TANG MAN KIT AND ANOTHER v. HIP HING TIMBER CO. LTD.

A8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

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Coram: Yuen J.A. in Chambers (sitting as additional judge of the Court of First Instance)

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REASONS FOR DECISION

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1. This was an application by the Defendant for leave to appeal against my order of 8 March 2002 dismissing its summons under Order 62 rule 8 and the inherent jurisdiction of the Court for two firms of solicitors to be ordered to pay its costs of the action. At the end of the application, I refused leave and said that I would reduce the reasons into writing to be handed down.

Principles

2. It is common ground that leave is required under s.14(3)(e) High Court Ordinance for this intended appeal on costs. It is also not disputed that the purpose of the leave requirement in the High Court Ordinance is to act as a "filtering process" to protect persons from the burden of costs where the proposed appeal itself is only on the question of costs (Ho Lee Man v Wong Wai Kai [1993] 1 HKC 183, 189.

3. Applying those principles and the principles as to solicitors' liability for costs set out in Nelson v Nelson [1997] 1 WLR 233, discussed in my decision of 8 March 2002, I found the issue to be clearly in the two firms' favour such that the "filtering process" should operate to protect them from the burden of costs in the intended appeal.

Application of principles

4. The history of the litigation and the background for the Defendant's application that the two firms be ordered to pay costs appear in my written decision of 8 March 2002 and I shall not repeat them here.

5. This is not a case where solicitors were acting for non-existent clients, or where the clients were incompetent by reason of minority or mental incapacity, or where existent, competent clients had not in fact authorized the proceedings. This was a case where solicitors were acting for Mr Tang and Mr Foo, who were sui juris and who had in fact authorized the solicitors to bring the proceedings.

6. The fact that Mr Tang and Mr Foo purported to act only as purportedly registered managers for what they claimed was a t'ong within the meaning of s.15 New Territories Ordinance, when, as I have found, they were not so, cannot absolve themselves from liability for costs. Indeed, it is not the Defendant's case that Mr Tang and Mr Foo are not liable for costs. The Defendant had sought, and has been given, an order for costs against them. No one has appealed that order.

7. The Defendant submitted that Mr Tang and Mr Foo were only named as plaintiffs as a matter of technicality, to comply with the procedure set out in Tang Yau Yi Tong v Tang Mou Shan Tso [1996] 2 HKLR 213, 219. However, the very rationale for that part of the Court of Appeal's decision was that a t'ong is not a legal entity (at 219E). Therefore, the solicitors here were not purporting to act for a legal entity which turned out to be non-existent, but for Mr Tang and Mr Foo, who were individual plaintiffs purporting to act in a certain capacity.

8. As a matter of completeness, I would only add that although Mr Chong submitted that there is no question of the Defendant's costs not being met, I do not in any event consider that relevant to the issue before me.

9. In light of the matters set out in paragraphs 5-7, I could not see how the solicitors could also be held liable for costs when the principles stated in Nelson v Nelson are applied. Accordingly, I dismissed the Defendant's summons and gave an order nisi that the costs of the summons for leave to appeal be paid by the Defendant to the two firms.

Representation:

Miss Winnie Tam instructed by Wai & Co for Defendant

Mr Clifford Smith SC instructed by Susan Liang & Co for Susan Liang & Co

Mr K.M. Chong instructed by Christine M Koo & Co for KW Lai & Co

HCA8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

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Coram: Yuen J in Chambers

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REASONS FOR DECISION

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1. On 3 September 2001, I granted the Defendant's motion to set aside the Writ on the ground that it has been issued without authority. I indicated that I would hear the parties as to the form of order and costs.

Proposed Order

2. The parties were unable to agree on the form of order or costs. The terms of the order proposed by the Defendant were as follows:-

(1) the Re-Re-Amended Writ of Summons be set aside and this action be dismissed;

(2) Tang Man Kit, Foo Tak Ching and the estate of Chan Kam Cheung personally do pay to the Defendant the costs of this action and of and occasioned by the Defendant's application (with certificate for two counsel), such costs to be taxed if not agreed; and

(3) there be liberty to the Defendant to apply for the appropriate orders for the payment of costs by KW Lai & Co, solicitors for the Plaintiff, and Susan Liang & Co and Wong, Hui & Co, former solicitors for the Plaintiffs.

Representation

3. On 21 December 2001, Mr Edward Chan SC appeared for "the unincorporated association known as Wah Yan Mo Fan Heung". Subsequently, he informed the Court that he also acted for Mr Tang Man Kit and Mr Foo Tak Ching personally. As far as the estate of Chan Kam Cheung was concerned, he informed the Court that no probate or letters of administration had been taken out.

