Archive for the ‘Presumption of advancement’ Category

No presumption of advancement between siblings

September 16, 2018

In Lee Yee Yan Eva v Lee Tak Gate Richard ([2018] HKCFI 1137) a flat was bought in the joint names of a sister and brother (E and R). E provided the entire purchase price. R refused to comply with E’s request to transfer the legal title into her sole name.

Peter Ng J. saw this as a classic purchase price resulting trust. He referred to Lord Browne-Wilkinson’s statement of the law:

‘Under existing law a resulting trust arises in two sets of circumstances: (A) where A … pays (wholly or in part) for the purchase of property which is vested … in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the … property is held on trust for A (if he is the sole provider of the money) … It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer.’ (Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, 708A-B).

It all depended on E’s subjective intention ([38]) and, as to this, the evidence supported E’s case; there was no suggestion that she intended R to be an equitable co-owner.

Peter Ng J. also pointed out that there was no authority for the idea of a presumption of advancement between siblings ([27]).

R was ordered to convey the property to E.

Michael Lower

 

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Actual intention? Common intention constructive trust not presumed resulting trust.

November 1, 2016

In Re Superyield Holdings Ltd ([2000] 2 HKC 90) a father and son each had one of the two issued shares in SH Ltd. SH Ltd, in turn, held one of the two issued shares in SC Ltd (along with another company LKR Ltd which was essentially owned and controlled by the son). SC Ltd owned a residential property (‘the property’). The question was whether the son was solely beneficially entitled to the property. Recorder Robert Kotewall SC found that he was. The son argued that since the property was bought using a combination of the son’s own funds and a loan to the company that the son had arranged, he could rely on the presumption of a resulting trust. The court seems rather to have found for the son on the basis of the father and son’s actual intention. The judge thought that where the trust rested on actual intention then the presumption of resulting trust had no part to play (at 111). He accepted that SH Ltd was in substance the son’s company and that the father was only involved as a formality to satisfy the then requirements of the Companies Ordinance. The father had been one of the joint guarantors of the loan to SC Ltd used to buy the property and it was possible to argue that this should be treated as a contribution to the purchase price by the father. This would depend upon underlying intention. In any case, the presumption of advancement would apply so that this contribution should be presumed to be a gift from father to son.

Michael Lower

Presumption of advancement and participation in an unlawful scheme

April 22, 2015

In Yip Wai Hong v Yip Kai Tong ([2015] HKEC 501, CFI) a father transferred a village house to each of his two sons.  The consideration referred to in the assignments was never paid. The father now contended that the sons each held their village house on resulting trust for him. The sons sought to rely on the presumption of advancement and Deputy Judge Burrell decided that they were entitled to do so. It did not matter that the defence made no specific reference to the presumption. It was enough to show that there had been a transfer from father to son for the presumption to arise ([34] – [38]). The father also argued that the presumption is now a ‘weak  concept’. This was rejected: Tribe v Tribe from the UK and Calverly v Green from Australia show that the presumption is still alive and well ([41] – [42]).

The father could not rebut the presumption. One reason for this was that in order to do so he would need to rely on evidence of an illegal scheme. The houses were among several built on land owned by the plaintiff under a scheme which involved indigenous villagers selling their ‘Ting’ rights to allow the houses to be built under the Small House Policy. The father alleged that the sons, like the other villagers, had simply sold their ‘Ting’ rights. The overall scheme was undoubtedly unlawful. The sons had to make statutory declarations that they ‘had no intention at present to make any private arrangement for any rights under the Small House Policy to be sold to other individual / developer’ and that they were each the sole owner of the relevant house ([44]). These would be untrue if the sons were not the sole legal and beneficial owners. Although the father was not the maker of the false declarations, his knowledge  that the scheme was unlawful was enough to prevent him from relying on the scheme to rebut the presumption. Further, his actions in making the allegedly false declarations possible by transferring ownership to the sons would be illegal ([54]).

