MA WAH YAN AND OTHERS v. DHARMA REALM BUDDHIST ASSOCIATION, INC.

CACV 179/2016

[2019] HKCA 100

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 179 OF 2016

(ON APPEAL FROM HCA 1190, 1191, 1192 AND 1193/2007)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  By a judgment of 3 August 2016, Au-Yeung J found, amongst other things, that the property at Flat A9, 5/F, Mirador Mansion, No 58, Nathan Road, Kowloon [“the Property”] was not subject to a charitable trust. Thus, upon the death of its registered owner Priest To-Lun [“the Deceased”] on 7 June 1995, the Property became the estate of Priest To-Lun and devolved in accordance with the Intestates’ Estates Ordinance.

2.  The 1^st Defendant appealed against that part of the judgment.

3.  We heard the appeal on 15 November 2018.  After hearing submissions, we reserved judgment in the appeal.

4.  We now give our judgment.

5.  The relevant factual background regarding the acquisition of the Property and its use since it came under the ownership of the Deceased were set out by the judge in her judgment at [6] to [10] and [65] to [70]:

“ 6. Priest To Lun was born in Mainland China in 1918.  He became a monk in 1937 at the age of 19 and was ordained in 1947.  In 1949, he came to Hong Kong to preach Buddhism.  Two years later, he established the Western Bliss Garden (西樂園) and preached there.

7. In between 1954 and 1958, Priest To Lun became registered owners of the 4 subject properties, tabulated below:

	Property name	Manner of acquisition	Donor	Use of the Property
1&2.	Lot No. 25 in DD No. 307, Lantau Island (“Lot 25”) Section A, Mang Cheung Po Lot No. 5, Mang Cheung Po, Lantau Island (“Lot 5A”) (collectively “the Lantau Properties”)	By a Deed of Gift dated 16 March 1954 (“the Deed of Gift”)	Donated by Tung Shau Hong董壽康 (“Tung”)	Tsz Hing Monastery (慈興寺) was built on it
3.	11/F, No. 31 Wong Nai Chung Road, Hong Kong (“the Happy Valley Property”)	By assignment dated 15 August 1957	Buddhist donors and funds of Priest To Lun	Established the Buddhist Lecture Hall (佛教講堂)
4.	Flat A9, 5/F, Mirador Mansion, No. 58, Nathan Road, Kowloon (“the Nathan Road Property”)	By assignment dated 15 November 1958	Allegedly Buddhist donors	Leased out for rent throughout the years

8. In February 1959, D1 was incorporated under its former name of “Buddhist Lecture Hall Inc” in California.  Contrary to paragraph 28 of the Amended Defence, Priest To Lun was not one of its founders.  Mr Miu (counsel for the Plaintiffs), however, accepts that Priest To Lun was the spiritual and de facto head of D1 during his lifetime, and that the directors and office holders of D1 were his followers and would obey his commands.

9. Priest To Lun used to preach at the Buddhist Lecture Hall until he departed for the USA in 1962 to continue preaching there. He had never since resided in Hong Kong except to return on 4 occasions to preach.

10. On 7 June 1995, Priest To Lun passed away in the USA.

…

65. Since Priest To Lun came to Hong Kong, there was no evidence as to his having any source of income as a monk.  Madam Lew’s evidence was that he had had no income bearing job.  Until his death in 1995, Priest To Lun had devoted his whole life as a monk to preaching Buddhism. 

66. All of the 4 properties were registered in Priest To Lun’s name as a Buddhist monk.  For 40 years up to 1995 (and thereafter), their respective uses have not substantially changed.  He had not personally used the 4 Properties except to preach on 4 occasions in 1974, 1978, 1981 and 1988.

67. Priest To Lun led a frugal life, never spending money for his own good.  He taught that “the very best thing for cultivators of the Way is to uphold the precept against touching money”.  There was a Shakya Fund set up by D1 to enable monks and nuns who would not touch money to apply for money, with justification.  Priest To Lun subjected himself to the same procedures under the Shakya Fund, just like his disciples, even to assist fellow villagers in need.  He practiced what he taught.

68. Priest To Lun had provided money to relieve his parents and their village from poverty and flooding.  Such financial assistance differed amongst persons.  The financial assistance to Priest To Lun’s brother was to repay the latter for taking care of their parents, as admitted by Madam Bai.  Priest To Lun also sponsored the trip of his brother and his family to the USA.  No witness could tell the source of such sponsorship.  All of these did not detract from Buddhist precepts.

69. I accept the evidence of Reverend Heng Sure and Madam Fu that people donated because they were impressed by Priest To Lun.  The donations were made to Priest To Lun.  Donors would not ask him to account for the money or ask for receipts from him.  They simply trusted him to use it for advancement of Buddhism.  There was no evidence that he abused that trust.  The Oral Wills pointed in the same direction.

