Lau Leung Chau v. Lau Leung Seung and Others
Read the full judgment text of CACV 33/1998 on BabelCite. This Court of Appeal judgment was delivered on 29 January 1999.
1. This case is all about an Ancestral Worship Trust (AWT). Two proceedings were instituted, one in 1995 and the other in 1996. The 1995 proceedings were compromised without prejudice to the rights of the parties thereto. In the 1996 proceedings, as administrator of the estate of Lau Wai Chau (the ancestor), deceased, and executor of the will of his own late father, the 4th son, the plaintiff sued the other seven branches of the ancestor's family (Fongs) primarily for a declaration that the dece
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CACV000033/1998 CACV 33/98 & 59/98 ---------------------- H E A D N O T E ---------------------- Ancestral Worship Trust in the New Territories - creation and dissolution. Whether an ancestral worship trust in the New Territories may be established by will. Impact of s. 13 of the New Territories Ordinance considered. Whether registration of a New Territories ancestral worship trust under s. 15 is mandatory. The application of Chinese Law and Custom. CACV 33/1998 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 33 OF 1998 (ON APPEAL FROM HIGH COURT MP NO. 3924 OF 1995 AND MP NO. 3209 OF 1996 - 1995, No.MP3924 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS ---------------
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--------------- AND 1996, No.MP3209 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS ---------------
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--------------- Coram: Hon Nazareth, V-P, Liu & Mayo, JJA in Court Date of Hearing: 15, 16, 17 & 18 December 1998 Date of Handing Down of Judgment: 29 January 1999 ---------------------- J U D G M E N T ----------------------- Liu, JA: 1. This case is all about an Ancestral Worship Trust (AWT). Two proceedings were instituted, one in 1995 and the other in 1996. The 1995 proceedings were compromised without prejudice to the rights of the parties thereto. In the 1996 proceedings, as administrator of the estate of Lau Wai Chau (the ancestor), deceased, and executor of the will of his own late father, the 4th son, the plaintiff sued the other seven branches of the ancestor's family (Fongs) primarily for a declaration that the deceased's properties be distributed in accordance with the provisions of a 1946 Deed of Family Arrangement (DFA). The ancestor had eight sons in eight Fongs. The two proceedings were heard before Cheung, J. The judge held that there was no AWT created, that even if an AWT had been created, it would have been dissolved or disregarded by the DFA and further that with or without an AWT, the ancestor's properties were effectually divided by the DFA. All this was decided by the judge under Chinese Law and Custom (CLC). The plaintiff's prayer for distribution pursuant to the DFA was not held by the judge to have been defeated by any of the alleged inequities. In the result, the judge declared the division and distribution of the ancestor's properties under the DFA to be valid and binding on all the descendants. 2. After a series of Government land resumptions, the convoluted family disputes entered a new phase in which an alleged One-Eighth Agreement was minuted in a Minute Book. The One-Eighth Agreement was allegedly to supersede the DFA and provide a re-distribution of the ancestor's assets equally in value among the eight Fongs, reserving a nine part for communal interest. Such alleged equal division in value formed the basis of a counterclaim which was dismissed by the judge. 3. It is only from the declaration made in the above terms that some of the defendants appeal. The two appeals were consolidated. The eight Fongs are divided into two camps. The appellants are represented by Mr Tang and the legal team he leads and the respondents (the plaintiff in the proceedings and other defendants) are represented by Mr Chang and his team. That is all we need to know. 4. The questions for our consideration in these consolidated appeals are:
5. Looked at in this simplified form, these proceedings are easy to follow. Judged by the sheer size of the two legal teams, their contended resolution of these questions should not be uninspiring. 6. Detailed facts are not necessary, but in order to set the scene for a comparative examination of Hong Kong Laws (HKL) and/or CLC, a brief historical overview would be helpful. The ancestor died in 1933. In 1930, he made an English will. He had eight sons. The first son had by then died. One son from the 2nd Fong was adopted by the 1st Fong. In the 1930 English will, the three eldest surviving sons, i.e. the 2nd, 3rd and 4th sons were appointed executors and named residuary legatees. It is not in dispute that these three eldest sons were not to take as beneficiaries. They were admittedly trustees. In 1932, the ancestor divided his properties in New Territories into nine parts, one for each son, including the son adopted over and the 9th part for himself held in trust by the three surviving eldest sons. Later in 1932, the ancestor made a Chinese Codicil which contained a reference to the earlier division. 7. The agreed translation of the Codicil reads:
8. In November 1945, all the Fongs agreed to a division of the New Territories properties in the Codicil. There was a Draft Property Division Book kept by the family. The actual allocation was recorded in a document entitled "Deed of Confirmation of Division of Assets for Descendants of Ancestor Lau Wai Chau of Lau Hak Sut Tong". Lau Hak Sut Tong was believed to be the ancestor's private tong. It was signed by or on behalf of all the Fongs. The actual division was made in 1946. It was followed by a Deed of Family Arrangement (DFA) executed in a firm of solicitors in March 1946. De facto enjoyment of properties was thereafter shared by the Fongs in accordance with the provisions of the DFA. At the end of an almost 5-year period between 1975 to 1979, an agreement was allegedly reached amongst the Fongs in the course of negotiation with Government on land resumptions. This is the so-called One-Eighth Agreement of 1979 whereby each Fong was to have an equal share of the net proceeds after sales or dispositions. Actual Government resumptions took place in 1980, 1981, 1989, 1993 and 1995. In February 1994, the plaintiff was granted Probate of the estate of his late father, the 4th son. In June 1995, the plaintiff procured a grant of Letters of Administration with the English Will and Codicil annexed of the estate of the deceased ancestor. As administrator of the estate of the deceased ancestor and executor of the estate of his late father, the 4th Fong, the plaintiff commenced the 1995 and the 1996 proceedings. In the 1995 proceedings, orders were made to enable negotiation with Government on resumptions to be sustained and compensation to be accepted, but the 1995 proceedings were otherwise compromised without prejudice to the rights of the Fongs. The 1996 proceedings sought primarily a declaration that the ancestor's properties be distributed in accordance with the provisions of the DFA. (1) Was there an AWT? (2) How was it created? 9. Under CLC, a Chinese had no testamentary power. The properties, his own or his ancestors', held by him were to devolve according to CLC. He could express his wish and offer his advice to his descendants by will which must not infringe the rules of succession in CLC. But in Hong Kong, for a great many years it has been held that a domiciled Chinese has full testamentary capacity. In Re Tse Lai-chiu, deceased, [1969] HKLR 159 at pp. 192-193, Hogan, CJ observed:
10. There were earlier assumptions made by our courts of testamentary capacity in cases involving land on the Hong Kong island. See Lau Leung-chi v. Lau Po-tsun, [1911] 6 HKLR 149 and In Re Chan Quan-ee, 15 [1920] HKLR 74. See also Wu Koon-tai and Another v. Wu Yau-loi, [1995] 2 HKC 732 at p.749A. It has not been seriously doubted that the assumed testamentary power enjoys a general application. Professor Dicks who had a close tie with this territory, readily indorsed as sound advice to be given by a practitioner for setting up an AWT by Will. In my opinion, it could no longer be plausibly argued that the testator did not set up an effectual AWT of New Territories land by Will, which was exempted from the application of the Rule Against Perpetuities, an aspect of HKL, by s. 13 of the New Territories Ordinance. See Tang Ka-chung and Another v. Tang Chik-shang and Others, [1970] HKLR 276 at p.295, per Mills-Owens J. 11. I would accept as an immutable rule to-day that a Chinese inhabitant of Hong Kong may make a will affecting any disposition of land, including land in the New Territories. The validity of an AWT created by Will would depend on whether its provisions breach HKL on testamentary dispositions. The Codicil has not been challenged for its validity. In this case, it was unceremoniously admitted to proof in the grant of the Letters of Administration, which was made with, inter alia, the Codicil annexed. The annexation of the Codicil was not sought to be resisted. Of itself, the bequest under consideration has also not been impugned for uncertainties. It identified the properties to be put under the AWT, albeit other mundane instructions were included. It was accepted on all hands that the ancestor intended to create an AWT by the Codicil. The judge returned such a finding. The beneficiaries of the AWT were known or ascertainable. Just as in the case of a charitable trust, the AWT in the Codicil was an effectual bequest under HKL. Nothing more needed to be done. In the absence of the Rule Against Perpetuities in the New Territories, there is no conceivable reason why an otherwise good New Territories bequest under HKL even in terms of an AWT should not be upheld. 12. In any case where the testamentary dispositions in an AWT created by HKL are not at variance with what is expected of an AWT by CLC, they could hardly be objectionable. It is also not suggested that any other HKL was contravened by the provisions of the AWT in this case. The constraint of the Rule Against Perpetuities had been removed by, as above explained, s. 13 of the New Territories Ordinance. It would seem that save for the lifting of the Rule Against Perpetuities, CLC was irrelevant to the valid creation of the AWT by the Codicil. Upon death, a deceased Chinese may will away his assets in more ways than one, and his testamentary disposition may set up an AWT. The bequest in the Codicil was valid; so was the AWT it established. Superimposition of CLC on HKL in the creation of an AWT by Will