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Khaw Sim Tek And Others v. Chuah Hooi Gnoh Neoh

Privy Council
Oct 21, 1921
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Summary of Opinion (Lord Buckmaster)

Factual and Procedural Background

The opinion addresses proceedings brought on 25 February 1916 by the respondent (the plaintiff) seeking: (1) a declaration as to the effect of a gift for yearly and other sacrifices contained in the Will of a testator who died on 25 May 1882; and (2) the distribution of the estate on the footing that that gift was void and that the property so given passed to the next of kin.

The Will was made in 1874 in Chinese form; the original Will was lost and only a translation (by a former interpreter of the Court in Penang) is available. The Will directed payment of many pecuniary legacies and that the residue be divided into 60 shares. Sixteen of those 60 shares were directed to be the means of the testator's maintenance during his lifetime and to be "Kong Lin for yearly and other sacrifices" after his death. Clauses 4 and 22 indicated the testator contemplated leaving the residue undistributed for sixteen years.

The plaintiff is the legal representative of a granddaughter of the testator (the testator's son having died in his lifetime) and sued as legal personal representative of one of the female next-of-kin. The defendants (appellants) pleaded, among other things, that the claim was barred by the Statute of Limitations in the Straits Settlements (Ordinance No. 6 of 1896). The relevant schedule (Art. 99 of Sch. II) prescribed a twelve-year limitation for suits obtaining a legacy or a share of a residue.

The Court refers to several potential limitation starting points: the date of death (1882), the expiry of the 16-year period fixed by the Will, and the date on which trustees had dealt with the estate so it was ready for division (accounts prepared 15 January 1904). The proceedings had produced a decree dated 12 August 1919; the appeal resulted in the judgment in which their Lordships advised His Majesty that the suit should be dismissed and the appeal allowed with costs, and that the decree of 12 August 1919 (except as to costs) be set aside.

Legal Issues Presented

  1. Whether the respondent is disentitled by lapse of time (the Statute of Limitations under Ordinance No. 6, 1896 of the Straits Settlements) from maintaining proceedings instituted on 25 February 1916 to obtain a declaration as to the gift for yearly and other sacrifices and for distribution of the estate if the gift is void.
  2. Whether the statutory exception in s.10 (Ordinance No. 6, 1896) — which preserves suits "for the purpose of following in his or their hands such property" where property has become vested in trust for any specific purpose — applies because the property was (or would be) vested in trustees for a specific purpose (and thereby not barred by limitation).
  3. Whether Clause 22 of the Will can be construed to include a granddaughter (female) among the beneficiaries of the "Kong Lin" (i.e., whether the class of beneficiaries includes daughters/grandchildren) and, if so, whether that alters the applicability of the limitation defence or the s.10 exception.

Arguments of the Parties

Appellants' Arguments

  • The right to bring the action is barred by the Statute of Limitations in the Straits Settlements (Ordinance No. 6, 1896), Section 4 and the Second Schedule (Art. 99) prescribing twelve years for suits to obtain a legacy or a share of a residue.
  • Mr. Upjohn contended that, whichever starting point is used (date of death, the end of the 16-year period fixed by the Will, or the date on which trustees had dealt with the estate and it was ready for division — with accounts drawn up on 15 January 1904), the twelve-year limitation had expired before the suit was instituted in 1916.
  • The Court should reject the views that limitation should run from the date on which a clause is construed by a competent Court or from the date when intestacy is declared by a decree established beyond appeal; the distributive share existed from the time intestacy (if any) arose and not only from declaration.
  • The s.10 exception (preserving suits to follow trust property) does not apply because there was no trust for a "specific purpose" in the sense required by s.10 that could be said to vest the property in trustees in which the next-of-kin had an interest absent defeating the will's provisions.

Respondent's Arguments

  • The plaintiff sought a declaration that the gift of the sixteen 60ths to the Kong Lin was void and that the property should be distributed among the next-of-kin.
  • The respondent relied on s.10 of the Ordinance (which states that no suit "for the purpose of following in his or their hands such property" shall be barred by time where property has become vested in trust for any specific purpose) and argued that if the 16/60ths were void as gifts for a purpose that failed, they became vested in trustees in trust for the next-of-kin — thereby attracting the s.10 exception to the limitation bar.
  • In support of that contention reference was made to Salter v. Cavanagh and later authorities which, on the respondent's case, support implying a trust in favour of next-of-kin where a specific portion of estate is set apart but the specified purpose does not exhaust it.
  • As an alternative (raised late in the argument), the respondent argued Clause 22 might itself entitle the granddaughter to benefit (i.e., that the clause could be construed to include grandchildren or daughters among those to use the estate for the specified rites), which would affect the nature of the interest asserted.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Salter v. Cavanagh (Dru and Walsh 668) Where property is set apart from the general estate and vested in trustees on trusts which do not exhaust the whole property, the balance may be held by trustees for the heir-at-law or next-of-kin — i.e., an implied trust in favour of next-of-kin for the unexhausted balance. The court held that, on the facts of this case, that principle did not assist the respondent: the next-of-kin's right here only arises if the will's provisions are defeated, and therefore the property cannot be said to have been vested in trustees for a specific purpose in which the next-of-kin had an interest independently of defeating the will.
Balwant Rao v. Puran Mal (1883) I.L.R. 6 All. 1 (P.C.) Provides a test that the purpose of "following the property in the hands of the trustees" (as referred to in s.10) must be the purpose specified in the trust itself; i.e., the trust for which property is followed should be the specific purpose defined earlier in the instrument/section. Their Lordships treated the statement as a sound and critical test to decide whether a particular trust falls within s.10. Applying this test, they concluded the present case did not present a trust for a "specific purpose" within s.10, so the exception did not save the respondent's action from the limitation bar.

