2) How do ancestral worship trusts fit into the world of trusts?
By Silvia On, Stephenson Harwood
Being a former British colony, Hong Kong law is very much based on English law but Hong
Kong, like many other countries that are former colonies, also retained some of its unique
customary laws which existed from before its colonial days. One of these laws relates to
ancestral lands in the New Territories. These ancestral lands are often held in the name of “t’so”
or “t’ong” for purposes such as ancestral worship and for the benefit of the male members of the
family or clan. Where a piece of ancestral land is held for ancestral worship, this type of
landholding is commonly called an ancestral worship trust. However, these ancestral worship
trusts are not like the trusts as we know them under the English legal system.
Tang Tak sum v Tang Kai Fong
In November last year, in the case of Tang Tak Sum v Tang Kai Fong,1 the Hong Kong Court of
Appeal looked at what formalities are required for setting up an ancestral worship trust.
Facts
The land (the “Land”) in question was a piece of ancestral land in the New Territories left by the
deceased Tang Cheung Mou (the “Deceased”) to his four sons. The Deceased had during his
lifetime set out in a document called “Division of Family” that his intention was for the land and
houses he owned to be divided and distributed equally to his four sons. He had also specifically
set out that the Land was to be set aside for ancestral worship after his and his wife’s death. He
named one of the sons as the “sole collector” of the rental from the Land. The Land was later
registered in the names of the four sons where each son owned a ¼ share in the Land as
tenants in common. The plaintiffs collectively owned ¼ of the Land and the defendant owned ¾
of the Land. The defendant let out the Land and collected the rent from the Land. The plaintiffs
claimed that the Land could only be used for ancestral worship purpose and defendant was
under a duty to give an account.2
One of the issues in question was therefore whether the formalities for the setting up of an
ancestral worship trust had been complied with.3
Decision
The Court of Appeal cited the rule set out by the Court of Final Appeal in Re Lau Wai Chau4
which sets out that under Chinese law and custom, no ancestral worship trust can be created by
will because Chinese law and custom does not recognise testamentary dispositions. Therefore
since an ancestral worship trust cannot be set up on the death of the Deceased, it was
necessary to show that the ancestral worship trust was set up during the lifetime of the
Deceased. In order to set up an ancestral worship trust, there are two requirements: (i) intention
to hold the properties for ancestral worship and (ii) registration of a t’ong or t’so in respect of the
properties intended for ancestral worship.5
1
[2015] 1 HKLRD 286.
Ibid. at pp.290-3 paras.6-13.
3
Ibid. at p.294 para.14.
4
(2000) 3 HKCFAR 98.
5
Tang Tak Sum (n 1) at pp.294-5 paras.17-19.
2
In this case, it was accepted by the Court that the Deceased had the intention to use the Land
for the purpose of ancestral worship but the Deceased had not during his lifetime taken the
steps to register a t’so or t’ong in relation to the Land and appoint a manager to deal with the
Land.6 Therefore it was concluded that an ancestral worship trust had not been set up.7
Interestingly, the Court of Appeal also considered the issue of whether Hong Kong law will apply
where Chinese law and custom does not apply. The Court turned to the case of Re Lau Wai
Chau case and quoted that there is “no room for Hong Kong law to operate so as to create an
instance of a Chinese law and custom institution in circumstances where Chinese law and
custom itself does not so operate” because this would be creating a hybrid between Hong Kong
law and Chinese law and custom.8
Ancestral worship trusts vs trusts
So would the outcome of the case have been different if the Court had applied Hong Kong law
instead of Chinese custom and law?
Under Hong Kong law, in order for there to be a valid trust, the trust must have the three
certainties, being (i) certainty of intention, (ii) certainty of objects (i.e. beneficiaries) and (iii)
certainty of subject matter. Therefore, if Hong Kong law had been applied instead of Chinese
custom and law, then it could be argued that the three certainties were present in the Tang Tak
Sum case since there was an intention to create a trust, the subject matter was the Land and
the beneficiaries were the descendants of the Deceased. However, it could also be argued that
the trust would fail because the trust was created for the purpose of ancestral worship and noncharitable purpose trusts are not recognised under Hong Kong law.
From the earlier case of Re Lau Wai Chau and the case of Tang Tak Sum, it would seem that
the rationale for not applying Hong Kong law is because ancestral worship trusts are a creation
of Chinese law and custom rather than a creation of Hong Kong law, and therefore Chinese law
and custom should be applied instead of Hong Kong law.
6
Ibid. at p.296 para.22.
Ibid. at p.297 para.28.
8
Ibid. at p.302 para.43.
7