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Wong Chim Ying v Cheng Kam Wing

Judgment Cited authorities 21 Cited in Precedent Map Related
Vincent
Judgment Date18 April 1991
Year1991
Judgement NumberCACV75/1990
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV000075/1990 WONG CHIM YING v. CHENG KAM WING

CACV000075/1990
Civil Appeal
No. 75 of 1990

Hong Kong Conveyancing Practice: Constructive Notice

Sale of domestic premises by vendor spouse holding legal title where both spouses in joint occupation: purchaser having Knowledge, before completion, of non-vendor spouse's actual occupation: duty to enquire regarding that spouses rights in the premises: such rights protected by the equitable doctrine of constructive notice : Williams & Glyn's Bank Ltd. v. Boland [1981] AC 487 (H.L.) applied.

IN THE COURT OF APPEAL

 1990, No. 75
(Civil)

BETWEEN

WONG CHIM YING Plaintiff
(Appellant)

AND
CHENG KAM WING Defendant
(Respondent)

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Coram: Hon. Clough, Penlington, JJ.A. & Mayo, J.

Date of hearing: 5-8 February & 19-21 March of 1991

Date of handing down of judgment: 18 April 1991

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JUDGMENT

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Clough, J.A.:

1. This is the judgment of the court.

2. This appeal raises questions concerning the beneficial ownership of a matrimonial home, namely Flat A on the 4th Floor at No, 50 Kai Tak Road, Kowloon, and also the important question, for Hong Kong conveyancers, whether (as the learned judge held) the reasoning leading to the decision of the House of Lords in Williams & Glyn's Bank Ltd. v. Boland [1981] AC 487 requires this court to hold that a purchaser of a domestic property from one of two jointly resident spouses who is the registered absolute legal owner takes the property subject to the beneficial interest therein of the other spouse in circumstances where the purchaser had actual notice before assignment (and before contract) of the fact that the other spouse was resident in the property, but made no inquiry regarding the rights of that spouse in the property.

3. The plaintiff, Wong Chim-ying, who purchased the flat in question from Cheung Sim-chun ("the wife") appeals from the order of Godfrey J. declaring that the premises are held by the plaintiff on trust for the defendant Cheng Kam-wing, the wife's husband ("the husband") and requiring the plaintiff to transfer the premises to the husband. The flat was purchased in 1973 in the name of the wife and was the home of the wife and husband, and their two sons (born on the 7th December 1969 and the 22nd January 1972 respectively) until 1988 when the wife purported to sell it to the plaintiff without the knowledge or consent of the husband who has at all material times remained in occupation with the two sons.

4. The wife contrived to obtain payment of most of the purchase price of $305,000 from the plaintiff by persuading the latter to agree to allow the wife to remain in possession of the flat for two months (at a "licence fee" of $2,500 per month) after completion of the purported sale in order to give her time to find alternative accommodation for herself and her family. In fact the wife absconded two days after executing an assignment of the flat in favour of the plaintiff on the 11th May 1988 and obtaining payment of $300,000 of the purchase price from the plaintiff. When the plaintiff, acting by her daughter Yuen Pui-ying ("Miss Yuen") sought vacant possession of the flat on the 10th July 1988 the husband refused to give it.

5. The plaintiff brought proceedings, initially and unsuccessfully under Order 113 and Order 14 to obtain possession of the flat from the husband. Eventually the matter went to trial before Godfrey J. on pleadings in which the plaintiff claimed possession of the flat and damages against the husband as the registered owner and the husband counterclaimed for inter alia the relief which the judge eventually granted him on the basis that he was entitled to the entire beneficial interest in the flat because he had contributed the purchase price of the flat and had not, by so doing, intended to advance the wife. Evidence having been given by Miss Yuen (who had negotiated the transaction with the wife on the plaintiff's behalf) that the wife had told her on the 28th April 1988 (before execution of the preliminary agreement for sale and purchase on the 30th April) and again on the 2nd May (before execution of` the formal agreement for sale and purchase on the 3rd May) that the husband was living in the flat, the judge concluded that the plaintiff, who had made no inquiry concerning the husband's rights (if any) in the flat, had had constructive notice of his beneficial ownership and therefore took the property subject to his rights. An argument that the husband was estopped from asserting his rights against the plaintiff was rejected by the judge. The occasions upon which the plaintiff had thus acquired notice, through Miss Yuen, of the husband's residence in the flat had not been particularised in the husband's Defence, but on appeal leave to make the appropriate amendments was formally granted unopposed.