Court's Reasoning and Analysis

The court proceeded by first adopting the most favourable legal assumption for the respondent — that the sixteen-year period fixed in the Will was a definite, fixed period before which no distribution could take place. Even on that favourable assumption the court examined when the twelve-year limitation for a suit to obtain a legacy or distributive share would begin to run.

Three possible starting points for the limitation were identified and tested:

  1. From the date of the testator's death (25 May 1882).
  2. From the expiry of the sixteen-year period fixed by the Will (i.e., when the testator contemplated distribution would take place).
  3. From the date on which the trustees had in accordance with the trusts dealt with the estate so that it was ready for division — specifically, elaborate accounts prepared on 15 January 1904 which allocated the relevant shares.

The court found it unnecessary to decide which of these three starting points was the correct legal moment because, however the starting point was fixed, the plaintiff's suit (instituted in 1916) was too late under the twelve-year rule.

The court rejected the approach adopted by the learned judge below that limitation runs from the date a clause is construed by a competent court, and also rejected Ebden, J.'s suggestion that limitation runs from the date when intestacy is declared by a decree established beyond appeal. Their Lordships explained that if an intestacy exists it exists from the outset and the distributive share is claimable from the time intestacy arose; probate only proves the contents of the Will and does not give efficacy to the Will's provisions in a way that stops limitation running.

The court then considered whether s.10 of the Ordinance (which preserves suits to follow property vested in trust for a specific purpose from being barred by limitation) applied. The respondent argued that, if the gift to Kong Lin failed, the property would have been vested in the trustees in trust for the next-of-kin and thus s.10 would save the action from limitation. The court analysed the meaning of "specific purpose" in s.10 and relied upon the principle in Balwant Rao that the purpose for which property is followed must be the specific purpose specified in the earlier part of the section or instrument.

Applying that test, the court concluded that a "specific purpose" must be either actually and specifically defined in the terms of the Will or be a purpose which can be certainly affirmed from the specified terms. Here, the next-of-kin's claim depends upon defeating the will's provisions (i.e., only if the gift is declared void does their interest arise). That means the property was not vested in trustees for a specific purpose in which the next-of-kin had an independent, ascertainable interest within the meaning of s.10.

The court also considered an alternative contention (raised late) that Clause 22 might itself directly benefit the granddaughter (i.e., include her as a beneficiary). The court noted interpretive uncertainty (the translation shows "or grand-children" added after "grandsons") and gave weight to Ebden, J.'s observation that, on local Chinese practice, daughters/granddaughters are typically not participants in ancestral sacrificial rites. The court regarded this as a strong argument that Clause 22 did not intend to include a granddaughter. Even if Clause 22 could be construed to include grandchildren, the court observed that the gift appears to be for performing sacrificial ceremonies (a purpose) rather than a gift to a class beneficially; that fact would also make s.10 inapplicable because the respondent would be seeking to take the property away rather than to follow it back to the specified trust.

On these grounds the court concluded the Statute of Limitations provided a complete bar to the general claim of the next-of-kin and that the s.10 exception did not rescue the respondent's suit.

Holding and Implications

Holding: The appeal was allowed and their Lordships advised His Majesty that the suit should be dismissed. The decree of 12 August 1919 (except as to costs) was set aside. (The opinion concludes: "Appeal allowed.")

