2022

NORMAN GUY DONALD AND ANOTHER v. LEE MICHAEL CHAK CHUEN in his capacity as executor of the estate of LI PAK IU AND OTHERS

Related cases with same parties

CACV126/2024NORMAN GUY DONALD AND ANOTHER v. LI PAK HUEN in his capacity as executor of the estate of LI PAK WING AND OTHERS
CACV137/2024NORMAN GUY DONALD AND ANOTHER v. LI PAK HUEN in his capacity as executor of the estate of LI PAK WING AND OTHERS
HCMP610/2021NORMAN GUY DONALD AND ANOTHER v. LEE MICHAEL CHAK CHUEN in his capacity as executor of the estate of LI PAK IU AND OTHERS

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[2024] HKCA 403-EN-2024-05-03

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CACV 203/2022, [2024] HKCA 403

On appeal from [2023] HKCFI 1106

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 203 OF 2022

(ON APPEAL FROM HCA NO 610 OF 2021)

_________________

BETWEEN
	(1) NORMAN GUY DONALD and (2) LAI KAR YAN (DEREK), THE JOINT AND SEVERAL ADMINISTRATORS OF THE ESTATE OF LI SING KUI DECEASED	Plaintiffs
	and
	LEE MICHAEL CHAK CHUEN IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF LI PAK IU	1^st Defendant
	LEE CHERYL ANN IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF LI PAK TAT (BY CHAIN OF REPRESENTATION)	2^nd Defendant
	CHEUNG WAI MING DAISY IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF LI PAK LEUNG	3^rd Defendant
	LI PAK HUEN IN HIS CAPACITY AS EXECUTOR OF THE ESTATE OF LI PAK WING	4^th Defendant
	LI PAK HUEN	5^th Defendant

_________________

Before:

Hon Chu VP, Yuen and Au JJA in Court

Date of Judgment:

3 May 2024

____________________

JUDGMENT

____________________

The Court:

A. Introduction

1. On 11 September 2023, we handed down our judgment[1] dismissing the 5^th defendant’s appeal against the judgment of B Chu J (“the Judge”) given on 21 April 2022 concerning the estate (“the Estate”) of Li Sing Kui, deceased (“the Deceased”) and the construction of his will dated 15 December 1954 (“the Will”). We also made an order that the 5^th defendant personally pay the costs of the plaintiffs (“the Trustees”) and the 1^st and 2^nd defendants with certificate for two counsel, and that any costs not so recovered by the Trustees be paid out of the Estate on an indemnity basis. We further ordered that the 5^th defendant’s own costs of the appeal should not be paid out of the Estate.

2. By a notice of motion filed on 9 October 2023, the 5^th defendant applies for leave to appeal our judgment to the Court of Final Appeal. The application is opposed by the Trustees and the 2^nd defendant. The 5^th defendant, the Trustees and the 2^nd defendant have respectively lodged written submissions on the application.

3. Having considered the notice of motion and the written submissions, we see no reason to depart from the usual practice of determining applications for leave to appeal to the Court of Final Appeal on paper without an oral hearing. We have therefore proceeded to determine the 5^th defendant’s application on the basis of the documents in the case.

B. Our judgment

4. The background and the facts underlying this appeal have been set out in our judgment. We will not repeat them.

5. The core issue in the appeal concerns the proper construction and validity of clause 5(2)(f) of the Will. Under clause 5(2) of the Will, the residuary estate of the Deceased (“the Residuary Estate”) was divided into six equal shares. Clause 5(2)(a) to (e) directed the Trustees to distribute one share to each of the five sons of the Deceased, one of whom is the 5^th defendant.

6. Clause 5(2)(f) provides as follows:

“ONE (1) share [of the Residuary Estate] to be appropriated for ‘Ching Sheung’ (蒸嘗) for the purpose of Ancestor Worship
Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons.”

7. The Judge described the clause as having two parts: the first being the appropriation of one share of the Residuary Estate for Ching Sheung (ancestral worship) (“1^st Part”); and the second being the proviso (“2^nd Part”).

8. While it is common ground between the parties that the gift for Ching Sheung was void for infringing the Common Law rule against perpetuities, the parties differed as to the construction and the effect of clause 5(2)(f). The Judge summarised the issues between the parties as:

“(1)  whether the fact that the 1^st Part is void defeats the entire Clause 5(2)(f) or whether the 2^nd Part takes effect notwithstanding the invalidity of the 1^st Part (“Issue (1)”);
(2)  even if the 2^nd Part can be severed from the 1^st Part, whether the 2^nd Part created a mere power or a trust power (“Issue (2)”); and
(3)  if a mere power then whether a reasonable time has already lapsed (“Issue (3)”).”

9. The Judge held, on Issue (1), that the 2^nd Part of clause 5(2)(f) does not have a life of its own, if the 1^st Part is found to be invalid. The Judge went on, in the event that she was wrong on Issue (1), to consider Issues (2) and (3) and hold that the proviso gave the Trustees a mere power, and that reasonable time for the Trustees to exercise the mere power has lapsed.

