A v. B

REDACTED AND
AMENDED VERSION

HCA 1489/2020

[2022] HKCFI 1031

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1489 OF 2020

_____________

_____________

Before:  Hon Mimmie Chan J in Chambers

Date of Hearing:  3 November 2021

Date of Decision:  11 April 2022

_______________

D E C I S I O N

_______________

Introduction

1.This is a dispute between members of the family of XXXXXXXXX (“Patriarch”), the founder of the XXXXXXXX Group (“Group”), which Group includes XXXXXXXXXXXX (“List Co”) which is listed on the Hong Kong Stock Exchange. The claims in this action are made by the youngest child and the only son of the Patriarch (“A”), as to the validity of documents seeking the appointment of A as the Appointor of a charitable trust set up by the Patriarch in the name of XXXXXXXXXXXXXXXXXXXXXXXXXXX (“Trust”), and as to the Patriarch’s mental capacity at the time of his execution in May and June 2019 of the relevant documents relating to (inter alia) A’s appointment. The Defendant in this action is the 6^th daughter of the Patriarch (“B”), who had been named as the Successor Appointor under the Trust by a Deed of Appointment dated 6 October 2003. Competing claims have been made by A and B as to their being the Appointor of the Trust, under the relevant documents relied upon by them.

2.Before this Court is an application made by B to stay these proceedings for determination by the Courts of the Bahamas, pursuant to an exclusive jurisdiction clause contained in the Deed of Settlement dated 5 November 1990 (“Deed”) under which the Trust was set up and constituted, and Cititrust (Bahamas) Ltd (“Trustee”) was appointed as the trustee. It is claimed by B that all matters pertaining to the Deed, the trusts declared under the Deed and all matters relating thereto should be determined by the Bahamas courts in accordance with the jurisdiction clause of the Deed, which also provides for the laws of the Bahamas to be the governing law.

Background

3.The Patriarch is 97 years old, and a famous industrialist and philanthropist in Hong Kong. He was the founder of the Group, and the Chairman of List Co until April 2018. He has 7 children with his first wife, XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. B had been appointed a director of List Co in 2000, and A was appointed director in 2003. When the Patriarch was still Chairman of List Co, B was also appointed the Chief Executive Officer. In April 2018, the Patriarch stepped down as Chairman of List Co, and B was appointed Chairman in his place, with A as the Deputy Chairman.

4.The Patriarch set up the Trust in 1990, and injected into the Trust all his interests in List Co which were held through a holding company known as Hold Co. The income of the Trust was derived from donations and dividends from List Co. The Trust would distribute money to 2 beneficiaries of the Trust, which were charitable companies (Charity BVI which was incorporated in the BVI, and Charity HK which was incorporated in Hong Kong). These 2 companies would then decide on the use of the funds received for charitable purposes. The board of Charity HK comprises of the Patriarch, A and B, whereas the board of Charity BVI comprises of these 3 individuals and other eminent members of society. Meetings of the 2 companies were held in Hong Kong.

5.The Trustee is a company incorporated in the Bahamas and was at all material times the trustee of the Trust.

6.Under the Deed, an Appointor may be nominated by the Settlor (ie the Patriarch), or appointed by an Appointor. The Appointor is an important position under the Trust and has wide powers under the Deed, including powers to appoint, remove or replace the trustee, to make advancements and distributions, to vary the trust, and to add or remove beneficiaries or an excluded class, as well as entitlement to receive notice of the trustee’s intention to exercise its various powers. There is no dispute that the Patriarch was the first Appointor.

7.The Appointor is defined by clause 1(a) of the Deed as such person or persons as the Settlor shall by deed nominate as Appointor. Clause 2 (a) further provides that the Appointor may by will or by deed inter vivos, revocable by further deed or irrevocable, and whether having immediate effect or postponed in its effect, or contingent upon any event or lapse of time, appoint any person or persons as an additional appointor or in substitution for an Appointor, and that the Setttlor during his lifetime may remove any such appointor howsoever appointed.

8.Clause 2 (g) of the Deed provides that no deed made pursuant to clause 2 (a) shall take effect until a memorandum has been endorsed on the Deed.

