Heng Kwai Shan v. Heng Hock Shan and Othres

HCMP000295/1964

Evidence and presumption of death. Trust and trustee. Construction of Deeds, Application of the rules in Lassence v. Tierney (1849) 1 Mac & G 551 and in Re Foord (1922) 2 Ch. 519.

During 1942 a student left Hong Kong to study at a university in a part of China not yet occupied by Japan. The following year he was seen at that university but, following further advances by the Japanese forces, never heard of again. In 1953 his mother conveyed a property to one of his brothers by an assignment absolute in its terms. In 1957 that brother declared that he had promised their mother to hold and held the property as trustee for the missing brother. In 1963 the mother died. In 1964 the trustee issued an Originating Summons to determine the beneficial ownership of the property.

Held:-

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

MISCELLANEOUS PROCEEDINGS

NO. 295 of 1964

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BETWEEN

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Coram: Hon. Kempster, J.

Date: 30th June, 1983

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JUDGMENT

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1. These proceedings, which were begun on the 30th July 1964 by originating summons, since amended, and gave rise to an interlocutory application which reached the Court of Appeal, ^(O) were revived and restored to the list following a summons dated the 10th January 1983.

2. Four of the children and one grand-child of the late Hong Yuk Ming, namely the plaintiff and the 3rd to 6th defendants inclusive, seek the court's rulings on and make submissions relating to three questions namely :-

3. The remaining children of the family who beyond question are still alive, namely the 1st and 2nd defendants, are content to abide by such rulings as the court may make without expressing any view as to the form or effect they should take or have.

4. During 1942 Hong Kong was subject to Japanese occupation and Heng Yuk Ming, his wife Heng Wong Shi and their eight children, one of whom died in or about 1947, lived together at No. 7 Fuk Kwan Avenue though in term-time the son Heng Fu Shan boarded at a hall of residence at the University where he was studying. In the course of that year Hong Fu Shan, who had neither wife nor children, left Hong Kong to study at the National Sun-Yat-San University in Ping Shek; a part of Kwan Tun Province. still free of the Japanese presence and from which he wrote to his mother in Hong Kong. He was seen there by Dr. Leung Yean Seng during the latter half of 1943. By the end of that year the Japanese had begun their attack on the surrounding area and. confusion reigned. Heng Fu Shan, who would today be 63 years old were he alive, has not been seen or heard of since though he was well aware of the family address and, I infer, of the fact that a share in the family property and fortunes might well have been or be liable to become available to him. Inquiries proved fruitless. No one has claimed to be his wife or child.

5. On the basis of these necessarily negative facts I find on the balance of probabilities, as invited by the active parties, that Heng Fu Shan died at about the end of 1943 still unmarried and childless. In any event there is no evidence to rebut the presumption of law that a person who has not been heard of for a period of 7 years by those who would be likely to have heard from him, all inquiries appropriate in the circumstances having been made, is dead. Such presumption would obtain certainly by 1951 and my findings on the evidence that Heng Fu Shan in fact died unmarried and childless at about the end of 1943 remain unaffected. Again the court may, in the alternative, rely on a presumption which would give a similar time of death. In Re Lewe's Trusts. ⁽¹⁾ I do not construe the opinion of the Judicial Committee in Lal Chand Marwari v. Mahant Ramrip Gir & another ⁽²⁾ as precluding my finding that the presumption takes effect regardless of the date upon which any relevant proceeding's are commenced. Were several actions to involve the application of the presumption in relation to a particular individual any other conclusion would produce manifestly absurd results. At the very least I can give a ruling analogous to the order reported in Re Benjamin.⁽³⁾

6. It follows that the answers to the first two questions posed by the originating summons are :-

7. The significance of 8th July 1953 is that on that date, following some family acrimony, Heng Wong Shi, who had by then inherited a number of properties on the death of her husband Heng Yuk Ming in 1950, assigned both numbers 7 and 8 Fuk Kwan Avenue to her son Heng Kwai Shan, Both assignments were absolute in their terms, as were deeds which she executed at about the same time conveying other properties to her four daughters, and expressed to be made in consideration of her love and affection for her son and to show his assent to the respective gifts. However, on the 25th September 1957, following family prompting, the plaintiff executed a deed which, after reciting the assignment to him of No. 8 Fuk Kwan Avenue, further recited:-

"Whereas the said indenture of assignment was executed in favour of the trustee (the plaintiff) on the trustee's promise that he will hold the said property No. 8 Fuk Kwan Avenue in trust for his brother Heng Fu Shan as the trustee both hereby acknowledge and admit - now these presents witness that the trustee hereby declares that he holds and will henceforth hold and stand possessed of the said property. and the rents and profits (if any) thereof and the proceeds of sale of the said property in case the same shall be sold or disposed of in trust for the said Heng Fu Shan."

8. Until the contrary was shown, as now it has been, Heng Fu Shan was to be presumed alive at the date of "the settlement", that is on the 8th July 1953 or the 25th September 1957 as will hereafter appear In Re Corbishley's Trusts. ⁽⁴⁾

9. Meanwhile, by her will dated the 26th October 1953,the mother had appointed the plaintiff her executor and, subject to a devise in favour of the 6th defendant, left the residue of her property to all the parties to the present litigation save for the 1st defendant but also to Heng Fu Shan in seven equal shares. The overall value of the residue was subsequently diminished by express bequests to the plaintiff made by a codicil executed by the mother on 8th January 1963. Four days later she died having, I find, trusted the plaintiff of all her children, and I use the verb in its colloquial sense, to safeguard the interests of the long-lost Heng Fu Shan in the unlikely event of his reappearance.