10. The 5^th defendant appealed the Judge’s decision on all the issues. On Issue (1), for the reasons we gave at [19.1] to [19.5] of our judgment, we held that the language of clause 5(2)(f) is clear and that there is only one gift in the clause, which is the gift for Ching Sheung. Accordingly, as the gift was void ab initio, there was never any gift, and thus no property which the Trustees could apply for the benefit of any sons. On this basis alone, the appeal should be dismissed. As to Issue (2), we expressed the view that the Trustees were given a trust power, not a mere power, and it would follow that Issue (3) did not fall for consideration: [21] to [22.2] of our judgment. We therefore dismissed the appeal.

C. The 5^th defendant’s application for leave to appeal

11. In the notice of motion, the 5^th defendant formulates the following questions as being of great general or public importance, or otherwise, which ought to be submitted to the Court of Final Appeal for decision (respectively “Question (1)” to “Question (4)”):

(1)  In a clause or sub-clause of a will containing multiple limitations and provisions, where one of the limitations or provisions fails or is void, what is the correct legal test to apply to determine the effect of such failure or void-ness on the other limitations and provisions which are valid in themselves.
(2)  In the above circumstances, whether the doctrine of severability applies to such a clause or sub-clause with the result that the void provision can be ignored and the valid provisions in the clause or sub-clause remain effective, and if so, what are the conditions required to be satisfied for that doctrine to operate.
(3)  Where in a clause or sub-clause in the will the testator directs or authorizes his trustees to act in one way (A), and at the same time it is expressly stated (in the same clause or sub-clause) that ‘Provided otherwise that’ or a similar expression such as ‘notwithstanding the above’ the trustees may in their uncontrolled discretion do something else (B), whether these expressions have overriding effect over (A).
(4)  Where parties dispute over the construction and effect of (A) and (B) as referred in Question (3) above, whether the value of the relevant disposition involved, which shows that the testator could not have intended to make only (A), is a relevant consideration of ‘materiality’ to be taken into account by the court.

12. The 5^th defendant contends that the four questions are of great general or public importance in relation to the construction of wills because it is commonplace for wills to contain multiple limitations and other dispositive provisions and the application of correct principles to such provisions is of fundamental importance, in particular, to the probate practitioners in the legal profession as a whole.

13. The 5^th defendant also seeks leave to appeal on the “or otherwise” limb, contending that this Court is manifestly wrong in the construction of clause 5(2)(f) by refusing to give proper weight to the value of the Estate in determining the Deceased’s intentions and therefore, that there has been grave injustice and exceptionally serious ramifications caused to the 5^th defendant. It is further contended that as this Court has failed to apply the correct principles and our judgment will result in confusion and uncertainty among the legal profession on construction of wills, it is necessary and desirable to seek clear and correct guidance from the Court of Final Appeal.

D. Our reasons for decision

D.1 Applicable principles

14. Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, provides that leave to appeal to the Court of Final Appeal may be granted if the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

15. An application for leave to appeal is not an occasion to re-argue an appeal, or to re-run arguments which had been canvassed in the appeal but rejected by the court: Ho Sin Ying v Chan Yui Ling & Another (unreported, CACV 221/2013, 14 November 2014) at [2] and [3]. An applicant is required to demonstrate that the questions in the intended appeal are reasonably arguable. He has to show sufficient merits to warrant embarking on a further appeal, notwithstanding that his arguments have been rejected by the Court of Appeal: Maeda Kensetsu Kogyo Kabushiki Kaisha aka Maeda Corporation & Anor v Bauer Hong Kong Ltd[2021] HKCA 653 at [14].

16. In light of the above principles and having considered the questions put forward by the 5^th defendant as well as the parties’ submissions, we are of the view that leave to appeal should be refused for the reasons set out below.

D.2 Question (1)

17. We would point out at the outset that although framed as separate questions, all four questions relate in substance to this Court’s application of the general legal principles of interpretation of a will to find that clause 5(2)(f), read as a whole, is clear from its language that the Deceased intended to make only one gift, which is the gift for Ching Sheung, and further that if such gift was void ab initio, there was simply nothing from which the Trustees could exercise their discretion to benefit one or more of the Deceased’s sons.

18. Question (1) asks for a legal test to be formulated and applied to determine the effect of a limitation or provision of a clause or sub-clause in a will, which fails or is held void, on the remainder of that clause or sub-clause.

19. Mr Patrick Fung SC, together with Ms Teresa Wu, for the 5^th defendant submits that this Court has erred in identifying the Deceased’s intention in that it is evident from the clear and express wordings of clause 5(2)(f) that there are two provisions for the one share of the Residuary Estate, respectively for Ching Sheung and for the Deceased’s son(s), and they are separate and independent of each other.

20. As discussed in our judgment (at [16]) and the Judge’s judgment (at [32] and [33]), the general legal principles for the interpretation of a will is clear and not in dispute. The 5^th defendant’s complaint is not that this Court has applied the wrong principles, but that in applying these well-established legal principles we have come to the wrong findings. The 5^th defendant’s complaint therefore is not one of law and principle, but is a challenge to the application of the relevant legal principles to the facts and context of this case.

21. Both Mr Eugene Fung SC, together with Mr Keith Chan, for the Trustees, and Mr Anson Wong SC, together with Mr Justin Lam, for the 2^nd defendant stress that the determination of the effect of a limitation or provision of a clause in a will where another limitation or provision of the same clause has failed or become void is a matter of construction, and it is a fact-sensitive and context-specific exercise. We agree. In our view, Question (1) does not raise any question of great general or public importance.

