NORMAN GUY DONALD AND ANOTHER v. LEE MICHAEL CHAK CHUEN in his capacity as executor of the estate of LI PAK IU AND OTHERS

HCMP 610/2021

[2022] HKCFI 1106

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 610 OF 2021

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BETWEEN

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DECISION

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Introduction

1.  The plaintiffs in these proceedings are the professional administrators appointed by this Court for the estate of Li Sing Kui (“Deceased”) who died over 66 years ago on 28 August 1955. The 5 defendants are the beneficiaries of the Deceased’s estate (“Estate”), or the executors or executrices of the respective estates of the beneficiaries (respectively referred to herein as “D1” to “D5”).

2.  The plaintiffs (“Administrators”) issued the originating summons herein (“OS”) on 30 April 2021 for determination of essentially two questions:

(1) Whether clause 5(2)(f) of the will dated 15 December 1954 (“Will”) of the Deceased is void for infringing the common law rule against perpetuities (“Question 1”) and what consequential directions should be made

(2) Whether the powers of the Administrators should be extended to investigating, ascertaining and (if so advised) applying for the administration of, and thereafter administering, the Estate in Mainland China, and what consequential directions should be made (“Question 2”)

3.  At the hearing on 13 December 2021 (“1 Hearing”), amongst other things, and in relation to Question 1, this Court declared that clause 5(2)(f) of the Will (“Clause 5(2)(f)”) is void for infringing the common law rule against perpetuities and any interim distribution earmarked by the Administrators for clause 5(2)(f) of the Will be distributed to the 5 residuary beneficiaries in clauses 5(2)(a) to 5(2)(e) of the Will (“Order”).

4.  Shortly thereafter and before the Order was sealed, D5 sought a rehearing in relation to Question 1. Suffice to say at this stage, leave was granted and D5’s summons was issued on 22 February 2022[1] (“D5’s Summons”).

Brief background leading to the present application

5.  The Deceased died leaving behind a “tin fong” wife, two concubines, 5 sons and 15 daughters. D5 is now the only surviving son and he is also the executor of the estate of D4.

6.  The Estate consisted of sizeable assets amongst which is a family property which is sitting on a valuable piece of land in Hong Kong (“Family Property”).

7.  On 26 April 2019, this Court handed down a judgment in Lee Goo Lynette Siu Yin and others v Cheung Wai Ming Daisy and others [2019] 6 HKC 16, HCMP 1836/2017, 26.04.19 (“Judgment”). Pursuant to the Judgment, this Court allowed the application of the widow and executrix of the estate of 2^nd son (D2) and two children of the eldest son including the executor of the eldest son’s estate (D1), and removed the widow and executrix of the estate of the 3^rd son (D3) ) as executrix of the Estate. Thereafter, the plaintiffs in the present proceedings have been appointed as the administrators.

8.  The relevant background of this family has been set out in the Judgment and will not be repeated here.

9.  As mentioned earlier, the Administrators issued the OS to seek determination from the Court on 2 Questions. Upon issue, the OS was duly served on all the 5 defendants together with a supporting affirmation from one of the Administrators Mr Guy Norman.

10.  D1 filed his acknowledgments of service in person, and D2 filed hers through her solicitors Messrs Withers. Both indicated they did not intend to contest the application of the Administrators. D3 filed her acknowledgment of service through her solicitors Messrs Raymond Tang & Co, and D4 and D5 filed their respective acknowledgment of service through their then solicitors Messrs Edmund Chow & Co.

11.  In their respective acknowledgment of service, D3, D4 and D5 indicated that they intended to contest the proceedings. Notwithstanding this, D3 has not filed any affirmation in response or in opposition to the OS.

12.  On 3 June 2021, there was a consent summons filed whereby the Administrators consented to D4 and D5 having an extension of time to file their affirmation/s in relation to the OS. On 4 June 2021, a notice of change of solicitors was filed on behalf of D4 and D5 and their present solicitors Messrs Chui & Lau (“C&L”) came on record.

13.  There was a further consent order for time for D4 and D5 to file their affirmations to be extended until 26 July 2021. Despite those extensions, no affirmations were filed by D4 and D5. Instead, on 23 July 2021, D4 and D5 filed an amended acknowledgment of service through C&L indicating that they did not intend to contest the proceedings.

