Archive for the ‘matrimonial home’ Category

Australia: presumption of beneficial joint tenancy where both spouses contributed to the purchase price of the matrimonial home

June 22, 2016

In Trustees of Property of Cummins v Cummins ([2006] HCA 6) title to a married couple’s family home was held by them as legal joint tenants. The wife had contributed two thirds of the purchase price. The husband transferred his interest in the joint tenancy to his wife. He later went into bankruptcy. The bankruptcy severed the joint tenancy. The transfer was void against the trustee in bankruptcy as a transaction intended to defraud creditors. The question was whether the couple had been beneficial joint tenants on the basis that the beneficial ownership was in line with the legal ownership. In this case, half of the value of the home was available to the husband’s creditors. The wife contended that she had a two thirds share under a resulting trust to reflect the unequal contributions to the purchase price; in that case, only one third of the value of the home would be available to the creditors. The High Court of Australia held that there was a beneficial joint tenancy.

In determining the beneficial ownership, the court was not confined to the proportionate contributions to the purchase price but could look at ‘evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction’ ([64]) The fact that the property was the matrimonial home had significant evidential value. The High Court endorsed the following statement in Professor Scott’s The Law of Trusts:

‘Where a husband and wife purchase a matrimonial home, each contributing to the purchase price and title is taken in the name of one of them, it may be inferred that it was intended that each of the spouses should have a one-half interest in the property, regardless of the amounts contributed by them.’ ([70])

The same applied, even more strongly, where the couple were legal joint tenants ([71]). Further:

‘The subsistence of the matrimonial relationship … supports the choice of joint tenancy with the prospect of survivorship.’ ([71]).

Note that the statement approved requires that both spouses should have made a contribution to the purchase price before the presumption of a beneficial joint tenancy of the matrimonial home arises.

Michael Lower

 

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Proving the existence of a common intention constructive trust in sole name cases: is marriage enough? Beneficiaries have a duty to inform purchasers where they are aware that a contract has been signed.

May 27, 2015

In Mo Ying v Brillex Development Ltd ([2015] HKEC 583, CA) H married W in Hangzhou. Shortly afterwards, H returned to Hong Kong and bought a flat in his sole name, using a combination of his own money and a mortgage taken out in his own name. A few months later, W joined him in Hong Kong and asked why her name was not on the title deeds. H told her that this was troublesome and would cause expense. W did not pursue the matter as she thought that the fact of the marriage entitled her to a share in the property. The marriage broke up and W argued that she had an interest under a common intention constructive trust.

On the facts of this case, the husband’s excuse could not be construed as an agreement that W was entitled to an interest. Unlike Grant v Edwards  and Eves v Eves, the words used were equivocal and W did not take them to mean that she was to have an interest in the property ([7.6]  and [7.7] per Cheung JA). There was a suggestion that H had told W that ‘What belongs to me belongs to you’. Had it been proved, this would have been decisive in W’s favour; it had not been proved ([7.2] per Cheung JA).

The whole course of conduct can be referred to when deciding whether or not a common intention constructive trust exists in a sole name case ([6.2] per Cheung JA).  The fact that the parties are married is an important feature of the whole course of conduct but, on its own, it does not give rise to an inference that a common intention constructive trust exists ([7.17] per Cheung JA and [11.4] per Yuen JA). There were no other features of the case that pointed to the existence of a common intention constructive trust. The evidence did not suggest that the parties had pooled their assets and liabilities ([7.19] per Cheung JA). Any payments that W had made towards household expenses were not referable to any common intention that she was to have an interest in the property ([7.20] per Cheung JA). Detrimental reliance remains a necessary element of the common intention constructive trust ([6.12] per Cheung JA).