22. Further, the question is not reasonably arguable.

23. The 5^th defendant’s arguments in essence are that this Court has failed to objectively construe the two parts in clause 5(2)(f) as comprising separate dispositions that are independent of, and therefore severable from, each other, and that, applying the test suggested by the 5^th defendant, this Court ought to have found that as the 2^nd Part is not ulterior to or dependent upon the 1^st Part, the Trustees may apply the one share of the Residuary Estate to benefit the son(s) pursuant to the 2^nd Part notwithstanding that the 1^st Part is void.

24. These arguments have been considered and rejected by us for the reasons given in [19.1] and [19.2] of our judgment. Other than stating his disagreement to our construction of clause 5(2)(f) upon the facts and context of this case, the 5^th defendant has given no convincing reasons to show that our reasoning is wrong. The authorities[2] cited by Mr Patrick Fung do not assist the 5^th defendant. They are demonstration of fact-specific instances of construction of wills in the specific context of their respective cases. They do not add anything to the arguments. Nor do they show any error in this Court’s approach to the construction of clause 5(2)(f).

25. We are not satisfied that Question 1 gives rise to any arguable question of great general or public importance.

D.3 Question (2)

26. Under Question (2), the 5^th defendant seeks to argue that the doctrine of severability, a contractual principle as applied in Midland Business Management Ltd v Lo Man Kui [2011] 1 HKLRD 470 and Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRIR 388, should also apply to the construction of wills, provided that certain conditions are satisfied.

27. In the first place, it is a new argument not raised before the Judge or before us. The practice of this Court is not to grant leave for new points (not restricted to new points involving fact-sensitive issues) that had not been canvassed in the substantive appeal before us: see Ageas insurance Co (Asia) Ltd v Lam Hau Wah Inneo, CACV 65/2014, unreported, 19 May 2015, at [7] to [9]; and The Law Society of Hong Kong v A Solicitor, CACV 78/2014, unreported, 10 July 2015, at [4] to [7]. In the absence of exceptional circumstances, the 5^th defendant cannot be permitted to run this point in this application.

28. Moreover, the 5^th defendant had argued in the appeal that the test in Re Canning’s Will Trusts [1936] Ch. 309, 314 should be applied to determine whether or not the invalidity of a gift or object under a clause of a will would also invalidate another object under the same clause, such as the power or discretion of the trustee to benefit a group of beneficiary(ies). Applying the test, we held that as the gift for Ching Sheung was void for perpetuity, there was no gift out of which the Trustees could apply for the benefit of any son(s). The 5^th defendant now seeks to advance a different legal test without providing any justification. This is not permissible.

29. In any event, Question (2) remains a matter of construction which is fact-sensitive and context-specific, and does not involve any question of great general or public importance.

D.4 Question (3)

30. Question (3) asks whether the expression “provided nevertheless that” or a similar expression in a clause or sub-clause of a will has any specific “overriding effect”.

31. The 5^th defendant argues that by reason of the expression “Provided nevertheless that”, the 2^nd Part of clause 5(2)(f) is not conditional upon the 1^st Part. Instead, it is argued, the proviso gives an overriding effect over the 1^st Part, empowering the Trustees to apply the one share of the Residuary Estate to benefit the son(s), irrespective of the validity of the gift for Ching Sheung.

32. The 5^th defendant says that it is commonplace for wills to contain multiple limitations and other dispositive provisions in a clause or sub-clause where the trustees are directed to do one thing or another, with or without certain condition or qualification imposed, and that it is common for testators to use the words “provided nevertheless that” or a like phrase in wills to impose a condition or qualification. Even if this was the case, whether or not particular words or phrases contained in a clause or sub-clause of a will carry specific meaning or effect, such as to give rise to the trustees’ discretion or power to do that one thing over another, remains a matter of construction to be determined by taking into account, among other things, the facts and circumstances known or assumed by the parties at the time the document was executed: AFH Hong Kong Stores Ltd v Fulton Corp Ltd[2023] HKCA 78 at [18.2], applying Eminent Investments (Asia Pacific) Ltd v DIO Corp[2020] HKCFA 38 at [43] to [45]. Question (3) cannot be answered in the abstract without regard to the facts and context of the case involved.

33. In any event, the 5^th defendant is merely rehashing his arguments in the appeal relating to the proviso in clause 5(2)(f). We have considered and dealt with them at [19.3] of our judgment where we held that these words do not assist the 5^th defendant’s case.

34. In short, Question (3) does not give rise to any arguable question of great general or public importance.

D.5 Question (4)

35. Question (4) is directed at [19.4] of our judgment where we held that the language of clause 5(2)(f) is so clear that considerations such as the sufficiency of other provisions for the sons or dispositions to other members of the family are of little materiality, and it is not necessary to discuss the Judge’s views on them.

36. The 5^th defendant argues that we have failed to take into account the value of the one share of the Residuary Estate and have erred in taking the view that the language of clause 5(2)(f) is so clear that other considerations are of “little materiality”. It is contended that given the sizeable value of the one share of the Residuary Estate, in contrast to the relatively small amount of funds required for Ching Sheung, it could not have been the Deceased’s intention, as this Court has found, that the entirety of the one share of the Residuary Estate is to be used for Ching Sheung.