14.  Further by a letter dated 1 December 2021 from C&L to the Administrators’ solicitors, C&L confirmed that in relation to Question 1, D4 & D5 maintained their views in C&L’s letter dated 28 July 2021 (in which amongst other things, C&L stated they had filed the amended acknowledgment of service indicating no intention to contest) and C&L’s letter dated 9 September 2021 (in which they confirmed not contesting the application and that C&L had no instructions to attend the hearing of the OS)[2].

15.  The 1^st Hearing was then fixed on 13 December 2021 before this Court. The notice of the 1^st Hearing was duly served on all the defendants.

16.  Upon hearing submissions from Senior Counsel Mr Eugene Fung for the Administrators and there being no affirmations filed by any of the defendants to contest the orders sought, nor was any of the defendants present at the 1^st Hearing, this Court accepted Mr Fung’s submissions and made the Order.

17.  4 days later on 17 December 2021, and before the Order was properly drawn up and sealed, the Court suddenly received a letter from C&L requesting the Court not to seal the Order[3]. In this letter, it was stated that C&L (and/or their clients) had just sought the opinion of another senior counsel on the validity of Clause 5(2)(f) who held a different view from that of their original senior counsel, and they sought leave to address the Court on the validity of Clause 5(2)(f). This was opposed by the Administrators.

18.  Various correspondence followed and a solicitor of C&L, Mr Chan Hor Yee Alex (“CHYA”) then filed an affirmation on behalf of D4 and D5 on 28 December 2021 (“28.12.21 Affirmation”)[4] to explain why D4 and D5 would wish the issue of the interpretation of Clause 5(2)(f) or Question 1 to be reheard.

19.  As seen in the 28.12.21 Affirmation, prior to 4 June 2021, D4’s and D5’s then solicitors by Messrs Edmund WH Chow & Co had instructed Counsel Mr Andrew Liao SC, Mr Kenneth Chow, Ms Grace Tam and Mr William Tse in the earlier mentioned HCMP 1836/2017 action. CHYA had stated that after considering all the legal authorities gathered from the former legal team and after conducting further research, he came to concur with the conclusion of the Administrators that Clause 5(2)(f) was not valid for breach of the rule against perpetuities. Further, CHYA disclosed that on D5’s instruction, he had on 8 November 2021 set up a conference with senior counsel Mr CY Li who confirmed that the gift for “Ching Sheung” in Clause 5(2)(f) should be void. According to CHYA, their focus at the time was on the directions to the Administrators to investigate into the alleged properties in the Mainland (namely in relation to Question 2 of the OS), and thereafter, D5 then wished to have a further opinion on the conduct of the case from another senior counsel, namely Mr Edward Chan.

20.  During the present hearing, it was further pointed to this Court that apart from those counsel named in 28.12.21 Affirmation, D5 had previously also instructed Mr Patrick Fung SC, which D5’s present team did not seem to be aware of.

21.  In short, although D5 had had benefit of senior counsel earlier, he decided to seek further opinion from a new senior counsel. According to CHYA, the conference with Mr Edward Chan SC was originally fixed on 11 December 2021 but had to be postponed to 18 December 2021 so that Mr Chan SC could have time to read the papers. Mr Chan SC then read the papers on 16 December 2021 and on that day orally advised CHYA his views on the interpretation of Clause 5(2)(f). It was this advice which led to C&L writing to the Court on 17 December 2022 seeking a rehearing of the Question 1.

22.  Eventually, on 5 January 2022, and as mentioned earlier, this Court granted leave to D5 to issue D5’s Summons.

The Will

23.  Under the Will, the Deceased had amongst other things:

1.1 bequeathed certain pecuniary legacies and annuities to his family members (clauses 3 & 4);

1.2 devised and bequeathed his estate to the 3 appointed individuals as trustees to sell, call in and convert the same into money to invest the residue of such moneys and to stand possessed of such investments and of all parts of his estate for the time being unsold (“Residuary Estate”) (clause 5);

1.3 directed his trustees to pay or apply the Residuary Estate or any part thereof for 3 specified purposes (clause 5(1));

1.4 subject to the trusts in clause 5(1), directed his trustees to divide the Residuary Estate into 6 equal shares and hold the same upon trust as set out in clause 5(2):-

“(a) ONE (1) share to and for my son LI PAK IU absolutely.