4. Mr KM Chong was instructed to appear for KW Lai & Co in their personal capacities. However it appeared that the hearing was fixed without reference to Susan Liang & Co and Wong, Hui & Co. The Court indicated that it would be inappropriate to proceed with the proposed paragraph (3) in their absence.

5. In the event, Mr Johnny Mok counsel for the Defendant, indicated that the Defendant would not proceed with the proposed paragraph (3) and asked for liberty to apply. He also indicated that the Defendant would also not proceed against the estate of Chan Kam Cheung and similarly asked for liberty to apply.

Proposed Order

6. The proposed paragraph (1) was not disputed by Mr Chan SC. As for the 2nd proposed paragraph, Mr Chan SC's submission was that Mr Tang and Mr Foo should not be personally liable for costs because they were representative plaintiffs of the unincorporated group of persons called "Wah Yan Mo Fan Heung". In support of this contention, he referred to paragraph 1 of the Re-Re-Amended Statement of Claim which pleaded that at all material times, Wah Yan Mo Fan Heung "was and is an unincorporated body beneficially interested" in the land in question. This pleading was never formally abandoned, although the case on the Motion was that the Heung was a "t'ong" within s.15 New Territories Ordinance.

Not representative plaintiffs

7. I do not consider that that renders Mr Tang and Mr Foo representative plaintiffs. Their alleged representative capacity was not indorsed on the writ as required under O.6 r.3 (see 15/12/5 Hong Kong Civil Procedure 2002). The pleading that they were "managers" is not indicative that they were representatives because the managers of a group of persons may not necessarily have the same interest as the other persons. Nor was the resolution relied upon by Mr Foo in his affirmation of 19 December 2001 ever pleaded in support of any alleged representative capacity.

8. It would also be observed that if they really were representative plaintiffs and this was a representative action, it is difficult to see why Mr Chan SC has agreed to the proposed order to dismiss the entire action.

9. In any event, even if Mr Tang and Mr Foo were representative plaintiffs, that does not mean that they would be relieved from personal liability to bear costs (see 15/12/41 Hong Kong Civil Procedure 2002).

10. The fact was that Mr Tang and Mr Foo's case was grounded upon their being managers of a t'ong known as "Wah Yan Mo Fan Heung" which they claimed to be a t'ong within the meaning of s.15 New Territories Ordinance. In my Decisions in December 1998 and March 1999, I had referred specifically to the issue of authority to sue and the possible repercussion regarding costs, so there can be no question of any injustice to Mr Tang and Mr Foo caused by an order of costs against them. They will have to look elsewhere for indemnities, if any.

Order

11. I would therefore order that :-

(1) the Re-Re-Amended Writ of Summons be set aside and this action be dismissed;

(2)(a) Tang Man Kit do pay to the Defendant the costs of this action including costs of and occasioned by the Defendant's Notice of Motion issued 26 March 1999 (with certificate for two counsel in relation to the preparation and hearing of the Notice of Motion), such costs to be taxed if not agreed;

(b) Foo Tak Ching do pay to the Defendant the costs of this action including costs of and occasioned by the Defendant's Notice of Motion issued 26 March 1999 (with certificate for two counsel in relation to the preparation and hearing of the Notice of Motion), such costs to be taxed if not agreed, to be limited to costs incurred on or after 22 March 2000;

(3) there be liberty to apply.

I would also make the other orders as to costs previously reserved, as proposed by Mr Mok and not objected to by Mr Chan.

Representation:

Mr Edward Chan SC and Mr Ernest Koo instructed by KW Lai & Co for the unincorporated association "Wah Yan Mo Fan Heung", and Mr Tang Man Kit and Mr Foo Tak Ching.

Mr Johnny Mok instructed by Wai & Co for Defendant

Mr KM Chong instructed by KW Lai & Co for KW Lai & Co.

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

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D E C I S I O N

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1. This is a motion issued by the Defendant to set aside the Writ on the ground that it has been issued without authority. The motion raises a number of interesting issues, but it is first necessary to set out briefly the background of the proceedings.

Proceedings

2. The action started in 1990. It appears not to have progressed much in the nearly 9 years before a strike-out application was issued by the Defendant in 1998, but no point on delay or lack of prosecution has been taken by either side.

