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Tam Mei Kam v Hsbc International Trustee Ltd And Others

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
Judgment Date10 February 2017
Year2017
Judgement NumberCACV181/2016
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV181/2016 TAM MEI KAM v. HSBC INTERNATIONAL TRUSTEE LTD AND OTHERS

CACV 181/20 16

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 181 OF 2016

(ON APPEAL FROM HCMP NO 2981 OF 2004)

________________________

BETWEEN
TAM MEI KAM Applicant
and
HSBC INTERNATIONAL
TRUSTEE LIMITED
 1st Respondent
JOSEPH LO KIN CHING and
DEREK LAI KAR YAN
 2nd Respondent
(Discharged)
NEW HORIZON BUDDHIST ASSOCIATION LIMITED
 3rd Respondent
LAU KAI EDDIE 4th Respondent
WONG TECK MENG and CHAN PUI SZE,
JOINT AND SEVERAL TRUSTEES
IN BANKRUPTCY OF TAM MEI KAM		 5th Respondent

________________________

Before: Hon Lam VP, Cheung JA and Kwan JA in Court
Date of Hearing: 20 January 2017
Date of Judgment: 10 February 2017

________________________

J U D G M E N T

________________________

Hon Lam VP:

1. I have read the judgment of Kwan JA and I agree with it.

Hon Cheung JA:

2. I agree with the judgment of Kwan JA.

Hon Kwan JA:

3. This is the appeal of Madam Tam Mei Kam against the decision of L Chan J on 1 September 2016 in which the judge refused her application for a lump sum order under section 4(1)(b) of the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481 (“the Ordinance”) out of the net estate of her deceased daughter, the well-known singer and artiste Mui Yim Fong (“the deceased”). Instead, he made an order for periodic payments under section 4(1)(a), to give Madam Tam “a generous monthly income and full disbursement of reasonable medical expenses”[1].

4. Madam Tam brought this appeal to set aside the order for periodic payments. She seeks an order for a lump sum. In the court below, the total lump sum she asked for was $71 million odd, computed on a multiplier of 15 years. On appeal, she is content with a multiplier of between 6.56 and 15 years. She contended that in refusing a lump sum payment, the judge had failed to have regard to weighty matters, he had given excessive weight to secondary, speculative or extraneous matters, and was wrong in law for a number of reasons.

The background

5. The relevant background matters may first be stated as follows.

6. The deceased passed away on 30 December 2003, having made a will and a trust deed on 3 December 2003. Madam Tam is not a beneficiary under the will. The sole beneficiary under the will is a discretionary trust established by the trust deed known as The Karen Trust. As of today, the discretionary beneficiaries of the trust include Madam Tam, two nieces and two nephews of the deceased.

7. The trustee, being the 1st respondent in these proceedings, has unfettered discretionary powers to add or remove beneficiaries of the trust and in determining how the assets of the trust should be dealt with and distributed. In exercising such discretion, the 1st respondent may have regard to the non-binding suggestions made by the deceased in the trustee memorandum dated 3 December 2003. Among the suggestions are that a monthly distribution of $70,000 is to be made to Madam Tam while she is alive for her use and benefit absolutely, and upon the death of Madam Tam the entire balance of the assets of the trust is to be distributed to a charity known as New Horizon Buddhist Association Limited, the 3rd respondent in these proceedings.

8. Madam Tam was born in 1924. She turned 92 in March 2016[2]. There is no dispute that she was wholly dependent on the deceased for her livelihood immediately before the deceased’s death.

9. Madam Tam brought proceedings to challenge the validity of the will. Litigation in the probate action was not concluded until May 2011 when her appeal was dismissed by the Court of Final Appeal. In April 2012, a bankruptcy order was made against her on the petition of her former solicitors for unpaid fees in the probate action. The bankruptcy order was discharged in April 2016.

10. In the meantime, in October 2004, she issued the originating summons in these proceedings for reasonable financial provision out of the deceased’s estate under section 4 of the Ordinance. Between October 2004 and August 2015, a series of orders were made for interim payments to her under section 7 of the Ordinance. The initial sum of monthly maintenance of $63,000 was increased over the years until it became $228,500. In addition, the court authorised payment to her for all reasonable medical expenses she had incurred. There were special payments for Chinese New Year, and for contingencies.