(b) ONE (1) share to and for my son LI PAK TAT absolutely.

(c) ONE (1) share to and for my son LI PAK LEUNG absolutely.

(d) ONE (1) share to and for my son LI PAK WING absolutely.

(e) ONE (1) share to and for my son LI PAK HUEN now aged 16 years absolutely.

(f) ONE (1) share to be appropriated for “Ching Sheung” (蒸嘗) for the purpose of Ancestor Worship Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons.”

24.  As seen above, Clause 5(2)(f) has two parts, namely:

(1) ONE (1) share to be appropriated for “Ching Sheung” (蒸嘗) for the purpose of Ancestor Worship (“1^st Part”)

(2) Provided nevertheless that my Trustees may in their uncontrolled discretion pay or apply the said share or any part thereof to or for the benefit maintenance and support of some one or more to the exclusion of the others or other of my abovementioned sons (“2^nd Part”)

The issues

25.  There is no dispute that the 1^st Part is void for infringing the rule against perpetuities.

26.  D5’s contention is that:

(1) Notwithstanding the invalidity of the 1^st Part, the 2^nd Part remains valid and can be severed from the 1^st Part;

(2) Under the 2^nd Part, the 1/6 share for Ching Sheung (“Ching Sheung Share”) is held on discretionary trust for D5 as the sole surviving object;

(3) D5, as the sole surviving object, is entitled to direct the Administrators to vest the Ching Sheung Share in himself absolutely.

27.  D2 makes no submissions on the severability of the 1^st and the 2^nd Parts, but submits that even if the 2^nd Part can be severed from the 1^st Part as an independent provision, the 2^nd Part only created a mere power (as opposed to a discretionary trust or trust power), which means the trustees have no obligation to exercise the power in favour of any of the 5 sons, or in other words, the 5 sons have no entitlement to require the trustees to exercise the power. Further, if a mere power is not exercised after a reasonable time it expires with the consequence that the asset shall be distributed to the persons entitled in default of appointment.

28.  To summarise from above, the issues are thus:

(1) whether the fact that the 1^st Part is void defeats the entire Clause 5(2)(f) or whether the 2^nd Part takes effect notwithstanding the invalidity of the 1^st Part (“Issue (1)”)

(2) even if the 2^nd Part can be severed from the 1^st Part, whether the 2^nd Part created a mere power or a trust power (“Issue (2)”)

(3) if a mere power then whether a reasonable time has already lapsed (“Issue (3)”)

Issue (1)

The general legal principles

29.  As observed by Lord Hoffman in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 at paragraph 14 “There is no dispute that the principles on which a contract (or any other instrument or utterance) should be interpreted are those summarised by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-913” and that the question is “what a reasonable person having all the background knowledge … would have understood them to be using the language in the contract to mean.”

30.  The Court was also referred to PTNZ v AS [2020] EWHC 3114 (Ch), in which Master Shuman had provided a summary of the applicable principles at paragraph 42 as follows:

“the task for the court in construing the trust is ascertaining ‘the objective meaning of the words used, and the objective intentions of the parties to it (or in the case of a unilateral document such as a settlement or a will, the settlor or testator) by interpreting the whole of the words used against their documentary and factual context.’ To put that in another way the court needs to sit in the settlor’s armchair and construe the objective meaning of those words in light of the relevant factual matrix. The relevant factual circumstances are those which existed or were in the reasonable contemplation of the settlor when the settlement was made and therefore do not include unforeseen circumstances.”

31.  Further, it is set out in Theobald on Wills (18^th Ed., 2016), at paragraphs 13-012 to 13-013, not only are the relevant words are to be construed in light of their natural and ordinary meaning, so too must the overall purpose of the document and any facts known or assumed at the time of execution.

32.  What is clear is that, as set out by Lord Neuberger at Marley v Rawlings [2015] AC 129 at paragraph 20, the interpretation of a will follows the same approach as interpretation of contracts and other legal documents. The court must ascertain the objective intention of the testator as expressed in the wording of the relevant provisions in the will, having regard to context and purpose.

