CHAN SIOW YOON (陳筱雲), MA SO CHUN (馬素真), WAN FUNG SIN (尹鳳仙) and LAM SHUN YUEN (林純源) suing on behalf of SIN TIN TOA HOME FOR THE AGED (先天道安老院) AND OTHERS v. SECRETARY FOR JUSTICE

HCMP 1298/2021

[2023] HKCFI 120

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1298 OF 2021

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DECISION

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INTRODUCTION

1.  The present proceedings concern a charitable organization Sin Tin Tao Home for the Aged (“STT Home”)[1] and two of its properties situate at Lot 64 and Lot 597 in DD 185 in Shatin (collectively referred to as “Properties”). The applicants (“collectively referred to as “Applicants”) are seeking an order for the 2^nd to the 5^th applicants (respectively “A2”, “A3”, “A4” and “A5”) to be appointed as trustees of the STT Home to replace 4 former trustees (collectively “Former Trustees”) to hold the Properties.

2.  The Applicants commenced the present proceedings under the Trustee Ordinance, Cap 49 (“Ordinance”) by issuing an ex parte originating summons on 7 September 2021. On 22 October 2021, Mr Justice Lok directed that the Secretary for Justice (“SJ”) be joined as a party and that the originating summons to proceed on inter partes basis. Subsequently, the Applicants formally issued a summons on 3 November 2021 to join the SJ as a respondent in these proceedings (“Joinder Summons”). The Joinder Summons was eventually fixed for a hearing before this Court on 24 August 2022.

3.  As there was no objection from the SJ to being joined, an order was made by this Court at the hearing. Although the Applicants had made submissions to seek an order in terms of the originating summons at the hearing, there had been further exchanges between SJ and the Applicants in November 2021, and that further information had been sought by the SJ in relation to the Applicants, including whether the Applicants have any criminal conviction and/or been sentenced to a term of imprisonment, and secondly whether they, or any of them are lunatics of unsound mind and thirdly whether they or any of them is a bankrupt.

4.  It was submitted on behalf of the Applicants that (1) on the issue of criminal record, A2 to A5 would need to apply to the Police Department for such record of no criminal conviction and (2) on the issue of the mental state, A2 to A5 would need to seek reports from a psychiatrist, and that as A2 to A5 have been the members of the Executive Committee of the STT Home for some time, they are the de facto trustees and that the information sought was not only unnecessary but unreasonable.

5.  In any event, as the relevant correspondences between the Applicants and SJ had not been properly placed before this Court prior to the hearing, nor were there any paginated hearing bundles, this Court adjourned the hearing and granted leave to the Applicants to file a supplemental affirmation, and the parties to lodge further written submissions. Thereafter, both the Applicants and the SJ jointly sought directions for the matter to be dealt with on papers, for which leave was given.

FACTUAL BACKGROUND

6.  The STT Home was first registered on 6 July 1949 as a society under the then section 5 of the Societies Ordinance, Cap 151. The certificate issued at that time was subsequently superseded by another certificate issued on 4 September 2007 with a minor change in the English name.

7.  On 7 October 2020, a company called Sin Tin Toa Home for the Aged Limited (“Limited Company”) was incorporated to take over the assets and liabilities as well as the operation of the STT Home.

8.  The Applicants are members of the Executive Committee of the STT Home (“Executive Committee”), for the year 2020-2021, A2 Chan Siow Yoon (now aged 76) being the Vice Chairperson, A3 Ma So Chun (now aged 59) being the Superintendent of the STT Home, A4 Wan Fung Sin (now aged 70) being the Vice Treasurer and A5 Lam Shun Yuen (now aged 59) being the Deputy Superintendent of the STT Home. They are also all religious priests of the Sin Tin Toa. They have all given their consent to be appointed the new trustees.

9.  The supporting affirmations were filed by Wong Sin Chai (“Wong”), the Chairperson of the Executive Committee. As at 21 March 2019, apart from the Properties in DD185, the STT Home held 7 other lots in DD185, and various other properties. According to Wong, all these other properties previously held by the STT Home were transferred to the Limited Company upon its incorporation and that the Properties had not been included in the transfers due to oversight.

10.  As seen in the record of the Land Registry, Lot 597 of the Properties was acquired on 24 March 1961 by the STT Home through its then trustees and Lot 64 was acquired by the STT Home on 2 May 1988 through its then trustees. The Properties had been held in the names of the Former Trustees who had all passed away over time, without having appointed in their respective lifetime new trustees to succeed them.

