SEAN ERIC MCLEAN HOTUNG v. HONG KONG SHANGHAI BANKING CORPORATION ("TRUSTEE")

HCA 2467/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2467 OF 2008

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D E C I S I O N

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INTRODUCTION

1.  There are two summonses before me.  There is the defendant’s summons seeking to strike out the writ and statement of claim and to dismiss this action.  There is also the plaintiff’s summons:-

(a)  to dismiss the defendant’s said summons;

(b)  to enter summary judgment declaring the plaintiff is a beneficiary of the will of Sir Robert Hotung.

BACKGROUND

2.  The background leading to this action and the two summonses is largely undisputed and can be summarized as follows.

3.  Sir Robert Hotung was a businessman well-known in Hong Kong (“the testator”).  He passed away in April 1956.  He made a will; it was dated 4 May 1955 (“the Will”).

4.  The plaintiff is one of the great-grandsons of the testator.  He was born in 1965, about 9 years after the testator’s death.  The defendant, on the other hand, was appointed under the Will to be the trustee and executor of the testator’s estate.

5.  The plaintiff commenced this action in November 2008, claiming to be one of the beneficiaries under the Will.  He sues the defendant for breach of trust in:-

(1)  illegally distributing the testator’s estate in favour of some of the beneficiaries to the prejudice of the others;

(2)  defrauding the plaintiff and other beneficiaries in his class by excluding them from one class of beneficiaries under the Will;

(3)  failing to perform the fiduciary duties owed by the defendant towards the class of beneficiaries of which the plaintiff is one.

RELEVANT CLAUSES IN THE WILL

6.  The following clauses in the Will have been relied upon by the parties.

Clause 7(7) of the Will (relied upon by both parties) states:-

“I BEQUEATH the following pecuniary legacies … [to] each of my grandchildren and great-grandchildren (other than the children and grandchildren of my deceased son Ho Wing) the sum of Five Thousand Dollars absolutely”.

Clause 14 of the Will (relied upon by the defendant) reads:-

“I DIRECT my Trustees to pay out of the income of my Residuary Estate … [specific legatees were then named and were given pecuniary legacies] (the named legatees do not include the plaintiff)” (emphasis supplied).

Clauses 15 and 25 of the Will (relied upon by the plaintiff) stipulate:-

“I DECLARE that if any of the trusts herein declared concerning my Residuary Estate or any share or shares therein shall fail by reason of no person attaining a vested interest therein then I DIRECT that subject to the trusts powers and provisions herein contained … the said shares and any share or shares which may accrue thereto by virtue of this present proviso shall be held by my Trustees as an accretion to the other share or shares … the trusts whereof shall not at the date of such acrruer have failed as aforesaid … ” (emphasis supplied);

“I DIRECT that in the interpretation of this my Will an infant shall be deemed to attain majority on the attainment of his Twenty-first birthday” (emphasis supplied).

THE STRIKING OUT APPLICATION

7.  The law governing this aspect is settled: pleadings should be struck out and actions dismissed using the court’s summary powers only in plain and obvious cases: Hong Kong Civil Procedure 2009, Vol. 1, para. 18/19/4.

(a)            Locus Standi

8.  The defendant’s primary stance is that the plaintiff lacks the necessary locus standi to commence or continue this action.

9.  It is common ground the plaintiff’s right to sue depends on whether he is a beneficiary (more precisely, whether he is a member of a class of beneficiary) under the Will.  Because it is the plaintiff’s case he is one of the testator’s great-grandsons, his right to sue has to rest on clause 7(7) of the Will.

10.  Consequently, to determine the main issue in this application, it is necessary to ascertain the true meaning of “great-grandchildren” in clause 7(7) of the Will.

11.  It is the defendant’s contention that phrase was intended to refer only to those of the testator’s great-grandchildren who were either already born, or at least conceived at the time of the Will (alternatively, at the time of the testator’s death).  The plaintiff argues otherwise, and submits that the phrase was intended to cover all of the testator’s great-grandchildren irrespective of their date of birth.

12.  Both parties rely on the following passages in Williams on Wills (2008) 9^th Ed.:-

“Where the donee is designated by a description which may at different times apply to different individuals and the context does not point to any future time as the time at which the donee has to be ascertained, then prima facie the only person who is entitled to take is the one satisfying the description at the date of the will, if there is anyone to the knowledge of the testator who then satisfied it … ” (emphasis supplied) (para. 65.2);

“If the gift is immediate and is a separate bequest of specific amount (as a gift of so much apiece) to each one of a group of certain children, who (though generally described in the same words as a class) are to take as individuals and not as a class, prima facie only those in existence at the death of the testator can take, and those coming into existence afterwards are excluded … ” (emphasis supplied) (para. 65.3).

13.  Because of the factual context, it is unnecessary to decide whether para. 65.2 or 65.3 applies to the plaintiff.

14.  In short, for the reasons stated below, I agree with the defendant and disagree with the plaintiff.

15.  First, it should be noted clause 7(7) of the Will specifically excluded “the children and grandchildren of [the testator’s] deceased son Ho Wing” from the classes of beneficiary set out therein.