Implications:

  • Direct effect on the parties: The respondent's suit (instituted 25 February 1916) is dismissed as time-barred under the limitation provisions of Ordinance No. 6 of 1896; the prior decree of 12 August 1919 is set aside except as to costs, and the appellants are awarded costs on the appeal.
  • Broader precedent: The opinion applies and explains the interpretation of s.10's "specific purpose" within the Ordinance and confirms that limitation may not be held to run only from a court's later declaration of intestacy or from judicial construction; however, the opinion does not purport to establish a distinct new rule beyond the reasoning and conclusions applied to these facts. (No broader new precedent was expressly stated in the opinion beyond its application to the facts before the court.)
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Lord Buckmaster :-

The real question that arises on this appeal is whether the respondent is disentitled by lapse of time from maintaining the proceedings which she instituted on the 25th February, 1916, for the purpose of obtaining (1) a declaration as to the effect of a gift for yearly and other sacrifices contained in the Will of a testator who died on the 25th May, 1882, and (2) the distribution of the estate upon the footing that the gift was void and the property so given passed to the next of kin. The Will is in Chinese form, and was made in 1874 ; the original has been lost, and there is nothing but a translation by a former interpreter of the Court in Penang by which it is possible to ascertain its contents. So far, however, as the critical question in this case is concerned, the translation, as it is before their Lordships, is adequate for the purpose. The testator provided that his property was to be dealt with by payment of a very large number of pecuniary legacies and after they had been paid and satisfied, the residue was to be divided into 60 shares. As to sixteen of those 60 shares he directed that they should be the means of his maintenance during his life-time, and should be "Kong Lin for yearly and other sacrifices" after his death. Both by Cl. 4 and by Cl. 22 of the testator's Will it appears that he contemplated that this residue should be left undistributed for sixteen years.

It is unnecessary for their Lordships to say definitely whether the directions that he imposed upon his executors in this respect were in the nature of a mere appeal to their discretion or created an imperative trust, since for the respondent's purpose the most favourable assumption is that the period of sixteen years was a definite period definitely fixed before which no division of the estate could take place, and for the purpose of this decision their Lordships will accept this view. At the expiration of sixteen years the testator declares by Cl. 22 that the income of the shares shall

"begin to be my sons and grandsons (or grand children) Kong Lin for yearly sacrifices as well as well for sacrifices in spring and autumn."

The plaintiff is the legal representative of a grand-daughter of the testator, her grandfather, the testator's son having died in the testator's life-time. Her claim,

therefore, is as the legal personal representative of one of the female next-of-kin of the testator and in this capacity she instituted these proceedings, asking that the gift of these sixteen 60ths of the residue to the Kong Lin should be declared void and distributed among the next of kin. Among other answers to that claim the appellants urged that the right to bring the action is barred by virtue of the Statute of Limitations which exists in the Straits Settlements. The Ordinance in question is Ordinance No. 6, 1896. This provides by Section 4 that :-

"Subject to the provisions containd in Ss. 5 to 25 inclusive, every suit instituted after a period of limitation prescribed therefor by the Second Schedule hereto shall be dismissed provided that limitation has been set up as a defence."

By Sch. II there is a provision in Art. 99 that a suit for obtaining a legacy or for a share of a residue bequeathed by a testator or for a distributive share of the property of an intestate cannot be maintained after the lapse of twelve years from the time when the legacy or share becomes payable or deliverable. Mr. Upjohn contended that in any circumstances that period must have elapsed before this suit was instituted. If it be taken from the date of the death, of course, it is obvious that it has long gone by. If a further period of sixteen years be taken and the calculation is assumed to date from the period of division fixed by the testator for the estate, still the suit is out of time, for the period expired in 1898; but finally if it be taken, as has been urged on behalf of the respondent, that it should be at the period when the trustees had in accordance with the trusts of the Will so dealt with the estate that it was ready for division, then again the plaintiff is out of time, for elaborate accounts were prepared on the 15th January, 1904, in which a full and proper allocation of the shares of the residue applicable for this rotation of the Kong Lin was set apart and fixed.

Their Lordships think, therefore, that it is unnecessary for them to decide which of those three periods is the right one to fix, because whatever period may be taken the plaintiffs is too late. Their Lordships cannot support the view which appears to have found favour with the learned Judge before whom the case was first heard that the time runs from the date when the clause is construed by a competent Court, nor that suggested by Ebden, J., in the Court of Appeal that the time fixed is when the intestacy is declared by a decree established beyond appeal. The intestacy, if it exists, has existed throughout and the distributive share of one of the next kin has been his to claim from the time when the intestacy arose and not when it was declared. The probate gives no efficacy to the provisions of the Will; it is merely proof of the contents, and their Lordships think Ebden, J., was in error in saying,

"When a will has been admitted to probate its provisions stand good unless and until they are avoided by the declaration of a competent Court."

Such provisions could be ignored from the outset, and the declaration of the Court is merely as to how the Will ought to have been construed throughout, nor is it necessary that "a suit, to recover such a share would have to be preceded by a suit to attack the Will." But it is then urged that the exception referred to in Cl, 4 of the Ordinance of 1895, making the times in the Schedule subject to the provisions of Ss. 5 to 25 enabled the plaintiff to maintain the suit because S. 10 provides that :-

"Notwithstanding anything hereinbefore contained no suit against a person in whom property has become vested in trust for any specific purpose or against his legal representatives or assigns (not being assigns for valuable consideration) for the purpose of following in his or their hands such property shall be barred by any length of time."

