HONGKONG BANK TRUSTEE LTD v. ATTORNEY GENERAL

HEADNOTE

A settlor constituted a trust fund in Hong Kong for the benefit of "British charitable institutions registered in Hong Kong or the United Kingdom."

1987 No. M.P. 1045

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

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BETWEEN

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JUDGMENT

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1. By a Trust Deed dated 12th March 1964 Bertram Walter Bradbury ("Mr. Bradbury"), and his wife ("Mrs. Bradbury") and two of their children, constituted a charitable trust of which the Hongkong and Shanghai Bank, Hongkong (Trustee) Limited was appointed trustee.

2. In these proceedings, that company (now known as Hongkong Bank Trustee Limited) is the Plaintiff and The Attorney General is now the sole Defendant. (One of the settlors was originally joined as a Defendant, but she has since died.)

3. The charity constituted by the Deed of 12th March 1964 was substantial. The settlors paid to the Plaintiff the sum of HK$5 million to constitute the trust fund and the evidence is that it is now worth in excess of HK$500 million.

4. By clause 1 of the Trust Deed it was provided as follows :

5. By Clause 2 of the Trust Deed, it was provided that the Advisory Committee should consist of the directors for the time being of Bradbury Investment Company Limited.

6. The Trust Deed contains other provisions usual in the case of a trust of this nature none of which are material to the matters which I have to consider.

7. By his Will dated 20th May 1964, Mr. Bradbury appointed the Plaintiff and Mrs. Bradbury trustees of his Will and made various dispositions of his real and personal estate. By clause 16 of his Will, Mr. Bradbury declared that the power of appointing a new trustee of his Will in place of the Plaintiff should be vested in the Plaintiff and in pursuance of his Will that his estate should at all time be administered under a British system of law; and he directed the Plaintiff, in the event of the rendition of Hong Kong or the abolition of its status as a British Colony before such rendition or abolition took effect, to exercise the power contained in his Will in favour of some British trust corporation outside the Colony of Hong Kong.

8. By an Order of this Court dated 5th November 1975 ("the 1975 Order") it was declared that on the true construction of Clause 1 of the Trust Deed, the expression "British charitable institutions registered in Hong Kong, or the United Kingdom", meant charitable institutions established in Hong Kong or in the United Kingdom recorded as approved charitable institutions for the purposes of Section 88 of the Inland Revenue Ordinance (Cap. 112) or currently on the Central Register of Charities maintained in the United Kingdom pursuant to Section 4 of the Charities Act 1960; and that the word "British" had no ethnic connotation. (Save to this negative extent the Court did not attempt to construe the word "British"). It was further declared that the charities and charitable purposes following the words "such as" in clause 1 were illustrative and not definitive.

9. On 19th December 1984, the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People's Republic of China made a Joint Declaration on the question of Hong Kong. By articles 1 and 2 of the Joint Declaration, it was declared as follows :-

10. I need not read any further articles of the Joint Declaration.

11. The Trust Deed, of course, pre-dates the Joint Declaration. But, as it appears to me, Mr. Bradbury's use of the word "British" in Clause 1 of the Trust Deed and in Clause 16 of his Will demonstrates that he was particularly conscious of what may I may call his Britishness. The Plaintiff, in these circumstances, has issued an Originating Summons, seeking answers to the following questions :-

                (The Originating Summons contains a prayer for further relief in connection with the appointment of a new Trustee. But I am not asked to deal with that today and Counsel for the Plaintiff and for the Attorney General have agreed that I should stand this over.)

12. As to the two questions I have set out, the evidence shows that the Plaintiff is anxious to make gifts to charities of a long-term nature or purpose, for example, by may of payment for new buildings, or the renovation of existing buildings, occupied by charitable institutions. Although it is nearly ten years until 1st July 1997, it seems to me there are special circumstances here which justify the Plaintiff coming to the Court now for an Order as to the limits of its discretion, if any, at this stage. I propose accordingly to decide both these questions.

13. In my judgment, Clause 1 of the Trust Deed defines the qualifications which an institution has to satisfy before it qualifies as a proper object of the trusts declared by the Trust Deed. First, the institution must be one "registered" in Hong Kong or the United Kingdom. (This qualification was the subject of the 1975 Order and must be construed accordingly.)

14. Secondly, the institution must be a charitable institution. When a settler uses the word "charitable" in a trust deed the proper law of which is English, it seems to me there can be no doubt whatever that what the settlor must be taken to have in mind are objects which are charitable according to the laws of England (particularly when, as in this case, the deed is a professionally drawn instrument).

15. As institution which is not charitable in the English law sense would not qualify under this Trust Deed as s charitable institution.

16. Thirdly, the registered charitable institution must, in order to qualify, be "British". The Attorney General argues that this means that the charitable institution must be one whose objects are such as to be recognised as charitable in the English Law sense, and that no more than that is meant by the use of the word "British". I reject this argument. The word "British", on that construction, would add nothing whatever to the word "charitable". I cannot believe that these settlors meant to add nothing by using the word "British" as an additional qualification.

17. Alternatively (if it is an alternative) the Attorney General argues that the word "British" really ought to be ignored altogether. I reject this, too.

18. I think the meaning of the word "British" in this Trust Deed is the political meaning; that is to say, that a charitable institution, in order to qualify, must be one which is amenable to the jurisdiction of the court of the sovereign of the United Kingdom of Great Britain and North Ireland. Until 1st July 1997, every charitable institution in Hong Kong which satisfies the "registration" qualification is "British" in this sense and is eligible as a potential donee. After 1st July 1997, no charitable institution not registered in the United Kingdom can satisfy the qualification that it must be "British". (I should perhaps add that I see nothing in this conclusion inconsistent with the declarations made by the 1975 Order.)

19. Having come to these conclusions, it follows that I must answer both questions in the affirmative sense.

20. The questions are framed in a way which might, perhaps, admit of some improvement. But the inevitable result of this judgment is that, after 1st July 1997, there will be no charitable institution registered in Hong Kong which will qualify as a potential beneficiary unless it is also registered in the United Kingdom, and amenable to its jurisdiction. After 1st July 1997, a charitable institution registered only in Hong Kong will be amenable only to the jurisdiction of a Court sovereignty over which will be exercised by the People's Republic of China. In those circumstances, I cannot accept that such an institution would continue to be a "British" one. It will not necessarily be any the worse for that; but it will not be "British". I propose to answer the questions raised by the Originating Summons as follows :

"DECLARE that on the true construction of the above-mentioned Trust Deed and in the events which have happened the income of the trust fund thereby constituted may until 1st July 1997 be paid to charitable institutions registered either in Hong Kong or the United Kingdom but may after 30th June 1997 be paid only to charitable institutions registered in the United Kingdom."

21. I will direct the rest of the Originating Summons to stand over.