PERPETUITIES AND ACCUMULATIONS ORDINANCE

PERPETUITIES AND ACCUMULATIONS ORDINANCE

LAWS OF HONG KONG

PERPETUITIES AND ACCUMULATIONS ORDINANCE

CHAPTER 257





CHAPTER 257.

PERPETUITIES AND ACCUMULATIONS ORDINANCE.

ARRANGEMENT OF SECTIONS.

Section. Page
PRELIMINARY AND GENERAL

1 . Short title ... ... ... ... . ... ... ... ... ... ... ... ... 2
2. Interpretation ... ... ... ... ... ... ... ... ... ... ... ... ... ... 2
3. Application ... ... ... ... ... ... ... ... ... ... ... ... ... ... 2

PERPETUITIES

4........................Abolition of the double possibility rule ... ... ... ... ... ... ... 3

5......................Restrictions on the perpetuity rule ... ... ... ... ... ... ... ... 3
6......................Power to specify perpetuity period ... ... ... ... ... ... ... ... 3

7...............................Presumptions and evidence as to future parenthood ... ... ... ... 4

8...................Uncertainty as to remoteness ... ... ... ... ... ... ... ... ... 4

9...........................................Reduction of age and exclusion of class members to avoid remoteness 6

10............................Condition relating to death of surviving spouse ... ... ... ... ... 7

11..........................Saving and acceleration of expectant interests ... ... ... ... ... ... 7

12.................Powers of appointment ...... ... ... ... ... ... ... ... ... ... 7

13.....................Administrative powers of trustees ... ... ... ... ... ... ... ... 7

14.................Options relating to land ... ... ... ... ... ... ... ... ... ... 8

15.....................................Avoidance of contractual and other rights in cases of remoteness ... 8

16. Possibilities of resulting trust, conditions subsequent, exceptions and

reservations .............................. ... ... ... ... ... ... 8

ACCUMULATION
S

17............................General restrictions on accumulations of income ... ... ... ... ... 8

18..........................Qualification of restrictions on accumulation ... ... ... ... ... ... 9

19..............................Restriction on accumulation for the purchase of land ... ... ... ... 10

20. Right to stop accumulations ... ... ... ... ... ... ... ... ... ... 10





CHAPTER 257.

PERPETUITIES AND ACCUMULATIONS.

To modify the law relating to the avoidance of future interests in
property on grounds of remoteness and governing accumulations
of income from property.

[13th March, 1970.]

PRELIMINARY AND
GENERAL.

1. This Ordinance may be cited as the Perpetuities and
Accumulations Ordinance.

2. (1) In this Ordinance, unless the context otherwise requires

'disposition' includes the conferring of a power of appointment and
any other disposition of an interest in or right over property, and
references to the interest disposed of shall be construed
accordingly;

'in being' means living or en ventre sa mere;

'power of appointment' includes any discretionary power to transfer a
beneficial interest in property without the furnishing of valuable
consideration;

'will' includes a codicil.

(2) For the purposes of this Ordinance a disposition contained in a
will shall be deemed to be made at the death of the testator.

(3) For the purposes of this Ordinance a person shall be treated as a
member of a class if in his case all the conditions identifying a member of
the class are satisfied, and shall be treated as a potential member if in his
case some only of those conditions are satisfied but there is a possibility
that the remainder will in time be satisfied.

3. (1) Nothing in this Ordinance shall affect the operation of the rule
of law rendering void for remoteness certain dispositions under which
property is limited to be applied for purposes other than the benefit of
any person or class of persons in cases where the property may be so
applied after the end of the perpetuity period.

(2) This Ordinance shall apply (except as provided in subsection (2)
of section 13 and section 18) only in relation to instruments taking effect
after the commencement of this Ordinance, and in the case of an
instrument made in the. exercise of





a special power of appointment shall apply only where the instrument
creating the power takes effect after that commencement:

Provided that section 12 shall apply in all cases for construing the
foregoing reference to a special power of appointment.

(3) This Ordinance shall apply in relation to a disposition made
otherwise than by an instrument as if the disposition had been
contained in an instrument taking effect when the disposition was made.

(4) This Ordinance binds the Crown.

PERPETUITIES.

