The Plaintiff (“P”) and the Defendant (“D”) in Chan Sang v Chan Kwok [2015] 3 HKLRD 131 were brothers. P ran a business in a shop which P and D had equal shares as tenants in common. Their father (“F”) financed P’s purchase of the shop. P alleged that D, F and he had agreed that D would be a registered co-owner of the shop for the purpose of securing repayment of the loan to F. When the loan was fully repaid, D would deregister his name. P had repaid the loan but D refused to deregister his name.
P sought a declaration that he was the sole beneficial owner of the shop and D was holding his shares on trust for P and an order that D transfer his shares to P.
The Court decided that “common intention constructive trust” could be relevant in considering the parties’ common intention as to the beneficial ownership of a property and should not be limited to the “domestic consumer context”. However, the presumption of equality would not apply outside the “domestic consumer context”; whereas, the presumption of resulting trust would apply in a “commercial context”.
In this case, P solely purchased and paid for the shop. D was registered as a tenant in common of the shop to secure P’s repayment of the loan. The loan was already repaid by P. Thus, the Court held that P was the sole beneficial owner of the shop under either the common intention constructive trust or resulting trust principles.