THE SECRETARY FOR JUSTICE v. JOSEPH LO KIN CHING AND OTHERS

CACV 44/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 44 OF 2013

(ON APPEAL FROM HCMP NO. 853 OF 2012)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1. This is an application for leave to appeal to the Court of Final Appeal against our judgment of 11 April 2014. The Foundation seeks leave under the “as of right” limb as well as the discretionary limb in Section 22 of the Hong Kong Court of Final Appeal Ordinance. The Secretary opposed leave on both limbs.

2. Parties agreed to the disposal of the application on paper.  Written submissions were filed in accordance with the directions given by this court on 26 May 2014. 

3. Having read and considered the written submissions, we are of the view that the intended appeal falls within the “as of right” limb of Section 22 and we grant leave accordingly.

4. The “as of right” limb which is relevant for present purposes provides that leave to appeal is as of right “from any final judgment of the Court of Appeal in any civil cause or matter … where the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1,000,000 or more”. We shall refer to this as the “property claim as of right limb”.

5. In the context of civil cause or matter relating to an estate, this limb has been considered in several probate appeals.  In Chinachem Charitable Foundation Ltd v Chan Chun Chuen (2011) 14 HKCFAR 798, Ribeiro PJ explained the proper approach to the “as of right” limb at para 20 of the judgment and went on to discuss it in the context of a claim in respect of an estate at paras 26 to 31.  For present purposes, the following propositions derived from His Lordship’s judgment are relevant:

(a) To come within the “property claim as of right limb”, the claim must be a claim to some particular property or to a proprietary right of the requisite value.  Other types of claim are insufficient, even if they are incidental to the enjoyment of property rights, see para 20(iv);

(b) The court focuses on the value of the claim instead of the value of the property or proprietary value in considering the threshold amount, see para 20(v);

(c) The order which the Court of Final Appeal would make at the end of the appeal (if the appeal is successful) must have the immediate effect of conferring or imposing on the relevant parties a financial benefit or detriment in the quantified amount.  It is not enough to show that such a financial impact is a likely eventual result, see para 20(vii);

(d) In the context of probate appeals, the grant of leave as of right in Wang Din Shin v Nina Kung CACV 460 of 2002 and Re Estate of Mui Yim Fong (No 2) [2010] 5 HKLRD 112 was correct in law.  In those cases, the Court of Appeal had regard to the reality of the situations: winning the appeal would result in the appellants becoming entitled, without any further adjudication, assessment or apportionment, to the entirety of each estate, see paras 26 to 30; and

(e) The immediacy requirement means that the order sought in the appeal, if granted, would have the effect of conferring the quantified financial benefit without need for any further adjudicatory process to determine any question of fact or law, including any process of assessment, quantification or apportionment, para 31.

6. In the present appeal, there is no dispute that the estate in question has a value well exceeds $1,000,000.  The Will having been proved in the probate action, there is no dispute that the Foundation is entitled to the property comprised in the estate.  The issue of construction which is engaged in the appeal was identified at para 7 of our judgment of 11 April 2014, viz whether the Foundation received the estate as an absolute gift as opposed to a trustee holding the same on a charitable trust.  We decided the appeal against the Foundation.  The Foundation intends to challenge our judgment and seeks to persuade the Court of Final Appeal that it should get the estate as an absolute gift.

7. If the Foundation were successful in the intended appeal, subject to what we shall say in respect of Clause 4 of the Will below, it would become the absolute owner of the estate.  Because of its charitable status and its memorandum and articles of association, it is obliged to make use of the property for charitable purposes.  And in its daily operation and administration, it shall be subject to the supervision under the parens patriae jurisdiction of the court and the Secretary.  However, none of these detract from the position that the Foundation would become the absolute owner of the estate if it were successful in its intended appeal.  The claim of the Foundation in the intended appeal is that on proper construction the Will provides it to become the absolute owner of the estate. 

8. We do not agree with the submissions of Mr Taube QC (together with Mr Ho SC and Mr Yin for the Secretary) that the claim of the Foundation is not a claim in respect of some particular property or to a proprietary right of the requisite value.

9. As regards the immediacy requirement, Mr Taube contends that the requirement is not satisfied because the Foundation is merely an administrative vehicle for administering property for charitable purposes for the public benefit.  With respect, we do not consider such characterization of the Foundation to be an obstacle in satisfying the immediacy requirement. In effect, this contention invites us to ignore the legal and equitable ownership of the property by a charity and treat the charity as a mere administrative vehicle.  For present purposes, we do not think this is a correct approach for determining whether the immediacy requirement is satisfied.  As we said at para 10 of our judgment, as the law stands, we do not think the Foundation or its directors can be regarded as trustees in respect of the assets owned by the Foundation.

10. Though there may be some formalities before the Foundation become the legal owner of the estate, we have not been told of any further adjudicatory process to determine any question of fact or law, including any process of assessment, quantification or apportionment that the Foundation must undergo to get its hand on the estate if it were successful in the intended appeal.  In this respect, the present case is different from Chinachem Charitable Foundation Ltd v Chan Chun Chuen, supra.

11. We alluded briefly to Clause 4 of the Will in the earlier part of this judgment.  If the Foundation were successful in the intended appeal, even on its case, it would have to comply with Clause 4 (see para 76 of our judgment of 11 April 2014).  We have accepted Mr Taube’s analysis that Clause 4 is to be construed as powers (see para 87 of our judgment).  We do not think the obligations of the Foundation under Clause 4 prevent it from satisfying the immediacy requirement because the powers (or on the Foundation’s case, the personal obligations) are to be exercised only after the Foundation becomes the owner of the estate.  Further, as held by us at para 114, such power is to be exercised in respect of income from the estate.  Therefore, it is not a case where one cannot tell whether the Foundation would obtain an immediate financial benefit of more than $1,000,000 without any process of assessment. 

12. We shall grant leave to appeal accordingly. Costs of the application will be costs in the cause of the appeal to the Court of Final Appeal.

13. Parties have not addressed the question as to the terms on which leave should be granted.  We direct that if parties can agree on the terms, they should submit jointly a draft order for our approval within 14 days.  If there were disagreement on any term, they should each submit, again within 14 days, their respective version of the draft order for our determination on paper.