11. On 23 March 2015, Madam Tam issued a summons in these proceedings for a lump sum payment. L Chan J dismissed that application on 1 April 2015. The Court of Appeal (Cheung, Yuen and Kwan JJA) allowed an appeal against that order on 3 August 2015 (CACV 89/2015), as there was confusion whether the judge’s order was made with section 4 or section 7 in mind. The matter was remitted to L Chan J for directions with a view to fixing a substantive hearing of the originating summons issued in October 2004. The judge gave various directions for the filing of evidence in respect of Madam Tam’s application under section 4 of the Ordinance. On 11 April 2016, he directed a hearing be held for the originating summons with respect to the question whether Madam Tam should be given (i) periodic payments and the amount thereof; or (ii) periodic payments plus a lump sum; or (iii) just a lump sum. The hearing was held on 26 August 2016 and on 1 September 2016 the judge gave judgment which is the subject of this appeal.

The judgment below

12. The judge found that Madam Tam has met the statutory requirements to apply for reasonable financial provision under section 4. She is within section 3(1)(iv), as a parent of the deceased who immediately before the death of the deceased was being maintained, wholly or substantially, by the deceased. She comes within section 3(3) in that the deceased, otherwise than for valuable consideration, made a substantial contribution in money or money’s worth towards her reasonable needs. The judge is satisfied under section 4(1) that the disposition of the deceased’s estate effected by the will is not such as to make reasonable financial provision for Madam Tam, in that the 1st respondent is not legally obliged to provide for her. The legal effect of the trust deed is that whether Madam Tam would be provided for is entirely a matter of the 1st respondent’s discretion. These findings are not challenged by the 1st or 3rd respondent on appeal.

13. The 1st respondent adduced evidence that as at 1 August 2016, the estate and the trust together have an estimated net asset value of $75.7 million. The four other discretionary beneficiaries named in the trust deed, who are Madam Tam’s grandchildren, have not taken part in the proceedings and are not seeking maintenance by the estate or the trust. The judge did not regard the 3rd respondent as a competing beneficiary as it is not a beneficiary of the trust but the final repository and there is no evidence that it is in financial need. The judge found, and there is no challenge on appeal, that there is in fact no competing beneficiary in this case[3].

14. One other matter that has been agreed and should not be controversial is that Madam Tam, the 1st respondent and the 3rd respondent had agreed that if the judge should order periodic payments only, the periodic sum should be at $207,000 per month at the start subject to the agreed annual adjustment of 3.5% for inflation[4].

15. Madam Tam has contended in her submissions on appeal that the parties have agreed on the multiplicands of the monthly maintenance plus new year bonus and annual medical expenses at $1,401,176, both with an inflation rate of 3.5% a year, and the only disagreement was the multiplier. This is incorrect, as can be seen from the relevant correspondence mentioned below. Her contention that the periodic payments order was “in violation of the parties’ agreement” on the multiplicand is simply wrong.

16. On 24 August 2016, the court wrote to the parties to enquire “in the event of the court ordering only periodic payments” whether there is any agreement among all three parties on (i) the amount of periodic payments; (ii) the date of the first payment; (iii) the rate of annual adjustment; and (iv) the day of the year for the adjustment to take effect. Madam Tam responded on 25 August stating that it was her understanding the parties have agreement that the domestic needs of her would be $207,000 plus medical expenses of $1,401,176 a year with an inflation rate to both of 3.5% per year and the only disagreement was that she contended a multiplier should be applied to “the said basic amount” to reach a lump sum.

17. The judge’s clerk wrote to the parties again on 25 August stating that Madam Tam had “misunderstood the direction of the court dated 24 August 2016” and repeated that the court enquired with the parties in the event of the court “ordering only periodic payments on the application” whether there was any agreement among them of the matters in (i) to (iv) as aforesaid. It was further stated in that letter if the court should “only order periodic payments on the application”, medical expenses will be paid as per the actual amounts incurred directly to the doctors and/or hospital and there will be no need to apply any multiplier.

18. In response to the further letter of the court, the 1st respondent proposed on 25 August 2016 that the periodic payments order should adopt a starting figure of $207,000 per month, the first payment should be made on 1 September 2016, the rate of annual adjustment should be +3.5%, and such adjustment should take effect on the first day of September each year.

19. Madam Tam responded by a letter to the court of 25 August 2016 confirming that the 1st...

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