33.  There is no dispute on the above general legal principles.

D5’s contention

34.  It is contended on behalf of D5 that the 2^nd Part is not a limitation ulterior to, or dependent upon, a void limitation, viz the part gifted to Ching Sheung and that naturally read, the intention of the Clause 5(2)(f) is clear: the language in clause 5(2) being mandatory creates (together with a power of selection) a trust for distribution of 1/6 share of the residuary estate, the options of which are set out therein, which allows the trustee to apportion between Ching Sheung and the 5 named sons at their full discretion[5].

35.  Further, the words “provided nevertheless” in the 2^nd Part confirm that the proviso is not ulterior to or dependent upon the 1^st Part and that the proviso was intended to be administered by the trustees irrespective of the validity or invalidity of the provision in favour of Ching Sheung[6].

36.  It is further argued that there is no basis to adopt the interpretation that the Deceased would have wished his executors to have the discretion to benefit his 5 named sons only if the 1^st Part was valid, bearing in mind the low costs of maintaining an ancestral worship and the significant disposition made hereunder. In gist, the Deceased’s desire to support and benefit his sons should not be seen as a desire only to persist if Ching Sheung were deemed valid.

37.  Thus, as the 2^nd Part is independent of the 1^st Part, the invalidity of the 1^st Part does not affect the validity of the 2^nd Part, since it was within the trustee’s discretion to apportion nothing to Ching Sheung and all to the 5 named sons[7]. Upon true construction, the 2^nd Part is valid and takes effect notwithstanding there was a void or ineffective qualification to it, because the disposition to the 5 named sons is not a limitation dependent upon or ulterior to the earlier void part.

38.  Mr Chan SC has further argued that another approach is that reading Clause 5(2)(f) as a whole, plainly the trustee has a discretion to apply the Ching Sheung Share or any part of it (a) for Ching Sheung purpose or (b) for the benefit of the 5 named sons in such proportion or shares as the trustee may absolutely decide[8].

39.  Hence, it should not matter whether the clause is drafted in the reverse order by purporting to allow the trustees to exercise his discretion in favour of the 5 sons and then gives him discretion to apply it for Ching Sheung. What the trustee cannot do is to apply the 1 share or any part of it for himself or for any other persons or purposes. As the law is that the trustee cannot apply anything for the purpose of Ching Sheung, his only discretion left is to apply it for the benefit of any or all of the 5 sons as he thinks fit.

Discussion

40.  First, as set out earlier, not only the relevant words have to be construed in light of their natural and ordinary meaning but also the overall purpose of the documents and any facts known or assumed at the time of execution.

41.  The Will was executed by the Deceased on 15 December 1954. The Deceased died on 28 August 1955 at the age of 76, and he was around 75 years old at the time of execution of the Will. As set out earlier, he left a tin fong wife, 2 concubines, 5 sons and 15 daughters.

42.  The Deceased first made bequests to one daughter Li Shuk Kuen and then to each of his unmarried daughters and unmarried sons under clause 3 of the Will. Then in clause 4, he made bequests of annuities for his tin fong wife and his 2 concubines.

43.  As set out earlier, clause 5 of the Will concerns the Deceased’s Residuary Estate.

44.  Under clause 5(1), 3 separate trusts were set up, namely (i) to keep and maintain the Family Property for his tin fong wife and his 2 concubines to live in during their respective lives; (ii) for the support maintenance and education of each of his unmarried daughters until each attains the age of 28 years or marry under that age; (iii) for the support maintenance and education of each of his sons hereinbefore mentioned until each attains the age of 28 years provided that his trustees if they think advisable may continue to pay for the educational expenses of any of his said sons until he shall attain the age of 30 years old. The sons referred to in (iii) were the 3 unmarried sons mentioned in clause 3(c), namely his 3 younger sons who or whose estate are now respectively D3 D4, and D5 herein.

45.  Then one comes to clause 5 (2). Although the mandatory word “shall” is used in the opening paragraph, clause 5(2) is clearly subject to clause 5(1). Further, as for the 3 sons under the age of 28, as their support maintenance and education have already provided for under clause 5(1)(c), there appears to be no need to resort to the trusts under clause 5(2)(a) – (e).

46.  Clause 5(2)(f) then sets up a trust for 1/6 of the Residuary Estate for Ching Sheung and as said, there is a proviso in the 2^nd Part. There has been no dispute between the parties that the beneficiaries in the 2^nd Part are intended to be the 5 sons. What is clear is that by the time one comes to this Clause 5(2)(f), all members of the Deceased’s family have already been provided for.

