Yau Pak Hin and Another v. Ho Lung Thomas Ignatius

HCMP 628/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 628 OF 2012

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BETWEEN

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J U D G M E N T

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Introduction

1.The 2^nd named plaintiff is the registered owner of Lot No 272RP in Demarcation District 41(“DD 41”) in the New Territories.

2.The 1^st named plaintiff is the registered owner of Lot No 272ARP in DD 41.

3.The 1^st named and the 2^nd named plaintiffs are the registered owners of Lot Nos 259, 267, 324 and 925 all in DD 41 as tenants in common in equal shares.

4.Thus, the plaintiffs are, between them, the owners of the properties known as Lot Nos 259, 267, 272RP, 272ARP, 324 and 925 all in DD 41 (“the properties”).

5.When the plaintiffs intended to sell the properties recently they were informed by their former solicitors that on checking the title deeds and documents in the Land Registry there was a stale mortgage made on 28 February 1938 registered in the Land Registry by Memorial No. N102147 (“the mortgage”).

6.There is no document evidencing any discharge or redemption of the mortgage.

The proceedings

7.By the originating summons issued on 2 April 2012 the plaintiffs brought these proceedings against two defendants namely, Fuk Lai Kung as the 1^st defendant and Ho Lung Thomas Ignatius (“Ignatius Ho”) as the personal representative of the estate of Yau Chun Wing, the trustee of Fuk Lai Kung as the 2^nd defendant.

8.By the amended originating summons filed on 3 December 2012 (“the amended OS”) the plaintiffs amended the originating summons by removing Fuk Lai Kung as the 1^st defendant and leaving Ignatius Ho as the personal representative of the estate of Yau Chun Wing , the trustee of Fuk Lai (or Loi) Kung as the only remaining defendant (“the defendant”).

9.The relief sought against the defendant in the amended OS is for a declaration that the mortgage is no longer subsisting and is no longer capable of taking effect by virtue of section 19 of the Limitation Ordinance, Cap 347.

10.There are also claims for declarations that the rights of the defendant to recover the principal sum of money secured by the mortgage and the interest payable in respect of the principal sum of money have been barred and/or extinguished by section 19 of the Limitation Ordinance.

11.There is also a claim for costs against the defendant.

12.The defendant disputes that the plaintiffs are entitled to seek the relief as sought against him.

13.For the purposes of the hearing of the amended OS the parties have filed evidence.  By the order made by Au Yeung J on 27 March 2013 it was ordered, inter alia, that the amended OS was to be heard solely on the evidence filed without cross‑examination.

14.The 2^nd named plaintiff Yau Fat Sun in his 1^st affirmation states that to the best of his knowledge the properties had been used by his family all along since at least when he was 10 years old namely, since about 1945.  All that time there was no claim or demand by any mortgagee or anybody else for payment under the mortgage.  No one had ever approached him to demand for repayment of the principal sum or interest in respect of the mortgage.  These facts are undisputed and I find them proved.

15.Under the terms of the mortgage the mortgage was to be repaid on 28 February 1939.

16.By section 19(1) of the Limitation Ordinance any action to recover the principal sum of money secured by the mortgage would have been time barred after the expiration of 20 years from the date when the right accrued namely, by 28 February 1959.

17.By section 19(5) of the Limitation Ordinance any action to recover arrears of interest, if any, payable in respect of the mortgage would have been time barred after the expiration of 6 years from the date on which the interest became due.

18.It seems to me that it is reasonable to assume that the mortgage had long been discharged as was assumed in Fung Kam Cheung v Kwok Yiu Wing [1991] 1 HKC 321.

19.In any event, it is clear that any action to recover the principal sum of money under the mortgage or interest thereon has been time barred a long time ago under the Limitation Ordinance.  Mr Lam, for the defendant, did not dispute this.

The main issue

20.The main issue between the parties is whether the defendant has been properly sued as a defendant in these proceedings.

The mortgage

21.The mortgage is evidenced by the instrument dated 28 February 1938 and registered by Memorial No. 102147 which was registered on 28 February 1938 (“the instrument”).

22.A copy of the instrument is at pages 149 and 150 of the Bundle.  It consists of two pages.

