MO YING v. BRILLEX DEVELOPMENT LTD AND ANOTHER

HCA 111/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 111 OF 2011

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A. INTRODUCTION

1.  These proceedings arise out of a dispute concerning the ownership of a residential flat at Flat G, 6^th Floor, State Theatre Building, Nos 277‑291 King’s Road, Nos 4, 4A‑D, 6, 6A‑D Java Road, Nos 2‑16 Tin Chong Street, Hong Kong (“the Property”).  The Property was the former matrimonial home of the plaintiff, Madam Mo Ying (“the Wife”) and the 2^nd defendant, Mr Chan Wai Tim (“the Husband”), and was at all material times registered in the Husband’s name.

2.  More than two years before the Wife commenced divorce proceedings against the Husband, the Husband sold the Property to the 1^st defendant, Brillex Development Limited (“the Purchaser”).  In this action, she claims against both the Husband and the Purchaser that she has some beneficial interest in the Property on the basis of a common intention constructive trust.

B. THE RELEVANT FACTUAL BACKGROUND

3.  The facts set out in this section were largely not disputed by the parties.

B1. Husband and Wife’s marriage in 1987

4.  The Husband and Wife were married in Hangzhou in Mainland China on 29 October 1987.  At the time of their marriage, the Husband was residing in Hong Kong and the Wife was residing in the Mainland.

B2. Husband’s purchase of the Property in 1988

5.  By a sale and purchase agreement dated 31 May 1988, the Husband agreed to purchase the Property for HK$500,000.

6.  On 20 June 1988, the Property was assigned to the Husband.

7.  The Husband purchased the Property with the assistance of a loan from Hang Seng Finance Limited (“Hang Seng”).  On 20 June 1988, a mortgage over the Property was executed by the Husband in favour of Hang Seng to secure the loan (“the Hang Seng Mortgage”).

8.  The Hang Seng Mortgage was discharged on 28 December 1993.

B3. Wife’s arrival in Hong Kong in 1988

9.  In December 1988, the Wife came to reside in Hong Kong from the Mainland.

B4. Birth of children in 1990 and 1995

10.  The Wife and Husband have two children.  On 8 January 1990, the Wife gave birth to a daughter.  On 12 November 1995, the Wife gave birth to a son. 

B5. Husband’s sale of Property to the Purchaser in 2008 and renting of Property from 2008 to 2010

11.  By a provisional sale and purchase agreement dated 18 July 2008 (“the Provisional SPA”), the Husband agreed to sell the Property to the Purchaser for HK$1,750,000.  The completion date was stated on the Provisional SPA to be 29 October 2008.

12.  On 31 July 2008, the Husband and the Purchaser executed the formal sale and purchase agreement in respect of the Property (“the Formal SPA”).

13.  By a tenancy agreement dated 9 October 2008 (“the Tenancy Agreement”), the Purchaser leased the Property to the Husband for one year from 29 October 2008 to 28 October 2009 for HK$9,500 per month.

14.  On 29 October 2008, the Husband and the Purchaser executed an assignment to assign the Property to the latter (“the Assignment”).

15.  After the expiry of the Tenancy Agreement on 28 October 2009, the Purchaser continued to lease the Property to the Husband on a monthly tenancy basis on the same terms as those in the Tenancy Agreement.

16.  The Husband continued to pay rent of HK$9,500 to the Purchaser until July 2010.

B6. Purchaser’s commencement of possession proceedings in 2010

17.  From late July 2010, the Husband defaulted in the payment of rent for the Property to the Purchaser.

18.  On 13 September 2010, the Purchaser commenced proceedings in the Lands Tribunal (LDPD 2264/2010) against the Husband to recover vacant possession of the Property (“the Possession Proceedings”).

19.  On 5 October 2010, Deputy HH Judge Kot ordered, amongst other things, that vacant possession of the Property be delivered to the Purchaser (“the Possession Order”).

20.  On 11 October 2010, the Wife applied to join in the Possession Proceedings as a co‑respondent. 

B7. Wife’s commencement of proceedings in 2011

21.  On 20 January 2011, the Wife commenced the present proceedings against the Purchaser and the Husband.

22.  On 30 January 2011, the Wife commenced divorce proceedings (FCMC 1264/2011) against the Husband (“the Divorce Proceedings”).

B8. Status of Possession Proceedings and Divorce Proceedings

23.  On 25 January 2011, Deputy HH Judge Kot allowed the Wife to be joined as a co‑respondent and ordered that the Possession Order be stayed upon the condition that the Wife should pay HK$9,500 per month from 1 February 2011 as interim payment to be stake‑held by the Purchaser’s solicitors.

24.  On 30 August 2011, the Purchaser successfully applied to be joined as an intervener in the Divorce Proceedings.

25.  On 25 November 2011, Deputy HH Judge Kot ordered that the interim payment order against the Wife be stayed.

26.  I was told by Ms Audrey Eu SC (leading Mr Alan Kwong), counsel for the Purchaser, that both the Possession Proceedings and the Divorce Proceedings are effectively stayed pending the determination of these proceedings.

C. THE PLAINTIFF’S CASE

27.  The Wife’s pleaded case can be summarised as follows:

(1) It was the common intention of the Wife and Husband that the Wife would have a beneficial interest in the Property.  The Husband therefore held the Property on a common intention constructive trust for himself and the Wife.

(2) In July 2008, the Husband sold the Property to the Purchaser without the knowledge or consent of the Wife.

(3) The sale price was below the market price of the Property.

(4) The Purchaser did not inspect the Property before the purchase.

(5) The Purchaser’s estate agent, Mr Chu Pui of Yue Kee Estate Agent (“Mr Chu”), knew that the Wife was in occupation of the Property at the time of purchase.  Mr Chu’s knowledge should be attributed to the Purchaser.

(6) The Purchaser had notice of the Wife’s beneficial interest in the Property.

(7) The Wife has not abandoned her right to enforce against the Property.

(8) The Wife seeks, amongst other things, (a) a declaration that she is a beneficial owner of the Property, (b) a declaration that the Husband holds the Property on trust for her, (c) a declaration that the Provisional SPA, the Formal SPA and the Assignment be null and void, (d) an order that the Purchaser do transfer the Property, or such share as the court thinks fair, to her, and (e) an account of profits made from the Property.

D. THE DEFENDANTS’ CASE

D1. The Purchaser’s case

28.  The Purchaser’s case against the Wife can be summarised as follows:

(1) The Wife has no beneficial interest in the Property.

(2) The purchase price of the Property was not below market value.

(3) Because the Husband leased the Property back immediately after the purchase, the Purchaser did not inspect the Property.

(4) An estate agent’s knowledge cannot be imputed or attributed to his principal.

(5) The Purchaser was a bona fide purchaser for value without notice.

(6) The Wife has waived her right to enforce, or is estopped from enforcing, against the Property.  Further, the Wife has acquiesced in the Purchaser’s purchase of the Property.

29.  The Purchaser has issued a Contribution Notice against the Husband. In the event that the Purchaser is found to be liable to the Wife, the Purchaser would claim against the Husband to be indemnified against the Wife’s claim and the costs of this action and, a number of other reliefs including (1) damages for breach of the covenants in the Assignment or the Formal SPA, (2) rescission of the Assignment, the Formal SPA and the Provisional SPA, and (3) restitution or refund of HK$1,750,000.

D2.    The Husband’s case

30.  Throughout these proceedings, the Husband was not legally represented.  He conducted the trial as a litigant in person.  His case is primarily that the Property belonged to him absolutely and there was no common intention between the Wife and him to share the Property beneficially.

E. THE ISSUES FOR DETERMINATION

31.  There are the following three principal issues in this trial for my determination:

(1) whether the Wife has any, and if so how much, beneficial interest in the Property under a common intention constructive trust (“the Common Intention Constructive Trust Issue”);

(2) whether the Purchaser was a bona fide purchaser for value without notice (“the Bona Fide Purchaser Issue”); and

(3) whether the Wife is barred from enforcing her rights by reason of estoppel, waiver, acquiescence, and laches (“the Estoppel, Waiver, Acquiescence and Laches Issue”).

F. THE COMMON INTENTION CONSTRUCTIVE TRUST ISSUE

F1. The Wife’s case on Common Intention Constructive Trust

32.  In her Statement of Claim, the Wife claimed that it was the common intention of her and the Husband that she would have a beneficial interest in the Property.  The following matters were pleaded as support of the alleged common intention:

(1) The Wife’s third sister, Madam Mo Ha Ting (“theThird Sister”) made a loan of HK$96,000 (“the Loan”) and the loan was used as part of the purchase price for the Property.

(2) The Husband and Wife pooled their income and resources together to build up their own family, to acquire the Property and to repay the Hang Seng Mortgage as well as the Loan.  The pooled income and resources were then used for the benefit of the household of both the Husband and Wife (“the Household”).

(3) The Husband and Wife rented out two bedrooms of the Property in order to generate rental income for the benefit of the Household, including the payment of the Hang Seng Mortgage as well as the Loan.

(4) With the consent of the Husband and Wife, the rental income of about HK$5,000 was appropriated to settle the mortgage instalments as well as some of the household expenses including the management fee, government rates, water and electricity charges and other outgoings for the benefit of the Household.

