Co-Ownership

Lecture 4
Tommy Ho

1

Co-Ownership
• Ownership of land can be different at law and in
equity.
• At law, it is the format that matters. In equity, it is
the reality that matters.
• In practice:
• At law, one only looks at who the registered
owner is. In equity, one looks at who the de
facto owner is.

2

Co-Ownership
• Question:
• X and Y jointly purchase a property but the
property is only registered in X’s sole
name. Who is the owner of the property?
• Would your answer be different if it is only
Y who pays all the purchase price?

3

4 . X is the registered and legal owner of the property but both X and Y are the equitable/benficial owners of the property. Co-Ownership • In the first scenario. we say that X is holding the property on trust for the benefits of X himself and Y. • In legal terms.

Co-Ownership • In the second scenario. but it is not so clear about the equitable ownership. 5 . X is still the registered and legal owner of the property.

Co-Ownership • “trust for sale” versus “bare trust” • If a property is held on trust. it is important to know whether the property is held under trust for sale or a bare trust. 6 .

and with or without power at discretion to postpone the sale”. whether or not exercisable at the request or with the consent of any person.29). Co-Ownership • Under section 2 of the Trustee Ordinance (Cap. means an immediate binding trust for sale. a trust for sale “in relation to land. 7 .

unless the trustee is given a power to postpone the sale. Co-Ownership • Immediate binding trust for sale means that the trustee in question is given a duty to sell and this is a duty which takes effect immediately but not in the future. 8 . • In practice the trustee has a duty to sell the property within one year.

the trustee has to apply to the court under section 56 of the Trustee Ordinance for an order to approve the sale. Co-Ownership • If it is a bare trust. The trustee can only sell the property if he is given a power to do so. Otherwise. 9 . the trustee does not have a duty to sell.

the beneficiary’s interest is always in the land itself. under the doctrine of conversion. Co-ownership • If the property is held under a trust for sale. • If the property is held under a bare trust. the interest of the beneficiary is converted into the proceeds of sale. 10 .

11 . it is very important whether a property is held under a bare trust or trust for sale. for the beneficial owner. • Trust for sale has to be expressly declared in the creation of the trust. the legal owner of a property is holding the property on a bare trust rather than trust for sale. Co-ownership • Thus. Under normal circumstances.

Co-ownership • Question: • A is taken by an estate agent to view a flat in Shatin. B who claims to be the owner of the flat opens the door of the flat for A to view. During discussions. 12 . B says that the flat is registered in the name of B’s wife as the sole owner. A is wondering about the true identity of the owner of the flat. Advise A.

Co-Ownership • One can easily find out the identity of the legal owner(s) of a property by examining the title deeds or conducting a land search in the Land Registry. 13 . whereas it is not always possible to find out the beneficial owner of the same property without making proper enquiries. • The situation is more complicated if there is more than one beneficial owner.

Co-Ownership • Where two or more persons hold the same interests in the same land at the same time. namely. 14 . joint tenancy and tenancy in common. they hold the interests as co-owners. • There are two types of co-ownership.

by virtue of section 34 of the Law of Properties Act 1925. a legal estate can only be held under a joint tenancy. 15 . Co-Ownership • In England. • In Hong Kong. there is no statutory provision to govern the holding of co-ownership at law and both joint tenancy and tenancy in common can exist at law and in equity. A tenancy in common only exists in equity.

A’s wife wanted to continue occupying the ground floor. 16 . A died in an accident. Advise B. A and his wife occupied the ground floor and B occupied the 1st floor. B wanted to sell the house because he thought that A’s death had to do with the bad fung-shui of the house. Co-Ownership • Question: • A and B jointly purchased a house of two storeys as joint tenants.

• Right of survivorship means that when one of the joint tenants dies. the right of survivorship applies. 17 . This is because in the case of joint tenancy. the ownership of the deceased will be automatically passed to the surviving joint tenant(s) by law. Joint Tenancy • It is important to distinguish a joint tenancy and a tenancy in common.

X drew a will and left all his properties to the mistress. Before X died. he met another woman in the mainland who became his mistress. X died before bringing an action to divorce his wife. Does the wife or the mistress get X’s share of the flat? 18 . To show his dedication to his mistress. Joint Tenancy • Question: • X and his wife jointly owned a flat as joint tenants.

Joint Tenancy • Would the result be different if X and his wife died simultaneously in a car accident? • Would the result be different if his wife on discovering X’s will killed X while they were quarrelling? 19 .