9.On 30 November 1990, the Patriarch as Settlor of the Trust appointed “the person for the time being holding the office of Chairman of the Board of Directors of Charity BVI” as the Appointor pursuant to clause 1 (a) of the Deed. As he was then Chairman of Charity BVI, he had appointed himself as the Appointor.

10.By a Deed of Appointment dated 6 October 2003 (“2003 Deed of Appointment”), the Patriarch as the Appointor of the Trust appointed B as the successor Appointor upon the resignation, disability or passing of the Patriarch pursuant to clause 2 (a) of the Deed. At the material time of the 2003 Deed of Appointment, B was not informed that she had been made the successor Appointor of the Trust, and she was not involved in the execution of the 2003 Deed of Appointment. Counsel for B has highlighted the fact that prior to such appointment, in 2004, B had been the first and only child of the family to be appointed as the Chief Executive Officer of List Co, at a time when the Patriarch was the Chairman.

11.It is also not disputed that on 23 April 2018, B was appointed the Chairman of List Co, and A was appointed its deputy Chairman.

12.On the evidence, the Patriarch had a fall in late August 2018, which led to a head injury and subdural hemorrhage. During that time, he was attended to by his doctor, Professor Mok (“Dr Mok”), who was a neurologist and had treated the Patriarch since 2013.

13.A series of documents were executed by the Patriarch between April and July 2019 (“Appointor Documents”), referred to at paragraph 22 of the Amended Statement of Claim (“SOC”), which are relied upon by A, but are disputed by B in these proceedings. These include in particular: a Deed of Removal of Appointor dated 19 July 2019, whereby the Patriarch as Settlor purported to remove B as an Appointor, and a Deed of Appointment of Appointor also dated 19 July 2019 (“2019 Appointment”), whereby A was nominated and appointed as the Appointor. The Appointor Documents also included an Appointment and Resignation of Protector and Appointor dated 17 June 2019 (“2019 Resignation”), whereby the Patriarch resigned as the current Appointor and protector of the Trust and appointed A as the new Appointor and protector.

14.Prior to the execution of the 2019 Resignation and the 2019 Appointment, the Patriarch was examined by 2 medical doctors, Dr Choi and Dr Lam, who concluded and certified that the Patriarch had the requisite mental capacity to execute these documents.

15.In the meantime, the Trustee had by a letter dated 3 July 2019 declared the Patriarch to be mentally incapacitated (“3/7/19 Letter”). This was in reliance, inter alia, on a medical certificate issued by Dr Mok on 25 June 2019, and a report of Murphy Chan, a Citi wealth planner who had met with the Patriarch in May 2019. According to A, it was B who had provided these reports to the Trustee in her allegation that the Patriarch did not have mental capacity to execute any valid documents or to deal with his affairs. A disputes Dr Mok’s assessment of the Patriarch, pointing out that he was not a practitioner approved by the Hong Kong Hospital Authority as having special experience in the diagnosis and treatment of mental disorder, and claiming that Dr Mok had not conducted any cognitive assessment with the Patriarch and had only seen the Patriarch in 2018. On his part, A relies on the medical opinion of Dr Choi and Dr Lam, who had appeared to be satisfied as to the Patriarch’s mental capacity when he executed the 2019 Appointor Documents.

16.Following correspondence between A, the Trustee and their respective solicitors, the Trustee indicated that it was undesirable for the Trustee to act on the basis of “battling” medical reports, and suggested that A should arrange for an independent medical examination, or obtain a Court order with a declaration on the Patriarch’s capacity.

17.In the meantime, B had commenced HCMH 56 of 2019 on 5 July 2019 (“MH Proceedings”), claiming that the Patriarch had become mentally incapacitated from August 2018. On his part, A commenced HCMP 1280 of 2019 on 22 August 2019 (“MP 1280”), which proceedings related to the directorship of the Patriarch, A and B in Hold Co. MP 1280 has been stayed by Order of the Court made on 9 July 2020, pending the final determination of the MH Proceedings. It was considered that the determination of the MH Proceedings would have impact on the relief sought in MP 1280.

