TSANG TAI TAI IVY, the administratrix of the estate of WU TAI WAI, deceased v. WU MING TAT AND OTHERS

HCA 371/2022

[2025] HKCFI 2057

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 371 OF 2022

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  In the present action, the Plaintiff claims against the Defendants for 20% of the beneficial interests in the estate of the late Woo (Wu) Huang Man, alias, Wu Shing (“the Late Wu Senior”). The estate of the Late Wu Senior consisted of various pieces of lands in the New Territories as particularized in Schedules 1 to the Amended Statement of Claim (“the Lands”).

2.  Only the 2^nd Defendant filed a defence. The other Defendants have not been properly served.

3.  The Late Wu Senior was an indigenous inhabitant of the New Territories and domiciled in Hong Kong. He died on 5 February 1994, leaving 5 fongs (房) of male lineages.

4.  When the Late Wu Senior died, Wu Tai Wai David (“the Late David Wu”), the Late Wu Senior’s grandson, was the only surviving male descendant in the 1^st fong.

5.  The Defendants are the male descendants of the other 4 fongs.

6.  On or about 9 August 1994, Messrs. Gilbert Tang & Co. acting for the 1^st, 2^nd and 3^rd Defendants, Wu Man Sun (successor-in-title of the 4^th and 5^th Defendants) and the Late David Wu, submitted to Yuen Long District Office (“DO”) an application for succession to the Lands under section 17 of the New Territories Ordinance, Cap.97. In the application form, the Late David Wu was stated as one of the 5 succeeding male descendants of the Lands (“the Original Application”).

7.  On 5 February 1998, the Late David Wu died intestate in Sweden.

8.  By the time of the death of the Late David Wu, the Original Application was still being processed by the DO.

9.  The Late David Wu was survived by his mother Madam Tsoi Kwai Ying (“Madam Tsoi”), his wife Tsang Tai Tai Ivy (the Plaintiff) and the then minor daughters Wu Syt Yan Sofie and Wu Suet Man Jenny who were respectively born on 20 February 1993 and 9 May 1994 (“the 2 Daughters”).

10.  By a letter dated 22 June 1998, the DO informed Messrs. Gilbert Tang & Co. that the Original Application could no longer be processed as the Late David Wu being one of the potential successors had passed away. The potential successors were advised to submit a fresh application together with the male descendants of the Late David Wu, if any.

11.  On or about 5 September 1998, Wu Man Sun, the 1^st to 3^rd Defendants, the Plaintiff and Madam Tsoi entered into a written agreement in relation to the succession of New Territories land held by the estate of the Late Wu Senior (the “Written Agreement”). Both the Plaintiff and Madam Tsoi were described as the personal representative of the Late David Wu’s estate.

12.  On about 11 September 1998, a new application for succession was submitted to the DO with the Late David Wu having been deleted as the successor (“the New Application”).

13.  On 27 November 1998, the New Application was approved. The 1^st, 2^nd and 3^rd Defendants, and Wu Man Sun were successfully registered as successors of the Lands except the lots of land which had already been resumed by the Government by then.

14.  Letters of Administration of the Late David Wu’s estate were granted to the Plaintiff and Madam Tsoi on 27 July 2001. By the judgment of Deputy High Court Judge MK Liu dated 12 March 2021 in HCMP 671/2019, the status of Madam Tsoi as one of the two administratrixes was removed.

THE PLAINTIFF’S CASE

15.  It is the Plaintiff’s case that on or about 5 September 1998, Wu Man Sun, on behalf of the 1^st, 2^nd and 3^rd Defendant, individually and / or collectively, met the Plaintiff in Sweden and made the following representations, promise and / or assurances to the Plaintiff:

(1) Since the Late David Wu died leaving no male descendant, his name had to be deleted from the application for succession to the Lands;

(2) If the Plaintiff would agree to the deletion of the Late David Wu’s name in the succession application and not to bring litigation, Wu Man Sun, the 1^st, 2^nd and 3^rd Defendants would hold 15% of the Lands on trust for the Plaintiff and the 2 Daughters, each having a share of 5%, and another 5% for Madam Tsoi, together constituting 20% of the interests in the Lands (“the Agreement”).

