Archive for the ‘Chinese customary trusts’ Category

Removal of the duty manager of a tso or t’ong

December 3, 2016

In Tang Fu Sun v Tang Lik Yuen ([2016] 4 HKLRD 608) the managers of two Chinese customary trusts sought declarations that the duty manager of the trusts (the same person being duty manager of both trusts) had been validly removed from office by a meeting of the general assembly of the descendants in January 2006. The defendant, the duty manager, argued that this resolution was ineffective since: (a) the proposed resolution to remove him had not appeared on the agenda for the meeting; and (b) that the customs of the trusts required resolutions of the assembly to be passed unanimously. The defendant argued that neither of these conditions for his valid removal had been satisfied. The plaintiffs were granted the declarations that they sought. Based on the law of meetings, there was no requirement to place the proposal to remove the duty manager on the agenda for the meeting since this amounted to a proposal to dismiss an employee and did not affect the interests of members as such. Nor was the defendant able to establish the existence of a custom that required decisions of the assembly to be reached unanimously.

Anthony To J. commented on the status of a duty manager. Unlike the manager, which was a requirement of section 15 of the New Territories Ordinance, there was no legal requirement to have a duty manager and the duty manager had the status of an employee. In the absence of some custom to the contrary, it was reasonable to think that the manager had the power to appoint and remove the duty manager since the manager would be legally liable for the duty manager’s actions or omissions. The managers’ evidence that the customs of the trusts gave them power to appoint and remove the duty manager as an exercise of their own authority was inherently reasonable and, for that reason, plausible. Since the duty manager was also a member of the trusts, a requirement for unanimity would amount to a requirement that he vote for his own removal; this would be an absurd requirement. Given that the assembly was at the heart of the governance of the trusts, it too had the power to remove the duty manager ([51]).

Michael Lower

Adverse possession and Tong land

October 13, 2014

In Tsang Kwong Kuen v Hau Wai Keung Gaius ([2014] HKEC 1612, CA) P claimed to have acquired title of Tong land as a result of adverse possession. The claim failed for several reasons at first instance.

One of these was the principle in Leung Kuen Fai v Tang Kwong Yu (applied in Wong Shing Chau v To Kwok Keung). There were members of the Tong whose beneficial interests had not been defeated.

In the present case, Lam V-P explained the principle thus:

‘The essence of the relevant principle is that due to the peculiar characteristic of a Tso or Tong (preserved by Chinese customary law and s 13 of the New Territories Ordinance Cap 97) with new equitable interest stemming from each new member being admitted upon birth by reason of his hereditary link with the focal ancestor, a person who is in adverse possession cannot extinguish the title of the Tso or Tong under the Limitation Ordinance unless he can establish the requisite limitation period against all the living members of the Tso or Tong.’ (at [5]).

In this appeal, the plaintiff contended that there was insufficient evidence to prove the existence of the Tong.  This failed since the oral evidence to this effect given in the first instance proceedings had not been contradicted by the plaintiff. ‘There is no requirement that a Tong must have a written document proving its nature as a hereditary Tong. ‘([9]).

The plaintiff further argued that there was insufficient evidence to show that the members said to have undefeated equitable interests really were members of the Tong. The managers relied upon their own knowledge and on informal methods of finding out about new members.  This method was adequate in the context of this type of institution:

‘First, in dealing with a customary hereditary institution like a Tong, it would not be appropriate to expect records are being kept in the same manner as in the case of a register of members for a large commercial corporation. Hau Keung’s evidence on how the list was compiled makes perfect sense in the context of an institution of this nature. It had been verified by all the managers and basically they knew each other. In any event, the presumption of regularity is applicable.’ ([12]).

Michael Lower

Tong land and the Limitation Ordinance

December 7, 2013

Tsang Kwong Kuen v Hau Wai Keung Gaius ([2013] HKEC 1920, CFI) concerned an unsuccessful adverse possession claim to Tong land. The court found that the plaintiff had not been in possession and this was really the end of the matter. In any event, the judgment contained a reminder that a new equitable interest is created with the birth of each member of a Tong. As a result, the limitation period runs anew when that member attains his majority ([50]). The claim also failed on this basis ([51]).

Michael Lower

Proper representatives of an estate consisting of a share in the assets of a wui

August 29, 2013

In Man Leung v Man Yuet Kwai ([2013] 2 HKLRD 1122, CFI) a share in a wui had been left by H to ‘Fuk Ma’. The main question was whether, as a matter of fact, this referred to just one of H’s wives (Madam To) or to all three. It was in essence a dispute between those descended from  Madam To and the descendants of another wife. All of the wives died some time ago. The contest was between the descendants in the male line of Madam To (who alleged that only they were entitled) and those of a concubine or third wife who argued that they too were entitled to a share along with the descendants of the second wife. The descendants of Madam To succeeded. On the facts, ‘Fuk Ma’ referred only to their mother.

Devolution of the interest was governed by Chinese customary law ([143]). It was common ground between the parties that the share would pass to the descendants in the male line of Fuk Ma once the identity of the person or persons so referred to had been established.

Even though the assets of Madam To’s estate comprised a share in a wui, the estate had to be administered in accordance with ordinary Hong Kong law.  No probate or letters of administration had been granted in respect of Madam To’s estate([150] – [151]). The share in the proceeds of sale of the wui land belonging to Madam To’s estate could not be paid out until lawful personal representatives of Madam To had been appointed.

