Ip (or Yip) Cheung (or Chiang) Kwok (also known as David Ip or Yip) v. Ip Siu Bun and Others

HCA007440B/1984

1984, No. A7440

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

AND BETWEEN

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Coram: The Hon. Mr. Justice Godfrey in Court

Date of Hearing: 14th September 1988

Date of Delivery of Judgment: 17th October 1988

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JUDGMENT

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1. On 18th May 1988, I gave judgment in these proceedings. In order to give the parties an opportunity to consider its implications, I adjourned further consideration of the proceedings to a date and time to be fixed. I indicated that I would then deal with any further matters the parties might wish to raise, including the possibility of an order for sale of the properties 152. 154 and 156 Queen's Road Central with which the proceedings are concerned, the form of the order to be made and all questions of costs.

2. The proceedings were accordingly restored to the list on 14th September 1988, and I now deal with the matters then discussed before me.

3. I deal first with the matter of sale. I am satisfied on the evidence that it would be expedient, in the interest of the persons beneficially interested in the estate of Ip Koo Chi, ("the settlor") to order a sale of these properties. The plaintiff, who claims to be such a person, wants a sale. The first defendant and the fourth defendant, as the trustees in whom the properties are vested, are against a sale. Have I jurisdiction, in this action, to order a sale? Certainly, the court has jurisdiction to direct a sale of trust property in an action for the execution of the trusts affecting the property or, under Rule 2(3)(c) of Order 85 of the Rule of the Supreme Court, in an action simply for an order directing trustees to sell the trust property (this avoids what would otherwise be the necessity for an action for a full order for execution of the trusts). An order in any such action would be an order made for "the purposes of the cause or matter"; and the provisions of Order 31 (relating to sales by the court) would apply to such a sale. But this is not such an action. The plaintiff is not the personal representative of the settlor; he claims to be interested in the estate of the settlor and as such he has been appointed by the court to represent the settlor's estate for the purposes of these proceedings. But in my judgment neither his claim to be interested in the estate of the settlor, nor his representation order, give him the locus standi to ask for execution of the trusts affecting the properties, nor for an order for sale under Order 85 Rule 2(3)(c). And indeed these are not reliefs claimed in the prayer for relief in the statement of claim. The representation order ensured that the estate of the settlor would be bound by any order which the court might have made adverse to the interests of that estate, although there was no personal representative before the court; it had no other substantive effect. As it happened, the decision went in favour of the estate of the settlor, not against it. But this does not give the plaintiff any further rights. The only person entitled in my judgment to institute proceedings against the trustees for the execution of the trusts affecting the properties, or for an order for sale of the properties under Order 85 Rule 2(3)(c), would be a duly constituted personal representative to the estate of the settlor. I do not think the plaintiff can reply on Order 31 to get him over this difficulty. That order does not authorize the making of an order for sale where otherwise the court would have no power to make such order, however expedient the court may think a sale would be. As it is put in Daniell's Chancery Practice, 8th edition (1914), p. 939, summarizing the effect of In re Robinson (1885) 31 Chancery Division 247: "The rule does not give the court any power to direct the sale when it had none previously, and a sale can only be ordered when necessary or expedient for the purpose of the particular action" (emphasis added); and see also London and County Banking Co. v. Dover (1879) 11 Chancery Division 204, which appears to be the decision of Sir George Jessel to which Pearson J. refers in the case of In re Robinson (cited above). It is clear from the report of the decision of Sir George Jessel that in his view the words "for the purposes of the cause or matter" demonstrate that the power to order a sale is of limited application, intended to apply only to administration actions. An action for the execution of a trust is the same thing as an administration action, and a stranger to the trust is not entitled to institute proceedings for the execution of the trust. Accordingly, there is no power in the court to order a trustee to sell the trust property at the instance of a stranger to the trust; and whatever beneficial interest (if any)the plaintiff has or may have in the estate of the settlor, he has as such no direct interest in the trust property. He is, strictly speaking, a stranger to the trust; and his position is not improved by the representation order made by the court in and for the purposes of these proceedings.