37. Firstly, as we pointed out in [19.1] of our judgment, the language and meaning of the words in clause 5(2)(f) are clear beyond doubt and that there was only ever one gift, which is the gift for Ching Sheung. This being the case, other considerations deserve less weight in the construction of the clause: Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) HKCFA 38 at [43] to [45].

38. Secondly, as the Trustees and the 2^nd defendant point out, the 5^th defendant’s contention has no evidential basis. There is no admissible evidence before the Judge and before us as to, for instance, the value of the Residuary Estate as at 1954 when the Will was made, and how much Ching Sheung would cost. In the circumstances, there was no proper basis for Question (4) to arise.

39. We are not satisfied that Question (4) is an arguable question of great general or public importance.

D.6 The “or otherwise” limb

40. The 5^th defendant also relies on the “or otherwise” limb. He argues that because of the significant value of the Estate, our judgment has caused him to suffer from grave injustice and exceptionally serious ramifications. The practice of this court is to leave it to the Appeal Committee to decide whether exceptional circumstances are made out for leave to be granted under this limb: Bill Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260 at [9]. We do not consider that the value of the Estate alone constitutes an exceptional factor in favour of granting leave to appeal under section 22(1)(b).

E. Costs and disposition

41. For the reasons set out above, we refuse to give leave to appeal to the Court of Final Appeal and dismiss the notice of motion.

42. Applying the normal rule of costs follow the event, we order the 5^th defendant to personally pay the Trustees and the 2^nd defendant their costs of this application to be summarily assessed on a party-and-party basis and with certificate for two counsel.

43. We have considered the respective statements of costs of the Trustees and the 2^nd defendant. Taking a broad-brush approach, we summarily assess their respective costs of this application at HK$280,000 and HK$260,000.

44. The orders that we make are as follows:

(1)  The notice of motion is dismissed.
(2)  The 5^th defendant do personally pay the plaintiffs and the 2^nd defendant their respective costs of the application on a party-and-party basis with certificate for two counsel, summarily assessed in the case of the plaintiffs at HK$280,000 and in the case of the 2^nd defendant at HK$260,000.
(3)  The plaintiffs’ own costs be paid out of the Estate on indemnity basis.
(4)  The 5^th defendant’s own costs shall not be paid out of the Estate.

(Carlye Chu)
Justice of Appeal

(Maria Yuen)
Justice of Appeal

(Thomas Au)
Justice of Appeal

Mr Eugene Fung SC and Mr Keith Chan, instructed by Herbert Tsoi & Partners, for the plaintiffs

The 1^st defendant, unrepresented

Mr Anson Wong SC and Mr Justin Lam, instructed by Withers, for the 2^nd defendant

Raymond Tong & Co for the 3^rd defendant

Chui & Lau for the 4^th defendant

Mr Patrick Fung SC and Ms Teresa Wu, instructed by Chui & Lau, for the 5^th defendant

[1][2023] HKCA 1032

[2]Attenborough v Attenborough (1855) 69 ER 470; Re De Sommery [1912] 2 Ch 622; Gooding v Read (1853) 43 ER 606; Re Hubbard’s Will Trust [1963] Ch 275; Re Abbott [1893] 1 Ch 54; Re Canning’s Will Trusts [1936] Ch 309; and Webb v Sadler 8 Ch 419.

[2023] HKCA 1032-EN-2023-09-11

NORMAN GUY DONALD AND ANOTHER v. LEE MICHAEL CHAK CHUEN in his capacity as executor of the estate of LI PAK IU AND OTHERS

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CACV 203/2022, [2023] HKCA 1032

On Appeal From [2022] HKCFI 1106

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 203 OF 2022

(ON APPEAL FROM HCMP NO 610 OF 2021)

__________________

	IN THE MATTER OF the estate of LI SING KUI, deceased
	and
	IN THE MATTER OF Order 85 of the Rules of the High Court (Cap 4A)

__________________

BETWEEN
	(1) NORMAN GUY DONALD and (2) LAI KAR YAN (DEREK), THE JOINT AND SEVERAL ADMINISTRATORS OF THE ESTATE OF LI SING KUI DECEASED	Plaintiffs
	and
	LEE MICHAEL CHAK CHUEN in his capacity as executor of the estate of LI PAK IU	1^st Defendant
	LEE CHERYL ANN in her capacity as executrix of the estate of LI PAK TAT (by chain of representation)	2^nd Defendant
	CHEUNG WAI MING DAISY in her capacity as executrix of the estate of LI PAK LEUNG	3^rd Defendant
	LI PAK HUEN in his capacity as executor of the estate of LI PAK WING	4^th Defendant
	LI PAK HUEN	5^th Defendant

__________________

Before:

Hon Chu VP, Yuen and Au JJA in Court

Date of Hearing:	2 March 2023
Date of Judgment:	11 September 2023

___________________

J U D G M E N T

___________________

Hon Chu VP:

1. I agree with the judgment of Yuen JA.

Hon Yuen JA:

2. This is an appeal from a Decision of B Chu J (“the Judge”) given on 21 April 2022 (“the Decision”) in HCMP610/2021 in proceedings concerning the estate (“the Estate”) of Li Sing Kui (“the Deceased”) who died on 28 August 1955 aged 76, leaving a Will dated 15 December 1954 (“the Will”). Essentially, the matter before the Judge centered on the construction of a clause in the Will¹ which will be discussed later in this Judgment.

