Chan Hin v Estate of Chen Bai Dyi (deceased) [2026] 3 HKLRD 1056, [2026] HKCA 1295 (Sanjay A Sakhrani)
Sanjay A Sakhrani and Wayne Hariman represented the 1st and 2nd defendants in Chan Hin v Estate of Chen Bai Dyi (deceased) [2026] 3 HKLRD 1056, [2026] HKCA 1295.
P was D1’s niece and D2 was D1’s daughter. In around 1988, an unincorporated business (L) was formed. The ownership of L was in dispute. P said that L was her own sole proprietorship business, by relying on a business registration certificate issued in the 1990s which stated the status of the business to be a sole proprietorship. D1 said that L was an equal partnership between D1 and P, with reliance on a handwritten agreement dated 1990 apparently signed by P and D1 (the Agreement). In 1991, P and D1 acquired a flat (the Property) as tenants in common in equal shares. All the funds used to purchase the Property, including the mortgage loan repayments, were generated from L until about the end of 2002 after L was terminated. The dispute in this case was whether the Property was beneficially owned entirely by P as she claimed. It was P’s case that an agreement or common intention was formed orally with D1 in 1991 that P would be the sole owner and D1 would have no beneficial interest in the Property; and further, that P solely contributed to the purchase price and all related disbursements. P claimed that on such basis, D1 held the Property on a common intention constructive trust or resulting trust for her. Ds denied P’s claim and counterclaimed for an account of all rent received by P for the Property and an order for payment of the sum due with interest. The Judge accepted D’s case and found that L was a partnership. He dismissed P’s action and gave judgment for Ds on their counterclaim. P appealed on various grounds.
Held, dismissing the appeal, that:
(1) The Judge did not make any mistake about the burden of proof, as argued by P. He was correct in proceeding on the basis that the overall legal burden lay on P to prove that the beneficial ownership was different from the legal ownership. Although the Judge did not use the phrase “evidential burden”, he clearly reasoned on the basis that the partnership was something that needed to be proved. Ultimately, having considered the evidence, the Judge positively found it more likely than not that L was a partnership. (See paras.30-33.)
(2) On the issue of the authenticity of the Agreement, at trial P had never raised any positive case of forgery, and had put Ds to strict proof of the Agreement. Whilst P had made clear that any allegation of forgery (which had been included in the list of agreed issues lodged with the Court) was withdrawn, it remained an issue for Ds to prove that the Agreement was genuine. The references in the judgment below to the withdrawal of the authenticity issue were therefore strictly speaking inaccurate, but it did not appear that the authenticity had been admitted by P. The Judge expressly considered the authenticity issue and decided that the Agreement was genuine. The mistake about the scope of the withdrawal did not lead to further errors in the Judge’s analysis either. There was no material error in the Judge’s finding, nor anything plainly wrong for the Judge to reject P’s evidence (Club Deluxe Ltd v Club Metropolitan Ltd [1995] 2 HKLR 69, Nina Kung v Wang Din Shin (2005) 8 HKCFAR 387, Hu Lan v David Golden [2024] 1 HKLRD 1252 considered). (See paras.35-40.)
(3) P’s contention that the Judge first came to the conclusion that L was a partnership before considering all the other material evidence against that conclusion was rejected. The judgment below should be read as a composite whole, without elevating form over substance. The Judge did consider the factors raised by P against L being a partnership, but rejected the relevant arguments. P had not demonstrated any error that entitled the Court of Appeal to intervene. Unless the finding of the Judge was shown to be vitiated by some material error or otherwise plainly wrong, it was not for this Court to weigh up the evidence again and make its own finding (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336, Cleare v Attorney General [2017] UKPC 38, Cheung Yuk Ying Engracia v MacGregor Isabella [2023] 3 HKLRD 164, Ho Yat Wah v Chung Hang Him [2024] HKCA 378 applied). (See paras.28, 42-44.)
(4) Nor had the Judge erred by failing to consider P’s alternative claim on the basis of resulting trust. Given that it was common ground that the money used to acquire the Property came from L, and since the Judge found L to be an equal partnership, P’s case of resulting trust did not get off the ground because she did not prove that the purchase monies entirely came from or belonged to her. It might also be noted that the mortgage loan was borrowed in joint names. (See paras.45-46.)
(5) The Judge was correct to preclude P from making the point that the Property must be treated as a partnership asset and that Ds’ counterclaim for an account and sum due in relation to the Property was time-barred and was unsustainable in law. Contrary to O.18 r.7(1) of the Rules of the High Court (Cap.4A, Sub.Leg.), P failed to plead the material fact that the Property was partnership property. Nor did the list of agreed issues raise for determination the question whether the Property was partnership property. The agreed fact was that the Property was bought with money “generated from” L’s business, not money “belonging to” L. Whether the profits used belonged to L or should be treated as having been divided and belonging to the partners individually was never investigated, because the matter was not raised. (See paras.47-53.)
(6) (Obiter) There was no argument relating to the basis of Ds’ counterclaim which seemed to be one for an occupation rent as between co-owners. The outcome in this case should not be taken as detracting from the principles that unity of possession precluded such claims otherwise than in cases of ouster or where an operative agreement rendered the co-owner in occupation an agent or bailiff so as to come under a duty to account to the other, and that the receipt of rents and profits by one co-owner did not in itself operate as an ouster of another co-owner (Cheung Lai Mui v Cheung Wai Shing (2021) 24 HKCFAR 116 considered). (See para.54.)
[The above is excerpted from the headnote to the report in HKLRD.]