(5) In September 1997, the Wife resigned from work and became a full‑time housewife.  The Husband said to the Wife that he would from then on be responsible for the financial support of the family while the Wife would be responsible for the household work and taking care of the children.

F2. The relevant legal principles

33.  Where a property is vested only in one person’s name (A), the other party (B), in order to establish a beneficial interest, may be able to establish a constructive trust by showing that it would be inequitable or unconscionable for A to claim the entirety of the beneficial ownership.  This requires two matters to be proved:

(1) that there was a common intention that both should have a beneficial interest; and

(2) that B has acted to his/her detriment on the basis of that common intention. 

See Grant v Edwards [1986] Ch 638 at 654D‑E (Sir Nicolas Browne‑Wilkinson VC); Luo Xing Juan Angela v Estate of Hui Shui See Willy (2009) 12 HKCFAR 1 at §38 (Ribeiro PJ).  This type of constructive trust is generally known as a “common intention constructive trust”.

34.  The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership.  Therefore, in sole ownership cases, it is upon the non-owner to show that he/she has any interest at all. See Stack v Dowden [2007] 2 AC 432 at §§56 and 68 (Baroness Hale); Jones v Kernott [2012] 1 AC 776 at §17 (Lord Walker & Baroness Hale).

F2a.  Common intention to share the property beneficially

35.  The party alleging the common intention constructive trust must first prove that there was, at any time prior to acquisition or exceptionally at some later date, an agreement, arrangement or understanding reached between the parties that the property is to be shared beneficially: see Lloyds Bank Plc v Rosset [1991] 1 AC 107 at 132E‑F (Lord Bridge).

36.  The question of whether there was a common intention that each party should have a beneficial interest in the property has been described as the primary or threshold question: see Oxley v Hiscock [2005] Fam 211 at §§47 and 68 (Chadwick LJ); Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343 at §24 (Johnson Lam J).

37.  The common intention, or the agreement, arrangement or understanding, between the parties may be based on express discussions between them or inferred from their conduct: see Lloyds Bank Plc v Rosset at 132E‑133B (Lord Bridge) and Oxley v Hiscock at §§36 and 40 (Chadwick LJ).

38.  Express common intention:

(1) To found any express agreement, arrangement or understanding between the parties, there must have been some actual discussions between them, however imperfectly remembered and however imprecise their terms may have been: see Lloyds Bank v Rosset at 132F‑G (Lord Bridge).

(2) Express discussions should be pleaded in the greatest detail, both as to language and as to circumstance: Hammond v Mitchell [1991] 1 WLR 1127 at 1139E‑F (Waite J).

39.  Inferred common intention:

(1) Where the parties have not used words to communicate their intention, the court may infer from their conduct an intention that both are to have a beneficial interest in the property: see Lloyds Bank v Rosset at 132H.

(2) The search is to ascertain the parties’ actual shared intentions to be deducted objectively from their words and their actions: see Jones v Kernott at §§31, 46, 51 (Lord Walker & Baroness Hale), §64 (Lord Collins).

(3) The parties’ whole course of conduct in relation to the property must be taken into account in determining their shared intentions as to its ownership: see Stack v Dowden at §60 (Baroness Hale), Abbott v Abbott [2008] 1 FLR 1451 at §19 (Baroness Hale).

(4) Examples of the sort of evidence which might be relevant to drawing inferences from the parties’ conduct were given by Baroness Hale in Stack v Dowden at §69:

“Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties’ true intentions. These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties’ relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses…”

(5) Direct contributions to the purchase price by one party who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference: see Lloyds Bank v Rosset at 133A‑B (Lord Bridge).

40.  In Lloyds Bank v Rosset, Lord Bridge at 132D‑E referred to the distinction between:

(1) cases in which there is evidence of express discussions to support an agreement, arrangement or understanding reached between the parties that each is to have a beneficial interest in the property (ie cases of express common intention); and

(2) cases in which there is no evidence to support such a finding the court must rely entirely on the conduct of the parties (ie cases of inferred common intention). 

Lord Bridge said that “any judge required to resolve a dispute between former partners as to the beneficial interest in the home they formerly shared should always have [such a distinction] in the forefront of his mind”.

F2b. Detriment

41.  Once a finding of express discussions is made, the party asserting a claim to a beneficial interest must show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement, arrangement or understanding in order to give to a constructive trust: see Lloyds Bank v Rosset at 133G (Lord Bridge).

42.  There must be some connection between the plaintiff’s conduct and his/her belief that he/she has an interest in the property.  To constitute conduct amounting to an acting upon the common intention, it must be conduct on which the plaintiff could not reasonably have been expected to embark unless he/she was to have an interest in the property: see Grant v Edwards at 648G‑H (Nourse LJ).

F2c. Quantifying the shares

43.  The last question is to find out the extent of the parties’ respective beneficial interests in the property: see Oxley v Hiscock at §69 (Chadwick LJ); Chan Chui Mee at §25 (Johnson Lam J).

44.  Where the defined shares have been agreed by the parties, the court will give effect to that agreement.  

45.  The court cannot impute an intention that is contrary to the evidence: Stack v Dowden at §61 (Baroness Hale).

46.  When the evidence does not support an inference as to the shares they intended to take, the court can impute an intention to them.  The parties are taken to have intended whatever share was fair having regard to the whole course of dealing between them.  See Jones v Kernott at §§31 and 51 (Lord Walker & Baroness Hale) and §64 (Lord Collins).

F3. Express Common Intention

47.  As I read the Wife’s Statement of Claim, there is no contention that the Husband and Wife had any actual discussions about the sharing of the Property at any time.

48.  Moreover, in her cross‑examination by Ms Eu, the Wife accepted that she and the Husband never talked about how much interest she would have in the Property.

49.  Nonetheless, in the Wife’s written closing submissions, Mr William Wong SC (leading Mr Justin Lam) contended the Wife’s primary case on common intention constructive trust was based on an express common intention.  His contentions are summarised as follows:

(1) There was a discussion between the Husband and Wife regarding the addition of the Wife’s name as a co‑owner of the Property but the Husband refused and gave some excuse.

(2) This conversation involved an express verbal communication between the Husband and Wife and was made on the basis that the Wife was entitled to a share in the Property.

50.  The discussion between the Husband and Wife was described in the Wife’s written closing submissions as the “most important piece of evidence”.  Mr Wong submitted that the Wife was led by the Husband to believe that she had an interest in the Property.  He relied heavily on Grant v Edwards and Eves v Eves [1975] 1 WLR 1338 and submitted that the existence of the Wife’s interest in the Property was established by these two authorities. 

51.  The Wife’s evidence was that soon after she arrived in Hong Kong, she and the Husband discussed about adding her name as a co-owner of the Property. However, the Husband refused to do so and said to the Wife “it’s troublesome, have to pay” (“好麻煩，要加錢”).  In the course of writing this judgment, I listened to the court’s recording of this part of the proceedings and am satisfied that these were the actual words used by the Wife when she told Ms Eu what the Husband said in that discussion.  The Wife also told the court in her oral testimony that she did not have anything else to say to the Husband after he uttered those words. The Wife confirmed that that was the only conversation she had with the Husband about the addition of her name to the title of the Property.  The Husband accepted the Wife’s account in his cross‑examination. 

52.  Although the Husband agreed that there was such a conversation between him and the Wife, the Husband said in his oral testimony that the conversation was very brief and only comprised a few exchanges between them. 

53.  In her witness statement (in the same paragraph where she described the conversation with the Husband about the addition of name as a co-owner of the Property), she said irrespective of whether she was a registered owner, she believed that she would have some “beneficial interest” in the Property by reason of her being the wife of the Husband.  In her cross-examination, the Wife explained the use of the words “beneficial interest” in her witness statement and said that those words were used by her lawyers.  She said that what she meant was that she believed that she was to have a share in the Property by reason of her marriage.  There was no evidence from the Wife that she was led by the words uttered by the Husband in the conversation shortly after December 1988 into thinking that she had an interest in the Property.

54.  Mr Wong submitted that Eves v Eves and Grant v Edwards are authorities for the legal proposition that where there was a discussion about the beneficial interest of the property and the legal owner gave an impression to the partner that the latter would have some interest in the property, this would give rise to an express common intention for the purpose of a common intention constructive trust.

55.  In Eves v Eves, the parties lived together and intended to marry each other when they were free to do so.  A house was purchased in the man’s name.  He told the woman that it was to be their house, but that it would have to be in his name alone as she was under the age of 21.  This was an excuse to avoid a conveyance into joint names.  She made no financial contribution, but did a great deal of work in the house and garden.  After they parted, she successfully claimed a share of the beneficial interest in the house.

56.  In Grant v Edwards, the defendant told the plaintiff with whom he was cohabiting that her name was not to go on to the title because, if the property were acquired jointly, it would operate to her prejudice in the matrimonial proceedings between her and her husband.  The English Court of Appeal concluded that there was a common intention between the parties that the plaintiff was to have some sort of proprietary interest in the house.

