ATTORNEY GENERAL v. PON YUP CHONG HOW BENEVOLENT ASSOCIATION AND OTHERS

1991 M. P. No. 1896

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. In these proceedings the court is required to determine the trusts on which certain property in Hong Kong is held.

2. The plaintiff, the Attorney-General, claims that the property is held on trust for charitable purposes. The 1st defendant, Pon Yup Chong How Benevolent Association, is a non-profit making association, incorporated under the laws of the State of California, which claims that it alone is entitled to the property. The remaining defendants are the trustees, who support the Attorney-General.

3. The trust property is of very considerable value. Briefly described, it consists of the following:-

(1) 58 Bonham Strand West;

(2) 78 Main Street, Shaukiwan;

(3) 6 Ko Shing Street;

(4) 18 Sai Yuen Lane;

(5) a fund in court representing the proceeds of resumption of 15 Queen's Street; and

(6) bank deposits representing accrued rents and interests derived from these various properties.

The facts (as I find them) are as follows.

4. On the mainland of China, lying at the head of the Pearl River Delta near the city of Guangzhou in Guandong Province, are three counties or districts, called Nanhai, Pon Yup and-Shun Tak. These "three districts" are collectively called Sam Yup.

5. By the middle of the 19th century, the region had fallen on hard.times. A number of its inhabitants.became economic migrants. For some of these the recently discovered goldfields of California proved a magnet. Newly arrived immigrants would naturally turn to their "landsmen" (to borrow a Yiddish word) for help and guidance. In 1850 the Sam Yup Association was formed in San Francisco to provide such help and guidance to provide protection against external threats, and to provide machinery for the resolution of internal disputes.

6. The lives of Chinese immigrants caught up in the Californian gold rush often proved to be nasty, brutish and short. Those who survived regarded it as their pious duty to locate and retrieve the remains of those who had died, gather them together, and tranship them to their native villages in China for proper burial there in accordance with Chinese custom. To this end, in 1855 the Nanhai people in San Francisco established an organizition called the Fook Yam Tong. In 1858, the Pon Yup and Shun Tak people there followed suit, with the establishment of the Chong How Tong and Hung On Tong respectivelr (These three organizations became the component parts of the Sam Yup "three districts" Benevolent Association, from the history of which thisbackground appears.)

7. There is in evidence a report of the Chong How Tong of San Francisco, which I shall call "CHT (San Francisco)", recorded in 1935 from which I set out the following extracts:-

"Regarding matters concerning burial of human remains, there were references made in the Analects of our ancestorc. In the Books ... there were references made as to how human remains should be attended to and the arrangements to be made for their burial. ... As Chinese, we are optimistic as long as we are alive, but if after our death, our bodies can be buried in our homeland, we should be even more thankful to God for it. ... due to abundance of mineral wealth having been discovered in Californian Territories, many of our countrymen took long journeys across the Ocean to those lands seeking fortune. Some of them before making any headway encountered the misfortune of death. Their homeland being thousands of miles away and out of vision, it was impossible for their souls to return to their native place. During festive occasions, the living would have thoughts of remorse because no one could console those who were dead and buried. All that they could do were to shed tears at their deceased friends' tombs when they paid them homage. Realizing that they themselves were also travellers, they could not help feeling their remorse more intensely. For this, we natives of [Pon Yup] are gravely concerned. So [in 1858] we founded [CRT (San Francisco)] with funds generously donated by those home returning retired merchants and those who were more well off in the villages taking on the responsibility of transporting the remains of fellow countrymen who died abroad back to their homeland for burial. Most of our ancestors cherished the idea that after death their bodies should be buried in homeland soil and the living should do their best to achieve the wishes of the dead. Such practice can render assistance to a Government in the administration of its policy and can promote love and affection amongst our fellow men. .... Due to the fervour of the righteous merchants in Hong Kong participating in this charitable course by contributing donations to establish 'Kai Sin Tong' and establishing a mortuary to temporarily accommodate coffins shipped in from overseas and publishing the names of the dead, relatives of the deceased are able to claim back dead bodies for burial. As regards those unknown of bodies and unclaimed for coffins, arrangements would be made for their burial in public cemetery so that wandering souls might have a home as their resting place. A public cemetery was founded in the winter of [1888] with stone. monuments of grand outward appearance erected. Tombs are situated on both sides. Every year during spring and autumn worshipping festivities, there have never been shortages of offerings of burning incense. Since the funds so donated became more and more cumulative as the days go by, apart from expenses in providing accommodation for the dead, the excess funds should be utilized for educational purposes to manifest.the Chinese traditions, culture and art. From time to time the donations coming from California .... directed funds be utilized to purchase real estate to enable income to be produced as a long term investment. ... Recently a school has been founded at Shui Mo Bay [on the mainland] for 'Kai Sin Tong Chong How Tong'. ... "

8. As the above suggests (and there is a considerable body of other evidence to the like effect), the logistics of the operation for which CHT (San Francisco) assumed the responsibi lity i.e., the location, retrieval and transhipment.of the remains of the dead to Pon Yup, were not simple. They dictated the establishment of another Tong here in Hong Kong, called the Kai Sin Tong ("KST") which was to provide facilities for the unloading of coffins in Hong Kong, for the provision of temporary mortuary accommodation, for notification to the relatives of the deceased (when traceable); and for onward transhipment to the mainland. There they would be received by yet another Tong, which I will call "CHT (Guangzhou)". CHT (Guangzhou) would then make arrangements for the burial with appropriate ceremonies of the remains of those natives of Pon Yup who had no relatives or whose relatives could not be traced or were unable through poverty thenselves to make the necessary arrangements.

