Hong Kong Cases

In Hong Kong, we recently have two cases concerning the ownership of a flat under the Home Ownership Scheme

In November 2012, the Court of Final Appeal ruled that each family member was entitled to ownership in proportion to their mortgage contributions. That means people who contribute to mortgage payments for Home Ownership Scheme flats are entitled to partial ownership, even though they are not named on formal documents.

FACV 9,11/2011 refers.

 

Legal Principles (Note 1)

 

Where there is no express trust declared over land, the courts will look for the common intention of the parties as to the equitable ownership of the home.

Presumptions

Stack v Dowden held that where the legal title is in joint names, there will be a presumption that the equitable interest is similarly held jointly; whereas if the legal title is held in one person’s name, then the presumption will be that person is the sole owner of the equitable interest. Either presumption may be rebutted on the following principles.

 

Common Intention

The position established in Lloyds Bank v Rosset is as follows: Where the parties have formed an agreement, arrangement or understanding as to the beneficial ownership of the home then the court will give effect to that common intention by means of constructive trust or proprietary estoppel if the claimant has also suffered detriment.

 

The second means, in the absence of agreement, will be to give effect to the common intention of the parties where the claimant has contributed to the purchase price of the property or to the mortgage instalments, again by way of constructive trust or proprietary estoppel.

Purchase Price

However, some UK Court of Appeal decisions have held that where a person contributes to the purchase price of the home, an amount of the total equitable interest proportionate to the size of the contribution will be held on resulting trust for that person.

 

Alternative UK Court of Appeal decisions have developed two further approaches.

Balance Sheet Approach

Firstly, a balance sheet approach based on resulting trust which favours a measurement of financial contribution over the life of a relationship to calculate proportionate equitable rights in the home.

 

Family Asset Approach

Secondly, a family assets approach, akin to the approach of a family court in divorce proceedings, which undertakes a survey of the parties’ entire course of dealing – thus going far beyond the approach in Lloyd Bank v Rosset – which suggests that property should be deemed to be held equally between couples.

Proprietary Estoppel

The doctrine of proprietary estoppel will grant an equitable interest to a person who has been induced to suffer detriment in reliance on a representation that she would acquire some rights in the property as a result.

Proprietary estoppel is a remedial doctrine whereby the court may award any one of a number of rights ranging from the entire freehold through to merely equitable compensation in money.

Unconscionability

The most recent trend in the UK case law has been to develop an approach based on avoiding unconscionability of the defendant were permitted to deny the claimant an equitable interest in the property. The ultimate aim is to reach a fair result and to supply the parties with a common intention if that is necessary.

 

Note 1 : Alastair Hudson, Equity And Trust, 6th Editon, 2010, London, Routledge Cavendish. pp.631-632.