Proving the common intention constructive trust

In Ip Man Shan Henry v Ching Hing Construction Co Ltd ([2003] 1 HKC 256, CFI) ICP paid for land but he channeled the payment through his company (Ching Hing). Ching Hing then paid the construction costs for the large family residence constructed on the land. Title to the land went into the name of ICP’s son, Henry. There was evidence to show that the common intention of ICP and Ching Hing was that the beneficial interest would be shared between them. Henry knew that he was merely nominee or trustee of the land. Thus, beneficial ownership of the property was shared between ICP and Ching Hing.

The court took a common intention constructive trust approach ([79]).

Johnson Lam J (then acting as a Deputy Judge) said that he thought Lord Bridge’s expression of the approach to proving the existence of the trust in Lloyds Bank v Rosset was too narrow:

‘I do not think that his Lordship intended to rule out completely the possibility of establishing common intention through conduct other than the payment of purchase price or mortgage instalments. I prefer to read the dicta as saying that the conduct relied upon have to be as concrete and compelling as these conduct.’ ([86]).

Relevant evidence here that shed light on the common intention included the way in which other provision had been made for this son, the way other family investments had been handled, the fact that Henry had only recently graduated and a gift of such a large property made little sense, express discussions between ICP and his wife (the other major controller of Ching Hing) and a declaration explaining his intentions made by ICP. Also relevant was the fact that Ching Hing had paid the premium for the land but had been immediately reimbursed by ICP. Further, Henry had immediately on obtaining the Government lease granted a lease of the property to Ching Hing for virtually the entire term (including any renewal).

As to quantification, the judge took a whole course of dealing approach ([192]) and said:

‘In the absence of evidence as to precise agreement on the proportion in which the beneficial interest in the property was to be shared between ICP and Ching Hing, I think a fair inference in the circumstances of the present case is that each party held a beneficial interest in proportion to his contribution to the acquisition of the property, including the construction costs of the building. That proportion was crystallized upon the completion of the construction in 1965.’ ([194]).

Michael Lower

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