18.In the MH Proceedings, the Court did not permit the issue of the validity of the Appointor Documents to be decided in the action, since the MH Proceedings were forward-looking as to how the affairs and property of the Patriarch should be dealt with in the future, and whether a committee should be put in place for that purpose to safeguard the interests of the Patriarch, rather than to determine cross-allegations made by family members as to the Patriarch’s mental capacity in 2019 at the time of the execution of the Appointor Documents.

19.These proceedings were accordingly commenced by A.

20.A claims that the issue for determination in these proceedings is narrow, and confined to the specific issue of whether the Patriarch had the mental capacity to execute the Appointor Documents in Hong Kong, and that the action should be tried here, and not by the Bahamas Court, essentially because of the close connection between Hong Kong, the Court here, and the issues in dispute between A and B and the family, and the evidence available here.

21.On the other hand, B claims that the claims made and relief sought by A in these proceedings all fall within the exclusive jurisdiction clause contained in the Deed, and all the issues should be tried together by the Bahamas Court which has exclusive jurisdiction, applying the governing law of the Bahamas as to the relevant questions of the Patriarch’s mental capacity and the validity and due execution of the Appointor Documents, and with the participation of the Trustee as a party, to ensure that the Trustee will be bound by the findings of the Court, and to avoid multiplicity of proceedings.

Applicable legal principles

22.There is no dispute that the Deed contains an exclusive jurisdiction clause.

23.The authorities are clear, that the Court will ordinarily exercise its discretion to stay proceedings brought in breach of an exclusive jurisdiction clause, in order to secure the parties’ compliance with their contractual bargain, unless the party resisting the contractual forum can show “strong reasons” for suing in the non-contractual forum: Donahue v Armco Ltd [2002] 1 All ER 749.

24.A argued that where proceedings have been commenced as of right against a party which has been served here, the party applying for a stay of the proceedings bears the burden to demonstrate that the stay should be granted. B was served in Hong Kong, and A contends that she bears the burden of justifying the stay sought.

25.In this case, B is relying on the exclusive jurisdiction clause in the Deed, and Counsel has highlighted the fact that firstly, that raises a presumption and a prima facie entitlement to enforcement of the clause. Secondly, in a case where an exclusive jurisdiction clause exists, the approach of the courts in dealing with applications for stay on forum non-conveniens grounds is not applicable. A party who relies on an exclusive jurisdiction clause is entitled to hold the other party to their contractual bargain, and it is not necessary for B in this case to justify that it is more convenient to try these proceedings in the Bahamas, simply because the parties had agreed to the Bahamas being the proper forum for the determination of the issues covered by the scope of the clause. To demonstrate that there are “strong reasons” or a “strong cause” for suing in a non-contractual forum, there must be something unforeseeable at the time of the contract, or something so exceptional that goes to the interests of justice. In Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631, the legal principles were summarized at paragraph 71 of the judgment, and paragraph 71 (ii) and (iii) are set out below:

“Although, in the exercise of its discretion, the court is entitled to have regard to all the circumstances of the case, the general rule is that the parties will be held to their contractual choice of English jurisdiction unless there are overwhelming, or at least very strong, reasons for departing from this rule: see eg British Aerospace Plc v Dee Howard Co; Mercury Communications v Communication Telesystems International at p 41; per Aikens J in Marubeni Hong Kong & South China Ltd v Mongolian Government [2002] 2 AER (Comm) 873 at p 891 (b)-(f); per Lawrence Collins J in BAS Capital Funding Corp & Others v Medfinco Ltd & Others [2004] 1 Lloyd’s Rep 652 at paras 192-195; per Gross J in Import Export Metro Ltd v Compania Sud America De Vapores SA [2003] 1 Lloyd’s Rep 405.

