BEAUTIGLORY INVESTMENT LTD. v. TANG YET TAI TONG AND OTHERS

1989, No. MP531

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is an action for partition or sale of land brought under the relevant provisions of the Partition Ordinance, Cap. 352.

2. The plaintiff in the action, Beautiglory Investment Limited, claims to be entitled to a 1/4 undivided share in the relevant land, which is the remaining portion of Section B of Lot No.636 in Demarcation District No. 124, Ping Shan, Yuen Long in the New Territories.

3. The defendants are three in number. The first is "Tang Yet Tai Tong" (A "tong" is a recognised form of association in the New Territories, capable of being treated as the owner of land and capable, subject to compliance with the relevant statutory provisions contained in the New Territories Ordinance, Cap. 97, of disposing by its managers of such land.) The 2nd defendant is "Tang Wai San Tong". The 3rd defendant is "Tang Chi Sing Tong". The 2nd defendant says that the plaintiff has no relevant interest in the land. It is with this preliminary point in the action that I am immediately concerned.

4. The relevant provision of the Partition Ordinance is s.2, which reads as follows:-

"2. Subject to this Ordinance, where any property in land is held by 2 or more persons, whether as joint tenants or as tenants in common, the Court may-

(a) make an order under section 4 for a partition of the property;

(b) make an order under section 6 for a sale of the property; or

(c) refuse to make any order."

5. The issue is whether the plaintiff is entitled (as it claims to be) to a 1/4 undivided share in the land. The 2nd defendant accepts that the plaintiff can show a paper title to some sort of interest in the land but denies that it is of sufficient quality to carry to the plaintiff the 1/4 undivided share which the plaintiff says it owns; accordingly, says the 2nd defendant, it is insufficient to give the plaintiff the right to apply to the court under s.2 for the order which it seeks.

6. In order to explain the respective contentions of the parties, I must investigate in some detail the dealings with the land (known as "Kat Chee Wai") so far as they emerged in the evidence, going back to a Chinese deed made on 3rd November 1903. The agreed translation of this instrument reads as follows:-

"The persons making this instrument for outright sale of paddy fields are Min Sun Tso family elders Yee Yau, Jock Yin and King Yin. Three pieces of paddy fields (of the Tso) have been passed on (from generation to generation). One piece, locally known as Kat Chee Wai, carries a rent of twenty one shek of rice grain; one piece, locally known as Ah Lo Hou carries a rent of ten Shek of rice grain, one piece, locally known as Chung Sha Ha, carries a rent of seven and a half shek of rice grain. Together, the three pieces yield thirty eight and a half shek (or rice grain) and together they are assessed a middle-rate land tax of six dou, nine shing and three hop (of rice grain). In previous years these fields were mortgaged to grand nephew Yick Ting to collect rent. Now because of a matter that requires use of money, we gathered the persons concerned to discuss the matter and reached a shared willingness to sell outright these fields to someone in order to obtain the money to spend. With the help of nephews including Jock Yin as middlemen, who went to Yick Ting's place to negotiate with him, and (Yick Ting) agreed to buy outright. In the presence of the middlemen it was stated clearly that Yick Ting is to pay an additional amount of five hundred dollars as the price for the outright purchase, and that on the day when the instrument is signed, the money is to be paid in full to and received by Yee Yau and others for them to spend. Then, the fields will forever go to Yick Ting for collection of rent and management. The tax for these fields is registered under (the name of) Tang Leung, a family elder (of Min Sun Tso) in the fifth du, the fourth tu, the fourth chia of Sun On district. Min Sun (Tso) will let Yick Ting, at his convenience, have the tax registration changed to go to his household, and will hereafter never talk about additional payment or redemption. This is agreed by both parties, and this instrument of outright sale is specifically made as a proof."

At the bottom of this instrument the following sentence appears:-

"The four character shou-tsu kuan-yi (for collection of rent and management) are added." This is a reference to the fact that, at some stage before that last sentence was written upon the instrument, four additional characters had been inserted in the body of the deed so as to make the express reference which it contains to "collection of rent and management".

7. The next recorded dealing is a Block Crown Lease made on 27th March 1906. In the Block Crown Lease reference is made to the land with which this action is concerned as "Lot 636". It is described as having an area of 15.08 acres and is described as "padi". The owner is named as "Tang Sze I Tong" Against the owner's name appears "Tang Yee Hing and Tang Yick Ting (trustees)".

