This article examines the prominent and expensive litigation in Hong Kong surrounding a deceased wealthy couple.

It is an oft-stated fact that even the wealthiest of persons sometimes forget to draw up a robust will and end up causing all manner of problems as a result. A recent prominent Hong Kong case highlights some very specific problems around “homemade wills”. In this article, Patrick Hamlin, counsel at Withers, the international law firm in Hong Kong, examines the case. The case is that of the The Chinachem Charitable Foundation. The judgment was delivered in the Court of Final Appeal on 18 May 2015. The editors of this publication are grateful for this expert commentary but as ever, don’t necessarily endorse all the opinions expressed and invite readers to submit their own views.

Seldom can there have been a husband and wife whose wills caused such a massive amount of hugely expensive litigation as those of Teddy and Nina Wang, of which the judgment handed down by the Hong Kong Court of Final Appeal in May this year is hopefully the final episode.

The story is well known. Mr and Mrs Wang both came from Shanghai, where Mr Wang's father started the Chinachem business. They married in 1955 when Mr Wang was 20 and Mrs Wang 18. They worked hard to grow the business of the Chinachem Group, which ultimately became one of the largest property companies in Hong Kong. By 2012, it had about 3,300 employees and an operating profit of about HK$2.48 billion ($319 million).

But all was not plain sailing. Tragically Mr Wang was kidnapped in 1990 and never seen again by his family and friends. In 1999 the Court of First Instance pronounced that Mr Wang must be presumed to have died, but then followed a long and bitter probate dispute as to whether the professionally drafted will propounded by Mr Wang's father or the homemade one advanced by Mrs Wang represented his last will and testament.  After lengthy hearings in the Court of First Instance, Court of Appeal and Court of Final Appeal, the territory's highest court finally ruled that the homemade will in the possession of Mrs Wang was valid and accordingly the Chinachem Empire passed in its entirety to Mrs Wang. But the lawyers were not done. Mrs Wang sadly succumbed to cancer in 2007, which was followed by substantial litigation about her estate.

Mrs Wang's last will appeared to be the homemade will, written in Chinese, under the terms of which she left her entire estate, including the Chinachem Group, to the Chinachem Charitable Foundation, a charity established jointly by herself and her husband. History, however, repeated itself (in a slightly different form) when a certain Mr Chan (Mrs Wang's feng shui adviser) produced another will under the terms of which Mr Chan was the major beneficiary.  

Again there was lengthy litigation before the Court of First Instance and the Court of Appeal to establish which will was valid.  Both the Court of First Instance and the Court of Appeal upheld the homemade will in favour of Mrs Wang. In a last desperate throw of the dice, Mr Chan applied to the Court of Final Appeal for leave to appeal against the Court of Appeal decision in favour of Mrs Wang. This application was rejected in October 2011, so that left the Chinachem Foundation holding the Chinachem empire.

Still the various legal teams could not rest. In 2012, proceedings were brought by the secretary for justice to determine the true meaning of Mrs Wang's last homemade will. The secretary for justice has a role in relation to the supervision of charities by virtue of his position as protector of charity. This is an ancient title deriving from the former role of the Crown in Hong Kong, whereby traditionally under English law the monarch was parens patriae, that is father of the nation, and was bound to ensure that charitable trusts (which are always for the benefit of the public rather than just a small private group of beneficiaries) are enforced. This role remains important in Hong Kong as there is no regulator for charities (unlike say the Charity Commission in England) so that without the secretary's involvement, potential difficulties in relation to individual charities would go unresolved.

The Chinachem Foundation was created during the lifetime of both Mr and Mrs Wang. But it was only upon Mrs Wang's death, under the terms of her homemade will, that the Foundation acquired substantial assets, namely the Chinachem Group. The Foundation is an incorporated company with charitable objects, but Mrs Wang's detailed wishes as to exactly what the Foundation was to do with its inheritance are set out in the will. It is not surprising that her will, drafted without the benefit of professional legal assistance, should give rise to doubts about its interpretation. Just what did Mrs Wang intend the Foundation to do with all that money?

At the heart of the argument before the Court of Final Appeal was whether the Foundation received its inheritance absolutely or on trust to carry out the directions in Mrs Wang's will, not all of which were completely clear. If the Foundation took absolutely, it would still be obliged to apply the assets of the Foundation for charitable purposes in accordance with its constitution but if it took as trustee then it would be bound to do its best to carry out Mrs Wang's wishes.  

This included not only any existing projects but also the establishment of a "Chinese prize of worldwide significance similar to the Nobel Prize" (to quote from the agreed English translation). The Court of Final Appeal and Court of Appeal both answered that question by holding the Foundation must do its best to give effect to Mrs Wang's wishes including the establishment of the "Chinese prize".  

The Court of Final Appeal recognised that Mrs Wang's wishes might be difficult, if not impossible, to carry out, for example her wish that the Foundation be supervised by a management organisation jointly formed by the secretary general of the United Nations and the premier of the Chinese government. Lord Walker, a distinguished member of the UK Supreme Court, giving judgment of the Court of Final Appeal pointed out that the Hong Kong Court had an inherent jurisdiction over the administration of charitable trusts.

This jurisdiction could be invoked by the secretary for justice to clarify or modify the purposes of a charitable trust or to improve the administration of the Foundation by making a scheme. The court decided therefore that in this case there should be a scheme for the administration of the charitable trusts of Mrs Wang's will. The scheme would have two principal objectives, the establishment of the supervisory body including its terms of reference and its membership and also the detailed working out of the arrangements for the Chinese prize. The scheme should be prepared and submitted to the Court of First Instance for approval after consultation between the Foundation and the secretary for justice as guardian of the public interest. In this way the practical difficulties of giving effect to Mrs Wang's wishes could be overcome with the full authority of the court.

Although not every testator sets out when drafting their will to create a Chinese Nobel prize, there is nonetheless a clear lesson to be learnt from the years of complex litigation surrounding the estates of both Mrs and Mr Wang. Had they both availed themselves of proper legal advice to draft their wills and not gone it alone with their own homemade version, many millions of dollars in legal costs could have been saved.  

Admittedly very little can be done to prevent a fraudster putting forward a fake will, as happened in Mrs Wang's estate, but almost certainly the disputes about Mr Wang's will could have been avoided. Had Mrs Wang's wishes been clearly and effectively set out in her will by a professional draftsman, the costs and expense of obtaining a court scheme to give effect to those wishes would also have been obviated.