Yuen Yat Shan Fiona v. Sit Hin Kau
Read the full judgment text of CACV 41/2005 on BabelCite. This Court of Appeal judgment was delivered on 28 October 2005 before Cheung JA, Tang JA, Lam J.
Civil appeal – resulting trust – property law – sub-sale agreement – plaintiff YUEN YAT SHAN FIONA (formerly known as YUEN CHUI KING) purchased uncompleted flat D, 36/F, Tower 9, Park Avenue, No.18 Hoi Ting Road, Kowloon from MTR Corporation Ltd under agreement dated 30 August 2000 for $4.452 million, partly financed by $1.2 million mortgage from American Express Bank – property market value dropped to between $3.9 million and $4.1 million by 2001 – plaintiff entered sub-sale agreement dated 7 June 2001 (following provisional agreement on or about 31 May 2001) with defendant SIT HIN KAU to sell property for $3.95 million – plaintiff acknowledged receipt of $2.67 million deposit and part payment in both provisional and sub-sale agreements – balance of purchase price to be paid by defendant to American Express Bank in discharge of mortgage – on same date, plaintiff gave irrevocable Power of Attorney to defendant effectively ceding all control over property – recital in Power of Attorney stated receipt of $2.67 million – defendant subsequently sold property for $3.9 million by agreement dated 16 June 2001 – common ground defendant did not pay $2.67 million to plaintiff – plaintiff's pleaded case was that defendant was required to redeem mortgage and pay HK$3,170,000 (deposit plus $500,000 interest) to plaintiff within one year of completion – plaintiff alleged agreement made partly orally in May 2001 between plaintiff and Ho Kar-lun Benson as agent for defendant – defendant's amended defence alleged set-off agreement whereby defendant's claim of $1.5 million against Ho's indebtedness was relinquished and defendant would lend further $1.17 million to Ho who would pay plaintiff instead – all expenses including legal expenses to be set off and deducted from purchase price – trial judge rejected plaintiff's evidence and accepted defendant's – no appeal from this finding – plaintiff raised resulting trust by late amendment at trial alleging defendant held property on resulting trust for plaintiff by operation of law and liable to account for HK$2,701,162.27 from net proceeds – whether resulting trust arose in plaintiff's favour – two categories of resulting trust per Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 – (A) voluntary payment to B or payment for purchase of property vested in B gives rise to presumption of resulting trust rebuttable by counter-presumption of advancement or direct evidence of intention to make outright transfer – Vandervell v IRC and In re Vandervell's Trusts (No. 2) – (B) transfer to B on express trusts not exhausting whole beneficial interest – Quistclose Investments – both types give effect to common intention – resulting trust gives effect to presumed intention, not imposed against trustee's intention – per Drake v Whipp [1966] 1 FLR 826, where sufficient evidence of actual intention at time of transaction exists, presumption of resulting trust has no room to operate – apparent inconsistency with Lewin On Trusts resolved – Lewin's observation that resulting trust may arise even where transferee unaware merely addresses transferee's liability not existence of trust – innocent receipt of property subject to existing equitable interest does not by itself make recipient a trustee absent requisite knowledge – In re Diplock and In re Montagu's Settlement Trusts – on facts, plaintiff intended to make outright transfer of all her interests to defendant – not presumed intention of either party that plaintiff should retain interest – trial judge's finding that plaintiff was looking to Ho for repayment meant no question of resulting trust could arise – appeal dismissed – order nisi that defendant have costs of appeal to be taxed if not agreed
Legal issues: Whether a resulting trust arose on transfer of property without payment by transferee
Outcome: Appeal dismissed
Cited by 19 cases · Cites 1 case
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CACV 41/2005 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 41 OF 2005 (ON APPEAL FROM HCA NO. 4038 OF 2002 AND HCA NO. 260 OF 2004 (CONSOLIDATED)) ______________ HCA 4038/2002 BETWEEN
______________ HCA 260/2004 AND BETWEEN
______________ (Consolidated pursuant to Order of Master Lung on 3rd April 2004)
Before: Hon Cheung, Tang JJA and Lam J in Court Date of Hearing: 20 October 2005 Date of Judgment: 28 October 2005 _______________ J U D G M E N T _______________ Hon Tang JA (giving the judgment of the Court): 1.By an agreement for sale and purchase dated 30 August 2000, made between MTR Corporation Ltd. and the plaintiff, the plaintiff agreed to purchase an uncompleted unit known as Flat D, 36/F, Tower 9, Park Avenue, No.18 Hoi Ting Road, Kowloon (“the property”), at a price of $4.452 million. The purchase was partly financed by a mortgage from the American Express Bank for $1.2 million. 2.Since the purchase, the market value of the property has dropped so that by 2001, the value was between $3.9 million and $4.1 million. 