4. The rule of law prohibiting the limitation, after a life interest to an
unborn person, of an interest in land to the unborn child or other issue
of an unborn person is hereby abolished, but without prejudice to any
other rule relating to perpetuities.

5. For removing doubts, it is hereby declared that the rule of law
relating to perpetuities does not apply and shall be deemed never to
have applied

(a)to any power to distrain on or to take possession of land or the
income thereof given by way of indemnity against a rent,
whether charged upon or payable in respect of any part of that
land or not; or

(b)to any grant, exception, or reservation of any right of entry on,
or user of, the surface of land or of any easements, rights, or
privileges over or under land for the purpose of

(i) executing repairs, alterations, or additions to any
adjoining land, or the buildings and erections thereon;

(ii) constructing, laying down, altering, repairing, renewing,
cleansing, and maintaining sewers, watercourses, cesspools,
gutters, drains, water-pipes, gas-pipes, electric wires or cables
or other like works.

6. (1) Subject to subsection (2) of section 14 and subsection (2) of
this section, where the instrument by which any disposition is made so
provides, the perpetuity period applicable to the disposition under the
rule against perpetuities, instead of being of any other duration, shall be
of a duration equal to such number of years not exceeding eighty as is
specified in that behalf in the instrument.

(2) Subsection (1) shall not have effect where the disposition is
made in exercise of a special power of appointment, but where a period
is specified under that subsection in the instrument creating such a
power the period shall apply in relation to any disposition under the
power as it applies in relation to the power itself.





7. (1) Where in any proceedings there arises on the rule
against perpetuities a question which turns on the ability of a
person to have a child at some future time, then-
(a)subject to paragraph (b), it shall be presumed that a
male can have a child at the age of fourteen years or
over, but not under that age, and that a female can have
a child at the age of twelve years or over, but not under
that age or over the age of fifty-five years; but
(b)in the case of a living person evidence may be given to
show that he or she will or will not be able to have a
child at the time in question.

(2) Where any such question is decided by treating a person
as unable to have a child at a particular time, and he or she does
so, the Supreme Court may make such order as it thinks fit for
placing the persons interested in the property comprised in the
disposition, so far as may be just, in the position they would
have held if the question had not been so decided.

(3) Subject to subsection (2), where any such question is
decided in relation to a disposition by treating a person as able
or unable to have a child at a particular time, then he or she
shall be so treated for the purpose of any question which may
arise on the rule against perpetuities in relation to the same
disposition in any subsequent proceedings.

(4) In the foregoing provisions of this section references to
having a child are references to begetting or giving birth to a
child, but those provisions (except paragraph (b) of subsection
(1)) shall apply in relation to the possibility that a person will
at any time have a child by adoption, legitimation or other means
as they apply to his or her ability at that time to beget or give
birth to a child.

8. (1) Where, apart from the provisions of this section and
sections 9 and 10, a disposition would be void on the ground that
the interest disposed of might not become vested until too remote
a time, the disposition shall be treated, until such time (if any)
as it becomes established that the vesting must occur, if at all,
after the end of the perpetuity period, as if the disposition were
not subject to the rule against perpetuities; and its becoming so
established shall not affect the validity of anything previously
done in relation to the interest disposed of by way of advance-
ment, application of intermediate income or otherwise.

(2) Where, apart from the said provisions, a disposition
consisting of the conferring of a general power of appointment
would be void on the ground that the power might not become
exercisable until too remote a time, the disposition shall be
treated, until such time (if any) as it becomes established that the
power will not be exercisable within the perpetuity period, as if the
disposition were not subject to the rule against perpetuities.





(3) Where, apart from the said provisions, a disposition
consisting of the conferring of any power, option or other right
would be void on the ground that the right might be exercised
at too remote a time, the disposition shall be treated as regards
any exercise of the right within the perpetuity period as if it were
not subject to the rule against perpetuities, and, subject to the
said provisions, shall be treated as void for remoteness only if,
and so far as, the right is not fully exercised within that period.