47.  Further as Mr Fung has pointed out, Clause 5(2)(f) is clearly not expressed as two alternatives, that is the 1/6 share in the Residuary Estate is not drafted in the way that it be appropriated for either (a) ancestor worship, or (b) benefit, maintenance and support of one or more the Deceased’s 5 sons.

48.  On my reading of Clause 5(2)(f), the main object and purpose of Clause 5(2)(f) is clearly for ancestor worship, but if drafted in the reverse order, the main object and purpose of Clause 5(2)(f) would become for the benefit maintenance and support of the 5 sons. In my view this could not have been the intention of the Deceased, nor could they both be the main objects and purposes of this clause, since the 5 sons have already been provided for in the earlier part of the Will, namely there is a pecuniary legacy for each of the 3 unmarried sons if he shall attain the age 21 or marry, and further there is a trust of both income and capital for support maintenance and education of each of the 3 unmarried sons until each of them shall attain the age of 28 subject to a proviso that the trustees may continue to pay for the educational expenses of any of the said children until he shall attain the age of 30 years.

49.  By adding the proviso in the 2^nd Part, the intention of the Deceased was clearly that the main object of the 1^st Part could only be departed from if the trustees should consider that any part of the Ching Sheung Share be applied for the benefit maintenance and support of one or more of his 5 sons. In my view, the object and the purpose in the 2^nd Part is an incidental one and it is not the main object and purpose of the clause.

50.  As set out earlier, one of the arguments on behalf of D5 was that the Deceased would not have intended his trustees to exercise their discretion to benefit his 5 sons only if the 1^st Part was valid. However, as pointed out by Mr Fung, it would not have crossed the Deceased’s mind as to what should have happened to the Ching Sheung Share if the disposition was void, or otherwise, the clause would have been drafted differently.

51.  Both Mr Fung and Mr Chan have referred this Court to dictionary meanings of the words “provided” and “nevertheless”. Suffice to say, these words in my view serve to qualify the 1^st Part, and the two Parts are inter-related and have to be read together, namely if the 1^st Part goes, the 2^nd Part cannot be severed and has an independent existence of its own.

Conclusion on Issue (1)

52.  Having considered the natural and ordinary meaning of the words in Clause 5(2)(f) and what in my view would be the objective intention of the Deceased at the time, and having regard to the context and the purpose of Clause 5(2)(f), I have come to the conclusion that the 2^nd Part of Clause 5(2)(f) does not have a life of its own, if the 1^st Part is found to be invalid.

53.  I will proceed to consider Issue (2) and Issue (3) in the event that my above conclusion should be wrong.

Issue (2)

The legal principles

54.  A power is a legal authority conferred on a person to dispose of property which is not his own. A power may be imperative or permissive[9]:

(1) A power is imperative if the done is required to exercise it and has a discretion, if any, only as to the timing or manner of the exercise. This is commonly known as a “trust power”.

(2) A power is permissive if the done is under no obligation to exercise it, though in the case of powers vested in trustees and other fiduciary powers the done will be under an obligation to consider its exercise from time to time. This is commonly known as a “mere power”.

55.  Counsel for D2, Mr Anson Wong SC, has also referred the Court to the Court of Appeal decision in Law Shuk Hoi v Lo Lok Fung Kenneth [2011] 5 HKLRD 23 in which Tang VP (as he then was) had in paragraph 15 referred to Lewin on Trusts and explained as follows[10]:

“A power may be and commonly will be altogether discretionary or permissive, in that the donee is under no obligation to exercise it, though in the case of powers vested in trustees and other fiduciary powers the donee will be under an obligation to consider its exercise from time to time. But a fiduciary power may be imperative, in that the donee is required to exercise it and has a discretion, if any, only as to the timing or manner of the exercise. The former is called a mere power, the latter a trust power. Though the distinction is equally applicable to administrative and to dispositive powers, the terminology is associated with dispositive powers and in particular with powers of appointment. If and to the extent that the donee does not exercise a mere power of appointment, the property subject to the power will pass to those entitled in accordance with a gift over in default of appointment or, if there is no default trust, the property will result to the settlor. But a power of appointment which is a trust power is different, because it is a power of which the objects are intended to take in any event. The donee is under a duty to exercise the power - he holds the property on trust to exercise it - with the consequence that if he does not exercise it the court will do so for him, by directing an equal or unequal division amongst the objects or some of them.”

