Peter Tsui Yan Sau v. Wong Cheung Hin and Another

HCA000628/1968

IN THE SUPREME COURT OF HONG KONG

(ORIGINAL JURISDICTION)

ACTION NO.628 OF 1968

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Coram: Briggs, C.J. in Court.

Date of Judgment: 20th July, 1973.

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JUDGMENT

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1. In this case the plaintiff seeks a declaration that he is absolutely entitled in equity to certain premises situated at the junction of Nelson and Tung Choi Streets, Mongkok, known as Kowloon Inland Lot Number 2190. He also prays that the habendum to the lease under which he holds the said premises from the Crown be amended by deleting certain words appearing therein which refer to an existing trust and to the possibility of the existence of another trust.

2. The first defendant is the executor of one Lim Hoy Lan whose name appears as a joint lessee with the plaintiff in the lease referred to above. The first defendant denies that the plaintiff is entitled to the relief he seeks. He avers that the said premises are impressed with a valid charitable trust for the public benefit. Alternatively he claims that the plaintiff holds the land in trust for himself (the plaintiff), and the beneficiaries of the will of Lim Hoy Lan as tenants in common. However, there is no counterclaim. The first defendant does not ask for relief by way of declaration or otherwise. He is content merely to deny the claim of the plaintiff.

3. The second defendant is the Attorney General. He defends this action solely to protect any charitable interests which lie within his guardianship. Specifically, he does not oppose the grant of the relief sought by the plaintiff. Yan College.

4. Five days later this land was mortgaged by the partners, the plaintiff and Mr. Lim, to the Ho Hong Bank for $15,000 : the mortgage was discharged in October 1928.

5. The Kowloon Brach of the College was separately enlisted as a Grant School early in 1928. The building was completed in March 1928. And on 20th November, 1928, the school was given the sum of $10,000 as a building grant under the provisions of the Grant Code. And in the same month the parties entered into a declaration of trust. This was in accordance with the provisions of Article 50 of the Grant Code then in force.

6. The Code provided that where a Building Grant was made the legal representatives of the school receiving the grant must make a declaration of trust. The Code lays down the specific nature of the trust to be declared. One term is that if the legal representatives of the school wish to release themselves from the trust they may do so upon repayment of the sum granted.

7. In the declaration of trust made by the plaintiff and Mr. Lim the Grant Code is referred to and it is abundantly clear that the only trust intended was that made necessary by the terms of the Code for a Building Grant. Part of the proviso of the declaration of trust reads:

"if at any time thereafter the said Tsui Yan Sau (i.e. the plaintiff) and Lim Hoi Lan or the survivor of them or the executors ..... of such survivor ..... should be desirous of releasing himself or themselves of the said premises from the forgoing obligations then and in such case he or they should be at liberty to do so, and to revoke the trusts hereinbefore declared at any time upon or after payment to the Colonial Treasurer on behalf of the said Government of the said sum of $10,000 (i.e. the amount of the grant.)"

The Memorial of May 11th, 1927 and the declaration of trust were superseded by a lease dated 28th March, 1930. The habendum clause of this lease reads thus:-

"to have and to hold the said piece or parcel of ground and premises hereby expressed to be demised with these and every of their appurtenances unto the said lessees as trustees under the Grant Code 1914 for the Wah Yan College Kowloon Branch and the survivor of them his Executors, Administrators and Assigns from the twenty fourth day of March 1923 for and during and unto the full end and term of 75 years ..." etc.

8. The lessees are of course the plaintiff and Mr. Lim. It is noteworthy that throughout the lease the lessees are referred to as "the lessees and the survivor of of them, his Executors etc."

9. In several subsequent mortgages of this land it is described as being subject to "a declaration of trust as set out in the Crown lease" or in words similar.

10. It is perfectly obvious that the trust stated in the Crown Lease is of a most limited nature. It is a trust arising under the declaration made by the plaintiff and Mr. Lim in accordance with the terms of the 1914 Grant Code. It covers the amount of the building grant, $10,000 and that amount only. The words used cannot be construed so as to infer the creation of a charitable trust: or for the creation of a trust of any nature other than that expressly dealt with in the Grant Code.

