Tang Che Tai and Others v. Tang on Kwai and Others
Read the full judgment text of CACV 137/2007 on BabelCite. This Court of Appeal judgment was delivered on 25 January 2008.
1. Tang Kwong Yu Tong (“the Tong”) was established over 200 years ago. In the beginning there were 6 fongs. The 4 th fong has become extinct. In 2002, when the writ was issued, the Tong had 206 members. The 3 rd fong was the smallest with only 5 members. The 5 th , the largest, with 151 members. The 1 st , 2 nd and 6 th fongs, 22, 11 and 17 respectively.
Cited by 3 cases · Cites 5 cases
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CACV 137/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 137 OF 2007 (ON APPEAL FROM HCA NO. 331 OF 2002) ______________________ BETWEEN
(BY ORIGINAL ACTION) AND BETWEEN
(BY COUNTERCLAIM) ______________________ Before : Hon Tang VP, Cheung JA and Lam J in Court Dates of Hearing : 8 and 9 January 2008 Date of Judgment : 25 January 2008 ______________________ JUDGMENT ______________________ Hon Tang VP : Introduction 1.Tang Kwong Yu Tong (“the Tong”) was established over 200 years ago. In the beginning there were 6 fongs. The 4th fong has become extinct. In 2002, when the writ was issued, the Tong had 206 members. The 3rd fong was the smallest with only 5 members. The 5th, the largest, with 151 members. The 1st, 2nd and 6th fongs, 22, 11 and 17 respectively. 2.The plaintiffs by original action (“the plaintiffs”) are members of the 3rd fong. The 1st plaintiff is a manager of the Tong. He was appointed on 4 March 2000, following the death of his father, Tang Chik Lam, who was a manager until his death on 29 January 1999. There were 4 defendants in the original action (“the defendants”). The defendants were all managers of the Tong. The 2nd defendant is now dead. Each of the 5 managers represented one of the fongs. 3.It is common ground that the Tong is an ancestral tong, and it is also common ground that the principal object of the Tong was:
4.In the words of Bokhary PJ in Re Lau Wai Chau [2000] 3 HKCFAR 98 at 105, the Tong:
5.It was the tradition of the Tong to pay its manager “shoe money” as well as “pork money” to its member annually. There is no dispute about them. However, at times, what has been described as pai-ji (派饑) or “Relief of Poverty” had been made to the members. The issue in the plaintiffs’ action is whether a payment of pai-ji could only be made with the unanimous consent of the members of the Tong. The matter was brought to a head when the defendants caused $201,000 to be paid by way of pai-ji to 201 of its members on 24 March 2002 against the objection of the plaintiffs. By this action, the plaintiffs seek an order that the defendants returned the $201,000 with interests to the Tong and an injunction to restrain them from further distribution of assets of the Tong in the absence of unanimous consent of all its members. 6.Between 1998 and 2000, various lots of land owned by the Tong were resumed. The compensation amounting to $73,443,081 had been paid into the Tong’s bank account which could only be operated with the signatures of all 5 managers of the Tong. The counterclaim is concerned with the distribution of the compensation money. There are 5 defendants by counterclaim. The first 3 defendants by counterclaim are the plaintiffs. The 4th and 5th defendants by counterclaim are also members of the 3rd fong. The 5th defendant by counterclaim was born in May 1982. He is a grandson of Tang Chik Lam. 7.After trial, Deputy Judge A To found in favour of the plaintiffs in the action and dismissed the counterclaim. However, he had not granted an injunction because he thought it was unnecessary. This is the defendants’ appeal in relation both to the claim and the counterclaim. By a respondents’ notice the plaintiffs asked that an injunction be granted. 8.There had been earlier resumption of land owned by the Tong. In 1982, as a result of such resumption, compensation in excess of $4 million had been received from the government. Such compensation money was distributed as a result of a decision made in 1982. 9.At the heart of these proceedings is the vexed question whether distribution under an ancestral worship trust should be per stirpes or per capita. It is obviously in the interest of a fong with a large membership to wish distribution on a per capita basis. However it is unnecessary in the context of these proceedings to decide whether distribution, if it should take place, should be done on a per stirpes or on a per capita basis. The plaintiffs’ case is that there should be no distribution without unanimous consent. The defendants’ case is that distribution should be in accordance with the 1982 decision, which provided for compensation money to be distributed partly per capita and partly per stirpes. 10.The defendants’ pleaded case is that:
The compensation money 11.I deal with the counterclaim first. As noted, it is concerned with compensation money paid as a result of compulsory resumption of land. The land before resumption would have been covered by section 13 of the New Territories Ordinance, Cap. 97. I adhere to the views expressed in Kan Fat-tat v Kan Yin-tat [1987] HKLR 516 at 524 that such compensation money:
12.However, as Bokhary PJ pointed out in Re Lau Wai Chau at page 100:
13.A consequence of this is that an endowment in perpetuity of such compensation money for the purpose of ancestral worship would not be void. A similar trust unrelated to land in the New Territories would be void. See Ip Cheung Kwok v Ip Siu Bun and Ors [1988] HKC 437. 14.More importantly, Bokhary PJ and Chan PJ said in their joint judgment in Secretary for Justice v To Kan Chi and Ors [2000] 3 HKCFAR 481 at 493:
15.To Kan Chi was concerned with a fong “devoted to the purposes of due observance of the customary ceremonies of the temple Tsing Wan Kun and of maintenance of its temple buildings and temple properties”, here the Tong was established for the purpose of ancestral worship. I believe the same approach is applicable here so properties devoted to ancestral worship will remain so devoted unless and until the Tong, proceeding in a manner which conforms with Chinese law and custom, withdraws them from devotion to those purposes. 16.Hence the critical issue in this case is the validity and effect of the 1982 decision. Whether the plaintiffs by counterclaim can insist on distribution in accordance with 1982 decision (leaving aside the question of duress relied on by the defendants by counterclaim) must depend on the validity and effect of the 1982 decision under Chinese law and custom. 17.Mr. Kenneth Kwok SC, who appeared for the defendants in the appeal, relied on the following passage from the judgment of Bokhary PJ in Re Lau Wai Chau:
18.He submitted that the 1982 decision was an agreement to regulate the distribution of existing as well as any future compensation money and that it conforms to the requirements of Chinese law and custom. Moreover, between 1982 and 1997, there were 9 distributions made in accordance with the 1982 decisions. 19.In Lau Wai Chau, Bokhary PJ was dealing with the dissolution of a Tong. Mr Kwok submitted the same principle applies to a partial dissolution. I am prepared to assume for the purpose of this judgment that a tong could, by unanimous consent, agree to sell some of its land and distribute its proceeds. I am also prepared to assume for the purpose of this judgment that by an unanimous decision, they might decide on the mode of distribution of compensation money on resumption. But we are not concerned with the legality of the distribution made in 1982 pursuant to the 1982 decision. Nor are we concerned with the distributions made between 1982 and 1997. At issue here is, whether, even if the Tong had unanimously agreed in 1982 that in the event of resumption, the compensation money should be distributed in accordance with the agreed formula, that agreement would be binding in perpetuity until such time as the Tong unanimously agreed to vary it. Mr Kwok submitted that the 1982 decision and the fact that it had been acted on between 1982 and 1997 meant that a new rule of distribution in accordance with Chinese law and custom has evolved in modern times, and the rule is binding on all members of the Tong until it was modified or revoked by unanimous decision. 20.Deputy High Court Judge To had the benefit of expert evidence from Professor Anthony Richard Dicks SC and Professor Chang Wejen. In para. 97 of his judgment, he quoted this passage from the evidence of Professor Dicks:
21.This is what Professor Chang said in para. 39 of his report:
22.The evidence in cross-examination of Professor Chang quoted by the learned judge was that:
23.The effect of Professor Chang’s evidence is that only if the 1982 decision was lawful under Chinese law and custom, and it was accepted “generation after generation, time after time”, then it could become a binding set of rules. 24.The learned judge agreed with Professor Chang’s evidence that to be effective the 1982 decision “must be in compliance with the very purpose and spirit of the establishment of the tong” and that it had been accepted “generation after generation, time after time”. 25.Here the 1982 decision lasted at most 14 years. Nor was it in compliance with the purpose and spirit of an ancestral worship trust, which was that, as the learned judge held “t’ong property is meant to be indivisible, inalienable and perpetual”. 26.Mr Kwok further submitted that the 1982 decision could take effect as a contract under Hong Kong law. Hong Kong law, in the context, is the law applicable to Hong Kong other than Chinese customary law. I do not agree. I do not believe the parties to the 1982 agreement ever intended to enter into a contract under Hong Kong law. Moreover, as the quotation from the joint judgment of Bokhary PJ and Chan PJ shows, in order to withdraw the compensation money from devotion to ancestral worship purposes, the withdrawal had to be done in a manner which conforms with the requirements of Chinese law and custom. Lau Wai Chau is also authority that one should not assemble:
27.Moreover, a contract is only binding on parties to the contract. It is difficult to see how such a contract could be enforced against persons who were under age at the relevant time or a person such as the 5th defendant by counterclaim who was yet unborn at the time. I am of the view that the 1982 decision must take effect, if at all under Chinese law and custom. 28.Mr Kwok also submitted since the 1982 decision was agreed to by the heads of all the fongs, Lau Wai Chau is authority that consent of the members or unborns was not necessary, and the question of authority was irrelevant. 29.It is unnecessary to decide whether agreement by the heads of all the fongs was sufficient. Lau Wai Chau is consistent with the view that consent of members could be inferred and would usually be expressed through the respective heads of their fong. However, that I do not understand Lau Wai Chau to have decided that the head of a fong could disregard actual dissent by members of his fong. It is not necessary for me to decide this issue and I do not do so. 30.Mr Kwok also submitted, that the plaintiffs’ pleaded case in the statement of claim was that the Tong had its own customs and rules which had been followed over the years and that the members considered on annual basis at general (or audit) meetings on whether and if so, how to deplete the Tong’s assets. It appeared to be Mr Kwok’s submission that the learned judge ought to have decided on the effect of the 1982 agreement on the basis of the pleading and not have regard to any requirement of Chinese law and custom. But the plaintiffs’ statement of claim was only concerned with pai-ji and the reference to surplus income in the statement of claim must be so understood. The 1982 decision was raised in the counterclaim, and it is clear from the pleading in the amended reply and defence to counterclaim that it was the plaintiffs’ case that:
31.It was clearly and distinctly pleaded in para. 8A that the 1982 decision should be governed by Chinese law and custom law and that it was neither binding nor enforceable under them. Duress 32.I turn to consider the question of duress. The learned judge held that the 1982 decision was agreed to by Mr Tang Chik Lam under duress. It is unnecessary for me to review the facts which have been carefully set out in the judgment. There is no basis upon which I could overturn such primary findings of fact. 33.Mr Kwok referred us to the following passage in the judgment in Pao On and Ors v Lau Yiu Long and Ors [1980] AC 614 at 635:
34.Mr Kwok submitted that since no step was taken to avoid the 1982 decision for 14 years, indeed it had been acted on for 14 years, the learned judge was wrong to have found duress proved. The learned judge noted the delay in objecting to the 1982 decision. The learned judge, on the facts, was entitled to and did find that there was duress. 35.In any event, duress has limited relevance. If the 1982 decision took effect as a contract under Hong Kong law, it would only be binding on the parties to it. It could not take effect in perpetuity. Nor would it be binding on non-parties. Anyway, I have come to the clear conclusion that the 1982 agreement is not a contract and is not to be considered as such under Hong Kong law. The 1982 decision was (subject to duress) an attempt on the part of the members or the heads of the fong of this particular Tong to resolve a problem which had arisen in the management of the Tong. It has to be regarded in the context of Chinese law and custom. 36.Mr Kwok submitted, however, that even if the 1982 decision was made under duress, it had been affirmed. He referred to this passage on Chitty on Contracts, 29th Edition, Volume 1, para. 7-045:
37.Mr Kwok submitted the fact that there had been 9 distributions between 1983 and 1997, which were made according to the 1982 agreement, showed that the 1982 agreement had been affirmed. Mr Ambrose Ho SC, who appeared for the plaintiffs, objected to the point being taken. Mr Ho submitted that the point had not been taken at trial. Nor was it pleaded. 38.In Mr Kwok’s predecessor’s written closing submissions at trial which ran to 45 pages, no point was taken that even if the 1982 decision had been entered into under duress, it had been affirmed. Not surprisingly, the learned judge did not deal with affirmation in his 102-page long judgment. Had the point been taken at trial, the learned judge would have dealt with it. 39.This is a new point taken on appeal. We should not allowed it to be taken unless we are satisfied that there is no reasonable possibility that the state of evidence relevant to the point would have been materially favourable to the plaintiffs. Flywin Co Ltd v Strong & Associates Ltd [2002] 5 HKCFAR 356, 369. 