70. When Priest To Lun died, he left no personal assets, whether in Hong Kong or the USA, except the subject properties.  See the Schedule of Properties attached to the grant of letters of administration to his estate and the evidence of Madam Lew and Reverend Heng Sure.”

6.  The judge’s assessment of the evidence regarding the Property was set out at [105] to [113] of the judgment:

“ 105.   D1’s case is that the Nathan Road Property was acquired with donations.  The original intention of Priest To Lun was to use it as a lecture hall.  Because of the noisy and complicated environment, that intention was never fulfilled. The Nathan Road Property has all along been leased out for rent to support the charitable work of D1. 

106.   The Nathan Road Property was purchased in the name of Priest To Lun, ie in his office as a monk.  According to the land search record, it was purchased with cash without the need for a mortgage. Madam Lew and Madam Fu had been told by Priest To Lun that the purchase price came from donations, and Reverend Heng Sure had been told by Priest To Lun that all the properties in his name came from donations. There was no evidence that Priest To Lun had other sources of income.

107.   Madam Fu testified that donors like her would make donations to Priest To Lun without specifying how he should use them.  They merely trusted Priest To Lun to be fair and not selfish and do good deeds.  Such evidence was irrelevant as the Nathan Road Property was purchased before she came into the picture.

108.   According to the sale and purchase agreement relating to the Nathan Road Property, there were 4 other properties in the same building purchased at the same time.  Madam Fu could not tell whether those 4 were adjacent to the Nathan Road Property and how they were disposed of.  There was simply no evidence as to why Priest To Lun saw fit to keep only the Nathan Road Property but disposed of the other 4.

109.   I have alluded to the possibility of Priest To Lun having personal assets at his disposal in paragraph 62 above.  Even if what the defence witnesses said as to original intention and source of purchase money was entirely accepted, a fundamental change of purpose upon completion of the Nathan Road Property would fail to satisfy the 1^st criterion of Cheung Man Yu.

110.   The Nathan Road Property was never used for advancement of Buddhism.  The 3^rd criterion of Cheung Man Yu that the institution must be exclusively charitable was not satisfied.

111.   According to Madam Lew, a Mr John Man has been handling the Nathan Road Property pursuant to a power of attorney from Priest To Lun.  He received the rental by auto-deposits and applied them to defray expenses (such as taxes and maintenance) and occasionally to donate to charities and needy students.  Mr Man had to ask for D1’s approval to disburse large sums of money, but it never occurred.

112.   The power of attorney, bank records of Mr John Man or accounts books of D1 (who has allegedly been “managing” the Nathan Road Property) which could have shed light on the use of the rental were not produced. The 2^nd criterion of Cheung Man Yu that the institution existed for the benefit of the public was not satisfied. 

113.   I am not satisfied that the Nathan Road Property was subject to a charitable trust.”

7.  The judge applied the criteria extracted from the judgment of Tang VP (as he then was) in Cheung Man Yu v Lau Yuen Ching [2007] 4 HKC 314 which the judge discussed at [16] to [22] of the judgment.  Those criteria were examined by this Court (Lam VP and Poon JA) in the present appeal in the Reasons for Judgment of 2 March 2017 at [21] to [25] when the Court refused leave to the Plaintiffs to file a respondent’s notice out of time.  In those paragraphs, the Court held:

“ 21. Properly understood, the following principles are affirmed in the judgment of Tang V-P (as he then was) in Cheung Man Yu, which was substantially based on the discussion of the law on charity in the judgment of Cross J in Neville Estates Ltd v Madden [1962] Ch 832.

22. To qualify as a public charity three conditions must be satisfied, see [24] of Cheung Man Yu:

(i)  The purposes of the institution must have charitable character;

(ii)  The institution must exist for the benefit of the public;

(iii)  It must be exclusively charitable.

23. Regarding the first requirement, ownership of the property is a relevant but not determinative consideration.  In respect of property held under private name(s) for the use of an unincorporated institution, its beneficial ownership could be held in three different ways as discussed in Neville Estates Ltd v Madden, supra.  If the terms or circumstances of the gift or the rules of the association of the unincorporated institution show that the property in question is not to be at the disposal of its members for the time being, but is to be held in trust for or applied for the charitable purposes of the association as a quasi-corporate entity, like the establishment of a place of public worship, it would be a charitable trust, see [41] to [46].  In this connection, it does not matter that the donors or the title holders did not appreciate the legal consequence of the dedication of the property to such purposes. Once a charity has been set up, the legal owners cannot re-convert the property back to private ownership for non-charitable purposes.  Further, when the evidence supports the existence of a charity, the court should be not astute to find otherwise.  On the facts in Cheung Man Yu, and also in Neville Estates Ltd v Madden, the courts were able to conclude that members of the institutions could not have envisaged for a moment that the property were to be divided between the members for the time being and there was enough in the circumstances to show that the fund was to be held on a trust for or to be applied for the charitable purposes notwithstanding that there was no formal declaration to such effect by the donee and no provision in the rules of the institution to that effect, see [45] and [54] to [56] of Cheung Man Yu.