could lead to an incongruous result of having an effectual AWT by Will but possibly no AWT under CLC for the same piece of land in the New Territories. Of course, it is not to say that an AWT could not be established otherwise than by Will, but as here where an AWT is created by a testamentary bequest, save for the Rule Against Perpetuities HKL applies to the exclusion of CLC. 13. The highest this case may be put is that all varieties of AWTs can be established by testamentary bequests under HKL, but it is not necessary to go that far. At least where an AWT created in accordance with HKL on testamentary dispositions, as the one created by the Codicil here, does not derogate from the very essence of an AWT as understood in CLC, it is clearly indefeasible. In my judgment, the bequest in the Codicil created an effectual AWT. The AWT was well and truly established. The answer to (1) is "yes", there was a valid AWT, and the answer to (2) is: the AWT was created by the Codicil upon the death of the ancestor under HKL. No further steps, positive or otherwise, needed to be taken. The bequest by the Codicil was effectual and the testamentary bequest alone established the AWT. 14. I should comment in passing that no inter vivos AWT was created by the division in 1933 or by the Codicil read as an instrument simpliciter, not as a testamentary document. For anyone who is reasonably knowledgeable in CLC, an AWT cannot be created in the lifetime of the focal ancestor. That coincides with the opinions of Professor Dicks, Professor Baker and Mr Palmer whose evidence the judge accepted. Moreover, there was no mention of a tong or auspicious name for the 9th part reserved for the dedicated purposes in the 1933 Division as it would be, in general, expected for a creation of an AWT. There was no AWT inter vivos in this case. Further, a codicil speaks from death. By the very nature of the Codicil and its language, the AWT in that document was established upon death. (3) Could the AWT be dissolved? 15. Under CLC, an AWT could be dissolved by the unanimous consent of all the living descendants as represented by the respective heads of the Fongs. On the evidence and for the reasons given by the judge, there was a purported CLC dissolution in 1946 as evidenced by the execution of the DFA, but was that effective for the AWT created by the Codicil? If CLC applied to an AWT in the New Territories, it would be. If CLC retained by s. 13 of the New Territories Ordinance was overtaken on this aspect by s. 15 for an AWT in the New Territories, it would not. In the latter case, an AWT in the New Territories would have to be dissolved pursuant to the provisions of s. 15. It is not strictly dissolution, but land in an AWT may be disposed of or otherwise in any way dealt with under s. 15. An AWT may possess a great variety of assets, notably the ancestral hall or temple, or contain directions and instructions. It is a misnomer to speak of dissolution. The real issue is whether properties in the New Territories could be taken out of an AWT in disobedience to the mandate from an ancestor or ancestors. Put another way, whether that part of an AWT as applied to New Territories land may be terminated. Subject to the above, the answer is a qualified "yes". (4) Was the AWT dissolved by the purported 1946 dissolution according to CLC? 16. Time and again CLC have been eroded or overtaken in part by HKL, such as the time-honoured testamentary capacity, the 1971 rules of intestate succession, the 1995 rules relating to the distribution of New Territories land on intestacy, adoption, marriage rites, bigamous marriage, concubinage and ouster of a tsai (wife). Conversely, HKL by CLC, such as the Rule Against Perpetuities in the New Territories. Once it is acknowledged that CLC, where it is or remains applicable, forms part of HKL (In re Tse Lai-chiu, deceased, [1969] HKLR 159, p. 175), it would not be difficult to appreciate that aspects of CLC may from time to time be cut adrift from laws operating in the Special Administrative Region. There is nothing inherently repugnant to displace a dissolution under CLC insofar as it involves land dispositions by one under s. 15 for an AWT in the New Territories. On the contrary, for ease of administration and a sounder conveyancing practice, this substitution in the rural district has much to commend itself. 17. I pass then to the question whether the aspect of CLC dealing with dissolution of an AWT or, more appropriately, family division of land in the New Territories subject to an AWT has been eliminated or displaced by HKL. Erosion of an AWT in the New Territories has had its hey day, albeit in a subtle form. Segregation of family Fongs and severance of clan tie in a division of New Territories land subject to an AWT have been often achieved by dispositions put through the registered managers under s. 15 of New Territories Ordinance with the Land Officer giving consent after his consultation with the village elders. This is my first encounter with an outright attempt to dissolve an AWT or, more accurately, divide land subject to an AWT by a deed of family arrangement. Even in the 1946 DFA, a legal document, due registration for facilitating execution of all necessary conveyancing documents under the New Territories Ordinance was envisaged, but attempted registration was not successful. Protracted proceedings ensued. Disputes over the dealings with these properties could have been avoided by the appointment and registration of managers under s. 15 for the "full power to dispose of or in any way deal with" land to be properly exercised with the consent of the Land Officer (Secretary for Home Affairs). 18. One then turns to s. 15 of the New Territories Ordinance for its true interpretation and effect. S. 15 reads:
