Norman Guy Donald and Another v. Lee Michael Chak Chuen in His Capacity As Executor of the Estate of Li Pak Iu and Others

CACV 203/2022, [2024] HKCA 403

On appeal from [2023] HKCFI 1106

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 203 OF 2022

(ON APPEAL FROM HCA NO 610 OF 2021)

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JUDGMENT

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The Court:

A.  Introduction

1.On 11 September 2023, we handed down our judgment[1] dismissing the 5^th defendant’s appeal against the judgment of B Chu J (“the Judge”) given on 21 April 2022 concerning the estate (“the Estate”) of Li Sing Kui, deceased (“the Deceased”) and the construction of his will dated 15 December 1954 (“the Will”).  We also made an order that the 5^th defendant personally pay the costs of the plaintiffs (“the Trustees”) and the 1^st and 2^nd defendants with certificate for two counsel, and that any costs not so recovered by the Trustees be paid out of the Estate on an indemnity basis.  We further ordered that the 5^th defendant’s own costs of the appeal should not be paid out of the Estate.

2.By a notice of motion filed on 9 October 2023, the 5^th defendant applies for leave to appeal our judgment to the Court of Final Appeal.  The application is opposed by the Trustees and the 2^nd defendant.  The 5^th defendant, the Trustees and the 2^nd defendant have respectively lodged written submissions on the application.

3.Having considered the notice of motion and the written submissions, we see no reason to depart from the usual practice of determining applications for leave to appeal to the Court of Final Appeal on paper without an oral hearing.  We have therefore proceeded to determine the 5^th defendant’s application on the basis of the documents in the case.

B.  Our judgment

4.The background and the facts underlying this appeal have been set out in our judgment.  We will not repeat them.    

5.The core issue in the appeal concerns the proper construction and validity of clause 5(2)(f) of the Will.  Under clause 5(2) of the Will, the residuary estate of the Deceased (“the Residuary Estate”) was divided into six equal shares.  Clause 5(2)(a) to (e) directed the Trustees to distribute one share to each of the five sons of the Deceased, one of whom is the 5^th defendant. 

6.Clause 5(2)(f) provides as follows:

“ONE (1) share [of the Residuary Estate] to be appropriated for ‘Ching Sheung’ (蒸嘗) for the purpose of Ancestor Worship

Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons.”

7.The Judge described the clause as having two parts: the first being the appropriation of one share of the Residuary Estate for Ching Sheung (ancestral worship) (“1^st Part”); and the second being the proviso (“2^nd Part”).

8.While it is common ground between the parties that the gift for Ching Sheung was void for infringing the Common Law rule against perpetuities, the parties differed as to the construction and the effect of clause 5(2)(f).  The Judge summarised the issues between the parties as:

“(1)  whether the fact that the 1^st Part is void defeats the entire Clause 5(2)(f) or whether the 2^nd Part takes effect notwithstanding the invalidity of the 1^st Part (“Issue (1)”);

(2)  even if the 2^nd Part can be severed from the 1^st Part, whether the 2^nd Part created a mere power or a trust power (“Issue (2)”); and

(3)  if a mere power then whether a reasonable time has already lapsed (“Issue (3)”).”

9.The Judge held, on Issue (1), that the 2^nd Part of clause 5(2)(f) does not have a life of its own, if the 1^st Part is found to be invalid.  The Judge went on, in the event that she was wrong on Issue (1), to consider Issues (2) and (3) and hold that the proviso gave the Trustees a mere power, and that reasonable time for the Trustees to exercise the mere power has lapsed.

10.The 5^th defendant appealed the Judge’s decision on all the issues.  On Issue (1), for the reasons we gave at [19.1] to [19.5] of our judgment, we held that the language of clause 5(2)(f) is clear and that there is only one gift in the clause, which is the gift for Ching Sheung.  Accordingly, as the gift was void ab initio, there was never any gift, and thus no property which the Trustees could apply for the benefit of any sons.  On this basis alone, the appeal should be dismissed.  As to Issue (2), we expressed the view that the Trustees were given a trust power, not a mere power, and it would follow that Issue (3) did not fall for consideration: [21] to [22.2] of our judgment.  We therefore dismissed the appeal.