57.  It is true that the man in both Eves v Eves and Grant v Edwards gave an excuse for not having the house conveyed into joint names, and that the English Court of Appeal in both cases concluded that a common intention existed between the parties for the woman to have some beneficial interest in the house.  However, it cannot be right to say that whenever a man makes an excuse for not wanting to convey a property into joint names, the court must necessarily find that there was a common intention between the parties that the property is to be shared beneficially.  The fact that a man makes an excuse does not necessarily mean that he accepts that the woman should have a share in the property.  Each case must turn on its own facts.  This was made abundantly clear in Stack v Dowden at 459B and Jones v Kernott at 794F.

58.  One can understand why the excuse made by the man in Eves v Eves and Grant v Edwards led the English Court of Appeal to conclude that there was a common intention to share the house:

(1) In Eves v Eves, the man told the woman that but for the fact that she was under 21, he would have put the house into their joint names:

“He told her that it was to be their house and a home for themselves and their children. He said that, as she was under 21, it could not be in joint names and had to be in his name alone; and that, but for her age, it would have been purchased in joint names.” [Lord Denning MR at 1340C-D]

“It is clear from the evidence, and was so found by Pennycick V-C, that at the time of the purchase the defendant told the plaintiff that if she had been 21 years of age, he would have put the house into their joint names, because it was to be their joint home.” [Brightman J at 1343H]

(2) Accordingly, on the facts of the case, the man clearly led the woman to believe that she was to have an interest in the house and the only reason why the house was not bought in joint names was that she was under 21. The basis for the court’s decision (Browne LJ and Brightman J) in favour of the woman rested upon the majority’s decision to draw an objective inference that there was an understanding that the woman was “intended to have some sort of proprietary interest in the house” (see 1343E, 1344A‑B and 1345B‑E).  Lord Denning MR reached his decision on the basis that the man “should be judged by what he told her – by what he led her to believe – and not by his own intent which he kept to himself” (1342E‑F).

(3) In Grant v Edwards, similar reasoning was given by the English Court of Appeal:

“Just as in Eves v Eves …, these facts appear to me to raise a clear inference that there was an understanding between the plaintiff and the defendant, or a common intention, that the plaintiff was to have some sort of proprietary interest in the house; otherwise no excuse for not putting her name onto the title would have been needed.” [Nourse LJ at 649B-C]

“Whatever the defendant’s actual intention, the nature of the excuse which he gave must have led the plaintiff to believe that she would in the future have her name on the title, and this in turn would justify her in concluding that she had from the outset some kind of right to the house. The case does not fall precisely within either of categories (b), (c) or (d) above, but the defendant’s conduct must now preclude him from denying that it is sufficiently analogous to these categories to make the relevant principles apply.” [Mustill LJ at 653E-G]

“… the representation made by the defendant to the plaintiff that the house would have been in the joint names but for the plaintiff’s matrimonial disputes is clear direct evidence of a common intention that she was to have an interest in the house…” [Sir Nicolas Browne-Wilkinson at 655G-H]

(4) In both of these decisions, it seems to me that the courts wanted to ensure that the woman obtained the share in the property which she was led to believe by the man that she could have had.  The same result could similarly have been achieved by applying the principles underlying the law of proprietary estoppel.  Indeed, Sir Nicolas Browne‑Wilkinson expressly referred to such a doctrine in Grant v Edwards at 656G‑H as being “closely akin to those laid down in Gissing v Gissing”.  Be that as it may, even on the conventional common intention constructive trust approach, the courts in these two English cases inferred from the objective facts (including the making of the excuse by the man) that the man intended the woman to have share in the house, even though the man subjectively and in his own mind did not intend to do so.

59.  In my view, the reasoning in Eves v Eves and Grant v Edwards is not applicable to the facts of the present case:

(1) Looking objectively at the words uttered by the Husband during the conversation, it seems to me that those words are equivocal.  On the one hand, it may be said that if the Husband truly thought that the Wife had no interest in the Property, he would have told her so directly and would not have just uttered the words.  On the other hand, the words that were in fact said by the Husband may be taken to mean that he did not want to add the Wife’s name to the title of the Property and therefore told her not to hassle him and brushed her off. 

(2) However, on her own evidence, the Wife was not led by the Husband’s words into believing that she would have an interest in the Property.  I have already mentioned the Wife’s evidence above and will not repeat it again.

(3) In any event, the nature of the words used by the Husband is very different from that of the excuse made by the man in Eves v Eves and Grant v Edwards.  In the two English cases, the nature of the excuse was such that the woman could well believe that her name would be added to the title of the property when the excuse given by the woman was no longer relevant (ie when she reached the age of 21 or when her matrimonial proceedings with the husband were over).  However, the Wife could not in the present case have reasonably believed that the reasons given by the Husband would one day disappear and that her name would be added to the title of the Property in the future.  As will be apparent below, I do not believe the Wife ever held such a belief.

(4) In these circumstances, I cannot infer from the words uttered by the Husband that there was a common intention between the Husband and Wife that the Wife was to have some interest in the Property.

60.  Further, it is important to bear in mind the distinction between a pre‑acquisition common intention and a post‑acquisition common intention:

(1) This distinction was highlighted by DHCJ J Lam (as he then was) in Ip Man Shan Henry v Ching Hing Construction Co Ltd [2003] 1 HKC 256 at §74:

“If the common understanding was arrived at prior to the acquisition of the property, the beneficial ownership had not yet been crystallized and one may infer a common intention more readily. On the other hand, if the common understanding were only formed after the acquisition of the property, this would imply a change in the beneficial ownership of the property. The evidence must support an inference that there was a fresh agreement as to beneficial ownership before the court can give effect to the common understanding. In other words, in that situation, there must be some evidence to infer that the original beneficial owner has agreed to give up some of his interest in the property in favour of the other party.”

(2) This passage was repeated by J Lam J (as he then was) in Chan Chui Mee at §34.  In particular, his Lordship did not think that the subsequent UK authorities like Stack v Dowden brought about any changes regarding that distinction.

(3) In James v Thomas [2007] 3 FCR 696, Sir John Chadwick at §24 said:

“… if the circumstances so demand, a constructive trust can arise some years after the property has been acquired by, and registered in the sole name of, one party who (at the time of acquisition) was, beyond dispute, the sole beneficial owner: Gissing v Gissing …, Bernard v Josephs … But, as those cases show, in the absence of an express post-acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of the acquisition.”

This passage cited with approval by J Lam J (as he then was) in Chan Chiu Mee in §35.

(4) The proposition that a court in the absence of an express post-acquisition agreement will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of the acquisition was followed by subsequent English cases: see Williams v Williams [2008] EWCA Civ 257 in §19 (Sir Peter Gibson), §36 (May LJ), §45 (Pill LJ).

(5) In all of the above cases, the property was in the sole name of one party and it was in that context that the courts made a distinction between a pre‑acquisition common intention and a post‑acquisition common intention.

(6) Mr Wong submitted that the proposition of Sir John Chadwick in §24 of James v Thomas has been “superseded” by Jones v Kernott [2012] 1 AC 776.  He relied on what Lord Walker and Baroness Hale said in §§47‑48 to support his submissions.  However, Jones v Kernott was not a single‑name case; it was a joint names case “where the parties already share[d] the beneficial interest” (§47).  As pointed out by Lord Walker and Baroness Hale in §52, the starting point for single name case is different from that of a joint names case.  I do not read what the Supreme Court said in Jones v Kernott as casting doubt on the correctness of the proposition in §24 of James v Thomas.

61.  Having carefully reviewed the evidence, I find that there was a short conversation between the Husband and Wife shortly after December 1988. In this conversation, the Wife asked the Husband to add her name as a co‑owner of the Property.  The Husband refused and said to the Wife “it’s troublesome, have to pay” (“好麻煩，要加錢”).  The Wife did not have any substantive response and the conversation ended shortly thereafter.  I find that the Husband at the time did not want to make the Wife a co‑owner of the Property, and that the Wife knew that this was the case.  And that was the reason why the Wife never raised the subject with the Husband again.  I do not think the words used by the Husband in fact led the Wife to believe that she was to have some interest in the Property.  These findings are made not on the basis of my assessment of the credibility of the Husband and Wife, but on the basis of the Wife’s own evidence, namely that the reason why she believed at the time she had an interest in the Property was due to the fact that she was married to the Husband.   Even on her evidence, the Wife never said that she was led by the Husband’s response in this short conversation into thinking that she had or would have an interest in the Property.  Insofar as the Wife thought at the time that she had an interest in the Property, I find that her (erroneous) belief was not caused by what the Husband said to her during the short conversation shortly after December 1988.

62.  Other than this short conversation between the Husband and Wife shortly after December 1988, I find that there was no actual discussion at any time between the Wife and Husband about whether the Wife would have any beneficial interest in the Property.

63.  For the above reasons, there was no express common intention between the Husband and Wife concerning the sharing of the Property at any time.

F4. Inferred Common Intention

64.  Apart from express common intention, the Wife also alleged that the court should infer from the conduct of the Husband and Wife a common intention that both were to have a beneficial interest in the Property.  Mr Wong submitted that he relied on 5 matters to give rise to such inference that both the Husband and Wife would have a beneficial interest in the Property:

(1) there was a marriage;

(2) the Wife made monetary contributions through the pooled family resources;

(3) the Husband abandoned the Property after 2005;

(4) the Husband took away his hi‑fi equipment from the Property in December 2008; and

(5) the Third Sister was allowed to stay at the Property after its purchase.