8. The next dealing (of which there is some documentary evidence) was a "division of property". There was no instrument itself effecting the "division of property", but on 30th April 1920 a memorial was registered in the District Office, New Territories which evidenced what had apparently taken place. The property and the parties to the transaction were described in the memorial. The property is described as "the property registered in the name of Tang Chi Shin Tong (trustee), Tang Yee Hing, Tang Yick Ting of Ping Shan Hang Mee". (The reference to the tong in the name of which the property was registered is, as I hold, a reference to the same tong as was named in the Schedule to the Block Crown Lease.) The land to which the "division of property" related included land other than that with which this action is concerned, but so far as our land is concerned, the land and the effect of the division are described in the following words:-

"Tang Yat Tai Tong, Tang Wai San Tong, Tang Chi Sin Tong and Tang Pak Yun to own DD124 Lot 636."

(Tang Pak Yun was the son of Tang Yick Ting.)

9. There is other evidence which sheds some light on the transaction recorded by this memorial. On 30th March 1920, the Land Office of the New Territories issued a public announcement which was posted on the notice board of Ping Shan Hang Mee Village. The notice (translated) read as follows:-

"The Land Office of the New Territories now announce the receipt by its offices application by Tang Yee Hing and other managers of Tang Sze I Tong of Ping Shan Hang Mee Village for the transfer of their landed property in Demarcation District No. 127 Lot No.26A to Tang Yue Man, Lot No.26B to Tang Kin Ting etc. If anyone considers this to be inappropriate, please attend our offices within the next 14 days from the date hereof to state his grounds of objection for our determination. Notice is hereby given accordingly."

And then (and this is the part that is material for present purposes):-

"P.S. Also Demarcation District No.124 Lot No.636 to be transferred to Tang Wai San Tong etc."

An officer has annotated the available copy of this notice at the bottom "Record: No objection received". He did so on 30th April 1920, which, it will be recalled, was the date on which the memorial was registered.

(On 3rd April 1920, an officer of the District Office had written to his superior about this transaction. This memorandum sheds little further light on the matter but, for what it is worth, I will read the relevant portion of it. It reads as follows:-

"D.D.124 Lot 636 to Tang Yat Tai Tong trustee Tang Kin Tin, Tang Wai San Tong trustee Tang Fong Hing, Tang Chi Shin Tong trustee Tong Ying Shang & Tang Pak Yun.")

10. The next dealing with the land is an instrument of 11th January 1943. It is signed by three of the family heads of Tang Yat Tai Tong and bears the seal of the Tong. It reads (translated) as follows:-

"Now, because from the ancestral worship land of Yat Tai Tong, locally known as Kat Chee Wai, Pak Yun should collect one fourth of the rent grain, on the 11th day of January of the 32nd year of the Republic of China, it was publicly discussed and agreed that a division was to be effected by picking lots, and Pat Yun picked the one fourth of the field now tilled by tenant farmer Tung Shing. From now on, this land will forever be the property managed by Pak Yun. Hereafter Yat Tai Tong should have the lot number of the field cut off and transferred to Pak Yun without change of mind or delay. Now, desirous to have a proof, we specifically made this instrument to be kept as evidence."

11. There have been subsequent dealings with the interest which the plaintiff now claims to hold since 1943, but it is, I think, common ground that nothing turns on these. If the plaintiff succeeds in establishing that, by 1943 at any rate, Tang Pak Yun, through whom it claims, had a 1/4 undivided share in the land, the plaintiff's title is unassailable. I need not therefore trace the dealings with the land from 1943 down to the present day. The challenge which the 2nd defendant makes to the plaintiff's title is based on its contention that Tang Pak Yun never acquired, contrary to the contention of the plaintiff, a 1/4 undivided share in the land under the "division of property" of 30th April 1920.

12. The resolution of the matter lies in a proper appreciation of the relationship between Chinese customary law and the law imposed on the New Territories by the British administration after 1898. The relevant Chinese customary law in force in the New Territories before 1898 and (so far as is relevant) thereafter, may be briefly stated as follows. Under Chinese customary law it was perfectly possible for an ancestral clan or tong to hold land for the purpose of ancestral worship and indeed for other purposes and to deal with that land as any natural person could do. Because the tong was an association of persons with perpetual succession within the clan of which it was a tong, it would be necessary for administrative and tax purposes for the land to be registered with the authorities in the name of an individual, but there would be no doubt as to the ownership of the land by the tong. There was a register of land ownership kept by reference to carefully mapped out surveys recorded in what was graphically described in the evidence before me as a "fish-scale book". In this "fish-scale book" were recorded dealings with the land which were intended to take effect as transfers of legal ownership. The authority responsible for the maintenance of the fish-scale book would consider an application for transfer of the registration of the land, and if satisfied by proper evidence that the application was in order, would effect the new registration. Among the documents which he would require in order to register the transaction would be what has been referred to in the evidence as a "white" deed. This would be an instrument leading to the registration and leading also, when the registration was completed, to the issue of a new deed referred to in the evidence as a "red" deed. The "red" deed would constitute proof of the title of the owner newly registered pursuant to the transaction. (I should make it clear that what I have just described is intended only as an elementary description of conveyancing practice under Chinese customary law.)

