrote of her claim, in which she showed an entry of $435,000 described as “Loan from (crossed out) to Vincent at February” casts doubt on her evidence. I cannot see that it does. I accept her evidence. I am satisfied that she lent Mr Ma $435,000 at his request, and his estate must repay the sum. This head of claim also succeeds.
The payments totalling $750,944.71 for Johnson Trading
The plaintiff’s evidence is that when Mr Ma was in hospital, he was unable to sign cheques on his company’s bank account. He asked her to put up money to run the company for him, and intended to repay her when he recovered. This she did.
The defendant’s case is quite simply that there was no agreement, and could be no agreement between the plaintiff and Mr Ma for her to make these payments on his behalf. He was simply too sick to make such an agreement.
There seems to be no dispute that the payments were actually made. The plaintiff has produced bank statements, and various vouchers in support. She was cross-examined at some length as to whether, before making the payments, she had checked that they were really due by Johnson. There seems to be some dispute over the wages of one employee, who, according to the defendant, was formerly working part-time, but was brought back full-time by the plaintiff. This, of course, the plaintiff denies. She admits that she did not check any of the contracts, orders and the like but simply made payments in respect of invoices handed to her by the staff of the company.
I have already indicated in the course of the hearing that the issue here is whether or not there was an agreement between the plaintiff and Mr Ma which would bind him and his estate to repay the money laid out by her on his behalf. If there was some such agreement, it would not be realistic to say that it must have involved some term that required her, at her own risk, to verify the correctness of the demands before meeting them. She would not be some sort of guarantor. The most that can be expected of her would be to do as she did, namely pay the bills that the staff told her were due for payment.
There was also some dispute about the payment of rates and a gas bill for the property at all Allway Gardens. It is suggested that this should not have been paid, because it was not Mr Ma’s property. But, as will be seen, the defendant is saying that he was the beneficial owner, even though Madam Yuen held the title. Also, the evidence is that he paid the utility bills when he and the plaintiff lived at the property. Obviously, if there was an agreement and these bills were outstanding, it would be right and proper for the plaintiff to pay them.
It is common cause that Mr Ma suffered a stroke. He also suffered a head injury, probably from falling. He had surgery to the brain. There is a medical report which is not accepted as expert evidence, for there is no direction allowing for such evidence to be adduced, but it is accepted for the facts contained in it. It shows, and the parties agree that Mr Ma was admitted to hospital on 31 March 1996. He had a severe head injury. He underwent an emergency operation for that injury on 31 March 1996. In fact the parties agree that the operation lasted for some 10 hours. After that, he was kept in the intensive care unit. He had a tracheotomy on 10 April 1996 to help his breathing. He suffered cardiac arrest on 23 April and 30 April 1996 and a further tracheotomy on 20 May 1996. He was paralysed on the right side.
The parties agree that Mr Ma could never speak properly after his stroke. According to the plaintiff, he could communicate by gestures and body language. Indeed, the defendant agrees that by late April he could communicate well enough to indicate to her that he wanted to cut the various tubes which were attached to him. He did not want to live any longer.
The defendant and her son were called to come from Australia when Mr Ma was admitted to hospital. She arrived on the evening of 31 March 1996 while her husband was still undergoing the operation. Thereafter, she says, she remained with him each day for about 10 hours, until some time in May, when had to go back to Australia to look after her son who had been left alone to start his first year at university and who was getting into trouble there.
The plaintiff in oral evidence says that Mr Ma’s staff contacted her and asked her what to do about paying the outstanding bills of the business. She went and asked Mr Ma. He was able to communicate with her sufficiently, by body language and in answer to what she said to him, to indicate that he wanted her to pay the bills for him.
There is some uncertainty in the plaintiff’s evidence as to when this happened. In further and better particulars, the plaintiff stated that it was after Mr Ma’s admission to hospital. In cross-examination, she said it was one or two weeks after he was admitted. She agreed that in the first two weeks, his condition was unstable and that he was sometimes conscious and sometimes not.
