The meaning of ‘alienation’

(Overturned by the CFA). An agreement giving rise to a common intention constructive trust is an alienation (eg for the purposes of section 17B(1) of the Housing Ordinance) even if entered into before the relevant property had been acquired.

In Ling Wing Fai Billy v Ling Shui Fai ([2010] 6 HKC 434, CA) the defendants were a married couple. They agreed with the husband’s mother (and brother and sister-in-law) that if their application for a flat from the Hong Kong Housing Authority were successful then they would all contribute to the mortgage installments and the mother would provide the deposit. In return, the beneficial ownership of the flat would be shared between them. The principal question was whether this was an unlawful ‘alienation’ for the purposes of section 17B(1) of the Housing Ordinance.

It was argued that an alienation requires a positive act while the beneficial interests here arose by operation of law. This was rejected. The defendants had engaged in positive acts (the agreement itself, using the money received to make the relevant payments and allowing the other family members to live in the flat and make contributions as agreed). The fact that the interests had arisen by operation of law did not mean that they were not the result of these positive acts (para. 26). The Court of Appeal referred to the description of ‘alienation’ in Re A Solicitor ([2000] HKCU 1003, CA): an alienation was described as the creation and grant of rights over property impinging upon the most important features of ownership.

This was an alienation. It did not matter that the arrangement was entered into before the flat had been acquired (para. 30). The fact that the arrangement was one made between family members was irrelevant (para. 32).

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