24. Regarding the second requirement, the public character refers to the institution existed for the benefit of the community or an appreciably important section of the community.  These involve consideration of two closely related questions: whether the purposes of the institution confer a benefit on the public or a section of the public; and secondly whether the class of persons eligible to benefit constitutes the public or a section of it.  See [26] of Cheung Man Yu citing Tudor on Charities.  A religious institution set up for the sole benefit of members of a priory live in seclusion was therefore not a public charity (as held in Gilmour Coats [1949] AC 426).  However, a religious institution set up as a place of public worship by persons who live in the world and mix with their fellow citizens would be a public charity as the court is entitled to assume that some benefit accrues to the public from the attendance of such worship.  See [72] and [73] of Cheung Man Yu citing Neville Estates Ltd v Madden, supra. 

25. Regarding the third requirement, the use of part of the property for private accommodation, serving of vegetarian meals and the installation of ancestral tablet at a fee could be incidental, ancillary or auxiliary to the charitable purpose and it would not be inconsistent with the charitable character of the institution, see [60] to [70].  In this connection, Secretary for Justice v Joseph Lo Kin Ching (2015) 18 HKCFAR 169 at [11], [67] to [72] (see also discussion in the Court of Appeal’s judgment in CACV 44 of 2013, at [92] to [116]) provides another example of the court holding that a charitable trust was established notwithstanding that there were provisions in the will for the exercise of fiduciary powers for private purposes.” 

8.  Before us, there was no dispute on any of these principles.

9.  Though 3 grounds of appeal were given in the Notice of Appeal of the 1^st Defendant, Mr Chong (appearing with Mr Yip for the 1^st Defendant) summed up these grounds as follows at paragraph 15 of his skeleton submissions of 18 October 2018:

“ Having accepted that the Nathan Road Property was purchased using donation money, and that people donated money to the Deceased for the purpose of advancement of Buddhism, the learned trial judge erred in failing to hold that the Nathan Road Property was held on charitable trust.”

10.  With respect, there is an erroneous premise in this submission.  Though the judge had accepted that the Property was purchased using “donation” money, the judge had not accepted that the people who gave such donation had done so for the purpose of advancement of Buddhism.

11.  Mr Chong relied on [69] of the judgment to advance his premise.  However, in that paragraph, the judge referred to the evidence of Reverend Heng Sure (whom the Deceased first met in the US in 1970) and Madam Fu, both of whom came into the picture long after the acquisition of the Property.  In the context of the events that occurred prior to such acquisition, the judge observed (as she was entitled to) at [107]:

“ Madam Fu testified that donors like her would make donations to Priest To Lun without specifying how he should use them. They merely trusted Priest To Lun to be fair and not selfish and do good deeds. Such evidence was irrelevant as the Nathan Road Property was purchased before she came into the picture.”

12.  In any event, the judge did not make a finding in [69] that the donors specifically gave the donations for the purpose of advancement of Buddhism.  Instead, the judge found that the donations were made to the Deceased without asking him to account for the money or asking for receipts.

13.  Whilst the judge also found that the donors trusted the Deceased using donations for advancement of Buddhism, that had to be read together with her findings at [62] and [68].  In those paragraphs the judge found that the Deceased had personal property at his disposal and he had used some property for purposes that cannot as a matter of common law be regarded as charitable purposes[1].  At [109] and [110], the judge further found that he had a free hand in deciding on the use of the Property which, notwithstanding the original but aborted intention of setting up a Buddhist lecture hall there, had never been used for the advancement of Buddhism.

14.  In short, the judge found that in the eyes of the law the so-called donations were actually gifts made to the Deceased and he was at liberty to use the same as he deemed fit.  It was up to the Deceased to decide whether the monies would be used to purchase a flat for a Buddhist lecture hall or for other purposes.  Hence, the judge alluded to the change of purpose in respect of the acquisition of the Property at [109] and observed at [111] to [112] that there was insufficient evidence to show that the Property had been used exclusively for the advancement of Buddhism.

15.  In the light of such finding, we cannot fault the judge in her conclusion that the criteria in Cheung Man Yu were not satisfied.

