Marie Fong Yee v. Lilly Fong Yee and Others

Civil Appeal No. 161 of 1996

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H E A D N O T E

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Succession. Construction of will - general power of appointment - whether cut down - gift over.

IN THE COURT OF APPEAL

1996, No. 161
(Civil)

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Coram: Hon Nazareth V.-P., Bokhary and Liu JJ.A.

Date of hearing: 5 December 1996

Date of handing down of judgment: 22 January 1997

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J U D G M E N T

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Nazareth V-P:

1. This is an appeal against the decision of P. Chan J given upon the originating summons issued by the executor of the estate of Mr Charles Fong Yee. It was for the determination of questions which arose from the administration of his properties in Hong Kong.

2. Mr Fong Yee ("the father") died in Jamaica on 16th October 1936. He left surviving him his wife ("the mother") and the following five children:

(1) Fook Lyn Fong Yee, who was the original plaintiff in this action, but has since died. His widow and sole executrix ("Marie") was thereupon substituted as plaintiff.

(2) Allan who is also deceased and is now represented by his widow and sole executrix ("Agnes") who is the 4th defendant;

(3) Lilly, the 1st defendant;

(4) Violet, the 2nd defendant;

(5) Barrington, the 3rd defendant.

3. By his will dated 15th October 1936, the father appointed the mother as his sole executrix. Probate was granted in Jamaica and resealed in Hong Kong on 1st March 1954. The mother died in Jamaica on 7th July 1956. She left a will dated 13th January 1947 appointing as executors of her will two of the sons, Fook Lyn and Allan.

4. The father had certain properties in Hong Kong, namely, Nos. 48, 50 and 52 Ki Lung Street, Kowloon. By his will, the father gave and devised all his "real estate wheresoever situate" including certain Jamaican properties and the Hong Kong properties unto the mother -

"for the term of her life with power to [the mother] to appoint and transfer or convey the fee simple in the said land or any of them or to Mortgage or lease any or all of the said lands or any part thereof from time to time to any person or corporation by any instrument under the Registration of Titles Laws or otherwise and from and after the death of the [the mother] and subject to any such sale settlement Mortgage or lease then to [his children specifying the five of them by name] as joint tenants in fee simple."

5. The mother did not during her lifetime make any appointment, transfer or conveyance of any of the properties pursuant to the terms of the father's will. By her own will, she gave and devised -

"the residue of [her] real and personal estate whatsoever and wheresover situate to [her] three sons [specified by name] in equal shares as to the personalty absolutely and as to the realty as tenants in common in fee simple."

The mother did not specifically refer to the Hong Kong properties or to the father's will or the power contained in it.

6. The main questions that fell to be determined at the hearing of the originating summons were:

(1) whether under his last will, the father had conferred upon his wife, the mother, a general power of appointment in respect of the Hong Kong properties; and

(2) whether the mother had validly exercised the power so conferred and in particular whether the residuary gift in her last will constituted an effective exercise of her power.

7. The summons came before P. Chan J. He concluded that the mother was given a life interest in the properties; a power of appointment in relation to them which could be exercised in a number of ways, including a bequest by will; and that her will was a valid exercise of that power.

8. Violet, the 2nd defendant, now appeals to this Court against the order of P. Chan J. She asks for it to be set aside and for this Court to substitute declarations that the power of appointment conferred upon the mother was not a testamentary power of appointment, and that it was exercisable only during the mother's lifetime and could not be exercised after her death by or through her will. The issue therefore in this appeal is whether the power of appointment was exercisable during the mother's lifetime only and whether the residuary gift in her last will to her three sons constituted an effective exercise of her power of appointment.

9. The practical implications are of course that if the residuary gift was valid then the properties go only to the three sons or their heirs; if not valid then, on the appellant's contentions, Lilly, Violet and Barrington would be entitled to the properties as the surviving joint tenants.

10. Mr John Griffiths QC who, with Mr Barrie Barlow, appeared for the appellant, Violet, submitted that the judge's construction focused unduly upon the means of exercising the mother's power of appointment rather than upon the scope or extent of the power itself, and that this led him into error. He contended that the mother's power of appointment was a power inter vivos and could not be exercised by will. He relied upon the following authorities and submissions. First, that the statement in Halsbury's Laws of England, 4th ed., Vol. 50, para. 559 that:

"A bequest to a donee for his absolute enjoyment during his lifetime, and to be disposed of as he thinks fit after his death, is equivalent to a gift for life with general power of appointment by deed or will, and on the power being exercised in his own favour the donee is entitled to the bequest absolutely. If there is no right of disposition on death, the donee has a general power of appointment inter vivos, and the unappointed part passes under a gift over."

However, it is plain, from that statement itself, and even more so from the authorities cited in the relevant footnote, that it is qualified by the words "If there is no right of disposition on death"; moreover that neither say that where there is a gift over, the appointment may not be made by will.

11. Mr Griffiths sought also to rely upon the point made in Jarman on Wills, 8th ed., at p. 1340 that "a gift in default of appointment is prima facie vested, subjected to be divested by an exercise of the power". The short answer to that must be that if the bequest in the mother's will was a valid appointment, the point does not avail. Moreover, the bequest itself was by the terms of the will "subject to any such ... settlement ...", and "settlements by private individuals may be made ... by will" (Halsbury's Laws of England, 4th ed., Vol. 42, para. 612).