(4) Where this section applies to a disposition and the
duration of the perpetuity period is not determined by virtue of
section 6 or subsection (2) of section 14, it shall be determined
as follows-

(a)where any persons falling within subsection (5) are
individuals in being and ascertainable at the commence-
ment of the perpetuity period the duration of the period
shall be determined by reference to their lives and no
others, but so that the lives of any description of persons
falling within paragraph (b) or (e) of that subsection shall
be disregarded if the number of persons of that
description is such as to render it impracticable to
ascertain the date of death of the survivor;

(b)where there are no lives under paragraph (a) the period
shall be twenty-one years.

(5) The said persons are as follows-

(a) the person by whom the disposition was made;
(b)a person to whom or in whose favour the disposition
was made, that is to say-
(i) in the case of a disposition to a class of persons,
any member or potential member of the class;
(ii) in the case of an individual disposition to a
person taking only on certain conditions being satisfied,
any person as to whom some of the conditions are
satisfied and the remainder may in time be satisfied;
(iii) in the case of a special power of appointment
exercisable in favour of members of a class, any member
or potential member of the class;
(iv) in the case of a special power of appointment
exercisable in favour of one person only, that person
or, where the object of the power is ascertainable only
on certain conditions being satisfied, any person as to
whom some of the conditions are satisfied and the
remainder may in time be satisfied;
(v) in the case of any power, option or other right,
the person on whom the right is conferred;

(c) a person having a child or grandchild within sub-
paragraphs (i) to (iv) of paragraph (b), or any of whose





children or grandchildren, if subsequently born, would by
virtue of his or her descent fall within those subparagraphs;

(d)any person on the failure or determination of whose prior
interest the disposition is limited to take effect.

9. (1) Where a disposition is limited by reference to the attainment
by any person or persons of a specified age exceeding twenty-one
years, and it is apparent at the time the disposition is made or becomes
apparent at a subsequent time

(a)that the disposition would, apart from this section, be void for
remoteness, but

(b)that it would not be so void if the specified age had been
twenty-one years,

the disposition shall be treated for all purposes as if, instead of being
limited by reference to the age in fact specified, it had been limited by
reference to the age nearest to that age which would, if specified
instead, have prevented the disposition from being so void.

(2) Where in the case of any disposition different ages exceeding
twenty-one years are specified in relation to different persons

(a)the reference in paragraph (b) of subsection (1) to the
specified age shall be construed as a reference to all the
specified ages, and

(b)that subsection shall operate to reduce each such age so far
as is necessary to save the disposition from being void for
remoteness.

(3) Where the inclusion of any persons, being potential members of
a class or unborn persons who at birth would become members or
potential members of the class, prevents the foregoing provisions of this
section from operating to save a disposition from being void for
remoteness, those persons shall thenceforth be deemed for all the
purposes of the disposition to be excluded from the class, and the said
provisions shall thereupon have effect accordingly.

(4) Where, in the case of a disposition to which subsection (3) does
not apply, it is apparent at the time the disposition is made or becomes
apparent at a subsequent time, that apart from this subsection, the
inclusion of any persons, being potential members of a class or unborn
persons who at birth would become members or potential members of
the class, would cause the disposition to be treated as void for
remoteness, those persons shall, unless their exclusion would exhaust
the class, thenceforth be deemed for all the purposes of the disposition
to be excluded from the class.





(5) Where this section has effect in relation to a disposition
to which section 8 applies, the operation of this section shall not
affect the validity of anything previously done in relation to the
interest disposed of by way of advancement, application of
intermediate income or otherwise.

10. Where a disposition is limited by reference to the time
of death of the survivor of a person in being at the commencement
of the perpetuity period and any spouse of that person, and that
time has not arrived at the end of the perpetuity period, the
disposition shall be treated for all purposes, where to do so
would save it from being void for remoteness, as if it had instead
been limited by reference to the time immediately before the end
of that period.

11. A disposition shall not be treated as void for remoteness
by reason only that the interest disposed of is ulterior to and
dependent upon an interest under a disposition which is so void,
and the vesting of an interest shall not be prevented from being
accelerated on the failure of a prior interest by reason only that
the failure arises because of remoteness.