40.Mr Kwok submitted, however, that given the fact that there had been 9 distribution over a period of 15 years, on the evidence we should have no difficulty in concluding that even if the 1982 decision had been entered into under duress, it had been affirmed. However, the situation is not so clear-cut. Much will depend, for example, on whether, and if so when, the duress had ceased. 41.Mr Ho has referred us to the evidence of the Tang Che Tai, the 1stplaintiff. It is clear from his evidence that certainly during the lifetime of his father, the duress might not have ceased. The evidence had not been fully explored. I would not entertain this new point. 42.Lastly, Mr Ho submitted that the 1982 decision could not be effective under Chinese law and custom because no necessity for distribution had been shown. Here, we are not concerned with voluntary sale of land, but with compulsory resumption. So the question of necessity for the disposition of land is irrelevant. But as Professor Chang said in his evidence, the compensation money could be re-invested in land. Whether there should be distribution, should also depend on whether there was necessity. Whilst it is important not to lose sight of the fact that Tong properties are meant to be held in perpetuity, the reality of the situation is that as long ago as 1970, Mills-Owens J in Tang Kai-chung and Anor v Tang Chik-shang and Ors [1970] HKLR 276 at 320 said:
43.It is unnecessary to decide whether the 1982 decision could also be impugn on the basis that no necessity for distribution could be shown. I prefer to rest my decision on the basis that the 1982 decision was not binding on the members of the Tong. It is unnecessary for me to decide whether members of the Tong acting unanimously could from time to time decide on the distribution of resumption money. Pai-ji 44.I turn to consider the question of pai-ji. Here, on the evidence, I have no doubt that the money the subject matter of the pai-ji, was derived from rental income, and hence covered by section 13 of the New Territories Ordinance. I also agree with the learned judge that the 1982 decision was not concerned with pai-ji. Whether there should be pai-ji in any particular year must depend on whether there was unanimous consent. It does not matter whether the consent must be given by the members or they could be given by heads of the fong. It is quite clear that in 2002 the managers were not unanimously agreed on such payment. Injunction 45.Since the judgment has been a further attempt by the defendants to distribute pai-ji. That was the subject of an interlocutory injunction granted by the learned judge. 46.In the circumstance, I would grant an injunction. We have been provided with a draft of the injunction subsequent to the hearing, which has incorporated some suggestions from Mr Kwok. The order is not made by consent since the defendants oppose any injunction. I would order that:
47.I would dismiss the appeal by the defendants with costs. Hon Cheung JA: 48.Apart from the issue concerning the applicable law on the compensation paid by the government on the resumption of the Tso land I agree with the judgment of Tang V.P. I. Applicable law 49.On this issue Judge To following the approach of Kan Fat-tat also known as Kan Fat and Kan Yin-tat also known as Kan Tat [19 [1987] HKLR 516 held that the applicable law governing the compensation is Hong Kong law. Different approach 50.In my view there is scope for a different approach on this matter. Whether one applies Chinese customary law or Hong Kong law on the compensation will of course depend on whether the compensation comes within the meaning of ‘land’ in the New Territories Ordinance (‘NTO’) (Cap. 97). Concept of Tso/Tong 51.But before one examines the meaning of ‘land’, it is appropriate to remind oneself the concept of Tso or Tong land. Tso or Tong land has been in existence in the New Territories well before the NTO was introduced. As pointed out in the case of Tang v. Tang [1970] HKLR 276 a Tso is an ancient Chinese institution of ancestral landholding whereby land derived from a common ancestor is enjoyed by his male descendents for the time being living for their lifetimes and so on from generation to generation indefinitely. Thus every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his lifetime; on his death his interest merges so as automatically to enlarge the interests of the surviving male descendants; thus his interest at any given moment during his lifetime depends on the number of male descendants then living and on his death it forms no part of his estate. Recognition of Chinese custom 52.This ancient institution is expressly recognized by the NTO to be governed by Chinese custom or customary rights. As Mr. Aker-Jones, the expert in Tang v. Tang said about the disposition of Tso land :