The rights of survivorship in a joint tenancy prevail over testamentary disposition. 20 . Joint Tenancy • It is important to note the following points in respect of a joint tenancy:- • 1. Under a joint tenancy. no single joint tenant holds an identifiable share in the property. He cannot dispose of his joint tenancy individually.

his interest must be passed to the survivors. • Severance of a joint tenancy must be made inter vivos. and no disposition of shares in a joint tenancy can be done by a will. Joint Tenancy • As a result. 21 . On the death of one joint tenant. he has nothing to pass under a will.

where two or more persons died without knowing actually who died first. Joint Tenancy • 2. it is presumed that death occurs in the order of seniority: the younger one is presumed to die later. Section 11 of CPO. 22 .

The court held that the effect of killing was to sever the joint tenancy and the wife was not allowed to take the husband’s share of the house under her right of survivorship. • See Re K [1986] Ch 180. Joint Tenancy • 3. A joint tenant cannot take advantage of the rights of survivorship when he kills the other joint tenants. The wife killed her husband accidentally when threatened the latter by a shotgun. In this case. a couple owned a house in a joint tenancy. 23 .

Joint Tenancy • 4. a corporation is able to acquire and hold any property in a joint tenancy in the same manner as if it were an individual. • Note: at common law a company cannot hold a property as joint tenant on the ground that a company never dies. • If the corporation is dissolved. 24 . Under section 10 of CPO. the property devolves on other joint tenant(s) by right of survivorship.

25 . interest. there must be the following four unities: unites in possession. title. Joint Tenancy • Four unities for joint tenancies • In order to establish a joint tenancy. and time.

Joint Tenancy • 1. 26 . Unity in possession means that possession must be to every part of the land. • Each co-owner may exercise ownership over the whole of the co-owned land and cannot be sued for trespass or required to pay a rent except where the co-owner ousts another (turns another out of the property or prevents him from enjoying the property such as changing the locks without the latter’s consent). No single joint tenant can claim that he is entitled to possession of which particular part of the land.

• When a co-owner ousts other co-owners. Joint Tenancy • Moreover. the former is guilty of trespass. Bull [1955] 1 QB 234. 27 . See Bull v. each joint tenant is entitled to receive his share of rents and profits from the property and is bound to pay all relevant liabilities.

nature and duration. Unity in interest means that interests of each joint tenant must be the same in extent. Unity in time means that all co-owners must acquire their interests at the same time. 28 . Joint Tenancy • 2. • 4. Unity in titles means that titles of each joint tenant is derived from the same source. • 3.

• (2) “X and Y”. Joint Tenancy • Question: • A house was conveyed to • (1) “X and Y in equal shares”. • (3) “X and Y as joint tenants in equal shares”. • Which form is an example of a joint tenancy? 29 .

Tenancies in common • Section 9 (1) of CPO provides that • “Whereas tenancy in the same estate or interest in land vests in 2 or more persons under an instrument or a will. that the tenancy vests in those persons as tenants in common rather than as joint tenants”. unless the contrary intention is expressed in that instrument or will. it shall be presumed. 30 . • This presumption applies to both legal estate and equitable interest.

31 . the court should construe the statement depending on the nature of the documents. Tenancies in common • In the Slingsby Case. then the first words (joint tenants) prevail. whereas if it is found in a will. If it is found in a deed. it was held that in the situation of (3) “X and Y as joint tenants in equal shares” where contradictory expressions are found. then the last words (in equal shares) prevail.

• The nature of a tenancy in common can be seen in Lord Denning’s judgment in Bull v. Tenancies in common • A tenancy in common is also known as “undivided share in land”: each tenant in common owns separate shares in the land. Bull: 32 . those shares do not attach to a particular portion of the land until it is divided up physically.

. Tenancies in common • “The son is. the legal owner of the house. but the mother and son are. equitable tenants in common. . . these equitable tenants in common have the same right to enjoy the land as legal tenants used to have. of course. until a sale takes place. . 33 . I think. Each is entitled in equity to an undivided share in the house. the share of each being in proportion to his or her respective contribution.

and that neither of them is entitled to turn out the other. each of them is entitled concurrently with the other to the possession of the land and to the use and enjoyment of it in a proper manner. until the place is sold. Tenancies in common • when there are two equitable tenants in common. then. … 34 .

as they have done here? • The answer is that the house must then be sold and the proceeds divided between the mother and son in the proper proportions”. 35 . Tenancies in common • The question may be asked: what is to happen when the two fall out.