16.  On or about 5 September 1998, by following express terms and provisions in the Written Agreement, the 1^st, 2^nd, 3^rd Defendants and Wu Man Sun, the Plaintiff and Madam Tsoi by affixing their signatures on the Written Agreement, expressly agreed, inter alia, the following:

(1) Wu Man Sun, the 1^st, 2^nd and 3^rd Defendants and the Late David Wu are the legal successors to the Late Wu Senior’s Lands in the New Territories (Section II(1)).

(2) An application for succession to the Late Wu Senior’s Lands had been filed to the Yuen Long District Office in August 1994 (Section II(2)).

(3) In the process of the application for succession to the Lands, Late David Wu died leaving the Plaintiff, and the 2 Daughters as the beneficiaries to the estate of Late David Wu (Section II(3));

(4) The Plaintiff and Madam Tsoi, are the administratrixes of the Late David Wu’s estate (Section II(4)).

(5) Wu Man Sun, the 1^st, 2^nd and 3^rd Defendants, the Plaintiff and Madam Tsoi have reached an agreement on the following terms:

(a) Wu Man Sun, the 1^st and 3^rd Defendants would authorize the 2^nd Defendant to make a new application to the Yuen Long District Office for the succession to the Late Senior’s Lands (Section III(1)(i));

(b) As a result of having no male descendant, the Late David Wu’s name has to be crossed out from the application for succession to the Lands (Section III(1)(ii));

(c) On the condition that the Plaintiff and Madam Tsoi do not object to the arrangements under Section III(1)(i) & (ii) and not to institute litigation, Wu Man Sun, the 1^st, 2^nd and 3^rd Defendants in return would be their nominee successors and beneficiaries of the Late Senior’s estate, and would agree to share the benefits from the estate in the following way (第七及第十方以其不反對上述(i)、(ii)項之安排及不提出訴訟為依歸，其條件為第二、三、四、五方名義上為其遺產繼承及受益人，而日後第一方之遺產所有收益，均作以下安排：):

Wu Man Sun: 20%

1^st Defendant: 20%

2^nd Defendant: 20%

3^rd Defendant: 20%

the Plaintiff: 5%

the 1^st Daughter of Late David Wu: 5%

the 2^nd Daughter of Late David Wu: 5%

Madam Tsoi: 5%

The Plaintiff and Madam Tsoi would jointly administer the interests of the 2 Daughters until they turn 21 years of age.

(Section III(1)(iii))

(d) The income from the estate of the Late Wu Senior would be managed by a solicitor firm and, after deducting the expenses, would be shared by Wu Man Sun, 1^st, 2^nd and 3^rd Defendants, the Plaintiff, Madam Tsoi and the 2 Daughters according to the agreed percentages (Section III(3));

(e) The Agreement is governed by the Laws of the Hong Kong (Section III(4));

(f) The Agreement is binding on the legal successor and agent of the contracting parties (Section III(5)).

17.  Relying on the Agreement and the Written Agreement, Wu Man Sun, the 1^st, 2^nd and 3^rd Defendants, on about 11 September 1998, submitted the New Application to the DO in which the Late David Wu’s name was deleted from the successors to the Lands.

18.  Further, relying on the Agreement and the Written Agreement, the Plaintiff, acted to her detriment, by agreeing to have the name of Late David Wu crossed out from the successors to the Lands and had refrained from instituting litigation.

19.  In essence, the Plaintiff’s case is that prior to the death of David Wu, he was entitled to an equal share in the Late Wu Senior’s estate together with the four surviving sons, i.e. 20% each. Such entitlement became vested upon the death of the late Wu Senior on 5 February 1994.

20.  Upon the late David Wu’s death, such 20% entitlement would pass to the late David Wu’s estate according to the New Territories Land (Exemption) Ordinance, Cap.452 (the Ordinance”).

21.  By the time of the late David Wu’s death, section 17 of New Territories Ordinance, Cap.97 (“NTO”) had been repealed and the succession to the late David Wu’s estate would be governed by the Intestates’ Estate Ordinance (Cap 73) (the “IEO”), such that the Plaintiff and the two daughters would be the beneficiaries.

22.  It is further submitted that prior to the entering into of the Written Agreement, Wu Man Sun 胡民新 (on behalf of the 1^st to the 3^rd Defendants made representations to the Plaintiff to the effect that because the late David Wu left no male descendant, his name had to be removed from the application for succession.