Such overwhelming or very strong reasons do not include factors of convenience that were foreseeable at the time that the contract was entered into (save in exceptional circumstances involving the interests of justice); and it is not appropriate to embark upon a standard Spiliada balancing exercise. The defendant has to point to some factor which it could not have foreseen at the time the contract was concluded. Even if there is an unforeseeable factor or a party can point to some other reason which, in the interests of justice, points to another forum, this does not automatically lead to the conclusion that the court should exercise its jurisdiction to release a party from its contractual bargain; see cases cited supra. In particular, the fact that the defendant has, or is about, to institute proceedings in another jurisdiction, not contemplated by the non-exclusive jurisdiction clause, is not a strong or compelling reason to relieve a party from his bargain, notwithstanding the undesirability of parallel proceedings. Otherwise a party to a non-exclusive jurisdiction clause could avoid its agreement at will by commencing proceedings in another jurisdiction; see cases cited supra and The El Amria [1981] 2 Lloyd’s Rep 119; Breams Trustees Ltd v Upstream Downstream Simulation Services [2004] EWHC 211 (Ch) per Patten J at paras 27-28.”

26.The parties in this case do not dispute that in the case of a trust deed, the weight to be given to an exclusive jurisdiction clause is less than the weight to be given to such a clause in an ordinary contract (Crociani v Crociani [2014] UKPC 40). A places reliance on this case, to argue that he is not a party to the Deed, and as such, he does not have to establish such a strong case as that contemplated by Noble Power, to avoid the enforcement of the relevant clause in the Deed.

27.In Crociani, Lord Neuberger explained at paragraphs 36 and 37 of the judgment:

“In the case of a clause in a trust, the court is not faced with the argument that it should hold a contracting party to her contractual bargain. It is, of course, true that a beneficiary, who wishes to take advantage of the trust can be expected to accept that she is bound by the terms of the trust, but it is not a commitment of the same order as a contracting party being bound by the terms of a commercial contract. Where, as here (and as presumably would usually be the case), it is a beneficiary who wishes to avoid the clause and the trustees who wish to enforce it, one would normally expect the trustees to come up with a good reason for adhering to the clause, albeit that their failure to do so would not prevent them from invoking the presumption that the clause should be enforced. In the case of a trust, unlike a contract, the court has an inherent jurisdiction to supervise the administration of the trust – see eg Schmidt v Rosewood Trust Ltd [2003] UKPC 26, [2003] 2 AC 709 (para [51]), where Lord Walker of Gestinghorpe referred to ‘the court’s inherent jurisdiction to supervise, and if necessary to intervene in, the administration of trusts’. This is not to suggest that a court has some freewheeling unfettered discretion to do whatever seems fair when it comes to trusts. However, what is clear is that the court does have a power to supervise the administration of trusts, primarily to protect the interests of beneficiaries, which represents a clear and, for present purposes, significant distinction between trusts and contracts.

Accordingly, the Board considers that, while it is right to confirm that a trustee is prima facie entitled to insist on and enforce an exclusive jurisdiction clause in the trust deed, the weight to be given to the existence of the clause is less (or the strength of the arguments needed to outweigh the effect of the clause is less) than where one contracting party is seeking to enforce a contractual exclusive jurisdiction clause against another contracting party.” (Emphases added)

28.As Counsel for B pointed out, and I accept, even if a trustee seeking to enforce the jurisdiction clause does not come up with some good reason to adhere to the clause, it is nevertheless entitled to rely on the presumption raised by such a clause. Lord Neuberger pointed out that the weight to be given to the existence of the exclusive jurisdiction clause may be less, because the court has the power to supervise the due administration of a trust, and primarily to protect the interests of beneficiaries.

Whether the exclusive jurisdiction clause (referred to below as “EJC”) should be enforced

29.I accept the submissions made on behalf of B, that A is seeking to claim in these proceedings that he is the Appointor validly appointed under the Trust pursuant to the Patriarch’s due execution of the Appointor Documents under the Deed. He seeks to defeat B’s status and appointment as Appointor under the 2003 Deed of Appointment. His original claim for relief, for declarations that each of the Appointor Documents was duly executed by the Patriarch and that he had been validly appointed, and that B had been removed as Appointor, fall clearly within the scope of the EJC, as matters “pertaining to” or “relating to” the Deed and the trusts declared thereunder. The amended prayer in the SOC seeks to confine the declarations to the Patriarch’s mental capacity to execute the Appointor Documents, and to the effect that “each of the Appointor Documents was duly executed by the Patriarch”. However, a finding of “due execution” encompasses more than a finding on the Patriarch’s possession of the necessary mental capacity to result in a finding that the Appointor Documents had been duly executed by him. By way of illustration, B claims in these proceedings that the Appointor Documents were prima facie not executed as deeds, that they were not accompanied by the necessary memorandum/memoranda endorsed on the Deed, and there is dispute as to whether the documents were valid as a matter of Bahamian law. These contentions have to be dealt with by the court before any declaration can be made as to the Patriarch’s due execution of the Appointor Documents in these particular factual circumstances.