12. In the light of those observations, I turn to the central question of whether there was a testamentary power of disposition given to the mother by the father's will. The power, it will be recalled, was conferred in the following words "...power to [the mother] to appoint and transfer or convey the fee simple in the lands ...". Mr Griffiths submitted that these words clearly denote an actual disposition of the title to the land, rather than a determination as to who should be beneficially entitled to such a transfer and conveyance after the mother's death. That determination, he contended, was made in the father's will itself, i.e. to his five children as joint tenants in fee simple. Mr Griffiths concedes that "appoint" imports a general power of appointment and that for such to be cut down would require express words. Those, it is implicit in his submission, are the words "and transfer or convey", which require any appointment to be linked to a transfer or conveyance. "And transfer or convey" he stressed is the language of the Torrens system of registered title, with "transfer" applicable to registered land and "convey" to unregistered land. Moreover, he contended eloquently, if somewhat speculatively, that having endured the ravages of the recession not long before making his will, the father would have wanted to ensure that there was adequate provision for the mother and, subject to that, to provide equally for his children. Accordingly, that such a construction of the father's will would have "the not unimportant merit of effecting the obvious and expressed intention of the testator" (per Joyce J in Re Sandford [1901] Ch 939).

13. I have to say that I do not find what is contended for, to be the obvious intention nor the expressed intention of the father. Mr Denis Chang QC, with Mr Chan Chi-hung, appeared for the 1st respondent. His submissions were adopted by Mr Wong Ting-kwong for the 2nd respondent. As Mr Chang contended, the construction argued for by Mr Griffiths would deny the word "appoint" any real meaning since "transfer" and "convey" would be all that was necessary; if an appointment were made it would have no effect without a transfer or conveyance. By appointing to herself and then bequeathing the properties the mother could have easily frustrated any intention that if not needed by the mother, the properties were to go to the children. She could also have done so by declaring herself a trustee for other beneficiaries and, if, indeed, it was the father's intention that apart from the mother's needs, the children were to take equal shares of the remainder, it would have been quite simple for his legal advisers to provide for that in express terms, and one would have expected them to have done so.

14. Moreover, upon the expert evidence put in by the appellant, "the issues of whether or not [the mother] had a general power of appointment ... would be determined by the principles of common law existing in England in 1936" and not, for example, by any statutory scheme of registered title.

15. However all that may be, what emerges clearly is that it cannot be said that the general power to appoint had been expressly cut down in the manner contended. It follows that the judge was right in his conclusion that the mother's power of appointment was not a power that was purely inter vivos.

16. Turning to the ancillary matter of the means of exercising the power of appointment, it was inter alia contended on behalf of the appellant that the reference to "settlement" in the following expression already quoted from the father's will "and subject to any such sale, settlement, mortgage or lease" supported the appellant's construction. However, if there was any such support, it can only have been negligible, for settlement is equally consistent with an appointment and, as already pointed out, can be made by will.

17. However that may be, as the judge accepted, under s. 27 of the Wills Act 1837 (and the corresponding s. 22 of the Jamaican Wills Act 1840 to the same effect) the mother's bequest to the three sons operated as an execution of the power of appointment. Moreover, the exercise of the power of appointment by will, as pointed out by the judge, was not inconsistent with the following words in the father's will "appoint ... by any instrument under the Registration of Titles Laws or otherwise" in that "otherwise" must embrace a will, as must also the word "includes" in the Jamaican Registration of Titles Acts.

18. For the foregoing reasons, it seems to me that the judge was quite right in concluding that under his will the father gave the mother a general power of appointment in respect of the Hong Kong properties, the exercise of which power was not restricted to her lifetime, and that the residuary gift in her will constituted an effective exercise of the power.

19. The appeal must, therefore, fail and I would dismiss it with an order nisi that the respondents are to have their costs of the appeal to be paid by the appellant.

Bokhary JA:

20. Where there is a devise or legacy of a life interest with a power of disposition conferred upon the devisee or legatee and the will specifies a gift over, there is no presumption either that the power is confined to inter vivos dispositions or that it extends to testamentary ones. Whether it is confined to the former or extends to the latter is a question of construction without any rule leaning towards one or the other.

21. That being so, the question (rhetorical or otherwise) posed by leading counsel for appellants "If the widow was allowed to dispose of the property by her own will, why have a gift over at all?" is really nothing to the point.

22. Having given the matter the best consideration I can, I have come to the conclusion that leading counsel for the 1st respondent is correct in his argument (which counsel for the 2nd respondent adopted) that the power of deposition here extends to testamentary ones.

23. There is here, as I read the will, a general power of appointment which by its nature covers testamentary depositions unless cut down by express words or, at least, words of necessary implication. And I find no such words.

24. Here the power is spelled out as one to "appoint and transfer or convey".

25. Faced with the presence of the word "appoint" and the difficulty that the words "transfer or convey" would of themselves suffice for inter vivos dispositions, leading counsel for the appellants skilfully argued that the word "appoint" is there to show or emphasise that the widow had a choice as to the person or persons to whom to transfer or convey.

26. But that is really no answer at all. For she did not have to transfer or convey at all unless she chose to do so. And the power to transfer or convey carries with it, by its very nature, a choice as to, among other things, the person or persons to whom to transfer or convey.

27. I, too, would dismiss this appeal with an order nisi as to costs in the respondents' favour and, of course, also with my thanks to counsel on both sides for their assistance.

Liu JA:

28. I agree.

Representation:

Mr John Griffiths CMG QC and Mr Barrie Barlow (M/s Robert W.H. Wang & Co) for the Appellant

Mr Denis Chang QC and Mr Chan Chi-hung (M/s Philip Chan & Co) for the 1st Respondent

Mr Wong Ting-kwong, Peter (M/s S.Y. Chu & Co) for the 2nd Respondent