11.  The last surviving Former Trustee Madam Ho Kam Oi (“Madam Ho”) passed away on 18 February 2020. It was Wong’s evidence that Madam Ho was a follower of Sin Tin Toa and that she was a spinster who devoted her life to her religious belief and left no valuable assets of her own. Notwithstanding that it was Wong’s evidence that it was unlikely that there would be personal representative/s of Madam Ho’s estate, the STT Home had conducted a will search of Madam Ho at the Law Society of Hong Kong, which failed to produce any response. The search at the Probate Registry indicated that a grant had been granted in respect of a person with the same Chinese name as Madam Ho, but as the date of death of that person was different, it was believed that the grant was not in respect of Madam Ho’s estate.

12.  It was under the above circumstances that the STT Home commenced the present proceedings.

SECTIONS 42 AND 45 OF THE ORDINANCE

13.  The Applicants rely on sections 42 and 45 of the Ordinance. Section 42 of the Ordinance provides as follows:

“42. Power of court to appoint new trustees

(1) The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. In particular and without prejudice to the generality of the foregoing provision, the court may make an order appointing a new trustee in substitution for a trustee who is sentenced to a term of imprisonment or is a lunatic or a person of unsound mind or is a bankrupt or is a corporation which is in liquidation or has been dissolved.

(2) An order under this section, and any consequential vesting order or conveyance, shall not operate further or otherwise as a discharge to any former or continuing trustee than an appointment of new trustees under any power for that purpose contained in any instrument would have operated.

(3) Nothing in this section gives power to appoint an executor or administrator.”

14.  Section 45 of the Ordinance provides as follows:

“45. Vesting orders of land

In any of the following cases, namely—

(a) where the court appoints or has appointed a trustee, or where a trustee has been appointed out of court under any statutory or express power;

(b) where a trustee entitled to or possessed of any land or interest therein, whether by way of mortgage or otherwise, or entitled to a contingent right therein, either solely or jointly with any other person—

(i) is under disability; or

(ii) is out of the jurisdiction of the court; or

(iii) cannot be found, or, being a corporation, has been dissolved;

(c) where it is uncertain who was the survivor of 2 or more trustees jointly entitled to or possessed of any interest in land;

(d) where it is uncertain whether the last trustee known to have been entitled to or possessed of any interest in land is living or dead;

(e) where there is no personal representative of a deceased trustee who was entitled to or possessed of any interest in land, or where it is uncertain who is the personal representative of a deceased trustee who was entitled to or possessed of any interest in land;

(f) where a trustee jointly or solely entitled to or possessed of any interest in land, or entitled to a contingent right therein, has been required, by or on behalf of a person entitled to require a conveyance of the land or interest or a release of the right, to convey the land or interest or to release the right, and has wilfully refused or neglected to convey the land or interest or release the right for 28 days after the date of the requirement;

(g) where land or any interest therein is vested in a trustee whether by way of mortgage or otherwise, and it appears to the court to be expedient, the court may make an order (in this Ordinance called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct:

Provided that—

(i) where the order is consequential on the appointment of a trustee the land or interest therein shall be vested for such estate as the court may direct in the persons who on the appointment are the trustees; and

(ii) where the order relates to a trustee entitled or formerly entitled jointly with another person, and such trustee is under disability or out of the jurisdiction of the court or cannot be found, or being a corporation has been dissolved, the land, interest or right shall be vested in such other person who remains entitled, either alone or with any other person the court may appoint.

15.  Further section 53 provides as follows:

“53. Vesting orders of charity property

The powers conferred by this Ordinance as to vesting orders may be exercised for vesting any interest in land, stock or thing in action in any trustee of a charity or society over which the court would have jurisdiction upon action duly instituted, whether the appointment of the trustee was made by instrument under a power or by the court under its general or statutory jurisdiction.

DISCUSSION ON THE STATUTORY REGIME

Generally

16.  As pointed out by Ms Camille Shek, Senior Government Counsel (Ag) appearing on behalf of the SJ, the Court’s power under section 42(1) to appoint a new trustee should be read in conjunction with sections 57(1) and s 57A of the Ordinance. These sections provide as follows:

“57. Persons entitled to apply for orders

(1) An order under this Ordinance for the appointment of a new trustee or concerning any interest in land, stock, or thing in action subject to a trust, may be made on the application of any person beneficially interested in the land, stock, or thing in action, whether under disability or not, or on the application of any person duly appointed trustee thereof.

(2) An order under this Ordinance concerning any interest in land, stock, or thing in action subject to a mortgage may be made on the application of any person beneficially interested in the equity of redemption, whether under disability or not, or of any person interested in the money secured by the mortgage.