C.  The 5^th defendant’s application for leave to appeal

11.In the notice of motion, the 5^th defendant formulates the following questions as being of great general or public importance, or otherwise, which ought to be submitted to the Court of Final Appeal for decision (respectively “Question (1)” to “Question (4)”):

(1)  In a clause or sub-clause of a will containing multiple limitations and provisions, where one of the limitations or provisions fails or is void, what is the correct legal test to apply to determine the effect of such failure or void-ness on the other limitations and provisions which are valid in themselves.

(2)  In the above circumstances, whether the doctrine of severability applies to such a clause or sub-clause with the result that the void provision can be ignored and the valid provisions in the clause or sub-clause remain effective, and if so, what are the conditions required to be satisfied for that doctrine to operate.

(3)  Where in a clause or sub-clause in the will the testator directs or authorizes his trustees to act in one way (A), and at the same time it is expressly stated (in the same clause or sub-clause) that ‘Provided otherwise that’ or a similar expression such as ‘notwithstanding the above’ the trustees may in their uncontrolled discretion do something else (B), whether these expressions have overriding effect over (A).

(4)  Where parties dispute over the construction and effect of (A) and (B) as referred in Question (3) above, whether the value of the relevant disposition involved, which shows that the testator could not have intended to make only (A), is a relevant consideration of ‘materiality’ to be taken into account by the court.

12.The 5^th defendant contends that the four questions are of great general or public importance in relation to the construction of wills because it is commonplace for wills to contain multiple limitations and other dispositive provisions and the application of correct principles to such provisions is of fundamental importance, in particular, to the probate practitioners in the legal profession as a whole. 

13.The 5^th defendant also seeks leave to appeal on the “or otherwise” limb, contending that this Court is manifestly wrong in the construction of clause 5(2)(f) by refusing to give proper weight to the value of the Estate in determining the Deceased’s intentions and therefore, that there has been grave injustice and exceptionally serious ramifications caused to the 5^th defendant.  It is further contended that as this Court has failed to apply the correct principles and our judgment will result in confusion and uncertainty among the legal profession on construction of wills, it is necessary and desirable to seek clear and correct guidance from the Court of Final Appeal.

D.   Our reasons for decision

       D.1  Applicable principles

14.Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, provides that leave to appeal to the Court of Final Appeal may be granted if the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

15.An application for leave to appeal is not an occasion to re-argue an appeal, or to re-run arguments which had been canvassed in the appeal but rejected by the court: Ho Sin Ying v Chan Yui Ling & Another (unreported, CACV 221/2013, 14 November 2014) at [2] and [3].  An applicant is required to demonstrate that the questions in the intended appeal are reasonably arguable.  He has to show sufficient merits to warrant embarking on a further appeal, notwithstanding that his arguments have been rejected by the Court of Appeal: Maeda Kensetsu Kogyo Kabushiki Kaisha aka Maeda Corporation & Anor v Bauer Hong Kong Ltd [2021] HKCA 653 at [14].

16.In light of the above principles and having considered the questions put forward by the 5^th defendant as well as the parties’ submissions, we are of the view that leave to appeal should be refused for the reasons set out below.  

       D.2  Question (1)

17.We would point out at the outset that although framed as separate questions, all four questions relate in substance to this Court’s application of the general legal principles of interpretation of a will to find that clause 5(2)(f), read as a whole, is clear from its language that the Deceased intended to make only one gift, which is the gift for Ching Sheung, and further that if such gift was void ab initio, there was simply nothing from which the Trustees could exercise their discretion to benefit one or more of the Deceased’s sons.

18.Question (1) asks for a legal test to be formulated and applied to determine the effect of a limitation or provision of a clause or sub-clause in a will, which fails or is held void, on the remainder of that clause or sub-clause.

19.Mr Patrick Fung SC, together with Ms Teresa Wu, for the 5^th defendant submits that this Court has erred in identifying the Deceased’s intention in that it is evident from the clear and express wordings of clause 5(2)(f) that there are two provisions for the one share of the Residuary Estate, respectively for Ching Sheung and for the Deceased’s son(s), and they are separate and independent of each other. 