6. On appeal the plaintiff seeks to set aside the judge's order and to obtain an order for possession of the flat and the dismissal of the husband's counterclaim. In the alternative the plaintiff seeks a declaration that she holds the flat on trust for herself and the husband in equal shares or in such proportion as the court may determine. On behalf of the plaintiff it is contended in substance that the judge had erred by:

(1) Accepting that the husband was a truthful witness and in holding that he was the sole contributor of the purchase price of the flat.

(2) Failing to hold, upon finding that the husband had been the sole contributor of the purchase price of the flat, that he had not succeeded in rebutting the presumption of advancement which operated in favour of the wife.

(3) Concluding that the purchaser, through Miss Yuen, had had constructive notice of the husband's beneficial interest in the flat and was thereby precluded from relying on the defence that she had been a bona fide purchaser for value of the legal estate in the flat without notice of the husband's equitable interest therein.

(4) Rejecting the plaintiff's contention that the husband had been estopped, by his own conduct in arming the wife with all the indicia of title to the property and enabling her to deal with it, from asserting his own beneficial interest in it.

7. There are no local statutory provisions in Hong Kong which directly govern these issues and the court has to consider them in accordance with the relevant English common law and rules of equity, subject to the qualifications contained in section 3 of the Application of English Law Ordinance (Cap. 88) which provides as follows :

"3. (1) The common law and the rules of equity shall be in force in Hong Kong -

(a) so far as they are applicable to the circumstances of Hong Kong or its inhabitants;

(b) subject to such modifications as such circumstances may require;

(c) subject to any amendment thereof (whenever made) by -

(i) any Order in Council which applies to Hong Kong;

(ii) any Act which applies to Hong Kong; or

(iii) any Ordinance.

(2) The common law and the rules of equity shall be in force in Hong Kong as provided in subsection (1) notwithstanding any amendment thereof as part of the law of England made at any time by an Order in Council or Act which does not apply to Hong Kong."

It was not suggested that in the present appeal this court should regard any of the relevant principles of common law or rules of equity (unamended by English legislation not applicable in Hong Kong) as inapplicable to the issues arising, or as requiring modification to allow for local circumstances, save that it was contended by Mr. Edward Chan on behalf of the plaintiff that, there being no registration of title in Hong Kong, there could be no justification for applying here (with specific reference to Boland) the "concept and practice required in registered land in England."

(1) The husband's beneficial interest in the flat

8. In his defence the husband pleaded inter alia that since the marriage of the husband and wife in 1969 the wife had been a housewife and had no independent source of income. It was alleged that the flat had been registered in the wife's name purely for convenience as the husband had to work as a public light bus driver during the day and had to leave the conveyancing matters for the wife to attend to. It was further pleaded that it had been agreed between the husband and the wife that the wife only should be registered as the owner of the flat so as to dispense with the trouble of summoning the husband to sign documents and comply with formalities.

9. The only evidence of the circumstances under which the flat had been acquired was that of the husband, supported by documents, which included a copy of his relevant savings Bank statements and a Land Office search indicating that the flat had been assigned to the wife on the 1st June 1973 for a consideration of $45,000. The judge, who had seen and heard him examined, cross-examined and re-examined at some length thought the husband a truthful witness and made the following findings of fact:

" The defendant ("the husband") was born in 1937. He gave evidence before me. I thought him a truthful witness and generally I accept his evidence. Since 1968 he has been, for most of the time, a public light bus driver. He married Cheung Sim-chum ("the wife") in 1969. The wife was a wig maker, but did not continue to work after the marriage. The husband and the wife lived with the wife's mother. (They had, eventually, two children, both boys.) The husband had some savings with which he was minded to replace his old bus with
...

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