16.  Mr Chong submitted that Madam Fu also gave evidence based on what she had learnt from the Deceased.  The short answer is that whilst hearsay evidence is admissible, the weight to be attached to it is a matter for the judge.  As we observed above, the judge was entitled to find that such evidence of Madam Fu as regards the intention of the donors was not of sufficient weight to establish a charitable intention on the latter’s part as required by law in light of the other matters the judge alluded to.

17.  Mr Chong placed reliance on the Oral Will of the Deceased of 1994.  The judge referred to that at [44] of the judgment.  She discussed the implications of it (together with the other Oral Will of 1995) at [45] to [48] of the judgment.  There is nothing in the grounds of appeal in the Notice of Appeal or the submissions of Mr Chong which caused us to doubt the validity of the judge’s analysis in those paragraphs.  At [48], the judge summed up the effect of these so-called “Oral Wills”[2],

“ The Oral Wills, made 8.5 months apart, consistently showed a good monk following Buddhist precepts with no intention to benefit himself but his sangha(s).  There were clear statements of his intention to apply personal assets to charitable causes.  However, they were far from defining the terms of the trust or the beneficiaries.  There was also no evidence that the “trust” was carried out or that Priest To Lun had effectively divested himself of all beneficial interests in his own assets.”

18.  In light of such a finding (with which we have no reason to interfere), we cannot accept Mr Chong’s submissions that the judge erred in her findings as regards the Property by failing to take account of the Oral Wills.  In particular, the Oral Wills could not have any probative value in establishing that the intention of the donors of gifts to the Deceased before the acquisition of the Property.

19.  In the appeal, Mr Chong also contended that as the Deceased held a charitable office, all donations made to him should be regarded as charitable.  In this connection, counsel relied on the judgment of Jenkins LJ in In re Spensley’s WT [1954] Ch 233 at 243,

“ Where there is a gift to a person who holds an office the duties of which are in their nature wholly charitable and the gift is made to him in his official name and by virtue of his office, then, if the purposes are not express in the gift itself the gift is assumed to be for the charitable purposes inherent in the office.”

20.  He also cited In re Rumball [1956] Ch 105 at 114, 116-118, 122-124 and Tudor on Charities, 10 Edn, paragraphs 2-110, 2-114 to 2-116.

21.  The judge did not allude to this line of argument by the 1^st Defendant in the judgment.  We have checked the written submissions advanced below and it does not appear that Mr Chong (who also appeared with Mr Yip at the court below) had run this argument.  Nor were these authorities cited. 

22.  An examination of the pleadings of the 1^st Defendant shows that this is also not the case of the 1^st Defendant advanced in its Amended Defence and Counterclaim of 10 March 2016.  In particular, there was no plea that the priesthood of the Deceased was an office and that donations made to him were to be treated as donations made to a charitable office.  There is also no plea as to whom that office was bestowed upon after the demise of the Deceased. 

23.  In such circumstances, in our judgment, it is impermissible for Mr Chong to run such a line of argument for the first time on appeal. 

24.  The authorities cited by Mr Chong concerned gifts made to the holder of an office for the time being.  Thus, the questions mentioned below do not arise.  Further, even in the context of gifts to an office holder of a religious institution, there were English cases which decided that the mere fact that the donee held such office was not sufficient to render the gift charitable if the donee was given absolute discretion to use the gift: In re Davidson [1909] 1 Ch 567; Dunne v Byrne [1912] AC 407; In re Jackson [1930] 2 Ch 389; In re Stratton [1931] 1 Ch 197; In re Davies (1932) 49 TLR 5; Farley v Westminster Bank [1939] AC 430. 

25.  In In re Rumball, supra, the Master of the Rolls acknowledged that the distinction between a valid charitable gift and an invalid one could be a fine one.  At p. 115-116, Evershed MR accepted the argument that it was a question of construction based on the terms of the gift whether it conferred upon the donee the discretion to used it for non-charitable purposes as well as charitable purposes. 

26.  Hence, there would have to be some investigation into the precise circumstances under which the gifts were made.  In the present context, the terms of the “donations” were not made or evidenced in writing. Actually, as discussed, the judge did not find sufficient evidence as regards the circumstances surrounding the “donations” as far as the purchase of the Property was concerned.

27.  If a case of gift to a charitable office had been pleaded and run at the court below, the court would have to investigate the institutional underpinning for the priesthood of the Deceased.  At least the following questions have to be looked into: the institutional authority ordaining the Deceased, the extent to which that institution can be regarded as charitable under common law and whether the priesthood can be regarded as an office (with a successor being appointed to fill such vacancy upon death of the Deceased) as opposed to a mere honorific in addressing a monk.

