Wan Po Jun Mary Pauline v Au Yeung Yee Man
Court of Appeal
Civil Appeal No. 141 of 2016
Lam V-P, Yuen and Kwan JJA
11 November 2016

Proceedings by bankrupt – claim by bankrupt to right to occupy property base on constructive trust – whether right personal or whether vested in trustees under s. 58(1)

X, the deceased, bequeathed his estate including a flat (the “Property”) to his children, including D, his personal representative. P was X’s cohabitee whose action challenging X’s will was unsuccessful. When P failed to pay D’s costs in that action, she was made bankrupt in April 2011. However, before her bankruptcy, P commenced the present action claiming a half share of X’s estate, including an entitlement to occupy the Property. On P’s bankruptcy, her proprietary interests vested in the trustees in bankruptcy (“Ts”) and Ts declined to continue the claim. D obtained leave to pursue a counterclaim against P for possession of the Property. P filed a reply and defence to the counterclaim asserting a beneficial interest in X’s assets, including the Property, based on a common intention constructive trust and denied that X had given her and then terminated a licence to occupy the Property. P was discharged from bankruptcy in April 2015, but Ts stated that they did not assign to P the right of action still vested in them. However, Ts consented to P using the rights vested in them to defend the counterclaim. The Judge rejected P’s contention that the right to occupy the Property was a personal one and so not vested in Ts under s. 58(1) of the Bankruptcy Ordinance (Cap. 6) and concluded that because Ts had not assigned P’s alleged beneficial interest in the Property vested in them, P had no defence. He therefore struck out P’s defence to the counterclaim and entered judgment for D. P appealed.

Held, dismissing the appeal, that:

  • The right of occupation relied on by P was a right immediately referable to her interest as the beneficial owner of the Property. P’s claim was a present chose in action and, as such, vested in Ts under s. 58(1) of the Ordinance.
  • The issue was whether P had a defence, not whether she had locus standi. The right to defend could not be segregated from the beneficial interest in the Property and separately assigned by Ts to P. Here, as P did not plead any right to possession other than beneficial ownership arising from a constructive trust, the right to possession was merely incidental to the property right. There was no question of any personal right being engaged.
  • Further, given T’s refusal to proceed with P’s claim for beneficial ownership based on a constructive trust, it was not inequitable to disallow her achieving by the backdoor what she had failed to achieve in bankruptcy proceedings. P was bound by Ts’ view that her claim was unmeritorious. P had no right to assert the claim herself and had failed to advance any viable claim independent of Ts’ legal title to resist D’s claim for possession in the counterclaim.

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