Whose house is it anyway? Hong Kong Court grapples with constructive and resulting trusts

In Cheung Hon Hung v Siu Wai Chun, the personal relationship between the plaintiff and the defendant had broken down, and they were in dispute over a property (the “Property”) in which they cohabited. The plaintiff claimed that he made payments in relation to the Property and has thus obtained some beneficial interest in it. The District Court held that the plaintiff had failed to adduce sufficient evidence to succeed in his claim.

Facts

The plaintiff and the defendant jointly occupied the Property, which was registered in the name of the defendant only. Many years later, the relationship between the plaintiff and the defendant turned sour and eventually came to an end when the plaintiff moved out of the Property.

Issues

The plaintiff claimed a share of the Property.  The Court had to decide whether there was any of:

1. a common intention constructive trust (i.e. the situation where two or more parties agree that a property would be beneficially shared between them); or
2. a resulting trust (i.e. a situation where the beneficial ownership in certain property does not pass to the legal owner either in part or in full);
3. a remedial constructive trust (i.e. the situation where the Court imposes a trust to cure unconscionable conduct).

Discussion

The Court found that the plaintiff did not contribute financially towards the Property. The Court described the plaintiff as ‘despicable’ and ‘calculative’, because he was found to have selectively disclosed documents which were favourable to his case while at the same time choosing to discard documents which may not have been helpful to his case. However, despite these nefarious efforts, he failed to produce a single document showing that he had in fact paid the deposit or any mortgage repayments relating to the Property.

On the other hand, the Court considered the defendant to be much more trustworthy and honest. The Court found that the defendant raised funds from her family members and friends and accepted that the defendant made the majority, if not all, the financial contributions towards the Property.

The Court held that the plaintiff failed to show that he had any beneficial interest in the Property at all and that the actual intention of the parties was clear; namely that the Property was purchased for the benefit of the defendant and her family.

As the deposit and monthly mortgage repayments all came from the defendant and her family, there was no resulting trust, common intention constructive trust or remedial constructive trust.

Given that the remedies sought were primarily equitable remedies, the behaviour of the parties was relevant to the Court's decision whether to award the relief sought.  The plaintiff's behaviour is most unlikely to have assisted his case.

If you wish to discuss, please contact Gareth Thomas or Richard Norridge of our Private Wealth and Trusts team.