9. The operations of CHT (San Francisco) were funded by substantial donations from active merchant there, and from retiring merchants, who could afford to assist in this way; by smaller donations (as the evidence shows), in the region of $10 or $20) from the less well-off among the immigrants; and out of income from investments.

10. The initial transhipment took place soon after CHT (San Francisco) was founded. The coffins were transhipped on this first occasion directly to the mainland but the larger size of the vessels used for subsequent transhipments made it necessary for the organizers to arrange for the coffins to be off-loaded in Hong Kong and transferred to smaller vessels. So Hong Kong was used as a staging post or half-way house. KST was founded for this purpose. KST's operations were financed partly by donations by erchants in Hong Kong and partly by subventions or remittances from CHT (San F rancisco). Some of the money was laid out in the purchase of property in Hong Kong to produce income, and this is the source of the funds now represented by the trust property with which the court is concerned. The records show that the funds to be made available for distribution were to be used solely for the purposes of the transhipment and burial operation and purposes ancillary thereto. CHT (San Francisco) regarded KST as its Hong Kong arm, acting for and assisting CHT (San Francisco) when properties were purchased by KST to produce rent for income and when income fell to be.distributed to defray the cost of the operation at this end KST also played.a partin ensuring the making of proper provision for burial on the mainland of the remains of the deceased (including the construction of a public cemetery for the burial of the remains of those whose relatives could not be traced) and for the proper conduct of and attendence at worshipping ceremonies.

11. On 18th September 1874, CHT (San Francisco) was incorporated as a non-profit making organization under the laws of the State of California in the name of "Pon Yup Company". Its corporate life was expressed to be limited to 50 years. The purpose for which it was stated to be formed was to aid and assist the poor, indigent, needy, superannuate, halt, lame, blind, aged and impecunious Chinese of the Pon Yup company to return to China and to transport the bones thither of deceased Chinese". On 7th May 1954, an amendment to the Association's Articles of Incorporation was expressed to make the term of its existence perpetual. On 3rd February 1955, a further amendment to the Association's Articles of Incorporation was  expressed to change the name of the corporation from "Pon Yup Company" to "Pon Yup Chong How Benevolent Association".

12. It is apparent that CHT (San Francisco) ceased separately to exist as an unincorporated association with the incorporation of the 1st defendant, which (although there is no.direct evidence of it) I take to.have succeeded on its incorporation to the property of CHT (San Francisco).

13. The transhipment operation was carried out on a number of occasions, but none since the Japanese occupation of Hong Kong during the Second World War. Some of the funds available in Hong Kong and originally earmarked for the purpose were subsequently used for the foundation and support of a school on the mainland but 40 years or so ago all activities here ceased other than the process of variation-and transposition of investments held or expressed to be held by trustees here for CHT (San Francisco) and/or KST.

14. Against this background, I find that the trust property with which the court is now concerned represents monies, originally donated or subscribed in San Francisco and Hong Kong for a religious purpose, that is to say, for the repose of the souls of those hailing originally from Pon Yup and dying in or around San Francisco. (All the rest is mere machinery; the location and retrieval of the remains of the dead, the transhipment of those remains in coffins to Hong Kong and thence to the mainland, the burial of the remains; the conduct of the appropriate accompanying ceremonies; and so on.)

15. It is in my judgment now clearly established by authority that property held on trust to finance, for the benefit of a suhstantial section of the community, provision for the repose of souls of the dead is property held on charitable trusts (see, for the latest case on the subject, In re Hetherington [1990] 1 Ch. 1). Accordingly, I hold the argument of the Attorney-General, that the trust property here is held for charitable purposes, to be correct and I will so declare.

16. It follows that I reject the claim of the 1st defendant that it alone is entitled to the trust property. It cannot be ertitled to the trust property for its general purposes, which at wider than the particular purpose for which I have held the funis now represented by the trust property were originally donated or subscribed (indeed I am not satisfied that the objects of the 1st defendant are exclusive ly"charitable objects). And since the particular purpose has anyway failed, the court must direct a scheme for the application of the trust property cy-press. It will not direct the trust property, which is now under its control, to be transferred to the 1st defendant so that the 1st defendant can carry that particular purpose into execution: see Tudor on Charities 7th edition (1984) pp.299, 300.

17. In the result, I shall direct a scheme to be settled for the application of the trust property cy-pres and I shall adjourn these proceedings into chambers for further consideration of that matter.