56.  In relation to a trust power, Tang VP referred to a further passage at paragraph 17:

“In conferring a trust power upon a trustee the settlor is, without himself creating a direct trust in favour of the objects, manifesting an intention that the objects are to receive the distributable subject-matter. It is to be left to the trustee to determine how they are to take, but if, for any reason, the trustee fails to make a determination, the objects are not for that reason to be defeated. A trustee with a trust power may determine how objects are to take but not whether they are to take at all.”

57.  Mr Wong has also referred to a summary by Park J in Breadner v Granville-Grossman [2001] Ch 523 at 540:

“It is trite law that there is a distinction between two kinds of dispositive discretion which may be vested in trustees. There are discretions which the trustees have a duty to exercise (sometimes called ‘trust powers’) and discretions which the trustees may exercise but have no duty to exercise (sometimes called ‘mere powers’). The distinction is most familiar in the context of discretions to distribute income. In cases of trust powers the trustees are bound to distribute the income, but have a discretion as to how it should be divided between the beneficiaries. In cases of mere powers the trustees have two discretions: first, a discretion whether to distribute the income or not; and second, if they decide that they will exercise the first discretion, a further discretion as to how to divide the income between the beneficiaries. In the latter kind of case there will usually be a default trust which deals with the income if the trustees do not exercise their discretion to distribute it. Typically the default trust will provide for the undistributed income to be accumulated or to be paid as of right to a beneficiary whose interest in it is vested but defeasible by the trustees exercising their discretion to distribute.”

58.  Again, there is no dispute on the above general legal principles.

D5’s contention

59.  First, it is contended on behalf of D5 that clause 5(2) makes clear that the trustees hold the dispositions under subclauses (a) – (f) are held “upon trust” and that the relevant clause created a discretionary trust held by the trustees, and not a mere disposive power[11].

60.  Secondly, it is D5’s primary position that in light of the factual matrix the only way in which the discretionary trust could be administered as intended is to vest the 1/6 share, ie the Ching Sheung Share in D5 being the last surviving son.

61.  If in the alternative that the Court is to construe the provision as giving rise to a power, D5 contends that the power is plainly a trust power and not mere power.

Discussion

62.  D5’s contention that the 2^nd Part created a discretionary trust is premised on the argument that the 1^st Part and the 2^nd Part are alternatives and independent to each other.

63.  As said earlier, this Court has come to the conclusion that the two parts are inter-related and the 2^nd Part does not have a life of its own if the 1^st Part is void. They are not alternatives and not independent to each other.

64.  Further, as pointed out by Mr Fung, the term “discretionary trust” has no fixed or precise meaning[12]. It could be used where a trustee has been conferred a trust power or a mere power. Anyway, in the event that the 2^nd Part is severable, D5’s case is that the trustees have been conferred a trust power.

65.  Mr Chan has referred to paragraph 45 of the dissenting judgment of Cheung JA in Law Shuk Hoi in which Cheung JA noted that it would frustrate the testator’s intention if the donee could simply decide not to distribute as per the testator’s intention, and that it was for this reason he dissented and held that it was a trust power. Mr Chan has also sought to distinguish the present case from Law Shuk Hoi on the basis that in Law Shuk Hoi, the relevant clause was not specifically concerned with the residuary estate and that the wording of the relevant clause therein conferred a mere power which is exercisable according to the then surroundings and actual circumstances (“視乎日後實際環境及情況盡量遵照”), which is plainly a guidance and permission not to exercise the power, whereas in the present case, in the context of Clause 5(2)(f), the word “may” goes to the power of selection, timing and apportionment and must be understood that the trustee must distribute to at least one of the 5 sons, in such amount and in such shares as the trustee deems fit. It is further argued that such power to select was made in the context that the Deceased expected the trustees could apportion between Ching Sheung and the 5 named sons, even though the Deceased’s wish to benefit Ching Sheung is frustrated and cannot be achieved in law.