The defendant’s evidence about Mr Ma’s condition is that he was pretty much unconscious until about the end of April. It was towards the end of April, after his cardiac arrest, that he had gestured to her to cut his tubes. She was unable to say that the plaintiff had never asked Mr Ma what he wanted to be done about his cheques. She admitted that she knew that the plaintiff was signing cheques for the business while Mr Ma was in hospital. But it appears from the defendant’s evidence that she was there nearly all the time, while the plaintiff was there very little of the time, that she is saying that the plaintiff would have had little chance to communicate with Mr Ma as she says. In fact her story changed somewhat in the course of cross-examination. At first, her evidence was that Mr Ma was unable to communicate, but this later changed to a suggestion that he was unwilling to communicate with the plaintiff. This had never been suggested to the plaintiff in cross-examination.
There is some evidence about a power of attorney which Mr Ma executed on 7 June 1996. The plaintiff said that this was necessary because the bank would not accept her authority. Indeed, she had had to open a separate account on one occasion in order to deal with a letter of credit on behalf of the business. The power of attorney was drawn up by a solicitor and executed by Mr Ma’s making his mark on it in the presence of a witness. The execution was postponed from an earlier date when Mr Ma was not well enough. Of course this was long after the time when, according to the plaintiff, she reached the agreement with him but the fact of its postponement indicates that it is most unlikely that any attempt was being made to exercise undue influence over Mr Ma. The fact that the power was executed also indicates that Mr Ma continued to have the intention that the plaintiff should act for him.
There is obviously no dispute that Mr Ma was able to communicate from about three weeks after he was admitted to hospital. There is some dispute as to whether he could do that in the first two weeks. The plaintiff paid the first cheques on 15 April, about two weeks after his admission.
There is no direct or specific evidence to contradict the plaintiff. Having heard her and the defendant, I prefer her evidence where there is a conflict. I believe her evidence that she made the agreement with Mr Ma that she should pay his business expenses on his behalf, within the first two weeks of his admission to hospital and some time before she issued the first cheque which, it appears, was put through her account on 15 April.
It is, of course, argued that it would not, in any event, matter if the agreement had been made after the first cheques were issued; the effect of the agreement would cover all the payments. I accept this. Mr Chan for the plaintiff also argued, as a fall-back position, that even if there had been no agreement because Mr Ma was physically or mentally incapable of making it, the law would raise an implied contract, as in the situation where money is expended for the necessary protection of a lunatic and his estate; see Williams v. Wentworth (1842) 5 Beav. 325. I think this must be right. If a person expends money on behalf of another, there will be a right of recovery, whether by reason of an implied contract or the presumption of a loan, or there will be an equitable remedy. That was, however, not pleaded; to rely on any implied contract by operation of law, it would at least have been necessary to plead the alternative factual situation, so that the defendant would know that she faced such an alternative case. But it does not matter, because I am satisfied that there was an agreement.
I have not yet considered the question of the counterclaim for intermeddling. I will do so below. I do not think I need to consider the two issues together, because it would be quite possible for a person, who had agreed to expend money on behalf of another, to go beyond the agreement. If that happened, that might be issues of set-off or counterclaim but it would not mean that the original agreement was never made.
For these reasons, I find that the third head of claim by the plaintiff succeeds.
I turn to the counterclaim. There are four heads. First there is the claim for an account; then that the claim for refund of the sale proceeds of the City Gardens property; then the refund of the sale proceeds of the Allway Gardens property; and lastly the claim for refund of the purchase price of the property in Beijing.
Intermeddling — the account
The defendant’s evidence is very sketchy indeed. In her witness statement, she says that she found out after the death of Mr Ma that the plaintiff had begun to make orders on behalf of his firm and that it was indebted to its suppliers for more than $1.7 million. In oral evidence, she said that she and Mr Ma had agreed in 1995 that he would run down the business and retire. When she arrived in Hong Kong after Mr Ma’s admission to hospital, she said that she would fold up the business, but the plaintiff disagreed with her and said that it should be kept running, and that she would not let Mr Ma have nothing when he came out of hospital. They had an argument about this. She then said that she did not object to the plaintiff paying the rent, staff salaries and utilities but she disagreed with the plaintiff ordering and paying and sending shipments to China.
The defendant then said that she had found in the office, after the death of Mr Ma, a lot of pending bills for orders placed in the last three months. She had made the supplier file a court claim against the estate for $1.7 million. She had seen a schedule of these outstanding bills, whether in the hands of the representatives of the supplier, or attached to the Statement of Claim in those proceedings or both I am not clear.
