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Tam Mei Kam v Hsbc International Trustee Ltd And Others

Judgment Cited authorities 3 Cited in Precedent Map Related
Vincent
Judgment Date01 September 2016
Year2016
Judgement NumberHCMP2981/2004
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP2981G/2004 TAM MEI KAM v. HSBC INTERNATIONAL TRUSTEE LTD AND OTHERS

HCMP 2981/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS 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 L Chan J in Court
Date of Hearing: 26 August 2016
Date of Judgment: 1 September 2016

_______________

J U D G M E N T

_______________


1. This is an application for an order of payment of maintenance under section 4 of the Inheritance (Provision for Family and Dependents) Ordinance, Cap 481 (“the Ordinance”).

Eligibility for section 4 order

2. The applicant Madam Tam was the mother of the deceased artist Madam Mui Yim Fong (“the Deceased”). The Deceased made a will (“the Will”) leaving her entire estate (“the Estate”) to a Karen Trust (“the Trust”), a discretionary trust. The 1st respondent is named in the Will as the executor and trustee of the Estate. It is also the trustee of the Trust.

3. The Deceased did not make any provision for Madam Tam as she intended that the Trust would provide for Madam Tam. Madam Tam however has been provided for by interim maintenance orders made under section 7 of the Ordinance.

4. Madam Tam commenced these proceedings on 6 October 2004 seeking an order for reasonable financial provision under section 4 of the Ordinance. Before proceeding to consider the application in terms of section 4, I have to consider the meaning and effect of section 3(1)(iv) and (3) of the Ordinance on this application. Sections 3(1)(iv) and (3) insofar as they are relevant to this application provide:

“(1) Where after the commencement of this Ordinance a person dies-

(a) domiciled in Hong Kong; ...

and is survived by any of the following persons-

...

(iv) a parent of the deceased who immediately before the death of the deceased was being maintained, either wholly or substantially, by the deceased;

...

that person may apply to the court for an order under section 4 on the ground that the disposition of the deceased's estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant.

...

(3) For the purposes of subsection (1)..., (iv), ..., a person shall be treated as being maintained by the deceased, either wholly or substantially, as the case may be, if the deceased, otherwise than for full valuable consideration, was making a substantial contribution in money or money's worth towards the reasonable needs of that person.”

5. There is no dispute that Madam Tam was wholly dependent on the Deceased for her livelihood immediately before the Deceased’s death. The Deceased had provided for all her daily needs including monetary allowance before the Deceased passed away. The Deceased maintained Madam Tam not for valuable consideration. Hence, Madam Tam was the Deceased’s mother who was being maintained wholly by the Deceased immediately before the Deceased’s death. Madam Tam thus satisfied section 3(1) (iv) and (3) of the Ordinance.

6. The next issue is whether the disposition of the Estate effected by the Will or the law of intestacy or the combination of both is not such as to make reasonable financial provision for Madam Tam.

7. Since the Deceased had by the Will left the entire Estate to the Trust, the law of intestacy has no part to play and does not need to be considered.

8. The next step is to consider whether the Trust contains provisions that make reasonable financial provision for Madam Tam. This consideration is necessary because the primary stance of the 3rd respondent is that the Deceased had made reasonable provisions for the maintenance of Madam Tam in the Will through the proper exercise of the discretionary power of the 1st respondent as the trustee of the Trust in terms as stated in the trust deed (“Deed”) that set up and govern the Trust.

9. When asked to advise the court on the exact terms of the Deed that govern the discretionary power of the 1st respondent which legally oblige the 1st respondent to make reasonable financial provision for Madam Tam, the 3rd respondent referred to clauses 5(a), (b) and the Third Schedule of the Deed. These provisions and clause 5(c) provide:

“5(a) The Trustee shall stand possessed of the Trust Fund and the income thereof UPON TRUST and with full power from time to time ... to ... pay or apply the whole or any part of the Trust Fund and the income thereof for the advancement maintenance ... or benefit of all or such one or more to the exclusion of the other of the Beneficiaries and in such proportions or manner and upon such other terms and conditions as the Trustee shall in its absolute and uncontrolled discretion deem appropriate ...