30.I therefore cannot agree that the sole or narrow issue for determination in this action is whether the Patriarch had the necessary mental capacity to execute the Appointor Documents, and that the issue of the validity of the Appointor Documents is not required to be determined by the court, as A contends.

31.In any event, as Counsel for B pointed out, the Court cannot make a declaration in the abstract (see Cheung Man Wai v Director of Social Welfare [2000] 3 HKLRD 205). A declaration can only be made in the context of the parties’ respective rights between them and as asserted on the facts and circumstances of the particular case. As Counsel for B also pointed out, references in the relief claimed in these proceedings, to “Appointor Documents”, only have meaning because of the Deed, and the only way in which any rights of A and B can be engaged by the validity of the execution of the Appointor Documents is through the operation of the Deed.

32.On a proper analysis of the claims made by A in these proceedings, he is asserting rights under the Deed as the purported Appointor, and claiming that he should have all the powers of the Appointor vested in him under the Deed, to affect the rights of B under the Deed. As a party claiming rights under the Trust, and claiming to have assumed duties or powers under the Trust, A must correspondingly be bound by the EJC contained in the Deed (para 11-078 Lewin on Trust (20^th ed, 2020)), and B is entitled to rely on the EJC, although neither A nor B are strictly parties to the Deed. This is not, in fact, disputed by Counsel for A in his skeleton submissions. What is contended for A is that B’s reliance on the EJC rings hollow when the Trustee is content for these proceedings to be tried in Hong Kong.

33.The position is that in the light of the EJC in the Deed, which B is entitled to invoke in respect of A’s claims made in these proceedings, there is a presumption that the Courts of the Bahamas have the jurisdiction to determine matters which pertain to the Trust. The presumption can be rebutted if A can show strong reasons not to comply with the clause – and whilst the Court bears in mind that A has a lighter burden in this regard when compared with the usual contractual case, there must still be sufficiently good reasons not to adhere to the ECJ, before the Court should exercise it discretion not to stay the proceedings and refer them to the Bahamas Court.

34.Counsel for A contended that the factors to be taken into account by the Court should be the same forum non-conveniens factors, with the focus on the effectiveness of the trial of the action. A relies on the fact that the present action has an overwhelming connection to Hong Kong, where A says the events occurred, the witnesses are residing, and much of the evidence is located. It is claimed that none of the proposed witnesses including the doctors have any connection with the Bahamas, and that the Patriarch had only dealt with the Trustee’s representatives in Hong Kong. It was also argued that the Hong Kong courts would be more familiar with the context and background of the dispute, the Patriarch being a well-known figure here, and that the Hong Kong Court would be in a better position to understand the traditional views and sentiments of the Patriarch who had set up the Trust.

35.In particular, A relies on the fact that the Trustee had all along recognized that the Hong Kong courts would be the appropriate forum to resolve the issue of the Patriarch’s capacity. One of the factors taken into consideration by the Board in Crociani was that the appellants in the case had been prepared to accept the jurisdiction of the non-contractual Jersey courts and were content to have the claims pursued there. A pointed out that it was in fact the Trustee which had suggested that a court order should be obtained in respect of the Patriarch’s mental capacity, and that this had led to B’s commencement of the MH Proceedings and these proceedings being commenced by A. A referred to the Trustee’s earlier correspondence, in which the Trustee had stated that it was proper to await the determination of the Court in the MH Proceedings.

36.Having considered the entirety of the evidence, including the correspondence between the Trustee and the solicitors for A, it cannot be concluded that the Trustee had been “content” (as A claims) for the issue of the Patriarch’s capacity at the time of the execution of the Appointor Documents to be tried in Hong Kong, and to be bound by any determination which may be made by the Hong Kong Court.