S. 15 is clearly mandatory on pain of forfeiture. The crucial issue for our consideration is whether the New Territories properties in the AWT are lands held "in the name of a clan, family or t'ong". These properties in the AWT are owned and belonged to the LAU clan or family. S. 15 goes on to provide that "every instrument relating to land held by a clan, family or t'ong, which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong". (Emphasis supplied). It is reasonably clear that land in the name of any clan, family or t'ong is land held by any clan, family or t'ong. S. 16 also refers to "any clan, family or t'ong owning land on 28 October 1910, in respect of which a manager has been duly registered under this Ordinance, ..........". (Emphasis supplied). The notion of proprietorship was fostered in Wu Koon-tai and Another v. Wu Yau-loi, [1996] 3 HKC 559 at p.566E/F where Lord Browne-Wilkinson said:
The repealed s. 17 of the New Territories Ordinance read:
S.17 also envisaged the dichotomy in registration of a personal name either privately or as a Manager. It reflected the need to register group ownership in the name of managers. 19. It would seem that the lands owned/held by or belonging to a clan or family such as the properties in the AWT in this case were squarely caught by s. 15 of the New Territories Ordinance. These lands must have managers appointed and registered. It is inconceivable that s. 15 is a section simply for facilitating conveyancing practices, as any failure to appoint and register managers would incur forfeiture, not to mention also that the authority has a right to intervene. 20. S. 15 is HKL and the full power of disposition conferred upon the registered managers would render any dealing "as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong". It would seem that these quoted words were referrable to an aspect of HKL, which requires every beneficiary to be made a party to an instrument. These words could not have been calculated to refer to a CLC dissolution. CLC would allow an AWT to be put to an end by or, perhaps, land subject to an AWT to be divided amongst all clan members through the heads of the fongs, but the execution or signing by "all the members" under s. 15 would not bring about such a finality until the consent of the Land Officer is given. The act of signing or executing an instrument by the registered managers is itself effective in form but completion of the transfer under s. 15 will not be finalised until the consent of the Secretary for Home Affairs is obtained. Therefore, the reference made to all members of the clan, family or t'ong in s. 15 could not have been meant to relate to a final resolution or division under CLC but only to an aspect of HKL in processing a conveyancing document. In conclusion, for the properties in the Codicil, HKL displaced CLC as the means of dissolving the AWT or, more precisely, disposing of the AWT land by registered managers pursuant to s. 15. If land owned by or belonging to a clan, family or t'ong in the New Territories could be divided, disposed of or otherwise dealt with under or also under CLC, s. 15 would become meaningless. Any division of such land or dissolution of a New Territories AWT under CLC would have the effect of exempting such New Territories land from the mandatory requirement of having managers appointed and need for obtaining the consent of the Secretary for Home Affairs. The penal provision in s. 15 may likewise be circumvented. 21. The beneficiaries may, of course, individually dispose of their respective personal interests as choses of action, limited to life. The beneficiaries of the AWT in this case belong to a class and the class interest necessarily fluctuates for the possible addition by births and diminution by deaths. The class is never closed. See Tang Kai-cheung & Another v. Tang Chi-shang & Others, [1970] HKLR 276 at pp. 279-280. Such disposition of their ill-defined choses of action in equity is no dissolution of the AWT created by the Codicil or no disposition of land subject to the AWT, which has to be dealt with under s. 15 by registered managers with official blessing. In my view, the AWT created by the Codicil in this case could not be and was not "dissolved" by the DFA. (5) Was the judge right in making his declaration? 