11. The plaintiff repaid the sum of $10,000 to the Government in 1962. And the Declaration of Trust dated March 28th, 1930 was endorsed with a statement that this trust had determined under the provisions of the Grant Code.

12. The plaintiff requested that the Crown Lease should be amended in accordance with this. This was refused him. A deed of release and discharge of trust was executed on 26th November, 1923. This states that the declaration of trust is revoked and discharged and that the plaintiff now holds the premises free from that trust. But the deed goes on to say that it is made "without prejudice to the trust contained in the said Crown Lease and any other existing trust."

13. This, with respect, is not correct. I repeat that the only trust mentioned in the Crown Lease is that of 28th March, 1930. So what the deed of release and discharge of trust appears to say is "You are discharged from the trust declared on 28th March, 1930 without prejudice to its continuance". It then appears to suggest the existence of other trusts.

14. In my view the plaintiff is entitled to the deletion of the words "as trustee under the Grant Code 1914 for the Wah Yan College Kowloon Branch" where they appear in the Crown Lease. Such trust having been discharged on 9th August, 1962.

15. In one sense the further words "and any other existing trust" are harmless; they merely state the obvious. But, in this case, I can see neither the necessity for the propriety for their inclusion. At the time of the execution of the deed of release there was no evidence that any other trust was brought to the notice of the authorities, though there were complaintis from Mr. Lim. And I do not think it was right to include words which might cause a prospective assignee to back out of any proposed assignment, or at least cause expense and hardship to the plaintiff or to a prospective assignee or to both. The words were not inserted at the request of the plaintiff and I think they were wrongly inserted. If the plaintiff had asked for the deletion of the words in the deed of release either referring to a trust under the Grant Code 1914 or generally, I think he would have suceedded.

16. I will now deal with the second ground of relief. Is the plaintiff absolutely entitled to the premises in equity, or are the premises subject to a trust other than that trust with which I have dealt above?

17. The purchase price for the land was $13,000. There is a dispute as to the source of this sum. Mr. Lim's evidence is contained in certain written documents which although hearsay evidence were admitted in evidence under the provisions of Section 38B of the Evidence Ordinance.

18. I must, I think, bear in mind that these statements of Mr. Lim have not been subjected to cross-examination. At the time they were made he was the lessee of the premises and the plaintiff was his landlord. Mr. Lim was running a very large school there. Further, he was a protected tenant under the Landlord and Tenant Ordinance. At that time it was obvious, and he knew then that the plaintiff wished to dispose of the premises. It was very much in the interest of Mr. Lim to remain at the premises as a protected tenant. Similar premises elsewhere could only be secured then, and even more so now, at a very much higher rent than he was paying.

19. Mr. Lim's evidence was that the purchase price for the land came from the profits made from the Wah Yan College. Those profits being made at a time when the school was a Grant-aided school. The plaintiff's case is that he himself contributed some of the money from his private funds in addition. One point is certain, Mr. Lim did not contribute anything from his personal funds.

20. The plaintiff in evidence said that the College made a profit before it became a Grant-aided school. This was the period from the school's inception in December 1919 until its enlistment as a Grant-aided school in October, 1922. The number of pupils rose from 4 at the beginning of this period to over 380 at its end. However, I do not think that there could have been much profit. While negotiating for the school to be enlisted as a Grant-aided school the plaintiff informed the Inspector of English Schools that the income of the school was scarcely large enough to meet the expenses. When giving his evidence on this aspect of the case I think that the plaintiff was looking at the past through rose-tinted spectacles.

21. What is apparent from the plaintiff's evidence is that he regarded the income of the school before it became a grant-aided school as his own income. He referred to anything over and above the expenses as representing "his" money or salary.

22. It is also apparent that he regarded the income of the school after it had become grant-aided as school income i.e. as partnership money. And he so used such monies. At this period of time he was paid a salary. And he was in the habit of borrowing and paying off monies for the benefit of the running of the school throughout the whole period of the school's existence. Such loans and repayments appear as items in the school's account, i.e. in the partnership account, regularly. And, of course, such accounts were submitted to the Education Authorities where such items of account apparently caused no comment.