Michael Lower

Presumption of advancement between mother and child in Hong Kong

July 25, 2014

Suen Shu Tai v Tam Fung Tai ([2014] HKEC 1125, CA) is a case where a mother transferred two properties to her daughter. The question was whether the daughter held the properties on resulting trust.

The presumption of advancement as between mother and child

Whether a person who has made a voluntary transfer of property to another intended to make a gift  or to retain beneficial ownership is ultimately a question of fact. Where there was no intention to transfer the equitable ownership, a resulting trust arises. The courts may make use of the presumption of resulting trust and, in appropriate cases, the presumption of advancement to help them find their way through the evidence and to reach a conclusion as to the transferor’s intention.

Historically, the presumption of advancement (equity’s presumption of an intention to make a gift in relevant cases) did not apply as between mother and child (Bennet v Bennet (1878 – 79) L.R. 10 Ch.D. 474). A number of jurisdictions have recently made the point that in modern times, there is no reason to distinguish between fathers and mothers when it comes to the presumption of advancement. This not only reflects the changed social and economic context but also legal policy as regards sex discrimination.  Obiter statements in this case argue that Hong Kong should now take the line that the presumption of advancement applies equally as between fathers and mothers.

In Suen Shu Tai v Tam Fung Tai a mother transferred title to two properties she owned to her daughter.  The mother claimed that the daughter held the properties on resulting trust for her. She succeeded at first instance where the judge found as a fact that the mother did not intend to make a gift of the properties to her daughter. This finding, which the Court of Appeal saw no reason to question, led inevitably to the conclusion that the daughter held the properties on resulting trust. There was no need to rely on any presumption.

Nevertheless, Cheung JA, giving the main judgment, commented on the possible operation of a presumption of advancement as between mother and child. He referred to the approach in other common law jurisdictions and to academic authority. He noted that the Court of Appeal had presumed that the presumption did apply in Au Yuk Liu v Wong Wang Hin Eddy ([2013] 4 HKLRD 373). He concluded that the position in Hong Kong was that there was no basis for distinguishing between fathers and mothers when it comes to the presumption of advancement ([10.15]).

Of course, the presumption of advancement remains an evidential tool and its weight and usefulness depends on the facts of each case. It might be irrelevant in the case of an independent adult child ([10.16] – [10.19]). Little weight would have been attached to it in the present case ([10.20]).

Can there be a resulting trust where the assignments are expressed to be for consideration and record the seller’s receipt of the money?

The daughter also sought to rely on the terms of the assignments to rebut the mother’s claim that there was a resulting trust. The assignment of each of the properties stated that the assignment was made in consideration of the payment of a purchase price and stated that the seller had received the purchase monies. In fact, no money had changed hands.

The daughter first relied on CPO, s.17:

‘Unless the contrary provision is expressed in the assignment, an assignment shall operate to assign all the estate, right and interest in the land assigned which the assignor has in that land, and which he has the power to assign.’

The daughter argued that this provision meant that the mother must be taken to have assigned all of her interest in the property unless an intention to retain a beneficial interest is recorded in the assignment. Cheung JA rejected this. Section 17 did not ‘override the question of intention of the plaintiff at the time of the transfer and also the operation of the resulting trust’ ([7.4]).

The daughter also sought to rely on CPO, s.18:

‘A receipt for consideration in the body of an instrument shall be a sufficient discharge to the person paying the consideration and, in favour of any other person acting on the faith of the receipt, shall be sufficient evidence of payment.’

The daughter (relying on passages in Tsang Chun v Li Po Kwai and Mascall v Mascall) argued that there is a rule to the effect that one cannot adduce evidence to contradict the terms of the receipt clause.  Cheung JA rejected the application of any such rule to the facts of the present case. He referred to a passage in the judgment of Godfrey JA in Tsui Hoi Pan v Wong Chun Ling:

‘as between immediate parties who know all the circumstances, there can be no estoppel by deed. If the facts are as the plaintiff  has pleaded, there is no objection to his asserting the existence of an implied, constructive or resulting trust, merely because of the fact that the assignment to the 1st defendant, on the face of it, appears to be an instrument of value. The law does not allow an instrument such as the instrument here to be used as an instrument of fraud: see eg Booth v Turle’ (Godfrey JA at 3).

