Archive for the ‘co-ownership’ Category

Legal tenancy in common: contractual interpretation

November 4, 2015

In Lam Kwok Hing v Lam Siu Keung ([2015] HKEC 2228, CFI) four brothers were tenants in common in equal shares of land in the New Territories (‘the Land’). They were also co-owners of several adjoining lots. The brothers entered into four contemporaneous transactions in 1972 to re-arrange the ownership of the Land and the adjoining lots. The 1972 transaction concerning the land assigned it to two of the brothers, LLW (2/5 shares) and LTW (3/5 shares). A separate ‘Division of Property’ document, signed by the four brothers, confirmed the overall effect of the four transactions. In a  document called ” 執照 ” and dated 2 September 1974, the District Commissioner, New Territories certified that LLW owned 2/5 and LTW owned 3/5 of the shares in the Land. LLW died in 1976 and in 2005 his family contended that his share was 9/20 rather than 2/5 (that he owned an additional 1/20).

The court now had to decide on the parties’ respective shares. The fact that the 1972 assignment recorded LLW as owner of 2/5 provided the starting point. All of the relevant legal and factual material available to the court supported the contention of the LTW family that the assignment accurately recorded the parties’ contractual intention. The undivided shares reflected the physical division of the Land between the two families. the Division of Property and the 執照 confirmed the ownership intention. Finally, the Schedule of Property annexed to the Letters of Administration of LLW’s estate also referred to his ownership of a 2/5 share.

The case is interesting since there was no recourse to the concept of the common intention constructive trust. In Hong Kong, unlike England, disputes as to ownership shares can be resolved through a process of contractual interpretation that focuses on ownership of the legal title.

Michael Lower

Alleged ouster of co-owner: injunction?

December 20, 2012

Khan v Mansoori ([2012] 5 HKLRD 637, CFI) concerned a dispute between P and D1 and D2 who were tenants in common of property in Kowloon. P lived in the USA. D1 and D2 changed the locks at the property. P alleged that he had been ousted from possession. D1 and D2 contended that P1 had no beneficial interest in the property but held his share as nominee for D1 and D2. The question at this stage was whether P should have an injunction pending the trial to restrain any actions by D1 and D2 ousting him from possession. The injunction was not granted. The balance of convenience weighed in favour of damages being the appropriate remedy should P succeed in the trial. P lived in the US, rarely visited Hong Kong and had no practical need to enter the property.

Co-ownership (NSW)

August 24, 2012

In Fallon v Madden (SC 2010/332163) B and M co-habited in property that was in M’s name. After several years of co-habitation they married. M died and B claimed that he had an interest under a resulting trust on the basis that he had provided all of the purchase price. The Supreme Court of New South Wales found that he had supplied 50.5% of the purchase price. Since the purchase preceded the marriage, the presumption of advancement did not apply. Thus, B was entitled to a 50.5% beneficial interest under a resulting trust. The co-ownership was as tenants in common (reflecting section 26 of the Conveyancing Act).

After M’s death (when the presumption ceased to apply) B made some repayments in respect of a loan which M had guaranteed (with the guarantee being secured by a mortgage over the property) and paid off M’s outstanding tax liability. He was entitled to recover these sums from M’s estate (which would otherwise have been liable). He paid for work at the property but was not entitled to compensation since the work did not increase the value of the property. He was entitled to compensation for the council rates that he had paid but not for water rates (a consumable). On the other hand, he had occupied the property. His claims to compensation relied on equity’s help. If he decided to press them (he had an option) then he must pay an occupation fee on the basis that he who seeks equity must do equity.

Order for sale: ‘beneficial to all the persons interested’

March 20, 2012

In Chan William Lai Yee v Chan Yau Yuen Fun Therese ([2012] HKEC 363) two luxury properties were held by the parties as tenants in common. The plaintiffs sought an order for sale. The defendant lived in one of the properties rent-free with her family. The plaintiffs were four elderly people who depended on their share of the property to support them financially. Essentially, they were not getting any benefit (either in terms of rent or possession) from the property occupied by the defendant. Section 6 of the Partition Ordinance gives the court the power to make an order for sale where partition is not practicable. In Wong Chun Kei Johnny v Poon Vai Ching ([2007] 1 HKLRD 825) Recorder Fok SC (as he then was) said:

‘When it is impracticable to make an order for partition, the court should make an order for sale unless it is persuaded (the burden being on the opposing co-owner) that such an order will not be beneficial to all the co-owners, or that it will result in very great hardship to one co-owner.’

He went on to say that whether the order is beneficial to all the co-owners is an objective question and that it might be beneficial even if some co-owners opposed the making of an order. Presumably this means that one looks at the interests of the co-owners as a body or perhaps at the interests of a hypothetical co-owner of the relevant property.