57A. Charitable trusts

Without prejudice to the generality of sections 56 and 57, the court may provide such relief, make such order, or give such direction, as it thinks just relating to a charitable trust upon an application made to it—

(a) by—

(i) 2 or more persons who have the consent in writing of the Secretary for Justice to make the application;

(ii) the Secretary for Justice; or

(iii) all or any one or more of the trustees or persons administering the trust, or persons claiming to administer the trust, or persons otherwise interested in the trust; and

(b) either—

(i) complaining of a breach of the trust or supposed breach of the trust; or

(ii) for the purposes of the better administration of the trust.

The locus standi of the Applicants in making the present application

17.  As recorded in the sale and purchase agreements, assignments, declarations of trusts registered at the Land Registry, the STT Home is the beneficial owner of the Properties. Thus, under section 57(1) of the Ordinance, the 1^st applicant being the STT Home is entitled to make an application for the appointment of a new trustees.

18.  As to whether A2 to A5 fall within “persons otherwise interested in the trust” under section 57A(a)(iii), Ms Shek has drawn an analogy with the words “person otherwise interested in the charity” under section 115(1)(c) of the Charities Act 2011 and what was said by Sir Robert Megarry V-C in Halsemere Estates Ltd and another v Baker and others [1082] 3 All ER 525 , at j, pg 536 and at a-b, pg 537:

“Now I do not aspire to define the meaning of the phrase ‘any person interested in the charity’ in this context…… Those who have some good reason for seeking to enforce the trusts of a charity or secure its due administration may readily be accepted as having an interest in the charity, whereas those who merely have some claim adverse to the charity, and seek to improve their position at the expense of the charity, will not. The phrase, I think, is contemplating those who are on the charity side of the fence, as it were, however much they may disagree with what is being done or not being done by or on behalf of the charity. The phrase does not refer to those who are on the other side of the fence, even if they are in some way affected by the internal affairs of the charity.”

19.  Ms Shek also referred the Court to Bisrat & Others v Kebede & Others [2015] EWHC 840 (Ch) where it was further clarified that not every person who may become a beneficiary in a loose sense as an object of the charitable trust ‘is a person interested in the charity’, and only those “who have an interest which is far greater than ordinary members of the Public” would so qualify[2]. The court eventually found the claimants, being the regular worshippers of the church over the years, were person interested in the church as a registered charity given their longstanding connection to the church.

20.  Although it has not been cited by Ms Shek, in釋照月 v Secretary for Justice and Others [2017] 4 HKLRD 803, CACV 221/2017 (10.08.2018), the Court of Appeal has set out the proper approach in the application of section 57A(a)(iii) of the Ordinance, and that the expression “persons otherwise interested in the trust” must not be construed narrowly[3].

21.  Having considered the above authorities, I am satisfied that the A2 to the A5 would fall within “persons otherwise interested in the trust” under section 57A (a)(iii) of the Ordinance by reason of:

(1)  they are members of the Executive Committee of the STT Home and have good reasons seeking to secure the due administration of the trust of the Properties, which are properties belonging to the STT Home and where the STT Home is situated;

(2)  A2 to A5 all appear to have long standing connections with the STT Home as religious priests of Sin Tin Toa and have been members of the STT Home since 1980.

Whether for the purposes of better administration of the trust

22.  As submitted by Ms Shek, the application appears to be for the purposes of better administration of the trust since the application is made to prevent the failure of the trust for want of trustees.

Test of expediency

23.  In this regard, Ms Shek has referred the Court to the following cases which contain facts similar to the current one:

“(i) In Re Nightingale’s Charity (1844) 3 HARE 336, the court allowed an application to appoint new trustees for a charitable trust formed in 1634. Although the trust instrument stated that new trustees shall be appointed by the 4 surviving trustees out of the original 12 trustees appointed in the instrument, the court accepted that no such appointment had ever been made and that the original 12 trustees were long since dead by the time of the application.

(ii) In Re Tam Kwong Cheung (unreported, HCMP 699/2020, 2 July 2020), the court observed at §37 that “cases of expediency may arise where there is great difficulty in obtaining administration to the deceased trustee or last surviving trustee, or where there is no personal representative of a sole surviving trustee”, citing Lewin on Trusts (20^th edition), vol 1, §15-087. Considering the fact that the sole trustee of a private trust has emigrated and died overseas some years ago and that it was extremely difficult for the applicant, the person administering the trust, to locate the personal representative of the deceased trustee and the beneficiaries as he had lost contact with them, the court found that the test of expediency was satisfied: §38.

