Archive for the ‘Gift’ Category

Gift or trust: proving the relevant intention

October 16, 2017

Leung Wing Yi Asther v Kwok Yu Wah ((2015) 18 HKCFAR 605) arose out of ancillary relief proceedings on the divorce of H and W. W was the daughter of F, a highly successful businessman. In 2005 F transferred shares in his company to W. The result of this transfer, and a 2006 issue of further shares to W arranged by F, was that W had 20 million shares in F’s company. H argued that these shares should be regarded as an asset of W for the purposes of the ancillary relief proceedings.

F and W argued that F had not given the shares to W but remained the sole beneficial owner of them. They pointed to the way in which, even before 2005, F had transferred shares to his children but later insisted on their re-transfer to him. They also pointed to the company’s 2012 purchase of two very valuable properties. The divorce proceedings had already begun by then. F and W argued that F would not have enhanced the company’s value in this way had he thought that part of the gain would go to H.

H succeeded at first instance and in the Court of Appeal. In the Court of Final Appeal, F and W argued that the first instance judge had mistakenly considered that he should decide on F’s objective intention in making the transfer. Stock NPJ agreed that the judge had to ascertain F’s subjective intention; in the absence of an express declaration this, ‘requires an objective inference drawn from the parties’ words and conduct’. The presumptions of resulting trust and advancement are only relevant where there is no evidence of actual intention ([53]). The judge had, however, taken the right approach to this question.

F and W also argued that the first instance judge had not given due weight to the 2012 acquisitions by the company when considering F’s intention. This conduct, though it post-dated the transfer to W, was admissible as evidence of F’s intention in making the transfer. That said, ‘contemporaneous conduct is inherently more likely to be a reliable indicator of intention, to be given greater weight, than are words and conduct after the event.’ ([56])

Michael Lower

 

 

 

Deed of gift where the donor held the property on trust

July 8, 2015

In Leung Mee Kuen v Leung Siu Kuen Bessie ([2015] HKEC 1148) Property A was jointly owned by the plaintiff and her brother (‘LPH’). Property A was sold and some of the proceeds were used to acquire Property B. The title to Property B, however, was placed in the joint names of LPH and his mother. This was done to reassure the mother that she would always have a roof over her head. There was no intention to make a gift of part of the purchase price to the mother. Thus, the plaintiff and LPH were the beneficial owners. The mother executed a deed of gift of her share in Property B to the defendant (the plaintiff’s sister). This did not transfer any beneficial entitlement to the defendant as the mother had no such entitlement.

Michael Lower

Land and donationes mortis causa

October 17, 2013

Sen v Headley [1991] Ch 425

BH had lived as man and wife with Mrs Sen for ten years. They separated but remained close friends. On his death bed he told her: ‘The house is yours, Margaret. You have the keys. They are in your bag. The deeds are in the steel box.’ He died intestate having, it seems, slipped the keys to the house and the only key to the steel box in the house containing the title deeds into her hand bag.

The question was whether title to the house passed to her by way of donatio mortis causa:

‘If the question whether the subject matter is capable of passing by way of donatio mortis causa is put on one side, the three general requirements for such a gift may be stated very much as they are stated in Snell’s Equity , 29th ed. (1990), pp. 380-383. First, the gift must be made in contemplation, although not necessarily in expectation, of impending death. Secondly, the gift must be made upon the condition that it is to be absolute and perfected only on the donor’s death, being revocable until that event occurs and ineffective if it does not. Thirdly, there must be a delivery of the subject matter of the gift, or the essential indicia of title thereto, which amounts to a parting with dominion and not mere physical possession over the subject matter of the gift.’ (Nourse LJ at 431 – 2)

The problem was the third element. Had there been a delivery of the subject matter of the gift? The title deeds were the relevant indicia ((Nourse LJ at 437) Had there been a parting with possession of the dominion of the house? Delivery of the title deeds could be such a parting. Whether or not it is is a question of fact (at 438). Here there had been a parting with dominion. (Nourse LJ at 439)

There was a doubt as to whether title to land was capable of passing by way of donatio mortis causa. Nourse LJ held that it was (at 441).

