Tse Moon Sak v. Tse Hung and Others

HCMP000088A/1968

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

MISCELLANEOUS PROCEEDINGS

ACTION NO. 88 OF 1968

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Coram: Rigby, S.P.J. in Chambers.

Date of Judgment: 24 July 1969

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JUDGMENT

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1.This is an Originating Summons to determine a variety of questions arising out of a Will and Codicil made by the Testator TSE LAI CHIU. The Will was made on the 5th November 1958 and the Codicil thereto on the 1st August 1959.

2.By his Will the Testator appointed his two sons, the younger son who is the present plaintiff, and the elder son who is the present 1st defendant, as his executors and trustees. The Testator died on the 27th July 1960 and his Will was duly proved and registered by the executors on the 2nd July 1963.

3.At the time of his death the Testator left surviving him:-

4.At the time of his death the Testator's real property consisted of a Crown Lease of premises at No. 204 Johnston Road for a period of 999 years commencing as from the 28th December 1899, together with a pharmaceutical business known as "Sun Hay Cheung", carried on on the ground floor of the premises at No. 204 Johnston Road. It is admitted by all parties - and, indeed, proved beyond doubt by documentary evidence - that a further property to which reference is made in the Will, to wit, No. 30 Wood Road, no longer formed any part of the estate of the Testator at the time of the making of his Will.

5.The primary matter for consideration is whether, by the terms of the Testator's Will, the property of No. 204 Johnston Road was left to the executors upon trust to administer it for the benefit of a number of specified persons named in the Will or whether, by the terms of the Will and the Codicil attached thereto, such property ought to be regarded as conferring an absolute vested interest in certain specified persons, to wit, the grandsons of the deceased. If the answer to this question is in the affirmative, then certain further questions arise as to the quantum and duration of the amounts to be paid to all or some of the specified beneficiaries. On the other hand, it is said by Mr. Patrick Yu, who appears for the 1st, 2nd and 3rd defendants, that if the answer to the question is that a vested and absolute interest is concluded in favour of the specified beneficiaries, then the matter of quantum and duration of payments to the other named beneficiaries under the Will is no longer relevant.

6.By the terms of his Will the Testator directed that the Johnston Road property should be "wholly left and handed over to the said TSE Hung Sak and TSE Moon Sak for administration and rent collection. The rents collected, after deductions for payment of Government rates, Crown Rent, property tax, and other expenses on repairs etc., shall be paid into the account of the income of my estate."

He further directed the executors to take sums of money from the income of his estate and thereafter pay monthly allowances to specified persons, to wit, his wife, his sons, grandsons, grand-daughters, and daughters-in-law.

Provision was expressly made to the executors "to increase or reduce the above enumerated monthly allowances to be paid to various persons according to the prevailing circumstances and the income of my estate, and no other person shall demur."

7.Finally the Will concluded with the paragraph -

" I direct the executors of my will that when the two persons, the said Tse Hung Sak and Tse Moon Sak, are both old and incapable of managing the said business of my 'Sun Hay Cheung' and my property, the whole of the said house at No. 204 Johnston Road, Hong Kong, they may divide all the estate in my name equally among my grandsons for their enjoyment, and each shall get one share. However, only grandsons born of legal daughters-in-law are entitled (to such a share)."

8.It is, of course, this particular paragraph which causes some confusion in the light of the earlier paragraphs contained in the Will. Mr. Patrick Yu submits that the effect of the direction contained in this paragraph is to confer an absolute vested interest in both the "Sun Hay Cheung" pharmaceutical business and the Johnston Road property equally upon each of the grandsons, such vested interest being deferred only by prolongation of time as to when it should take effect. He submitted that, at any rate in theory, the grandsons could apply forthwith for partition of the Johnston Road property and a vesting order of their respective shares in the name of each one of them.

Mr. Ignatius Wong, appearing for the plaintiff, on the other hand submitted that the direction was vague and bad for uncertainty; he stressed the use of the words "old and incapable" and "may divide" and contended that there was a complete and unfettered direction given to the executors as to whether or not they should divide up the estate, and he submitted that the executors, if they chose to exercise their discretion not to divide up the estate, were themselves entitled to the beneficial interest in the property. For reasons which will become later apparent I do not propose to deal with the "Sun Hay Cheung" pharmaceutical business and will at this stage confine myself to the Johnston Road property. I find myself unable to accept Mr. Wong's submission that the executors would themselves be entitled to retain a beneficial interest in this property, particularly having regard to the earlier part of the Will directing that this property was "left and handed over" to the executors "for administration and rent collection". In my view Mr. Patrick Yu is right in his contention that the effect of the last paragraph of this Will was to confer a vested interest in the grandsons, deferred only in point of time as to actual distribution. I would myself have thought that there would have been no lack of settled authority for the purpose of considering the proposition now under consideration, but Mr. Patrick Yu, regrettably, has not thought fit to refer me to any cases or, indeed, text books, throwing light on the problem. However, in my judgment, the passage to be found in Halsbury's Laws of England, Third Edition, Yolume 39, Page 1121, Paragraph 1656, is directly relevant. It reads:-