3.By a sub-sale agreement dated 7 June 2001 (following a provisional agreement made on or about 31 May 2001) made by the plaintiff as vendor and the defendant as purchaser, the property was sold by the plaintiff to the defendant for $3.95 million. In both the provisional agreement and the sub-sale agreement, she acknowledged receipt of a deposit and part payment in the sum of $2.67 million. The balance of the purchase price was to be paid by the defendant to the American Express Bank in discharge of the mortgage. 4.On the same date as the sub-sale agreement, 7 June 2001, the plaintiff also gave an irrevocable Power of Attorney to the defendant. By that irrevocable Power of Attorney, the plaintiff effectively ceded all control over the property to the defendant. In the irrevocable Power of Attorney, it was stated in the recital that she had received from the defendant the sum of $2.67 million being the money deposit and part payment of the purchase price. 5.Eventually, the defendant sold the property for $3.9 million by an agreement dated 16 June 2001. 6.It is common ground that the defendant did not pay the $2.67 million to the plaintiff. 7.It was the plaintiff’s pleaded case and that it was agreed that the defendant not only had to redeem the mortgage but he also had to pay HK$3,170,000 (being $2.67 million plus $500,000 interest) to the plaintiff within one year from the date of completion of such transfer of the property. It was also alleged that the agreement was made partly orally in or about May 2001 between the plaintiff and one Ho Kar-lun Benson (“Ho”) as agent for and on behalf of the defendant. 8.The defendant’s case as pleaded in para. 4 of the amended defence was that it was agreed between the defendant and Ho that the deposit of $2.67 million be paid as follows:
9.It was also agreed that all the expenses, including legal expenses, in the sale and purchase of the property should be set off and deducted from the purchase price. 10.At the trial, the plaintiff gave evidence. Her evidence was rejected by the judge. He accepted the evidence given by the defendant. There is no appeal from this. 11.However, by a late amendment at the trial, the plaintiff also relied on a resulting trust. It was alleged that the defendant held the property on a resulting trust for the plaintiff by operation of law, and that the defendant was liable to account to the plaintiff, from the net proceeds of sale, a sum of HK$2,701,162.27. 12.Mr Danny Ng, counsel for the plaintiff, submitted that since it is a common ground that no payment was made by the defendant to the plaintiff, a resulting trust would follow. 13.He submitted that although the judge rejected the plaintiff’s evidence, the judge was not entitled to hold that there was indeed a set-off agreement since there was no evidence of any direct agreement between the plaintiff and the defendant. 14.We do not agree. We are of the view that the judge was entitled on the facts which were found by him and having regard to the conduct of the plaintiff, to infer that the agreement was that she would look to Ho and not the defendant for payment. 15.This is what the judge said about resulting trust in para. 46 of his judgment:
We agree that having regard to the judge’s finding that the plaintiff was looking to Ho for the repayment of the money, no question of resulting trust could arise. 16.Ms Queenie Ng, counsel for the defendant has referred us to Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 and in particular to the speech of Lord Browne-Wilkinson at p. 708 where he said:
17.We are of the view that on the facts of this case, it is obvious that the plaintiff intended to make an outright transfer of all her interests to the defendant. In other words, it was not the presumed intention of either party that the plaintiff should retain any interest in the property. That being the case, no question of resulting trust can arise. 18.Mr Danny Ng submitted that there is an apparent conflict between what Lord Browne-Wilkinson said and the following passage from Lewin On Trusts (17th ed.) at para. 9-07:
19.There is in fact that no inconsistency. In that situation, the transferee is not a trustee, although the transferor is entitled to enforce his equitable interest against the property which has been transferred to the transferee. See per Lord Browne-Wilkinson at page 707:
20.Further, when there is sufficient evidence on actual intention at the time of the transaction, there is no room for the operation of presumption of resulting trust, see Drake v Whipp [1966] 1 FLR 826. In effect, the learned Judge found that the common intention of the parties at the time of the transfer was to effect an outright transfer from the plaintiff to the defendant. Given such intention shared by the plaintiff, the question of presumed intention does not arise. 21.For the above reasons, we dismiss the appeal. 22.We also make an order nisi that the defendant is to have the costs of the appeal to be taxed if not agreed.
Mr Danny P K Ng, instructed by Messrs George Tung, Jimmy Ng and Valent Tse, for the Plaintiff in HCA 4038/2002 and the Defendant in HCA 260/2004 (Appellant). Ms Queenie W S Ng, instructed by Messrs Terry Yeung and Lai, for the Defendant in HCA 4038/2002 and Plaintiff in HCA 260/2004 (Respondent). |
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