TSANG WING LUNG v. TSANG LUN AND ANOTHER

1987 No A7770

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The plaintiff claims to be the fourth and youngest son of Tsang Fat Tun, also known as Tsang Kan (hereinafter referred to as "the father") who died in Hong Kong in 1937. The three other sons are Tsang Sun, Tsang Lun (hereinafter referred to as "the deceased") and Tsang Fung (hereinafter referred to as "D2").

2. The father died intestate in or about 1937, owning various properties in New Territories.

3. The plaintiff lived in China between 1945 and 1982, when he returned to Hong Kong.

4. The plaintiff has settled his claim against the second defendant. The present action is between the plaintiff and the Official Administrator representing the estate of the deceased (hereinafter referred to as "D1").

5. The deceased and D2 became registered as the owners of the father's property. The plaintiff and another brother, Tsang Sun were excluded.

6. Some of the property was solo some is still registered as aforesaid, and some has been resumed by the Crown upon payment of compensation.

7. The plaintiff now claims a share of all money received for land sold and/or resumed, an order that his name be included in the District Lands Office as one of the owners of unsold land, and an account of all monies and benefits received or receivable by the deceased and the second defendant in respect of family property.

8. D1 denies that the plaintiff is a son of the father, and pleads that the Limitations Ordinance, Cap. 347 bars the plaintiff's claim.

9. The plaintiff replies that under section 13 of the New Territories Ordinance, Chapter 97, Ching law applies, which recognises no rules of limitation. Further, the plaintiff contends that under section 20(1)(b) of the Limitation Ordinance, no period of limitation applies to an action by a beneficiary under a trust to recover trust property or the proceeds thereof, which was previously received by the trustee and converted to his use. It is not in dispute that the deceased and D2 were constructive trustees for the plaintiff.

10. The plaintiff called two witnesses, the first being Tsang Sun, the oldest brother. He is now 82, and lives in Shek Ku Lung Village, Taipo, and the son of the father by the second of three wives. The son of the first wife passed away. When he was 4 Years old, his mother, the second wife, passed away, and the father took a third wife, Ng Fook Kiu. She had three sons, the deceased, D2 and the plaintiff. He continued to live with the father, the stepmother, and his three half-brothers. Everyone was born at 33, Shek Ku Lung Village.

11. The father passed away when PW1 was 28 A funeral was held, and according to the custom of the village, the 4 brothers bought water. The only other person who bought water was his wife. Only the deceased's children are required by custom to buy water.

12. He said that the plaintiff went to China in the 1940's when the Japanese invaded Hong Kong, and returned in 1982.

13. He identified the plaintiff from photographs at p 26 and p 36 of the plaintiff's bundle.

14. Finally, he said that Yau Kwok Tong was the head of Kam Shun Village, a village very near to Shek Ku Lung.

15. In cross-examination, he said that the plaintiff had always been his younger brother "even when he was a child". He said that he was at home when the plaintiff was born. "No need for father to tell me. I knew it."

16. He said that when he saw the plaintiff in 1982 after his return from China, he recognised him as his younger brother.

17. The second witness called was Yau Kwok Tong, 75 He has lived his entire life in Kam Shun Village, five minutes walk from Shek Ku Lung village. He knew the family of the father. There were 4 children and he knew them all. The plaintiff was also known as Tsang on. He recognised PW1 as Tang Sun. He said that the plaintiff was born in Shek Ku Lung, when he was 10 years old. He thought he had a different mother, whereas the other three had the same mother. He remembered her name - Ng Fook Kiu. He confirmed that the plaintiff went to China when the Japanese invaded and returned around 1982. He recognised him. The Plaintiff stayed with one of his brothers, the deceased. He identified the plaintiff from the photographs at p 26 and p 36 of the plaintiff's bundle.

18. In cross-examination, he said that he first saw the plaintiff when he was 2 or 3 "He ran to my place to play. Previously the villages were connected. We had the same person in charge. Whenever someone was born or died in Shek Ku Lung, all the elders of my village went there to give assistance, So all the children and grown-ups associated with each other. We were very close."

19. In re-examination, he Said that his father and his elder brother carried the father's coffin at his funeral, which was before the Japanese' invasion.

20. I had no doubt, whatsoever, on this evidence, that the plaintiff was a son of the father. Both witnesses were conspicuously impressive and dignified edders, and were not challenged in cross-examination. There was no reason not to accept their evidence. I noted the discrepancy between PW1 and PW2 to the effect that whereas PW1 said that Ng Fook Kiu was the mother of his three brother, but not his mother PW2 said that Ng Fook Kiu was the mother of three, but not of the plaintiff. Obviously, the evidence of PW1 was correct. He would know who his mother was PW2 error was not significant in the scheme of things, and one easily made in relation to events taking place over 60 years ago.

21. I was in no way inhibited from concluding that the plaintiff was a son of the father, by fanciful doubts, arising from the fact that PW1 did not actually witness the birth. As he himself, Somewhat pointedly Said, "No need. I was not a midwife." Nevertheless, he was then a member of the family, living with the family, and when he said that the plaintiff had "always been my younger brother, even when he was a child", he left no doubt in my mind about the matter.

22. Since the plaintiff is a son of the father, and since the dispute concerns land in the New Territories, section 13 of the New Territories Ordinance, Chapter 97, is relevant. It reads as follows:

"13. 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."