66.  As submitted by Mr Wong, it is a matter of construction of the terms of the instrument whether the power is a mere power or a trust power, citing Lord Upjohn at page 525 in In re Gulbenkian ‘s Settlements [1970] AC 508.

67.  As set out earlier, Clause 5 is in relation to the Residuary Estate and in Clause 5(1) there are 3 trusts created, then one comes to Clause 5(2), which subject to the 3 trusts in Clause 5(2), the wording is mandatory. Thus, it is mandatory for the trustees to divide the Residuary Estate into 6 shares, and then one comes to Clause 5(2)(f). As held earlier, the main object and the purpose of the 1^st Part is for ancestral worship and the incidental object is in the 2^nd Part. In any event, in my view, the express words “may in their uncontrolled discretion” in the 2^nd Part is not simply in relation to power of selection, timing and apportionment but clearly indicate that the trustees may or may not pay or apply the Ching Sheung Share for the purpose therein, and this is in their uncontrolled discretion. There is no mandatory obligation on the part of the trustees to exercise the power in the 2^nd Part.

68.  On the construction of Clause 5(2)(f), I agree with Mr Wong that there is no entitlement for any of the 5 sons to receive the Ching Sheung Sheung or any part thereof under the 2^nd Part.

69.  Having considered the terms of Clause 5(2)(f) and in particular the wordings and terms of the 2^nd Part , I have come to the view that the the trustees are only conferred with a mere power under the 2^nd Part.

Issue (3)

Legal principles

70.  As explained by Park J in Breadner in relation the distinction between trust power and mere power at 540:

“Sometimes the distinction does not matter, but there is an important difference between the two kinds of case if the trustees do not exercise the discretion to distribute income within the normal time for exercising it. That time is usually “a reasonable time”. If there is a trust power and, although the trustees are required to exercise it within a reasonable time, they do not do so, the discretion still exists. If the trustees are willing to exercise it, albeit later than they should have done, the court will permit them to do so. That is what happened in In re Locker’s Settlement. Alternatively the court will exercise the discretion itself. But if the discretion to distribute is a mere power, and the trustees do not exercise it within a reasonable time of the receipt of an item of income, the discretion no longer exists as respects that income. The default trusts take effect indefeasibly. That is what happened in In re Allen-Meyrick’s Will Trusts.”

(Emphasis added.)

71.  Mr Wong has referred the Court to In Re Allen-Meyrick’s Will Trusts [1966] 1 WLR 499, which is an example of a case in which a mere power expired after the lapse of a reasonable time. In that case, the will provided that the trustees had to “… hold the residue upon trust that they may apply the income thereof in their absolute discretion for the maintenance of my said husband and subject to the exercise of their discretion upon trust for my two godchildren… in equal shares absolutely”. Buckley J (as he then was) held that, insofar as the trustees had already accumulated certain funds for a reasonable period of time without exercising the power, the power would lapse.

72.  It was further explained by Buckley J at 505 that:

“As I have said, the trustees have been making certain payments for the benefit of the first defendant and have accumulated in their hands a certain fund of undistributed income. So far as a reasonable period after receipt of any part of that accumulated fund has elapsed, I think that the trustees' discretion in respect thereof must be treated as being at an end. It is true that the reason why they have accumulated that fund is that they have not been able to agree how their discretion should be exercised; but that discretion if exercised at all must be exercised by the trustees unanimously. If they have not succeeded in being unanimous, they have not succeeded in exercising their discretion. It may be that, if the trustees do decide to surrender their discretion to the court in respect of any part of the income of this fund, it may turn out that, as at the time when this summons was launched in September, 1964, some part of the undistributed income had accrued so recently that it might be said that a reasonable time for the exercise of discretion had not yet elapsed, and to that extent I think it would be open to the trustees still, in these proceedings, to surrender their discretion in respect of that part of the income as well as in respect of any income which has accrued since the issue of the summons. But beyond that, I do not think they have any discretion which is still alive and capable of being surrendered…”

(Emphasis added)

73.  Thus, as submitted by Mr Wong, whilst a mere power remains extant, the only duty upon the holder of the power is a duty of consideration, ie “from time to time form a judgment bona fide as to whether they should exercise the power”: Lewin on Trusts (20^th ed) at 29-008. In contrast, a trust power will not expire and if it is not exercised, the Court will direct its exercise.

