Looking after the family as detrimental reliance?

In HKCB Finance Ltd v Yuen Yi Wan ([2006] HKEC 1425, CA) title to a family home was in the husband’s name. The husband owned the home and had paid off the mortgage before his marriage (so subsequent payments by the wife could not be referred to payment of the purchase price in any way). The husband sold the property to A who immediately sub-sold to B. B relied on a loan from HKCB to finance the purchase. The original owner’s wife claimed to have an equitable interest under a common intention constructive trust. The basis of the alleged common intention constructive trust was an agreement to be inferred from the wife’s conduct in financially supporting the family, the upbringing of the children and her performance of the household chores and the sum of $50,000 she gave to her husband ([9]).

The majority of the Court of Appeal (Cheung JA dissenting) found that the payments that were made were not referable to any common intention that the wife should have an interest in the property ([16]).  The question as to whether the bank was on notice because of its failure to inspect the property did not arise since the wife had no equitable interest ([17]).

Rogers V-P said:

‘In every case the facts are different. But in the present case the [wife’s] contribution of financially supporting the family and upbringing the children and her performance of the household chores over the six years in which she was in Hong Kong and living with [her husband] even taken together with the sum of $50,000 are so distinct from any right in respect of the property that I cannot see how any claim to an interest in the property arises. The [wife’s] evidence, as already indicated, does not establish that it was her expectation to receive an interest in the property. Still less was there any evidence that [her husband] ever had any intention that the second respondent would have any interest in the property.’ ([24])

Cheung JA (in his dissenting judgment) thought that the proposition that looking after the home and caring for the children could not be the basis for inferring a common intention (Burns v Burns) should be rejected. He referred with approval to approaches in Canada and New Zealand that took a different line. He proposed what might be termed an imputed intention approach:

‘When parties enter into a long term relationship it is most unlikely that they will ever discuss whether they have a share in the family assets or how much each of them would be entitled to at the end of the day. I agree with the view of Cory J that it is just and reasonable that the situation be viewed objectively and that an inference be made out, in the absence of the evidence establishing a contrary intention, the parties expected to share in the assets created in the matrimonial relationship should it end.’ ([63])

In any event, he thought that a common intention constructive trust could be shown even following traditional English / Hong Kong principles. In the typical Hong Kong context (where there are regular management fees to be paid) contributions to ongoing maintenance could be as significant as contributions to purchase price. In the case of a long marriage, the nature of the relationship and the pooling of financial resources were relevant factors ([65] – [70]). Cheung JA thought that the wife was entitled to a half share ([73]).

Cheung JA thought that the suspicious circumstances (the quick sub-sale at double the price) put the bank on notice. It was not entitled to rely on the husband’s statement that there were no other occupiers of the property. It had failed to inspect and had constructive notice of the wife’s equitable interest.

Michael Lower

 

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