23. I will accept the evidence of the plaintiff that this sum of $13,000 was partially provided by himself and partially from the running expenses and profits of the school before and after it became grant-aided. This means that part of it was his own personal money and part was partnership money.

24. It was suggested by the second defendant, the Attorney General, that this was a misapplication of grant-aided funds. And that the result is that the plaintiff, who is invoking the equitable jurisdiction of the court does not come before the court "with clean hands".

25. Article 42 of the Grant Code states that the income of the grant-aided school "must be applied solely to the purposes of the school." This is exactly what the $13,000 was used for. It was used to buy land on which the Kowloon Branch of the College was to be built. It was not a new school, a new college. It was to be a branch of the existing college. The same two partners were engaged in the transaction and the log books show that several teachers from the Hong Kong or mother school were transferred to teach at the Kowloon Branch and vice versa. The log books refer to "the Kowloon Branch of the Wah Yan College." In particular, the log book for the Kowloon Branch refers to the school in this way up to the Japanese occupation.

26. Finally, in one of his statements, Mr. Lim points out clearly that the Kowloon Branch was part and parcel of the Wah Yan College and not independent of it: the mother school being responsible for all the expenses of the branch.

27. Later, presumably after the authorities had satisfied themselves with the condition of the Kowloon Branch, the grant in aid was extended to cover the expenses of the running of that branch as well as the Hong Kong Branch.

28. I do not think that a trust attaches to payments made under the Grant Code except in the single instance of a building grant. This is specifically mentioned in the Code. But there is no suggestion of a trust arising other than in that single case.

29. In the case of Cook v. Fountain⁽¹⁾, Lord Raynsford said this:-

"All trusts are either, first, express trusts, which are raised and created by act of the parties, or implied trusts, which are raised or created by act or construction of law; again, express trusts are declared either by word or writing; and these declarations appear either by direct and manifest proof, or violent and necessary presumption. These last are commonly called presumptive trusts; and that is when the Court, upon consideration of all circumstances presumes there was a declaration, either by word or writing, though the plain and direct proof thereof be no extant. In the case in question there is no pretence of any proof that there was a trust declared either by word or in writing; so the trust, if there be any, must either be implied by law, or presumed by the Court. There is one good, general and infallible rule that goes to both these kinds of trusts; it is such a general rule to which there is no exception, and that is this; the law never implies, the Court never presumed a trust, but in case of absolute necessity."

30. Looking at the Grant Code, I can see no necessity to hold that a trust arises upon the payment of monies thereunder except in the expressed case of the payment of a building grant.

31. But the matter does not end there. As I have said the partners mortgaged the land and buildings. The buildings were completed by March 1928, but at that time there was an outstanding mortgage to a bank for a large amount. The purpose of the mortgage was to give overdraft facilities to the partners for the running of the school.

32. The evidence shows that apart from the provision of the $13,000 and the payment of the $10,000 Building Grant, at least two further measures were taken to raise money for the school in order to reduce the amount of the overdraft. Sometime in 1928, after the completion of the building, a sum was raised by means of a school lottery and the following year, Mr. Lim raised a sum of money from some of his friends and relatives in Malaya.

33. It was suggested to the plaintiff that these sums were for payment of equipment which was necessary for the school. That may well be. However, I accept the evidence that in each case the sum raised was first paid into the school, the partnership, account. thus reducing the overdraft with the bank. It does not, in my view matter whether school furniture and equipment were thereupon purchased or not. The sums were paid generally for the benefit of the school.

34. Two suggestions were made by the defendants. It was suggested that such sums were paid for the benefit of Wah Yan College and that since that college has long since removed from this site there was either a resulting trust to the donors of such sums or that a trust for general charitable purposes, namely, for the provision for education generally in Hong Kong, has been created. A great number of cases were brought to my notice but they were cases where the original object of the gift, whether it was a particular fund or a particular institution such as a school or hospital, had vanished. The point at issue in those cases was since the particular donee no longer existed, a decision must be reached as to what was to be done to that part of the present property of the vanished donee which represented the gifts or contributions of the donors.