5(b) In the exercise by the Trustee of its powers under sub-clause (a) above in favour of a Beneficiary who is not sui juris by reason of infancy or otherwise the Trust may pay or apply such part of the income of the Trustee Fund as it shall think fit to the parent guardian or other person for the time being having the care or custody of such Beneficiary ...

5(c) The Trustee may in its absolute discretion at any time by deed appoint additional persons not being members of the Excluded Class to become Beneficiaries.”

“THE THIRD SCHEDULE

‘Beneficiaries’ means and includes:-

(1) TAM Mei Kam (mother of Settlor);

(2) MUI Pak Ning (niece of Settlor);

(3) MUI Pak Wai (niece of Settlor);

(4) POON Chun Ho (nephew of Settlor); and

(5) POON Man Ho (Nephew of Settlor).”

10. I do not know why the 3rd respondent would refer to clause 5(b) as Madam Tam is surely sui juris. She is of age and independent. Putting aside clause 5(b), the legal effect of clauses 5(a), 5(c) and the Third Schedule is that the 1st respondent may or may not provide for Madam Tam. It has the absolute discretion to add to the membership of beneficiaries and a similar discretion to provide maintenance to one or more of the beneficiaries. Whether Madam Tam would be provided for by the 1st respondent out of the Trust is entirely a matter of the 1st respondent’s discretion. The 1st respondent is not legally obliged to provide for her. It is thus clear that the primary stance of the 3rd respondent is wrong and the disposition of the Estate by the Will is not such as to make reasonable financial provision for Madam Tam.

Stance of the 1st respondent

11. I would also record the stance of the 1st respondent as stated by its senior counsel Mr Man on why it has not taken any initiative to provide for Madam Tam by exercising its discretionary powers in the Deed.

12. Mr Man advised that when these proceedings were taken out by Madam Tam for maintenance, Madam Tam was litigating against the validity of the Will and Trust. In the light of such litigation and the possibility that the Will and Trust might be declared invalid, the 1st respondent was not in a position to exercise its discretionary powers in the Deed. Madam Tam was in the meantime maintained by payments made out of the Estate pursuant to interim maintenance orders made under section 7 of the Ordinance.

13. Since such payments had provided satisfactory maintenance for Madam Tam, the 1st respondent is contented to deal with the long term maintenance for Madam Tam under section 4 of the Ordinance.

Madam Tam’s evidence

14. I now consider the evidence adduced by the parties. Mr Man for the 1st respondent has indicated in his submissions (§9) that the 1st respondent in principle does not object to an order of payment under section 4. The dispute is whether it should be only for periodic payments under section 4(1) (a) (as contended by the 1st respondent and by the 3rd respondent (as an alternative to its primary contention of no provision)) or it should provide only for a lump sum under section 4(1) (b) (s contended by Madam Tam).

15. The 1st respondent by the 3rd affirmation of Chan Chui Wa, its Assistant Vice President filed on 17 August 2016 advised that the Estate and Trust together have an estimated net asset value of HK$75.7 million as at 1 August 2016.

16. Madam Tam is now 93 years old. She by her 4th affirmation seeks a lump sum order under section 4(1)(b). She said that her application for a lump sum is well founded in law. She produced an English medical certificate by Dr Chris K Y Wong, a cardiologist and a Chinese medical certificate by a Chinese Traditional Medical Practitioner, Mr Chung Chau Nang (鍾守能醫師). The certificates are couched in general terms and opined that Madam Tam may expect to live for another 10 to 15 years and over 15 years respectively.

17. Madam Tam further produced two type-written medical certificates by Dr Wong and Mr Chung in her 7th affirmation. The contents of the certificates are as before but Dr Wong’s certificate contains some elaboration. Dr Wong’s certificate referred to Madam Tam’s cardiac condition and several minor ailments that she had. It then opined that she could expect to live for another 10 to 15 years without difficulty.

18. Mr Chung’s certificate said that Madam Tam had a sound mind and good health which were far better than those of the same age. On the basis of the long term care that Mr Chung had provided for Madam Tam and Mr Chung’s knowledge of her health and on condition that she would continue to receive the medicinal strengthening care provided by traditional Chinese medicine and adopt a tranquil style...

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