37.The correspondence in 2019, before the commencement of the MH Proceedings and the decision of the Court in the MH Proceedings that the question of the Patriarch’s historic capacity would not be considered in the MH Proceedings, cannot be conclusive as to the Trustee’s position. It was of course appropriate and reasonable for the Trustee to ask for a court order on the Patriarch’s mental capacity, before it could consider reversing its decision made on the basis of the evidence presented to it at the time of the 3/7/19 Letter. However, that cannot be taken as an indication that an order or declaration should be obtained from the Hong Kong Court, as opposed to the Bahamas Court, without the Trustee being joined in the relevant action. The Trustee has not been made a party in any of the proceedings instituted by A or B in Hong Kong.

38.In any event, in the letter of 30 August 2019, those acting for the Trustee had, in the context of the determination on the capacity or disability of the Patriarch, referred not only to the Hong Kong courts but also to “other court of competent jurisdiction”.

39.In the Trustee’s letter of 7 August 2020, and that was after A had disputed the Trustee’s determination as to the Patriarch’s mental incapacity and after B’s institution of the MH Proceedings, the Trustee had pointed out, in the context of “whether certain documents were validly executed under Bahamian law and are effective under (the Trust)”, that the Trust is subject to the EJC in favour of the Courts of the Bahamas, and that it was “not immediately clear what might be the effect in the Bahamas of a determination procured within the contemplated Hong Kong proceedings”. The Trustee also stated in the letter that the existence of the EJC made it impossible for the Trustee to provide a firm commitment in the absence of additional information and study, and that it was “not entirely certain whether a Bahamian trustee could ever lawfully agree to be bound” in the circumstances.

40.The Trustee’s position has been made clear in the proceedings it instituted in the Bahamas or on about 20 December 2019, for directions from the Bahamian Court (“Trustee Application”). This was an application made under section 77 (1) of the Trustee Act 1998, for directions of the court pending the determination of the MP Proceedings in Hong Kong. The questions on which directions were sought from the Bahamas Court included what steps the Trustee should take in relation to the MH Proceedings and these proceedings relating to the Patriarch’s mental capacity, and whether the Trustee may continue to administer the Trust on the basis that the Patriarch is incapacitated and that B is the Appointor of the Trust, pending the final determination by the Hong Kong Court.

41.The Ruling of the Court was in fact rendered by Hon Charles J on 29 October 2021 (“Ruling”).

42.It is clearly reflected in the Ruling, and the submissions made on behalf of the Trustee and the other parties in the Trustee Application, that there has been no submission by the Trustee to the jurisdiction of the Hong Kong Courts, and no commitment that the Trustee will be bound by any decision to be made by the Hong Kong Court in these proceedings. That was considered to be premature, and the Trustee was cautious to maintain a distance from the claims made by A against B in these proceedings, without committing to a judgment outside the jurisdiction of the Bahamas. This was pointed out in paragraphs 77 to 79 of the Ruling:

“That said, the Trustee has taken what I consider to be a rather conservative approach and has kept its distance from (A’s) Action against (B). The Trustee has made submissions on the potential ramifications of submitting to the jurisdiction of the Hong Kong Court and/or whether it would be appropriate for it to do so because under Bahamian conflict of laws principles, submission to the courts of a foreign jurisdiction will render an ensuing judgment binding upon the defendant subject to a limited number of defences, with the result that the judgment can be recognized domestically without a thorough consideration of its merits.

Mr Dunkley QC (for the Trustee) contends that, in the trusts context, courts in jurisdictions with comparable conflicts of laws principles have admonished trustees against submitting to the jurisdiction of foreign courts too readily. For example, in In the Matter of the H Trust (2006) 9 ITELR 133, the Royal Court of Jersey (against the backdrop of a trustee seeking directions in relation to foreign divorce proceedings) stated at [16]:

‘The significant factor from the point of view of whether the trustee should submit to the jurisdiction of the overseas court is that it will remain a matter of discretion for the Court as to the course it should take in the light of the overseas order if the trustee has not submitted, whereas if the trustee has submitted, the overseas order is likely to be enforced without reconsideration of the merits.’