22. The judge found a clear intention to create an AWT in the Codicil but went on to hold that it had yet to be perfected or implemented by steps such as due registration with the authority. The general tenor of the Chinese experts' evidence was that the requirement of registration in the creation of an AWT was more honoured in the breach than in its observance and, more importantly, that non-registration would not be fatal to the validity of a created AWT. Be that as it may, the AWT in this case was not created by an instrument but by Will. The AWT in the Codicil had the requisite certainties for a valid bequest. It can hardly be gainsaid that the bequest, if made for a charitable trust, was effectually made. It stands to reason that in the circumstances the bequest setting up the AWT was equally effectual. Hence, the AWT in this case was validly created by Will. The validity of a testamentary bequest of New Territories land is governed by HKL, and the customary procedure for perfecting or implementing instructions to create an AWT under CLC would have no application, nor would the custom for selecting a t'ong name or an auspicious name for creating an AWT under CLC flaw the conclusion I have reached. Dissolution in the sense as understood in these appeals was, in my view, exclusively catered for in s. 15. 23. The judge was wrong in holding that the AWT could not be established by Will without more. The judge was wrong in introducing to a testamentary bequest in the Codicil, to which HKL exclusively applied, the customs of registration and use of a t'ong or auspicious name under CLC. The judge was further wrong in considering a CLC dissolution where s. 15 had overtaken s. 13 for property dispositions. To sum up: in his entrenched testamentary capacity, the ancestor created the AWT by Will under HKL, and it could not be "dissolved" otherwise than under s. 15. In my judgment, the AWT established by the testamentary bequest in the Codicil is subsisting. 24. Before closing, I should turn briefly to the respondents' case which is rejected in my disposal of these consolidated appeals. If, so submits Mr Chang for the respondents, of itself the Codicil fell short of establishing an AWT and s. 15 was not the exclusive means for dividing up, disposing of or otherwise dealing with the New Territories properties contained in the Codicil, the CLC rules of succession and dissolution alluded to by the Chinese experts would have no application to an, so to speak, inchoate AWT. In that scenario, on what trusts these properties were held and whether they were successfully divided must be decided solely by HKL. The trial judge was not invited to interpret the Codicil under HKL with a view to ascertaining all the beneficial interests of these properties bequeathed in a HKL Codicil, and therefore there was no finding made under HKL as to whether the 1946 DFA had joined all the beneficiaries of this HKL bequest. Further, it is clear under HKL that the DFA was not properly signed or executed by all of them. 25. I would allow the consolidated appeals, set aside the declaration and make an order nisi for costs against the respondents represented by the legal team Mr Chang leads. Mayo, J.A.: 26. One of the main issues in this litigation was the question whether an Ancestral Worship Trust (A.W.T.) was created either during the life of the Ancestor Lau Wai Chau or by his will and codicil. The determination of this issue was critical because as was conceded by Mr. Robert Tang, S.C. for the Appellants if he was unable to establish this the appeal could not succeed. 27. It was Mr. Tang's primary submission that the A.W.T. had been created by the codicil to the Ancestor's will. He argued that it was well established that a Chinese person had a testamentary capacity. Unless there was some good reason to the contrary a person of the Chinese race could dispose of any property including land in the New Territories by his will and this would be a valid disposition. 28. The agreed translation of the codicil reads:
29. Mr. Tang contended that it was for the court to construe this codicil. In doing so it was manifest that the Ancestor was creating an A.W.T. This being the case Cheung, J. should not have held that although the Ancestor may have intended to establish an A.W.T. this intention had never been implemented. 30. Mr. Denis Chang, S.C. for the Respondent's answer to this was that the Judge's finding in this connection was in conformity with the expert evidence on Chinese laws and customs. 31. Mr. Palmer had this to say at p.566 of the appeal bundle:
32. The Judge also summarized the evidence of the other experts. He came to the conclusion that while the Ancestor may well have intended that an A.W.T. should be established he was satisfied that this intention was only capable of implementation by his sons. 33. I have no doubt that on the expert evidence which was before him the Judge was right to hold that an A.W.T. was not created by the codicil. 34. S.13 of the New Territories Ordinance, Cap. 97 provides:
35. It is by virtue of this section that Chinese laws and customs apply in the instant case. 36. What is very clear is that A.W.T.'s are a creature of Ching Dynasty laws and customs and that the concept is alien to English and Hong Kong Law. 37. When reference is made in the codicil to what apparently might be an A.W.T. it is not open to the court to attempt to construe the relevant directions unless it is assisted by experts on the subject. It was the view of the majority of the experts, if not all of them, that the codicil did not establish an A.W.T. I do not think we can go behind the Judge's finding or that it is open to us on the evidence which was before him to interfere with his conclusion. 