News
News //
Submitted by // K Bowers, Partner / Solicitor Advocate
22 August 2018


Ng Po Yu and Another v Lam Kai On [2018] HKCU 2335

Introduction

This is a case involving a family dispute over the ownership of a house ("House") which was left by the deceased ("Mother"), who had 3 sons from a previous marriage and a daughter, the 1st Plaintiff, from her second marriage to Mr. Ng ("Father"). The Mother left the House to her 3 sons (one of which was the Defendant) in a will.

In 1982, the Mother and Father ("Parents") set up a fabric wholesale business called Shun Lee Trading Co ("Shun Lee"), and held equal shares in Shun Lee as partners. Over the years, the Parents bought 6 properties held in either the sole name of the Father or the Mother.

During the 1990s, the 1st Plaintiff gave up her job to help the Parents with the running of Shun Lee. Among other transactions involving the Parents' properties, a mortgage was created over the House in May 1996 to secure banking facilities for Shun Lee. Over the years, multiple facilities and loans were taken out by the Father, the 1st Plaintiff, and Shun Lee. The House eventually became the only property left in the family.

After the Mother died during May 2012, the 1st Plaintiff applied for letters of administration. She then discovered the Mother's will.

Parties' respective cases

The 1st Plaintiff's case was three-fold:

- there was a general promise by the Parents which led to the 1st Plaintiff leaving her job to (i) help run the family business (ii) repay the mortgage, and (iii) maintain the Parents ("3 Conditions");

- the Mother had asked the 1st Plaintiff to perform the 3 Conditions on the express understanding that the House would be left to the 1st Plaintiff; and

- there was a common intention constructive trust which arose after the 1st Plaintiff assumed liability for repaying the mortgage on the House in return for the Mother's agreement to leave her the interest in the House.

The Defendant pointed out that the ownership of the House was in the Mother's sole name, and asserted that he had also helped run (for no pay) the Mother's business between 1970 – 1980 and that the bank loans were taken out wholly or partly for the personal use of the Father and the 1st Plaintiff. The Defendant also claimed that the 1st Plaintiff had provided maintenance and had repaid the mortgage on the House in discharge of her filial duties, and not in exchange for the House.

Findings

In assessing whether a constructive trust had been created, the starting point is that beneficial interest follows the legal title. The burden of proof in establishing that there was a constructive trust fell on the 1st Plaintiff. The principles for a common intention constructive trust are that there must be:-

a) a common intention between the parties that one party was to be the beneficial owner of a property despite the fact that the property was acquired in another's name;

b) the claiming party had altered its position in detrimental reliance upon such a common intention; and

c) it is therefore unconscionable for the legal owner to assert ownership in reliance on his/her legal title to the property.

In relation to the 1st Plaintiff leaving her job to perform the 3 Conditions, the Court found that the 1st Plaintiff had received significant benefits at the beginning of her career working for the family business. In evidence, the 1st Plaintiff also stated that she had acquired shares in some of the family business. As such, she had suffered no real detriment. The Court did not find any incentive on the part of the Parents to make a general promise. Without any concrete evidence of intention, the Court found that the facts and evidence did not support the 1st Plaintiff's case.

It is worth pointing out however that although the 1st Plaintiff's case in constructive trust failed, the Court found that the 1st Plaintiff's money was the source of the repayment of the mortgage on the House and that these repayments had not been made out of filial duties. As such, the Court held that the Mother's estate should reimburse 3/4 of the mortgage repayments made by the 1st Plaintiff. The monetary judgment for repayment was charged on the House until full payment by the Mother's estate.

Comment

It is important for family members to ensure that interests in property and other family-owned assets are recorded in writing (and preferably witnessed), so that there is 'hard' documentary evidence of any conflicting interests to prefer any family member over another – the alternative (in disputed cases) is an expensive, long-drawn out court process which can (and does) cause permanent damage to family relationships.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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Please click here for a printable PDF version.


About Us

Howse Williams Bowers is an independent law firm which combines the in-depth experience of its lawyers with a forward thinking approach.

Our key practice areas are corporate/commercial and corporate finance; commercial and maritime dispute resolution; clinical negligence and healthcare; insurance, personal injury and professional indemnity insurance; employment; family and matrimonial; property and building management; banking; financial services/corporate regulatory and compliance.

As an independent law firm we are able to minimise legal and commercial conflicts of interest and act for clients in every industry sector. The partners have spent the majority of their careers in Hong Kong and have a detailed understanding of international business and business in Asia.

Disclaimer: The information contained in this article is intended to be a general guide only and is not intended to provide legal advice.  Please contact pr@hwbhk.com if you have any questions about the article.

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