Archive for the ‘Small House procedure’ Category

Resulting trusts and land transferred under an unlawful joint development agreement

August 1, 2014

In Tang Teng (or Ting) Hong (or Hon) v Cheung Tin Wah ([2014] HKEC 643, CFI) a Tso transferred property to a developer under the terms of a development agreement that provided for the return of the land to the Tso in the case of certain events of default. There was no intention, the court found, to make an outright transfer to the developer. This implies, presumably, that the transfer was simply part of the machinery for implementing the agreement. The developer had failed to apply for building licences as envisaged by the agreement. The Tso sought the return of the land to it relying not on the terms of the agreement but on the basis that the developer held the property on resulting trust for it (there being no intention that the developer should be the beneficial owner of the land).

The main question was whether the claim must fail since the agreement was tainted with illegality  in that its implementation necessarily involved the making of false declarations to the Government by tings ((ie a male indigenous villager of the New Territories entitled to benefit under the Small House Policy). The court found that the Tso could recover the property since it did not need to rely on the unlawful agreement (it merely supplied an explanation as to why the tso  had made the transfer to the developer) ([49]).

The assignment to the developer contained an acknowledgement of receipt of the purchase price (though it had not been paid). It was held that this did not prevent the resulting trust claim since this was collateral to the assignment and not an action on the assignment. The plaintiff was not estopped from bringing evidence to show that the consideration had not been paid ([44]).

Michael Lower

Resulting / constructive trust of Ting house

June 8, 2012

In Lau Kwai Kiu v Bian Xintian ([2012] 2 HKLRD 954) O applied for land by way of private treaty grant in Lok Lo Ha Village near Shatin under the Small House Policy. He was successful. He paid the premium and a grant of land in the village was made to him. At that time, the Lands Department did not require applicants to sign a declaration to the effect that they had not entered into an agreement to sell the land, hold the property on trust or sell it (the Department later did insist on such declarations).

O had agreed to sell the land to P before making the application. P had supplied the funds for the premium. Once the grant was made, she supplied the funds for the construction of the house and she and her family lived in it from the time of the issue of the certificate of compliance. O had written letters to P confirming that he would give the property to her and would transfer the title to her after five years. This would require a further application to the Government and payment of a premium to lift the restriction on alienation in the grant to O. This application was never made because P could not afford the additional premium. O died and the question of P’s interest in the land had to be decided.

O’s wife argued that P had no interest in the land and that any resulting or constructive trust there might have been was unenforceable on the grounds that the arrangement was illegal or contrary to public policy.

It was held that P had an interest under either a resulting and / or a common intention constructive trust because of the payments and the agreement set out in the letters (signed by the parties and, in the case of one letter, witnessed). There was no illegality on the facts of this case. Even if there were, P had no need to plead it since she could rely on the payments she had made to establish her beneficial interest; she did not need to rely on the letters at all (see Tinsley v Milligan). Nor was the arrangement contrary to public policy since there had been no false declaration. The express agreement envisaged that the necessary application to the Government would be made and the additional premium for the lifting of the restriction of alienation would be made.

The Court of Appeal held that the land was held on a resulting and / or a common intention constructive trust (but expressly subject to the Government’s rights).

Michael Lower

Implied long-stop date in agreement for the sale of a Small House

April 1, 2011

There is no room to imply a long-stop date for completion of a conditional agreement where the agreement expressly contemplates uncertainty and the parties have agreed to wait until the condition can be met.

In Wong On Na v Harbour Well Development Limited ([2002] HKEC 2) the plaintiff had agreed to buy a house in the New Territories from the defendant developer. The agreement made completion conditional on getting the necessary Certificate of Compliance from the relevant District Lands Office. The developer completed the building works and sought the certificate. A lengthy delay ensued (through no fault of the developer). The plaintiff sought to rescind and the developer counter-claimed for damages. The plaintiff alleged that there was an implied term that completion was to take place within a reasonable time (see Johnson v Humphrey [1946] 1 All ER 460). This claim failed. The agreement made it clear that the completion date was uncertain and depended on obtaining the certificate. This was outside the developer’s control; it had done all that it could to obtain the certificate. The developer was awarded damages representing the difference between the contract price and the market price at the date of the hearing (the market had fallen).