Grand View Private Trust Company Ltd v Wong, Wen-Young

• Jurisdiction: Bermuda
• Judge: Clarke,Smellie JA,Subair Williams JA
• Judgment Date: 20 April 2020
• Neutral Citation: BM 2020 CA 6
• Court: Court of Appeal (Bermuda)
• Docket Number: CIVIL APPEAL No. 5A of 2019
• Date: 20 April 2020

The Court of Appeal for Bermuda

Before:

Clarke, President

Smellie, JA

Subair Williams, JA

CIVIL APPEAL No. 5A of 2019

Between:

Grand View Private Trust Company Ltd.

Appellant

and

Wong, Wen-Young

(A.K.A. Winston Wong)

1 ^st Respondent

and

Wong, Ray-Tseng

(A.K.A. Riley Wong) (an infant by his next friend, Grace Tsu Han Wong)

2 ^nd Respondent

and

Wang, Ven-Jiao

(A.K.A. Tony Wang)

1 ^st Intervenor

and

Wu Wang, Hsueh-Min

(A.K.A. Jennifer Wang)

2 ^nd Intervenor

Appearances:

Mark Howard QC, Jonathan Adkin QC and Christian Luthi, Conyers Dill & Pearman Ltd., for the Appellant;

Elspeth Talbot Rice QC, Dakis Hagen QC and Rod Attride-Stirling, ASW Law Ltd., for the 1 ^st and 2 ^nd Respondent;

Richard Wilson QC and Fozeia Rana-Fahy, MJM Ltd., for the 1 ^st Intervenor

Keith Rowley QC and Mathew Watson, Cox Hallett Wilkinson Ltd., for the 2 ^nd Intervenor

Addition of a beneficiary to a trust and transfer to it of the whole of the trust assets — Whether such addition and transfer was within the scope of the power to add a beneficiary contained in the trust deed — whether what was done constituted a fraud on the power

INDEX

Topic	Page No.
CLARKE P
Introduction	4
The Facts	4
The History	5
Developments in the early 2000s	6
The Establishment of the Wang Family Trust and the GRT	8
GRT No 1	8
The Wang Family Trust	9
Developments in 2005	11
The Addition of Grand View as a Beneficiary	12
The Key Provisions of the GRT	15
The Claim in the Action	18
The Judgment	18
Bank of New Zealand	26
The Parties' Submissions	36
The Appellants	37
The substratum rule	41
Other cases relied on by the judge	44
Hole v Garnsey	44
Authorities not cited to the judge	46
Kearns v Hill	47
Lewis v Condon	48
Mercanti v Mercanti	49
Re Anloma	49
Re Z	50
Mirvac v Mirvac Funds	52
The Respondents' submissions	52
British Airways v Airways Pension Scheme Trustee	53
Commissioner of Taxation v Bargwanna	60
Grand View's other cases	65
Re Z	65
Mirvac	67
Lewis v Condon	68
Mercanti	69
Re Anloma	70
The Respondents' conclusion	70
Discussion	73
The scope of the power	80
The Purpose of the Power	81
Conclusion	97
Remoteness of Vesting	98
The Respondents' submissions	98
The Judge's View	103
Grand View's submissions	105
Conclusions on clause 9	109
Conclusions on remoteness of vesting	113
Disapplication of clause 9	115
SMELLIE JA	127
Remoteness of vesting	129
SUBAIR WILLIAMS JA	129
The Fraud on a Power Doctrine and ‘the Substratum Doctrine’	130
Cases decided under the Variation of Trusts Act 1958 do not assist	136
There is no sub-stratum doctrine in law or equity	139
Remoteness of Vesting	143

Clarke P:

Introduction

1 The question at issue in this appeal is whether the execution by the Trustee of the Global Resource Trust (“GRT”) of a power contained in the Trust Deed to add a beneficiary to which it then transferred the whole of the assets of the Trust was valid or, as Kawaley AJ held on an application under Order XIV of the RSC, invalid as being beyond the power of the GRT Trustee. The assets of the GRT consisted of shares worth over US $560 million. The case raises fundamental issues as to the scope of powers of amendment contained in Trust Deeds and of the doctrine of “ fraud upon a power” 1.

The Facts

2 Wang, Yung Ching (YC Wang), who died on 15 October 2008, and Wang, Yung Tsai (YT Wang), who died on 27 November 2014, (together “the Founders”), were brothers, who were born into a poor family. In 1954 YC Wang founded Fu-Mao Plastics Corporation which later changed its name to Formosa Plastics Corporation. In 1958 YT Wang joined him in the business. This led in due course to the formation of a group of companies called the Formosa Plastics Group (“FPG”), of which YC Wang was the Chairman, which became, and remains, one of the largest conglomerates in Taiwan. The assets of the GRT Trust consisted of an indirect interest in shares in FPG companies.