28.  There cannot be a proper consideration of these questions when the issue had not been pleaded and the Plaintiff had not been given the opportunity to adduce the necessary evidence on the same.  It is unsatisfactory to allow this argument to be run on appeal when the judge had not ruled on the same and this Court does not have the benefit of the analysis on the evidence available at the trial on this issue by the judge.

29.  We are therefore not impressed by Mr Chong’s submissions on donations being made to the office of the Deceased.

30.  The above analysis also addressed Mr Chong’s argument based on the description of the Deceased in the documents for acquisition of the Property as “Priest To Lun” and his address as the Buddhist Lecture Hall.

31.  Mr Chong also submitted that the judge erred in taking account of the subsequent use of the Property (or the lack of evidence that the Property was exclusively used for advancement of Buddhism).  He submitted that the charitable trust crystallized when the Deceased, as he originally intended, decided to purchase the Property for use as a Buddhist Lecture Hall.

32.  It is clear from the judgment that the judge considered the evidence regarding the actual use of the Property in the assessment based on the Cheung Man Yu criteria, which was the only basis on which the case on charitable trust had been argued in the final submissions at the court below.  Like the argument based on office, the argument of the Deceased setting up a charitable trust when he entered into an agreement to purchase the Property based on his unwritten dedication of it for the exclusive use of the 1^st Defendant was not pleaded nor run at the trial below.  All along, the case of trust as argued below was based on a trust arising from the intention of the followers of the Deceased who made donations for the purpose of the furtherance of Buddhism (see paragraphs 8, 18 to 33 of the Amended Defence).  With respect, counsel again tried to run the case of the 1^st Defendant on a footing which had not been canvassed properly before the judge. 

33.  In any event, Mr Chong failed to address the conundrum arising from the apparent liberty taken by the Deceased to complete the purchase on one unit whilst the agreement was for the purchase of four units and to change the use of Property upon completion.  Such liberty is inconsistent with a charitable trust already having been established when the sale and purchase agreement was made. 

34.  Though we agree with Tang VP at [46] of Cheung Man Yu that subsequent conduct could not change the nature of the trust, the learned Vice President also said in the same paragraph that subsequent events or conduct might throw light on whether a charitable trust had been established.

35.  We reject Mr Chong’s argument on the use of the Property.

36.  For these reasons, we are not persuaded that the judge was wrong in her conclusions in respect of the Property.

37.  We shall dismiss the appeal with an order that the 1^st Defendant shall pay the Plaintiffs’ costs of this appeal. Such costs are to be taxed if not agreed.  The Plaintiffs’ costs are to be taxed according to Legal Aid Regulations.

CACV 179/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 179 OF 2016

(ON APPEAL FROM HCA NOS 1190, 1191, 1192 AND 1193 OF 2007)

________________________

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REASONS FOR JUDGMENT

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Hon Lam VP (giving the Reasons for Judgment of the Court):

1.  By a summons of 15 November 2016, the Plaintiffs sought leave to file a Respondent’s Notice out of time in this appeal. The appeal stems from the judgment of Au Yeung J of 3 August 2016 in HCA 1190 to 1193 of 2007. The 1^st Defendant lodged an appeal by a notice of appeal of 28 August 2016. On 23 February 2017, after hearing counsel, we dismissed the summons with costs. Here are the reasons for our decision.

2.  The proposed Respondent’s Notice challenged the judge’s finding that the Lantau Properties were held by Priest To Lun, deceased, for charitable purposes instead of his own beneficial interest.  This part of the judgment was not challenged by the 1^st Defendant in the notice of appeal. 

3.  The rule requires a respondent’s notice to be served within 21 days from the service of a notice of appeal.  It is clear from the provisions of Order 59 Rule 6(1) that it is applicable to a case where a respondent actually mounts a cross-appeal, viz challenging a part of the judgment which is not challenged in the notice of appeal.  Thus, Rule 6(1)(c) refers to the raising of a contention by way of cross-appeal that the decision of the court below was wrong in whole and in part and the respondent’s notice must specify the precise form of the order that the respondent asks this Court to make. 

4.  In the present case, bearing in mind the summer vacation, subject to the effect of the legal aid stay, the Plaintiffs could serve a Respondent’s Notice on or before 21 September 2016 without leave.

5.  Legal aid application was made and on 12 September 2016 a notice of such application was lodged.  Thus, the legal aid stay of 42 days came into operation.  That stay expired on 24 October 2016. After that, time continued to run again.  Since 11 days elapsed before the legal aid stay took effect, the Plaintiffs had another 10 days from 24 October 2016 to file a Respondent’s Notice. 