53.Viewed in this light and proceeding on first principles without going into the question of the statutory definition of land for the time being, the whole tenor of Tso or Tong land is based on Chinese traditions. It would be most odd if upon resumption of the Tso or Tong land, the compensation which is to be held by the same managers who are the custodians of the Tso or Tong land for the time being and imprinted with the same trust as the land itself, would be subject to a different system of law from the one which previously governs the land. In my view this cannot be the intention of the NTO. Intention of the NTO 54.The crucial question is whether the statutory definition of land in the NTO in fact brings about such a fundamentally different approach? In my view it does not. If the definition of land includes ‘rent’ from the land or ‘profits issuing out of land’, this clearly indicates that recognition is given to all matters that arise out of and relate to the land and there is no intention to exclude compensation from the meaning of land. 55.This case highlights the unnecessary complication when a different approach is adopted. Judge To held that he had to apply Chinese law in respect of the ‘mesne profit’ paid by the government to the Tong for the occupation of its land but Hong Kong law in respect of the compensation when both matters involved an acquisition by the government of the use of the land : one temporary, the other permanent. 56.The fact that section 8 of the NTO vested land in the New Territories in the Government does not preclude the compensation which is not in the nature of physical land from being treated as land. After all section 2 of the NTO is expressly stated to be ‘unless the context otherwise requires’. My approach 57.In my view there is no difficulty involved to regard the applicable law on compensation as Chinese customary law. If the land immediately before resumption is subject to Chinese customary law, the compensation which is only given by virtue of the land must likewise be subject to the same system of Chinese law. In my view in considering the compensation, one must not confine the examination to its existing state and say that because it is not in the nature of physical land therefore it is not land within the meaning of section 13 of the NTO. But rather to approach it on the basis that as the land itself has always been subject to Chinese law, the conversion into compensation does not change this characteristic : the recognition given by section 13 will continue to be observed after the resumption. Put in another way, in conducting this inquiry, it is wrong to approach it from the angle of an examination of the definition of land to see if ‘compensation’ somehow fits into the meaning of land, but rather approach it on the basis that the compensation which came from the resumed land has always been imprinted with this characteristic. 58.Further but without deciding, it may be arguable that ‘profits issuing out of land’ covers the compensation as well. Rule against perpetuity 59.In Kan v. Kan after holding the compensation did not fall within the meaning of land and therefore was subject to Hong Kong law, the Court further disapplied the rule against perpetuity which otherwise would be applicable. I fully appreciate that the Court adopted this approach to find a practical solution to the problem but I would say respectfully that it was a very cumbersome way of dealing with the matter. Inalienability is the hallmark characteristic of a Tso or Tong land. The British government in its wisdom expressly recognized this ancient landholding system when it leased the New Territories. The recognition was made by expressly allowing Chinese law to be applied to it and not by a legal fiction that it would unjust to apply the rule against perpetuity to this system of landholding. In my view to give full effect to this recognition, the most appropriate way is to apply Chinese law and custom to the compensation. 60.I do not see this approach would affect the well-being of the indigenous population of the New Territories nor would it upset any well-established practice. In practice, the indigenous population observed or purported to observe Chinese customs in matters concerning the division of compensation. Whether in any given case, the full effect and requirement of Chinese customs are observed is of course a different consideration. II. Circumstances for distribution 61.I would also like to express a view on the circumstances in which the Tso or Tong land or compensation can be distributed. Professor Chang discussed the question of whether a clan could be forced to alienate its property by government order. He stated in his report that
62.He then referred to the following three decisions of the Supreme Court of the Republic of China (大理院, Da-Li-Yuan) in 1915. During 1912 - 1927, after the establishment of the Republic of China but before the government promulgated its new statutes, the Supreme Court was entrusted to continue to apply Qing law. 63.In the first decision the Supreme Court (Appeal No. 771 of 1915) stated that
