Read the full judgment text of HCB 1174/2019 on BabelCite. This Court of First Instance judgment was delivered on 16 July 2021 before Madam Recorder Yvonne Cheng SC.
Bankruptcy law – transactions at an undervalue – s.49 Bankruptcy Ordinance (Cap 6) – common intention constructive trust – resulting trust – transfer of property interest to spouse – matrimonial home – Flat 42H, Tower 5, The Belcher's, Pok Fu Lam – whether there was a common intention to share beneficial ownership of matrimonial home – whether Madam Kwok detrimentally relied on alleged common intention – whether Madam Kwok had a beneficial interest by way of resulting trust from payment of initial deposit – assessment of credibility of witnesses – weight of affirmation evidence where witness fails to attend for cross-examination – drawing of adverse inferences – Flat 42H purchased in October 2008 for HK$14,080,000, registered in Mr Yeung's sole name, with Madam Kwok paying the initial HK$704,000 deposit – Respondents alleged an express agreement due to objections of Mr Yeung's parents that Mr Yeung would hold the property in his name alone initially and add Madam Kwok as co-owner upon repayment of the mortgage – In November 2018, after mortgage repayment, Mr Yeung transferred 50% of his interest to Madam Kwok by way of a sale and purchase (stated consideration HK$14,625,000, not actually paid) – In 2019, Mr Yeung adjudged bankrupt following the collapse of the Coastal Oil Group – Court applied the test from Luo Xing Juan, Liu Wai Keung, Mo Ying and Primecredit, requiring common intention, detrimental reliance and unconscionability – Court found no common intention: the 2008 PSPA was signed by Mr Yeung alone, there was no contemporaneous record of any trust arrangement, no steps were taken to add Madam Kwok as co-owner for nearly a decade, the 2018 transfer documents were structured as a sale and purchase rather than giving effect to a pre-existing trust, and Mr Yeung did not attend court to be cross-examined – Court also rejected Madam Kwok's late-raised claim of a 1990 verbal agreement to share all assets as internally inconsistent and unsupported by Mr Yeung's statement of affairs – No detrimental reliance established – Presumption of resulting trust had no role to play and Madam Kwok had not advanced her payment of the deposit as intended to give her a specified percentage interest – Following Ding Yi v Lu Ying, the incoming value (nil) was significantly less than the outgoing value (50% of Flat 42H, valued at approximately HK$30.94m in March 2019) – Transfer declared a transaction at an undervalue and set aside – Costs ordered to be paid out of Mr Yeung's estate with certificate for two counsel.
Legal issues: Common intention constructive trust over Flat 42H · Detrimental reliance on alleged common intention · Resulting trust in favour of Madam Kwok
Outcome: The court declared that the November 2018 Transfer of 50% of Mr Yeung's interest in Flat 42H to Madam Kwok was a transaction at an undervalue within s.49(3)(c) of the Bankruptcy Ordinance (Cap 6), and ordered that the Transfer be set aside. The Trustees' claim succeeded in full.
Cited by 32 cases · Cites 4 cases