65.  As far as the second matter is concerned, the Wife alleged that through the existence of “pooled family resources”, she contributed to (1) the purchase price of the Property, (2) the payment of mortgage instalments in relation to the Property, and (3) the household expenses.

F4a.  Marriage between the Husband and Wife

66.  Mr Wong submitted that the court should infer from the existence of the marriage between the Husband and Wife that each of them intended to have a beneficial interest in their matrimonial home.  I am unable to accept this submission.

67.  The fact that two persons get married and live in a family home (either by themselves or with other family members) does not throw light on their intention in relation to the beneficial ownership of the home.  As Lord Bridge said in Lloyds Bank v Rosset at 130D:

“I pause to observe that neither a common intention by spouses that a house is to be renovated as a ‘joint venture’ nor a common intention that the house is to be shared by parents and children as the family home throws any light on their intentions with respect to the beneficial ownership of the property.”

68.  Therefore, I cannot infer from the marriage between the Husband and Wife and the fact that they used to live together with the children at the Property that the two of them intended to each have a beneficial interest in the Property.

F4b.  The Wife’s alleged contribution to purchase price of the Property

69.  The Wife contended that the Property was purchased with the assistance of the Loan (from the Third Sister):

(1) There is no dispute that the Third Sister made a loan of HK$96,000 in December 1987.  The Wife produced a copy of a receipt dated 17 December 1987 and signed by the Husband acknowledging the making of the Loan.

(2) There is a dispute as to whether any part of the Loan was used towards the purchase of the Property.  The Wife said the entirety of it was used in the purchase of the Property.  The Husband disputed this and said that none of it was used towards the purchase.

(3) It is right to point out that the Wife’s case about the purpose of the Loan and the application of the money under the Loan was not altogether consistent:

(a) In the Wife’s Statement of Claim, she alleged that the Loan (of HK$96,000) was used to pay the purchase price of the Property.  In the pleading, there was no mention of the identity of the borrower or the exact amount of money which went into the purchase of the Property.

(b) This led to the Purchaser making a request for further and better particulars.  In her Answers, the Wife said that (i) the Loan was made between the Third Sister as the lender and the Husband for and on behalf of himself and the Wife as the borrowers, and (ii) she did not know the exact amount of the Loan which was applied for the payment of the purchase price.  The Answers were signed by the Wife after the relevant interpretation was made to her.

(c) In her cross-examination by Ms Eu, the Wife said that the Loan was made to the Husband as the borrower and that all the money from the Loan was applied towards the purchase of the Property.  There were discrepancies between the Wife’s oral testimony and her written answers previously filed, and Ms Eu asked the Wife about such discrepancies.  As to the identity of the borrower, the Wife said that she was the cause for the Loan to be made.  As to the application of the money from the Loan, the Wife said that her solicitors possibly did not listen to her carefully when her written answers were prepared.

(d) In her re‑examination, the Wife said that she did not know how the Husband made use of the Loan of HK$96,000.

(4) In her cross‑examination, the Wife further told the court for the first time that the Loan was repaid by treating the Third Sister as paying rent of HK$2,000 a month for the occupation of herself and her family in the Property.  Ms Eu pointed out to the Wife that the HK$2,000 per month notional rent was never mentioned in her written answers to the requests for further and better particulars, or in her witness statement.  The Wife was not able to give any satisfactory explanation for her failure to mention this piece of evidence.

(5) In his oral testimony, the Husband said that the Loan from the Third Sister was not made for him to purchase the Property.  He disagreed with the suggestion that he needed the Loan to purchase the Property.  It is apparent from the next sub-paragraph that I have not found it necessary to place any weight on the Husband’s evidence on the issue in order to arrive at my conclusion.

(6) On balance, I am unable to accept the Wife’s evidence that the money from the Third Sister went into the purchase of the Property.  First, the timing of the Loan did not quite match the Husband’s purchase of the Property.  The Loan was made on 17 December 1987 but the Husband only agreed to purchase the Property on 31 May 1988.  I am unable to infer that the Loan of HK$96,000 was retained by the Husband for over five months to pay for the HK$10,000 deposit on 31 May 1988, or the HK$40,000 further deposit on or before 5 June 1988, or as partial payment for the HK$450,000 as the balance of purchase price on 20 June 1988.  Second, there were unsatisfactory aspects about the Wife’s evidence concerning the Loan and I am not satisfied that she knew how the money from the Loan was used by the Husband.  Indeed, she frankly admitted in her re-examination that she did not know how the Husband applied the Loan.  For these two reasons, I do not find that the HK$96,000 from the Third Sister (or any part thereof) was applied towards the purchase of the Property by the Husband in 1988.

(7) In any event, it is conceptually difficult to see how a loan from a third party can be used to constitute a contribution by the Wife towards the purchase of the Property.  As pointed out in the Purchaser’s written closing submissions, the nature of loan is that it has to be repaid and is not a contribution for acquiring beneficial interest in the property.

70.  Following from my conclusion that the Wife has not established that any part of the Loan was subsequently applied towards the payment of purchase price of the Property in 1988, I find that the initial deposit of HK$10,000 and the further deposit of HK$40,000 for the purchase of the Property were paid by the Husband using his own money.  I also find that the Wife did not in any way contribute to the payment of purchase price when the Property was purchased by the Husband in 1988.

F4c.   The Wife’s alleged contribution to payment of mortgage instalments

71.  It was submitted on behalf of the Wife that “Mortgage payments were … made by the pooled family resources, including rent from the [Property]”.  It appears to be the Wife’s contention that the Husband and Wife consciously pooled the family resources together and the mortgage instalments were settled by the Husband using the pooled family resources.  If this were true, it might provide a basis for the Wife to contend that she indirectly contributed to the payment of mortgage instalments in relation to the Property.

72.  The Wife’s evidence was that the Husband and Wife pooled their income and resources to acquire the Property, to repay the mortgage in respect of the Property, to repay the Loan and for the benefit of the Household.

73.  In her evidence, the Wife accepted that all the mortgage instalment payments were made by the Husband.  The Wife also gave evidence to say that the rental income of about HK$5,000 per month was used, with the consent of both herself and the Husband, to settle the mortgage instalments as well as some of the household expenses.

74.  In her cross-examination, the Wife accepted:

(1) she never had any joint bank account with the Husband;

(2) all of her salary income was paid into her personal bank account; and

(3) all expenses relating to the Property were paid by the Husband (despite the fact that she said in her witness statement that some of the household expenses including the management fees, Government rates, water and electricity charges were paid from the alleged pooled income and resources).

75.  There was no dispute that it was the Husband who arranged for all the mortgage instalments to be paid.  The Husband gave evidence to this effect at the trial.

76.  However, the Husband denied that the mortgage instalments were paid from the rental income.  He said he had sufficient money to settle them from his salary.  Moreover, he said that all the expenses relating to the Property including management fees, all utility expenses, rates, as well as renovation expenses.  The Husband disagreed with the Wife’s contention that there was any pooling of income between him and the Wife, and that there was any discussion between them relating to the application of the rental income.

77.  In seeking to resolve the factual differences between the Husband and Wife in this case, I bear in mind the general principles which judges apply as to fact finding and the assessment of credibility.  Some of these principles were recently summarised in Hui Cheung Fai v Daiwa Development Ltd (unreported, HCA 1734/2009, 8 April 2014) §§77-80:

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce)…

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

78.  In the context of the present case, I also bear in mind what Baroness Hale said at §69 of Stack v Dowden where she said the “parties’ individual characters and personalities may also be a factor in deciding where their true intentions lay”.  On this point, I have seen how the Wife and Husband gave their evidence from the witness box.  Although one’s true character and personality may never be accurately assessed from the witness box, it is fair to say that one aspect of the Husband’s character and personality surfaced fairly clearly during his oral testimony.  When the Husband was asked in cross-examination why he did not consult the Wife before signing the Provisional SPA, the Husband said that he just decided to sell the Property and that was his way of doing things.  Having seen the Husband giving evidence in the witness box, it appears to me that the Husband is a man of strong character and is not the sort of person who would discuss family matters with the Wife.  Indeed, Ms Eu in her closing submissions described the Husband as someone with “a big ego” and “in every respect a male chauvinist”. Bearing in mind that one should not too readily draw conclusions about a witness’ reliability from the assessment of his character, I should emphasise that my assessment of the Husband’s character and personality in this respect is only relevant to my assessment of the inherently likelihood of the Wife’s case concerning the existence of the alleged pooled family resources.

79.  Neither the Husband nor the Wife produced any contemporaneous documents to support their respective evidence.

80.  On the existing evidence, I find it was inherently unlikely for the Husband and Wife at the material times to have any arrangement or understanding between them that they should pool their resources together to settle the mortgage instalments.  First, there was no joint bank account between the Husband and Wife and they kept their income separate at the material times.  I am not satisfied that the Wife has proved on a balance of probabilities that the money used by the Husband to pay the mortgage instalments was not his alone but came from some “pooled resources”.  Second, in view of the Husband’s strong personality, I find it difficult to imagine that this couple would have had any discussion about how to pool their resources together to settle any payment. Third, I am not satisfied on the evidence that the Husband needed the Wife’s income to settle the mortgage instalments.  If the Husband could afford paying the mortgage (as he claimed he could and I do not have sufficient basis to disbelieve him on this point), I find it inherently improbable that he would agree with the arrangement now contended for by the Wife.  I find that it is more probable than not that the money for the payment of mortgage instalments came entirely from the Husband’s own resources and not from the alleged pooled resources of the family.  I am unable to find that there were any pooled resources in this family.  I also find that the Wife did not in any way contribute to the payment of mortgage instalments in respect of the Property.