Original Plaintiffs

3. The plaintiffs named in the writ were originally "Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers". It was pleaded in the Statement of Claim that "at all material times, Wah Yan Mo Fan Heung (華人模範鄉) ('the Heung') was and is an unincorporated body beneficially interested in lands in the New Territories ...". It was further pleaded that the Defendant was a former tenant occupying part of those lands, that a Notice to Quit was given by solicitors in April 1986, by reason of which the tenancy expired in December 1986, and that the Defendant was holding over. Recovery of the land and mesne profits were sought. (There was an amendment in 1997 to add certain allegations which are not relevant here).

4. In the Defence, the Defendant admitted that Wah Yan Mo Fan Heung "has been and is" the beneficial owner of land occupied by the Defendant. However, it was pleaded in the Defence that the solicitors lacked authority to issue the Notice to Quit and that certain agreements had been made with Wong Tat To, a manager of Wah Yan Mo Fan Heung, in 1966 and 1974. The Defence also contained defences of estoppel and laches and acquiescence. There was a Counterclaim for specific performance, damages for breach of contract and declaratory and consequential relief.

Application to strike out

5. In December 1998, the matter first came before me on the Defendant's application to strike out the claim on the ground that an unincorporated body has no legal capacity to sue.

Application to amend

6. At the hearing, Mr Patrick Fung SC then leading counsel for the Plaintiff, whilst not abandoning the pleading that "Wah Yan Mo Fan Heung" was an unincorporated body, sought to amend the name of the Plaintiff as "Tang Man Kit suing as sole manager of Wah Yan Mo Fan Heung" and to re-amend the Statement of Claim to add an alternative case that Wah Yan Mo Fan Heung "was and is a t'ong within the meaning of s.19 of the New Territories Ordinance (Laws of Hong Kong, 1960 edition) and s.15 of the New Territories Ordinance (Laws of Hong Kong, current edition)". I granted leave to amend on the ground that it was not sufficiently plain and obvious that Wah Yan Mo Fan Heung was not a t'ong or that there had been no approval of managers that leave to amend should not be given (reported at [1999] 1 HKC 373).

7. There was subsequently a re-amendment to add Foo Tak Ching as a plaintiff as he had purportedly been appointed manager by a resolution passed by "the members of the Heung" on 17 December 1999. There was no objection to this re-re-amendment.

Motion to set aside for lack of authority to sue

8. The amendment to plead that Wah Yan Mo Fan Heung was a t'ong within the meaning of s.15 NTO and that Tang Man Kit and Foo Tak Ching were suing as its managers led to the present motion for an order that the writ be set aside as having been issued without authority (Banco de Bilboa v Sancha [1938] 2 KB 176).

9. The grounds are that :-

(1) Wah Yan Mo Fan Heung is not a clan, family or t'ong within the meaning of s.15 and s.16 NTO or exempted from the requirement to be registered under the Companies Ordinance by virtue of s.16 NTO;

(2) Wah Yan Mo Fan Heung has no legal status and is not recognized in law as a legal entity capable of enforcing rights over land or authorising the commencement of an action on its behalf; and

(3) no application for approval has been made under s.15 of the NTO or approval granted pursuant to any such application or at all.

The reference to "approval" has been understood to mean approval of the appointments of Tang and Foo as managers assuming that Wah Yan Mo Fan Heung is a t'ong within the meaning of s15 NTO.

Section 15 New Territories Ordinance

10. Section 15 NTO in its current form provides:-

"Whenever any land is held from the Crown under lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the City and New Territories Administration, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong. The Secretary for Home Affairs may on good cause shown cancel the appointment of any manager and select and register a new manager in his place. If the members of any clan, family or t'ong holding land do not within 3 months after the acquisition of the land make and prove the appointment of a new manager, it shall be lawful for the Crown to re-enter upon the said land held by such clan, family or t'ong, which shall thereupon become forfeited. Such re-entry shall be effected by the registration of a memorial thereof in the appropriate New Territories Land Registry".

11. This section was first enacted as s.13 of the New Territories Land Ordinance 1905. Apart from stylistic differences, the only differences are that in the 1905 Ordinance, (i) the word "office" was in place of "New Territories District Office of the City and New Territories Administration"; (ii) "Land Officer" in place of "Secretary for Home Affairs"; (iii) changes of appointment were expressly referred to; and (iv) the word "thereupon" appeared in the sentence "every such appointment and change shall be reported at the appropriate office and the Land Officer on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said Manager or Managers; the said Manager or Managers thereupon shall after giving such notices as may be prescribed have full power to dispose of or in any way deal with the said land as if he or they were sole owner thereof, subject to the consent of the Land Officer, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land". The deletion of the word "thereupon" has been held by Litton JA (as he then was) in Light Ocean Investments Ltd v Enway Development Ltd [1994] 3 HKC 31, 40G-H not to have had any effect on the substantive law.