24.  Having considered the above cases, I am of the view that the test of expediency is satisfied in the present case.

Whether A2 to A5 are fit and suitable persons to be appointed as trustees

25.  As pointed out by Ms Shek, the provisions in section 42(1) of the Ordinance would suggest that the new trustees to be appointed should not be persons who (i) have been sentenced to a term of imprisonment; or (ii) who is a lunatic or a person of unsound mind; or (iii) who is a bankrupt or is a corporation which is in liquidation of has been dissolved. This was why the SJ had raised their initial queries in November 2021. I accept that SJ was only carrying out its duty as parens patriae of charitable organisations and such queries were neither unnecessary nor unreasonable as alleged by the Applicants.

26.  Ms Shek has also referred to the Court to Lewin on Trusts (20^th Edition) at paragraph 15-085 and that the following evidence of fitness would generally be required:

(1)  a signed and sealed consent to act as trustee by the proposed new trustee(s);

(2)  evidence as to the qualification and experience of the proposed new trustee(s) and

(3)  evidence that the proposed new trustee will be able to act independently despite his being or related to or otherwise connected with a beneficiary.

27.  Ms Shek has further referred to para 19-02 which states as follows:

“… where a charity is established for prescribed religious purposes or where the benefits of the charity are intended to be confined to persons holding prescribed religious views, the trustees should be persons pressing the religious doctrines specified.”

28.  According to the Skeleton Submissions filed on behalf of the STT Home on 18 August 2022, A2 to A5 are all aged between 59 and 76. They have been acting as members of the Executive Committee of the Home for a period between 7 and 17 years[4]. Three of them (ie with the exception of A2 who is the current Vice Chairman) are already holding 8 other landed properties on trust for the STT Home. There is no contrary evidence suggesting they are persons of unsound mind.

29.  The bankruptcy search against each of A2 to A5 on 17 August 2022 did not reveal any positive results. There is thus no evidence suggesting any of them is a bankrupt.

30.  Each of A2 to A5 has already signed a consent to act.

31.  According to Article 3 of the constitution of the STT Home, the STT Home was founded upon the religious spirit and doctrines of Sin Tin Toa, and so as religious priests of Sin Tin Toa, A2 to A5 are likely to fall within the category of “persons professing the religious doctrines specified ”.

32.  Having considered the above, I am satisfied that there is no evidence suggesting that any of A2 to A5 are unsuitable or unfit to be appointed as new trustees for the STT Home.

INHERENT JURISDICTION

33.  The Applicants did not in fact invoke the Court’s inherent jurisdiction nor were any submissions made in this regard.

34.  As held at paragraphs 32 & 36 of Re Tam Kwong Cheung, the court has “an inherent jurisdiction to appoint new trustees as part and parcel of its general power to supervise the administration of a trust”, in addition to its statutory power under section 42 of the Ordinance. Such inherent jurisdiction would only be exercised in exceptional circumstances as the statutory power of the court would generally suffice: §34, citing §24 of London Capital & Finance plc (in Administration) v Global Security Trustees Ltd [2019] EWHC 3339 (Ch).

35.  Further, when exercising the court’s inherent power to appoint trustees, the same principles applicable to the exercise of its statutory power apply[5].

36.  In any event, in light of what has been said earlier, it is not necessary in the present case for this Court to invoke the Court’s inherent jurisdiction.

CONCLUSION

37.  I grant an order in terms of paragraphs (1) to (5) on page 3 of the Applicants’ Supplemental Submissions. SJ shall submit a statement of costs within 7 days and the Applicants shall submit their list of objections within 7 days thereafter. The costs summarily assessed shall be paid by the Applicants to SJ within 7 days thereof.

OBSERVATION

38.  This Court is grateful to Ms Shek for her detailed skeleton submissions on behalf of the SJ. The Applicants appeared to have failed to consider the matters set out by Ms Shek in her submissions. The application made by the Applicants was initially by way of an ex parte originating summons without even serving the SJ with a copy. Further, the evidence in Wong’s 1^st affirmation and submissions in the Applicants’ initial skeleton submissions were simply insufficient for this Court to consider whether to make an order, whether under the statutory regime or its inherent jurisdiction. As the STT Home is a charitable organisation, the Applicants should not be expecting this application to be “rubber-stamped” by the Court. Even though SJ took a neutral stance, the Applicants should have set out detailed submissions on the various matters, as set out by Ms Shek on behalf of SJ, for this Court’s consideration.