XCHRX CHAN HOW CHUEN, STEPHEN v. CHAN HAU CHEONG AND OTHERS

1996, No.MP2437

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H E A D N O T E

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CONSTRUCTION OF CHINESE WILLS.

1. A Chinese testator thought he owned what belonged to him and what belonged to his wife as his wife also belonged to him.

2. He intended to bequeath a whole building (which was on two lots of land belonging to him and his wife separately) to all his three sons but not his three daughters.

3. In bequeathing the business of the testator, a Chinese Herbal medicine shop to his three sons, the testator did not only bequeath his sole proprietorship in that business but also those parts of the building occupied and used by the business as a matter of true and proper construction of the Will in the circumstances of this case.

4. Since he could not bequeath what he did not own, the three sons could only inherit about ¾ of the building as his wife had predeceased him intestate leaving her own issues of two sons and three daughters to inherit ½ of her about ½ share i.e. about ¼ of the building but one son of the testator with another woman could not share in that ¼ share under the intestacy rules.

5. In bequeathing his another residential property to his eldest son which was jointly owned by him and his wife, he had successfully done so as his wife had predeceased him. Consequently he owned the whole property at the time of his death and his Will should be construed to speak and take effect as if it had been executed immediately before the death of the testator.

1996, No.MP2437

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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Background

1. The testator Chan Yee Po (also known as Chan Siu Hung) passed away on 17 November 1992 in Hong Kong leaving the following natural children with his lawful kit fat wife Madam Lee Wai Fong :-

1) How Chuen, Stephen, the Plaintiff,

2) Hau Cheong, the 1^st Defendant,

3) Wah Bing, the 3^rd Defendant,

4) Wah Yin, the 4^th Defendant,

5) Wah Ying, the 5^th Defendant.

2. The testator also had a son, namely Hau Poon, the 2nd Defendant, with one Madam Tse Ying, as a result of their co-habitation. Thus the testator had two sons and three daughters with his kit fat wife Madam Lee and one son with Madam Tse.

3. Madam Lee in fact had predeceased the testator, and passed away intestate on 30 March 1987.

4. The Plaintiff is now the administrator of the estates of both the testator and his mother, Madam Lee.

5. The testator had been running the business of one Chan Fun Kee at 40 Ko Shing Street, Hong Kong. The shop was a traditional Chinese medical herbs shop at the ground floor of the aforesaid address.

6. Before 1970/1971 the testator owned No.38 Ko Shing Street and Madam Lee owned No.40 Ko Shing Street. These two lots of land comprised also a six-storey building with a roof-top. There was one staircase leading to two separate units A and B on each floor for the two numbers 38 and 40. No.38 was on the eastern side whereas No.40 was on the western side. However it should be noted here that No.38 has a width of 19 feet 10 inches whereas No.40 has 12 feet 8 inches only. (The two lots of land are hereinafter called "the old No.38" and "the old No.40" respectively).

7. The Plaintiff in his affirmation said the two numbers comprised of two buildings sharing a common staircase. I suspect it was only one building with one staircase leading to two units on each floor designated as No.38 and No.40 respectively. Whether it was one or two would not affect the decision herein.

8. In 1970/1972 the property was redeveloped and the building was rebuilt. Consequently, the building comprised of the following which is different from the original building :-

1) the partition between the two lots was in the middle of the two lots instead of No.38 being larger than No.40, i.e. what is now known as No.40 ("the new No.40") now encroached onto part of the previous old No.38. The two new Nos.38 and 40 are now of equal width. Each shop has a cockloft and I was told that each of them had an internal staircase thereto for access.

2) From the 1st floor to the 5th floor there are three units A, B, and C instead of A and B previously. Unit B is entirely within the old No.38 lot whereas Unit C now encroached onto a small part of the old No.38 lot whereas Unit A was at the back of the building occupying both the old Nos.38 and 40 lots. In other words Unit B is on the eastern side and Unit C is on the western side but they are at the front of the building with equal width, whereas Unit A is now at the back of the building crossing the old Nos.38 and 40 lot.

3) There is no partition on the roof and therefore the roof was on top of Units A, B and C.

4) The herbalist shop Chan Fun Kee occupied the new No.40, i.e. on the western side of the building and No.38 was rented out.

5) Units A and B were all rented out whereas Chan Fun Kee, apart from occupying the shop of No.40, also occupied and run its business in all the five Units C on the upper floor (as residence for its employees) together with the whole roof for drying and storing medicine and herbs.

6) Although the common staircase of building could lead to all three units, i.e. Flats A, B and C on the upper floors, at all material times in the past the entrance on each floor to Flat C were locked so much so that all Units C on the upper floors were only accessible by an internal staircase from the ground floor of No.40.

7) At the time of the hearing before me, the whole building has already been sold out.

9. As stated hereinbefore, the deceased testator was the sole owner of No.38 or the original lot of old No.38 which was larger than the present new No.38 in the new building whereas Madam Lee was the sole owner of smaller old No.40 lot.