6.  In other words, the Plaintiffs could have filed a Respondent’s Notice within time by 3 November 2016 without leave.  The Plaintiffs did not do so because legal aid was only granted on 8 November 2016.

7.  Though the delay is a short one (the summons was taken out on 15 November 2016), in accordance with settled practice, the court shall consider the following criteria in deciding whether extension of time should be granted:

(a) Length of delay;

(b) Explanation for the delay;

(c) The merits of the intended appeal;

(d) Prejudice to the other party.

8.  The Plaintiffs referred to the time taken for the application for legal aid to account for the delay.  This Court had said in a number of judgments that a litigant relying on the time taken for legal aid as explanation for delay must give an account of the time taken in that process, see BI v Director of Immigration [2016] 2 HKLRD 520 at [131]; 黃得煒與懲教署署長 HCMP 1491/2016, 4 November 2016; 黃得煒及懲教署署長 HCMP 1246/2016, 18 July 2016; AIA International Ltd v Lam Che Wah HCMP 1107/2016, 27 June 2016.

9.  In the present context, there was no explanation as to why the Plaintiffs could not have made the application for legal aid before 12 September 2016 if they were serious about challenging the judge’s conclusion on the nature of Priest To Lun’s holding of the Lantau Properties.  The court vacation does not afford any excuse to the Plaintiffs in that regard.

10.  The Plaintiffs also said that the beneficiaries of the estate were in Heilongjiang and the lawyers could not act without authorization from the Director of Legal Aid.  With respect, there seems to be confusion as to the role of the Plaintiffs as executors of the estate and the role of Mr Ma as a partner in the solicitor firm acting for the Plaintiffs.  Mr Ma in his capacity as one of the executors should be able to assess for himself whether it is in the interest of the estate to pursue an appeal against the findings regarding the Lantau Properties. There is no reason why he should wait for instructions from the beneficiaries in Heilongjiang. 

11.  On the whole, we did not find the explanation for the delay to be satisfactory.

12.  In the circumstances, we should not grant extension of time unless the intended appeal has a real prospect of success, see SJ v Hong Kong Yaumati Ferry Co Ltd [2001] 1 HKC 125.

13.  The main ground advanced by Mr Miu on behalf of the Plaintiffs under the proposed Respondent’s Notice was that the judge had misapplied the principle in Cheung Man Yu v Lau Yuen Ching [2007] 4 HKC 314.  Counsel accepted that had Priest To Lun as absolute beneficial owner of the Lantau Properties dedicated the same to be used as a Buddhist monastery (thereby using it for a public charitable purpose), the principles in Cheung Man Yu would apply and the land would be held under a public charitable trust even though there was no written declaration to that effect.  However, Mr Miu submitted, in the present case, the judge could not have found Priest To Lun becoming the absolute beneficial owner because there was no evidence as to the dates of death of the Beneficiaries named in the Deed of Gift [“the Beneficiaries”].  Since the Lantau Properties were held in accordance with Clauses 1 to 6 of that Deed pending the demise of the Beneficiaries, the judge erred in applying the principles in Cheung Man Yu in such circumstances.

14.  The judge’s reasoning in coming to the conclusion she did was set out at Section M of the judgment at [73] to [104]. The judge recited the background to the gift of the Lantau Properties to Priest To Lun at [73] to [74].  Priest To Lun approached the donor seeking the gift to develop a monastery over the land and the purpose of the monastery was to advance Buddhism.  The judge then referred to the actual use of the Lantau Properties after the gift: Priest To Lun did set up the Tsz Hing Monastery over the Lantau Properties together with the land at RP of Lot 5.  The judge found that the several pieces of the land procured by Priest To Lun were intended to be used as one single establishment for the purpose of advancement of Buddhism.  At [103] the judge made these observations regarding the intention of Priest To Lun:

“ (a) For 40 years up to 1995, the Tsz Hing Monastery had stood on 2 lots of land from different sources, of which Lot 5RP was not bound by the Deed of Gift.

(b) In view of the Layout, it was inconceivable that Priest To Lun would have intended that the Tsz Hing Monastery should be severed so that the part that stood on Lot 5A would be reverted to him when all the Beneficiaries have died, whereas the other part would remain subject to a charity.

(c) Priest To Lun’s stated intention in the Deed of Gift to advance Buddhism was not limited in time.

(d) He devoted his lifetime to preaching Buddhism.

(e)   Reverend Heng Sure’s evidence was that Priest To Lun had always taught that the monasteries and Buddhist Lecture Hall did not belong to him or any individual.  For 40 years, Priest To Lun acted what he taught in not asserting personal right over the Tsz Hing Monastery.”