4. For these reasons I consider that I cannot make an order for sale of the properties in this action. I regret this and my regret is made the more acute by the reflection that the application for the order was initially prompted by observations from the bench. However, I cannot resist adding that I was told from the Bar that, since my judgment of 18th May 1988, the plaintiff has applied for a grant of representation to the estate of the settlor; if he obtains such a grant he will then (as it seems to me) be in a position to institute an action for the execution of the trusts affecting the properties and to apply for an order for sale in that action.

5. I turn now to costs. This is hostile litigation in which the plaintiff has claimed from the start that the properties were held on trust for the estate of the settlor. Whether or not the plaintiff eventually succeeds in establishing that he is the person, or one of the persons, beneficially interested in the estate of the settlor, he has succeeded in this claim. His costs should accordingly be provided for. They should not be borne by him personally. Nor should they fall on the trust estate, except in so far as they are not met by the fourth defendant, which, instead of taking a neutral stand as between the competing claimants, as a trustee ought to do, advanced a case hostile to the plaintiff's successful claim and indeed to the claims of everyone else who could be identified as a possible claimant. The fourth defendant must pay out of its own moneys the plaintiff's costs of the action, and counterclaim, to be taxed as between party and party. The plaintiff's costs must also be taxed on the common fund basis; and the first defendant and the fourth defendant as trustees must pay to the plaintiff out of the trust estate the differences between the plaintiff's costs taxed between party and party, and the plaintiff's costs taxed on the common fund basis. I dismiss as irrelevant in this connection the representation order under which the plaintiff was appointed to represent the estate of the settlor for the purposes of these proceedings. The plaintiff's costs, both before and after the making of that order, were incurred for the benefit of the estate of the settlor. No sensible distinction can be drawn between the costs incurred by the plaintiff before the making of the representation order and those incurred by him after it. I also dismiss as irrelevant the fact that the plaintiff did not succeed in establishing his claim to be the only, or even one, of the persons beneficially entitled to the estate of the settlor. Such additional time of the court as was spent on this matter was spent largely on the initiative of the fourth defendant, which maintained its inital position throughout notwithstanding that the plaintiff had at a very early stage in the argument made it clear that he accepted that the court would not be able to come to a conclusion on this aspect of the case in the present proceedings.

6. I now deal with the costs of the first defendant and of the second defendant.

7. The first defendant has represented in this action all persons for the time being claiming to be members for the time being of the Ip Cheung Kwong Tong. The second defendant has represented in this action all persons claiming to be members for the time being or the Ip Cheung Kong Tong Loan Association and the Tung Yan Sheen Tong Loan Association. Although their arguments failed, and although the first defendant is in an addition a trustee of the properties. I consider it proper to order that their costs be taxed on a common fund basis and paid out of the trust estate. This is the usual order made in the favour of those who have argued, although unsuccessfully, in the interests of the persons who can reasonably claim, on the true construction of a trust instrument, to be interested in the trusts thereby constituted. The first and second defendants ought, in my judgment, to have their costs provided for in this way.

8. The action has been discontinued as against the third defendant and I need not and do not make any provision for his costs.

9. I turn next to the costs of the Attorney-General, who was brought into these proceedings by the fourth defendant, as a defendant to its unsuccessful counterclaim. The fourth defendant ought, in my judgment, to pay the cost of the Attorney-General to be taxed as between party and party.

10. I turn finally to the costs of the fourth defendant. The fourth defendant is a trustee. It did not obtain and in my judgment could not have obtained an order of the court giving it leave to defend at the expenses of the trust estate an action in which the central question was concerned with the trusts on which the trust properties were held. But it did defend the action. It did so as its own risk as to costs. It lost. It must bear the consequences. It would not in my judgment be right to throw the costs of the fourth defendant on the plaintiff or any other party or on the trust estate. All its arguments, supported by weeks of what was really inadmissible evidence about what had happened since the trusts were constituted, were untenable: and in the case of its arguments that the trust properties were held upon charitable trusts, were advanced in the face of opposition from the Attorney-General, whose exclusive duty it was to represent the interests of charity. The fourth defendant must bear out of its own moneys its own costs of the action and counterclaim, without recourse to the trust estate.