23.  The Written Agreement was induced by the mistake that the late David Wu’s estate could not succeed to the 20% entitlement in the late Wu Senior’s estate, and that the mistake was caused by Wu Man Sun 胡民新’s representations.

24.  As a result of the alleged mistake, the alleged interest of David Wu’s estate in the Lands were “wrongfully registered in the names of [the 4 surviving sons]”, and there was “a constructive trust constituted by the Mistake”, and the four surviving sons were constructive trustees of the 20% interest for the estate of the late David Wu.

25.  Surprisingly, the Plaintiff submits that she is not relying on, and is not seeking to enforce, the terms of the Written Agreement. It is pleaded expressly that the Written Agreement was invalid because: (1) at that time no grant had been made in respect of the late David Wu’s estate and the Written Agreement cannot bind the estate; (2) the two daughters were minors and the agreement prejudiced their interests.

26.  Lastly, it is pleaded that over the years, in breach of the Agreement and the Written Agreement, the 1^st, 2^nd and 3^rd Defendants, Wu Man Sun and his successors the 4^th and 5^th Defendants, failed to account to the Plaintiff the interests / income of the Lands.

27.  In terms of relief, the Plaintiff claims 20% of the Lands and all interests derived therefrom. The reliefs sought are a declaration to this effect, and an order for an account of the Lands, its dealings, income and profits etc., (and consequential orders).

THE DEFENDANT’S CASE

28.  The 2^nd Defendant’s case is very simple. Given that the Plaintiff is not relying on the Written Agreement, then the correct position is that: (1) by reason of section 12 of the Ordinance, the succession to the late Wu Senior’s estate is governed by Chinese customary law and the registration procedure under section 17 of the NTO; (2) following the death of David Wu, under Chinese customary law, the late David Wu’s estate had no right to succeed to the late Wu Senior’s estate.

29.  Hence, there was no operating mistake as the late David Wu’s estate had no right to succeed to the late Wu Senior’s estate. Additionally, there was factually no mistake because the terms of the Written Agreement showed that the parties had assumed the risk of a mistake.

30.  The 2^nd Defendant’s position is also that he does not rely on the Written Agreement and does not contend that it would create any binding obligation. In other words, both sides agree that the Written Agreement did not create any valid binding obligations on the parties.

31.  Finally, the 2^nd Defendant also contends that the Plaintiff’s claim to a 20% interest in the Lands is now barred by limitation, by reason of sections 4(1)(a), 7, 8, 10, 17, 20(2) and/or 21 of the Limitation Ordinance (Cap 347) (the “LO”).

ISSUES IN DISPUTE

32.  On day 1 of the trial, this Court has ruled that because the Plaintiff’s attempt to introduce the case of a constructive trust arising from a pre-acquisition agreement (in the form of the Written Agreement or any prior oral agreement or discussion) at §19 of the Statement of Claim had been refused previously by Deputy High Court Judge KC Chan at the Pre-Trial Review. There is no appeal against the said decision. Hence, Mr Lam for the 2^nd Defendant is correct that this Court cannot allow the Plaintiff to introduce this plea on the first day of the trial. Mr Lam for the 2^nd Defendant also submitted that if this new cause of action is allowed to be run in this trial, it is only fair that the 2^nd Defendant should be allowed to amend his pleadings and adduce new factual evidence.

33.  Additionally, there is no clear reason why this new plea was not made earlier. It follows that the only cause of action open to the Plaintiff on the pleadings is the “constructive trust constituted by the Mistake” pleaded at the current Amended Statement of Claim at §19, the “Mistake” being defined in Amended Statement of Claim at §18 as the mistake that the David Wu’s estate could not succeed to the interest in the Lands held in the name of the late Wu Senior due to the fact that the late David Wu died without leaving a male descendant (the “Mistake”).

34.  Hence, the issues to be determined in this trial are:

(1) Whether, as a matter of law, the late David Wu’s estate had the right to succeed to the late Wu Senior’s interest in the Lands. This depends on the effect of the applicable Chinese customary law and section 17 of NTO and section 12 of the Ordinance.

(2) Whether, as a matter of fact, the Plaintiff’s state of mind at the material time was indeed one of mistake. If not, the Plaintiff can have no cause of action based on mistake.

(3) Whether the Plaintiff’s claim is in any event time-barred.

