Lee Pui Ling Angelina And Others v Chen Wai Wai (Also Known As Vivien Wai Wai Chen) And Others

Judgment Date28 November 2019
Neutral Citation[2019] HKCA 1317
Judgement NumberCACV206/2017
Citation[2020] 1 HKLRD 194
Year2019
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV206/2017 LEE PUI LING ANGELINA AND OTHERS v. CHEN WAI WAI (also known as VIVIEN WAI WAI CHEN) AND OTHERS

CACV 206 /2017

[2019] HKCA 1317

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 206 OF 2017

(ON APPEAL FROM HCMP NO 3245 OF 2015)

________________________

IN THE MATTER of the Estate of CHEN DIN HWA (陳廷驊) also known as CHEN TSO HSING (陳祖馨) also known as CHEN KA FOO (陳嘉福) late of No 5 Middle Gap Road, The Peak, Hong Kong, Deceased
and
IN THE MATTER of Order 85, Rule 2 of the Rules of the High Court (Cap 4A) and the Inherent Jurisdiction of the Court

________________________

BETWEEN

LEE PUI LING ANGELINA (李王佩玲),
CHOW SUK HAN ANNA (周淑嫻)
and WAI-PAT WONG (黃維弼),
three of the Executors of the Estate of CHEN DIN HWA, Deceased
Applicants
and
CHEN WAI WAI (also known as VIVIEN WAI WAI CHEN),
CHEUNG KAREN TIH LOH,
CHEUNG WAI HING,
CHOI SAU LIN DORIS,
KUOK HOI SANG,
LAM KWOK KWONG PAUL and
LUI WING KWONG GILBERT,
Trustees of THE D.H. CHEN FOUNDATION
1st Respondent
CHEN WAI-FONG (also known as ANGELA CHEN) (陳慧芳) 2nd Respondent
CHEN WAI WAI (also known as VIVIEN WAI WAI CHEN) (陳慧慧) 3rd Respondent
SABELLA MARCEL CHEN (陳世民) 4th Respondent
SABELLA DAMIEN CHEN (陳世安) 5th Respondent
CHEUNG VINCENT SAI SING (張世成) 6th Respondent
CHEUNG KAREN TIH LOH (張添珞) 7th Respondent
CHEUNG VANESSA TIH LIN (張添琳) 8th Respondent

________________________

Before: Hon Kwan VP, Chu JA and Au JA in Court
Date of Hearing: 1 November 2019
Date of Judgment: 28 November 2019

________________________

J U D G M E N T

________________________

Hon Kwan VP:

Introduction and factual background

1. This is an appeal by the 4th respondent, Sabella Marcel Chen (“Marcel”), from the decision of L Chan J handed down on 13 July 2017 on the originating summons issued by three of the four executors[1] of the estate of Chen Din Hwa, deceased (“the Deceased”), seeking the determination of various questions arising from the administration of the residuary estate.

2. Pursuant to the will of the Deceased dated 30 August 2001, the Deceased gave his residuary estate to the D H Chen Foundation, his two daughters (Chen Wai-Fong Angela (“Angela”) and Chen Wai Wai Vivien (“Vivien”)) and the children of Angela and Vivien. The beneficiaries are the eight respondents in these proceedings. Angela, the mother of Marcel and Sabella Damien Chen (“Damien”), is entitled to 15% of the residuary estate. Marcel and Damien are each entitled to 5%.

3. The gifts of 5% of the residuary estate to Marcel and Damien are contingent, as to one half on each attaining the age of 30, and as to the other half on attaining the age of 40. Marcel and Damien have attained 30 but not 40[2]. Angela has not exercised the power vested in her under the will to accelerate the payment of the gifts in favour of her two sons.

4. The Deceased passed away in June 2012. Probate of his will and codicil was granted to the executors on 16 April 2013. The administration of his estate has not been completed.

5. At the time of the hearing before the judge and in this court, Marcel and Damien each have a vested interest in 2.5% of the residuary estate as both have attained the age of 30 and this interest is not subject to any condition precedent. They have a present right to future enjoyment of this interest but not an immediate right to present enjoyment as the administration of the estate is not yet complete, so this is an interest vested in interest but not vested in possession (Lewin on Trusts (19th ed) para 1‑048).

6. On 21 May 2015, Angela wrote to the executors’ solicitors requesting the executors to exercise the power of advancement under section 34(1) of the Trustee Ordinance, Cap 29 (“the s 34 Power”) to transfer part of the interests of Marcel and Damien in the estate (at 2.5% each) to existing trusts established for their benefit. She stated that the proposed transfer would confer on Marcel and Damien wealth preservation benefits, privacy and confidentiality benefits, and tax benefits by minimizing or eliminating the exposure to tax liability in the United States in respect of income, estate, gift and generation-skipping transfer taxes.