20.As discussed in our judgment (at [16]) and the Judge’s judgment (at [32] and [33]), the general legal principles for the interpretation of a will is clear and not in dispute. The 5^th defendant’s complaint is not that this Court has applied the wrong principles, but that in applying these well-established legal principles we have come to the wrong findings.  The 5^th defendant’s complaint therefore is not one of law and principle, but is a challenge to the application of the relevant legal principles to the facts and context of this case.

21.Both Mr Eugene Fung SC, together with Mr Keith Chan, for the Trustees, and Mr Anson Wong SC, together with Mr Justin Lam, for the 2^nd defendant stress that the determination of the effect of a limitation or provision of a clause in a will where another limitation or provision of the same clause has failed or become void is a matter of construction, and it is a fact-sensitive and context-specific exercise.  We agree.  In our view, Question (1) does not raise any question of great general or public importance.

22.Further, the question is not reasonably arguable. 

23.The 5^th defendant’s arguments in essence are that this Court has failed to objectively construe the two parts in clause 5(2)(f) as comprising separate dispositions that are independent of, and therefore severable from, each other, and that, applying the test suggested by the 5^th defendant, this Court ought to have found that as the 2^nd Part is not ulterior to or dependent upon the 1^st Part, the Trustees may apply the one share of the Residuary Estate to benefit the son(s) pursuant to the 2^nd Part notwithstanding that the 1^st Part is void.

24.These arguments have been considered and rejected by us for the reasons given in [19.1] and [19.2] of our judgment.  Other than stating his disagreement to our construction of clause 5(2)(f) upon the facts and context of this case, the 5^th defendant has given no convincing reasons to show that our reasoning is wrong.  The authorities[2] cited by Mr Patrick Fung do not assist the 5^th defendant.  They are demonstration of fact-specific instances of construction of wills in the specific context of their respective cases.  They do not add anything to the arguments.  Nor do they show any error in this Court’s approach to the construction of clause 5(2)(f).

25.We are not satisfied that Question 1 gives rise to any arguable question of great general or public importance.

       D.3  Question (2)

26.Under Question (2), the 5^th defendant seeks to argue that the doctrine of severability, a contractual principle as applied in Midland Business Management Ltd v Lo Man Kui [2011] 1 HKLRD 470 and Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRIR 388, should also apply to the construction of wills, provided that certain conditions are satisfied.

27.In the first place, it is a new argument not raised before the Judge or before us.  The practice of this Court is not to grant leave for new points (not restricted to new points involving fact-sensitive issues) that had not been canvassed in the substantive appeal before us: see Ageas insurance Co (Asia) Ltd v Lam Hau Wah Inneo, CACV 65/2014, unreported, 19 May 2015, at [7] to [9]; and The Law Society of Hong Kong v A Solicitor, CACV 78/2014, unreported, 10 July 2015, at [4] to [7].  In the absence of exceptional circumstances, the 5^th defendant cannot be permitted to run this point in this application.

28.Moreover, the 5^th defendant had argued in the appeal that the test in Re Canning’s Will Trusts [1936] Ch. 309, 314 should be applied to determine whether or not the invalidity of a gift or object under a clause of a will would also invalidate another object under the same clause, such as the power or discretion of the trustee to benefit a group of beneficiary(ies).  Applying the test, we held that as the gift for Ching Sheung was void for perpetuity, there was no gift out of which the Trustees could apply for the benefit of any son(s).  The 5^th defendant now seeks to advance a different legal test without providing any justification.  This is not permissible.

29.In any event, Question (2) remains a matter of construction which is fact-sensitive and context-specific, and does not involve any question of great general or public importance.

       D.4  Question (3)

30.Question (3) asks whether the expression “provided nevertheless that” or a similar expression in a clause or sub-clause of a will has any specific “overriding effect”.

31.The 5^th defendant argues that by reason of the expression “Provided nevertheless that”, the 2^nd Part of clause 5(2)(f) is not conditional upon the 1^st Part.  Instead, it is argued, the proviso gives an overriding effect over the 1^st Part, empowering the Trustees to apply the one share of the Residuary Estate to benefit the son(s), irrespective of the validity of the gift for Ching Sheung. 