35.  Further, I have expressed my concern that given that the other defendants had not been properly served, whether and to what extent the Plaintiff’s claims can be proceeded with.

SUCCESSION TO LAND IN THE NEW TERRITORIES UNDER THE NTO AND THE ORDINANCE

36.  It is agreed between the parties that, as a matter of Chinese customary law:

(1) Only the surviving sons (or his male descendants if the son predeceased the father) of the father are entitled to succeed to the estate or properties of the father.

(2) Upon the death of the son, the son’s right to succeed to the father’s estate is extinguished and does not pass on to the son’s estate.

(3) If the son had male descendants:

(a) If the son predeceased his father, the son’s male descendants (instead of the son’s estate) would be entitled to succeed to the estate or properties of the father.

(b) If the son survived his father but later died, the son’s male descendants would be entitled to succeed to the son’s right or share in the father’s estate or properties.

(4) If the son had no male descendants:

(a) If the son predeceased his father, the son’s female descendants had no right to succeed to the estate or properties of the father.

(b) If (1) he survived the father but later died, and (2) the father had other sons – then the son’s female descendants had no right to succeed to the son’s right or share in the father’s estate or properties.

37.  However, the Plaintiff contends that they would only apply before the enactment of the Ordinance.

38.  Prior to the enactment of the Ordinance, section 13 of the NTO provides:

“In any proceedings in the High Court or the District Court in relation to land in the New Territories, the court shall have power to recognise and enforce any Chinese custom or customary right affecting such land.”

39.  The effect of section 13 is that the Court is mandated to and must apply Chinese customary law in a case concerning New Territories land. Although it does not follow that Chinese customary law applies to all aspects of a dispute in relation to New Territories land, it is well-established that the issue of succession to New Territories land is governed by Chinese customary law: e.g. Wu Koon Tai v Wu Yau Loi [1996] AC 179 at 187G.

40.  Such succession is effected by registration of the land in the name of the successor. Section 17 of the NTO provides that:

“In the event of the death of any person in whose name any land is registered otherwise than as a manager, if no grant of probate or administration of the estate of the deceased is made by the High Court within 3 months after such death, the Land Officer, on ascertaining the name of the person who is entitled to such land in succession to the deceased person (hereinafter called the successor), and on being satisfied that any estate duty which may be due has been paid, shall register the name of the successor, and upon such registration being effected the said land shall vest in the successor for all the estate and interest of the deceased person therein, or for such estate and interest as shall be entered on the register by the Land Officer against the entry of the name of the successor…” (emphasis added)

41.  On 24 June 1994, the Ordinance came into operation. It had the effect of removing the application of Chinese customary law to New Territories land in matters of intestate succession, by abolishing section 17 and introducing a new section 13(2) to the NTO which provides that the IEO would apply to intestate succession to New Territories land: see sections 10 and 11 of the Ordinance.

42.  Section 12 of the Ordinance is a transitional provision, and its current version provides that:

“Where, at the commencement of this Ordinance, rural land is held in the name of a deceased person registered in accordance with the New Territories Ordinance (Cap. 97) otherwise than as a manager, if no grant of probate or administration of the estate of the deceased is made by the Court of First Instance within 3 months after the death of that person then, notwithstanding sections 3(a), 10(c) and 11 of this Ordinance—

(a) the Secretary for Home and Youth Affairs may exercise the powers conferred on him under section 17 of the New Territories Ordinance (Cap. 97) in respect of any person who may be entitled to that rural land in succession to the deceased person as if section 17 of that Ordinance had not been repealed;

(b) in any proceedings in the Court of First Instance or the District Court concerning the exercise by the Secretary for Home and Youth Affairs of those powers in relation to that rural land, the court shall have power to recognize and enforce any Chinese custom or customary right affecting that rural land as if section 13(2) had not been added to that Ordinance; and

(c) on the registration of the name of the person entitled to that rural land in succession to the deceased person being effected by the Secretary for Home and Youth Affairs under section 17 of that Ordinance, that rural land shall, for the purpose of entitlement to rural land in succession and only for that purpose, be deemed to be land exempted from Part II of that Ordinance by the Chief Executive under section 7(2) or (3) of that Ordinance.” (emphasis added)

43.  I agree that the effect of section 12 is to preserve: (1) the application of Chinese customary law to the succession to New Territories land; and (2) the registration mechanism for a successor under the sections 13 and 17 of the NTO, in respect of the estate of a person who died before the commencement of the Ordinance (See: Liu Ying Lan, HCA 6693/1992, 8 May 2002, unrep., Deputy High Court Judge Andrew Cheung (as he then was) at §16.