"Postponement of enjoyment only. In addition to the general presumption in favour of early vesting, particular circumstances may affect the question whether a gift is vested. Thus, where a condition can be fairly read as postponing merely the right of possession or of obtaining payment, transfer, or conveyance, so that there is an express or implied distinction between the time of vesting and time of enjoyment, the gift is held to be vested at the earlier date, if the rest of the context allows. This construction is particularly applicable where the postponement is for the convenience of the testator's estate, or is occasioned by the gift of some prior interest filling up the interval."

In my judgment the effect of the direction contained in the last paragraph of the Will was to confer a vested and absolute right of possession of the Johnston Road property upon the grandsons, postponing only their right in point of time to take possession. If, for example, the executors, considering themselves at all times neither too old nor incapable of managing the property, died before any such division of such property, then it seems to me the grandsons would have been entitled each to one share of that property.

9.The position, in so far as the specified beneficiaries to the Johnston Road property are concerned, is slightly altered by the Codicil to the Will, the first part of which provides:-

"I direct the executors of my will that, when the two persons, Tse Hung Sak and Tse Moon Sak are both old and incapable of managing the business of my said 'Sun Hay Cheung' and my said property, the whole of the house at No. 204 Johnston Road, Hong Kong, (they) may divide, according to the items enumerated below, all the estate in my name among my sons and my grandsons born of my legal daughters-in-law for their enjoyment, to wit:-

The unfortunate effect of this paragraph is that the Testator, acting no doubt under the erroneous impression that he had title to the house at 30 Wood Road, has conferred an interest in that house upon the two grandsons, Tse Chu Wah and Tse Chu Kwan, to the exclusion of their earlier interest - which they had had under the Will itself - in the Johnston Road property. The result is that, unlike the other grandsons, they now have no interest in the Johnston Road property. However, it is to be hoped that this omission is only one of academic interest since these two grandsons are, in fact, the sons of the 1st defendant who receives, jointly with the plaintiff, a half share in the ground floor of the Johnston Road house.

10.The remaining matter for comment in regard to this paragraph in the Codicil is that, in variation of the concluding paragraph in the Will itself, the plaintiff and the 1st defendant are now to have, in equal shares, "all income and interests from the business of the 'Sun Hay Cheung' pharmaceutical business". I am informed that this business was in fact wound up by the plaintiff and the 1st defendant on the 16th March 1968, so that it remains of no further concern or interest for the purpose of these proceedings.

11.Mr. Patrick Yu submitted that if I came to the conclusion that there was an absolute vested interest in the Johnston Road property given to the persons specified in the first part of the Codicil to the Will, then the remaining questions raised for determination under the provisions of the Originating Summons were no longer relevant and necessary for decision. I do not think that this is so. I am not asked to make a vesting order of the property in favour of those named persons nor, indeed, without considerably further argument and persuasion, would I be prepared to do so. Indeed, to do so at this stage would be to defeat the intentions of the Testator that the property was to be administered and the rents collected for the purpose of payment of allowances to the various persons, the names of whom are specified in the Will itself, and include the Testator's widow, grand-daughters and daughters-in-law. It is true that the Will expressly gives a discretion to the executors "to increase or reduce the above-enumerated monthly allowances" to these persons, but until that discretion is exercised or, alternatively, until a vesting order is made, it seems to me wholly right and proper, and entirely in accordance with the Testator's wishes, that these allowances should continue to be made. I propose therefore to deal expressly, but briefly, with each question raised under the Originating Summons before me. I now do so.

12.The consent of the 4th defendant, the Testator's widow, to any division of the property does not arise for consideration since no such division can be made unless and until a vesting order is applied for by those persons entitled to a distribution and share of the property.

The question of costs remains for consideration.

Representation:

I. Wong (Peter C. Wong & Co.) for Plaintiff

P. Yu (P.C. Woo & Co.) for 1st, 2nd and 3rd Defendants.

P. Woo (P.C. Woo & Co.) for 5th Defendant.