a tenant in common may even grant a lease or licence to a third party without the consent of the other tenant(s) in common. 36 . • In theory. Tenancies in common • A tenant in common is entitled to deal with his own undivided share in any way without joining the other tenant(s) in common. • The other tenant(s) in common also cannot revoke the lease or licence without joining the grantor.

the plaintiff sought an injunction to restrain dock workers from mounting demonstration at the open space outside Cheong Kong Centre in Central. • The land was granted to the plaintiff under the condition that the open space shall be opened to all members of the public for all lawful purposes. Tenancies in common • In Turbo Top Ltd v Lee Cheuk Yan [2013] 3 HKLRD 41. 37 . The Financial Secretary Incorporated is one of the co-owners of the land in question.

38 . the trial judge held that a licence was deemed to have been granted to the public to use the open space for lawful activities by the Government (represented by the Financial Secretary Incorporated) and the plaintiff was not entitled to revoke the same unilaterally. rights and privileges” granted to the public. Tenancies in common • The DMC of the land also expressly provides that the plaintiff’s right is subject to the “easement. • Based upon the principles of of tenancy in common.

Tenancies in common • In Chan Po King v Yau Wai Yin [2015] 4 HKLRD 54. He could lease it or dispose of his right to possession to a stranger without the concurrence of the other co-tenants. He could also enforce his interest on his own without joining the other co-tenants. 39 . the Court of Appeal explained the separate and distinct interests of tenants in common that a tenant in common could deal with his own undivided share as he liked.

• There is only one requirement for a tenancy in common. his share will be passed on to his estate. That is to say even if one tenant in common owns only minority share of a property. When a co-owner dies. Tenancies in common • There is no right of survivorship in a tenancy in common. this tenant in common is still entitled to enjoy the entire property without restriction. ie unity in possession. 40 .

• 2. The purchase of land by a partnership. The purchase of land in unequal shares of money (Bull v Bull). 41 . Tenancies in common • Four equitable presumptions for tenancy in common. even if legal estate is held in joint tenancy:- • 1.

When the mortgagor is in default of payment and the mortgagees take possession of the land. regardless of the fact that the mortgage loan was in equal or unequal shares. When two or more mortgagees advanced money on mortgage. Tenancies in common • 3. 42 . they hold the land as tenants in common. the share of the interests of these mortgagees in respect of the land in question is tenancy in common. The “co-ownership” of mortgagees.

When properties are held for several individual business purposes: See Malayan Credit Limited v Jack Chia MPH [1986] AC 549. Tenancies in common • 4. 43 .

whether a co- ownership was created as a joint tenancy or tenancy in common is a matter of common intention of the co-owners. Lai Ngai [1995] 1 HKC 556. Tenancies in common • At the end of the day. • See Hon Po Sun v. 44 .

but the death certificate of the deceased is required for proving title. 45 . it is necessary for all the legal joint tenants to join in the conveyance.Transfer of Interests in Co-owned Land • Co-ownership of legal estate • For joint tenancy. • If one joint tenants dies before the conveyance. • The legal estate must also be transferred by deed. his interest in the joint tenancy goes to the other joint tenant(s). The surviving joint tenant(s) can transfer the legal estate without any prior transfer of the deceased joint tenant’s interest to them.

then all tenants in common must join in the conveyance.Transfer of Interests in Co-owned Land • For tenancy in common. . • The transfer of legal estate must also be 46 by deed. • It is possible for each individual tenant in common to transfer his own undivided share to a third party without joining other tenant(s) in common • But if the entire legal estate is to be transferred.

• Question: • Can a co-owner holding equitable interest under joint tenancy transfer his equitable interest without joining other co-owner? 47 . Any transfer of equitable interest must be in writing and signed by the co-owner in question.Transfer of Interests in Co-owned Land • For co-ownership in equity. • Each individual co-owner can dispose of his own equitable interest.

Severance • Joint tenancy can be severed to become tenancy in common. • Section 8 of CPO • (1) A joint tenancy of an estate or interest in land may be severed at law only by • (a) a notice served by a joint tenant on the other joint tenants. or • (b) an instrument. 48 .

49 . be effective at law. but for subsection (1). Severance • (2) A joint tenancy of an estate or interest in land may be severed in equity by a notice served by a joint tenant on the other joint tenants or by any other method that is effective in equity or that would.

“an instrument” under section 8(1)(b) can be any documents having legal effect including an agreement to transfer the equitable interest but not a will. 50 . Severance • As a joint tenancy must be severed inter vivos.