Michael Lower

Adverse possession: land owned by Tong but no evidence of the birth of a new member

July 2, 2013

In Wealth Hill International Limited v Wong Kwan Siu ([2013] HKEC 838, CFI) a Tong was the registered owner of land. W had been in adverse possession for the necessary twenty year period. If a new member of the Tong had had been born, the limitation period would have started to run again ([72]). Here, however, there was no evidence of such a birth. W had defeated the Tong‘s title.

Michael Lower

Sale of Tso land to a member whose equitable interest may have been extinguished as a result of adverse possession

February 6, 2013

In Wong Shing Chau v To Kwok Keung ([2008] HKEC 969, CA) D (and his family) had been in possession of land since 1972. A Tso was the formal owner of title to the land but there was no doubt that D had had the necessary possession and intention to possess since 1972. In 1996, the Tso sold the land to P (a member of the Tso). P now sought possession of the land. P succeeded. The Court of Appeal referred to Leung Kuen Fai v Tang Kwong Yu and approved the reasoning in that case ([9] – [11]). New members of the Tso had been born since 1972. There were members whose interests had not been extinguished and so the Tso’s title was still alive. Thus, the title acquired by P in 1996 had not been extinguished.

Adverse possession and Tso land

February 4, 2013

In Leung Kuen Fai v Tang Kwong Yu ([2002] 2 HKLRD 705, CFI) L claimed that he (and his father before him) had been in possession of land owned by the defendant Tso. The periods of adverse possession taken together stretched back to 1923.

The court held the relevant law for the period from 1923 until the commencement of the Limitation Ordinance in 1865 was the Real Property Limitation Act 1833. The members of a Tso each have their own independent life interest in the Tso land which they do not claim through any other person. They have a right to possession for the purposes of the Limitation Ordinance and the equitable interest survives any effect that the law of limitations might have on the legal title. In this case, there had never been a time when there was not a member whose right to possession had not been defeated as a result of the law of limitations.

It was possible that the legal title of the managers had been defeated as a result of 20 years’ adverse possession commencing in 1923 since the Real Property Limitation Act 1833 did not have a provision equivalent to section 10(2) of the Limitation Ordinance.  At the date of the action there were three members of the Tso whose right to possession had not been defeated by L’s possession and who could therefore bring proceedings ([73]).

The Limitation Ordinance applies to Tso land as to any other land in Hong Kong notwithstanding section 13 of the New Territories Ordinance ([72]).

Can a widow claim a share of Tso / Tong property?

February 1, 2013

In Lee Sun Kiu v Ho Kay Fuk ([2004] HKCU 960, CFI) P was the widow of the member of a customary trust. Her husband had died several decades before the action. The couple had two daughters but no sons. Trust property had been sold and P sought a declaration that she was a member of the Tong and entitled to a share of the proceeds of sale. Her action failed.

In principle, membership of a Tso or Tong is exclusively for male members. While the court did not rule out the possibility of a local custom to the contrary, there was no cogent evidence of such a custom in this case ([34] – [51]).

As regards Tso / Tong properties (rather than family properties):

‘Since the interest and membership arises upon birth and ceases upon death, there is no question of succession of such interest and membership from father to son. Nor is there any question of that interest and membership forming part of the family property of a deceased male. When an heir is adopted posthumously, the adopted son becomes a member on his own right instead of being succeeded to the interest of the deceased in the Tso.’ (72]).

Illegitimate son’s right to Tso distributions

January 30, 2013

In Tang Chun Kit v Tang Lo Ping ([2004] HKEC 1105, CFI) P was the illegitimate son of the member of a Tso. D was the manager of the Tso who, in essence, sought the court’s directions as to how to proceed. P sought to have his name recorded in the Register of Indigenous Inhabitants in respect of the Tso. He also made a retrospective claim to a share of distributions made since his birth.

The court heard expert evidence as to the relevant Chinese customary law. The parties accepted that membership of a Tso was a birthright and did not depend on having gone through any formalities ([17]). There was a question as to whether illegitimate sons were entitled to a full share or only a half share. Insufficient evidence on this point was made available to allow the court to settle this point and so a second hearing was arranged. By the time of this hearing ([2005] HKEC 1469) the parties had agreed that illegitimate sons were entitled to a full share ([8]).

P accepted that he could not make a retrospective claim. The court held that D had acted reasonably in relying on the records of the Tso in making earlier distributions. There was no duty to conduct a full enquiry as to the membership of the Tso before making a distribution ( [2004] HKEC 1105, [39]).

As to costs, the court applied the general rule that the trust fund should bear the costs of an action seeking directions as to the administration of the trust ([2005] HKEC 1469, [20]).

Allegation of breach of trustees’ breach of duty: need to prove loss

December 11, 2012

In Man Ping Nam v Man Fong Hang ([2006] 4 HKLRD 484, CFA) the managers of a wui agreed to sell land to EY (a shell company) but without vacant possession and subject to severe restrictions on the permissible use. Shortly thereafter EY agreed to sub-sell to another company SLD at a considerably higher price but on terms that provided for a significant reduction in price if vacant possession could not be given and if it proved impossible to relax the restrictions on use. The transactions were later completed.

One of the members of the wui alleged a breach of trust in agreeing to sell at a substantial undervalue. The only evidence of this (given the unique nature of the land and the fact that it would be of interest only to a very limited set of buyers and middlemen prepared to take the risk of being able to sell on to them) was that the headline price in the sub-sale was higher than the price to be paid under the agreement with EY.

The Court of Final Appeal rejected this as evidence of a sale at an undervalue; the terms of the two transactions were radically different and there was no satisfactory way of comparing the two (or at least the plaintiff had not proved that this was possible). Hence, even if the managers’ conduct had been open to criticism, there was no evidence that any loss had been incurred by the wui.