H sold the property. W was informed of the sale once the provisional sale and purchase agreement had been signed but did nothing to protect her interest or to inform the purchaser of her rights. The sale was later completed. While the purchaser had constructive notice of any interest that W might have (because of her occupation and the purchaser’s failure to inspect) this did not mean that W could not be estopped from enforcing her rights against the purchaser. Her silence, once she knew of the contract, gave rise to an estoppel ([8.7]  and [8.12] per Cheung JA, [11.10] per Yuen JA and [20] per Kwan JA). Even if it were seen as being a proprietary estoppel, it could be relied upon as a defence. It is unhelpful to draw rigid distinctions between types of estoppel ([8.9] and [8.10] per Cheung JA).

This case provide an extremely important review by the Court of Appeal of the framework for the law of the common intention constructive  trust in Hong Kong. It draws on the English developments in Stack v Dowden, Abbott v Abbott and Jones v Kernott. Further, W had commenced divorce proceedings. The comparison between W’s family law rights and her rights as a matter of strict property law is a fascinating thread running through Cheung JA’s judgment. As a wife, W had rights under family law. Should the law of the common intention constructive trust also be especially responsive to the relationship? As explained above, the conclusion reached, ‘with regret’ ([7.23]) was that in the absence of any basis other than marriage for inferring an agreement, W had no claim as a matter of property law.

Michael Lower

Legal joint tenancy: determining beneficial ownership under a common intention constructive trust

March 11, 2015

In Lo Kau Kun v Cheung Yuk Yun ([2015] HKEC 316, CFI) a married couple bought a flat as joint tenants. P claimed that the property was held on common intention constructive trust in equal shares. D claimed that she was the sole beneficial owner. Deputy Judge Sakhrani referred to the statements in Stack v Dowden ([68] in Stack) and Jones v Kernott ( [51] in Jones) to the effect that where the legal title is in joint names and there is a question as to beneficial ownership equity follows the law (so that a legal joint tenancy gives rise to equal shares) but that it may be possible to show a contrary intention (the burden of proof being on the party seeking to establish this). P had paid the down payment. P and D were jointly liable under the terms of the mortgage and each had contributed to the mortgage payments. Crucially, there was a finding that the parties had discussed their intentions concerning the ownership of the property ([63]). The couple had agreed that the property was to be a family asset (to be held equally as a family asset according to P) ([64]). This (not the record of financial contributions) was determinative. The property was held on common intention constructive trust in equal shares ([66]).

D also argued that she had extinguished P’s title by adverse possession. P had left the property in 1993 after a violent argument and never returned ([77]). This argument failed since D was entitled to be in possession as co-owner. There was no evidence of the ouster that would be necessary for this claim to succeed ([81]).

Michael Lower

‘Ambulatory’ constructive trust v post-acquisition agreement

April 11, 2011

There might be a common intention constructive trust where the parties have agreed that the precise apportionment of their respective beneficial interests is to be settled at some future date by reference to the course of dealings between them. This is not the same as the case where the parties have agreed on some particular apportionment and then, post-acquisition, agree to change this apportionment. Strong evidence will be needed of any such post-acquisition agreement.

In Chan Chui Mee v Mak Chi Choi ([2008] HKEC 1572) title to property was in the name of a husband. he had told his wife that it was to be ‘family property’. This was found to be evidence of an agreement that beneficial ownership was to be equally divided between them. The wife made some contributions to the mortgage payments and this provided the necessary reliance.

Speaking obiter Johnson Lam J said that strong evidence would be needed as to a post-acquisition agreement that someone was to have a beneficial interest in property or that the apportionment of beneficial ownership was to be altered. He also suggested that a post-acquisition variation of beneficial entitlements would not bind third parties. Thus, imagine that  A and B had been equally beneficially entitled and then (post-acquisition) they agreed that B was to have a 75% beneficial entitlement. This amounts to a disposal of 25% by A to B. As far as that 25% is concerned the interest of B would rank behind any interest acquired before the agreement concerning the change.

It would be otherwise if the parties had from the outset agreed that there was to be a constructive trust but that the precise beneficial entitlements would be calculated later by reference to the whole course of dealings. Here the priority date for the whole ‘ambulatory’ entitlement would be the date when the constructive trust arose.

Michael Lower