51 . • The notice of severance must be in writing. • If the notice is sent by post. but need not be signed (Re Draper’s Conveyance [1969] 3 All ER 853). Severance • For legal estate. it is enough if it has been duly posted to the other joint tenants even if it is not received by them (Re 88 Berkeley Road [1971] Ch 648).

Ma Fook Leung [1993] 2 HKC 647). 52 . a document served in court proceedings may be a notice for the purpose of severance. if the intention to sever is clearly shown(Ho Nga Sheung v. Severance • Thus. Goddard [1983] 3 All ER 242). • But the intention must be to sever immediately but not to sever at some time in the future (Harris v.

Severance • Where there is a deed of severance. 53 . the title to the severed share rests on an assignment and the deed of severance. Gold Rich Investments (Asia) Ltd [1997] 3 HKC 797. • See Olympic Garden Properties Ltd v.

54 . any notice referred to above for severing legal estate will also sever equitable interests held in joint tenancy. Severance • For equitable joint tenancy • Under section 8(2).

55 . • (b) Where there is a mutual agreement no matter whether that agreement is oral or written. or enforceable at all. Rawnsley [1975] Ch 429 and Gore and Snell v. Carpenter (1990) 60 P & CR 456. See Re K. See Burgess v. Severance • Severance in equity occurs also in the following scenarios:- • (a) When one of the co-owners unlawfully kills the other.

• In Gore and Shell. it was held that an “agreement in principle” would not be sufficient to effect a severance. 56 . Severance • In Burgess. it was held that an agreement made between the joint tenants for one to buy out the other’s share was sufficient to sever the joint tenancy. even though the agreement was not in writing and not specifically enforceable.

57 . • See Malahon Credit Co Ltd v. unless the declaration is incorporated in a written notice. Siu Chun Wah Alice [1987] 2 HKC 79. • But a mere declaration of an intention to sever is not sufficient to sever a joint tenancy. eg by sale or entering into an enforceable contract to transfer his share to another person. Severance • (c) An act of any one of the persons interested operating upon his own share.

The dealings must show an intention that the parties are to be tenants in common rather than joint tenants. 58 . See Nelson-Jones v. Severance • (d) Any mutual course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. Fedden [1975] Ch 222.

• In Gore and Snell. 59 . Lord Denning MR said that inconclusive negotiation between joint tenants concerning their respective shares could be sufficient severance. Severance • In Burgess v Rawnsley. it was held that it was possible to have a course of dealing even where the negotiation broke down. but the majority of the Court of Appeal disagreed.

60 . one co-owner dies and the other co-owner takes the entire title by way of right of survivorship).Termination of Co-ownership • Co-ownership of land comes to an end when the property is sold or when it is vested in one particular co-owner (eg. • An important way to terminate a co- ownership is by means of partition.

any agreement by deed to partition a land can take effect at law. extinguished or disposed of only by deed”.Termination of Co-ownership • Section 4(1) CPO provides that “a legal estate in land may be created. 61 . • Thus.

62 . which in effect will also terminate a co-ownership.Termination of Co-ownership • Where agreement cannot be reached. parties interested can apply to Court for an order of sale or partition of the land under the Partition Ordinance (Cap 352).

• (b) make an order under section 6 for a sale of the property. or • (c) refuse to make any order. whether as joint tenants or as tenants in common.” 63 . the Court may- • (a) make an order under section 4 for a partition of the property.Termination of Co-ownership • Section 2 of the Partition Ordinance provides that • “Subject to this Ordinance. where any property in land is held by 2 or more persons.

64 . any person interested in such property may institute proceedings in the Court under this Ordinance by way of an action for partition or sale.Termination of Co-ownership • Section 3 provides that • (1) Where any property in land is held in the manner referred to in section 2.

• (3) Subject to subsection (2). and no defendant may object for want of parties.Termination of Co-ownership • (2) In any proceedings under this Ordinance the Director shall be served with such documents relating to the proceedings as may be prescribed by the Partition Rules. 65 . proceedings under this Ordinance may be instituted against one or more of the persons interested without serving the other or others.

