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PROPERTY LAW — District Court dismisses claim for entire beneficial interest in property and allows counterclaim for order for sale

In Tse Dao Chuen v Cheung Wai Yan formerly known as Cheung Suet Ngor [2021] HKDC 399, the Plaintiff acquired property as joint tenants with his goddaughter, the Defendant, who did not contribute to the purchase price. The District Court rejected the Plaintiff’s claim that the Defendant held the property on trust for him after allegedly breaching a condition of the acquisition. The Court ruled that the Plaintiff gave the Defendant a beneficial interest in the property as an absolute and unconditional gift. Andrew Lau acted for the successful Defendant.

Photo by Tomáš Malík from Pexels

The District Court dismissed the Plaintiff’s claim for the entire beneficial interest in a property (“Property”) on the basis that the evidence did not support his pleaded case of common intention constructive trust and/or resulting trust. The Court allowed the Defendant’s counterclaim for a declaration that she is a beneficial owner of the Property and an order that the Property be sold pursuant to section 6(1) of the Partition Ordinance (Cap. 252) (“PO”).

Background

The Plaintiff is a 93-year-old retired pastor and has been the Defendant’s godfather since July 2002. The Defendant is presently a full-time pastor.

On 8 January 2004, the parties purchased the Property as joint tenants. It is undisputed that the Defendant did not contribute to the purchase price. What is in dispute, however, are the circumstances surrounding the said purchase.

Before commencing the present action, the Plaintiff unilaterally executed a Notice of Severance on 10 March 2017, and thus, the parties currently hold the Property as tenants-in-common in equal shares.

The Parties’ Cases

According to the Plaintiff, the Property was purchased under their joint names on the condition that the Defendant accepted his proposal (“Proposal”) that the Defendant would promise to take care of and look after him when he was unable to do so during his lifetime and arrange a funeral service for him after he passed away (“Promise”). The Plaintiff further alleged that, since the Defendant failed to honour the Promise after his heart operation in about June 2015, the Defendant was holding her beneficial interest in the Property on common intention constructive trust and/or resulting trust for him.

The Defendant argued that the Proposal and the Promise never existed, and thus, her beneficial interest in the Property was an absolute gift not subject to any condition. She also counterclaimed for a declaration that she is a beneficial owner of the Property and an order that the Property be sold pursuant to section 6(1) of the PO.

The District Court’s Ruling

The key issue is whether the Plaintiff, at the time of the acquisition of the Property, gave the Defendant her share of the beneficial interest in the Property as an absolute gift or as a conditional gift (Judgment §9).

In preferring the Defendant’s evidence over the Plaintiff’s, HHJ Kent Yee held that the Plaintiff had intense feelings for the Defendant, treating her as his natural daughter and being willing to give her unreserved financial support (Judgment §38). In view of their relationship, it was improbable that he made the Proposal and required her to make the Promise (Judgment §39). Moreover, the Plaintiff’s account of events markedly differed from his pleaded case, while the Defendant appeared to be forthcoming and truthful in her testimony and gave a far more probable account (Judgment §39 and §41).

The following matters also reinforced the Court’s belief that the Plaintiff indeed intended to give the beneficial interest in the Property as an absolute gift to the Defendant free of conditions:

• After acquiring the Property, the Plaintiff continued to make unconditional gifts to the Defendant and her family (Judgment §47).

• Since his heart operation in June 2015, the Plaintiff remained socially active and on good terms with the Defendant despite having allegedly breached the Promise. He never indicated to her that he could not take care of himself, nor required to her to fulfil the Promise (Judgment §§48-50).

• The Plaintiff never mentioned the Proposal and the Promise in any of his personal letters and subsequent legal correspondence to the Defendant (Judgment §§51 and 53).

• Most importantly, the Notice of Severance amounted to the Plaintiff’s unequivocal recognition of the Defendant’s beneficial interest in the Property. There is no reason why he would still accept her beneficial interest if she had allegedly breached the Promise (Judgment §52).

Since the parties are equal beneficial owners of the Property, the Court held that it is not fair for the Defendant to be locked in the unhappy co-ownership of the Property, but accepted that the Plaintiff may suffer certain hardship if he is ordered to leave the Property in his twilight years (Judgment §61). Upon the Defendant’s invitation, the Court agreed to grant an order for sale of the Property not less than 6 months after the Plaintiff’s passing (Judgment §64).

Representation:

Andrew Lau, instructed by Paul Yau and Michael Chak of Tam, Pun & Yipp, acted for the successful Defendant.


Andrew Lau

   
Andrew is a Charles Ching Scholar who joined Chambers in 2018. He has experience in areas such as commercial disputes, company/insolvency, construction, equity/trusts, probate, personal injuries and public law.

Andrew’s notable cases include 陳基裘 v. 香港政府警務處 [2020] HKCFI 2882 and Yeung Tsz Chun v. Commissioner of Police [2020] HKCFI 2882, where the Court held that the failure of the police to display unique identification numbers violated the Hong Kong Bill of Rights (led by Martin Lee SC and with Jeffrey Tam), and Tian Tian v Cao Ji [2019] HKDC 197, where Andrew successfully obtained a Mareva injunction in the cyber-fraud context.

Court work aside, Andrew teaches administrative law at the Chinese University of Hong Kong and media law at the Hong Kong Baptist University.

Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photograph which appears in this article is included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related.