Mr Dunkley QC also refers to the case of In the Matter of the B Trust, RBS Coutts (Cayman) Limited v W and Others [2010] (2) CILR 348. It was held that it would commonly be appropriate for a trustee to follow guidance from a foreign court even if it had not submitted to its jurisdiction but the trustee would not be bound to follow the guidance since the foreign court would not have the jurisdiction to direct a particular exercise of such a trustee’s power. If the trustee was of the opinion that following the foreign court’s guidance would be unduly prejudicial to the beneficiaries’ interests, it would be appropriate for it to decline to do so.”

43.Charles J found the above submissions compelling and concluded that it would be wrong for the Court to give directions to the Trustee on matters which are extant before a foreign court. She also agreed that it was premature to direct what steps the Trustee should take upon the final determination of the Hong Kong proceedings, stating that “when the time is right”, the Trustee can reapply for guidance of the Bahamas Court, which governs the Trust, if it should still require such guidance. She considered that the Bahamas Court should not direct the Trustee to fetter its discretion when the decisions of the Hong Kong Court are unknown.

44.With respect, these conclusions perfectly make sense.

45.The Trustee’s stance in relation to the issues raised by A in these proceedings is also clearly reflected in the Ruling. According to the Trustee, these issues appear to be governed by Bahamian law and are subject to the exclusive jurisdiction of the Bahamian Courts, and section 7 (1)(a) of the Trust (Choice of Governing Law) Act, Ch 179 (“Act”) stipulates a conflict of law rule which applies Bahamian law to a multiplicity of questions which include the question of the capacity of the settlor. It was also argued before the Bahamian Court that A’s amended claim in the SOC falls within the scope of the EJC because due execution involves considerations other than mere capacity, and that questions involving formalities under Bahamian law must also be considered.

46.The Court accepted, as “preliminary observations” in the Ruling, that as the governing law of the Deed is the law of the Bahamas, and section 7 (1)(a) of the Act is clear that the issue of capacity of the settlor is governed by Bahamian law, the Bahamian Court would have jurisdiction, perhaps not exclusive, to hear the issue on the capacity of the Patriarch, and that although the Hong Kong Court may have in personam jurisdiction over the Patriarch, the decision of the Hong Kong Court in these proceedings are not binding on the Trustee, as it has not submitted to the jurisdiction of the Hong Kong Court (paragraphs 29 to 32 of the Ruling).

47.A attempted to highlight the fact that the Bahamian Court did not, in the Trustee Application, direct or order the Trustee to intervene in these proceedings, or to insist that the claims should be brought in the Bahamas. This should be properly considered in the context of the arguments made before Charles J, the stance adopted by the Trustee for those proceedings, and the reasons given by the Court in the Ruling.

48.The Trustee made it clear in the Trustee Application, that although it had elected to await the outcome of the Hong Kong proceedings in the absence of directions to do otherwise, that should not be treated as its admission that the Bahamian Court is not the most appropriate forum for a final and binding determination of the matters sought to be litigated in the Hong Kong Court, and particularly in these proceedings (see paragraph 44 of the Ruling). The Trustee had explained that there was no need for it to take further steps in these proceedings because B had already applied to stay them (see paragraph 56 of the Ruling).

49.In the light of the above matters, Counsel for B is justified to contend that in view of the stance taken by the Trustee, there is no clear commitment by the Trustee that it would act upon or follow the determination made by the Court in these proceedings. In the event that the Hong Kong Court should make a decision which is contrary to the Trustee’s own determination of the Patriarch’s lack of mental capacity at the time of the execution of the Appointor Documents or which is in conflict with Bahamian law on issues of the execution of the Appointer Documents, there is a real risk that the Trustee may decide not to follow the determination by the Hong Kong Court and instead seek a determination from the Bahamas Court under the governing law of the Deed and the governing law of the settlor’s mental capacity. This will lead to multiplicity of legal proceedings in the future which is highly undesirable.

50.The Trustee is obviously a necessary and proper party to the determination of the issue of the Patriarch’s mental capacity in his execution of the Appointor Documents. The Trustee has not been joined in these proceedings, and the Trustee is not bound by the determination of the Court in this action. The Trustee clearly regards the Bahamian Court as the proper forum with the exclusive jurisdiction over the claims made in these proceedings.