35. This is not the case here. The lottery was run by the school within the school and for the benefit of the school. That school was the Wah Yan College. The contributions given by the friends and relatives of Mr. Lim were contributions for Mr. Lim's school. Again, that means the donee was the Wah Yan College. The donors must have known that. That college still exists. There is no room here to infer resulting trusts or trusts for charitable purposes. Nor is there any room for the doctrine of cy pres. The original object of the trust still exists. It matters not that the Wah Yan College has moved to other premises. That the sums were intended for the Wah Yan College is obvious from the evidence. I therefore find that the premises are held by the plaintiff subject to a trust in favour of the Wah Yan College for the sum of some $2,500 Hong Kong in respect of the lottery and some $2,800 Hong Kong in respect of the contributions raised by Mr. Lim in Malaya. These sums are not exact. The evidence as to the exact amounts is lacking. I do not here intend to be more particular. It is a matter which principally affects the Wah Yan College and the plaintiff. The College is not a party to these proceedings; I will, however, give leave to the plaintiff to apply to me in Chambers to determine the amount and extent of this trust for the Wah Yan College. And I think that the college should be represented at any such proceedings.

36. I now come to the question whether the plaintiff also holds these premises on behalf of himself and the legal beneficiaries of the estate of Mr. Lim. As I have repeatedly said, the plaintiff and Mr. Lim. were partners so far as the school was concerned. They were also partners in the Pak On Rubber Estate, which was in North Borneo and, indeed, they were employed in other business activities together. However, according to the plaintiff, the partnership, so far as the school was concerned, was dissolved on April 14th, 1932.

37. The evidence of this is as follows. At that time the premises were mortgaged to the Ho Hong Bank. The mortgagors were the partners. On that date, April 14th, 1932, the premises were reassigned to the mortgagors by the Bank. On the same date the premises were re-mortgaged to the same Bank by the plaintiff as sole mortgagor. In addition, and again on the same date, the plaintiff and Mr. Lim entered into a deed in which Mr. Lim transferred his share in the lease of the premises dated 28th March, 1930 to the plaintiff. From then on, Mr. Lim's name does not appear in any of the mortgages or other documents concerning the land. The consideration mentioned in the deed transferring Mr. Lim's half of the lease is stated to be $20,500. It is common ground that this sum was never paid, and that it was never intended to be paid.

38. It was suggested by counsel for the first defendant that the assignment to the plaintiff of the share of Mr. Lim in the land was a voluntary conveyance and that the fact that the plaintiff took over the burden of the mortgage of the property should not be admitted so as it were to supply a consideration for the assignment of the half share, different from that which is contained in the assignment itself. But the assignment is a deed properly executed and as such requires no consideration nor was there any consideration. Both parties to the deed well knew that the consideration expressed was a sham. There is no mention of a resulting trust in the deed itself. I do not think that a resulting trust automatically arises when there is a voluntary assignment of leasehold property. However, in my view, the correct way to look at the assignment is this.

39. The evidence is clear. The parties intended to dissolve their partnership in the school and indeed, did so. This deed is only one of several documents which evidences that dissolution. It is true that the partnership was an oral partnership, but there is no reason why an oral partnership should not be dissolved.

40. The plaintiff and Mr. Lim each places the responsibility for the dissolution of the partnership on the other party, but that it was intended that the partnership should cease is very clear. Mr. Lim has never suggested that the partnership in the school continued after April 1932. No where in Mr. Lim's written statements it is suggested that he had any interest in the land in Nelson Street after the signing of this deed. He referred to the land as being that of the plaintiff and he himself, at the dissolution of the partnership took over the running and control of the Kowloon school while the plaintiff took over the running and control of the Hong Kong school.

41. In a statement by Mr. Lim to the Registrar General, Mr. Lim made it clear that his case was that it was agreed at the time of the dissolution that he would be allowed to run the school on the Nelson Street property until he died. The actions of Mr. Lim after the dissolution of the partnership in the school are inconsistent with his having any beneficial interest in the land or of there being any trust in the property. He paid rent for the premises to the plaintiff and when the Kowloon Wah Yan passed to the Jesuits they continued to pay rent to the plaintiff also. In 1952 the college moved to new premises in Waterloo Road and Mr. Lim again became the plaintiff's tenant of the Nelson Street premises where he established another school, named the Tak Yan College. In addition, Mr. Lim referred to the Nelson Street premises as being the property of the plaintiff in his correspondence with him. And even offered to act as a broker in order to sell the premises on the plaintiff's behalf.

