Creation of a Chinese customary trust. Adverse possession as between co-owners

In Tang Tak Sum v Tang Kai Fong ([2013] HKEC 1159, CFI) the first question was whether certain land in the New Territories was subject to a Chinese customary trust. It was held that it was not since no positive steps had been taken to establish such a trust and  there had been no transfer of land to such a trust. No managers had ever been appointed under section 15 of the New Territories Ordinance. Thus, the terms of a 1939 Division of Family document stating that the land was to be ancestral worship property were not effective. This conclusion was confirmed by the fact that the four sons of the person who had created the Division of Family had, on their father’s death, had themselves registered as tenants in common of the land under the now-repealed section 17 of the New Territories Ordinance ([59]).

Alternatively, even if the Division of Family had taken effect, the trust created was ended by the registration as tenants in common since this registration had priority over Chinese customary law ([67]). Further, this registration amounted to agreement by all the heads of the family for the purposes of Chinese customary law that the trust was to end ([74]). Alternatively, the registration as tenants in common was a valid basis for estoppel by convention to operate (the common assumption being that the land was not subject to an ancestral trust ([76] – [88]).

The plaintiffs claimed the quarter share due to them and even having failed to establish the existence of a Chinese customary trust, they would still be entitled to this as successors of one of the original tenants in common. The defendants had, however, collected the rent from the property without accounting to the plaintiffs for 31 years. This was held to be an ouster and, having continued for more than 20 years, it allowed the defendants to defeat the plaintiff’s title by adverse possession.

Michael Lower

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