The common intention constructive trust is not limited to the ‘domestic consumer’ context

In Chan Sang v Chan Kwok ([2015] HKEC 822, CFI) title to shop premises was in the joint names of the plaintiff and the defendant (who were brothers). The legal title was held by them as tenants in common in equal shares. The plaintiff successfully claimed to be the sole beneficial owner. The court made a declaration to this effect and ordered the defendant to convey his half share to the plaintiff. The defendant’s name was on the title deeds because of an agreement between the parties and their father. The father made a loan to the plaintiff to allow him to purchase the shop and the defendant’s name was on the title deeds as a form of security. The agreement was that the defendant would give up his share once the loan had been fully repaid. The plaintiff had fully repaid the loan and had also made all the payments due to a bank under the mortgage that had been entered into at the time of acquisition. The defendant made no payments that were referable to the property. The plaintiff had established that he was sole beneficial owner under either a common intention constructive trust or a resulting trust ([76]).

The defendant, basing himself on Laskar v Laskar, argued that the common intention constructive trust had no application here and applied only in the ‘domestic consumer’ context.  Anderson Chow J. rejected this.  Laskar was, rather, authority for the proposition that the Stack v Dowden presumption of equality in joint name cases only applied to the ‘domestic consumer’ context.  In fact, the case goes to show that it is difficult to draw a dividing line between the domestic and consumer contexts.

Michael Lower

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Legal joint tenancy: determining beneficial ownership under a common intention constructive trust

In Lo Kau Kun v Cheung Yuk Yun ([2015] HKEC 316, CFI) a married couple bought a flat as joint tenants. P claimed that the property was held on common intention constructive trust in equal shares. D claimed that she was the sole beneficial owner. Deputy Judge Sakhrani referred to the statements in Stack v Dowden ([68] in Stack) and Jones v Kernott ( [51] in Jones) to the effect that where the legal title is in joint names and there is a question as to beneficial ownership equity follows the law (so that a legal joint tenancy gives rise to equal shares) but that it may be possible to show a contrary intention (the burden of proof being on the party seeking to establish this). P had paid the down payment. P and D were jointly liable under the terms of the mortgage and each had contributed to the mortgage payments. Crucially, there was a finding that the parties had discussed their intentions concerning the ownership of the property ([63]). The couple had agreed that the property was to be a family asset (to be held equally as a family asset according to P) ([64]). This (not the record of financial contributions) was determinative. The property was held on common intention constructive trust in equal shares ([66]).

D also argued that she had extinguished P’s title by adverse possession. P had left the property in 1993 after a violent argument and never returned ([77]). This argument failed since D was entitled to be in possession as co-owner. There was no evidence of the ouster that would be necessary for this claim to succeed ([81]).

Michael Lower