12. For the purposes of the rule against perpetuities, a
power of appointment shall be treated as a special power unless-
(a)in the instrument creating the power it is expressed to
be exercisable by one person only, and
(b)it could, at all times during its currency when that
person is of full age and capacity, be exercised by him
so as immediately to transfer to himself the whole of
the interest governed by the power without the consent
of any other person or compliance with any other con-
dition, not being a formal condition relating only to the
mode of exercise of the power:
Provided that for the purpose of determining whether a
disposition made under a power of appointment exercisable by
will only is void for remoteness, the power shall be treated as
a general power where it would have fallen to be so treated if
exercisable by deed.

13. (1) The rule against perpetuities shall not operate to
invalidate a power conferred on trustees or other persons to sell,
lease, exchange or otherwise dispose of any property for full con-
sideration, or to do any other act in the administration (as
opposed to the distribution) of any property, and shall not prevent
the payment to trustees or other persons of reasonable remunera-
tion for their services.

(2) Subsection (1) shall apply for the purpose of enabling a
power to be exercised at any time after the commencement of this
Ordinance notwithstanding that the power is conferred by an
instrument which took effect before that commencement.





14. (1) The rule against perpetuities shall not apply to a
disposition consisting of the conferring of an option to acquire
for valuable consideration an interest reversionary (whether
directly or indirectly) on the term of a lease if-
(a)the option is exercisable only by the lessee or his
successors in title, and
(b)it ceases to be exercisable at or before the expiration of
one year following the determination of the lease.

This subsection shall apply in relation to an agreement for a
lease as it applies in relation to a lease, and 'lessee' shall be
construed accordingly.

(2) In the case of a disposition consisting of the conferring
of an option to acquire for valuable consideration any interest in
land, the perpetuity period under the rule against perpetuities
shall be twenty-one years, and section 6 shall not apply.

15. Where a disposition inter vivos would fall to be treated
as void for remoteness if the rights and duties thereunder were
capable of transmission to persons other than the original parties
and had been so transmitted, it shall be treated as void as between
the person by whom it was made and the person to whom or in
whose favour it was made or any successor of his, and no remedy
shall lie in contract or otherwise for giving effect to it or making
restitution for its lack of effect.

16. (1) In the case of a possibility of a resulting trust on the
determination of any determinable interest in property, the rule
against perpetuities shall apply in relation to the provision causing
the interest to be determinable as it would apply if that provision
were expressed in the form of a condition subsequent giving rise,
on breach thereof, to a right of re-entry or an equivalent right in
the case of property other than land, and where the provision
falls to be treated as void for remoteness the determinable interest
shall become an absolute interest.

(2) Where a disposition is subject to any such provision,
or to any such condition subsequent, or to any exception or reser-
vation, the disposition shall be treated for the purposes of this
Ordinance as including a separate disposition of any rights
arising by virtue of the provision, condition subsequent, exception
or reservation.

ACCUMULATIONS.

17. (1) No person may by any instrument or otherwise settle
or dispose of any property in such manner that the income thereof
shall, save as hereinafter mentioned, be wholly or partially
accumulated for any longer period than one of the following,
namely-





(a) the life of the grantor or settlor; or
(b)a term of twenty-one years from the death of the grantor,
settlor or testator; or

(c)the duration of the minority or respective minorities of
any person in being at the death of the grantor, settlor
or testator; or

(d)the duration of the minority or respective minorities only
of any person who under the limitations of the instru-
ment directing the accumulations would, for the time
being, if of full age, be entitled to the income directed
to be accumulated; or
(e)a term of twenty-one years from the date of the making
of the disposition; or
the duration of the minority or respective minorities of
any person or persons in being at the date of the
making of the disposition.

(2) In every case where any accumulation is directed other-
wise than as aforesaid, the direction shall (save as hereinafter
mentioned) be void; and the income of the property directed to
be accumulated shall, so long as the same is directed to be
accumulated contrary to this section, go to and be received by
the person who would have been entitled thereto if such accumula-
tion had not been directed.

(3) The restrictions imposed by subsection (1) apply in
relation to a power to accumulate income whether or not there
is a duty to exercise that power, and they apply whether or not
the power to accumulate extends to income produced by the
investment of income previously accumulated.

(4) This section does not extend to any provision-

(a)for payment of the debts of any grantor, settlor,
testator or other person;
(b) for raising portions for-
(i) any child or remoter issue of any grantor, settlor
or testator; or
(ii) any child or remoter issue of a person taking any
interest under any settlement or other disposition
directing the accumulations or to whom any interest is
thereby limited,

and accordingly such provisions may be made as if no statutory
restrictions on accumulation of income had been imposed.