F4d.  The Wife’s alleged contribution to household expenses

81.  As mentioned above, the Wife alleged that she and the Husband pooled their income together and spent it on the household expenses.  By household expenses, I refer to the everyday expenses of the family (eg expenses for grocery), but excluding those relating to the Property (eg utility expenses).

82.  A common intention may be inferred where there is an agreement between the parties that the payment by one of them of the household expenses permits the other to pay the mortgage instalments: see Gissing v Gissing [1971] AC 886 at 903B‑C (Lord Pearson).

83.  However, following from my finding that the Husband and Wife did not have any arrangement or understanding between them that they should pool their resources together to settle the mortgage instalments, I also find that there was no arrangement or understanding between them to pool their resources to pay for the household expenses. 

84.  Mr Wong submitted that the Wife must have paid some household expenses.  I have no reason to doubt this.  However, I do not think this is a sufficient basis to infer that the Husband and Wife each intended to have a beneficial interest in the Property.  This is because the mere payment of household expenses is not an expenditure that is referable to the acquisition of the property: see Burns v Burns [1984] Ch 317 at 328H‑329C (Fox LJ); Grant v Edwards at 647B.  I understand from Mr Wong’s submissions that this proposition was accepted by the Wife.

85.  For these reasons, I cannot infer from the Wife’s payment of household expenses (ie expenses not related to the Property) that there was a common intention between the Husband and Wife that the Property was to be shared beneficially.

F4e.   The Husband’s alleged abandonment of the Property in 2005

86.  The Wife’s evidence was that the Husband no longer lived at the Property from 2005 onwards and had from that date abandoned the family.  The Husband disagreed with the Wife’s evidence.

87.  I do not consider this to be a relevant issue.  Even if (which I do not find) the Husband did move out of the Property in 2005, that cannot have any bearing as to whether there was or was not any common intention between the Husband and Wife that each of them should have a beneficial interest in the Property.

F4f.   The Husband’s removal of hi-fi equipment from the Property in 2008

88.  In the Husband’s cross-examination, he said that he went back to the Property in 2008 to take away his hi-fi equipment.  Mr Wong submitted that this was consistent with the Wife having some interest in the Property. I disagree with this submission.  I cannot see how the removal of certain chattels from the Property by the Husband can give rise to an inference that there was a common intention that the Wife would have some beneficial interest in the Property.

F4g.  The Third Sister’s occupation at the Property

89.  The Wife’s evidence was that the Third Sister occupied a room at the Property with her family from around August 1988 to around February 1990. The Husband did not seriously dispute this.  Mr Wong submitted that the fact that the Third Sister was allowed to live at the Property suggested that the Wife had an interest in the Property.  I also cannot accept this submission.  On the Wife’s own case, the Third Sister was staying at the Property as a tenant (even though the rent she would have had to pay was set off against the Loan).  I fail to see how the Third Sister’s occupation at the Property can give rise to an inference of common intention that the Wife should have some beneficial interest in the Property.

F5. Detriment

90.  As mentioned in the above section on the legal principles, in order to establish a common intention constructive trust, a plaintiff must prove that he or she has acted to his/her detriment in reliance on the informal agreement, arrangement or understanding that he/she would acquire a beneficial interest in the property.  In case I am wrong in my conclusion on the existence of common intention, I proceed to briefly discuss the element of detriment and make the necessary findings.

91.  In the light of my findings made about regarding the absence of any alleged pooled family resources, it seems to me that the Wife can only rely on two matters to support her case on detriment: (1) that she paid for some of the household expenses (ie expenses not related to the Property) prior to 1997; and (2) that she resigned from work in around September 1997.

92.  In my view, neither of these matters (whether taken singly or together) can constitute reliance on the part of the Wife to establish a common intention constructive trust.  As mentioned above, the sort of conduct sufficient to constitute detriment for the purpose of establishing a common intention constructive trust must be conduct on which the plaintiff could not reasonably have been expected to embark unless he/she was to have an interest in the property: see Grant v Edwards at 648G‑H (Nourse LJ).  The two matters relied upon by the Wife cannot be described as such conduct. Indeed, as the Wife herself said so in her cross-examination, the reason why she gave up her job in 1997 was to look after the children and to help them with their studies, and she did not want to regret for not having done so.

93.  Accordingly, even if the Wife has established a common intention to share the Property beneficially (which she has not), I would not have been able to find that the Wife acted to her detriment in reliance on any agreement, arrangement or understanding that she would take a beneficial interest in the Property.

F6. Quantification of Interests

94.  In the light of my conclusion that there was never any common intention between the Husband and Wife that each of them should have a beneficial interest in the Property, the question (“what is the extent of the parties’ respective beneficial interests in the property?”) does not arise.

F7. Conclusion

95.  It is perhaps worth repeating one part of the Wife’s evidence to illustrate her frame of mind in bringing this claim.  As mentioned above, the Wife said that the reason why she believed that she has an interest in the Property was because she was the lawful wife of the Husband.  In other words, her belief was not grounded on the existence of some informal agreement, arrangement or understanding between herself and the Husband that she would have an interest in the Property.  In these proceedings, this Court is determining the property rights of the parties.  Whether or not the Wife should obtain any assets upon her divorce is not a question before this Court.

96.  Accordingly, I conclude that: (1) there was no common intention at any time, whether express or inferred, between the Husband and Wife that each should have a beneficial share in the Property; and (2) the Wife did not act to her detriment in the belief that by so acting she was acquiring a beneficial interest in the Property.  In these circumstances, it would neither be inequitable nor unconscionable for the Husband (who was the sole registered owner) to claim the entirety of the beneficial ownership of the Property.

97.  The Wife’s claim that the Property was held on a common intention constructive trust therefore fails. 

G. THE BONA FIDE PURCHASER ISSUE

G1. The Purchaser’s case

98.  The Purchaser contended that it was a bona fide purchaser for value without notice and should take free of the Wife’s interest even if she has any beneficial interest in the Property.

99.  In the light of my conclusion on the Common Intention Constructive Trust Issue, I do not strictly need to go into the Bona Fide Purchaser Issue.  However, in case I am wrong on my views expressed above, I will proceed to discuss this issue and make the necessary findings of fact.  Everything I say on the Bona Fide Purchaser Issue in this judgment is therefore on the assumption that the Wife has a beneficial interest in the Property under a common intention constructive trust.

G2. The Wife’s case

100.  The Wife alleged that the Purchaser was not a bona fide purchaser for value without notice.  Mr Wong submitted that the Purchaser had (1) actual, (2) imputed and (3) constructive, notice of the Wife’s beneficial interest in the Property.

101.  The Wife also took a point in her pleadings and evidence that the Property was sold by the Husband to the Purchaser at an undervalue.  This point was featured in Mr Wong’s opening submissions and was explored by Mr Wong in his cross-examination of the Purchaser’s witness.  At the end of his oral closing submissions, Mr Wong confirmed that the court would not need to be troubled by the Wife’s undervalue point.  Accordingly, in this judgment, I have treated the Wife’s undervalue complaint as no longer being an issue between the parties.

G3. Different kinds of notice

102.  The Wife relied on three classes of notice against the Purchaser and it is important to bear in mind what each class of notice means.

103.  I adopt the definition of the three classes of notice used in Snell’s Equity (32^nd edn, 2010) §4-027:

(1) Actual notice: where the equity was within the purchaser’s own knowledge.

(2) Constructive notice: where the equity would have come to the purchaser’s own knowledge if proper inquiries had been made.

(3) Imputed notice: where the purchaser’s agent as such in the course of the transaction had actual or constructive notice of the equity.

G4.    The Wife’s case on Actual Notice

104.  The Wife alleged that the Purchaser had actual notice of the Purchaser’s interest in the Property.

105.  In her closing submissions, Mr Eu objected to the Wife’s allegation of actual notice on the basis that it was not pleaded by the Wife.  Ms Eu took me to the relevant parts of the Wife’s pleadings to demonstrate that there was never any pleaded case that the Purchaser had actual notice of the Wife’s interest in the Property.  In response, Mr Wong submitted that the case of actual notice was pleaded and took me to a paragraph in the Wife’s Reply to the Purchaser’s Defence where the Wife pleaded “[the Purchaser] had notice of the [Wife’s] occupation of the [Property] and her refusal to sell the [Property] through its agent Mr Chu and/or Yue Kee Estate Agent”.  In my view, reading this paragraph as a whole, it is clear that it was not a plea of actual notice, but a plea of imputed notice.  The Wife in that paragraph relied on the notice of the Purchaser’s agent to support her case of notice; there was no plea that the Purchaser’s agent actually told the Purchaser what the agent knew.  I consider Ms Eu’s objection on pleading to be well‑founded.