51.There is little point in the argument made for A, that B has not sought to join the Trustee in the MH Proceedings, in view of the nature and purpose of those proceedings as the Court has explained in that action.

52.Before granting any declaratory relief of the nature sought by A in this action, the Court must ensure that all parties affected are before it, or will have their arguments put before the Court (Rolls-Royce Plc v Unite the Union [2010] 1 WLR 318, para 120 (6)). From my reading of the Ruling and the arguments made before the Bahamas Court, I cannot agree that the Hong Kong courts are “clearly more familiar with the context and background of the dispute” between the parties.

53.For the purpose of rebutting the presumption in favour of the Bahamas Court pursuant to the EJC, and for the purpose of arguing that the Hong Kong Court is (on forum non-conveniens principles) the more appropriate forum and the forum with the most real and substantial connection with this action, A places reliance on the fact that the witnesses have no connection with the Bahamas, and that all of the witnesses are resident or present in Hong Kong. It was also argued that the Hong Kong courts would be in a better position to understand the wishes, traditional views and sentiments of the Patriarch.

54.On B’s part, it was pointed out that the Trustee is a company in the Bahamas, from which it manages and administers the Trust and where it holds the Trust documents which it prepared.

55.Questions of the availability and preference of the witnesses to give evidence in Hong Kong are only questions of convenience and do not carry much weight in these proceedings. This is particularly so now, with modern technology that can facilitate and accommodate remote hearings and parties giving evidence by video link. I reject any suggestion that there can be any hardship or prejudice likely to be caused to any members of the family, or to any witnesses of the professional Trustee who may be in Hong Kong, should they be required to give evidence in the Bahamas, in terms of the need for or costs of traveling outside Hong Kong.

56.At the time when the Trust was set up and the Deed was executed, the Patriarch himself was content to confer exclusive jurisdiction on the Bahamas Courts to determine all questions relating and pertaining to the Trust, notwithstanding his own traditional views (as alleged by A), his background and his sentiments. If he was content with that, I fail to see how A or other members of the family can contend that the Bahamas Court would not be able to understand the Patriarch’s views. It is not apparent that the Patriarch had any reservations as to the competence of the Bahamas Court, and there is no reason now to doubt the ability of that Court to appreciate any evidence that may be presented to it on the views and wishes of the Patriarch. The Bahamian Court is eminently experienced in the supervision and administration of trusts to be able to understand and deal with such evidence, even if part of the evidence should be in Cantonese which can be translated and (if necessary) for any nuances to be explained to the Court.

57.I do not consider the location of the witnesses, the nature of the evidence, or the nature of the dispute, to be good reasons not to enforce the EJC.

58.This is particularly so when the Deed and the Trust are governed by the law of the Bahamas, and the Bahamian Court is plainly more familiar than any other court with that law; there is no question or doubt as to the exclusivity of the jurisdiction conferred under the EJC; the stance of the Trustee who has not submitted to the jurisdiction of the Hong Kong courts, and the likelihood of and the obvious need to avoid the multiplicity of proceedings concerning the validity and due execution of the Appointor Documents. I have paid heed to the reminder in Crociani of the need of the courts to supervise the administration of trusts, primarily for the protection of the interests of beneficiaries, but this will not be obviated by referring this action to the Court of the Bahamas, which is more than competent to perform this role. I find no circumstances involving the interests of justice which call for this action to be tried in Hong Kong, as opposed to the agreed forum in the Bahamas.

Disposition

59.For all the reasons set out above, I conclude that there is no reason not to enforce the exclusive jurisdiction clause of the Deed. To the extent necessary, I also consider that the Bahamian Court is the more appropriate forum for the trial of the claims made in this action.

60.B’s application to stay this action is allowed, with costs to B (including all costs reserved), with certificate for 2 Counsel. Such costs order will be made absolute unless application for variation is made within 14 days from 11 April 2022.

Mr Bernard Man SC leading Mr Keith Lam, instructed by TH Koo & Associates, for the plaintiff

Mr Paul Shieh SC and Mr James Man, instructed by MinterEllison LLP, for the defendant