38. In this connection it has to be said that the experts opinions were probably correct. Whilst it is undoubtedly true that a Chinese person has testamentary capacity this is not necessarily relevant to the present situation. Here the question which is being posed is whether an A.W.T. can be established by a will in accordance with Chinese laws and customs. If under Chinese laws and customs a Chinese person does not have a testamentary capacity it is not altogether surprising to find that an A.W.T. cannot be created by a will. 39. There are also other difficulties. Under Hong Kong laws a deceased person's property passes to his Executors where he has made a will. It is then for the Executors to take such action as may be required to comply with the terms of the will. If they do not take the necessary steps to establish an A.W.T. it will not exist. 40. In the present case there is also the problem which is referred to by Mr. Palmer of multiple purposes being referred to in the codicil. The reference to "payment of expenses designated by me before I die" in the codicil might well offend against the perpetuity rule. 41. What I think is very clear is that it is not possible to call in aid Hong Kong law to assist in the interpretation of Chinese laws and customs or vice versa. In the present situation the applicable law is Chinese laws and customs and if it becomes clear that the directions given in the codicil do not create an A.W.T. then that is the end of the matter. 42. The question whether the Ancestor created an A.W.T. during his life time can be disposed of quite shortly. 43. There was nothing in the 1932 Deed of Division to indicate an intention to create an A.W.T. All of the indications are to the contrary. Property is distributed to various members of the family. These include infants. Where this is the case it is clear that during the infancy the property is to be held by Trustees. 44. More importantly the expert evidence suggests that where it is the intention to establish a Tong either the word 'Tong' is added after the name or some auspicious name is invented. There is nothing to indicate this sort of intention. 45. I am satisfied that Mr. Tang was right to concede that if he was unable to demonstrate that the Judge was wrong to hold that no A.W.T. was established the appeal must fail. 46. Very shortly if there was no A.W.T. s.15 does not apply to dispositions and it would then be possible for the parties to the 1946 Deed of Family Arrangement to make the provisions they did. 47. In my view this appeal should be dismissed. Nazareth, V-P: 48. I gratefully adopt the outline of facts given by Liu JA which, upon the view to which I have come, suffices to dispose of these appeals. I adopt also the acronyms and abbreviated designations used by Liu JA. However, it will be seen that I have found it necessary to address only one aspect of the wide ranging submissions made to us. With reference to that specific aspect, the following overview of the facts is of assistance. The ancestor made an "English" will in 1930 appointing his three eldest sons as executors. In or about 1932 he divided some of his considerable landed property into nine parts. He gave each of his eight sons one part. The remaining part was given to the three eldest sons on trust for himself. In 1932 he made the Chinese codicil of which the text is reproduced in my Lords' judgments. He died in August 1933. After his death, his ninth share was managed by his three sons. Disputes arose after the end of the Second World War about the properties and how the income from them had been disposed of. The eight Fongs decided to divide those properties between them. The division took place in 1946, and was recorded in the Chinese document referred to as the Confirmation Deed. The several Fongs then entered into and remained in possession of the lands allocated to them apart from dispositions made by them and resumptions for public purposes. Letters of Administration with the will and codicil annexed were granted to the plaintiff/respondent in June 1995. The principal issue in the proceedings has been whether an Ancestral Worship Trust (AWT) was established by the codicil. It arises in the context of the appellants seeking to set aside the DFA. 49. That can be seen from a similar limited outline of the associated legal issues viewed likewise in a simplified way from the appellants' perspective. If the codicil failed to establish the AWT, the properties concerned would not be subject to CLC. The result would be that the elders of the eight Fongs would not be able to consent to the DFA under CLC. The DFA would, therefore, not have taken effect and the properties or their proceeds would have to be redistributed. Conversely, if an AWT had been effectively established, on the evidence of the experts, the elders of the eight Fongs could by agreement have under CLC validly terminated it and shared out the properties, as they did, under the DFA. 50. The concession made by Mr Robert Tang SC on behalf of the appellants that if the codicil to the ancestor's will is held to have failed to establish an AWT, then the appellants' appeals must fail, is accordingly critical, as pointed out by Mayo JA. That concession was made in the context of the question whether the Deed of Family Arrangement ("the DFA") was valid as all infant sons had not themselves signed. The judge, Mr Tang noted, had held that they must be taken to have consented, and that the appellants had not appealed against that decision. Therefore, if