106.  Be that as it may, I do not think the point would have assisted the Wife even if the case of actual notice had been pleaded.  This is because I do not consider that the Wife has proved that the Purchaser actually knew about the Wife’s interest in the Property.  Ms Sy Lai Li (“Ms Sy”) gave evidence for the Purchaser and her evidence was that the Purchaser never knew, or was told by anyone, whether the Wife had any interest in the Property. I accept her evidence in this regard. 

107.  If (contrary to my conclusion on the Constructive Trust Issue) the Wife has a beneficial interest in the Property, I would have concluded that the Purchaser did not at the material times have actual notice of the Wife’s interest in the Property.

G5. The Wife’s case on Imputed Notice

108.  The Wife’s case on imputed notice was that the Purchaser’s estate agent, Mr Chu, had notice of the Wife’s interest in the Property and such notice ought to be imputed to the Purchaser.

G5a. The relevant principles on imputed notice

109.  The general principles on imputed notice are summarised in Snell’s Equity (32^nd edn, 2010) §4-036:

“It has long been settled that any actual or constructive notice which an agent has (e.g. a purchaser’s solicitor or counsel) is normally imputed to his principal. The notice must have been obtained by the agent in the same transaction, and it must have come to the agent as such. Notice acquired in a previous transaction, however closely connected with the transaction in which the question of notice to the principal arises, is not sufficient to affect the principal. And even if the notice is acquired by the agent in the same transaction, it affects the principal only if it is so material to the transaction as to make it the duty of the agent to communicate it to the principal… The question of whether an agent has actual or constructive notice of a matter which can be imputed to the principal is an objective one and does not depend on the particular instructions given by the principal to the agent.”

110.  Ms Eu submitted that an estate agent in Hong Kong in law is not a true agent of the principal, but only a middle man.  She relied on what Godfrey J said in Cheng Kwok-fai v Mok Yiu-wah [1990] 2 HKLR 440 at 445F:

“An agent in the property market in Hong Kong is not, as it seems to me, in quite the same position as an estate agent in England and Wales … An agent in Hong Kong acts as a broker, usually, though not always, taking ‘commission’ from both vendor and purchaser.”

111.  This passage was relied upon by Chung J in Tai Sang Kung Ltd v Paraking Ltd [2001] 4 HKC 61 at 77D‑E to conclude that the estate agent on the facts of the case only acted as an “introducer” of the relevant property.

112.  In Yili Concepts (HKG) Ltd v Lee Wai Chuen (unreported, HCA 12911/97, 29 September 2000), DHCJ Kwan (as she then was) at pages 21 and 22 referred to Cheng Kwok Fai and said:

“It is a question of fact in each case whether an estate agent is authorised by and therefore acting for a particular party in providing information relating to a property to another party. Although an estate agent in Hong Kong usually acts as a broker taking commission from both sides, he may assume different roles at different stages of the negotiation leading to the transaction…

… I do not think Godfrey J [in Cheng Kwok Fai] was laying down any proposition of law that is generally applicable in that part of his judgment.  As I have stated, it is a question of fact whether an estate agent was acting for a particular party at a particular stage of the negotiating process.”

113.  In my view, I consider what Godfrey J was saying in the above-quoted passage in Cheng Kwok Fai was to explain that an estate agent in Hong Kong is not an agent in the strict legal sense.  An agent in the strict legal sense is a person who acts on behalf of the principal so as to affect the principal’s legal relations with a third party.  In a case of true agency, where the agent is effectively the alter ego of the principal, so that the agent’s acts are treated as the principal’s acts, it is not surprising that the agent’s knowledge is similarly attributed to the principal. However, an estate agent in Hong Kong cannot affect his principal’s legal relations with a third party, and is therefore not an agent in the strict legal sense.  This was explained by Lord Millett NPJ in ING Baring Securities (HK) Ltd v Commissioner of Inland Revenue (2007) 10 HKCFAR 417 at §§137-138:

“137. In Kennedy v. De Trafford [1897] AC 180 Lord Herschell observed (at p.188) that ‘No word is more commonly and constantly abused than the word ‘agent’’. An agent properly so called is a person who acts on behalf of another, called the principal, so as to affect the principal’s legal relations with a third party: see the definition in Bowstead and Reynolds on Agency (op. cit.) p.1. Where a contract is entered into by an agent acting on behalf a principal, it is the principal who obtains rights and incurs liability under the contract, not the agent. In such a case it is not inaccurate to describe the contract as the contract of the principal and not the agent.

138. But many professional persons who act for clients and who are popularly described as agents are not agents in this sense at all.  Estate agents are an obvious example.  Stockbrokers are another.  They transact business on the stock exchange as principals, not as agents for their clients.  Stockbrokers are liable as principals on the contracts which they make with each other; their clients have no liability under those contracts.  The only contractual liability which the client undertakes is to his own stockbroker under the contract between them in which each acts as principal.”

I believe this was why Godfrey J in Cheng Kwok Fai described a Hong Kong estate agent as a “broker”. 

114.  Accordingly, given that the Wife relied on the notice of an estate agent in the present case, it seems to me that she cannot simply rely on the general principle that “any actual or constructive notice which an agent has … is normally imputed to his principal”.  The Wife must rely on something more to impute the notice of Mr Chu or Yue Kee to the Purchaser.  Mr Wong appeared to recognise this and submitted that the question to ask was whether Yue Kee had actual or ostensible authority to receive information on behalf of the Purchase in relation to the transaction.

115.  The question posed by Mr Wong appeared to be taken from what Hoffmann LJ said in El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 at 703c-e:

“Agent authorised to receive communications

Thirdly, there are cases in which the agent has actual or ostensible authority to receive communications, whether informative (such as the state of health of an insured … or performative (such as a notice to quit …) on behalf of the principal.  In such cases, communication to the agent is communication to the principal.”

116.  Mr Wong then submitted that the question he posed must be answered in relation to the specific facts of the case. 

117.  In cases where an agent’s function is to receive communications on behalf of his principal, one can readily understand why the knowledge of the agent would be imputed to the principal.  However, I have some doubt as to whether such a principle applies to an estate agent in Hong Kong.  In a typical case, an estate agent’s function is to perform a service by introducing a counter-party to his principal so as to enable his principal to conclude a particular transaction with that counter-party; his function is not to receive communications on behalf of his principal.  No cases have been cited to suggest that an estate agent in Hong Kong has the general authority to receive communications for his principal.  Accordingly, I am unable to accept Mr Wong’s submission that notice of an estate agent in Hong Kong is imputed to his principal.

G5b.  Findings of fact

118.  In any event, I proceed to make the relevant findings of fact in the event that I am wrong in my conclusion above that notice of an estate agent is not imputed to his principal. 

119.  The Wife’s evidence was that after she learned of the Husband’s sale of the Property, she went to Yue Kee and told Mr Chu that she did not approve of the sale and would not move out of the Property.  The Wife said that she expressly told Mr Chu to pass on the message to the Purchaser.  The Wife also said that during that visit, Mr Chu’s daughter, Ms Chu Lai Sheung (“Ms Chu”), told the Wife that this had nothing to do with them and asked the Wife to discuss with the Husband.

120.  Before the trial, Mr Chu prepared a witness statement for the Purchaser (on 3 April 2012).  In the Purchaser’s written opening submissions, Ms Eu informed the court and the Wife that Mr Chu was unfit to attend the trial to give evidence.  A letter from Mr Chu’s doctor (dated 28 February 2014) was produced to certify that Mr Chu was suffering from senile dementia and that he was not able to present himself in court.  On the first day of the trial, Ms Eu asked the court for leave to allow Ms Chu to file a witness statement for the Purchaser.  Mr Wong did not object to the application.  I accordingly gave leave to the Purchaser to file Ms Chu’s witness statement.  Ms Chu attended the trial and gave evidence on behalf of the Purchaser.

121.  Ms Chu’s evidence was that: (1) the Wife did pay a visit to Yue Kee on one occasion and asked Mr Chu whether the Property had been sold; (2) Mr Chu told the Wife that the Husband had already sold the Property for HK$1,750,000 and that the Provisional SPA had already been signed; and (3) the Wife left Yue Kee without protest or making any objection to the sale.  In her cross-examination, Ms Chu said that she told the Wife on that occasion to ask the Husband about the sale.

122.  Mr Wong submitted that Ms Chu’s evidence should not be believed because it was inherently improbable for the Wife to visit Yue Kee and not object to the sale of the Property.  I do not find it inherently improbable for the Wife not to have made any objections during her visit to Yue Kee.  I do not see why a person would necessarily make objections to an estate agent about the sale of a property when the person knew that the provisional sale and purchase agreement has already been signed. 

123.  Mr Wong further attacked Ms Chu’s credibility by suggesting that there was no reason for her to tell the Wife to ask the Husband about the sale unless Ms Chu knew that there was already a dispute between the Husband and Wife over the sale of the Property.  I do not think this is necessarily correct.  As submitted by Ms Eu, as Ms Chu did not understand why the Wife would approach an estate agent to ask whether the Husband had sold the Property, it was only natural for Ms Chu to tell the Wife to talk to the Husband about the sale.