23.The first page of the instrument records that it was received at the District Office at Tai Po and registered as Memorial No. 102147 (“the memorial”) on 28 February 1938.  It was certified as a correct memorial by the District Officer.

24.The instrument records the date of the mortgage as 28 February 1938.  The names of the parties to the mortgage are recorded as:

“Yau Shiu Shum of Sam Tsuen mortgagor

Fuk Lai Kung (T) Yau Chun Wing of Tong To mortgagee”

25.The instrument records the land or premises affected as Lot Nos 259, 267, 272, 324, and 925 in DD 41.

26.It also records that $400 was paid to the mortgagor by the mortgagee for securing payment on 28 February 1939 of $400 with interest at $48 per year payable yearly.

27.The name Yau Chun Mui was recorded in Chinese as the name of the witness.

28.The parties signing the memorial in Chinese were Yau Shiu Shum and Yau Chun Wing.

29.The second page of the instrument (at page 150 of the Bundle) is a List of Members.  This was supposed to be a List of Members of a Tong or Tso as is apparent from this page.

30.As regards the item “Name of Tong or Tso” in English there was recorded the Chinese characters for “Fuk Loi Kung”.

31.As regards the item “Name of Managers or Trustees” in English, there was recorded in Chinese the words translated as “Sze Lei Yau Chun Wing”.

32.As regards the item “Address” in English, there was recorded in Chinese the words translated as “Sam Tsuen Tong To”.

33.There is no dispute that Sam Tsuen and Tong To are villages in the New Territories.

34.Under the column “Names of Members as follows” in English is a line containing Chinese characters which, I was informed by Counsel, means “The names of the persons who have a share in the said … are as follows”.  Mr Lam emphasized that in the line containing Chinese characters there was a blank after “the said” thereby indicating that there was some uncertainty as to what Fuk Lai Kung was.

35.The names of the members were written in Chinese.  There were 4 names recorded namely, Yau Chun Wing, Yau Shiu Cheung, Lam Wah Sum and Lee Shing Wah.

36.It is plain that the members in the List of Members on the second page of the instrument consisted of persons with different surnames.  It is highly unlikely that Fuk Lai (or Loi) Kung (“FLK”) was a Tso or Tong.  Indeed, it is common ground that FLK was neither a Tso nor a Tong.

37.In Leung Kuen Fai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso [2002] 2 HKLRD 705 Deputy Judge Lam (as he then was) said at paragraph 16 of his judgment:

“ The nature of a Tso and the interest of its members

16. Regarding the nature of a Tso, a good starting point is the often quoted dicta of Mills‑Owens J in Tang Kai Chung & Another v Tang Chik Shang [1970] HKLR 276 at pp 279-280:

“Speaking generally, a Tso may be shortly described as an ancient Chinese institution of ancestral land‑holding whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetimes and so 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.”

His Lordship further observed at p 294, that a Tso was a mode of devolution unknown to the English common law.  It was preserved by s 13 of the New Territories Ordinance and the rule against perpetuities was held to be inapplicable (see also Kan Fat Tat v Kan Yin Tat [1987] HKLR 516).  At p 304, Mills‑Ownes J held that a Tso was a trust and the registered managers were trustees within the meaning of the Trustee Ordinance (Cap 29).”

38.According to the 1^st affirmation of Fu Mau Ping, on behalf of the plaintiffs, it was originally thought that FLK was a Tso or Tong but upon further enquiry this was found to be untrue.  The North District Office, which is the only authority for keeping a record of a Tso or Tong, has no information regarding FLK.

39.I am satisfied that FLK was neither a Tso nor a Tong.

40.If it was not a Tso or a Tong then what was FLK?

41.The plaintiffs’ primary case is that FLK was a natural person.  Their case is that Yau Chun Wing signed the memorial as trustee for the person known as FLK.

42.I reject the submission that FLK was a natural person.  The second page of the instrument contradicts this.  FLK was stated to be the name of the Tong or Tso.  It may well be that the person filling in that page assumed that FLK was a Tong or Tso but, as I have said, FLK was neither a Tong nor a Tso.

43.Also, there are 4 names mentioned in the List of Members.  This must refer to the members of FLK.  Yau Chun Wing is mentioned as the “Sze Lei” which means manager.

