Is v. Hdsy
Read the full judgment text of FCMC 13532/2015 on BabelCite. This Family Court judgment was delivered on 30 June 2020 before HH Judge C.K. Chan.
Matrimonial causes – beneficial ownership – constructive trust – resulting trust – presumption of advancement – Hong Kong Property – Canadian Property – express agreement not proven – purchase price payment disputed – presumption of advancement rebuts resulting trust – Husband holds 1/3 share in Hong Kong Property and 1/2 share in Canadian Property – Wife awarded 70% costs
Legal issues: Express agreement for common intention constructive trust · Payment of purchase price · Presumption of advancement vs resulting trust
Outcome: Husband holds beneficial shares in Hong Kong and Canadian properties; no beneficial title in PRC property.
Cited by 1 case · Cites 11 cases
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FCMC 13532/2015 [2020] HKFC 131 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 13532 OF 2015 ------------------------
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----------------------- J U D G M E N T ------------------------ Preliminary Issue 1.This is a trial of a preliminary issue on the beneficial ownership of the following properties:
2.It was the Husband’s case that he only held the above 2 properties and a third property at 深圳市龙华新区潜龙曼海宁花园（南区）1栋5Ｃ（” the PRC Property” ）on trust for his parents, namely HF and HM. The Petitioner (“the Wife”) disputed such contention and therefore, a trial on the beneficial ownership of those properties became necessary. However, at the first day of trial and in the parties’ Agreed List of Disputed Issues, the Wife withdrew her objection in respect of the PRC Property and only insisted on a trial on the beneficial ownership of the Hong Kong Property and the Canadian Property. Hence, the following discussion will focus on the Hong Kong Property and the Canadian Property only. Background 3.The parties were married on 19 May 2012 and they had no children born from this marriage. 4.The Wife issued a petition for divorce based on behaviour in 2015, the particulars of which were later amended in July 2016. The Husband decided not to defend and a decree nisi was granted on 11 January 2017. The Wife was at one stage acting in person and that might explain why there was still no application for a decree absolute in these proceedings. 5.As far as ancillary relief was concerned, the parties had attended several First Appointments during which the assets owned by the Husband became the focus of argument. There was no dispute that there were 3 properties (namely, the Hong Kong Property, the Canadian Property and the PRC Property) registered under his name either solely or jointly with one or both of his parents, i.e. HF and HM. The Husband’s case that he only held those properties as a trustee for HF and HM was disputed by the Wife. As a result, HF and HM were joined as interveners so that their interests in the properties, if any, could be determined once and for all. Pleadings were ordered and a trial was fixed for the determination of the preliminary issue on the properties’ beneficial ownership. 6.The trial on preliminary issue was heard over a period of 4 days, starting in December 2018 and ending on 2 May 2019. At the first day of trial, the Wife conceded on the PRC Property, accepting that the Husband was only holding such property as a trustee for the parents. Therefore, only the Hong Kong Property and the Canadian Property required a determination of this court on their beneficial ownership. After the completion of the evidence and final submissions, judgment was then reserved which I now give. Pleadings Points of Claims of the Husband, HF and HM 7.The Points of Claims of the Husband, HF and HM can be summarized as follows:
Preliminary Comments 8.Before I proceed to consider the Wife’s Points of Defence, I would like to make a preliminary observation on the Husband and the parents’ pleadings. 9.It is common ground that for both the Hong Kong Property and the Canadian Property, the Husband is a registered joint owner thereof either with HF and HM (the Hong Kong Property) or just with HM (the Canadian Property). It was never their case that the Husband was holding those 2 properties as registered sole owner. Therefore, when the Husband or the parents pleaded that the Husband was holding “the Hong Kong Property” and “the Canadian Property” on trust for the parents, I am prepared to accept that they actually meant that the Husband was holding only “his joint title and share” in the Hong Kong Property and the Canadian Property on trust, but not the entirety of those 2 properties. The Wife’s Points of Defence 10.The Wife had filed a 15-page Points of Defence which was in a totally unsatisfactory form. A substantial part of the narrative was either unrelated to the preliminary issue or were merely submissions on why the other parties’ evidence should not be accepted. If one should read her witness statement (Bundle 2/pp.73-88), one would notice that the Wife had simply repeated her Points of Defence therein. Doing the best as I could, the Wife’s pleadings would be summarized as follows:
Points of Reply 11.The Husband and the parents have filed a Reply mainly pointing out the drafting deficiencies in the Wife’s Points of Defence. The contents of the Reply will not be repeated here as they were not conducive to defining the proper issues to be tried. Issues 12.Based on the parties’ pleadings, these are the issues to be determined by this court:
The Legal Principles 13.The joint case of the Husband and the parents is that the Husband was only holding the Hong Kong Property and the Canadian Property on either a common intention constructive trust or resulting trust for the parents. The burden of proof rests squarely on the Husband and the parents to prove on a balance of probabilities that such was indeed the case:Stack v Dowden [2007] 2 AC 432 at §§56, 68. 14.The law on constructive/resulting trust are well settled and I would gratefully adopt a succinct summary of those principles by Madam Recorder Winnie Tam SC in a recent case of Chin Nai Man v Chin Yat Keung Alex [2020] HKCFI 403 at §§10-15:
15.The principles on resulting trust can also be found in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708A‑D, in which Lord Browne‑Wilkinson set out the law in these terms:
Was there an express agreement on beneficial interest? 16.Before I embark on an assessment of the evidence, I would remind myself that the burden is on the Husband and the parents to prove on a balance of probabilities that the Husband was indeed holding his interests in the Hong Kong Property and the Canadian Property on trust for the parents. Therefore, the following discussion will be mainly centred on the evidence of the Husband and the parents, instead of the Wife. After all, as one would see from the Wife’s witness statement, there was very little positive evidence therein as far the issues of common intention constructive trust/resulting trust were concerned. The only relevant evidence was given at cross examination when the Wife testified that she was verbally informed by the Husband of his ownership in the Canadian Property and the Hong Kong Property. There was nothing in support except her own words. The evidence of the Husband and the Parents 17.The Husband and the parents have all filed and served their respective witness statement, the contents of which were largely in line with their pleadings. I do not intend to repeat them in the following discussion unless they are relevant to my decision on whether a case of common intention constructive trust or resulting trust has been established. Discussion 18.According to the Husband and the parents, as far as the Hong Kong Property is concerned, both HF and HM wanted to buy an investment property in Hong Kong in 2010 with their entire life savings. As they would like to entrust the management and documentation of the Hong Kong Property to the Husband, they decided to add him as one of the joint owners. In order not to cause any misunderstanding, HF and HM had expressly told the Husband that he would only hold the property on their behalf and the 1/3 share in his name was not a gift from them either. The Husband said he was fully aware of this and that he did not have any beneficial interest in the property. According to the parents, they had also explained this to the 2 sisters in order not to stir up any family dispute. 19.A similar arrangement applies to the purchase of the Canadian Property in 2000. At that time, both FH and HM wanted to buy a property for the family in Canada, but only the Husband and HM were physically there at the time. As HM was not proficient in the English language, she needed the Husband to assist in communicating with the vendor and in the translation of the sale and purchase documents. Hence, the parents wanted the Husband to represent HF and sign the sale and purchase agreement jointly with HM. In order to avoid future family dispute, the parents had explained the arrangement to the Husband and his 2 sisters. The Husband was fully aware that he was only holding the Canadian Property as a trustee and did not have any beneficial interest therein. 20.Although in Ms. Au (counsel for the Husband)’s final submissions, she has made reference to “tacit understanding” reaching between the Husband and the parents, it is quite clear that their case is one of common intention constructive trust based on express agreement, but not tacit understanding. Ms. Au has also alluded to the presumption of resulting trust (§38 of her final submissions) relying on the payment of the purchase price by the parents. Declarations in the Mortgage Deeds 21.Before I move on to assess the Husband and the parents’ evidence in more details, it is noted that during the course of trial, the mortgage deeds of the Hong Kong Property were produced. There is no dispute that in the said deeds, the Husband and the parents charged the Hong Kong Property to the mortgagee bank as “beneficial owners” in order to secure the mortgage loans. 22.In this regard, I was referred by Ms. Au to Deputy District Judge Grace Chan (as HH Judge Grace Chan then was)’s observation in TSC v KWH & Ors [2016] HKFLR 215, at §89, to which I agree:
Equally, I am not prepared to place too much weight on these rather standard conveyancing terms in determining the beneficial ownership of the Hong Kong Property. Assessment of the Husband and the Parents’ Evidence 23.In assessing the credibility of the Husband and the parents’ evidence, I am of the view that the following aspects of their evidence require a critical analysis. 24.First, I note that apart from the Husband, HF and HM’s own evidence on their express agreement of a common intention constructive trust, there was no other independent corroborating evidence in support. Despite the claim that the Husband’s 2 sisters were all informed of this arrangement, there was no attempt to call them to give evidence. 25.Second, the Husband was the only male descendant of the family who had decided to live with his parents even after his marriage to the Wife. The fact that his name was added as one of the joint owners of the Hong Kong Property under such circumstances can also be consistent with the notion of a gift from a pair of loving parents to their only son who was already in his late 30s and has decided to stay with them even after marriage. If the court does not accept the Husband’s case of common intention constructive trust at the end of the day, the presumption of advancement may well come into play. 26.Third, it is common ground that after marriage, the Wife and the Husband lived in the Hong Kong Property as their matrimonial home. There was no explanation from the parents why they did not expressly tell the Wife that the Husband had no beneficial interest therein, in the same way as they had expressly told the Husband and the 2 sisters previously. 27.Fourth, despite the Husband and the parents’ evidence that all the purchase money for the Hong Kong Property was paid by the parents, there is indisputable evidence that most, if not all of the initial deposit and later all the mortgage repayments were paid out of a joint bank account in the names of the Husband, HF and HM. There was no direct evidence on the source of funds in the joint account, except the Husband’s claim that he was employed by HF’s company at the time and only had monthly income of no more than $10,000. According to him, all the moneys in the joint bank account had to belong to HF and HM. Again, this aspect of his evidence is also lack of corroboration, apart from the oral evidence of the parents. 28.I also find it strange that if the Husband was indeed employed by HF’s company, why there was no documentary record of his income. There were no salary slips, company ledgers or bank entries recording such salary payments. When the Husband was cross examined in court about his income of $10,000, he said the payments were made in cash. 29.Even more strangely is the fact that despite the Husband’s claim of such a low income, there were securities trading in his sole bank account involving amounts well above his monthly income of $10,000. If one should look at the bank statements of his sole bank account at Chiyu Bank, for instance, the account statement dated 31 October 2015 (Bundle 4/ p.335), the Husband had cash deposit of HK$15,170.11 and securities worth of HK$305,600. More interestingly, there was an item called「綜合理財總值」 in the sum of HK$1,137,908.03, of which the Husband failed to give any explanation. He did mention that his sister had lent him money to make the investments. Again, they were his own words only. Under these circumstances, I do not accept the Husband’s evidence that he only had monthly salary of $10,000 at the time of purchase of the Hong Kong Property. I also do not accept that the funds in the joint bank account were all from the parents. Therefore, I reject the Husband and the parents’ claim that all the purchase money of the Hong Kong Property was paid by the parents. 30.Fifth, according to the Husband, his name was added as a joint owner because his parents wanted to delegate the management of the Hong Kong Property to him. There was no explanation on why that could not be achieved by way of giving him a power of attorney or other authorization documents. When he was asked this question during cross examination, the Husband simply said it was not necessary for him to answer. 31.When HF was asked of the same question, he stated for the first time that it was the staff of the mortgagee bank (Chiyu Bank) suggested that the Husband’s name to be added to the Hong Kong Property. I note that HF was a long time business client of Chiyu Bank. There was no attempt to call the bank staff who gave this advice to testify. He also failed to explain why the advice of the bank staff was needed when, according to himself, he had already done this before in 2000 when the Husband’s name was added to the Canadian Property. Furthermore, it is noted that HF’s evidence changed course further down the cross examination, when he stated that he had consulted nobody on adding the Husband’s name, which was clearly inconsistent with his previous testimony. 32.Sixth, there were also unexplained inconsistencies in their evidence, including:
33.After considering the Husband and the parents’ evidence as discussed above, I am not convinced that they have told me the whole truth of their finances and more importantly, on their express agreement that the Husband would hold his share in the Hong Kong Property on trust for the parents. Simply put, I do not accept that they are credible witnesses and therefore, their evidence on express agreement of a common intention constructive trust are rejected. 34.As to the submission of there being a tacit understanding that the Husband would hold on trust for the parents, I have explained in paragraph 20 above that the true basis of the Husband and the parents’ claim of a constructive trust is based on express agreement, there is actually no room for an argument of tacit understanding. Moreover, given that I was not satisfied that they were credible witnesses on their evidence on express agreement, I would have no hesitation in rejecting their claim on tacit understanding as well. 35.Although the deficiency in the Husband and the parents’ evidence mentioned above mainly concerns with the Hong Kong Property, I am afraid that their evidence was so tainted that I could not accept them as credible witnesses for their claim of an express agreement in respect of the Canadian Property as well. 36.As a result, I am not satisfied that the Husband and the parents have discharged their burden on proving, on a balance of probabilities, that the Husband was holding his 1/3 share in the Hong Kong Property and half share in the Canadian Property on common intention constructive trust for HF and HM. Did the Parents pay all the purchase price of the Hong Kong Property and the Canadian Property? 