124.  Moreover, I bear in mind that Ms Chu is a completely independent witness and I can see no good reason for her to lie in her evidence.

125.  On the other hand, there are unsatisfactory aspects of the Wife’s evidence regarding her visit to Yue Kee: 

(1) First, when the Wife was cross-examined, I noticed that she was able to give some information which did not appear in her witness statement.  For example, the Wife in cross-examination said that she told Mr Chu to tell the purchaser to return the Property and Mr Chu told her that they had money and should go and buy an apartment in City Garden.  Such information was not mentioned in her witness statement.

(2) Further, the Wife in cross-examination said that Ms Chu “rushed out” to scold her when she (the Wife) was talking to Mr Chu at Yue Kee.  However, the premises of Yue Kee were less than 100 sq ft with two desks and no partition.  I do not understand how Ms Chu could have rushed out from anywhere on that occasion.

126.  For these reasons, as far as the Wife’s visit to Yue Kee is concerned, I prefer Ms Chu’s evidence to that of the Wife.  I find that on a day between 18 July 2008 (the date when the Provisional SPA was signed) and 29 October 2008 (date of completion of the sale and purchase of the Property), the Wife visited Yue Kee and spoke to Mr Chu.  On that occasion, the Wife asked Mr Chu whether the Property had been sold.  Mr Chu told the Wife that the Husband had already sold the Property for HK$1,750,000 and that the Provisional SPA had already been signed. Having heard Mr Chu’s response, the Wife left Yue Kee without protest or making any objection to the sale.

127.  It follows that I am unable to find that Mr Chu was told by the Wife that she would not move out of the Property or that she objected to the sale of the Property by the Husband. 

G5c.  Conclusion on imputed notice

128.  If (contrary to my conclusion on the Constructive Trust Issue) the Wife has a beneficial interest in the Property, I would have concluded that the Purchaser did not at the material times have imputed notice of the Wife’s interest in the Property.

G6. The Wife’s Case on Constructive Notice

G6a. The relevant principles

129.  According to Megarry & Wade: The Law of Real Property (7^th edn, 2008) §8-018, a purchaser has constructive notice of a fact if he:

(1) had actual notice that there was some incumbrance and a proper inquiry would have revealed what it was; or

(2) deliberately abstained from inquiry in an attempt to avoid having notice; or

(3) omitted by carelessness or for any other reason to make an inquiry which a purchaser acting on skilled advice ought to make and which would have revealed the incumbrance.

The learned editors also say that a purchaser’s ordinary duties fall into two main categories: inspection of the land, and investigation of the vendor’s title.

130.  As far as an inspection of the land is concerned, if the land is occupied by a person jointly with the vendor, this occupation will be constructive notice of that person’s rights such as any rights stemming from a contribution to the purchase price: Wong Chim-ying v Cheng Kam-wing [1991] 2 HKLR 253 at 273C-G (Clough JA).

G6b.  The Purchaser’s position

131.  There was no dispute that the Purchaser did not inspect the Property at any time prior to the completion of the purchase.  Ms Sy’s evidence was:

(1) She did intend to inspect the Property before completion but did not do so because the Husband, through Yue Kee, proposed to rent the Property upon completion and the tenancy agreement was signed on 9 October 2008.

(2) She believed that inspection was unnecessary since the vendor would continue to occupy the Property.  

Ms Sy fairly accepted in cross-examination that had there been an inspection, she would have known that the Wife was occupying the Property and would have known about the Wife’s position of not wanting to sell.

132.  Ms Eu accepted that Wong Chim Ying remains good law. She submitted that there is no direct authority suggesting how the legal principle should apply in situations where the purchaser and vendor enter into a post-completion rental arrangement.  She further submitted that in a rental case, the tenant has to pay rent every month and there would be a repeated and renewed acknowledgement and representation every month that the landlord is the owner and entitled to possession.  I am unable to accept these submissions:

(1) The law on what would amount to constructive notice is fairly clear.  I have already set out the legal principles above.

(2) I cannot accept that a purchaser’s duties to make enquiries would be different where a “sale-and-leaseback” arrangement is entered into between the purchaser and the vendor upon the completion of the sale and purchase.  It is true that under such an arrangement, the vendor’s capacity would change from a vendor to a tenant after the completion of the sale and purchase.  However, that change tells the purchaser nothing as to who was in actual occupation at the time when the property was being purchased.  Without an inspection of the property, the purchaser would not be in a position to know whether anyone with an unwritten equity (eg a beneficial interest under a common intention constructive trust) is in occupation.  A purchaser who chooses not to inspect the property in accordance with ordinary practice must bear the consequences.  As Shaw LJ said in Midland Bank Ltd v Farmpride Hatcheries Ltd (1981) 260 EG 493 at 496: “[if] a purchaser … elects to proceed with the transaction upon the assumption that no adverse interest exists of which he is not told, he will generally do so at his peril if reasonable enquiry would have elicited that his assumption was ill‑founded”.

G7. Conclusion

133.  Accordingly, if (contrary to my conclusion on the Constructive Trust Issue) the Wife has a beneficial interest in the Property, I would have concluded that the Purchaser had constructive notice of the Wife’s interest and would not be a bona fide purchaser for value without notice.

H. THE ESTOPPEL, WAIVER, ACQUIESCENCE AND LACHES ISSUE

134.  The Purchaser raised a number of distinct defences to defeat the Wife’s claim.  The Purchaser contended that by reason of the Wife’s conduct, she is now barred from claiming her beneficial interest in the Property.  As pointed out by Ms Eu, these defences are only applicable if (1) the Wife succeeds in her claim to establish that she has some beneficial interest in the Property, and (2) the Purchaser is not a bona fide purchaser for value without notice.

135.  In view of my conclusion above on the Common Intention Constructive Trust Issue, these defences strictly do not arise.  On the assumption that I am wrong on that issue, I now proceed to discuss the various defences and make the necessary findings.  Again, everything I say on this issue is on the assumption that the Wife has a beneficial interest in the Property under a common intention constructive trust.  Both Mr Wong and Ms Eu referred me to numerous authorities on this issue.  However, since what I say will necessarily be obiter, I hope I will be forgiven for referring to only some of the authorities.

H1. The Relevant Evidence and Findings of Fact

136.  There are two areas in which I need to make findings of fact for the purpose of making a determination on the application of the defences relied upon by the Purchaser: (1) the Wife’s knowledge of the sale of the Property by the Husband, and (2) the Wife’s knowledge of the lease of the Property entered into by the Husband.

H1a. Wife’s knowledge of sale of the Property

137.  The Wife’s own evidence was that she knew about the sale of the Property by the Husband on 1 October 2008.  The Husband, on the other hand, said in evidence that he told the Wife about the sale of the Property within a few days of his signing of the Provisional SPA on 18 July 2008. It is fair to record that the Husband did say in cross-examination that he was not sure about the exact timing. 

138.  The exact date on which the Wife learned about the sale of the Property is not important.  It is sufficient for me to find that the Wife knew about the sale of the Property on 1 October 2008 at the latest. 

H1b.  Wife’s knowledge of lease of the Property

139.  The Wife’s evidence was that she did not know about any lease arrangement in relation to the Property until she received an eviction notice in September 2010.

140.  I am unable to accept the Wife’s evidence that she only found out that she was occupying a leased property for the first time in September 2010:

(1) First, the Husband gave evidence that he took the Wife and the daughter to inspect other flats in North Point for rental when the Wife refused to move to Tai Po.  According to the Husband, it was only when the Wife expressed no interest in renting other flats that he entered into a lease in respect of the Property with the Purchaser on 9 October 2008.  Although there was other evidence given by the Husband that I would not accept, the evidence that I just set out was given by the Husband spontaneously on two separate occasions during the trial (once when he was cross-examining the Wife and once when he was being cross-examined by Mr Wong).  I accept the Husband’s account of the events.  On that basis, it seems to me more likely than not that the Wife knew that a leasing arrangement had to be entered into after the sale of the Property in October 2008.

(2) Second, the Husband also said in evidence that he told the Wife about the tenancy and the rental of $9,500 shortly after the tenancy agreement of 9 October 2008 was executed.  The Husband undertook the trouble to enter into the Tenancy Agreement with the Purchaser and I see no reason why he would not the Wife about the tenancy arrangement: the Wife was after all still living at the Property.  I also accept the Husband’s evidence in this regard.

(3) Third, there was no dispute that the Wife knew about the sale of the Property on 1 October 2008 and that she continued to stay at the Property from October 2008 to September 2010 when she received the eviction notice.  She was asked in cross-examination why and how she could continue to stay at the Property after October 2008. She told the court that she thought the problem had gone away.  I find her answer to be incredible, particularly in view of her own evidence that (a) the Husband would not withdraw from the sale of the Property and (b) she obtained no assistance during the visit to Yue Kee.

141.  Accordingly, I find that it is more likely than not the Wife knew in October 2008 or shortly thereafter that there was some lease arrangement in respect of the Property.

H2. Estoppel

142.  The Purchaser contended that if the Wife had a beneficial interest in the Property, she had a duty to speak out in the circumstances of this case and having failed to speak out, she is now estopped from asserting her interest.

143.  Ms Eu appeared to rely on both the doctrine of estoppel by representation and the doctrine of proprietary estoppel.