44.  The effect of the registration procedure under section 17 of the NTO had been considered by the Privy Council in Wu Koon Tai v Wu Yau Loi [1996] AC 179. There, Lord Browne-Wilkinson explained that the devolution of title to land in the New Territories, whether by inter vivos transaction or on death, is regulated by the registration system under section 17 of NTO and the general law: 187H.

45.  The point that emerges from Wu Koon Tai is that devolution of title to land is governed by section 17, and is a matter of Hong Kong common law. In other words, the operation of section 17 and the registration mechanism does not tell one anything about the contents of the Chinese customary law on succession.

46.  Thus, I agree that upon the death of an owner of New Territories land, Chinese customary law applies to determine who is entitled to succeed to those lands. Upon ascertaining who is entitled to succeed, those persons are entitled to apply to be registered as a successor under section 17 of the NTO.

47.  The passing of the title to such lands through the process of registration is a matter of Hong Kong general law, and turns on what is, under Hong Kong general law, and the effect of such registration.

48.  I agree that upon the death of David Wu, his right to succeed to the late Wu Senior’s estate is extinguished and does not pass on to his (David Wu’s) estate. In other words, the late David Wu’s estate has no right to succeed and cannot be an applicant (i.e. by replacing the late David Wu) in a succession application.

49.  As the late David Wu had no male descendants, his two daughters have no basis to succeed to his “right or share” in the late Wu Senior’s estate or properties.

50.  In the present case, the Lands were, at the commencement of the Ordinance, held in the names of the Wu Senior otherwise than as a manager, and that no grant of probate or representation of the late Wu Senior’s estate had been made within 3 months of his death. It follows that section 12 of Ordinance applies. The effect is that Chinese customary law applies to the succession of the late Wu Senior’s estate, and that section 17 of the former NTO may be invoked to pass title to the Lands to the late Wu Senior’s successors.

51.  In other words, as no interest in the Lands had passed to the late David Wu’s estate, it follows that even if the IEO applies in respect of the late David Wu’s estate, no interest in the Lands would pass to the Plaintiff and the two daughters as beneficiaries under an intestacy.

52.  It is unfortunate that the late David Wu’s right to succeed to the late Wu Senior’s estate was extinguished upon his death under Chinese Customary law. Nothing is vested upon the late David Wu on the death of the late Wu Senior on 5 February 1994. Section 17 of NTO makes clear that title only vests upon registration, and Wu Koon Tai demonstrated that title to the estate of the deceased person had never become vested in an unregistered successor.

53.  Mr Lam for the Plaintiff submitted the effect of a registration under section 17 of the NTO would be to vest the interest in the land on the registered successor retrospectively, dating back to the date of the death of the deceased person in question. However, I agree that the cases of Wing Tung Yick v. AG [1994] 4 HKC 432 and Li Wong Fat v Chan Kam Hei & Another, DCMP 1350 of 2012 merely recognise that once the name of the successor is registered pursuant to section 17, the effect is that title to the lands becomes devolved to the successor as from the date of death of the deceased person (as stated in the approval letter by the District Office). I agree that the correct approach is first, to identify the rightful successor by applying Chinese customary law and then consider how title has devolved under the registration mechanism under section 17 of the NTO. The operation of section 17 is simply that upon registration, title shall vest in the rightful successor as from the date of death.

54.  The fact that the effect of a registration section 17 of the NTO would date back to the date of death does not mean that the applicant had a vested right prior to the registration. It only means that whoever became registered would obtain title dating back to the date of death. It does not tell us who would be entitled to be registered in the first place. The DO had not made any mistake on this.

55.  Mr Lam’s reliance of the doctrine of implied assent does not help. The position under Chinese customary law, as admitted by the Plaintiff, is that upon the death of the late David Wu, his right to succeed in the late Wu Senior’s estate did not pass to the late David Wu’s estate and had become extinguished. On this basis, whatever right arises from the doctrine of implied assent would also have become extinguished.

WAS THERE A MISTAKE?