64.The Supreme Court confirmed the principle that clan land is meant to be indivisible and inalienable, but held that under certain compelling circumstances, or in its words “necessary conditions” (bi-yao qing-xing 必要情形), ancestral worship property could be disposed of if all members of the clan unanimously decide to do so. 65.In the second decision (Appeal No. 977 of 1915) the Supreme Court held that
66.The Supreme Court held that while normally for disposition of clan property unanimous decision by all members of the clan is essential, in practice such a decision could be valid if there is an established local custom or a provision in the clan’s charter permitting the decision be made unanimously by the heads of the fongs jointly representing all the members of the clan or by a majority of the clan members at a meeting called jointly by the heads of the fongs. 67.In the third decision later that year the Supreme Court further held
68.The Supreme Court held that where necessary conditions for division of clan property exists, any of the fongs, for some private gain to itself, stubbornly refuses to give its consent to the division, a court can, responding to the petition from the other fongs, permit the division. 69.Professor Chang’s comments on these decisions are as follows :
70.Judge To was of the view that,
71.I agree with Judge To’s view on the requirement of necessity and that the distribution of compensation on resumption should not be distributed as a matter of course. Compelling circumstances include ‘serious disputes with the management’ of the Tso（‘因管理而生重之糾葛’）. If the condition which enables distribution is set as high as one which requires ‘compelling circumstances’ then obviously it cannot mean any disagreement in the management but rather a deadlock. I do not regard that a disagreement on the mode of distribution i.e. whether the asset should be distributed equally among the fongs on the one hand or equally among the members on the other hand constitutes a deadlock in management because this proceeds on the basis that there should be distribution in any event. It begs the question as to why there should be distribution at all in the first place. 72.The fact that there had been distribution of Tso or Tong assets in the past in breach of this requirement does not mean that such a distribution is valid. The Court would only be able to adjudicate on the validity until such time as a challenge is raised. 73.Further the view expressed in Re Lau Wai Chau Tso (2000) 3 HKCFAR 98 by the Court of Final Appeal that a Tso can be dissolved by the unanimous consent of the heads of the fongs does not exclude the requirement that compelling circumstances must be present before the dissolution. The existence of ‘compelling circumstances’ was not an issue which required address in that case. 74.As to the requirement of unanimous consent it may well be due to modern circumstances this requirement may not be able to be faithfully observed : members of the Tso or Tong may no longer be living in the same locality and the members may in practice and in accordance with their clan customs delegate to the head of their individual fong to represent them in matters concerning the Tso or Tong. In the circumstances I would reserve the question as to whether a decision could only be made by the unanimous consent of all members or whether the unanimous consent of the fongs would be sufficient. In this case, irrespective of the issue of ‘compelling circumstances’ and unanimous consent, I am firmly of the view that the 1982 agreement was invalid because it affects the interest of future generations by reason of the agreement on the disposal of future compensation that may come into the hands of the managers. Hon Lam J: 75.I agree with the judgment of the Vice President. I only wish to add a few observations on the governing law in respect of the compensation money. 76.I agree that the definition of land under the New Territories Ordinance does not include compensation money as such. Hence, Chinese customary law cannot be applicable simply by reason of Section 13. I have read Cheung JA’s judgment in draft. With the greatest respect, I do not consider the expression ‘profits issuing out of land’ in the definition of land under Section 2 of the New Territories Ordinance to be wide enough to cover such compensation money. In the common parlance, profit does not carry with it the original capital value of the asset in question. In the context of Section 2, ‘profits issuing out of land’ is used in association with ‘rent’. This is another indicia suggesting that the ‘profits’ in question do not include anything representing the capital value of the land. 77.Nor do I find anything in the context of Section 13 alone that requires an extended meaning be given to the word ‘land’ in that section. 