15.  Based on these observations, the judge concluded at [104]:

“ The Tsz Hing Monastery satisfies the 3 criteria in Cheung Man Yu, §24, as being built for a charitable purpose, ie for advancement of Buddhism. It was open to the public and was for the benefit of the public. It was exclusively charitable, past and present, including its incidental use by a resident nun. Applying Cheung Man Yu, §45 Priest To Lun had created a charity even though there was no declaration of trust for the period beyond the express trust. It was not a case of a landlord lending out his property temporarily for a charitable purpose. I find that the Lantau Properties was and is bound by that charity even beyond the period of the express trust and regardless of Clause 7.”

16.  In our judgment, there is no reason why the principles in Cheung Man Yu could only be applicable if the 1^st Defendant established that Priest To Lun had become the absolute beneficial owner of the Lantau Properties before dedicating the same to public charitable purposes.  Mr Miu himself classified the restrictions in Clauses 1 to 6 in the Deed of Gift as contractual obligations, see [75] of the judgment.  For present purposes, we are prepared to regard these clauses as restrictive covenants.

17.  What is significant is that there was nothing in these covenants which prevented Priest To Lun from setting up Tsz Hing Monastery on the Lantau Properties for public charitable purposes provided that the obligations in those covenants were observed during the lifetime of the Beneficiaries. 

18.  Mr Miu did not cite any authority to support a proposition that the incidence of some obligations in the Deed of Gift on the use of the land would prevent a public charitable trust from coming into existence (notwithstanding such obligations are not inconsistent with the public charitable purpose to which the land was dedicated).

19.  At the hearing, Mr Miu referred to the condition subsequent at the end of the Deed of Gift which required Priest To Lun to re-convey the Lantau Properties back to the Beneficiaries should there be a breach of the covenants in the Deed of Gift. Counsel submitted that such condition subsequent prevented a public charitable trust from being created in the meantime.

20.  Mr Miu cited no authority for this proposition and we could not accept the same.  As we observed above, the due performance of the covenants was perfectly consistent with the setting up of the Monastery for public charitable purpose and there was no suggestion that Priest To Lun did not intend to perform such covenants. There was no suggestion whatsoever that the covenants had not been duly performed. As such, it had to be within Priest To Lun’s contemplation that there was no scope for the occurrence of any event which would trigger the operation of the condition subsequent. In such circumstances, we did not regard the existence of that condition subsequent as a bar to a charitable purpose trust being set up as a matter of law.

21.  Properly understood, the following principles are affirmed in the judgment of Tang V-P (as he then was) in Cheung Man Yu, which was substantially based on the discussion of the law on charity in the judgment of Cross J in Neville Estates Ltd v Madden [1962] Ch 832.

22.  To qualify as a public charity three conditions must be satisfied, see [24] of Cheung Man Yu:

(i)    The purposes of the institution must have charitable character;

(ii)     The institution must exist for the benefit of the public;

(iii)   It must be exclusively charitable.

23.  Regarding the first requirement, ownership of the property is a relevant but not determinative consideration.  In respect of property held under private name(s) for the use of an unincorporated institution, its beneficial ownership could be held in three different ways as discussed in Neville Estates Ltd v Madden, supra.  If the terms or circumstances of the gift or the rules of the association of the unincorporated institution show that the property in question is not to be at the disposal of its members for the time being, but is to be held in trust for or applied for the charitable purposes of the association as a quasi-corporate entity, like the establishment of a place of public worship, it would be a charitable trust, see [41] to [46].  In this connection, it does not matter that the donors or the title holders did not appreciate the legal consequence of the dedication of the property to such purposes. Once a charity has been set up, the legal owners cannot re-convert the property back to private ownership for non-charitable purposes.  Further, when the evidence supports the existence of a charity, the court should be not astute to find otherwise.  On the facts in Cheung Man Yu, and also in Neville Estates Ltd v Madden, the courts were able to conclude that members of the institutions could not have envisaged for a moment that the property were to be divided between the members for the time being and there was enough in the circumstances to show that the fund was to be held on a trust for or to be applied for the charitable purposes notwithstanding that there was no formal declaration to such effect by the donee and no provision in the rules of the institution to that effect, see [45] and [54] to [56] of Cheung Man Yu.

24.  Regarding the second requirement, the public character refers to the institution existed for the benefit of the community or an appreciably important section of the community.  These involve consideration of two closely related questions: whether the purposes of the institution confer a benefit on the public or a section of the public; and secondly whether the class of persons eligible to benefit constitutes the public or a section of it.  See [26] of Cheung Man Yu citing Tudor on Charities.  A religious institution set up for the sole benefit of members of a priory live in seclusion was therefore not a public charity (as held in Gilmour Coats [1949] AC 426).  However, a religious institution set up as a place of public worship by persons who live in the world and mix with their fellow citizens would be a public charity as the court is entitled to assume that some benefit accrues to the public from the attendance of such worship.  See [72] and [73] of Cheung Man Yu citing Neville Estates Ltd v Madden, supra. 