there was no AWT, the appeals must fail since that would mean there would be no issue concerned with whether infant sons were bound by the DFA. 51. I turn then to the question whether the ancestor's will, specifically the codicil, established an AWT. It is not in dispute that Chinese Law and Custom (CLC), neither recognise nor make provision for the testamentary disposition of property. A significant consequence of that position is that the notion of an AWT being established by will or codicil is one that is simply not known to CLC. To say that it is alien to CLC would not be inaccurate, but does not lend all that much to the resolution of Mr Tang's submission that there is room for the familiar and unquestioned mode of establishing trusts by will under HKL, particularly charitable trusts which closely correspond to an AWT. If such trusts can be and are created by Chinese persons, even in respect of land in the New Territories, why, Mr Tang asks, should that means not be utilised in creating an AWT without in any way contradicting the nature of an AWT or failing to conform with the relevant provisions of CLC. But this does not seem to me to be the right question. Whether an AWT was effectively created seems to me to be a question to be determined in accordance with CLC and not HKL. As I understand the position, it is not in dispute that at the time of the will, of the codicil and of the ancestor's death, the land in question was not family, clan or tong land and was therefore not subject to CLC under s.13 of the New Territories Ordinance. That position in any case seems to me to be right, for the land was apparently purchased by the ancestor out of his personal trading profits and was his own property. 52. It would seem from the text of the codicil that it was the ancestor's intention to create an AWT or to have an AWT created. It was contended in argument that such wish and the effect to be given to it could operate in two ways:
53. The former was but faintly relied upon by Mr Tang. I think the judge was right in concluding that the words "in the future" pointed to the contrary. In any case, the view of the three experts, other than Professor Chang, was that in CLC the codicil did not constitute an inter vivos document creating the AWT; and, moreover, that an AWT would not be created inter vivos in that way. There is simply no good reason to fault the factual finding of the judge in preferring the evidence of the three experts as opposed to that of Professor Chang. 54. Reverting to the effect of the codicil as a testamentary instrument, much emphasis was placed by Mr Tang upon the acknowledged testamentary capacity of Chinese persons under HKL, even in respect of land in the New Territories. The ancestor could certainly dispose of what was his own land, as opposed to family, clan or tong land, by will. And he could do so to create a trust. But that is not what is in question. What is in question is whether he could by will create an AWT in terms of CLC. The construction of the codicil to determine its intention is a matter for the court and not the experts. Whether the result constitutes an AWT must be determined by the norms and requirements of CLC. In the latter respect, it is not for this Court to determine the matter by reference to what it may think fair or right, but by reference to CLC; and that is to be determined as a matter of fact upon the evidence of the experts. 55. Again, the preponderance of their evidence was that the codicil would require the executors to create the AWT and that, the executors have not done. In my view, therefore, it is not possible to fault the judge's conclusion that the codicil did not establish an AWT. It has to be recognised in that regard that three of the experts were not unfamiliar with at least the general nature of the creation of a trust by will. Professor Dicks QC, who had practised in Hong Kong, was very well placed to appreciate all the relevant aspects and complications of the two systems of law. Yet his opinion was that no AWT was created. It is unfortunate that this aspect of the matter i.e. creation of an AWT by testamentary instrument, was not specifically pursued in greater detail with the experts below, particularly by counsel for the appellants. It was really for them to pursue their case. We now have to deal with the matter as we find it. 56. It is well to remember that the substantial question before the Court is what effect is to be given to the following words in the codicil:
57. The construction of those words and their effect would have to be determined under HKL. Likewise, the properties not being family, clan or Tong land, the matter has to be addressed under HKL. If there were no CLC or it did not apply, the bequest (assuming it were such) would clearly fail under HKL. What the appellants ask the Court to do is to give effect to the bequest as if it were a charitable trust. The latter it is plainly not and it would seem to me that this submission fails in limine. Similarly, there is the "multipurpose effect" of the codicil to consider, implicit in the words "they are to be kept and managed in perpetuity for payment of expenses designated by me before I die". The implications of this would appear to serve only to undermine the effective creation of an AWT, and the analogy of the creation of charitable trusts relied upon by Mr Tang and referred to below. 