78.Having said that, it does not mean Chinese customary law cannot be applicable to compensation money paid to the Tong on account of resumption of New Territories land. Section 13 is not the only source of jurisdictional basis for the court in Hong Kong to apply Chinese customary law. 79.As a matter of logic and common sense, I agree with the observations of Cheung JA regarding the undesirability of having a different system of law governing the compensation money. In fact, as explained below, I will go further and say such a result will be unjust and oppressive. 80.Article 18 of the Basic Law provides that the law in force in Hong Kong shall be, amongst others, the laws previously in force in Hong Kong as provided for in Article 8. Article 8 says that the laws previously in force in Hong Kong includes common law and customary law. Hence, the restrictions on the application of the English common law and the rules on the applicability Chinese customary law previously in force before the 1 July 1997 shall continue to be the law in Hong Kong. 81.Before 1 July 1997, the restriction on the application of English common law to Hong Kong had been set out in Supreme Court Ordinance 1844 and the Application of English Law Ordinance 1966. Section 3 of the 1844 Ordinance reads:
82.Section 3 of the 1966 Ordinance provided that common law shall be in force in Hong Kong “so far as they may be applicable to the circumstances of Hong Kong and subject to such modifications thereto as circumstances may be required”. 83.It has been established in Hong Kong that these statutory provisions mean that English common law is not applicable if its application would cause injustice or oppression and in such circumstances, the court can apply Chinese customary law: see Re Tse Lai-chiu [1969] HKLR 159. 84.It follows that the non-application of a particular English common law principle to cases where it would cause injustice or oppression is part of the law previously in force in Hong Kong prior to 1 July 1997. In such situations, the court in Hong Kong can apply Chinese customary law. As explained above, by reason of Articles 8 and 18 of the Basic Law, this remains to be the position today. 85.The underlying rationale for holding that the rule against perpetuities should not be applicable to Tso or Tong holding New Territories land is that it would destroy these types of social institutions, see Tang v Tang [1970] HKLR 276. 86.If the common law rule against perpetuities were to apply to the compensation money payable on resumption of Tso or Tong land in the New Territories, it would bring chaos to the administration of the Tso or Tong. Mr Ho submitted that in such event, the ancestral worship trust will fail and there comes into existence a resulting trust in favour of the settlor. But there can be all sorts of difficulties in identifying the settlor (as pointed out by Mr Ho, the name of the Tso might not be the name of the settlor) and the rightful beneficiaries to his estate. It may take lenghty costly proceedings by way of administration actions or other forms of legal actions to resolve the matter. Such proceedings may cause serious dissension amongst the members which can be destructive to the social cohesion essential to the clan. In my view, the imposition of such a burden on the Tso is unjust and oppressive. This provides the jurisdictional basis for holding that the rule against perpetuities shall not be applicable to Tso holding compensation monies on account of resumption of lands in the New Territories. Similar view was held by Deputy Judge Tang QC (as he then was) in Kan v Kan [1987] HKLR 516 at p.527. 87.Huggins J observed in Wong Kam Ying v Man Chi Tai [1967] HKLR 201,
88.Hence, Chinese customary law should continue to apply to a Tso or Tong that originally held land in the New Territories after the land had been changed to other form of assets. 89.This analysis coincides with the observations of the Court of Final Appeal in Secretary for Justice v To Kan Chi [2000] 3 HKCFAR 481 at 493 cited at paragraph 14 of the judgment of the Vice President and His Lordship’s conclusion at paragraph 15. It is also consistent with Cheung JA’s test on applicability of Chinese customary law. 90.I also respectfully agree with Cheung JA’s observations on the requirement of necessity and unanimous consent. Hon Tang VP: 91.The appeal is dismissed with costs.
Mr. Kenneth H. W. Kwok, SC & Mr. James Tze, instructed by Messrs Gary Lau & Partners, for the 1st, 3rd and 4th Defendants in original action and the 1st, 3rd and 4th Plaintiffs in counterclaim. Mr. Ambrose Ho, SC & Mr. Paul H. M. Leung, instructed by Messrs Rowdget W. Young & Co., for the 1st to 3rd Plaintiffs in original action and the 1st to 5th Defendants in counterclaim. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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