18. Where accumulations of surplus income are made during
a minority under any Ordinance or under the general law, the
period for which such accumulations are made is not (whether
the trust was created or the accumulations were made before or
after the commencement of this Ordinance) to be taken into





account in determining the periods for which accumulations are
permitted to be made by section 17, and accordingly an express
trust for accumulation for any other permitted period shall not
be deemed to have been invalidated or become invalid, by reason
of accumulations also having been made as aforesaid during such
minority.

19. No person may settle or dispose of any property in such
manner that the income thereof shall be wholly or partially
accumulated for the purchase of land only, for any longer period
than the duration of the minority or respective minorities of any
person or persons who, under the limitations of the instrument
directing the accumulation, would for the time being, if of full
age, be entitled to the income so directed to be accumulated.

20. Section 7 shall apply to any question as to the right of
beneficiaries to put an end to accumulations of income under any
disposition as it applies to questions arising on the rule against
perpetuities.
Originally 26 of 1970. Short title. Interpretation. 1964, c. 55, s. 15(2), (3). Application. 1964, c. 55, s. 15(4)-(7). Abolition of the double possibility rule. [cf. 1925, c. 20, s. 161.] Restrictions on the perpetuity rule. [cf. 1925, c. 20, s. 162.] Power to specify perpetuity period. 1964, c. 55, s. 1. Presumptions and evidence as to future parenthood. 1964, c. 55, s. 2. Uncertainly as to remoteness. 1964, c. 55, s. 3. Reduction of age and exclusion of class members to avoid remoteness. 1964, c. 55, s. 4. Condition relating to death of surviving spouse. 1964, c. 55, s. 5. Saving and acceleration of expectant interests. 1964, c. 55, s. 6. Powers of appointment. 1964, c. 55, s. 7. Administrative powers of trustees. 1964, c. 55, s. 8. Options relating to land. [cf. 1964, c. 55, s. 9.] Avoidance of contractual and other rights in cases of remoteness. 1964, c. 55, s. 10. Possibilities of resulting trust, conditions subsequent, exceptions and reservations. [cf. 1964, c. 55, s. 12.] General restrictions on accumulations of income. [cf. 1925, c. 20, s. 164, & 1964, c. 55, s. 13.] Qualification of restrictions on accumulation. [cf. 1925, c. 20, s. 165.] Restriction on accumulation for the purchase of land. [cf. 1925, c. 20, s. 166.] Right to stop accumulations. 1964, c. 55, s. 14.

Originally 26 of 1970. Short title. Interpretation. 1964, c. 55, s. 15(2), (3). Application. 1964, c. 55, s. 15(4)-(7). Abolition of the double possibility rule. [cf. 1925, c. 20, s. 161.] Restrictions on the perpetuity rule. [cf. 1925, c. 20, s. 162.] Power to specify perpetuity period. 1964, c. 55, s. 1. Presumptions and evidence as to future parenthood. 1964, c. 55, s. 2. Uncertainly as to remoteness. 1964, c. 55, s. 3. Reduction of age and exclusion of class members to avoid remoteness. 1964, c. 55, s. 4. Condition relating to death of surviving spouse. 1964, c. 55, s. 5. Saving and acceleration of expectant interests. 1964, c. 55, s. 6. Powers of appointment. 1964, c. 55, s. 7. Administrative powers of trustees. 1964, c. 55, s. 8. Options relating to land. [cf. 1964, c. 55, s. 9.] Avoidance of contractual and other rights in cases of remoteness. 1964, c. 55, s. 10. Possibilities of resulting trust, conditions subsequent, exceptions and reservations. [cf. 1964, c. 55, s. 12.] General restrictions on accumulations of income. [cf. 1925, c. 20, s. 164, & 1964, c. 55, s. 13.] Qualification of restrictions on accumulation. [cf. 1925, c. 20, s. 165.] Restriction on accumulation for the purchase of land. [cf. 1925, c. 20, s. 166.] Right to stop accumulations. 1964, c. 55, s. 14.

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