25.  Regarding the third requirement, the use of part of the property for private accommodation, serving of vegetarian meals and the installation of ancestral tablet at a fee could be incidental, ancillary or auxiliary to the charitable purpose and it would not be inconsistent with the charitable character of the institution, see [60] to [70].  In this connection, Secretary for Justice v Joseph Lo Kin Ching (2015) 18 HKCFAR 169 at [11], [67] to [72] (see also discussion in the Court of Appeal’s judgment in CACV 44 of 2013, at [92] to [116]) provides another example of the court holding that a charitable trust was established notwithstanding that there were provisions in the will for the exercise of fiduciary powers for private purposes. 

26.  The judge clearly had these principles in mind when she examined the case regarding the Lantau Properties. 

27.  It is also noteworthy that the judge said the following at [74] after referring the terms of the Deed of Gift:

“ On a proper interpretation, these clauses showed that Priest To Lun was the initiator who asked for the gift. The gift was made to him in the capacity of a monk using his name To Lun. The common intention of both the donor and the donee was that it was not an outright gift but that there was an express trust to carry out a charitable purpose subject to the life interests of the Beneficiaries…”

28.  As a matter of fact, the Deed recited such common intention:

“ the Grantor has been approached by the Donee with the project of developing the [Lantau Properties] into a monastery for the advancement of Buddhist religion which the Grantor has agreed to do so …”

Clause 6 of the Deed provided:

“ That during the respective lifetimes of the Beneficiaries the Donee shall only use the [Lantau Properties] and/or any building erected thereon for the sole purpose of advancing the Buddhist religion and not otherwise.”

29.  Hence, it was indeed the common intention of the donor and Priest To Lun that a Buddhist monastery for public worship was to be established on the land.  The life interest of the Beneficiaries included the right of access and egress over the land, the absolute use and enjoyment of one room on the first floor of the building and provision of food and lodging whenever they resided at the building.  These activities were perfectly consonant with the public charitable character of the monastery. 

30.  The judge went on to at [74] (obviously with reference to Clause 7 of the Deed of Gift):

“ After the death of all the Beneficiaries, Priest To Lun would be free to use the land in any way he liked.”

31.  However, after examining all the circumstances surrounding the disposition as well as the history of Tsz Hing Monastery, she concluded that a charity, viz a monastery for public worship, had indeed been set up by Priest To Lun and the 3 criteria for public charity were satisfied.

32.  Mr Miu failed to persuade us there is any real prospect of succeeding in the argument that the judge came to a conclusion which is plainly wrong regarding the charitable nature of Tsz Hing Monastery.

33.  At the hearing, Mr Miu made the further point that since Priest To Lun was obliged under Clause 6 of the Deed of Gift to use the Lantau properties as a monastery for the advancement of Buddhist religion, his conducts before the demise of the Beneficiaries were equivocal and one cannot therefore apply the Cheung Man Yu principles to conclude that a charitable trust had been set up.

34.  That point might have some force if Tsz Hing Monastery was set up solely on the Lantau Properties. But that was not the case. The judge quite rightly placed significance on the fact that the Monastery was set up on the Lantau Properties together with land otherwise acquired and concluded by reference to the layout of the Monastery that Priest To Lun could not have intend that the portion of the Monastery situated on the Lantau Properties could be segregated and used for other purposes after the demise of the Beneficiaries. 

35.  The other intended ground of appeal is a pleading point.  However, as apparent from the judgment, Mr Miu was clearly alive at the trial to the possibility of the judge examining whether the Lautau Properties were subject to a charitable trust and had advanced arguments which he sought to repeat before us.  There was no protest before the judge for the point being considered and no request for adjournment or admission of further evidence before the judge.  Thus, it is simply too late for the pleading point to be taken only after the judge had reached a conclusion unfavourable to the Plaintiffs.

36.  For these reasons, we did not see any merit in the intended cross-appeal by the Plaintiffs.

37.  Though it can be said that not much prejudice had caused to the 1^st Defendant by the delay, this alone cannot justify extension of time being granted for an unmeritorious cross-appeal to be brought.

38.  In the circumstances, we refused to grant the extension of time and dismiss the summons of 15 November 2016 accordingly.

39.  We also ordered the Plaintiffs to pay the costs of the 1^st Defendant in the summons and having considered the statement of costs, we fixed such costs at $82,500. The Plaintiffs’ own costs should be taxed under the Legal Aid Regulations.