Posts Tagged ‘CPO s.18’

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