16.  The affidavit evidence filed in connection with this application contains no evidence regarding Ho Wing or his descendents.  But, judging from the language used, the only logical inference to be drawn from the exception to clause 7(7) is:-

(a)  the reference to “the children … of … Ho Wing” must mean those of his children who were already born (or at least conceived).  This is because Ho Wing must have pre-deceased the testator and it would not make sense to infer that Ho Wing’s children can mean those who might be borne after the date of the Will;

(b)  the reference to the “grandchildren … of Ho Wing” by itself does not give any indication of whether it was intended for the existing grandchildren.  However, when this reference is considered together with the rest of clause 7(7), it must be intended to refer to the existing ones.  Were it otherwise, one would expect a reference to the great-grandchildren of Ho Wing in the exception to clause 7(7);

(c)  the grandchildren of Ho Wing would of course be the great-grandchildren of the testator.  Thus, when the whole of clause 7(7) is considered, the reference to the testator’s great-grandchildren can only mean those already born (or at least already conceived) at the time of the Will.

17.  The defendant’s affidavit evidence reinforces the above conclusion.  As a fact, there were 6 great-grandchildren existing before the death of the testator (some of them were born before the date of the Will).

18.  The plaintiff relies on clauses 15 and 25 of the Will in support of his argument that, in context, clause 7(7) of the Will was intended to have a “wait-and see” meaning; that is, the bequest was intended for future members of the class as and when they came to be born.

19.  Neither clause can assist the plaintiff.  Clause 15 of the Will clearly was concerned with the testator’s residuary estate (as defined by clause 14) for which the plaintiff cannot possibly claim entitlement.  Clause 25 of the Will is nothing more than a definition provision to put beyond doubt the meaning of “majority”.

20.  The plaintiff’s reliance on the decision in Hongkong Bank Trustee Ltd. v. Ho Shai Lai and Others M.P. No. 2879 and 2880 of 1984 (27 December 1984) is misconceived.  As the defendant correctly points out, that was a decision relating to the defendant’s application to enlarge its powers conferred by the Will.  It cannot properly be regarded either as the defendant’s acknowledgement of the plaintiff’s right to sue, or the court’s decision to such effect.

(b)  Sufficiency of Particulars

21.  Having reached the conclusion above, it is strictly unnecessary to consider this aspect.  I shall do so for completeness.

22.  To put it as mildly as can be, the statement of claim is set out in a way which does not promote comprehension; in fact, one needs to second-guess and cross-refer to different parts of the pleading to try to understand the plaintiff’s case summarized in para. 5 above.

23.  The plaintiff has helpfully explained the gist of his case during the hearing of this application.  In the course of his verbal explanation, the plaintiff also referred to various supporting documents.  No doubt the exercise helps to clarify his case.

24.  But the legal requirement is in effect that pleadings ought to be self-sufficient.  Hence, at the very least, the statement of claim is embarrassing and ought to be struck out for that reason alone.

25.  The plaintiff also asks the court to grant leave for the statement of claim to be amended if it was struck out.  Had it not been for the lack of locus standi, this may be a case where the plaintiff should be afforded an opportunity to re-formulate his case by way of an amendment.

THE ORD. 14 APPLICATION

26.  The plaintiff accepts that this application is also dependent on the court’s decision on his right to sue.

27.  Because I concluded in the defendant’s favour as regards that matter, this application should be dismissed.

CONCLUSION

28.  This is an appropriate case for the powers conferred by RHC Ord. 18 r. 19 to be exercised in the defendant’s favour.  The statement of claim is struck out and this action is dismissed with costs (including any reserved costs) to be taxed if not agreed.

29.  As stated above, the plaintiff’s summons is dismissed.

OTHER MATTERS

30.  The plaintiff also launches what in effect is a technical objection to the defendant’s summons.

31.  He argues that the defendant’s summons is itself an abuse of process.  The grounds on which this application are that the writ and statement of claim:-

“… disclose no reasonable cause of action … are frivolous and vexatious … may prejudice, embarrass or delay the fair trial of the action, and … are otherwise an abuse of the process of the Court”.

32.  The supporting affidavit, so it is claimed, “departs” from that basis in that it alleges that the plaintiff lacks the locus to sue.  The plaintiff contends that the departure falls foul of Ord. 18 r. 10(1).

33.  The objection stems from a misunderstanding of the Rules of the High Court and has no substance.  Ord. 18 r. 10(1) prohibits inconsistencies between previous and later pleadings.

34.  The grounds set forth in the plaintiff’s summons are not “pleading”: see Ord. 1 r. 4(1) and Hong Kong Civil Procedure 2009, Vol. 1, para. 1/4/5.  Indeed, the language must have been taken from the provisions of Ord. 18 r. 19(1)(a) to (d).

35.  A plaintiff who commences or continues a civil litigation when he has no right to do so can properly be regarded as falling within one or more of the four limbs of Ord. 18 r. 19(1).

COSTS ORDER

36.  The parties disagree as regards the applicability of the usual rule that costs should follow the event.  I consider there is no valid ground to depart from the usual rule.  There will accordingly be a costs order that the costs of the two summonses be paid by the plaintiff to the defendant to be taxed if not agreed.  This order is of course in addition to that in para. 28 above.