Common intention constructive trust or resulting trust?

In Liu Wai Keung v Liu Wai Man ([2013] HKEC 1567, CFI) property had been bought as a family home. Title went into the name of the daughter of the family but the payments associated with its purchase and the repayment of the mortgage came from the elder brother. The elder brother claimed that the sister held the property on trust for him absolutely. The property had been sold and he claimed the proceeds of sale.

Both common intention constructive trust and resulting trust were pleaded but the court took the view that where the plaintiff was going to rely on evidence of an actual agreement / intention then the case should be thought of as one of common intention constructive trust ([45]). The relevant principles concerning the common intention constructive trust are set out ([44] – [50]).

The court found that there had been an express agreement at the time of acquisition that the flat would be paid for and beneficially owned by the elder brother. His payments provided the necessary detrimental reliance ([113]).

The brother had asked for title to be assigned to him in 1998 or 1999. The sister claimed that the action was time-barred (Limitation Ordinance, s. 20). This failed:

‘It seems to me it would defeat the very purpose of trusts if a trustee could plead limitation of action against the beneficiary where the trustee still has the legal title but where the beneficiary has been in beneficial enjoyment of the trust property for over six years.’ (Godfrey Lam J at [127]).

The brother was entitled to the proceeds of sale.

Michael Lower

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