The contention is that in this case the property was vested in trust for specific purpose, because in the event of the sixteen 60ths being declared to have been gifts for a purpose that failed, they became vested in the trustees' hands intrust for the next of-kin, and in support of that contention reference has been made to the old and well-known case of Salter v. Cavanagh, Dru and Walsh 668 which has been subsequently followed, though with some hesitation, in other authorities. So far as that case is concerned, apart from an argument as to the meaning of Cl. 22 of the Will, it affords him no assistance, for the principle that underlies that authority is this : that if property be set aside by a testator from the general body of his estate and vested in trustees upon certain trusts, which upon the face of them are inadequate to exhaust the whole of the property, there remains as to the balance a trust impressed upon the trustees in favour of the next-of-kin or the heir-at law, a trust for the purpose of which you have to do no violence whatever to the language of the Will, for which it is unnecessary to disregard any intention or desire that the testator has expressed, for which it is only necessary to imply that when the testator knew, as he must have done, that the specific purpose to which the property had been devoted did not exhaust the whole trust estate, the balance would of necessity be held by the trustees for the heir-at-law or the next-of-kin.

In this case the only way in which the next-of-kin can, apart from Cl. 22, assert their position is by defeating the provisions that the testator has made in his Will. It is only upon the hypothesis that those provisions are bad that his interest arises, and it is, in the opinion of their Lordships, impossible to say that in those circumstances the property was vested in trust for a specific purpose in which the next-of-kin was in any way interested. A 'specific purpose', within the meaning of S. 10, must, in their Lordships' opinion, be a purpose that is either actually and specifically defined in the terms of the Will or the settlement itself, or a purpose which, from the specified terms, can be certainly affirmed. The statement which was made on the authority of Balwant Rao v. Puran Mal, (1883) I. L. R. 6 All. 1 (P.C.) that the purpose of following the property in the hands of the trustees referred to at the end of S. 10, must be the purpose of restoring it to the trust which is specified in the earlier part of the section is in their Lordships' opinion a sound and critical test by which to consider whether or not any particular trust is within the provisions of the section.

Their Lordships, therefore, think that so far as the general claim of the next-of-kin is concerned on the hypothesis that the gift is wholly void, the statute of Limitations affords a complete and effectual bar, and this view appears to be in agreement with that of Sproule, J. But it was then urged that there was an alternative view which arises upon the face of the Will by which it may be said that the plaintiff was in fact entitled under the benefit of the trust contained in Cl. 22. This proposition was only raised at the end of the earlier argument, and certainly found no part in the original claim. There was, therefore, some technical difficulty in the way of the respondent, but their Lordships were anxious that a matter, which had come from such a distance and is of such importance to the parties, should not be imperfectly considered, and therefore they heard all that could be urged upon this later branch of the case, but in truth when it is examined there is very little that can be said. Cl. 22 provides that at the expiration of sixteen years the shares "shall begin to be my sons and grandsons Kong Lin for yearly sacrifices as well as sacrifices in the spring and autumn." The copy of the Will before us has the words "or grand-children" added after the "grandsons," but whether or no that was the real interpretation of the word it seems difficult to ascertain, because the word in the previous Cl. 21, which has been the subject of interpretation and has been held to include grandchildren, has not necessarily the same meaning in Cl. 22, and their Lordships think there is much weight in the statement made by Mr. Justice Ebden, who must be much more familiar with the local circumstances than their Lordships can possibly be, when he pointed out that the sacrificial rites which are imposed upon the property and for which, under Cl. 22 the beneficiaries there mentioned are to use the estate, are rites for which the daughter is a useless person. To use the language of the learned Judge, he says :- "She is useless for the purpose of ancestral worship which requires male issue, and he says again that the phrase itself which was assumed to mean grand-children including daughters, might, on careful consideration, be shown only to mean sons and grandsons for the reason that daughters have no place in Chinese succession."

This is a cogent argument to show that in Cl. 22 there never was any intention that a grand-daughter should be included. If, however, the clause is capable of such a construction as the two other learned Judges in the Court of Appeal appear to hold, there still remains the difficulty that the gift is not to the class beneficially but to perform ceremonies which it is said render the gift void, so that even on this hypothesis the respondent is not seeking to restore the property to the trust but to take it away, and consequently S. 10 is inapplicable. It follows, therefore, that the respondent is unable to escape from the general effect of the Statute of Limitations, and that this suit was instituted too late for it to be capable of being entertained by the Court before whom it was brought.

For these reasons their Lordships will humbly advise His Majesty that the suit should be dismissed, that this appeal should be allowed with cost, and that the decree of the 12th August, 1919, except so far as it dealt with costs, should be set aside.

Appeal allowed.