11. The plaintiff asks for an order that (subject to any order of the court of appeal) the plaintiff is entitled to be indemnified in any event out of the trust estate for any costs incurred by him as the person appointed to represent the estate of the settlor in respect of any appeal from this judgment. I am of the opinion, on the authority of Wallersteiner v. Moir (No. 2) [1975] 1Q.B. 373, and in all the circumstances of this case, that it would be right to make such an order.

12. In the light of my judgment of 18th May 1988 and of this judgment, I will make an order disposing of the case in the following terms:

"THIS ACTION AND COUNTERCLAIM coming on for trial on 14, 15, 16, 17, 18. 21, 22, 23, 25, 28,29 and 30 September and 1,2, 5, 6 and 7 October 1987 and 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 25, 26, 27, 28 and 29 April, 18 May 1988, 14 September 1988 and this day in the presence of Counsel for the Plaintiff and for the Defendants Sin Hua Bank Trustee Limited and Her Majesty's Attorney-General ("the Attorney-General") and of the Defendants Ip Siu Bun. Ip Cheung Kit Yee and (down to 23 September 1987) Ip Siu Kong (or Kwong).

AND UPON READING the documents on the Court file and the exhibits listed in the record

AND UPON HEARING the said Counsel and the Defendants Ip Siu Bun, Ip Cheung Kit Yee and (down to 23 September 1987) Ip Siu Kong (or Kwong) in person and having dispensed with further attendance by Counsel for the Attorney-General after 15 September 1987

THIS COURT DOTH DECLARE that the properties known as Numbers 152, 154 and 156 Queen's Road, Central in the Writ of Summons mentioned ("the trust estate") are and have been at all times since 28 September 1875 held by the trustees there of from time to time (including the Defendants Ip Siu Bun. And Sin Hua Bank Trustee Limited) upon trust for the above-named Ip Koo Chi or his estate

AND IT IS FURTHER ORDERED that the following Account and Inquiry be taken and made, that is to say

AND IT IS FURTHER ORDERED that any such rents and profits now held by the last-mentioned Defendants or any of them any sums representing the same and any interest thereon be raid into this Court forthwith to the credit of this action.

AND IT IS FURTHER ORDERED that any further sums found due from the last-mentioned Defendants or any of them upon the said Account and Inquiry be paid into this Court to the credit of this action forthwith upon the amount of any such sums being certified

AND IT IS FURTHER ORDER that the Counterclaim do stand dismissed out of this Court

AND IT IS FURTHER ORDERED that it be referred to a Taxing Master to a tax (1) on the party and party basis the costs of this action and counterclaim of the Plaintiff and the costs of the counterclaim of the Attorney-General and (2) on the common fund basis the costs of this action and counterclaim of the Plaintiff and of the Defendants Ip Siu Bun and Ip Cheung Kit Yee

AND IT IS FURTHER ORDERED that the said costs of the Plaintiff and of the Attorney General when so taxed on the party and party basis be paid by the Defendant Sin Hua Bank Trustee Limited out of its own moneys to the Plaintiff and to the Attorney General respectively

AND IT IS FURTHER ORDERED that the difference (if any) between the said costs of the Plaintiff when taxed and paid on the party and party basis and when taxed on the common fund basis be raised out of the trust estate and paid to the Plaintiff

AND IT IS FURTHER ORDERED that it be referred to a Taxing Master to tax on the common fund basis the costs of this action and counterclaim of the Defendants Ip Siu Bun and Ip Cheung Kit Yee and that such costs when taxed be raised out of the trust estate and paid to the Defendants Ip Siu Bun and Ip Cheung Kit Yee

AND IT IS FURTHER ORDERED that (subject to any Order of the Court of Appeal) the Plaintiff is entitled to be indemnified in any event out of the trust estate for any costs incurred by him as the person appointed to represent the Estate of the said Ip Koo Chi in respect of any Appeal from this Judgment

AND the parties are to be at liberty to apply''

(G. M. Godfrey)

Judge of the High Court

Representation:

Mr. John McDonnell. Q.C. and Mr. B. Van Buuren instructed by Messrs. King & Co. for the Plaintiff.

1st and 2nd Defendants in person.

Mr. Charles Ching, Q.C., Mr. Denis Chang, Q.C. and Mr. K.B. Ng instructed by Messrs. Woo & Woo for the 4th Defendant.

Mr. Eric Lau. Crown Solicitor. for the Attorney General.