Termination of Co-ownership • Section 4(1) In any proceedings instituted under this Ordinance the Court may. 66 . subject to subsection (2). make an order for the partition of property in land in any of the following ways- • (a) into parcels held by single owners in severalty. • and may partition the property in all those ways or in any combination of them and give all necessary or proper consequential directions. (b) into parcels held by 2 or more owners as joint tenants. (c) into parcels held by 2 or more owners as tenants in common.

the Court shall not partition the property in that land so that part only of a building stands on any parcel into which the property in the land is partitioned unless that part of the building is self- contained and is not connected to the remainder of the building otherwise than by a party-wall or a mutual staircase.Termination of Co-ownership • (2) Where there is a building on any land. 67 . or both. (3) No order for partition shall prejudice any person other than a party to the proceedings.

Termination of Co-ownership • Unless the property in question is a piece of land. the Court will order for sale under section 6. 68 . partition is very often not possible or feasible. under normal circumstances. • Thus.

where it appears to the Court that a partition of the property would not be beneficial to all the persons interested by reason of- • (a) the nature of the land to which the proceedings relate. 69 . • (b) the number of the persons interested or presumptively interested.Termination of Co-ownership • Section 6 provides that • (1) In any proceedings under this Ordinance.

Termination of Co-ownership • (c) the absence or disability of some of the persons interested. the Court may make an order for the sale of the property. or • (d) any other circumstances. 70 .

71 .Termination of Co-ownership • Section 6(2) The Court may exercise its powers under subsection (1). notwithstanding the dissent or disability of any person interested.

unless the other persons interested undertake to purchase the interest of the party applying for an order for sale. 72 . if any person interested in the property applies to the Court to make an order for the sale of the property instead of an order for partition. if it thinks fit. the Court may. then.Termination of Co-ownership • 6(3)(a) Without prejudice to subsection (1). make an order for the sale of the property.

73 . the Court may order a valuation of the interest of the person applying for an order for sale in such manner as it thinks fit.Termination of Co-ownership • 6(3)(b) If an undertaking is given by the other persons interested.

Termination of Co-ownership • 6(4) On making an order under subsection (1) or subsection (3). 74 . the Court may direct a distribution of the proceeds of the sale and give all other necessary or proper consequential directions.

75 . or • (b) setting off or accounting for the purchase money or any part thereof instead of paying the same. or • (c) as to any other matters. on such terms as the Court deems reasonable as to- • (a) non-payment of deposit.Termination of Co-ownership • 6(5) On a sale under this section the Court may allow any of the persons interested in the property to bid at the sale.

Termination of Co-ownership • “Any person interested” in section 3 has been construed to mean “any person in possession” of the land (Cromwell Investment Co Ltd. The reason is that the bank holding only a charging order has no interest in the land and not a person in possession. the court applied Cromwell Investment and refused an application for an order for sale under the Partition Ordinance by a bank which held a charging order against the property in question. Fook Sun Enterprises Ltd [1975] HKLR 1). 76 . v. • In Fortis Bank Asia HK v Yu Kam Hoi Herman [2004] 2 HKC 314.

Termination of Co-ownership • In Ip Sau Shu v Sham Lai Hing [2003] 4 HKC 528. 77 . the property was a “matrimonial home” of an unmarried couple who co-owned the property and lived in there together with their daughter. The court held that the daughter was not a person interested for the purposes of section 6 and the court was not to consider the daughter’s interests unless they form part of the personal circumstances of the other persons interested.

Termination of Co-ownership
• In Pun Jong-sau v. Poon Wing-kong [1980]
HKLR 662, it was argued that an order for sale
should only be made if partition was not
beneficial to all the persons interested. Thus,
the order for sale presupposed physical partition
was possible; and if physical partition was
impossible or infeasible, the Court would have
no power to make an order for sale.
• Held: section 6(3) provided an additional power
for the court to make an order for sale no matter
partition was physically possible. 78

Termination of Co-ownership
• It has been decided that section 6(3)(a)
curtails the power of the Court in deciding
whether or not to make an order for sale.
• The effect of section 6(3)(a) therefore may
create an impasse when other persons
interested undertake to purchase the
interest of the party applying for an order
for sale.
• See Ma Wei-hua v. Ngai Man [1998] 2
HKC 52. 79

Termination of Co-ownership
• The Court also takes into consideration of the
original purpose of acquiring the land by the co-
owners.
• Where land acquired by the owners for a
particular purpose and the purpose was still
subsisting, if the majority owner wished to
continue this purpose instead of selling the
property, and he had given the discontented
owner the opportunity to sell his share at a fair
valuation, it would not be appropriate to order
the sale of the property. See Ma Wei-hua v.
Ngai Man.
80