Section 16 New Territories Ordinance

12. Section 16 NTO in its current form provides:-

"Any clan, family or t'ong owning land on 28 October 1910, in respect of which a manager has been duly registered under this Ordinance, shall not, so long as such land is certified by the Secretary for Home Affairs as being used for agricultural, religious, educational or charitable purposes or such other uses of a similar nature as are recognized by established local custom, or for dwelling houses occupied by bona fide members of the clan, family or t'ong, be required to be registered under the Companies Ordinance (Cap.32), although such clan, family or t'ong may consist of more than 20 members".

13. This section was first enacted as s.14 of the New Territories Land Ordinance 1905. The only differences were that in the 1905 Ordinance, the section applied to "any clan, family or t'ong owning land in the New Territories at the date of the coming into operation of this Ordinance" instead of the date "28 October 1910", and again, "Land Officer" was in place of "Secretary for Home Affairs".

14. Twenty-eighth October 1910 is the date when the New Territories Regulation Ordinance 1910 came into operation. This Ordinance was to "consolidate and amend the laws relating to the administration and regulation of the New Territories". Section 13 NTO became s.27 NTRO and s.14 NTO became s.28 NTRO, but apart from extending the application of s.14 NTO from any clan, family or t'ong owning land on 7 July 1905 to any clan, family or t'ong owning land on 28 October 1910, there were no substantive differences. This extension does not make any difference in the present case because whatever Wah Yan Mo Fan Heung is or is not, the lands in question were only acquired in the 1920's.

Proceedings against Secretary for Justice in HCMP 2082/00

15. The Motion was first heard in June 2000, but as the Plaintiffs' expert witness was taken ill and could not travel to Hong Kong, the hearing had to be adjourned to dates in late August and September. In the meantime, there was a change in events which may be said to be dramatic.

16. It appeared from materials available at the hearing of the Motion in June that starting from the 1970's, at the latest, the position taken by the Land Officer was that Wah Yan Mo Fan Heung was not a t'ong within the meaning of s.15 NTO. This was shown in contemporaneous documents in the Land Office file and in correspondence passing between the Land Officer and the purported managers or solicitors acting for them.

17. In April 2000, after the re-re-amendment, the Plaintiffs issued separate proceedings in HCMP 2082 of 2000 against the Secretary for Justice on behalf of the Director of Home Affairs and the Director of Lands, claiming that (i) Chan Kam Cheung and Tang Man Kit were registered or entitled to be registered as managers of Wah Yan Mo Fan Heung under s.15 NTO since 1989 and that Tang Man Kit and Foo Tak Ching were registered or entitled to be registered as managers of Wah Yan Mo Fan Heung since 1999; (ii) the Director of Home Affairs was obliged to register them as managers of Wah Yan Mo Fan Heung since 1989 and 1999 respectively; and (iii) the Director of Lands was obliged to pay compensation to Tang Man Kit and Foo Tak Ching as such managers for the resumption in 1997 of certain lands registered in the name of Wah Yan Mo Fan Heung.

18. Between the first hearing of the present Motion in June and the adjourned hearing in late August, however, the Plaintiffs and the Secretary for Justice reached agreement in the form of a Tomlin Order in HCMP 2082/00, the terms of the schedule to which were that the Director of Home Affairs shall approve and register the appointments of Chan Kam Cheung, Tang Man Kit and Foo Tak Ching as managers under s.15 NTO which shall have retrospective effect.

19. The Defendant applied to join as a party to HCMP 2082/00. I refused leave for the reasons given in my written Decision of 30 August 2000. The Tomlin Order did not involve the making of any declarations by the Court and the terms in the Schedule are not binding on the Defendant in the present action. Nor do I consider it relevant to a judge being asked to make a Tomlin Order to ask the parties why they have chosen to do so, when the parties are legally represented.

20. On 31 August 2000, the District Officer (Yuen Long) signed a document which stated that "in accordance with the provisions of section 15 of the New Territories Ordinance, I hereby approve the appointment of Messrs TANG Man Kit and CHAN Kam Cheung of Wah Yan Mo Fan Heung to replace Messrs. LUI Lap Ka (雷立家), WONG Tat To (黃達道) and WONG Pui (黃培) (and including Messrs. WONG Fook Pui (黃福培) and WONG Kwan Fat (黃均發) in so far as they have been purportedly appointed additional managers of the Heung) as the managers of the above named Heung with effect from the 28th day of January 1989".