Objection was taken to this line of evidence, for the obvious reason that it went far outside the ambit of the witness statement and further because no discovery had ever been given of the documents referred to. Obviously, although this evidence has come out, little weight can be attached to it. It may be that, in the last three months of operation, the existing employees kept the company running and made further purchases of raw materials. There is some support for this in the evidence of the plaintiff explaining why she signed cheques for large sums to petty cash; she said that the cash was needed to pay for chemical ingredients to be bought locally, to mix with chemicals already ordered. But even if this happened, it would not necessarily follow that the plaintiff intermeddled or in some way acted so as to become liable to account for the operation of the business. Her own evidence is that she had no intention or desire to run the business; she had a high-powered job in design, and knew absolutely nothing about chemicals. This, to me, has the ring of truth.
There really is insufficient evidence to support the claim that the plaintiff intermeddled in Mr Ma’s business and this head of the counterclaim must fail.
The City Gardens property
On the defendant’s own case, there is simply no basis for this claim. What she says, and I have not accepted it, is that Mr Ma lent the plaintiff $400,000 towards the purchase of this property. Even if that were true, it would not have entitled him to any claim on the property. If he had made a contribution which gave rise to a resulting or constructive trust that would be a different matter, but that has never been suggested. This head of claim fails.
The Allway Gardens property
Again, the evidence is sketchy and conjectural, and attempts were made to bolster it by going outwith the ambit of the witness statement. There really is nothing in the witness statement about this property, although it is averred in the Amended Defence and Counterclaim that Madam Yuen acknowledged that she was holding the property on trust, and promised to repay Mr Ma the full sale proceeds when she sold the property in 1996. After the sale, Madam Yuen paid the deposit for the sale of the Allway Gardens property, i.e. $250,000 to the plaintiff as the plaintiff admitted to the defendant, and the balance of the sale proceeds in the total sum of $2,250,000 had also been paid to the plaintiff.
In evidence, the defendant could only say that she did not know what had happened to the proceeds of the sale.
There are some handwritten documents relating to this matter, which the defendant apparently found after Mr Ma’s death. They bear to be signed by Madam Yuen and dated 13 May 1995. In the first one, she acknowledges that she borrowed RMB 2 million from Mr Ma and used the Allway Gardens property to secure the loan. In the second, she states that she is unable to repay the loan and unconditionally assigns the property to Mr Ma.
It is the evidence of the plaintiff that, so far as she knew, the property belonged to Madam Yuen. It was only later that she came to know of the documents, after Mr Ma had died. When Madam Yuen sold the property in May 1996, $250,000 was lent to the plaintiff for the operating costs of the business of Mr Ma. She paid $170,000 to Madam Yuen in the latter half of 1996 and, at Madam Yuen’s request, she paid $80,000 to Allan Ma, the son of Mr Ma and the defendant. She did not receive the rest of the sale proceeds.
The plaintiff has produced bank records to show remittances to Madam Yuen and Allan Ma. I accept her evidence that this is how she dealt with the money she received. There is no evidence that she ever received the balance, and she says she did not receive it. This head of claim also fails.
The Beijing property
Again, this is based on guesswork, and the fact that Mr Ma paid the purchase price of this property in Beijing.
The plaintiff’s explanation is that this was done for convenience. The price was US$179,500. When she mortgaged the City Gardens property and paid off her company housing loan, she instructed her solicitors to pay the balance of $1,514,441.13 to Mr Ma so that he could pay for the Beijing house on her behalf. The solicitors drew a cheque in favour of Mr Ma. Copies of the completion statement, her instructions to the solicitor, the cheque and the receipt are all in evidence. After paying for the house, there was a small balance left, some of which was applied towards utility deposits, stamp duty and lawyers fees, and the balance was repaid to the plaintiff. The cheque for this repayment has been produced.
There is simply nothing to support the averment that Mr Ma lent the plaintiff money to buy the Beijing property. Her explanation is clear, and supported by documents. This head of the counterclaim also fails.
There will be judgment in favour of the plaintiff for $1,347,944.71 with interest at prime rate plus 1% from the date of the Writ until the date of judgment and thereafter at the judgment rate; and costs to be taxed if not agreed.
The defendant’s counterclaim is dismissed with costs to the plaintiff to be taxed if not agreed.
The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.
Mr Jeremy S.K. Chan, instructed by Messrs Johnson, Stokes & Master, for the Plaintiff.
Miss Yanky Lam, instructed by Messrs Chung, Fong & Co., for the Defendant.
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