23. That section was carefully considered in Tang Kai Chung and Tang Chik Shang [1970] HKLR 276, and Mills-Owens, J decided that it was mandatory and not discretionary. Mr Yeung, on behalf of D1, did not seek to suggest otherwise.

24. In those circumstances, as Mills-Owens, J said, at p 295:

In a situation such as Cap 97 envisages, authorities, I think, are of limited assistance; one must give priority to the language of the enactment itself and the circumstances in which it was enacted... lead irresistibly to the conclusion that the Court must recognise and enforce Chinese custom and customary right in the case of a TSO in the NT."

25. The plaintiff's case is that since the case involves land in the New Territories, Chinese custom must apply. Mr Dicks, in his unchallenged proof of evidence marked B, states that succession to land in the New Territories is governed by a code of the Ching dynasty, "which requires equal division of family property as between brothers", and which largely excludes "the voluntary disposition of land by gift or will, and in particular excludes the possibility of substantial departure from such equality of distribution." There are certain exceptions, which Mr Dicks does not believe are relevant in this case, and there has been no suggestion that they are relevant.

26. Mr Dicks states that "under Chinese law and custom there are no rules of limitation. As general concepts limitation of actions and prescription of rights were unknown to the traditional Chinese legal system and in fact it was not uncommon in traditional China to litigate, or even to re-open litigation, in respect of disputes over property many decades or even centuries after the occurrence of the events on which the outcome of such disputes depended."

27. It is submitted on behalf of D1 that the law of limitation, being a matter of procedure, must still apply in this case, even though Chinese law applies to such substantive matters as arise. It is submitted that the action is brought in Hong Kong, and that the court in Hong Kong must be bound by its own procedure.

28. That proposition is derived from Rodriguez V RJ Parker (1967) QB p 116, where it was held that the benefit which a defendant derived from the Statute of Limitations was procedural, operating to bar the remedy and not to remove the cause of action.

29. However, if the procedure of Hong Kong prevails over the applicable substantive Chinese law, it seems to me that the very essence of that substantive law would be subverted. Under Chinese law, a son is entitled to his share of the father's land, come what may all succession is "by way of legal succession". The application of the procedural law of Hong Kong, would necessarily interfere with the substantive Chinese law, and therefore, as Mills-Owens J said, in the Tang Kai-Chung case, supra, at p 295:

"It is then a necessary corollary that one must disregard any aspect of English law, including the rule against perpetuities or any rule regarding unusual modes of devolution, which might affect the customs or trusts of the Tso; and I would so hold." (My underlining.)

30. I am satisfied that the Hong Kong law of limitations, is an "aspect of English law", and that, even though it might be procedural, it would affect the operation of the substantive Chinese law which applies to New Territories land by virtue of section 13 of Chapter 97. Therefore it must be disregarded, in exactly the same way as Mills-Owens J disregarded the rule against perpetuities. That is implicit also, in dicta in Kan Fat Tat and Kan Yin-tat (1987) HKLR p 516 at p 533.

31. The plaintiff does not rest there. It is submitted that the law of limitations does not, in any event, apply to the present case, because of the provisions of section 20(1)(b) of the Limitations Ordinance, Chapter 347.

32. The section reads as follows:

"20. (1) No period of limitation prescribed by this Ordinance shall apply to an action by a beneficiary under a trust, being an action

(b) to recover from the trustee trust property or the proceeds thereof in the possession of the trustee, or previously received by the trustee and converted to his use."

33. It is not disputed, on behalf of D1, that when the deceased and D2 contrived to become registered as owners, they became constructive trustees for the plaintiff, and presumably, PW1.

34. But, it is argued, there is no evidence that monies received by the trustees were converted to their use. In my view, it would be unrealistic in the extreme to suggest otherwise. There is no evidence as to precisely how the deceased and D2 managed to become registered as owners in 1945 without disclosing the existence of PW1 and the plaintiff, but it is a reasonable inference that some dishonesty was involved, and a more than reasonable inference that the proceeds of trust property were converted to the use of trustees, including the deceased. It is true that the plaintiff has not directly proven that the proceeds were converted as aforesaid, but I am satisfied on the balance of probabilities that in all the circumstances, they were so converted, notwithstanding the passage in volume 28 of the 4th Edition of Halsbury at para. 835, that it is not sufficient to prove mere receipt.

35. Of course, there is no problem in relation to that land which has not been sold. It is obvious that it is not subject to any period of limitation under s 20(1)(b) of Cap 347.

36. There remains only the claims of the plaintiff for an order that the District Lands Office records be rectified to include the plaintiff as one of the owners and for an account of all monies and benefits received by the deceased.

37. It is submitted that these are not claims under s 20(1)(b) and therefore not exempt from the law of limitations.

38. It seems to me that land cannot be fully "recovered" unless the register is put right and that an order for rectification is an integral part of any action for recovery of property where a system of registration exists.

39. As to the claim for an account, it is also quite obviously part of an action to recover the proceeds of trust property which have been previously received and converted. How is a beneficiary to know exactly how much is involved where a trustee has been selling and converting trust property? In my view, that is implicit in the decision of Kekewich J, in How v Earl Winterton,[1896] Ch Div p 626, a case concerning the effect of section 8 of the Trustee Act, 1888, upon which s 20(1)(b) of cap 347 is largely based.

40. I am satisfied on the balance of probabilities that the plaintiff has established that his action is within section 20(1)(b) of Cap 347, and therefore not liable to the law of limitations.

41. There will be judgment for the plaintiff with costs in the terms sought in the prayer.