Pang Kam Wah v. Pang Kam Hung
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HCA1550/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1550 OF 2008 ------------------------ BETWEEN
------------------------- Before : Hon Poon J in Chambers Date of Hearing : 24 June 2009 Date of Decision : 10 July 2009 ------------------------ D E C I S I O N ------------------------ Introduction 1.The plaintiff and the defendant are brothers. They executed a trust dated 10 February 1999 (“the Trust”) whereby the plaintiff entrusted to the defendant 8 items of properties with a total value of HK$3,440,000, including :
2.The Trust provided :
3.On 19 September 2008, the plaintiff commenced the present action seeking to enforce the Trust. 4.The defendant raised three points :
5.The plaintiff now applies to have the following question of law determined under Order 14A, Rules of the High Court :
6.If the answers to the two questions of law are in the affirmative, the plaintiff seeks an order that the paragraphs 4-6 and 12 of the defence (relating to the illegality point) be struck out; and final judgment be entered for his claims for Property 3 and 7. Illegality 7.At the outset of the hearing, Mr Lam, counsel for the defendant, told me that the intention point is really a corollary of the illegality point, which means that they stand or fall together. That being the case, the two questions of law raised by the plaintiff really boil down to one : is the plaintiff entitled to enforce the Trust despite the alleged fraudulent scheme? 8.The law is well established. Where an express trust was created for an ulterior unlawful purpose, the beneficiaries, including the settler himself, who were parties to the illegal purpose, may enforce the trust in their favour provided that they do not need to rely on the illegal purpose to establish the trust : Tinsley v Milligan [1994] 1 AC 340 at p. 375, followed in Best Sheen Development Ltd v Official Receiver [2001] HKLRD 866 at p. 874. See also Lewin on Trusts, 18th Edition, paras. 5-30 to 5-32 at pp. 133 and 134. 9.Here, the plaintiff does not need to rely on the alleged fraudulent scheme in order to prove or enforce the Trust. It follows that the illegality point is simply not a defence. 10.Mr Lam relied on Tsui Hoi Pan v Wong Chun Ling, CACV150/1999, unreported, 1 December 1999 (CA) and argued that the defendant is entitled to take the illegality point. There, the plaintiff desired to borrow money from the bank to finance the purchase of the property in question. The bank was unwilling to do so. He therefore enlisted the defendant, to whom the bank was willing to grant the necessary loan as purchaser of the property. The property was registered in the defendant’s name but the plaintiff remained the beneficial owner. But that was not disclosed to the bank. The plaintiff’s claim was based on an implied resulting trust. The defendant contended that the plaintiff’s claim was incurably bad because of illegal purpose of defrauding the bank and should be struck out. The Court of Appeal rejected the argument, applied the principle of Tinsley v Milligan and ruled that the plaintiff’s claim should not be struck out. Geoffrey JA then noted that it was the defendant who wished to rely on the illegality to rebut the presumption of implied resulting trust and observed that it was a somewhat difficult point. Thus when Tsui Hoi Pan v Wong Chun Ling is properly understood, it does not assist the defendant here. 11.For these reasons, I will answer the two questions set out in paragraph 5 above in the affirmative. Paragraphs 4–6 and 12 of the defence are liable to be struck out because they do not disclose any reasonable defence. Summary judgment 12.I next turn to the plaintiff’s application for summary judgment. 13.Mr Lam submitted that the defendant is still willing to return Property 3 to the plaintiff provided that he pays all the tax incurred. The plaintiff through his counsel, Ms Ho, agreed. On that consensus, Mr Lam has no objection to the court entering judgment on Property 3 with the proviso that the plaintiff is to pay all the tax. 14.As to the balance of the claims, the defendant relied on the settlement point. The plaintiff denied that they had entered into the settlement as alleged. The payment of RMB$430,000 was made in connection with the shares of the company listed in item 2 of the schedule to the Trust. 15.The parties have put forward different versions of the events. I will not dwell on the details. Suffice it to say that I have already considered all the relevant evidence. In my view, the factual disputes cannot be resolved on affidavit. The matter needs to go to trial. Summary judgment is inappropriate for the rest of the claims. Orders 16.For the above reasons, I will strike out paragraphs 4–6 and 12 of the defence, enter judgment for the plaintiff on his claims for Property 3 provided that he pays all the tax incurred, and give unconditional leave to defend on the balance of the claims. 17.I had already heard counsel on costs. The costs order should duly reflect how I disposed of the applications before me. Taking the matter in the round, I order that the plaintiff shall have 75% of the costs, to be taxed if not agreed.
Ms Jane T.C. Ho, instructed by Messrs Edmund W.H. Chow & Co., for the Plaintiff Mr Lam Siu Wah, Joseph, instructed by Messrs C.C. Lee & Co.,for the Defendant |
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