Constructive trust – common intention constructive trust – family home – not uncommon in context of Hong Kong Chinese family for parents to acquire property in name of child and yet retain control and beneficial ownership during their lifetime
H and W had five children. The youngest, S, was their only son. Their first flat was in W’s sole name. When it came to buying a second family flat (the “Property”), W’s evidence in an affirmation was that, as the first flat was in her name, she was not eligible for a Home Ownership Scheme and so the application was made in H and S’s name and there was a common intention “among the family” that the Property would only pass to S, as the only male descendant, when she and H had passed away. The purchase was funded by selling the first flat and taking out a bridging loan. H and W contributed to the mortgage repayments. H and S held the Property as joint tenants. S became the sole legal owner in 2012 upon H’s death. The Property was acquired when both H and W were in their 50s and it was their matrimonial home until H’s passing. W continued to reside there. Upon H’s passing, P then sought to enforce a charging order against S, in relation to an unrelated loan taken out by S, seeking vacant possession of the Property and an order for sale. At first instance W’s claim that she was a beneficial owner of the Property was rejected, finding inter alia that W’s evidence on common intention was nebulous. W appealed.
Held, allowing the appeal as W was a beneficial owner, that:
- (Per Kwan JA, Lam V-P and Cheung JA agreeing) A resulting trust had been made out. This case concerned a couple in their 50s with limited financial resources, who had spent a substantial part of their resources on the purchase of the Property as their matrimonial home, W being aged 51 at the time of the purchase could look forward to a number of years ahead, while S was only 21 at the time, had not completed his studies, nor was he married. Even allowing for the Chinese traditional thinking of leaving real property to the male descendant, this would likely happen on the demise of the parents, it would not be so likely for an immediate gift to be made to S in these circumstances.
Common intention constructive trust
- (Per Cheung JA, Lam V-P agreeing) The beneficial interest of W could also be asserted under the second limb of common intention constructive trust (objective inference from conduct of parties). Even where there was no express agreement between W and S, the intention of W at the time of acquisition, namely that she intended the Property to pass to S as the only male descendant after she and H had passed away, must be a relevant factor. The proper inference to be drawn was that W was the beneficial owner of the Property during her lifetime. There was nothing incredible or inherently improbable about such an intention particularly in the context of a Hong Kong Chinese family where it was not uncommon that parents acquired a property in the name of their children and yet retained control and beneficial ownership of the property during their lifetimes. More importantly, there was W’s financial contribution.
- (Per Lam V-P, Cheung JA agreeing) W had a beneficial interest based on constructive trust. The modern approach to constructive trusts was to assess the common intention of the parties by a holistic approach having regard to the context. In a domestic context, particularly in relation to a matrimonial home, the court was not constrained in that exercise by pure direct monetary contributions to the purchase price. In a Chinese setting, especially for the older generations where explicit discussions on property rights within the family was not that common, the court had to pay more regard to circumstantial matters.
- (Per Kwan JA, disagreeing) The Judge was entitled to take the view that the evidence on an arrangement or understanding reached among the three parties regarding common intention was so nebulous and vague that, on the balance of probabilities, there was no common intention.