44.It seems to me that the evidence shows that FLK was not a natural person but an organization or a body of the 4 persons named in the list.

45.In the context of a Tso or Tong, the Courts have held that a “Sze Lei” or manager is a trustee of the Tso or Tong.  There is no dispute as to this.  However, in my view, there is no valid basis for saying that a “Sze Lei” must necessarily be regarded as a trustee of an organization or a body which is neither a Tso nor a Tong.  It seems to me that a “Sze Lei” or manager may or may not also be a trustee.  That depends on the facts.

46.The only thing that the plaintiffs can point to as suggesting that Yau Chun Wing was a trustee is the use of the letter “T” in the first page of the instrument where as regards the names and addition of parties of the mortgage it is stated:

“Fuk Lai Kung (T) Yau Chun Wing of Tung To mortgagee”

47.It may well be that the person filling in the memorial believed that Yau Chun Wing was the trustee of FLK.  But there is no evidence to show the basis on which it can be said that Yau Chun Wing was a trustee of FLK with the 4 named persons as beneficiaries.  There is no evidence as to what the nature of the trust was, what the trust property was, when and how Yau Chun Wing was appointed as a trustee.

48.There is simply no evidence apart from the letter “T” appearing in the instrument to support the plaintiffs’ case that Yau Chun Wing was a trustee of the 4 persons in the organization or body known as FLK.

49.I am not satisfied on the evidence that Yau Chun Wing was a trustee of the 4 persons mentioned in the List of Members.  FLK may have been a partnership of the 4 named persons or may even have been a non‑legal entity of the 4 named persons.  There is simply no evidence as to what it was.

50.In the event, however, that this matter goes further and it is held that Yau Chun Wing was indeed a trustee of the 4 named persons in the organization or body known as FLK, that does not, in my view, assist the plaintiffs in the relief sought against the defendant.

51.The undisputed facts are that Yau Chun Wing died intestate on 8 November 1967.  Letters of administration of Yau Chun Wing’s estate was granted to Aston Hugh also known as Yau Ying Po (“Yau Ying Po”) on 6 October 1975.  Yau Ying Po was a son of Yau Chun Wing.

52.Yau Ying Po married Ignatius Ho’s mother Hugh Mona Maud alias Chin Nuke Gin (“Chin”) when Ignatius Ho was about 13 years old.  Yau Ying Po was Ignatius Ho’s step‑father.

53.Yau Ying Po passed away on 17 November 1992.  He had appointed Chin to be the executrix and trustee of his estate in his last Will and bequeathed all his real and personal estate to his wife Chin.  Probate was granted to Chin on 8 January 1998.

54.On 15 May 2001 letters of administration de bonis non were granted to Chin in respect of part of the estate of Yau Chun Wing which was left unadministered and as set out in the schedule to the letters of administration de bonis non.

55.Chin passed away on 11 February 2006.  She had appointed her son Ignatius Ho to be the executor and trustee of her estate in her last Will and she bequeathed all her real and personal estate to him.

56.On 5 February 2007 letters of administration de bonis non were granted to Ignatius Ho in respect of part of the estate of Yau Chun Wing which was left unadministered and as set out in the schedule to the letters of administration.

57.The above facts are undisputed and I find them proved.

58.I would observe that the letters of administration de bonis non granted to Ignatius Ho was a limited grant limited to the property in the estate of Yau Chun Wing which were left unadministered and as set out in the schedule.  It was not a general grant of letters of administration to administer the estate of Yau Chun Wing.

59.The undisputed evidence shows that Ignatius Ho does not know what FLK is.  He emphasizes that he had never agreed to take up the role of Yau Chun Wing as the manager or the trustee of FLK and he has not acted as such.

60.Ignatius Ho maintains the stance that the plaintiffs have wrongfully sued him as the personal representative of the estate of Yau Chun Wing deceased and the trustee of FLK.

61.It was submitted by Mr Shum, for the plaintiffs, that as the defendant was the personal representative of Yau Chun Wing, the defendant was bound to be liable for the trusteeship created by Yau Chun Wing.

62.The plaintiffs rely on:

(1)     O.15; r 14 RHC and

(2)     Section 20(2) of the Trustee Ordinance Cap 29.