13. Now, when the British imposed a new administration on the New Territories after 1898, it was necessary to deal with the question of land ownership. It was provided by legislation that all land in the New Territories should be vested in and belong to the Crown. But a land court was set up to consider applications for registration of title so that claims could be recognised when evidence was provided to the land court which would justify their recognition. The old system of taking one's "white" deed to the Chinese authorities and obtaining a "red" deed was superseded.

14. Nevertheless, mindful as always, no doubt, of the necessity to preserve stability and prosperity, the British did not desire, so it appears, to trample altogether over the customary rights of landholders in the New Territories. Provision was made in the New Territories Ordinance enabling the court to recognise and enforce any Chinese custom or customary right. Accordingly, I turn to the events which I have detailed above to see what the end result is for the purposes of the present case.

15. I deal first with the 1903 deed. There was a difference between the plaintiff and the 2nd defendant as to the effect of this deed in Chinese customary law. But, by 1903, the British administration had already succeeded to the Chinese administration. No question could in practice arise of "white" deeds or "red" deeds or registration of land for the tax purposes of Imperial China. That clearly did not deter the parties to the 1903 deed from entering into it, either because they did not know, or because they did not care, that the British administration now provided for other ways of dealing with land transfer. And anyway at this stage the British administration had not finally settled down. It will be recalled that the Block Crown Lease here was not granted until 1906. Whatever the reasons, the parties to the 1903 deed clearly proceeded on the same footing as they would have proceeded if the British had never taken over the New Territories at all. In my judgment, the 1903 deed does have some relevance to the history of this piece of land. In order to ascertain the intention of the parties in subsequent dealings, it is I think right for me to have some regard to it.

16. The difference between the plaintiff and the 2nd defendant to which I have referred arises in this way. The plaintiff says that, on the true construction of the 1903 deed, Yick Ting could have gone with it to the authorities, treating this as a "white" deed leading to the registration of himself as the owner of the land in question and to the issue of a "red" deed which would be evidence of his ownership for the future. The 2nd defendant denies this. It says that although the 1903 deed conferred on Yick Ting the right in perpetuity to manage the fields to which it related and to collect the rent therefrom for his own benefit, it did not affect the ownerhsip of the land as such, which remained in the tong. I agree with the 2nd defendant. I am of the opinion that the words "for collection of rent and management", emphasized as they were in the 1903 deed, demonstrate that the nature of the interest conferred on Yick Ting was not intended to be an absolute interest. This construction is, I think, consistent with the concern of a tong to retain its ancestral property. It is not, I think, inconsistent with the rest of the instrument. I do not overlook the fact that, in more than one place, reference is made in the instrument to "outright sale" and "outright purchase". But in order to reconcile these various provisions, I would prefer to interpret those expressions as a reference to the perpetual nature of the transaction rather than to the extent of the rights of ownership being transferred. I received evidence on these matters from distinguished experts, Mr Anthony Dicks for the plaintiff and Professor Chang for the defendants, but in the end I prefer the views expressed by Professor Chang upon this aspect of the matter. I do not think that the 1903 deed would have led to the issue by the Chinese authorities of a "red" deed showing a transfer of absolute ownership from the tong to Yick Ting.

17. In these circumstances, under Chinese customary law the ownership of the land would have remained with the tong subject, of course, to the right in perpetuity of Yick Ting (and his successors in title, at any rate, within the family) to manage the property and collect the rents therefrom for his own benefit.

18. But in 1920, the tong, through its family elders and by the employment of the proper machinery (the operation of which can be observed from the memorandum of 3rd April 1920 and the public notice of 30th April 1920) was clearly desirous of dealing with its ownership of the property. The tong, by its family elders, came before the British authorities, requesting a division of of its property to be recorded. Under that "division of property", the three defendants took their present interests, as did Tang Pak Yun, through whom the plaintiff claims. I do not think the defendants can be heard to say that this "division in property" was ineffectual. If I allow them to say so, they will be hoist with their own petard, because they themselves will have no title to be here at all. Their rights depend, as much as do Tang Pak Yun's, upon the efficacy of the "division of property". Since they claim interests under the "division of property" they are, in my judgment, landed with the burden as well as the benefit of it, and cannot advance any claim inconsistent with it. I see nothing in any of this contrary to Chinese customary law. I propose to assume that the family elders, in 1920, acted regularly and properly in what they did rather than to assume the contrary.