Michael Lower

Transfer by mother to daughter for no consideration: resulting trust

September 3, 2013

In Suen Shu Tai v Tam Fung Tai ([2013] HKEC 1287, CFI) (subsequently affirmed by the Court of Appeal) a mother transferred title to two properties to her daughter (probably to avoid any possible claim against the properties on the part of the father). There was no consideration for the assignments. The court found on the balance of probabilities that the mother did not intend to make a gift of the properties and that the daughter therefore held them on resulting trust for the mother ([96]).

There is a lengthy discussion as to whether the presumption of advancement should be extended to assignments by a mother to her child ([61] – [76]). Although the court doubted whether the presumption should be extended to this relationship, it was emphasised that this was not a factor in the decision in this case ([76]).

The daughter had sold one of the properties to a third party and no order was made as to the property (or the proceeds of sale) until the claims made by the third party could be investigated.

Michael Lower

Tribe v Tribe: illegal purposes and rebutting the presumption of advancement

November 7, 2012

In Tribe v Tribe ([1996] Ch. 107, CA (Eng)) a father was worried that he would have to sell the shares in his business to meet the claims of creditors (landlords alleging substantial dilapidations for which the father would be liable as tenant). To put the shares out of their reach (and to give them the impression that he was less wealthy than he was in reality) he transferred his shares to his son on the understanding that they would be transferred back to him when the danger had passed. In fact, however, no creditor ever knew of the transfer so there had been no actual deception. The father was able to resolve the difficulties with the creditors. He then asked his son to transfer the shares back to him but the son refused. The father sought a declaration to the effect that he was entitled to the entire beneficial interest and succeeded. He was able to show that a resulting trust had arisen.

He had to rebut the presumption of advancement and, to do so, had to give evidence of the unlawful purpose (putting assets beyond the reach of creditors) that underlay the scheme. Normally, this would not be possible but there is an exception where the unlawful purpose has not been carried into effect (where no attempt has been made to deceive any actual creditor). The exception applies even though the reason for not carrying out the unlawful purpose is that the danger has passed. The policy underlying the exception is to encourage people to pull back from fraudulent schemes even though they have put the foundations in place. Once the unlawful purpose has been implemented (an attempt has been made to deceive a creditor) then it is too late to invoke the exception.

Millett L.J. pointed out that even where the presumption of advancement does not apply transferors should not be lulled into a false sense of security by Tinsley v Milligan. Where there is no presumption of advancement a presumption of resulting trust will arise:

‘But the transferee cannot be prevented from rebutting the presumption by leading evidence of the transferor’s subsequent conduct to show that it was inconsistent with any intention to retain a beneficial interest. Suppose, for example, that a man transfers property to his nephew in order to conceal it from his creditors, and suppose that he afterwards settles with his creditors on the footing that he has no interest in the property. Is it seriously suggested that he can recover the property? I think not. The transferor’s own conduct would be inconsistent with the retention of any beneficial interest in the property. I can see no reason why the nephew should not give evidence of the transferor’s dealings with his creditors to rebut the presumption of a resulting trust and show that a gift was intended. He would not be relying on any illegal arrangement but implicitly denying it. The transferor would have to give positive evidence of his intention to retain a beneficial interest and dishonestly conceal it from his creditors, evidence which he would not be allowed to give once the illegal purpose had been carried out.’ (129)

The presumption of advancement: alive and well

August 1, 2012

Antoni v Antoni ([2007] UKPC 10) was an appeal to the Privy Council from the Court of Appeal of the Commonwealth of the Bahamas. A father was the beneficial owner of the five issued shares in a property investment company. He transferred the ownership of one share each to his three children. After his remarriage, he revoked a will leaving his property to his children and made a new one leaving everything to his new wife. He died not long afterwards. The wife claimed that the children held the shares on resulting trust for the father. This failed in the Court of Appeal in the Bahamas and in the Privy Council. There was nothing to rebut the presumption of advancement (or, one might say, no evidence to show that anything other than a gift was intended). The new will came after the transfer of the shares and cast no light on the father’s intention at the time of the transfer.