56.  Importantly, the Plaintiff’s evidence in court is that she did not suffer from the pleaded Mistake. She fairly admitted that the view that the late David Wu’s estate could not succeed to the Lands held in the late Wu Senior’s name might not be correct. The Written Agreement was the result of the uncertainty about the exact legal position.

57.  She said that she was aware of the coming into effect of the Ordinance and the change of the law at the time in 1994, because the late David Wu informed her. Her understanding was that during the process of the application for succession, the late David Wu already had a confirmed right to succeed to the late Wu Senior’s interest in the Lands. This was the late David Wu’s understanding, which he informed her, and she shared this understanding.

58.  Wu Man Sun 胡民新 had told her about the District Land Office’s view that because David Wu had passed away and he had no male descendants, he (David Wu) could not continue to be in succession application. He said this to her during the conversation prior to the Plaintiff’s execution of the Written Agreement, on or around 5 September 1998.

59.  When Wu Man Sun 胡民新 said this to her, she was suspicious that he was misleading her, because she knew that the law had been changed, and she thought that the late David Wu’s estate could succeed to the late Wu Senior’s interest in the Lands. She even challenged Wu Man Sun 胡民新 on the spot on this point, and he responded saying he was not sure and needed to ask a lawyer.

60.  When explaining the terms of the Written Agreement to the Plaintiff, Wu Man Sun 胡民新 had asked the Plaintiff not to bring proceedings. In fact, the Plaintiff had during the conversation thought about bringing legal proceedings and had mentioned it, because she appreciated that the view adopted by Yuen Long District Office might have been wrong.

61.  Despite this, she still signed the Written Agreement, without legal advice, because she was at the time still recovering from grief from the death of the late David Wu, and she had to take care of her 2 young daughters alone.

62.  On the above facts, I find that there is no mistake on the part of the Plaintiff. She could have taken legal advice on the very issue which she had suspicion. She chose not to for her own reasons. It is not right that she can now reopen the issue and allege that she signed the Written Agreement under a mistake.

63.  Further, Mr Lam for the 2^nd Defendant is correct that as explained by Kwan JA (as she then was) in Lo Shing Kin v Sy Chin Mong Stephen, CACV 148/2012 (unrep., 8 May 2012), a person in a state of doubt is not suffering from a mistake. Rather, he/she would be taken to have assumed the risk that he/she was wrong. The evidence summarised above shows clearly that the Plaintiff was prior to the signing of the Written Agreement already in doubt as to the correctness of the suggestion, adopted by the Yuen Long District Office and conveyed to her by Wu Man Sun 胡民新, that the David Wu’s estate could not succeed to the Lands. She heard that even Wu Man Sun 胡民新 himself was not sure about this. She had also appreciated that she could take legal proceedings because the view adopted by the Yuen Long District Office might be wrong. Nevertheless, she chose not to do so, but instead chose to enter into an alternative arrangement represented by the Written Agreement, because she was influenced by other personal factors. That should be the end of the analysis.

64.  Mr Lam for the Plaintiff also referred this Court to the case of Angrove’s Pty Ltd v Bailey [2016] 1 WLR 3179. However, on analysis, the “enrichment” or benefit (being 20% interest in the Lands) received by defendants came from the late Wu Senior’s estate. The late David Wu’s estate had never been vested with any interest in the estate of the late Wu Senior. Hence, the estate of the late David Wu did not confer anything onto the defendants.

65.  Further, Mr Lam for the 2^nd Defendant is correct that the terms of the Written Agreement suggest that the parties had assumed the risk of a mistake because it was acknowledged that the Plaintiff and Madam Tsoi might bring proceedings. In other words, factually, there was no mistake by the parties to the Written Agreement.

66.  Finally, Mr Lam for the Plaintiff, perhaps, seeing the difficulties, attempted to run a different mistake in the Plaintiff's Closing Submissions, namely, “there would be difficulties for David’s application and that the Written Agreement could secure the interest of the estate of David”. I agree that to be fair no such case is pleaded. The Plaintiff did not give any evidence that she was suffering from this new mistake. To be fair, this cannot be allowed.

67.  Mr Lam for the Plaintiff also relied on the doctrine of posthumous adoption. I do not see it to be relevant. This issue was not explored during the trial. There is no evidence or basis to suppose that the defendants were aware of the laws on posthumous adoption, or had considered this possibility, let alone that this was the reason for the Written Agreement. No such case was put to the 2^nd Defendant in cross-examination.