In this case, it was clear that the parties were unwilling to continue as co-owners and the primary purpose of the legislation is to allow unwilling co-owners to terminate an unwanted co-ownership (Pun Jong Sau v Poon Wing Kong). An order for sale would allow all the parties to benefit from a reasonably bouyant market. It would not cause undue hardship to the defendant (para. 22).

Wai Ming Trading Ltd v Poon Tang Fat

February 7, 2012

In Wai Ming Trading Ltd v Poon Tang Fat ([2012] HKEC 146) W owned 11 / 12 and P owned 1 / 12 of a plot of land. P had assured W that he would sell the 1/12 share to W and, on the strength of that, W had acquired the interests of the other former owners. P later decided not to sell. W now sought an order for sale and P resisted. W was successful; partition was not practicable and there was nothing to indicate that the interests of the co-owners would be better served by continuing the co-ownership. There was no evidence that the sale would impose any hardship on P. The agreement was another relevant factor.

Gift of land and duress

December 16, 2011

In Mir Abdul Rehman v Mir Heena ([2011] HKEC 1644) P and D had been tenants in common of a flat (with P owning a 75% share and D a 25% share). In 2001 P executed a deed of gift of his share to D. The relationship broke down in 2006. At that time, D executed a deed of gift of a 50% share to P. P applied for an order for sale and for the proceeds to be divided equally between P and D. The 2006 deed of gift had, however, been executed under duress and the court made an order setting it aside. P also claimed that at the time of the 2001 deed of gift there had been an understanding that D held the 75% share on trust for P. The court did not believe that any such understanding had been reached. D was the sole legal and beneficial owner of the property.

When is one co-owner who collected rent liable to account to the other?

November 24, 2011

Where one co-owner collects rents the mere fact of being co-owners does not give rise to a liability to account to the other co-owner(s). A liability to account to the other for the latter’s share arises where the former is the agent or bailiff of the latter. It can also arise in partition actions (or actions that are equivalent), administration actions, in other cases where there is a fund in court, where the court makes an order for sale as an alternative to partition or where one party claims an interest under a resulting or constructive trust and the court is asked to quantify that interest (paras. 103 – 105).

Where one co-owner collects the other’s share of rent, it is possible to imply an agency. It is also possible (depending on the context) that this agent holds the rents collected on a ‘real’ constructive trust so that there is no limitation period in respect of the claim by the agent for the rents received (see Limitation Ordinance, s. 20).

In Chen Yu Tsui v Tong Kui Kwong ([2005] HKEC 1679, CA) property was held by two brothers as tenants in common in equal shares. One brother (the defendant) collected all the rents and after a time stopped accounting to the other (the plaintiff’s deceased husband) for his share of the rents. The plaintiff brought an action to recover the rents. It was held that there was a duty to account in this case  since the defendant had impliedly acted as his brother’s agent (paras. 111 – 112). The action was not time-barred. This was a ‘real’ constructive trust to which section 20(1) of the Limitation ordinance applied (para. 123).

Michael Lower

Beneficiary seeking order for sale / account in an interlocutory application

November 9, 2011

In Lam Sik Shi v Lam Sik Ying ([2008] HKEC 1048) P was the beneficiary under a trust of his late father’s estate. D1, his half-brother, was the trustee. D2 was a company which had bought property forming part of the trust estate. P alleged that the sale was at an undervalue and he sought a declaration that the sale was void or voidable. He sought to have D2 account as constructive trustee. A lis pendens had been registered. In an interlocutory hearing, P sought an order for sale with the proceeds to be paid into court pending the final hearing or, alternatively, the appointment of a receiver. The court refused to make either order. P’s position was adequately protected by the registration of the lis pendens.

Michael Lower

Beneficial title in sole name even though the legal title is in joint names

September 22, 2011

Abbey National Bank plc v Stringer ([2006] EWCA Civ 338, CA (Eng)) concerned property the title to which was in the joint names of a mother and a son. This was because the mother was 50 years old at the time of the purchase and the lender wanted someone younger to be jointly liable on the mortgage. The son was 19 at the time. He made no contributions to the purchase price or mortgage instalments. Years later, the son persuaded his mother to sign some documents. She was elderly and poorly educated. She was Italian and did not speak good English. She was not familiar with business matters. She signed the documents because she trusted her son. They were not explained to her in either Italian or English. The documents were a second mortgage over the home in respect of a loan facility for a business in which the son was a partner. The second mortgagee sought possession of the property. The English Court of Appeal decided that although the legal title was in joint names, the mother was the sole beneficial owner; the Court of Appeal thought that there must have been an agreement between them to that effect. Thus, the son himself had no property in the home. This is a striking exception to the presumption formulated soon after in the House of Lords decision in Stack that there is a presumption of equal beneficial ownership where the title is in joint names. The Court of Appeal went on to hold that the mortgage was not enforceable against the mother because she had signed it as a result of her son’s undue influence. The bank had taken none of the steps required to show that the mother knew what she was signing and the associated risks.