21. On the same day, the District Officer (Yuen Long) signed a document which stated that "in accordance with the provisions of section 15 of the New Territories Ordinance, I hereby approve the appointment of Mr FOO Tak Ching (傅德楨) of Wah Yan Mo Fan Heung to replace Mr CHAN Kam Cheung as a manager of the above named Heung with effect from the 17th day of December 1999".

22. Both documents were registered in the Yuen Long Land Registry on 1 September 2000.

Further amendment of Statement of Claim

23. By reason of the above turn of events, the Plaintiffs formulated their case as follows:-

"3E. Further or in the alternative, the appointments of the first named Plaintiff and the second named Plaintiff as managers of the Heung on the respective dates of 28th January 1989 and 17th December 1999 were both, pursuant to Section 15 New Territories Ordinance, Cap. 97, approved on 31st August 2000 and registered on 1st September 2000 with effect from their respective dates of appointment".

It is not clear from that whether it is the Plaintiffs' case that both approval and registration were effective from their respective dates of appointment.

Issues on Motion

24. The issues that arise on the Motion are:-

(1) What is the meaning of "t'ong" in the context of s.15 NTO?

(2) What is "Wah Yan Mo Fan Heung" and is it a t'ong within the meaning of s.15 NTO?

(3) Even if Wah Yan Mo Fan Heung is a t'ong within the meaning of s.15 NTO, have Tang Man Kit and Foo Tak Ching been appointed managers of the t'ong and have their appointments been approved and registered so that they are authorised to bring or continue this action?

25. The burden is of course on the Defendant to show that Tang Man Kit and Foo Tak Ching have no authority to sue.

26. It would be convenient to deal with each issue in a separate section.

(1) Meaning of "t'ong" in s.15 New Territories Ordinance

27. The issue is not what is meant by the word "t'ong" in Chinese customary law, but what is meant by that word in the context of s.15 NTO.

28. A t'ong in the sense of a family lineage "trust" is well-known. The question in the present case is whether the legislature intended to include within s.15 a business organization or association, which the Plaintiffs have referred to as a "business t'ong", for the Plaintiffs' case is that Wah Yan Mo Fan Heung is a "business t'ong".

"Business t'ong"

29. A "business t'ong" was referred to by Cheung J (as he then was) in Tang Yau Yi Tong and another v Tang Mou Shau Tso and others [1995] 2 HKC 245, 253. The learned judge made that reference in a summary of the customary law gleaned from various authorities and articles to which he had been referred. However, that case involved a pure family lineage t'ong, and so it was not necessary for the judge to find (and as I read the judgment, he did not find) that a "business t'ong" was included within the meaning of "t'ong" in s.15 NTO. In any event, even if his judgment were to be read to include such a finding, that finding would have been obiter.

30. In the present case, expert evidence of Chinese customary law was adduced from Professor Anthony Dicks SC by the Defendant and from Professor Chang We Jen by the Plaintiffs. There was no dispute, and I accepted, that both Professor Dicks SC and Professor Chang are experts in the field of Chinese customary law. From their evidence (Professor Dicks SC was not cross-examined on his report), I derive the following points.

31. In relation to the term "business t'ong", even Professor Chang confessed to some resistance to the use of that term, which he used in his report, possibly, he said, by reference to the request from the Plaintiffs' solicitors for his expert evidence. In cross-examination, Professor Chang said he would prefer to express a "business t'ong" as "an organization or association for business undertaking". Such associations were generally called he-hua (合伙) (or he-ben合本, he-gu合股, he-zi合資).

32. The term he-hua合伙 is also the translation of "partnership" and indeed, Professor Dicks SC in his report refers to organizations described as "companies" as being "extended and more elaborate versions of the traditional Chinese partnership". The term partnership appears to be apposite because according to Professor Dicks SC, the concept of a separate corporate personality was unknown to Chinese customary law. This was not disputed by Professor Chang. In effect, therefore, what the Plaintiffs refer to as a "business t'ong" was a group of individuals in partnership to do business.

33. According to Professor Chang, these groups might be further sub-categorized into the narrow, profit-making sense (where the members intend to make money for themselves) or the broad, non-profit-making sense (where the members raise funds, not for their own profit, but for worthy causes such as the building of schools).

