ANGEL FUND CO LTD v. CHAN YAU KWONG AND OTHERS

ANGEL FUND CO LTD v. CHAN YAU KWONG AND OTHERS

The Court found Ds had established equitable proprietary interests in the land and property by common intention constructive trust (alternatively resulting trust) based on the 1993–1994 agreements, payments, continuous occupation and corroborative surrounding circumstances; D1 thereafter held only legal/paper title; P had actual or constructive notice (or ought to have known) of defects in D1's title (unpaid premium, absence of original title deeds, suspicious tenancy) and thus was not a bona fide purchaser for value without notice, so P's mortgage claim failed and Ds' counterclaim succeeded.

Citation
[2019] HKCFI 1821
Parties
Plaintiff / 2nd Defendant (counterclaim): Angel Fund Company Limited; 1st Defendant / 1st Defendant (counterclaim): Chan Yau Kwong; 2nd Defendant / 1st Plaintiff (converted): Kong Kwok Leung; 3rd Defendant / 2nd Plaintiff (converted): Kong Kwok Wing; 4th Defendant / 3rd Plaintiff (converted): Yeung Kar Lee; 5th Defendant / 4th Plaintiff (converted): Tang Wing Chiu; 6th Defendant / 5th Plaintiff (converted): To Tai
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 July 2019
Case Number
HCMP3022/2015
Procedural Posture
Mortgage Action and Counterclaim Concerning Beneficial Ownership of Land and Equitable Interests / Judgment After Trial (court of First Instance)
Outcome
Plaintiff's claims dismissed; Defendants' counterclaim against D1 and P allowed; declarations and orders in favor of Ds granted subject to Government rights under the New Grant
Legal Topics
Common Intention Constructive Trust, Resulting Trust, Bona Fide Purchaser Without Notice, Mortgage Enforceability, Title Investigation and Notice, Small House Policy
Source Language
EN
Property Law Equity and Trusts Mortgages Land Registration Civil Procedure Administrative/land Premium Issues Common Intention Constructive Trust Resulting Trust +4 more

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Parties

Angel Fund Company Limited

Plaintiff / 2nd Defendant (counterclaim)

Chan Yau Kwong

1st Defendant / 1st Defendant (counterclaim)

Kong Kwok Leung

2nd Defendant / 1st Plaintiff (converted)

Kong Kwok Wing

3rd Defendant / 2nd Plaintiff (converted)

Yeung Kar Lee

4th Defendant / 3rd Plaintiff (converted)

Tang Wing Chiu

5th Defendant / 4th Plaintiff (converted)

To Tai

6th Defendant / 5th Plaintiff (converted)

Procedural Posture

Mortgage Action and Counterclaim Concerning Beneficial Ownership of Land and Equitable Interests / Judgment After Trial (court of First Instance)

Legal Issues

  1. 1 Whether defendants (Ds) acquired equitable beneficial interests by common intention constructive trust or resulting trust
  2. 2 Whether plaintiff (P), as mortgagee, was a bona fide purchaser for value without notice and thus took free of Ds' equitable interests
  3. 3 Whether alleged 1993–1994 agreements and contemporaneous documents existed and were signed as alleged

Ratio Decidendi

The Court found Ds had established equitable proprietary interests in the land and property by common intention constructive trust (alternatively resulting trust) based on the 1993–1994 agreements, payments, continuous occupation and corroborative surrounding circumstances; D1 thereafter held only legal/paper title; P had actual or constructive notice (or ought to have known) of defects in D1's title (unpaid premium, absence of original title deeds, suspicious tenancy) and thus was not a bona fide purchaser for value without notice, so P's mortgage claim failed and Ds' counterclaim succeeded.

Court Disposition

Plaintiff's claims dismissed; Defendants' counterclaim against D1 and P allowed; declarations and orders in favor of Ds granted subject to Government rights under the New Grant

Orders

  • Dismiss plaintiff's claims for vacant possession and mesne profits against D1 and Ds
  • Allow Ds' counterclaim against D1 and P and grant the declarations and orders sought by Ds, subject to any rights of the Government under the New Grant