32.The 5^th defendant says that it is commonplace for wills to contain multiple limitations and other dispositive provisions in a clause or sub-clause where the trustees are directed to do one thing or another, with or without certain condition or qualification imposed, and that it is common for testators to use the words “provided nevertheless that” or a like phrase in wills to impose a condition or qualification.  Even if this was the case, whether or not particular words or phrases contained in a clause or sub-clause of a will carry specific meaning or effect, such as to give rise to the trustees’ discretion or power to do that one thing over another, remains a matter of construction to be determined by taking into account, among other things, the facts and circumstances known or assumed by the parties at the time the document was executed: AFH Hong Kong Stores Ltd v Fulton Corp Ltd [2023] HKCA 78 at [18.2], applying Eminent Investments (Asia Pacific) Ltd v DIO Corp [2020] HKCFA 38 at [43] to [45].  Question (3) cannot be answered in the abstract without regard to the facts and context of the case involved. 

33.In any event, the 5^th defendant is merely rehashing his arguments in the appeal relating to the proviso in clause 5(2)(f).  We have considered and dealt with them at [19.3] of our judgment where we held that these words do not assist the 5^th defendant’s case. 

34.In short, Question (3) does not give rise to any arguable question of great general or public importance.

       D.5  Question (4)

35.Question (4) is directed at [19.4] of our judgment where we held that the language of clause 5(2)(f) is so clear that considerations such as the sufficiency of other provisions for the sons or dispositions to other members of the family are of little materiality, and it is not necessary to discuss the Judge’s views on them. 

36.The 5^th defendant argues that we have failed to take into account the value of the one share of the Residuary Estate and have erred in taking the view that the language of clause 5(2)(f) is so clear that other considerations are of “little materiality”.  It is contended that given the sizeable value of the one share of the Residuary Estate, in contrast to the relatively small amount of funds required for Ching Sheung, it could not have been the Deceased’s intention, as this Court has found, that the entirety of the one share of the Residuary Estate is to be used for Ching Sheung.

37.Firstly, as we pointed out in [19.1] of our judgment, the language and meaning of the words in clause 5(2)(f) are clear beyond doubt and that there was only ever one gift, which is the gift for Ching Sheung.  This being the case, other considerations deserve less weight in the construction of the clause: Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) HKCFA 38 at [43] to [45].

38.Secondly, as the Trustees and the 2^nd defendant point out, the 5^th defendant’s contention has no evidential basis.  There is no admissible evidence before the Judge and before us as to, for instance, the value of the Residuary Estate as at 1954 when the Will was made, and how much Ching Sheung would cost.  In the circumstances, there was no proper basis for Question (4) to arise.

39.We are not satisfied that Question (4) is an arguable question of great general or public importance.

       D.6  The “or otherwise” limb

40.The 5^th defendant also relies on the “or otherwise” limb.  He argues that because of the significant value of the Estate, our judgment has caused him to suffer from grave injustice and exceptionally serious ramifications.  The practice of this court is to leave it to the Appeal Committee to decide whether exceptional circumstances are made out for leave to be granted under this limb: Bill Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260 at [9].  We do not consider that the value of the Estate alone constitutes an exceptional factor in favour of granting leave to appeal under section 22(1)(b).

E.  Costs and disposition

41.For the reasons set out above, we refuse to give leave to appeal to the Court of Final Appeal and dismiss the notice of motion.

42.Applying the normal rule of costs follow the event, we order the 5^th defendant to personally pay the Trustees and the 2^nd defendant their costs of this application to be summarily assessed on a party-and-party basis and with certificate for two counsel.

43.We have considered the respective statements of costs of the Trustees and the 2^nd defendant.  Taking a broad-brush approach, we summarily assess their respective costs of this application at HK$280,000 and HK$260,000.  

44.The orders that we make are as follows:

(1)  The notice of motion is dismissed.

(2)  The 5^th defendant do personally pay the plaintiffs and the 2^nd defendant their respective costs of the application on a party-and-party basis with certificate for two counsel, summarily assessed in the case of the plaintiffs at HK$280,000 and in the case of the 2^nd defendant at HK$260,000.

(3)  The plaintiffs’ own costs be paid out of the Estate on indemnity basis.

(4)  The 5^th defendant’s own costs shall not be paid out of the Estate.