When is one co-owner who collected rent liable to account to the other?

Where one co-owner collects rents the mere fact of being co-owners does not give rise to a liability to account to the other co-owner(s). A liability to account to the other for the latter’s share arises where the former is the agent or bailiff of the latter. It can also arise in partition actions (or actions that are equivalent), administration actions, in other cases where there is a fund in court, where the court makes an order for sale as an alternative to partition or where one party claims an interest under a resulting or constructive trust and the court is asked to quantify that interest (paras. 103 – 105).

Where one co-owner collects the other’s share of rent, it is possible to imply an agency. It is also possible (depending on the context) that this agent holds the rents collected on a ‘real’ constructive trust so that there is no limitation period in respect of the claim by the agent for the rents received (see Limitation Ordinance, s. 20).

In Chen Yu Tsui v Tong Kui Kwong ([2005] HKEC 1679, CA) property was held by two brothers as tenants in common in equal shares. One brother (the defendant) collected all the rents and after a time stopped accounting to the other (the plaintiff’s deceased husband) for his share of the rents. The plaintiff brought an action to recover the rents. It was held that there was a duty to account in this case  since the defendant had impliedly acted as his brother’s agent (paras. 111 – 112). The action was not time-barred. This was a ‘real’ constructive trust to which section 20(1) of the Limitation ordinance applied (para. 123).

Michael Lower

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