WU WAN YAU v. WU KAI MAN (胡繼文) (Administrator of the estate of Wu Tam Po (胡譚保) alias Wu Po (胡保) alias Wu Lui Po (胡雷保), Deceased) AND ANOTHER

HCMP 689/2019

[2019] HKCFI 2400

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 689 OF 2019

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JUDGMENT

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1.  The late father^[1] and late uncle^[2] of the applicant purchased the property in question back in 1970. The applicant and his late uncle were registered as the owners of the property, and in respect of which they executed a declaration of trust for holding the property for the benefit of their family tso tong then to be formed. Unbeknownst to all involved, the appointment of the managers of the tong was never registered, and the tong has never existed as a valid legal entity capable of holding any property since its purported formation. The applicant commenced these proceedings to rectify the situation with reference to the subsequent devolution of the interest in the property since then.

Background

2.  The affirmation filed by the applicant in support of these proceedings gives the following background.

3.  The applicant’s grandfather founded the family business under the name of Yee On Lung in 1960.  Subsequently, his two sons, i.e., the late father and late uncle of the applicant, began to run the family business.

4.  In 1970, the idea of purchasing the property in question and the setting up of a tso tong for the male descendants of the grandfather came about.  The tso tong would be named Yee On Tong (“YO Tong”).  Because of the old age of his father, the applicant was put forward, together with the applicant’s late uncle, to become the two registered owners of the property.  At the same time, they executed a declaration of trust (“the Declaration of Trust”) for such purpose.  The applicant and his late uncle also became the managers of YO Tong.

5.  Pursuant to section 15 of the New Territories Ordinance, Cap 97 (“NTO”), whenever any land is held in the name of a clan, family or tong, such clan, family or tong shall appoint a manager to represent it, and the appointment shall be duly reported to the District Office of the Home Affairs Department.  Upon that, the manager shall have full power to hold and to dispose of the land as if he were the sole owner.  If the tong does not appoint or register such a manager within 3 months of the acquisition of the land, it shall be lawful for the Government to re-enter upon the land, which shall thereupon become forfeited.  According to the applicant’s recollection, solicitors were then engaged to handle the compliance with the above provision.

6.  The property consists of 2 identical units.  Both were rented out.  The late father and late uncle of the applicant had since collected rental income from each of the 2 units respectively.

7.  The applicant’s uncle passed away in 1984.  His widow and son, as the administrators of his estate, began collecting the rental income from the same unit of the property as before.  The two were also added as co-managers of YO Tong.

8.  The applicant’s father passed away in 1992.  His sons, including the applicant, formed a tso tong in the name of the late father, ie, Wu Hung Tao Tso Tong, for his own line of male descendants (“WHTT Tong”).

9.  In 1994, WHTT Tong bought out the interest of the branch of the applicant’s late uncle in the property.  A vesting assignment dated 29 March 1994 was executed with a view to vesting the entirety of the interest in the property in YO Tong (“the Vesting Assignment”).  The Vesting Assignment was also executed by the widow and son of the applicant’s late uncle.  The understanding then was that YO Tong would continue to exist and to hold the property, but only for the benefit of the male descendants of WHTT Tong to the exclusion of those of the late uncle.  The widow and son of the applicant’s late uncle also retired, and the brothers of the applicant were appointed instead, as the co-managers of YO Tong.  The documents signed by the parties concerned in this respect were also passed to the solicitors with a view to submitting to the District Office.

10.  However, it was not until November 2016 when the applicant and his brothers for the first time came to realise, through his present solicitors, that the appointment of managers of YO Tong was never registered in accordance with section 15 of the NTO or at all in 1970. Nor was the Vesting Assignment in 1994.  Officially, YO Tong never exists as a legal entity capable of holding the property.

These proceedings

11.  Against the above background, the applicant commenced these proceedings essentially for:

(1)  a declaration that the property now registered in the name of YO Tong and subject to the Declaration of Trust in favour of YO Tong is now held on trust for WHTT Tong;

(2)  an order that the Vesting Assignment be set aside and vacated from the Land Registry; and

(3)  an order that the property be vested in WHTT Tong.

12.  The son of the applicant’s late uncle, in his capacity as the surviving administrator of his late father’s estate^[3], was named as the 1^st respondent.  In view of the provision in respect of default in compliance with section 15 of the NTO, the Secretary for Justice was joined as the 2^nd respondent.

13.  The 1^st respondent has entered appearance, but indicated that he does not intend to contest these proceedings.

Discussion

14.  The trust in favour of YO Tong failed for the reason that YO Tong never existed as a legal entity capable of holding any property.  A resulting trust arises by operation of law: see Lewin on Trusts (19^th ed) at §8-002, and in favour of those who contributed to the property put under the trust in the first place: see Lewin (above) at §8-019.

15.  In the present case, the subject matter of the trust, ie, the property, reverted on resulting trust to the settlors, namely, the late father and the late uncle of the applicant, back in 1970.  The relief sought by the applicant effectively seeks to rectify the situation in line with the devolution of the interest in the property since then that eventually became entirely for the benefit of the members of WHTT Tong.  The evidence produced supports such devolution.

16.  Since 1970, the family of the late father and the late uncle of the applicant had shared the income from the two identical units of the property respectively and effectively equally.  In 1994, the branch of the applicant’s late father, later WHTT Tong, bought out the interest of his late uncle’s branch in the property.  Albeit ineffectively, formal documentation was prepared for such purpose whereby the late uncle’s interest in the property, then represented by his widow and son, was disposed of in favour of the branch of the applicant’s late father.  The devolution of the interest in the property since the trust failed back in 1970 was such that WHTT Tong has become entitled to all the interest in the property since 1994.  As submitted on behalf of the applicant, the interest in the property has devolved into unity in WHTT Tong, though in the name of YO Tong.

17.  The evidence shows that the members of WHTT Tong specifically, and unanimously, resolved to sanction the application to the court for the vesting of the property in the name of the tong instead of the applicant and his brothers.  Hence the relief sought by the applicant.

18.  As mentioned, the 1^st respondent acknowledged service of these proceedings with no intention to contest.

19.  As to the 2^nd respondent, by letter dated 3 June 2019, the Secretary for Justice confirmed that after considering the evidence in these proceedings, her Department takes the view that the appointment of managers of YO Tong has never been registered, and the tong is an un-incorporated association incapable of holding any property.  Likewise, the Declaration of Trust is null and void.  As YO Tong has never validly held the property, the Government’s right under section 15 of the NTO mentioned above is not engaged.  In the circumstances, the Secretary for Justice decided not to contest these proceedings either.

20.  It is not the practice of the court to grant declaratory relief without a trial, but the court is entitled to consider if the fullest justice will be done by granting what the plaintiff is entitled to: see Hong Kong Civil Procedure 2019, Vol 1 at §19/7/20.

21.  The applicant, albeit in his own name, commenced these proceedings for the benefit of his tong.  The claim is adequately evidenced by, amongst other things, contemporaneous documents.  Both respondents have expressed their intention not to contest these proceedings.  I detect no suspicious circumstance surrounding the claim that warrants investigation by way of trial.  I am satisfied that full justice will be done by granting the order sought summarily in this first hearing.

Order

22.  I give an order in terms of the originating summons mentioned above.  In the absence of contest by either respondent, I make no order as to costs of these proceedings.