34. The Plaintiffs' case is that Wah Yan Mo Fan Heung was an investment project where the members intended to reap a profit for themselves (affirmation of Chong Kai Man). Accordingly if it is a t'ong, it could only be a "business t'ong" in the narrow, profit-making sense. The issue in the present case is whether the legislature intended that such an organization or association for business undertaking, where the members or partners intended purely to make a profit for themselves, to be included in the word "t'ong" in s.15 NTO.

35. In Professor Chang's report, he said that customarily, for tax and social control purposes, a t'ong was required to register its name and the name(s) of its manager(s) with the Bureau of Civil affairs (hu-fang戶房) at the local yamen and, if the t'ong owned real property, that must be registered with the same Bureau in the name of the t'ong. In cross-examination, however, he said that the name of the owner appearing on the title deed depended on the number of members. If the members were small in number (what he called the "closed" type), then all the members' names would be included. If however the number was large, or even if small, was expected to increase, then the land would be held in the name of managers. (This is not unlike the holding of association property in English law by trustees for the members - see Underhill and Hayton, Law Relating to Trusts and Trustees, p.102). The managers were elected or dismissed by the members.

36. It is significant that if the members were small in number, the title deeds would be in the name of the individual members, as it shows that the land belonged to the individual members. This is consistent with the lack of a concept of a separate corporate entity in Chinese customary law. Accordingly, even if the land were registered in the name of the t'ong, being a he-hua (合伙) or partnership, the t'ong name would be no more than the trade name or style of the individuals in partnership, in the way that a business registered in the name of "XYZ", a firm, would just mean individuals "A", "B" and "C" trading as "XYZ".

37. It should further be noted that according to Professor Chang, people would normally insist that the agreement between the members of an organization or association for business undertaking in the narrow, profit-making sense be put into writing, to avoid disputes. If land was involved, then a written agreement was a "must". Management of the land would have to be in accordance with the agreement.

38. In the light of the evidence set out above regarding "business t'ongs", or more appropriately, organizations or associations for business undertakings, it is now necessary to consider s.15 in the context of land in the New Territories when that section was first enacted in 1905.

The Lockhart Report

39. Soon after the New Territories was leased to Britain, the Colonial Secretary Stewart Lockhart was asked to prepare a report on the New Territories ("the Lockhart Report"). His report was dated 7 February 1900 and contained, amongst other things, a memorandum on land. This was presented to the Legislative Council by the Governor.

40. In relation to land tenure, he found:-

"in most cases land is owned by clans or private families and individuals, and can be sold, mortgaged, or settled upon specific trusts. In addition to these there are also the following varieties of tenure:- Ancestral land or Sheung T'in (嘗田), Temple land or "Miu T'in" (廟田), Land held by associations or "Ui T'in" (會田)".

41. As to what was meant by land held by associations, he wrote:-

"China is a land of associations, which are as numerous and the objects of which are as varied as the needs of man. Their formation is simple and easy. Certain villages, whatever their object may be, meet in a temple, ancestral hall or private house to deliberate over some scheme. If it is approved, a fund is raised to which the members contribute equally, their contributions being devoted to the purchase of a piece of land, landed property in China being considered the safest investment. The rent derived from this land may be used for the burial of a member of the association when he dies, or may be let out on interest, or may be used to assist members to emigrate to California and Australia, or for any other enterprise or good object that may be desired".

42. It would first be noted that according to the Lockhart Report, land in the New Territories was held by individuals, families or clans and the three other types of tenure he described. No other type of landholding is indicated.

43. Organizations or associations for business undertakings in the narrow, profit-making sense (the Plaintiffs' concept of "business t'ong") did not fit within the description of "associations" referred to in the Lockhart Report. First, Lockhart refers to equal contributions towards a fund to buy land. There is no evidence that in Chinese custom or law, members of "business t'ong" were permitted to invest only in equal proportions. Secondly, Lockhart refers to the use of rent derived for good objects. There is no mention of business or commerce which one would expect if organizations or associations for business undertakings in the narrow, profit-making sense were intended to be included in the description of this type of tenure. Obviously, the administration would have been aware of these profit-making organizations or associations for business undertakings as they had been part of Chinese society for a long time (according to Professor Chang, since the Han Dynasty). Chinese partnerships were governed under the provisions of the Chinese Partnerships Ordinance enacted in 1911.

44. Accordingly, it is clear from the above that the Plaintiffs' concept of "business t'ong" did not fit within Lockhart's description of the type of associations holding land. Since these organizations or associations for business undertakings are not families or clans, in so far as they held land, Lockhart must have regarded them simply as individuals, an understanding that would accord with the findings set out above that these "t'ongs" are actually he-hua, partnerships of individuals bound by private contract to one another.