10. All the upper Units A, B and C were described as Nos.38-40 Ko Shing Street Unit A, B or C.

11. At all material times the testator and Madam Lee also owned as joint tenants, a property at Block B, 4th Floor, Bonham Road, No.14 Oaklands Path, Hong Kong ("the Oaklands Path property").

The two Wills and questions arising

12. The testator left behind two Wills. They are in Chinese and were made by the testator in 1982.

13. In the first one, the testator bequeathed the Oaklands Path property to his eldest son the Plaintiff as follows :-

"W I L L

When I purchased my residence at Block B 4th floor, Bonham Road, 14 Oaklands Path, the assignment (of the property) was signed by me and my wife Lee Wai Fong jointly, i.e. half share to each party. My (said) property is to be given to my eldest son CHAN HOW CHUEN absolutely. I make this Will.

(In) the Year One thousand Nine hundred and Eighty-two."

Thus the question arising from the 1^st Will is whether the testator was only bequeathing his original 1/2 in the property to the Plaintiff or all he had for the whole property at the time his death.

14. In the Second Will the testator said :-

"W I L L

I have three sons, eldest son CHAN HOW CHUEN, second son CHAN HAU CHEONG, third son CHAN HAU BOON, now I give to my three sons all I have in CHAN FUN KEE which is to be divided into three shares and each of them shall have one share thereof.

And all the rental derived from the property of 40 Ko Shing Street, Ground floor including Flat A, Flat B on the 1^st to 5^th floors, six storeys totalling twelve units, is to be divided into three shares. In the case of sale, (the proceeds) is also to be divided into three shares.

(In) the Year One Thousand Nine Hundred and Eighty-two."

15. Apparently under the first part of the Second Will, the deceased testator purportedly bequeathed his interest in the business of Chan Fun Kee in equal shares to his three sons namely, the Plaintiff, the 1st Defendant and the 2nd Defendant, i.e. How Chuen, Hau Cheong and Hau Poon.

16. In the second part of the will the testator purportedly bequeathed the rental income and in the event of sale, the sale proceeds of "the property of No.40 Ko Shing Street, Ground Floor including Flat A, Flat B on the 1st to 5th Floor, six storeys totalling 12 units" to be divided into three shares to again his aforesaid three sons.

17. This will raised a number of difficulties :-

1) In bequeathing his business of Chan Fun Kee, does it mean the business of Chan Fun Kee only or Chan Fun Kee together with all those parts in the building occupied by Chan Fun Kee in the said property, i.e. shop of No.40 together with its cockloft and all five Units C together with the whole of the roof-top.

2) The property of 40 Ko Shing Street did not attract any rental income and thus was it a mistake on the part of the testator and he actually meant the Ground Floor of No.38 together with its cockloft.

3) The testator only owned the old No.38 lot whereas Madam Lee owned the old No.40 lot. Since a testator could not bequeath what he had not got, (i.e. No.40 which belonged to Madam Lee was part of Madam Lee's estate), and as Madam Lee died intestate and predeceased the testator, at the time of the testator's death, the testator only owned half of No.40 under Madam Lee's intestacy whereas all her natural children i.e. the Plaintiff, the 1st, 3rd, 4th and 5th Defendants together owned the other half in equal shares among themselves.

General principles

18. As the testator died in 1992, the old Wills Ordinance, Cap.30 applies : s.30 of the new Wills Ordinance, Cap.30 and s.5 of the old Wills Ordinance.

19. As the will was written wholly in Chinese, there is no need for it to be executed in accordance with the formal requirements.

20. Section 19 of the Wills Ordinance provided that every will should be construed to speak and take effect as it had been executed immediately before the death of the testator, unless a contrary intention appears from the will. (See also Higgins v. Dawson [1902] A.C.1 at 7, per Lord Halsbury LC).

The First Will

21. Under the First Will, the testator purported to bequeath this specific property, i.e. the Oaklands Path property to the Plaintiff alone. Although at the time of the will the testator was only a joint tenant of the said premises, yet by the time of his death in 1992, he had already become the sole owner of the premises because the other joint tenant, Madam Lee had predeceased him. The joint tenancy had not been severed during Madam Lee's life time. The First Will did not serve as a severance of the said joint tenancy (See Halsbury's Laws of England, 4^th edition, Vol.50, para.231).

22. Accordingly on the plain reading of the First Will, the reference to "half share to each party" was only a description of the assignment of the property when the same were purchased and registered in the names of the testator and Madam Lee. It is quite clear from the Will itself that Mr Chan considered that he was the sole owner of the premises as his residence even in 1982 when he described the property as his residence and he was the one who purchased the same, albeit legally he was wrong. However, all in all there is no contrary intention as appeared from the Will itself that Chan had only intended upon his death to pass only half share of the interest to the Plaintiff. In the circumstances, the sole beneficial owner to this Oaklands Path premises now is the Plaintiff alone. The parties are not in dispute on this point and I entirely agree with the interpretation or construction of such a Will put forward by the parties.