Background

3.1. The relevant background may be summarized as follows.

3.2. The Deceased was a wealthy businessman. He had a tin fong wife, 2 concubines, 5 sons and 15 daughters. In his Will, he provided for his family² in the following way.

3.3. As for his tin fong wife Madam Leung, and 2 concubines Madam Cheung and Madam Chau, in clause 4 of his Will, he gave each of them annuities of equal sums during their respective lifetimes, and in clause 8, he authorized the trustees to provide for the payment of these annuities by establishing an annuity fund for each, and on the cesser of an annuity, that annuity fund would revert to his residuary estate. The last surviving of them (Madam Chau) died in 2002.

3.4. As for the daughters, they are not affected by these proceedings, although some of them were given pecuniary legacies etc [clauses 3(a) and (b)³ and clause 5(1)(b)].

3.5. The Deceased had 5 sons, viz.

-  1 son Pak Tat (James), by Madam Leung
-  1 son Pak Iu (Francis), by Madam Cheung, and
-  3 sons Pak Leung (Bernard), Pak Wing and Pak Huen, by Madam Chau.

As seen below, they were beneficiaries in equal shares of his residuary estate.

4. Four of the sons died between 1987 and 2016, leaving only Pak Huen who is the 5^th defendant in these proceedings. The estates of the other 4 sons are represented as follows:

-  Lee Michael Chak Chuen is the 1^st defendant in his capacity as executor of Pak Iu’s estate,
-  Lee Cheryl Ann is the 2^nd defendant in her capacity as executrix of Pak Tat’s estate (by chain of representation),
-  Cheung Wai Ming Daisy is the 3^rd defendant in her capacity as executrix of Pak Leung’s estate, and
-  Pak Huen is the 4^th defendant in his capacity as executor of Pak Wing’s estate, of which he is also the sole beneficiary: Lee Goo Lynette Siu Yin v Cheung Wai Ming and others[2019] HKCFI 1086, [29].

(Where this Judgment refers to “the 5^th defendant”, that is a reference to Pak Huen personally only).

5. The executors and trustees named in the Will were Pak Iu, Pak Leung and Madam Chau. Probate was first granted on 19 June 1956 to Pak Iu and Madam Chau, power being reserved to Pak Leung to apply for a like grant. Subsequently, on 22 May 1957, double probate of the Will was granted to Pak Leung.

6. There have been previous proceedings between the members of the Li family, but they are not material to the present appeal. Suffice it to say that on 3 July 2020, Letters of Administration with the Will annexed de bonis non of the estate left unadministered were granted to the plaintiffs, who are professional trustees (“the Trustees”).

HCMP610/2021

7. In 2021, the Trustees commenced these proceedings. In the Originating Summons (“OS”), the first issue was for the court to determine the issue of the validity of Clause 5(2)(f) of the Will and to make consequential orders.

Clause 5

8. Clause 5 of the Will provided as follows:

“5. I devise and bequeath all my real and personal estate and effects unto my Trustees upon Trust to sell call in and convert the same into money with power in their absolute discretion to postpone such sale calling in and conversion and after payment thereout of my debts funeral and testamentary expenses, legacies and annuities to invest the residue of such moneys in manner hereinafter authorised and to stand possessed of such investments and of all parts of my estate for the time being unsold (hereinafter called ‘the Residuary Estate’) during the joint lives of my Tin Fong wife Li Leung Shi and my Concubines Li Cheung Shi and Li Chau Shi and the life of the survivor of them⁴ Upon the following Trusts:-
(1) Upon Trust from time to time and at such times and in such manner as my Trustees shall in their absolute discretion think fit to pay or apply the income of the Residuary Estate or any part or parts of such income or such part of the capital of the Residuary Estate as they may for the time being think advisable in or towards the following purposes:-
(a) To keep and maintain a family house at No.15 Robinson Road Victoria Hong Kong for the habitation of my Tin Fong Wife Li Leung Shi my Concubines Li Cheung Shi and Li Chau Shi during their respective lives.
(b) For the support maintenance and education of each of my unmarried daughters hereinbefore mentioned until each of them shall attain the age of twenty eight years or marry under that age.
(c) For the support maintenance and education of each of my sons hereinbefore mentioned⁵ until each of them shall attain the age of twenty eight years Provided that my Trustees if they think advisable may continue to pay for the educational expenses of any of my said sons until he shall attain the age of thirty years⁶.
(2) Subject to the above Trusts my Trustees shall divide the Residuary Estate into SIX (6) equal shares and hold the same Upon Trust as follows:-
(a) ONE (1) share to and for my son LI PAK IU absolutely.
(b) ONE (1) share to and for my son LI PAK TAT absolutely.
(c) ONE (1) share to and for my son LI PAK LEUNG absolutely.
(d) ONE (1) share to and for my son LI PAK WING absolutely.
(e) ONE (1) share to and for my son LI PAK HUEN now aged 16 years absolutely.
(f) ONE (1) share to be appropriated for ‘Ching Sheung’ (蒸嘗) for the purpose of Ancestor Worship Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons”.

9. The first issue in the OS was whether clause 5(2)(f) (the entirety of which is referred to hereafter as “the Ching Sheung clause”) was void for infringing the Common Law rule against perpetuities, and if so, whether distributions of the Residuary Estate should be divided into 5 equal shares for the 5 residuary beneficiaries in clauses 5(2)(a) to (e), i.e. the 5 sons.