Clan, family or t'ong

45. Having set out my understanding of "business t'ongs" (more appropriately called organizations or associations for business undertakings in the narrow, profit-making sense) and the historical context of landholding in the New Territories in 1900, I proceed to consider the meaning of "t'ong" in s.15 NTO.

46. It has been held that a t'ong is not a legal entity but a customary land trust (Tang Yau Yi Tong v Tang Mou Shau Tso (Court of Appeal) [1996] 2 HKLR 212, 219).

47. There is no ground for it to be read ejusdem generis with "clan" and "family" such that its members have to be related by blood or lineage ties. The words "clan" and "family" have such loose and flexible meanings anyway that the legislature could have rested with them if they intended to refer to persons related by blood or lineage.

48. So what is the genus between "clan" or "family" and "t'ong" which caused the legislature to regulate their landholding in the same way in s.15 NTO? One looks first at the constitution of the members of these groups. From s.15, one can see that the membership must be of a group of individuals, such that it was necessary for the land administration to impose rights and duties on an identifiable individual, i.e. the manager, who was given wide powers. More importantly, one can see that the clan, family or t'ong's objectives were sufficiently uncontroversial to enable the land administration to take a role in the process of selection and re-selection of a manager for their members.

49. By way of amplification, it is clear from the title to the 1905 NTLO that it is to, amongst other things, facilitate the transfer of land in the New Territories and for settling disputes in respect thereof. Obviously it would not facilitate the transfer of land if it were held by a large group of persons, who would all need to execute the transfer documents. Accordingly, the manager was given wide powers "as if he were sole owner".

50. Given these wide powers, the identity of the manager was important. Section 15 gave the Land Officer the power to approve, cancel and re-select a manager. It is true that the Land Officer was empowered under s.6 of the 1905 NTLO to decide questions relating to land in a summary way, subject to appeals to the Supreme Court provided for in s.9. But s.15 goes beyond "judicial" intervention, and empowers the Land Officer to participate in the selection (by way of approval) and re-selection process of the manager.

51. It is unlikely that the legislature would have intended the Land Officer to be involved like this in a commercial undertaking such as a "business t'ong", where there may be conflicts of interests between individual members who may have their private interests to serve in the choice of manager. By way of contrast, that sort of conflict and controversy would not be contemplated (or at least not expected) in a clan or family or a social organization or association (whether say, a charitable or religious society or a guild) whose members would be devoted in common to the same worthy objectives (such as those described in the Lockhart Report) and not motivated by pure commercial, profit-making interests. I find that this is the type of organization or association that was meant by the word "t'ong" in s.15 NTO.

(2) What is Wah Yan Mo Fan Heung and is it a t'ong within s.15 NTO?

52. I then turn to an analysis of what is "Wah Yan Mo Fan Heung". This task is made difficult by the paucity of contemporaneous documentary evidence as to what it was intended or understood to be by persons involved when the lands registered in the name of Wah Yan Mo Fan Heung were first acquired. It is unfortunate that no statement was taken from Lui Lap Ka, who had been involved from the start of events and who died only in the 1960's.

53. There was an affirmation of Chong Kai Man, who asserts that he is a member of Wah Yan Mo Fan Heung. Mr Chong was not cross-examined on his affirmation, but it has to be noted that he did not obtain information from his grand-aunt Chiu Ho Yin (whose shares he is said to have ultimately succeeded to), but from his aunt Chong Kam Yung (to whom Chiu Ho Yin gave her shares) and from his grandmother Chiu Yau (who did not have any dealings with Wah Yan Mo Fan Heung). It is not stated that Chong Kam Yung or Chiu Yau obtained any information about Wah Yan Mo Fan Heung from Chiu Ho Yin, or that they had any personal knowledge about it.

Finding

54. However I find from the matters discussed chronologically below that Wah Yan Mo Fan Heung is merely the name or style in which the members of Chap Shing Company (集成公司), an unincorporated association whose members were motivated by purposes of gain, sought to hold lands, and that Wah Yan Mo Fan Heung is not a t'ong within the meaning of s.15 NTO.

Acquisition of lands starting 1924

55. Events started in 1924 with the acquisition of lands from Crown lessees by Lui Lap Ka and Wong Yuet Chiu (黃月樵) either in their own names, or as trustees for Chap Shing Company, or as trustees for themselves and Chap Shing Company. Lands were also bought in 1933 by Lui Lap Ka and Wong Yuet Chiu as trustees of Wah Yan Mo Fan Heung.