63.O.15, r 14 (1) RHC provides:

“ Any proceedings, including proceedings to enforce a security by foreclosure or otherwise, may be brought by or against trustees, executors or administrators in their capacity as such without joining any of the persons having a beneficial interest in the trust or estate, as the case may be; and any judgment or order given or made in those proceedings shall be binding on those persons unless the Court in the same or other proceedings otherwise orders on the ground that the trustees, executors or administrators, as the case may be, could not or did not in fact represent the interests of those persons in the first‑mentioned proceedings.”

64.As the note 15/14/1 in Hong Kong Civil Procedure 2013 states:

“ This rule enables trustees, executors and administrators in their capacity as such to sue or be sued without their beneficiaries being joined, but so as to bind them.”

65.And at note 15/14/2 in Hong Kong Civil Procedure 2013 it is stated:

“ Where an action is brought by a stranger in respect of property vested in trustees, the trustees sufficiently represent all persons interested, and the beneficiaries should not be joined …”

66.If, contrary to my view, Yau Chun Wing was a trustee of FLK, I fail to see how O.15, r 14 RHC can assist the plaintiffs in their claims against the defendant.

67.The purpose of O.15, r 14 RHC is to enable trustees, executors and administrators in their capacity as such to sue and to be sued without joining beneficiaries so as to bind the beneficiaries.  Even if Yau Chun Wing was a trustee of the 4 named persons in 1938, there is no evidence as to what has happened to the trust after 1938.  Was the trust still in existence when these proceedings were instituted?  Who are the beneficiaries to be bound?  There is no evidence of any of these matters.

68.Section 20 of the Trustee Ordinance provides:

“(1) Where a power or trust is given to or imposed on 2 or more trustees jointly, the same may be exercised or performed by the survivors or survivor of them for the time being.

(2) Until the appointment of new trustees, the personal representatives or representative for the time being of a sole trustee, or, where there were 2 or more trustees of the last surviving or continuing trustee, shall be capable of exercising or performing any power or trust which was given to, or capable of being exercised by, the sole or last surviving or continuing trustee, or other the trustees or trustee for the time being of the trust”

69.It seems to me that Section 20(2) of the Trustee Ordinance also relied on by the plaintiffs does not assist the plaintiffs.  Section 20(2) provides that until the appointment of new trustees, the personal representative for the time being of a sole trustee shall be capable of exercising or performing any power or trust. It permits the personal representative of a sole trustee to exercise or perform a power or trust.  It does not compel him to do so if he does not want to do it.

70.It is important to bear in mind that Ignatius Ho was never appointed a trustee of FLK.  He has never accepted any appointment as a trustee either of FLK or of Yau Chun Wing.  He has not elected to act as a trustee and he cannot be compelled to do so (In re Benett [1906] 1 Ch 216, In re Sharman’s Will Trusts [1942] 1 Ch D 311.)

71.As I have said, the letters of administration de bonis non granted to Ignatius Ho was only a limited granted limited to administering the unadministered estate of Yau Chun Wing.

72.The plaintiffs also relied on a letter dated 10 September 2011 written by Ignatius Ho when he was acting in person which was sent to the plaintiffs’ former solicitors.  There he said, inter alia, that he was the sole administrator and representative of Yau Chun Wing.  In my view, that may have been what he thought but in fact by the letters of administration of 5 February 2007 it is plain that he was only an administrator de bonis non with a limited grant.

73.I do not think that the plaintiffs can place much reliance on what Ignatius Ho said in that letter.  In that letter he also took the mistaken view that Yau Chun Wing was the mortgagee and not the trustee under the mortgage and that FLK was the trustee at that time.

74.In my view, the plaintiffs reliance on O.15, r 14 RHC and section 20(2) of the Trustee Ordinance is misplaced.

75.In my judgment, the claims against the defendant in these proceedings have not been established.

76.I dismiss the plaintiffs’ claims against the defendant.

77.I also make an order nisi that the costs of the proceedings be costs to the defendant such costs to be taxed if not agreed.

Mr Kenneth K H Shum, instructed by Kevin Li & Co, for the plaintiffs

Mr Allen Lam, instructed by S H Chan & Co, for the defendant