10.1. All the defendants were served with the OS, and all (except the 1^st defendant) were legally represented. Chui & Lau, the solicitors for the 4^th and 5^th defendants filed an acknowledgment of service on 23 July 2021 indicating that they did not intend to contest the proceedings. All the defendants were absent at the hearing of the OS⁷ before the Judge on 13 December 2021.

10.2. After considering the Trustees’ submissions, the Judge declared on 13 December 2021 that the Ching Sheung clause was void for infringing the Common Law rule against perpetuities, and ordered that any interim distribution earmarked by the plaintiffs for clause 5(2)(f) be distributed to the 5 residuary beneficiaries in clauses 5(2)(a) to (e), i.e. the 5 sons.

10.3. On 17 December 2021 however, the solicitors for the 4^th and 5^th defendants wrote to the court asking for a rehearing as leading counsel⁸ had given certain advice the previous day. The order of 13 December 2021 had not been sealed. On 5 January 2022, the Judge allowed the application for a rehearing.

The 5^th Defendant’s Summons

11. On 22 February 2022, Chui & Lau, as solicitors for the 5^th defendant only, issued a summons for the determination of the following questions arising in the administration of the Estate:

“1. Notwithstanding that the part of the Clause 5(2)(f) of the Will of the Deceased dated 15^th December 1954 (the ‘Will’) on the one share of the residuary estate ‘to be appropriated to ‘Ching Sheung’ (蒸賞[嘗]) for the purpose of Ancestor Worship’ is void, whether the proviso for the discretionary trust stated in the remainder of clause 5(2)(f) of the Will is valid;
2. If the answer to Qn.1 is ‘yes’, whether the one share of the residuary estate stated in clause 5(2)(f) of the Will is held on discretionary trust for the sole surviving object of the discretionary trust, i.e. the 5^th Defendant;
3. If the answer to Qn. 2 if ‘yes’, whether the 5^th Defendant being the sole surviving object of the discretionary trust, is entitled to direct the Plaintiffs as trustees to vest the one share of the residuary estate mentioned in clause 5(2)(f) of the Will in the 5^th Defendant”.

The Judge’s Decision

12. At the hearing, the Judge heard submissions from the leading counsel for the 4^th and 5^th defendants, the 2^nd defendant and the Trustees respectively. The 1^st defendant filed written submissions but did not appear. The solicitors for the 3^rd defendant did not file submissions and were absent.

13. Whilst it was common ground that the gift for Ching Sheung was void, the respective cases of the protagonists may be encapsulated as follows:

(1)  the case of the 4^th and 5^th defendants now was that the proviso in the Ching Sheung clause was valid, and that as the 5^th defendant is now the sole survivor of the sons referred to in the discretionary trust in the proviso, he is entitled to direct the Trustees to vest the share in that clause in him exclusively [§§34-39];
(2)  the case of the 2^nd defendant was that, without making submissions on severability of the 1^st and 2^nd Parts of clause 5(2)(f) (referred to in the following paragraph), even if so severed, the 2^nd Part only created a mere power (as opposed to a discretionary trust or trust power), and so the Trustees were not obliged to exercise it. It was further submitted that if a mere power was not exercised within a reasonable time, it expired, and the asset should be distributed to persons entitled in default of appointment (i.e. all the 5 sons) [§27].
(3)  The 1^st defendant objected to the case of the 4^th and 5^th defendants.

14. In the Decision, the Judge described clause 5(2)(f) as having two parts [§24]:

“(1) ONE (1) share to be appropriated for ‘Ching Sheung’ (蒸嘗) for the purpose of Ancestor Worship (“1^st Part”)
(2) Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons (“2^nd Part”)”.

15. The Judge summarised the issues between the parties as follows [§28]:

“(1) whether the fact that the 1^st Part is void defeats the entire Clause 5(2)(f) or whether the 2^nd Part takes effect notwithstanding the invalidity of the 1^st Part (“Issue (1)”)
(2) even if the 2^nd Part can be severed from the 1^st Part, whether the 2^nd Part created a mere power or a trust power (“Issue (2)”)
(3) if a mere power then whether a reasonable time has already lapsed (“Issue (3)”)”.

16. The Judge recorded that there was no dispute between the parties that the interpretation of a will follows the same approach as interpretation of contracts and other legal documents, and the court must ascertain the objective intention of the testator as expressed in the wording of the relevant provisions in the will, having regard to context and purpose [§32].

17.1. For the reasons set out in the Decision, the Judge held, on Issue (1), that “the 2^nd Part of Clause 5(2)(f) does not have a life of its own, if the 1^st Part is found to be invalid” [§52].

17.2. The Judge then went on, in the event that she was wrong on Issue (1), to discuss Issues (2) and (3), holding that the proviso gave the Trustees a mere power, and that reasonable time for the Trustees to exercise the mere power has lapsed.