68.  It is fair to say that the Plaintiff’s case has never that she was misled or mistaken into entering the Written Agreement which turns out to be, on the Plaintiff’s view, unenforceable. The pleaded mistake is not the enforceability of the Written Agreement. It is also not the Plaintiff's case that the Defendant’s conscience should be affected by their breaches of the Written Agreement.

69.  It is regrettable that the Plaintiff’s case has not been well thought out. Mr Lam of the 2^nd Defendant, thus, can fairly complain that the Plaintiff is in effecting running new cases which are not pleaded. I agree that insofar as the Plaintiff is relying on any different species of constructive trust based on breach of a promise and unconscionability, the same has equally been disallowed – an express plea in the draft Amended Statement of Claim at §19B to the effect that “it is unconscionable for the Defendants not to keep the promise and assurances therein the Agreement and the Written Agreement” had also been disallowed by Deputy High Court Judge KC Chan.

70.  Mr Lam for the 2^nd Defendant also has a valid point that the Plaintiff’s pleaded position is that the Written Agreement was not binding on the late David Wu’s estate because it pre-dated the grant of representation. In other words, the Plaintiff is saying that because no grant had been made to them at the time when the Plaintiff and Madam Tsoi signed the Written Agreement, they thus had no authority to act on behalf of the estate to enter into the Written Agreement. If so, the estate cannot now claim to have relied on the Written Agreement.

LIMITATION

71.  By reason of the above analysis, strictly speaking, it is not necessary for this Court to deal with the limitation defence.

72.  For the sake of completeness, I agree the trust relied on by the Plaintiff is a “category 2 constructive trust” and section 20(1) of the LO does not apply.

73.  It is by now well-established that, while section 20(1) of the LO refers to a “trust” and that this definition covers a constructive trust, not every type of a constructive trust falls within the scope of section 20 such that no limitation period applies. See: Lord Hoffmann NPJ in Peconic Industrial Development Ltd v Lau Kwok Fai (2009) 12 HKCFAR 139.

74.  Kwan VP in Hui Chun Ping v Hui Kau Mo [2024] 2 HKLRD 178 at §44 said:

“Category 1 comprises those cases in which a defendant has assumed the duties of a trustee or other fiduciary, doing so by a transaction which was independent of and preceded the breach of trust complained of. Category 2 comprises those cases in which the so-called trust obligation arises as a direct consequence of an unlawful transaction which the claimant impugns and in which the defendant is no more than a wrongdoer. A category 1 trust is a true trust, for the defendant has assumed a fiduciary duty in relation to the trust property by a lawful transaction, though not expressly appointed as a trustee. He is treated in the same way as an express trustee. A category 2 trust is not a true trust, for the defendant has not assumed any prior fiduciary duty. It is purely remedial and is described as constructive trust merely as “a formula for equitable relief”.” (emphasis added).

75.  At §82 of the decision, Kwan VP emphasised that category 1 trusts are true trusts which are governed by the Trustee Ordinance:

“Just like the English statutes, the definition provision in the Limitation Ordinance is to be determined by reference to the definition in the Trustee Ordinance, which is also modelled on the English Act. The Trustee Ordinance is concerned with the administration of true trusts, unlike the situation of a constructive trustee required to account in the exercise of equity’s remedial jurisdiction whose sole obligation of any practical significance is to restore the assets immediately. His possession is at all times wrongful and adverse to the rights of the claimant, nor does he have the powers and duties of a trustee with regard to investment and management. Most of the provisions in the Trustee Ordinance do not apply to him appropriately. He does not come within a “trustee” as provided in s.20(1) of the Limitation Ordinance which is determined by reference to the Trustee Ordinance. The meaning and language of “trustee” in the Trustee Ordinance do not extend to constructive trustees whose liability to account arose from the misapplication itself.” (emphasis added)

76.  At §89, Kwan VP concluded that section 20 only applies to a pre-existing trust or a claim for pre-existing trust property, and that the imposition of a proprietary constructive trust on the facts of that case (which concerns receipt by a fiduciary of a secret profit from a third party) is “a remedial device” and the trust imposed is a category 2 trust.