Michael Lower

When is gift of title to land irrevocable?

October 15, 2013

In Mascall v Mascall ((1984) 50 P & CR 119, CA (Eng)) a father agreed to give his son a house. He refused to accept payment for it. About five years later, the son wanted to regularize the situation and he persuaded his father to transfer title to the house to him. The father handed over an executed transfer and the Land Certificate. The son then sent the document to the Inland Revenue for payment of the Stamp Duty. A delay occurred and this prevented completion of the registration of the son as proprietor. During that period, the father changed his mind and sought a declaration was void. This failed. The English Court of Appeal relied on Re Rose. The father had followed the appropriate procedure and had done all that he lay within his power to transfer title to his son.

Lawton LJ said:

[I]in the course of Re Rose, Rose v. Inland Revenue Commissioners, Jenkins L.J. pointed out that the statement that a failed transfer cannot be construed in any circumstances as a trust was a statement which was much too wide. He qualified the proposition by saying that, if the effect in law is that the donor holds the legal interest for the benefit of the donee, in those circumstances there is a trust to which the court will give effect.

In my judgment, that is the situation here. The plaintiff had done everything in his power to transfer the house to the defendant. He had intended to do it. He had handed over the land certificate. He had executed the transfer and all that remained was for the defendant, in the ordinary way of conveyancing, to submit the transfer for stamping and then to ask the Land Registry to register his title … He had done everything in his power in the ordinary way of the transfer of registered property and, in the ordinary way, it was for the defendant to get the Land Registry to register him as the proprietor of the property.’ (at 125 – 6).

Browne-Wilkinson L.J. explained the rationale behind this approach:

‘The basic principle underlying all the cases is that equity will not come to the aid of a volunteer. Therefore, if a donee needs to get an order from a court of equity in order to complete his title, he will not get it. If, on the other hand, the donee has under his control everything necessary to constitute his title completely without any further assistance from the donor, the donee needs no assistance from equity and the gift is complete. It is on that principle, which is laid down in Re Rose, that in equity it is held that a gift is complete as soon as the settlor or donor has done everything that the donor has to do, that is to say, as soon as the donee has within his control all those things necessary to enable him, the donee, to complete his title.’ (at 126)

Michael Lower

Donatio mortis causa

August 6, 2013

In Estate of Chen Soo King ([2013] HKEC 210, CFI) C was the adopted son of the deceased. He claimed to be entitled to the shares, cash, jewellery and other assets forming the deceased’s estate by virtue of donationes mortis causa (DMC).

The essential elements of the doctrine are:

‘(i)The donor must have made the gift in contemplation though not necessarily in expectation of death.

(ii) He must have delivered the subject-matter of the gift to the donee or transferred to him the means or part of the means of getting at that subject-matter, e.g. delivering a key, like car keys, or a key to a box containing essential indicia of title, intending to part with dominion over the property to which the key relates.

(iii) The circumstances must have been such as to establish that the gift was to be absolute and complete only on the donor’s death so as to be revocable before then. A condition to this effect need not be expressed and will normally be implied from the fact that the gift was made when the donor was ill.’  (Official Administrator v Luk Ho Tong ([2005] 3 HKC 615 per Cheung J).

The burden of proof was on C to show that these requirements had been satisfied([28]). Any claim based on the doctrine must undergo ‘the strictest scrutiny’ ([50]).

Shares can be the subject of a DMC ([40]) and delivery of the share certificates would be sufficient to satisfy requirement (ii) ([48]).

C’s claim succeeded in respect of the shares and other assets which were in a safe deposit box for which the deceased had given him the only keys ([56]). The claim also succeeded in respect of bank deposits where the deceased had given C the passbooks ([59]). The claim failed where the assets (or the means of controlling them) were in the deceased’s flat. It was not enough that he held one of the two sets of keys to the flat.

Michael Lower

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.