19. The only question remaining is this. What rights did Tang Pak Yun, through whom the plaintiff claims, acquire under the "division of property"? It will be remembered that the memorial of 30th April 1920 is jejune in its description of the nature of the interests taken thereunder by the parties. The three defendants are named, and Tang Pak Yun is named, "to own DD124 Lot.636"; and that is all. In my judgment the intention of the parties must have been that each of the defendants, and Tang Pak Yun, would become tenants in undivided shares of the property. In the absence of any other quantification of the shares in which these four parties were to become tenants in common, I think Mr Tang Q.C., for the plaintiff, is right to say that I ought to assume that Tang Pak Yun was intended to become the owner of a 1/4 undivided share. Such a finding would be entirely consistent with the evidence I received as to the way in which the produce of the land was dealt with and the way in which the Crown rent was paid; and again is not in my opinion inconsistent with any rule of Chinese customary law. Such an arrangement would, I accept, have been highly unusual. But, in my opinion, not wrongful or unlawful.

20. As between the three defendants, I am not called upon to decide and do not decide whether they too each own a 1/4 undivided share or whether, as at least one of them wishes to contend, these shares ought to be treated for extraneous reasons as unequal undivided shares. That can be decided by some other judge at some other time and place unless these proceedings are reconstituted so as to make it possible for me to decide them in these proceedings. But that Tang Pak Yun took a 1/4 undivided share, as a result of the division of property recorded on 30th April 1920, I have no doubt. The only consideration which could be urged against this is that, in some way, Chinese customary law precluded the "division of property" from having what I have held to be its intended effect. In my judgment, Chinese customary law has no such effect. The provisions of the New Territories Ordinance are such, in my judgment, as now to enable a tong to take an interest in property as a co-owner with another tong and another individual. This is what, in my judgment, happened. There is, I think, nothing in Chinese customary law which would operate to prevent that from happening or would make it unlawful in any way. I see no good reason for holding that it was in fact unlawful in Chinese customary law for the transferor tong under the "division of property" to recognise a clan member, Tang Pak Yun, as having an absolute interest in a 1/4 undivided share in the land. I appreciate that in Chinese customary law a transaction under which, even for consideration, a clan member was to become the owner of a 1/4 undivided share in tong property would be regarded with some disfavour and maybe as something of an illogicality. But the life of the common law is not logic but experience; and I suspect the life of Chinese customary law is much the same. I am not deterred by logical considerations from concluding that Tang Pak Yun was intended to become and did become, under the "division of property", the owner of a 1/4 undivided share in the land. The contemporaneous supporting evidence, showing that this seems to have been done with the consent of the family elders and managers of the transferor tong, without any objection from anybody and with the consent of the District Land Officer, buttresses this conclusion. Why should I hold now that Chinese customary law makes unlawful the transaction which the memorial of 30th April 1920 records? Certainly it does not do so according to Hong Kong law. Nor, in my judgment, does it do so according to Hong Kong law as applied with such modification as Chinese customary law requires.

21. Further support for this conclusion is, in my judgment, to be found from the instrument of 1943. It seems perfectly clear that in 1943 the family elders, no doubt not thinking for a moment that they were doing anything contrary to Chinese customary law, effected a de facto if not de jure partition of the land attempting to give Tak Pak Yun, in place of his 1/4 undivided share in the field, a specific quarter of the field itself (at any rate for the purposes of management and collecting rent). Given the amount of time over which these dealings took place, starting in 1903, 90 years ago, through 1943, 50 years ago, I see no reason at all to hold that Tang Pak Yun did not take under the "division of property" of 30th April 1920, what it must have then been intended that he should take. For these reasons I propose to hold that the plaintiff, as successor in title of Tang Pak Yun, does have an interest as a tenant in common in relation to this land and does accordingly have the locus stand) to apply for an order for its partition or sale under s.2 of the Partition Ordinance.

22. I do not propose in this judgment to embark on the question whether I should in fact order a partition or, alternatively, a sale. I need the benefit of further argument upon the point. But, so far as the preliminary point is concerned, the plaintiff succeeds.