37.As discussed in paragraphs 27-29 above, most if not all of the purchase money and mortgage repayments were made from a joint bank account of the Husband, HF and HM. I have rejected the Husband and the parents’ evidence that all the money in the joint bank account belong to the parents. Hence, the Husband and the parents have failed to prove that all the purchase money of the Hong Kong Property was paid by the parents. 38.As far as the Canadian Property is concerned, the circumstances on its payment might be different. It is noted that the Canadian Property was purchased in 2000 after the family’ migration to Canada. Like many other Hong Kong families at the time, the breadwinner might stay behind in order to continue his/her employment or business endeavours. I accept that this was the case for the Husband’s family. After the family has obtained Canadian residency, HF and the 2 sisters returned to Hong Kong leaving the Husband and HM in Vancouver, Canada. 39.The Husband was aged 27 at the time. There is cogent evidence (Bundle 3/ p.145) to suggest that despite his age, he was still a full time student in Canada. I accept his evidence that he had no income at the time and therefore, any payment towards the purchase of the Canadian Property had to be made by the parents. Therefore, I accept the Husband and the parents’ evidence that all the purchase money for the Canadian Property was paid by HF and HM jointly. Resulting Trust in favour of the Parents? 40.As the Husband and the parents have failed to prove that all the purchase money for the Hong Kong Property was paid by the parents, their claim of a resulting trust of that property must fail. 41.On the other hand, the situation of the Canadian Property might warrant some further discussions. As indicated in paragraphs 38-39 above, I accept the Husband’s evidence that all the purchase money of the Canadian Property was indeed paid by the parents. Although I do not accept their evidence of an express agreement founding a common intention constructive trust of the Canadian Property, the presumption of resulting trust might apply based on the parents’ payment of the purchase price. However, the presumption of resulting trust itself may also be rebutted by another presumption, namely the presumption of advancement. 42.In this regard, Madam Justice Au-yeung has very succinctly summarised the relationship between the 2 presumptions in The Joint and Several Trustees of the Property of Yip Yam Yu Alex v Yip Yam Yu Alex and Another [2019] HKCFI 75, at §§35-42:
43.Coming back to the context of the present case. It is noted that at the time of the purchase of the Canadian Property, the Husband was no longer a minor (aged 27). However, according to him and which I accept, he was still a full time student staying with HM in Canada. It could be safely assumed that he was still relying on the financial support of the parents. Although the presumption of advancement is often referred to as a weak presumption, under the circumstances of the present case, I am satisfied that the presumption of advancement does apply and has successfully rebutted the presumption of a resulting trust in favour of the parents. Conclusions and Findings 44.Based on the above discussion, these are my findings:
Orders 45.Based on the above findings, I make the following orders in respect of the preliminary issue:
46.In the Points of Claims, the Husband and the parents asked for a Declaration on the beneficial interest of the 3 properties. I am not satisfied that I have the power to make such declarations. In any event, the determination on the preliminary issue is sufficient to dispose of the matter and there is no need to make such declarations in the present ancillary relief proceedings. Costs 47.Costs to follow event. The Wife succeeds substantially in this trial of preliminary issue and should have the costs of the proceedings. However, she has conceded on the PRC Property only on the first day of trial. This has to be reflected in the costs order. Therefore, I order that the Wife shall have 70% of the costs of preliminary issue, including all costs reserved, on a party and party basis payable by the Husband, HF and HM jointly and severally, to be taxed if not agreed. This will be in the form of an order nisi to be made absolute after the expiry of 14 days from the handing down of this Judgment. Way forward 48.After the conclusion of the preliminary issue trial, it is now time for the case to move forward. For this purpose, I now fix a First Appointment return date on 10 September 2020 at 11:00 am in Court No.2 with 30 minutes reserved and the following directions are given for the Husband and the Wife to:
49.The Wife is also reminded to deal with the main suit as soon as possible. 50.Last but not least, I thank both counsel for their assistance.
Representation: Ms. Lisa Wong of Messrs. K.K. Tsui & Co., solicitors for the Petitioner Ms. L. Au of Messrs. Nixon Peabody CWL, solicitors for the Respondent, 1st Intervener and 2nd Intervener |
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