81 . Forced sale of undivided shares in land • Pursuant to the Land (Compulsory Sale for Redevelopment) Ordinance (Cap 545). a person holding not less than 90% of the undivided shares in a lot can apply to the Lands Tribunal for an order to sell the undivided shares in the lot for the purposes of redevelopment.

not less than 90% of the undivided shares in a lot may make an application- • … for sale of the property for redevelopment purposes. the person or persons who owns or own. Forced sale of undivided shares in land • Section 3 of the Land (Compulsory Sale for Redevelopment) Ordinance • (1) Subject to subsection (5). 82 . otherwise than as a mortgagee.

the application for forced sale for more than one lot is possible provided that the applicants owns on average not less than 90% or 80% as the case required of each of the lots. 83 . Forced sale of undivided shares in land • Under section 3(2).

Forced sale of undivided shares in land • Section 3(5) of Cap 545 • allows the Chief Executive in Council to specify a percentage lower than 90% in respect of a lot belonging to a class of lots specified in the notice. 84 . • Section 3(6) of Cap 545 • No percentage may be specified in a notice under subsection (5) which is less than 80%.

pursuant to section 3(5). the Chief Executive in Council gazetted a notice Land (Compulsory Sale For Redevelopment) (Specification Of Lower Percentage) Notice (Cap.545A). Forced sale of undivided shares in land • In 2010. 85 .

Forced sale of undivided shares in land • The effect of Cap 545A is that since 1 April 2010. 86 . the requirement of 90% under section 3(1) of Cap 545 can be lowered to 80%.

87 . Forced sale of undivided shares in land • Section 3 of Cap 545A provides that • 80% is specified as the percentage required for the purposes of section 3(1) of the Ordinance in respect of a lot that belongs to any class of lot specified in section 4.

88 . • (b) a lot with each of the buildings erected on the lot issued with an occupation permit at least 50 years before the relevant date. Forced sale of undivided shares in land • Section 4 of Cap 545A: • (1) The following classes of lot are specified for the purposes of section 3— • (a) a lot with each of the units on the lot representing more than 10% of all the undivided shares in the lot.

89 . and (ii) was issued with an occupation permit at least 30 years before the relevant date. Forced sale of undivided shares in land • (c) a lot that is not located within an industrial zone and each of the buildings erected on the lot— • (i) is an industrial building.

or • (ii) any change in a person’s liability in relation to the common areas and facilities of the building under the common law or any enactment. 90 . Forced sale of undivided shares in land • S.4(2) of Cap 545A: For the purposes of the class of lot referred to in subsection (1)(a). and • (b) the subdivision does not involve— • (i) any alteration to the size of any common area of the building. • those units are regarded as one single unit. if— • (a) a unit in a building is subdivided into 2 or more units on or after 1 April 2010.

The Ordinance can avoid. one or two owners of an old building ready to be demolished for redevelopment refusing to sell their properties except for a ransom price. 91 . Forced sale of undivided shares in land • The purpose the Land (Compulsory Sale for Redevelopment) Ordinance is to help private developers in their redevelopment projects. thereby causing unnecessary delay to the redevelopment project. for example.

92 . particularly in a rising market as in Hong Kong today. Forced sale of undivided shares in land • On the other hand. • Owners in an old building situating in the centre of the city who cannot afford other accommodations in the vicinity may be forced to move out from their old homes to live in more remote areas. the compulsory sale may infringe the rights of individual owners.

93 . Co- Co-ownership in Hong Kong • In Hong Kong. the most common types of co-ownership can be found in the area of matrimonial homes and multi-storey buildings. • Subject to the land held by ts’o or tong. there is actually no such concept of family home or family property at law in Hong Kong. The ownership of a property is established according to common legal principles.

94 . There is a further doctrine of proprietary estoppel whereby a person is allowed indefinitely remain in a property even though he may have no proprietary interest in the same. Co- Co-ownership in Hong Kong • The most obvious evidence of ownership is that a person has contributed to the purchase price or mortgaged repayments of the property concerned. • Ownership can also be established by law through resulting or constructive trusts.

95 . The “stronger” party contributes all the purchase money and pays the instalments of mortgage. Co- Co-ownership in Hong Kong • A typical scenario is a couple either married or not married bought a house in the name of only one member.

96 . Co- Co-ownership in Hong Kong • The weaker party stays at home and contributes his or her labour to improve the house or take care of the children so that the other party can go out to work and earn money. the weaker party is kicked out because he or she has no legal estate in the house in question. When the relationship breaks down.