17.3. The Judge ordered that in respect of the costs incurred after the hearing on 13 December 2021, the costs of the Trustees and the 2^nd defendant be borne by the 5^th defendant personally on a party and party basis with certificate for two counsel, and any costs not so recovered be paid out of the Estate on an indemnity basis, with certificate for two counsel. The Judge also ordered that the 5^th defendant’s own costs should not be paid out of the Estate. No order was made regarding the costs of the 4^th defendant who was represented by the same counsel instructed by Chui & Lau as the 5^th defendant at the hearing. The costs orders were made on a nisi basis. There was no application by any party to vary any of those costs orders.

Appeal

18. The 5^th defendant (but not the 4^th defendant) appealed against the Judge’s Decision on all the issues, as well as the costs orders. The respondents to the Notice of Appeal were the Trustees and the 1^st to 4^th defendants. For the appeal, the Trustees were represented by leading and junior counsel. The 1^st defendant was not legally represented. He filed written submissions but did not appear. The 2^nd defendant was represented by leading and junior counsel. The 3^rd defendant’s solicitors were absent. As for the 4^th defendant, Chui & Lau remained on the record as solicitors. No written submissions were filed. Although Chui & Lau (as solicitors for the 4^th defendant) did not apply to the court to be excused from the hearing, they stated on the attendance sheet at the hearing of the appeal that they acted for the 5^th defendant only.

Discussion

Issue (1)

19.1. In my view, the meaning of the Ching Sheung clause is clear beyond doubt. Whilst it may have been convenient to refer to the clause as being in two “parts”, references to “parts” or “severance” should not be grafted onto the clear language of the Will. Clause 5(2)(f) should be read as a whole. There can be no question that there was only ever one gift in clause 5(2)(f), which is the gift for Ching Sheung (ancestor worship). Even though under the proviso the Trustees could in their uncontrolled discretion benefit one or more of the sons, they could only do so out of that gift. If one applies the test suggested by the 5^th defendant⁹, it is clear that the power to benefit the son(s) was dependent upon the validity of the gift for Ching Sheung. Accordingly, where (as is common ground) that gift was void ab initio, there was never any gift, and therefore no property which the Trustees could apply for the benefit of any son(s)¹⁰.

19.2. It was submitted on the 5^th defendant’s behalf that the language in clause 5(2) is mandatory, but I do not see how that would assist his case. The language is plainly consistent with the testator’s intention that one share of the Residuary Estate is to be used for Ching Sheung, with the Trustees given a discretion to benefit the son(s) from that share intended for Ching Sheung. Crucially, there were no words¹¹ indicating that the testator was aware that the Ching Sheung gift would (or might) be void, and that he intended to provide for the son(s) on the contingency that the gift for Ching Sheung failed in limine. As stated in Canning at p.312, in construing a will which raises questions as to the rule against perpetuities, the will must be construed in the first place without regard to the rule against perpetuities.

19.3. The words “provided nevertheless” do not assist the 5^th defendant’s case. The proviso refers to “the said share”, which meant the share to be appropriated for Ching Sheung. The words “provided nevertheless” simply gave the Trustees the power to apply for the benefit of the sons(s) that which would otherwise have been used for Ching Sheung. But since the gift for Ching Sheung was void ab initio, there was simply nothing from which the Trustees could exercise that discretion.

19.4. The language of clause 5(2)(f) is so clear that, in my view, considerations such as the sufficiency of other provisions for the sons [§45 and §48] or dispositions to other members of the family [§46], are of little materiality, and it is not necessary to discuss the Judge’s views on them.

19.5. That is the end of the matter, and the appeal should be dismissed.

Issue (2) and Issue (3)

20.1. On Issue (2), the legal principles on the differences in the duties of trustees who are given a trust power and a mere power respectively were set out by the Judge in the Decision [§§54-57]. In a nutshell,

-  where they are given a trust power over property, they have a duty to dispose of the property, but they determine in their discretion which objects to benefit and when and how;
-  where they are given a mere power over property, they have two discretions:
(i)    a discretion whether to distribute at all; and
(ii)  if they decide to exercise the 1^st discretion, a discretion which objects to benefit and when and how.

20.2. On the assumption that the gift in the “2^nd Part” of clause 5(2)(f) was severable from the “1^st Part”, the Judge held that the words “my Trustees may in their uncontrolled discretion pay or apply the said share” indicated that they may – or may not – pay or apply the share, and so their discretion was not simply in relation to selection, timing or apportionment.

20.3. Accordingly, the Judge held, on Issue (2) that there was a mere power and not a trust power [§67], and on Issue (3), that since a reasonable time had already elapsed after receipt of the accumulated funds, and the power to pay the Ching Sheung share for the benefit of the son(s) had never been exercised [§81], the Trustees’ discretion must be treated as having expired [§82].

21. In light of my view on Issue (1), I will only discuss Issues (2) and (3) briefly. The scenario postulated is that the Trustees have a duty to set aside a 6^th share, but they “may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support” of one or more of the sons. Whilst the words emphasized above may point to a mere power, the subject matter is a share in the residuary estate where there is no gift over. The absence of a gift over is indicative of a trust power rather than a mere power, although it is not conclusive¹². On the other hand, if the Trustees are donees of a mere power, then the situation would arise where 1/6 of the residuary estate would be left in limbo for an uncertain time, with the Trustees required only to consider whether to make a distribution or not, which would not likely have been the testator’s intention.

22.1. Accordingly, if I am wrong on Issue (1), then I would hold on Issue (2) that the Trustees were given a trust power, and not a mere power, over the Ching Sheung share. It would follow that Issue (3) would not fall for consideration.

