KWONG SUK CHUN v. WONG FUNG MING AND ANOTHER

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H E A E N O T E

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    In 1978 a mother declared that she held a property on trust for her two daughters (both them infants). The declaration of trust recited (incorrectly) that the purchase money for the property had been advanced by, the daughters. In 1989 one daughter had attained her majority but the other was still under age. The mother wanted to sell the property to provide a fund for the maintenance and education of the younger daughter. The declaration of trust contained no power enabling the mother to sell the property, and she applied for an order to confer the necessary power on her.

HELD : that such an order would be made, but only on terms that another trustee was appointed to act together with the mother.

Per curiam : It was wrong inaccurately to recite the true facts in a declaration of trust and any such declaration made for the benefit of infants should in any event contain appropriate trusts, powers and provisions for the application of the application and income of the trust property.

1989, M.P. No. 66

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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IN THE MATTER OF Section 56 of Trustee Ordinance Chapter 29

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IN THE MATTER OF the property known as Flat A on the Sixth Floor of the said Tung Fat House, Kowloon, Hong Kong.

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J U D G M E N T

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Godfrey, J. This is an application under s.56 of the Trustee Ordinance Cap. 29, sub-section (1) of which provides (so far as is material) as follows :

"Where in the management or administration of any property vested in trustees any sale ........ or other disposition ...... is in the opinion of a Court expedient, but the same cannot be effected by a reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees....... the necessary power for the purpose on such terms, and subject to such provisions and conditions, if any, as the Court may think fit ........"

2. In the present case, the trust property is the above - mentioned Flat A, 6th floor, Tung Fat House, 306-310A Sai Yeung Choi Street, Kowloon ("the trust property"). The trust is held on the trusts declared by a declaration of trust dated 28th June 1978 and made by the plaintiff. By the declaration, of trust, the plaintiff declared that she held the trust property upon trust for her daughters, Wong Fung Kam and the defendant, as tenants in common in equal shares.

3. The declaration of trust contains no power enabling the plaintiff to effect a sale of the trust property; and the defendant is still a minor (her sister has attained her majority so that she (the defendant) cannot consent to the proposed sale.

4. The declaration of trust recites, quite untruthfully that the trust property was purchased out of moneys belonging to and provided by the defendant and her sister. The correct facts probably are (there is no evidence) that the property was brought by the plaintiff out of her own moneys as a gift to her daughters. Whether this deception was resorted to in order to avoid stamp duty, or whether it merely reflects yet another solicitor's mindless use of a standard form intended to be used in altogether different circumstances, I do not know and I do not pause to inquire. I do know that the facts are not correctly stated in the declaration of trust; and I express the hope that in future solicitors will take care to insure that this does not happen.

5. Be that as it may, I am satisfied that the sale proposed is a beneficial one, and I intend to approve it. The object of the sale is to provide a fund for the maintenance and support of the defendant. I am not prepared to approve the sale unless the net proceeds are paid to two trustees, but I understand that the defendant's guardian ad litem, Wong Shui Oi, is prepared to act with the plaintiff in that capacity. Of course, it will be necessary for the plaintiff to appoint Wong Shui Oi as a co-trustee under the declaration of trust, which remains the trust instrument affecting the proceeds of the sale of the trust property. On that footing. I will approve the sale; the proceeds of sale will be held on trust for the defendant and her sister as tenants in common in equal shares. The income of the defendant's share may be used by the trustees for her maintenance and education under s.33 of the Trustee Ordinance (the statutory power to apply income for maintenance and to accumulate surplus income during a minority). But the trustees will not be at liberty to apply capital for that purpose, without the further leave of the Court, unless the application can be justified under s.34 of the Ordinance (the statutory power of advancement). That is another reason why a declaration of trust in the form before me is so completely unsuitable for use where beneficiaries are under-age; for it contains no appropriate trusts, powers or provisions to meet the case and the trustees therefore have only those limited powers to deal with trust moneys which are conferred on them by the Ordinance.

6. The costs of this application will have to be taxed (unless agreed by the defendant's sister, the other beneficiary) and retained and paid out of the defendant's share in the trust property.