144.  The essential elements of estoppel by representation are (1) a representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made, (2)  an act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made, and (3) detriment to such person as a consequence of the act or omission.  See Greenwood v Martins Bank Ltd [1933] AC 51 at 57 (Lord Tomlin).

145.  The essential elements of proprietary estoppel have been described as follows:

(1) The owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the owner’s property (representation or assurance).

(2) In reliance upon this belief, the claimant acts to his detriment to the knowledge of the owner (reliance).

(3) The owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive (detriment).

See Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 at 144 (Oliver J); Thorner v Major [2009] 1 WLR 776 at §29 (Lord Walker); Chan Gordon v Lee Wai Hing [2011] 2 HKLRD 506 at §28 (DHCJ Au‑Yeung).

146.  I should say at once that I find it somewhat odd for the Purchaser to rely on the doctrine of proprietary estoppel to seek to defeat the Wife’s claim.  It is clear from the description of the elements of this doctrine that it is used as a cause of action (and not as a defence) to enforce or grant rights to those who have been induced or invest in or improve property owned by others either as a consequence of their own mistake or by direct encouragement or informal agreement.  I am therefore not convinced that proprietary estoppel can be used as a defence against the Wife in this case.  In any event, the three broad elements of proprietary estoppel appear to coincide closely with the elements of estoppel by representation, and it is not clear what additional benefit one can derive from the reliance on proprietary estoppel as a defence if the doctrine of estoppel by representation is applicable.  For these reasons, I will confine my discussion on the Purchaser’s defence of estoppel by representation in the remaining part of this section.

147.  Ms Eu submitted that a representation can be made by way of silence or inaction.  She relied on the proposition that the duty necessary to found an estoppel by silence or acquiescence arises where a reasonable man would expect the person against whom the estoppel is raised, acting honestly and responsibly, to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations: see Spencer Bower: The Law Relating to Estoppel by Representation (4^th edn, 2004) p 48 citing Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890 at 903F (Lord Wilberforce). Ms Eu also submitted that the duty to speak can arise in situations where there was no contractual or pre‑existing relationship between the parties: see Fung Kai Sun v Chan Fui Hing [1951] AC 489 at 501‑503 (Lord Reid).

148.  On the facts of the present case, I do not think the authorities cited by Ms Eu assist the Purchaser.  It cannot be disputed that the Purchaser had a duty to make inquiry, including a duty to inspect the Property (see Section G above).  In view of this, I do not think a duty to speak could be imposed on the Wife to inform the Purchaser of her interest in the Property.  Given that the Purchaser had failed to inspect the Property in the first place (and had therefore acquired constructive notice of the Wife’s interest in the Property), the Purchaser could not “reasonably assume” (using the words of Lord Wilberforce in Moorgate v Twitchings) that the Wife would not claim an interest in the Property.

149.  Ms Eu also relied on the case of Midland Bank Ltd v Farmpride Hatcheries Ltd (1981) 260 EG 493 to found a case of estoppel.  In that case, a company mortgaged its property to a bank and it was held that a contractual licensee who was in occupation of a house under a licence from the company, of which he and his wife were in complete control, to be estopped from relying on the constructive notice doctrine against the bank. This was because he had “set up a smoke-screen designed to hide even the possible existence of some interest in himself which could not derogate from the interest of the company ostensibly conferred by the mortgage” (Shaw LJ at 497).  In the present case, I do not find that the Wife deliberately withheld information about her interest in the Property.  I do not think this case assists the Purchaser.

150.  As the Purchaser has failed to establish the first element for an estoppel by representation (namely the existence of a representation), I do not propose to go on to discuss the remaining elements.  I conclude that the Purchaser’s defence of estoppel has not been made out.

H3. Waiver

151.  Further, Ms Eu submitted that the Wife’s inaction and/or conduct constituted a pure waiver or a waiver by election.

152.  Pure waiver can be summed up as “the unilateral divesture of certain rights” or “the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted”: see S Wilken QC & K Ghaly, The Law of Waiver, Variation, and Estoppel (3^rd edn, 2012) §4.28.

153.  The principles of waiver by election were summarised by Yuen JA in Large Land Investments v Cheung Siu Kwai [2003] 1 HKLRD 313 at §15:

(1) A waiver by election occurs, in the context of a binding contract, when a state of affairs comes into existence in which one party becomes entitled, either under the terms of the contract or by the general law, to exercise a right, and he has to decide whether or not to do so.

(2) It is a prerequisite of election that the party making the election must first be aware of the facts which have given rise to the existence of his right.

(3) It may be that the party must also be aware of his legal right of affirming or rescinding the contract when there has been repudiation by the other party.

(4) Further, since a party who elects not to exercise a right which has become available to him is abandoning that right, he will only be held to have done so if he has so communicated his election to the other party in clear and unequivocal terms.

154.  It is not entirely clear from the Purchaser’s case as to what was alleged to have been waived by the Wife.  Insofar as the Purchaser contended that the subject matter of the waiver was the Wife’s interest in the Property, it seems clear to me that there could not have been any such waiver because the Wife has not satisfied the relevant formality requirements to dispose of her beneficial interest in land.  Insofar as the Purchaser contended that the subject matter of the waiver was the Wife’s right to pursue her claim as a beneficial owner of the Property, I do not consider that the facts of the case support this contention.  There was nothing to suggest that the Wife actually knew of the identity of the Purchaser before she received the eviction notice in September 2010.  Ms Eu suggested that the Wife could have found out the identity of the Purchaser from the estate agents, or could have approached various government departments or other people for assistance.  That may be true, but I do not think the law requires someone like the Wife to have made enquiries about the identity of the Purchaser in the circumstances of the present case.  No authorities have been cited to me to suggest that the Wife should have been fixed with constructive knowledge of the identity of the Purchaser.  As the identity of the Purchaser was a pertinent fact which gave rise to the existence of her right of claim, the Wife cannot be said to have waived her right to pursue a claim against the Purchaser.

H4. Acquiescence

155.  Moreover, Ms Eu submitted that the Wife’s inaction and/or conduct amounted to acquiescence.

156.  The term “acquiescence” is used where a person having a right, and seeing another person about to commit, or in the course of committing an act infringing upon that right, stands by in such a manner as to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act: see De Bussche v Alt (1878) 8 Ch D 286 at 314.

157.  On the facts of this case, I do not think it can be said that the Wife’s inaction had induced the Purchaser into acquiring the Property. 

H5. Laches

158.  Finally, Ms Eu submitted that the Wife’s inaction and/or conduct amounted to laches.

159.  Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. Accordingly, delay alone is insufficient to constitute laches.  Further, there can be no abandonment of a right without full knowledge of all the relevant circumstances.  See Snell’s Equity (32^nd edn, 2010) §5-019.

160.  The essence of equitable doctrine of laches was summarised by Lord Selbourne LC in Lindsay Petroleum v Hurd (1874) LR 5 PC 221, 239-240:

“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapses of time and delay are most material.”

161.  Mr Wong submitted the doctrine of laches has no application where the Statute of Limitations applies. Specifically, he submitted that laches has no application in the present case because of the application of section 20(2) of the Limitation Ordinance (Cap 347) which expressly allows the Wife to pursue her claim for the beneficial interest in the Property within six years from the date on which the right of action accrued. 

162.  In reply, Ms Eu submitted that section 20(2) of the Limitation Ordinance has no application in the Wife’s claim against the Purchaser.  She submitted that the “action by a beneficiary to recover trust property” referred to in section 20(2) is only intended to cover a claim by a beneficiary against the trustee for recovery of trust property, and has no application in the present case where the Wife is claiming against a third party non‑trustee.

163.  Given that section 20(1)(b) already provides for a claim by a beneficiary to recover trust property from the trustee, it would be odd for section 20(2) to repeat the same claim but to provide for a different limitation period.  It seems to me that on a proper construction of section 20 of the Limitation Ordinance, the words “action by a beneficiary to recover trust property” should be construed to mean an action against non-trustees.  I note that the learned editors of Lewin on Trusts (18^th edn, 2006) §44‑19 also take the same view.

164.  Accordingly, it seems to me that Mr Wong’s point that the defence of laches cannot apply to the Wife’s claim against the Purchaser is a valid one.

165.  In any event, even if I am wrong on the construction of section 20(2), laches would not have assisted the Purchaser because I do not think that (1) there had been a substantial lapse of time; and (2) the circumstances of the case do not appear to me to be inequitable for the Wife to enforce her claim against the Purchaser.

H6. Conclusion

166.  Accordingly, if (contrary to my conclusion on the Constructive Trust Issue) the Wife has a beneficial interest in the Property, the Purchaser’s defences in estoppel, waiver, acquiescence and laches would have failed.

I. CONCLUSION

167.  For all of the above reasons, I dismiss the Wife’s claims against the Purchaser and the Husband.  The issues in the Purchaser’s Contribution Notice against the Husband do not arise.  I make an order nisi that the costs of the defendants in this action are to be paid by the plaintiff, to be taxed if not agreed.  The costs order nisi shall be made absolute 14 days from the date of this judgment.  The Wife’s own costs are to be taxed in accordance with the Legal Aid Regulations, Cap 91A.