22.2. If, in relation to Issue (2), the Trustees were given a trust power, then the deaths of the other 4 sons would result in the reduction of the members of the class of potential beneficiaries to leave only the 5^th defendant, and under the rule in Saunders v Vautier¹³which can be applied to discretionary trusts¹⁴, he would be entitled to terminate the trust and receive the sole benefit of the assets¹⁵. However, as mentioned earlier, these views are expressed only on the assumption that I am wrong on Issue (1).

Costs

23. As for costs, the 5^th defendant argued that it was in the best interests of the Estate for the provisions in the Will to be properly construed. It was also said that the Trustees had failed to present the case “from all reasonable angles”. Accordingly, he asked that the costs orders made by the Judge be set aside, and his costs below be paid out of the Estate.

24.1. In the Decision, the Judge held that she was satisfied that the 5^th defendant’s summons was issued not for the benefit of the Estate but for his own benefit, and that this falls within the 3^rd class of cases described in Re Buckton¹⁶ [§87]. The 3^rd class is where

“... the application is made by a beneficiary who makes a claim adverse to other beneficiaries, and really takes advantage of the convenient procedure by originating summons to get a question determined which, but for this procedure, would be the subject of an action commenced by writ, and would strictly fall within the description of litigation. ... when once convinced that I am determining rights between adverse litigants I apply the rule which ought, I think, to be rigidly enforced in adverse litigation, and order the unsuccessful party to pay the costs”.

24.2. The application of this approach to cases on the construction of wills was confirmed by the Court of Appeal in Tan Cheng Gay and others v Tan Choo Suan and another¹⁷.

25. In the present case, the Judge was entitled on the evidence to make the costs orders that she did. The costs orders were made on a nisi basis, but the 5^th defendant did not apply to vary them. As such, there are no grounds for this court to interfere with the Judge’s exercise of discretion in the making of the costs orders.

Order

26. For the reasons set out above, I would dismiss the appeal with the following orders nisi as to the costs of the appeal:

(a)  the 5^th defendant is to personally pay to the plaintiffs and the 2^nd defendant their respective costs of the appeal on a party and party basis with certificate for two counsel, and any costs not so recovered by the Trustees be paid out of the Estate on an indemnity basis, with certificate for two counsel;
(b) the 5^th defendant is to personally pay the costs of the 1^st defendant, who may submit a summary of his costs (with reference to Order 62 rule 28A of the Rules of the High Court for litigants in person) to the court (copied to the 5^th defendant’s solicitors) within 14 days of this Judgment. The 5^th defendant may file submissions on the 1^st defendant’s summary of costs within 14 days thereafter. The court will then undertake a summary assessment of the 1^st defendant’s costs on paper;
(c)  there be no order as to the costs of the 3^rd defendant, as no written submissions were filed and her legal representatives were absent;
(d) there be no order as to the costs of the 4^th defendant, as no written submissions were filed and Chui and Lau did not attend court in their capacity as solicitors for the 4^th defendant.
(e)  the 5^th defendant’s own costs of the appeal should not be paid out of the Estate.

Hon Au JA:

27. I agree with the judgment of Yuen JA.

(Carlye Chu)
Vice President

(Maria Yuen)
Justice of Appeal

(Thomas Au)
Justice of Appeal

Mr Eugene Fung SC and Mr Keith Chan, instructed by Herbert Tsoi & Partners, for the plaintiffs

The 1^st defendant, acting in person, absent

Mr Anson Wong SC and Mr Justin Lam, instructed by Withers, for the 2^nd defendant

Raymond Tong & Co for the 3^rd defendant, absent

Chui & Lau, for the 4^th defendant

Mr Edward Chan SC and Mr Abel Lam, instructed by Chui & Lau, for the 5^th defendant

1 See §8 below.
2 (Or some of them, as he only provided for 6 daughters).
3 As a matter of completeness, in clause 3, Pak Leung, Pak Wing and Pak Huen (referred to as the Deceased’s “unmarried sons”) were also given pecuniary legacies “if he shall attain the age of 21 years or marry”: [clause 3(c)].
4 The last surviving of them (Madam Chau) died in 2002.
5 Viz. Pak Leung, Pak Wing and Pak Huen.
6 The youngest son Pak Huen attained the age of 30 years 14 years later (in 1968).
7 The Judge also heard the Trustees’ application in HCMP1621/2021, which is not relevant to this appeal.
8 Mr Edward Chan SC who replaced another leading counsel.
9 Whether the gift in question is “dependent upon and ulterior [meaning situated more remotely] to the trust which immediately precedes it”: In re Canning’s Will Trusts [1936] Ch 309, 314.
10 In re Canning’s Will Trusts, at 313 on the rule in Jarman on Wills 7^th ed p.324.
11 The word “nevertheless” does not mean “regardless of the validity of the Ching Sheung provision”, contrary to the 5th Defendant’s skeleton submissions, §8.
12 Snell’s Equity 34^th ed §21-044.
13 (1841) 41 ER 482.
14 Schmidt v Rosewood Trust Ltd [2003] 2 AC 709, §§40-41.
15 Lewin on Trusts 20^th ed §22-022.
16 [1907] 2 Ch 406, 415.
17 CACV200/2013, 23 May 2014, §55.