97 . Gissing [1971] AC 886 which was confirmed in the leading case Lloyds Bank v. • In Gissing. Co- Co-ownership in Hong Kong • The classic case is Gissing v. The contribution took the form of general household expenditure. Rosset [1990] All ER 111. the House of Lord held that indirect financial contributions by a wife over 25 years did not create a beneficial interest in the house.

as “contributions” must be directly referable to the acquisition of the property. • Their lordships held this did not give rise to a constructive trust. 98 . she freed the husband’s income for the mortgage payments. Co- Co-ownership in Hong Kong • The wife argued that by paying these items.

• It is held that there was no indirect contribution which could show a common intention between the parties for the wife to have an interest in the property. the wife had carried out substantial work on renovation of a derelict farmhouse which was eventually intended as the matrimonial home. Burns v. There are many other cases such as Passee v. 99 . Passee [1988] FLR 263. Burns [1983] Ch 317. Co- Co-ownership in Hong Kong • In Lloyds Bank.

• But in this case. Here. the Court of Appeal held constructive trust existed. there was a finding of express common intention that the house was to be commonly owned. similar facts as in the above cases. Co- Co-ownership in Hong Kong • But in Grant v. 100 . the name of the woman was not put in the conveyance because the man said that it would prejudice the woman in the matrimonial proceedings which were pending against her and her husband. Edwards [1986] Ch 638.

Co- Co-ownership in Hong Kong • See also Lam Ping Wong v. 101 . Ho Chi Na [1987] 3 HKC 544 and Hon Po Sun v. Lai Ngai [1995] 1 HKC 556.

• When a common intention is established. a constructive trust may be found by courts. Co- Co-ownership in Hong Kong • The most important thing therefore is whether or not a common intention can be inferred from the actions or contributions of the weaker party. 102 . if there is a change of position of the weaker party or he/she acted to his/her detrimental on reliance of the common intention.

there may be a proprietary estoppel. 103 . Co- Co-ownership in Hong Kong • In the case of proprietary estoppel. there must be a promise or representation by the stronger party. • When the weaker party acted to his/her detriment in reliance on this promise or representation. instead of common intention.

104 . Co- Co-ownership in Hong Kong • What is the difference between constructive trust and proprietary estoppel? • If the Court declares a constructive trust in favour of one party. that party will be definitely entitled to a beneficial interest in the property.

When this person dies. the legal owner takes the property in its entirety. 105 . Co- Co-ownership in Hong Kong • A proprietary estoppel does not necessarily give rise to any proprietary right. • The person successfully establishes a proprietary estoppel may only get an irrevocable licence to stay in the property.

Co-
Co-ownership in Hong Kong
• The area of laws evolving resulting trust,
constructive trust, and proprietary estoppel
is complicated and is not the main concern
of this Lecture. The above information is
only for reference.

106

Special Provisions for married couple

• In Hong Kong, there are special statutory
provisions to protect interests of spouses
in relation to matrimonial homes. Such
protection is not extended to co-habitants.

107

Special Provisions for married couple

• Section 9 Married Person Status
Ordinance (Cap 182)
• A husband or wife who makes substantial
contribution in money or money’s worth to
the improvement of real property in which
either or both has an interest will be
treated as having a share or an enlarged
share in that beneficial interest.

108

109 . Special Provisions for married couple • Matrimonial Property and Proceedings Ordinance (Cap 192) gives the Court a wide discretion in the distribution of a spouse’s properties in a divorce action.

there was a piece of concrete loosed out and fell from the roof of the building. Advise A. . B is now threatening to sue owners of the building for compensation. The concrete landed on B’s head and seriously injured B who happened to pass by. Multi-Storey Building • Question: • A purchases Flat 1A of a multi-storey building. Before the purchase. A believes that B’s injuries has nothing to do with him because he is the 110 owner of Flat 1A only.

111 . all owners are tenants in common and co-own all parts of the building and the relevant land on which the building is erected. Multi-Storey Building • The most common form of co-ownership in Hong Kong is the co-ownership in respect of a multiple-storey building. • In a multiple-storey building.

Multi-Storey Building • The owner of each individual flat is assigned with certain number of equal undivided share of the land usually according to the size of the flats. 112 . these owners entered into a Deed of Mutual Covenant whereby they agree with each other which owners have the exclusive possession of which specific parts of the building. • As tenants in common are entitled to possession of each part of the land.

for example. He only has certain equal undivided shares of the land on which the building is erected and the exclusive possession of Flat 1A by virtue of the Deed of Mutual Covenant. Multi-Storey Building • Thus. the owner of Flat 1A does not in law own Flat 1A of the building. 113 .

