Introduction
Hong Kong has been famous for its unaffordable housing in the world. With the soaring property prices, it is not uncommon to see young couples borrowing from their parents to buy a home. However, in funding their children to buy houses, parents’ intentions as to the ownership of the property are often unclear between love and transitional support.  If the relationships turn sour, such unclear intentions may lead to legal disputes as to who really owns the property. A recent Court of First Instance decision Leung Lai Kwan v Lo Kai Wing HCA 1158/2011 is an apt illustration.

Facts
The Defendants, Mr. Lo Kai Wing (the “Son”) and Madam Hon Kam Wah (the “in-law”) (collectively, the “Couple”), are the registered joint tenant of a residential property in Tai Po (the “Property”). 

The Plaintiff is the Son’s 73-year-old mother (the “Mother”). In 1996, the Mother and her late husband (the “Father”) (collectively, the “Parents”) decided to sell their property in Tsuen Wan and transferred the proceeds of sale (the “Funds”) to the Couple to enable the Couple to buy their home in their names. The Couple bought the Property with the Funds and has been occupying the Property as their home ever since. Nothing happened until the relationships turned sour between the Couple and the Mother. In 2011, the Mother claimed against the Couple for a declaration that she is the sole beneficial owner the Property, which the Couple has allegedly held on resulting trust for her. 

The parties disputed over the circumstances in which the Parents transferred the Funds to the Couple. 

According to the Mother, the Parents never intended to give the Property to the Couple as a gift. Seeing that the in-law’s mother had been disparaging the Son for lacking property, the Mother let the Property be registered in the Couple’s names to deceive the in-law’s mother into believing that the Son and the in-law owned the Property and to give the Son face.  It is however intended that the Property shall remain beneficially owned by the Parents. 

According to the Couple, the Funds were the gift from the Parents. During the Parents’ visit to the Couple’s son in 1995, the Father suggested that the Parents’ property in Tsuen Wan should be put in the Couple’s names. When the Couple explained that they would prefer to live in Tai Po, the Father agreed to sell the Parents’ property in Tsuen Wan and use the Fund to buy the Property in Tai Po. According to the Son, the Father explained that he very much loved his grandson, particularly as he was the first son of his eldest son, so the Property would be given to the eldest son and the father of the grandson he so loved. 

The live issue therefore lies on what the Parents’ intention was when they sold their property in Tsuen Wan, and gave the proceeds of sale to the Couple enabling them to buy the Property in their names.

The law
The general position is that holder of the legal title to property is the true owner of the property. The burden of proof lies on the Mother (as the Father has passed away) to establish that, notwithstanding that the title to the Property was with the Couple, they held the Property on a resulting trust for the Mother. 

A resulting trust may arise in the following manner: when A makes a voluntary payment to B or pays for the purchase of property which is registered in B’s name, there is a general presumption that A did not intend to make a gift to B, and the property is held on trust for A (Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 per Lord Browne-Wilkinson at p.708).   However, if the Court can determine A’s intention (i.e. to make a gift to B or to have A’s property held on trust by B) based on the available evidence, as in this case, it is not necessary to resort to the said presumption of resulting trust (Au Yuk Lin v Wong Wang Hin, Eddy [2013] 4 HKLRD 373). 

Applying the above principles, the Court was able to make a determination based on the following evidence:

1.         the Couple always keep the title deeds and did mortgage the Property as a security for loans without consultation with the Mother in advance;

2.         the Mother never asked the Couple to deliver the title deeds to her, and never had a key to the Property;

3.         if the purpose of vesting the title in the Couple is to deceive the in-law’s mother, it would suffice to put the title in the Son’s name only, but not the in-law as well;

4.         further, the Mother did not take steps to retrieve the title to the Property to herself after the in-law’s mother died in 2000, when there is no more need to deceive her as to the ownership of the Property;

5.         the Couple paid for the estate agent’s commission and solicitors fees for the purchase of the Property, renovation, repair, government rents, management fees and all outgoings of the Property out of their own funds; and

6.         the Mother claimed that she told the solicitors she intended to beneficially own the Property, but no steps were taken to prepare a declaration of trust. There were also no records of such instruction to the handling solicitors.

The Court also assessed the credibility of the witnesses who gave the evidence. Identical wordings were found in the witness statements filed on behalf of the Mother (by the Mother and her other children). The Court took this as reflecting that the witness statements were prepared by the solicitors without proper consultation with the witnesses, who simply adopted the language of the solicitors. As a result, the Court placed little reliability on the Mother’s witnesses. 

Based on the above, the Court held that the Mother has failed to discharge her burden of proof to displace the inference that the Couple, being the registered owners of the Property, are the true owners. The Mother’s claim for resulting trust was therefore dismissed. 

Conclusion
It may be weird for parents to haggle over every dollar with their children. However, to avoid causing future disputes with and among the children over the ownership of the property, parents should appreciate the underlying legal implications in “assisting” their children to buy their home. If parents intend to reserve their stake in the properties, they should document their intention clearly. For example, they may execute a declaration of trust, keep the title deeds or maintain written records of such intention. Otherwise, their monies spent and love may return with unwanted legal battles and family disharmony.

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Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.