10. The answers to questions 3 and 4 of the originating summons depend upon the true interpretation of what took place on or about 8th July 1953 and upon the legal consequences of such construction. It is common ground that in embarking on the necessary inquiry I am entitled to consider only the terms of the two documents to which I have just referred in the context of the facts and matters already outlined.

11. The terms of the document dated 25th September 1957 make it clear beyond a peradventure that the mother had made an ostensible gift of No. 8 Fuk Kwan Avenue to the plaintiff on the faith of his antecedent or concurrent promise to hold that property in trust for Heng Fu Shan from the outset. Had he been living Heng Fu Shan could have enforced the trust as from the 8th July 1953 albeit there was no written document signed by the mother to support his claim. Rochefoucauld v. Boustead;⁽⁵⁾ In Re Gardner;⁽⁶⁾ Bannister v. Bannister.⁽⁷⁾ On strict analysis a court of conscience would have found the plaintiff in the position of an absolute legal owner of a property. But the mother intended that property to be employed as she and not the plaintiff desired and had told him of her wishes. Encouraged by and trusting in his promises to fulfill those wishes the mother conveyed the property to him. For the prevention of fraud equity would have fastened on the conscience of the plaintiff the trust in favour of his brother. It would have allowed him to take what the 1953 assignment gave him and then required him so to apply it as to give effect to the wishes of his mother, the donor. It would not be necessary in order to exclude the plaintiff trustee from any beneficial interest that the trust should be valid or effectual. Briggs v. Penny.⁽⁸⁾ The 1957 document, indeed, nowhere suggests that the plaintiff was to enjoy any beneficial interest in the property himself` whatever the circum-stances. The mother was the settlor and the 8th July 1953 the date of "the settlement". The only effect, therefore, of the 1957 document was to furnish evidence of a trust which, had the plaintiff failed to act with candour after his mother's death, might not easily have been proved. Whether or not this was a "secret" trust seems to me to be neither here nor there since trusts were declared in conformity with the directions of the party by law entitled to declare them and the court does not have to consider the admissibility of parol evidence. If it be necessary, however, I hold that a secret or semi-secret trust may as well be constituted by a transaction inter vivos as by testa-mentary disposition as was conceded in Nichols v. I.R.C.⁽⁹⁾

12. As Mr. Chang, who appeared for the plaintiff, rightly said it is for the court to construe and, insofar as they apparently conflict, if possible reconcile the 1953 and 1957 documents. This invitation I have readily accepted fortified by the submission made to me on behalf of all active parties that the assignment of 8th July 1953 does not tell the whole truth about the transaction it purports to describe as an out and out gift. It is also common ground that any trust in favour of Heng Fu Shan purporting to take effect on or after 8th July 1953 fails having regard to the answers already given to questions 1 and 2. The principle submission made on behalf of the plaintiff was that the two documents could be reconciled by. construing the words "on the trustee's promise that he will hold" in the deed of declaration of trust as if they read "on the trustee's promise that he will declare himself trustee in favour of Heng Fu Shan" so as to allow the plaintiff a period of four years full beneficial enjoyment which would revive on the failure ab initio of the trust said first to have taken effect on the 25th September 1957; the plaintiff being the settlor. But if the plaintiff was under a contractual obligation to his mother, who had part performed, to declare himself the trustee of the property for his long-lost brother the terms of the assignment of 8th July 1953 can only be regarded as expressing the truth if it was an express or implied term of the agree-ment. between mother and the plaintiff that the plaintiff should take the whole beneficial interest if the trust were to be shown to have failed; in other words that the mother was making him a contingent gift. In my view such a finding would directly conflict with and contradict the express terms of the 1957 document and could not be sustained.

13. Having found that the plaintiff has never held No. 8 Fuk Kwan Avenue otherwise than as trustee of the whole; that, in the circumstances already outlined, the 1953 assignment did not convey any beneficial interest in that property to him and that the 1957 document was only of evidential significance there is no room for the application of what is called the rule in Lassence v. Tierney ⁽¹⁰⁾ and is in truth the rule defined by Lord Davey in Hancock v. Watson ⁽¹¹⁾:-

"In my opinion, it is settled law that if you find an absolute gift to a legatee in the first instance, and trusts are engrafted or imposed on that absolute interest which fail, either from lapse or invalidity or any other reason, then the absolute gift takes effect so far as the trusts have failed to the exclu-sion of the residuary legatee or next of kin as the case may be."

14. No more, and for the same reason, can the 1953 transaction be construed as a gift to the plaintiff for the purpose of giving him a beneficial interest subject to discharging certain obligations to a third party as in Re Foord.⁽¹²⁾

15. In the event my answer to question 3 of the originating summons is "no" and to question 4, that the property "results" to the personal representatives of the mother, Heng Wong Shi, being the beneficial owners.

(0)    (1967) H.K.L.R. 168

(1)    (1871) L.R. VI Ch.App. 356

(2)    (1926) T.L.R. 159 at 160

(3)    (1902) 1 Ch. 223

(4)    (1880) XIV Ch. D. 846

(5)    (1897) 1 Ch. 196

(6)    (1923) 2 Ch. 230

(7)    (1948) 2 All E. R. 133

(8)     (1851) 3 Mac & G 546

(9)     (1973)3 All E. R. 632 at p 637

(10)    (1849) 1 Mac & G 551

(11)    (1902) A.C. 14 at p 22

(12)    (1922) 2 Ch. 519

Representation:

Denis Chang Q.C., Maria Yuen (C.Y. Kwan & Co.) for plaintiff

Mrs. Margaret Clough (C.P. Liu & Co.) for 3rd to 6th defendants 2nd defendant present in Court