On the presumption of advancement, Lord Scott of Foscote said:

‘[T]he first instance decision [in favour of the wife] overlooked the relevance and importance of the presumption of advancement. This presumption, a construct of equity, applies when a parent places assets in the name of a child and assumes that the parent intends to make a gift to the child. It is a rebuttable evidentiary presumption. In the absence of adequate rebuttal evidence the presumption bars the application of the converse presumption, namely, the presumption of a resulting trust. If a person places assets of his or hers in the name of a stranger, the presumption is that the stranger holds the assets on resulting trust for the transferor. This, too, is a rebuttable evidentiary presumption.’ ([20]).

Note that the presumption of advancement was held to apply as between parent (not only father) and child.

Constructive or resulting trust?

July 30, 2012

Lee Koon Wan v Sherman Ngai Wing Lee ([2012] HKEC 1046, CFI) concerned a dispute between father and son as to the beneficial ownership of three properties. Title was in the son’s name but the father claimed that they were held on resulting or constructive trust. The court found that the father had paid for the properties and there was a clear understanding that the son would hold them on trust for his parents and, on their death, for himself and his brothers. The judge preferred to think of this as a constructive rather than a resulting trust (though he was clearly of the view that the elements of each were satisfied) ([53]). The resulting trust analysis clearly shows the primacy of the search for actual intention with the presumptions being considered but not playing any role in the analysis ([47]).

Michael Lower

Presumption of advancement rebutted

July 6, 2012

Wong Fu Cheung v Wong Pui Hung Peter ([2012] HKEC 927) was a dispute between father and son. Property was bought in their joint names and the father (and his company) provided the entire purchase price. He claimed to be the sole beneficial owner under a resulting trust; the son claimed that the father had made a gift of the property to him. The court noted that the presumption of advancement was applicable. In modern times the court has to be careful to weigh its probative value given that the aim is to discover the parties’ true intentions. The court found that there had been no intention to make a gift and the son was trustee for the father who was the sole beneficial owner.

The resulting trust in Singapore

April 27, 2012

In Neo Hui Ling v Ang Ah Sew ([2012] SGHC 65) the Singaporean High Court had to consider how the proceeds of sale of a house should be distributed. The house was in the joint names of a mother and daughter as joint tenants. There was no clear indication as to the equitable ownership of the property. The house had been paid for by the daughter. She did not intend to make a gift of any part of the beneficial ownership to her mother. The joint tenancy had been chosen purely for the benefits of the right of survivorship; the daughter intended to remain sole beneficial owner but that, should she predecease her mother, the mother would be the beneficial owner. The court held that where the joint tenancy had been chosen for this motive, it did not lead to the conclusion that a severance gave rise to equal beneficial ownership. In the absence of any clear indication as to the parties’ intentions, the usual presumed resulting trust approach would apply and the beneficial ownership would reflect the parties’ direct contributions to the purchase price. Thus, the daughter was the sole beneficial owner.

The mother also argued that she had a claim based on proprietary estoppel. This failed. The daughter’s only assurance was that she would keep a roof over her mother’s head. This was a personal assurance not linked to any specific property. The mother had given up a joint tenancy with her daughter in another property to move into the present property. But the ownership intentions were presumably the same for the former property as for the present property and so there was no detriment. The daughter had offered to provide her mother with suitable alternative rented accommodation but the mother had rejected it. This suggested that there was nothing unconscionable in the daughter’s behaviour in relation to her assurance.

The High Court left open the question as to whether there could be a presumption of advancement in the case of a transfer from daughter to mother in Singapore.