D5’s contention

74.  It is D2’s submission that if a mere power is not exercised after a reasonable time, it expires with the consequence that the asset shall be distributed to the persons entitled in default of appointment.

75.  As said earlier, D5’s case is that the 2^nd Part confers upon the trustees a trust power. Mr Chan has argued that a general proposition that a power would have lapsed after a reasonable time and therefore no longer legally possible to exercise the power, is wrong. He submitted that the cases relied on by D2 are cases involving the discretionary power to distribute income with an express gift over of the capital and any accumulated income. Further, it is his submission that if the power is to benefit or support one or more named persons, absent any express provision, it could only make sense if the power is exercisable during the lifetime of the object.

Discussion

76.  There were no submissions as to why a mere power should continue to remain exercisable during the lifetime of the object, nor any authorities in this regard.

77.  As Mr Chan has himself submitted, how soon must a power be exercised must be dependent on the true construction of the clause providing for the power.

78.  There is nothing the Court can see on the true construction of Clause 5(2)(f) that the power in the 2^nd Part should continue to remain exercisable until the death of all 5 sons.

79.  As pointed out by Mr Wong, in the Judgment, this Court has noted that the Deceased died in 1955 and probate of the Will was first granted on 19 June 1956, and now we are in 2022, 66 years thereafter.

80.  The Deceased’s sons except D5 have died between 1987 and 2016.

81.  In fact, although D1 was absent and only submitted a statement of submission, which although was not by way of affidavit, there was no sufficient evidence before this Court to contradict what was stated by D1 in his statement, namely that no personal representatives of the Estate had ever exercised the power to apply the Ching Sheung Share for the benefit of any of the 5 sons under the 2^nd Part.

82.  Having considered all the above, I have come to the conclusion that any reasonable time for the trustees to exercise the mere power under the 2^nd Part has already lapsed by now.

83.  Thus, as the mere power has lapsed and the 1^st Part is void, even if the 2^nd Part is severable from the 1^st Part, the Ching Sheung Share should fall back into the Residuary Estate to be distributed in accordance with Clauses 5(2)(a) to (e) of the Will, ie equally amongst the 5 sons and/or their estates.

Conclusion and Order

84.  In light of all said above, for the question in paragraph 1 of D5’s Summons, the Court’s answer is “no”, namely the Court’s conclusion is that the proviso in the 2^nd Part of Clause 5 (2)(f) of the Will is also void. As for paragraphs 2 and 3 of D5’s Summons, again, the answer to both questions is “no”.

85.  Consequently, upon rehearing the OS, this Court confirms the Order made at the 1^st Hearing, and to be clear, the order this Court makes is to the following effect:

(1) in relation to paragraph 1 of D2’s Summons, the answer is the proviso in the 2^nd Part of Clause 5(2)(f) of the Will is void.

(2) this Court declares that the entire Clause 5 (2)(f) of the Will is void for infringing the common law rule against perpetuities;

(3) any interim distribution earmarked by the plaintiffs for Clause 5(2)(f) of the Will be distributed to the 5 residuary beneficiaries in clauses 5(2)(a) to 5(2)(e) of the Will;

(4) paragraphs 1(2) and 2 of the OS be adjourned sine die with liberty to restore

86.  As for costs, in respect of costs incurred up to the 1^st Hearing, there be no order as to costs between the plaintiffs and the defendants and that the plaintiffs’ own costs to be paid out of the Estate on trustee basis.

87.  In respect of the costs incurred after the 1^st Hearing, including the costs of D5’s Summons, having considered all the circumstances of this case, I am satisfied that D5’s Summons was issued not for the benefit of the Estate but for his own benefit, and that this falls into the third category in Re Buckton [1907] 2 Ch 406. I thus order the plaintiffs’ costs and D2’s costs should be borne by D5 personally on a party and party basis, with a certificate for two counsel, and any costs of the plaintiff and D2 which are not recovered from D5 shall be paid out of the Estate on an indemnity basis, with a certificate for two counsel. D5’s own costs of and occasioned by D5’s Summons shall not be paid out of the Estate.

88.  The costs are to be summarily assessed and payable within 14 days of summary assessment.

89.  This is an order nisi which shall be made absolute after 14 days.