7. Marcel wrote to the executors’ solicitors on 12 June 2015 indicating his agreement with his mother’s request.

8. On 2 November 2015, Angela wrote to the executors’ solicitors with a revised request to the effect that the interests of Marcel and Damien be transferred to new trusts established under US laws for their benefit rather than to existing trusts as proposed earlier. The legal representatives of Marcel and Damien wrote on 3 November 2015 indicating their agreement with the revised request.

9. On 8 December 2015, the three executors issued the originating summons in these proceedings seeking determination of a number of questions arising from the administration of the residuary estate, including three questions of law that are the subject of this appeal.

The three questions and the determination by the judge

10. I will take the wording of the three questions as stated in §15 of the judge’s decision. They were numbered 1A, 1 and 3 in the decision and were considered in that order by the judge.

11. Question 1A is as follows: Whether the executors can exercise the s 34 Power before the administration of the estate is completed and the relevant interest of the relevant adult beneficiary has not yet vested in possession.

12. The judge agreed with the executors and answered this in the negative. The executors cannot exercise the s 34 Power before the administration of the estate is completed[3].

13. Question 1 is as follows: Whether the executors can exercise the s 34 Power to pay or apply trust capital in favour of an adult of full capacity who has become absolutely entitled to his or her interest under the trust.

14. Although the words “vested in possession” are missing from the formulation of this question in the decision[4], the judge had dealt with the question on the basis that there is absolute vesting “in possession” of trust property and all parties had apparently argued the matter before him on that basis[5]. I shall therefore take Question 1 as worded in the executors’ submission on appeal: Whether the s 34 Power can be used to pay or apply trust property already absolutely vested in possession in the adult beneficiary of full capacity.

15. The judge also agreed with the executors and answered this in the negative. The executors cannot exercise the s 34 Power in favour of an adult of full capacity whose share or interest in the trust property has absolutely vested in possession[6].

16. Question 3 is as follows: Whether the executors are enabled by the s 34 Power to advance the entirety of the interests of Marcel[7] and Damien in the residuary estate.

17. It is provided in proviso (a) to section 34 that “the money so paid or applied for the advancement or benefit of any person shall not exceed altogether in amount one-half of the presumptive or vested share or interest of that person in the trust property”. The judge agreed with the executors’ submission and held that the meaning of proviso (a) is that the amount of money paid or applied for advancement is limited to one-half of the presumptive or vested share or interest of the beneficiary in the trust property that the trustees can apply at the time of the advancement. Since Marcel and Damien have attained 30 and not yet reached the age of 40, only 2.5% of the residuary estate had vested in each and can be transferred to them upon completion of administration and only 2.5% is available for use in their advancement. Hence, proviso (a) limits the amount to be paid or applied for their advancement to 1.25% of the residuary estate[8].

18. In this appeal, which was brought only by Marcel, Question 3 is of little moment in light of the imminence of Marcel’s 40th birthday. We have indicated to the parties at the hearing that we do not propose to deal with it. The only live issues in this appeal are Questions 1A and 1.

19. Both questions involve statutory interpretation. Before I consider them, I will first set out the relevant principles of construction and mention a number of matters relevant to the context in construing section 34.

Principles of statutory interpretation

20. The relevant principles have been summarised by Ma CJ in Town Planning Board v Town Planning Appeal Board (2017) 20 HKCFAR 196 at §29 and are as follows[9]:

“(1) In construing statutory provisions, the court does not merely look at the relevant words. It construes the relevant words having regard to their context and purpose.

(2) The context of the relevant statutory provision should be taken in its widest sense and will of course include the other provisions of the statute. It may also be relevant in any given case to look at the history of the relevant provisions.

(3) Ascertaining the purpose of the statutory provision is obviously relevant, not only to help provide the relevant context, but to give meaning to the words used. In this latter respect, it is to be observed that often the meaning of words by themselves will not be clear unless regard is paid to context and purpose. Words have to be construed but they must not be construed in a vacuum.

(4) In ascertaining the purpose of a statutory provision, the court adopts a flexible and open-minded approach. The purpose may be clear from the provision itself or it may be necessary to look at the Explanatory Memorandum to the bill introducing the provision or a ministerial or official statement may be utilised for this purpose.”

21. In addition, the following principles as mentioned by the judge...

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