No presumption of advancement between siblings

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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Presumption of advancement and participation in an unlawful scheme

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

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

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