Multi-Storey Building • The equal undivided shares coupled with the right to exclusively possess a certain part of the building is transferable to anyone and binding the successors of other tenants in common. But the right to exclusively possess certain part of the land by itself is contractual (by virtue of the DMC). . such right is only transferable to other common owners who own some equal undivided share of the building. See Jumbo King Ltd v. Faithful 114 Properties Ltd [1999] 3 HKLRD 757. • Due to the doctrine of privity of contract.

Multi-Storey Building
• When the building as a whole is sold,
presumably the original co-owners will share the
proceeds of sale according to the proportion of
their numbers of equal undivided shares.
• When the building needs renovation, unless
there is other provision in the DMC, the shares
of the renovation fees are also according to this
proportion of equal undivided shares.

115

Sub-division of Co-ownership in
Multi-storey buildings

• In Sheenip Industries Ltd. v. Champion
Billion Development Ltd., MP Nos. 1390
and 1696 of 1995, 4 July 1995, Deputy
Judge Maria Yuen, as she then was, held
that a developer of a site was free to
allocate the shares he then had in
whatever manner he thought appropriate
unless there was “clear wording” or
“necessary implication” to indicate that
there were any constraints upon his rights.
116

Sub-division of Co-ownership in
Multi-storey buildings
• The decision in Sheenip Industries Ltd.
was followed by Woo, J. in Kwong Ka
Hung v. Lai Wah Development Ltd., HCA
No. A10566 of 1994, 16 January 1996.
Woo J held in this case that in order to
restrict the rights of allocation of the
undivided shares; there must be “clear and
certain” wordings to that effect.

117

Sub-division of Co-ownership in Multi-storey buildings • In Hinex Universal Design Consultants Co Ltd. as she then was. Madam Justice Le Pichon. that “as a matter of principle there was no valid basis for differentiating between the position of the developer and that of a subsequent owner in the right of allocating the undivided shares to whom they belong”. Chan Lai Hing [1998] 1 HKC 317. v. 118 . further developed the ratio in Sheenip Industries Ltd.

a co-owner in a multi-storey building in Hong Kong can actually further sub-divide the undivided share he is entitled to and can execute a sub-DMC to regulate the mutual rights and liabilities between the co-ownership arising from the subdivision. Sub-division of Co-ownership in Multi-storey buildings • Therefore. by virtue of his exclusive possession. 119 .

as long as he allocates some undivided shares to each unit. • All owners of these sub-divided units are bound by the original DMC of the commercial building. 120 . X purchased the entire ground floor of a commercial building. X is entitled to divide the floor into different units and sell these units separately to different purchasers. Sub-division of Co-ownership in Multi-storey buildings • For example. • Subject to building regulations.

121 . Sub-division of Co-ownership in Multi-storey buildings • If X has also executed a sub-DMC to regulate the rights an liabilities of the owners of the sub-divided units. the sub- DMC only binds these owners but not owners occupying other parts of the commercial building.

122 . • The illegal partition of flats (劏房) prevalent these days in Hong Kong is made possible by virtue of this concept. a co-owner having exclusive possession of only one flat may also subdivide his flat and sell it to two different purchasers. Sub-division of Co-ownership in Multi-storey buildings • In theory. It is an illegal practice simply because it violates the building regulations.

123 . and in theory can exert his right on each and every part of a multi-storey building. Right of co-owners as to common parts • Every co-owner is entitled to possession of each part of the land.

in particular in relation to the common parts of the building. 124 . Right of co-owners as to common parts • This will create confusion and difficulties in the management of a multi-storeys building.

125 . the rights. . .344). Right of co-owners as to common parts • Pursuant to section 16 of the Building Management Ordinance (Cap. on incorporation. by the corporation to the exclusion of the owners” and the liabilities of the common parts shall also be enforced against the incorporation instead of individual owners. and performed . privileges and duties of the owners in respect of the common parts of the building “shall be exercised.

This has to be done by the owners’ incorporation. a co-owner is prohibited from instigating proceedings against another co- owner who has occupied some common parts to the exclusion of other co-owners. • Likewise. the injured person have to sue the owners’ incorporation instead of individual owners. where an owners’ incorporation has formed under Cap. if someone suffers personal injury in the common parts of a building. 126 . Right of co-owners as to common parts • Thus.344.