58. Approaching the matter from the direction of CLC, this provides for the mode of creation of an AWT. The only recognised way is inter vivos. To produce a new way would change CLC. That may be a desirable and even legitimate and proper area for the Hong Kong courts to develop in the interaction of HKL and CLC applied by HKL. Assuming it is, this does not seem to me an appropriate case in which to embark upon expansion or introduction of testamentary capacity within the prescribed realm of CLC in Hong Kong. 59. It also may well be that any such extension by reference to the obligation of trustees should be hedged with normal equitable defences like delay, bearing in mind that the appellants have continued to be in possession of the shares of lands allocated to them for over 50 years and would presumably have continued to be content had there not occurred the purely fortuitous acquisitions for public purposes and the equally fortuitous hugely uneven appreciation in value of different shares of land. 60. Undoubtedly, the executors were at least in the position of trustees and Mr Tang made a powerful submission that their breach of duty ought not to frustrate the ancestor's clear intention. That is a beguilingly attractive submission to anyone versed in HKL with its essential component of, and traditions rooted in Equity; but it does not seem to me that it can be right. In the first place, the question is not about the failure of the executors to carry out the ancestor's will. It is whether an AWT was constituted by the will and codicil. To compel the executors now to constitute an AWT would raise other questions, not least whether those who would now rely upon equitable relief, having taken and for more than 50 years remained in possession of land allocated by the DFA (which arrangement they concede they can no longer challenge in this Court), should now be allowed equitable relief, even if they would ordinarily have been entitled to it. I would add that I am not able to accept Mr Tang's contention that since trusts, including charitable trusts, are very similar to an AWT, and they are freely created by Chinese testators in Hong Kong, there is no reason why an AWT should not be so created. As a creature of CLC, the existence of an AWT, it seems to me, falls to be determined by CLC unless the latter is expressly displaced by HKL, and there is no suggestion of that. It likewise seems to me therefore the creation of an AWT is similarly to be determined by CLC, subject to the same limitation. In that regard I have to say also, that in my view, the question whether such determination is a matter of CLC or HKL must be one for this Court as a matter of law. However that may be, the view of three of the four experts in Chinese law is that no AWT is created by the will. In particular that was Professor Dicks' view notwithstanding his remark that if he were a Chinese person seeking to create an AWT, he would not omit doing so by will. That was counsel of prudence, i.e. to utilise all possible means to try and ensure the attainment of the objective. It did not detract from the view that an AWT could not be directly created by will; the executors would have had to do so as an inter vivos act of theirs. 61. For those reasons, I reject the appellants' submission that an AWT comprising the ancestor's one-ninth share was established by the will. 62. Therefore, upon the concession rightly made by Mr Tang, the appeals must fail. I would accordingly dismiss them and make an order nisi that the respondents are to have the costs of the appeals. 63. Before I leave the matter, I feel it necessary to refer to the title to the proceedings which runs to an incredible five pages of dense typescript, listing in particular details of presumably every portion of the many parcels of land involved. I can find no requirement for a title of this sort, much less any justification for it, whatever may have been past practice. It should not be beyond those who are able to draft complicated pleadings to produce a title that gives the names of the parties and where deemed necessary, a brief description of the subject matter, without particularising it. In that regard, the Chancery practice that only the parties need be specified in the title (with two exceptions) referred to at p. 96 of Atkins Court Forms, 1993 Issue, Vol. 1, has much to commend it. 64. By a majority, therefore, the appeals are dismissed and there will be an order that the respondent is to have his costs of the appeals.
Representation: The Appellants Mr Robert Tang SC Albert Yau and Kenny Lin instructed by M/S Hau, Lau, Li & Yeung for D1, D3 & D4 in HCMP No. 3924/1995 Proceedings and D3, D4, D5, D6 and D7 for the HCMP 3209/1996 Proceedings The Respondents Mr Denis Chang SC & Chan Chi Hung instructed by Iu, Lai & Li for the Plaintiff in the HCMP 3209/1996 Proceedings Mr Louis Chan instructed by Philip Chan & Co. for the Plaintiff in the HCMP 3924/1995 Proceedings Mr Alexander Wong instructed by M/S C. S. Chan & Co. for D1 in the HCMP 3209/1996 Proceedings Mr Thomas Lai instructed by M/S S. Y. Chu & Co. for D2 in HCMP 3924/1995 Proceedings and HCMP 3209/1996 Proceedings Appeal dismissed: see FACV15/1999 dated 27 March 2000 |
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