On 14 January 2022, the High Court handed down its reasons for judgment in Kwan Kwai Lin v Yeung On Ki  HKCFI 174 dismissing the Plaintiffs’ claims, and allowing the Defendant’s counterclaims.
The 1st and 2nd Plaintiffs were the Deceased’s husband (“Kwan“) and Kwan acting as administrator of the Deceased’s estate. The Defendant is the sister of the Deceased.
The dispute concerns the beneficial ownership of a flat in Yuen Long which was purchased in August 2003 and has been registered in the name of the Defendant. Since then, Kwan, the Deceased, their daughter and the Defendant lived in the flat. In 2007, the Defendant moved out to live with her then-boyfriend. The Deceased passed away in 2013.
The Plaintiffs’ case was that in 2003, before purchasing the flat, the parties had agreed for the Defendant to hold the flat on constructive trust for Kwan and the Deceased. Subsequently, Kwan discovered, in breach of her duties as trustee, the Defendant re-mortgaged the flat without prior notice. As a fallback, the Plaintiffs sought to rely on the presumption of resulting trust and claimed to have made certain monetary contributions towards the purchase price.
On the other hand, it is the Defendant’s case that between herself and the Deceased, it was agreed that the Defendant would be the legal and beneficial owner of the property. The Deceased would pay for the mortgage in consideration of the Defendant taking care of their parents and allowing the Deceased, Kwan and their daughter to live in the flat. The Defendant therefore counterclaimed for a declaration that she was the legal and beneficial owner, for vacant possession and mesne profits.
As to the issue of beneficial interest, the Court examined the approach to finding common intention constructive trust. In particular, following the Court of Appeal’s judgment in Primecredit Ltd v Yeung Chun Pang Barry  4 HKLRD 327, the Court found that there are two situations where a common intention constructive trust may arise: (i) where there was an agreement, arrangement or understanding between the parties prior to the acquisition; or (ii) where there is no evidence to support an agreement or arrangement, the Court nevertheless finds sufficient basis from which to infer a common intention.
Monetary contribution is a relevant consideration in the latter, but, particularly in the domestic context, the court is not constrained by pure direct monetary contributions. In both cases, the inherent probabilities in light of surrounding circumstances are important.
As to the evidence, the Court held that the inherent probabilities were strongly in the Defendant’s favour. Further, the Court also found major inconsistencies between Kwan’s oral evidence, pleaded case and witness statements. In contrast, the Defendant was credible and reliable.
Accordingly, the Court believed the Defendant’s version of facts and held that the Plaintiffs’ claims were dismissed and the Court allowed the Defendant’s counterclaims.
Deanna Law acted for the Defendant, instructed by Alex To & Co Solicitors.
The Court’s reasons for judgment can be found here.