Posts Tagged ‘acknowledgement of receipt’

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