77.  Further, the availability of a proprietary claim under the constructive trust does not render the claim a category 1 trust. In Timmerton Co Inc v Equity Trustee Ltd [2015] 1 HKLRD 247, the Court of Appeal came to the same conclusion in respect of a proprietary claim arising from knowing receipt (see §§22, 28). Chu JA cited with approval at §20 the following passage of Lord Sumption JSC in Williams v Central Bank of Nigeria [2014] AC 1189 at §31:

“The essence of a liability to account on the footing of knowing receipt is that the defendant has accepted trust assets knowing that they were transferred to him in breach of trust and that he had no right to receive them. His possession is therefore at all times wrongful and adverse to the rights of both the true trustees and the beneficiaries. No trust has been reposed in him. He does not have the powers or duties of a trustee, for example with regard to investment or management. His sole obligation of any practical significance is to restore the assets immediately. It is true that he may be accountable for any profit that would have been made or any loss that would have been avoided if the assets had remained in the hands of the true trustees and been dealt with according to the trust. There may also, in some circumstances, be a proprietary claim. But all this is simply the measure of the remedy. It does not make him a trustee or bring him within the provisions of the Limitation Act 1980 relating to trustees.” (emphasis added)

78.  In the present case, I agree that the pleaded “constructive trust constituted by mistake” is clearly a category 2 constructive trust. The alleged trust was constituted by the alleged mistake. The claim is not based on any pre-existing trust or fiduciary duty assumed by the 2^nd Defendant, or the reposing of any trust and confidence in the 2^nd Defendant. Rather the trust arises from the transaction which the Plaintiff seeks to impugn (the registration of the Lands in the successors, through the concept of mistake), and the trust and the proprietary claim was only imposed as a measure of remedy.

79.  If the case falls within a category 2 constructive trust, then usual limitation periods in the LO would apply by analogy. In the present case, the pleaded mistake occurred, by the latest, by 31 December 1998, and the Plaintiff’s cause of action must have accrued by then by the latest. The present action was only commenced on 13 April 2022, more than 23 years later.

80.  At the Plaintiff’s Closing Submissions, it is submitted that “in any event”, the Plaintiff only discovered the Written Agreement may be invalid in 2021, and that it was a recent discovery. I agree that this is not relevant, given that: (1) the Mistake (which is the only one the Plaintiff has pleaded and is entitled to run) is a mistake that the late David Wu’s estate had no right to succeed, and not a mistake that the Written Agreement was valid; (2) in any event the Plaintiff has not pleaded any postponement provisions and cannot rely on the same.

MISCELLANEOUS ISSUES

81.  On the issue of the services, I agree with Mr Lam for the 2^nd Defendant that this should not have any impact on the Court’s determination of the Plaintiff’s claim as between the Plaintiff and the 2^nd Defendant as the 2^nd Defendant had been properly served and the Plaintiff and the 2^nd Defendant had gone through a trial, it would be entirely proper for the Court to make a substantive ruling on the Plaintiff’s claim. Such a ruling would be binding as between the Plaintiff and the 2^nd Defendant.

82.  Finally, I like to say something about the 2^nd Defendant’s evidence in court to the effect that he would in future, if the Lands are sold, make distributions to the Plaintiff according to the terms of the Written Agreement. I find this to be an honourable thing for the 2^nd Defendant to do. However, this is not an undertaking to the Court. I did not solicit an undertaking. I was trying to ascertain the position of the 2^nd Defendant.

83.  With sincerity, I hope that the Defendants will abide by the terms of the Written Agreement despite its potential legal deficiencies. At the end of the day, the late David Wu was a dear family member and there is no strong moral reason as to why his wife and two daughters should not be taken care of. For the avoidance of doubt, this Court does not seek to impose any legal obligations on the part of the Defendants. This Court expresses a wish that the 2^nd Defendant and indeed other defendants will do the honourable act of carrying out the terms of the Written Agreement.

DISPOSITION

84.  For all the reasons stated above, I make an order in terms of the draft Order as attached to the 2^nd Defendant’s submissions and:

(1) Dismiss all of the Plaintiff’s claims against the 2^nd Defendant;

(2) Costs of this action (including all costs reserved, if any) be paid by the Plaintiff to the 2^nd Defendant, to be taxed on a party to party basis, if not agreed.

85.  Finally, I thank counsel’s able assistance in this trial.