Resulting trust, outright gift or conditional gift?

Tang Kim Kwan Patrick v Lee Chi Ting Karen ([2012] HKEC 918) (now partly overturned by the Court of Appeal) concerned four properties in Hong Kong. Three were purchased in the name of the defendant and one was in the joint names of the plaintiff and the defendant. The defendant, who had been the plaintiff’s mistress and had a child by him, had not provided any of the purchase price for any of the properties. She had been joined as a party to the mortgage of one of them but no weight was attached to this in the analysis since it was accepted that there was never any intention that she should be responsible for making any of the mortgage payments.

The relationship between the parties broke down and the plaintiff alleged that the properties were all held on resulting trust for him and, in one case, the company that he used for his property investment activities. In the case of two of the properties that were in the defendant’s sole name, the court found that there had been no intention to make a gift of the property. In the case of one of these, however, it found that there had been an intention to resell and to make a gift of a share of the proceeds of sale. The court held that this gift of a share of the proceeds of a future sale had been completed by putting the title to the property into the defendant’s name and, so, while she was ordered to convey the title to the plaintiff this was subject to her right to receive a share of the profits on any resale.

In the case of the third property in the defendant’s sole name, the presumption of a resulting trust was rebutted; the plaintiff had intended the property to be the source of financial security for the couple’s child.

Title to the fourth property was in the joint names of the plaintiff and the defendant as joint tenants.  The plaintiff accepted that he intended to make a gift of a half share in the property (this must be a share under an equitable tenancy in common) but contended that this gift was intended to be conditional on the defendant remaining faithful to him. The court decided that an unconditional gift of a half share was intended.

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