42. Mr. Lim and the plaintiff were also partners, as I have said, in the Pak On Estate in North Borneo and there is a purported assignment of Mr. Lim's interest in that Estate dated March 14th, 1932 which is included amongst the documents which have been put before the court. This purported assignment was never registered nor acted upon. In effect, the partnership in the rubber estate continued for a long time thereafter. It was a partnership separate and distinct from the partnership of the Wah Yan College. It concerned a business venture in another country and was not connected with the school.

43. The plaintiff also relies upon the doctrine of estoppel. Mr. Gittins referred me to paragraph 20 of "Estoppel by Representation" by Spencer Bower, 7th Edition. In that paragraph all the constituent elements of estoppel by representation are set out in five sub-paragraphs. Mr. Gittins claims that the facts of this case show that he must succeed under this head. I will deal with them one by one. The learned editor of Spencer Bower says that -

"the following elements must concur in order to constitute a valid estoppel by representation, and the party setting up such an estoppel must be prepared ....... to establish each and every of them, That the alleged representation of the party sought to be estopped was such as is in law deemed a representation;"

44. Mr. Gittins says that the assignment of the 14th April, 1932, and the reassignment of the mortgage and the mortgage of the premises on the same date whereby the plaintiff altered his position to his detriment, satisfies this and I agree with him. Mr. Lim in that deed purported to assign his half share in the lease to the plaintiff. The plaintiff assumed responsibility for the whole mortgage. By the conduct of Mr. Lim the plaintiff was justified in consideration that he, the plaintiff, was the sole lessee of the property and the plaintiff has acted as sole lessee ever since.

45. The second element is:

"that the precise representation relied upon was in fact made;"

In this case, this is not denied.

46. The third element is:-

"that the representation, or case, which the party is sought to be estopped from making, setting up, or attempting to prove, contradicts in substance his original representation, according to proper canons of construction;"

I have dealt with this above. The first defendant now wishes to set aside the dissolution of the partnership of Mr. Lim and the plaintiff in the school, of which there is such clear evidence.

47. The fourth element is:-

"that such original representation was of a nature to induce, and was made with the intention (actual or presumed) and the result of inducing, the party raising the estoppel to alter his position on the faith thereof to his detriment;"

I have also, in effect, dealt with this. It is enough to say that the plaintiff's position was altered by the fact of him taking over the mortgage and paying it off and the partnership's assets, namely the school, were divided between the partners.

48. The fifth element is:-

"that such original representation was made by the party sought to be estopped, or by some person for whose representations he is deemed in law responsible, and was made to the party setting up the estoppel, or to some person in right of whom he claims."

The paragraph applies to the first defendant as the executor or legal representative of Mr. Lim.

49. I therefore think that the plaintiff is entitled to succeed on this ground also.

50. To sum up, therefore, the plaintiff is entitled to an order that the habendum in the lease be amended by the deletion of the words "As trustee under the Grant Code 1914 for the Wah Yan College, Kowloon Branch."

51. I cannot make the declaration sought in paragraph 14 of the Statement of Claim because although I have found that there is a trust in favour of the Wah Yan College, the exact terms of this trust are uncertain. This is not to say that the plaintiff is not entitled to any declaration. He is entitled to the declaration sought but subject to the trust mentioned above. I will hear counsel for the plaintiff as to the form of any declaration sought. However, I suggest that as a preliminary, the terms of the trust should be settled. I have suggested a way to do this.

52. I will now hear counsel on the question of costs.

Representation:

Gittins, Q.C. & Swaine (Brutton & Stewart) for Plaintiff.

Bern. Q.C. & Mills-Owens (P.C. Woo & Co.) for 1st Defendant.

Kneebone, C.C. for 2nd Defendant.

(1) 3 Swanston's Rep. 585 @ 591.