3 The Wang Family Tree is extensive. One of YC Wang's sons, by his second wife, was Wong, Wen-Young, also known as Winston Wong (“Dr Wong”). Dr Wong is a plaintiff

in the action, and hence a respondent, together with Wong, Ray-Tseng, known as Riley Wong, Dr Wong's grandson and YC Wang's great-grandson. Dr Wong has four half-sisters, children of YC Wang's third wife, including Susan and Sandy Wang

4 YT Wang had five children by his first wife. They are William, Wilfred, Sarah, Jennifer and Hsiueh-Kuang Wang (hereafter “the first family”). He had three children by his second wife who are, to use their common abbreviations, Tony, Tammy and Janis Wang (hereafter “the second family”). Dr Wong and the second family take a diametrically opposing view to that of YC Wang's children by his first wife as to the correctness of the judgment below.

The History

5 The evidence of Susan Wang 2, which I summarise in this and the following paragraphs, is that the Founders felt strongly that, whenever possible, one must give back to society. They regarded FPG itself as one of their greatest legacies to Taiwanese society and, also, made very substantial sums available to establish a number of higher education institutions, hospitals and other charitable foundations. Her understanding, based on many conversations with YC Wang, her father, YT Wang, her uncle and Mr Wen-Hsiung Hung (“Mr Hung”), a close friend and confidant of YC and YT Wang, over the years until their respective deaths, was that the ownership of various holding companies established in Liberia and the BVI (“the Holding Companies”), which owned shares in FPG companies (worth in the year 2000 around US $1.8 billion), one of which was Grid Investors Corp (“Grid Investors”), had been entrusted to Mr Hung on the basis that he would use them for such purposes as might be directed by the Founders.

6 These purposes included the continued holding and purchase of shares in the FPG companies in order to assist the perpetuation of FPG and to provide funding for the

charitable foundations which the Founders had established. By 2000 FPG had become very successful and the Founders extremely wealthy in their own right. By 2008 FPG was one of the largest conglomerates in Taiwan

7 YC Wang had made clear to Susan Wang that neither of the Founders intended that the assets in the Holding Companies should ultimately form part of their estates upon their death – specifically they did not wish to leave these assets to their heirs by way of inheritance. Her father indicated to her that the Founders' wishes were that those assets should be applied towards the perpetuation of FPG and the fulfilment of the Founders' vision of giving back to society. The Founders hoped that their descendants would assume the role of caretakers or managers of that wealth for the greater good of society.

Developments in the early 2000s

8 By the summer of 2000 the Founders had turned their attention to succession planning. This included making arrangements to perpetuate and formalise the basis on which the Holding Companies would be held over the long term, and to put in place structures that would subsist long after the Founders and Mr Hung had died. Ultimately it was decided that a significant proportion of assets should be placed into a Bermuda Purpose Trust, which ultimately led to the creation in May 2001 of the Wang Family Trust (see [10] ff below). The Founders' original idea was that a single Bermuda Purpose Trust would be established to hold the FPG shares, whose purposes would include the continuous growth and prosperity of FPG and the support of the Founders' various charitable foundations. At that time the Founders also had in mind that the trust would make provision for those family members who served as directors of the company which was to be the trustee of the proposed Bermuda Purpose Trust to benefit personally in some very limited way. This was intended to ensure that the family members who devoted time and energy in supporting the growth and prosperity of FPG and the various charitable foundations were sufficiently motivated to carry out their duties as effectively as possible.

9 In early 2001, following further discussion, the original proposal was modified. It was decided that, instead of making provision within the Bermuda Purpose Trust for family members to be incentivised, there would be a separate private Bermuda discretionary trust from which those family members could potentially benefit. This is what became the Global Resource Trust. The structure was designed to align the interests of the Founders' children (as potential beneficiaries of the GRT) with the continued growth, and perpetuation of the success, of the FPG companies. The formation of the GRT was intended to incentivise the descendants of YC Wang and YT Wang to perpetuate the success of the FPG companies, and thereby to achieve the wider goals of the Founders and ensure that their philanthropic views were given effect, by providing them with an interest in shares in those companies which would form the assets of the Trust. It is apparent from this description that the GRT was not simply a trust to benefit the Founders' issue but a means of achieving, through them, the ongoing prosperity of the FPG and fulfilment of the Founders' vision.

10 The proposals for what became the Wang Family Trust and the GRT were set out in a Memorandum prepared in April 2001 by Susan Wang. In it she explained the structure that was to be adopted in relation to the Wang Family Trust. In addition to its board of directors Grand View Private Trust Company Limited...