The Second Will

23. Both sides agreed that when the testator stated 40 Ko Shing Street, he actually meant "38", not only because he did not own No.40 but No.40 had always been used by Chan Fun Kee as its shop and thus there was no rental income derived therefrom. Otherwise it would be contrary to the intention as appeared in the Will itself.

24. Mr Simon Leung, Counsel for the 4th and 5th Defendants, i.e. two of the three daughters, suggested that :-

1) When the testator bequeathed in the first part of the 2nd Will the business of Chan Fun Kee to the three sons he meant Chan Fun Kee which occupied the shop premises in No.40, Ground floor, Ko Shing Street.

2) Since he had not mentioned the cockloft thereof and the roof above which covered both Nos.38 and 40, what the testator owned in these premises would become intestate.

25. Accordingly Counsel for the two daughters submitted that :

a) under the intestacy of their father, the daughters should have their respective shares out of the half share belong to him; and

b) under the intestacy of the mother, the daughters should have their respective shares out of the other half share not belonging to their father.

26. The testator actually had not mentioned Unit C either. Counsel for the two daughters suggested that when he mentioned Units A and B, he meant Units A and B in the old building, i.e. pre-1970 and therefore they accepted that the new Unit C is included in that description and they conceded Unit C should also be given to the three sons of the testator.

27. I find the submissions of Counsel for the two daughters unconvincing at all. First of all, as both sides agreed and it is accepted by me that when he mentioned 40 Ko Shing Street, Ground Floor, he actually meant 38, Ground Floor since only 38, Ground Floor attracted rental income. I notice that the testator wrote both Wills in the letterhead of Chan Fun Kee which was described as "40, Ko Shing Street, Hong Kong". It did not even say Ground Floor since Flat C was on the side of No.40.

28. Secondly the second part of the Will must refer to all those parts which attracted rental income and they are No.38 Ko Shing Street, Ground Floor, Units A and B on the 1^st to 5^th Floors of Nos.38-40, Ko Shing Street.

29. Consequently every other portion of the building left behind would be those parts used and occupied as aforesaid by Chan Fun Kee.

30. It is inconceivable that a testator like Mr Chan who was so familiar with the business of Chan Fun Kee would only bequeath the business of Chan Fun Kee to his three sons including only its business as a going concern, its stocks in trade, its goodwill and all assets owned by this sole proprietorship of the testator except those parts of the building which had all along been occupied and used by Chan Fun Kee. By the time of the testator death, he owned more than half in terms of area of the two lots. What is inconceivable is that if that was the only intention of the testator, he would be saying to his three sons that he was passing the business of Chan Fun Kee to them but God knows how they could operate such a business without the Ground floor, the cockloft, the five Units C and the necessary roof-top for drying Chinese herbal medicine.

31. The most acceptable construction, in my view, is that Mr Chan, the testator, as most Chinese man in his generation thought that he owned what belonged to him and what belonged to his wife as his wife also belonged to him. There is also such an indication as I have said in respect of the First Will when he described his residence premises as what he bought in the name of himself and his wife. Accordingly in 1982 when he wrote the Will, he thought Chan Fun Kee and himself owned all those parts used and occupied by Chan Fun Kee. It was his clear intention that Chan Fun Kee's business should pass on to his three sons only. To him Chan Fun Kee is him and he is Chan Fun Kee and he owned the whole building. Thus the most sensible and reasonable construction of the Second Will is that the testator thought in 1982 and the Will also spoke at the time of his death in 1992 to the effect that he bequeathed all those parts used and occupied by Chan Fun Kee instead of just the business of Chan Fun Kee. This is subject, of course, to the principle that a testator could not bequeath what he did not own in the first place.

Conclusion

1) Under the First Will, the eldest son, i.e. the Plaintiff, is entitled to the Oaklands Path premises absolutely.

2) Under the Second Will :-

i) The three sons, i.e. the Plaintiff, the 1^st and 2^nd Defendants would be entitled to the property at No.38 and No.40 of Ko Shing Street subject to Madam Lee's other half interest in half of the old No.40 lot as she owned the old No.40 lot.

ii) The issues of Madam Lee i.e. the Plaintiff, the 1^st, 3^rd, 4^th and 5^th Defendants shall share the aforesaid remaining half of Madam Lee's interest in the old No.40 lot equally according to the Intestacy Rules. The 2^nd Defendant, Hau Poon, not being a child of Madam Lee is not a child or issue of her for the purpose of Intestate's Estates Ordinance, is not entitled to part of the remaining half of Madam Lee's interest in the old No.40 lot.

32. I was told that the parties have no dispute as to the various undivided shares of each unit and they can work out a formula to share those proceeds of sale of the whole building. In any event, all parties shall have liberty to apply before me on any other issues arising.

33. As agreed all costs of the parties shall be paid on common fund basis out of the estate of the testator.