The rule against perpetuities does not apply to compensation paid on the resumption of Tso land

The rule against perpetuities does not apply to compensation paid on the resumption of Tso land to which section 13 of the New Territories Ordinance applies. The law of partition does not apply to Tso land. A sale needs the consent of all of the members. There is no Chinese custom concerning the distribution of Tso land (since in principle it was not to be divided). The members themselves would have to agree on how it (or sale proceeds) should be distributed.

In Kan Fat-Tat v Kan Yin-Tat ([1987] HKLR 516) land belonging to a Tso was resumed by the government. Compensation took the form of cash and Letters B. As a result the Tso property comprised this compensation and other land belonging to the Tso. The plaintiff sought a partition of the land and per stirpes distribution of the compensation. The defendant, his brother, claimed that if the Tso failed then its property should belong to him on a resulting trust as he had provided the Tso property in the first place. It was held that section 13 of the New Territories Ordinance and Chinese customary law in the New Territories meant that the compensation remained Tso property and the rule against perpetuities did not apply. Had it applied, the Tso would fail with regard to that property and it would be held on resulting trust for the defendant. The law on partition did not apply to Tso land. Any sale or distribution needed the consent of all of the members. There was no Chinese custom as to how a distribution should be effected and the members would have to agree on this for themselves.

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