56. Whilst there was no business registration of "Chap Shing Company" or of "Wah Yan Mo Fan Heung", nor was either name registered in any t'ong/tso registry book (although it would be fair to say that the evidence of the keeping of such books did not show that such books were kept in all parts of the New Territories at all times).

57. No land was ever granted directly from the Crown to Chap Shing Company or in the name "Wah Yan Mo Fan Heung" (cf Tsing Wan Kun).

Share certificates issued 1928

58. The most direct contemporaneous documentary evidence are share certificates issued in 1928. These share certificates contained the earliest reference to Wah Yan Mo Fan Heung, although no land had at that stage been put in that name.

59. It is necessary first to discuss the meaning of the words Wah Yan Mo Fan Heung (華人模範鄉). The literal meaning is "Chinese People's Model Village". It could be a name given to a place and indeed it appears that it has been so used. According to Mr Chong's affirmation (subject to the qualifications set out above), it was the name given to an investment project managed by Chap Shing Company. It is also possible, according to Professor Chang, that it could be the name given to a business organization or association, as stylised names have been known to be given to business organizations or associations. Professor Chang also said that "Heung" or bao (堡) or zhuang (莊) have also been used as the names of organizations set up to help settle dislocated families, although in this respect it is noted that there was no evidence that there were such families needing assistance in the 1920's, and Chong Kai Man's evidence was contrary to Wah Yan Mo Fan Heung being a philanthropic organization. There is therefore little assistance that one can derive from the literal meaning of the words Wah Yan Mo Fan Heung.

60. It is clear upon a perusal of the share certificates that they were issued by Chap Shing Company and not by an organization or association called "Wah Yan Mo Fan Heung".

61. First, by way of description, the "letterhead" of the share certificate states "Chap Shing Company" above "Wah Yan Mo Fan Heung" which words are in larger type. Then printed on the background of the share certificate are the words "Chap Shing Company" and "Wah Yan Mo Fan Heung", this time in similar size of print. By themselves, the above facts may not be of much significance, although it would be unusual for a management company or agent (if that was what Chap Shing Company was, according to Mr Chong) to place its name before the principal.

62. However, importantly, the shares are expressed to be issued by Chap Shing Company, not by "Wah Yan Mo Fan Heung". There is nothing that indicates that in issuing these shares, Chap Shing Company was acting as a management company or agent for another organization or institution called Wah Yan Mo Fan Heung. Lui Lap Ka and Wong Yuet Chiu signed the share certificates as sze lei (司理) or trustees or managers, but there was no indication of what persons or body. It is noted that they had by then bought land as trustees of Chap Shing Company but not (until 5 years later) as trustees of Wah Yan Mo Fan Heung.

63. Whilst it is true that payment of the "share money" (股銀) is said to be in accordance with the章程 (rules or constitution) of the Heung, that may as much be a reference to the terms of that venture or project, as to the constitution of a separate body. No constitution has been found or been referred to in other documents. And the question remains why, if at least the name "Wah Yan Mo Fan Heung" had already come into existence by then, and if it were meant to be a body of whom the investors were members, were the lands not transferred to it and shares not issued by it?

64. The counterfoils of the share certificates were also chopped only by Chap Shing Company. Again, there was no reference in the counterfoils to Chap Shing Company being a management company or agent only.

65. In my view, the fact that the shares were issued by Chap Shing Company, when the name "Wah Yan Mo Fan Heung" had already appeared, is an important pointer that the investors' membership was of that Company and not of a body called Wah Yan Mo Fan Heung.

66. Further, each share certificate recorded the member's entitlement to the permanent control of a stated house-lot (the location of which was written on each certificate). This specific beneficial interest of a member to a specific part of the lands (none of which had then been registered in the name Wah Yan Mo Fan Heung) is a pointer against Wah Yan Mo Fan Heung being a collective group such as a clan or family or social organization or association within the meaning of s.15 NTO.

67. The counterfoils show that some individuals took up a larger number of shares than others. According to a lay-out plan, the author of which is unknown but which apparently was in existence by 1932, some 396 house-lots had been laid out on part of the lands (later registered in the name Wah Yan Mo Fan Heung in 1929). The counterfoils show that some individuals acquired more shares (and thus more house-lots) than others (unlike the equal contributions referred to in the Lockhart Report).

68. I pause here to record that although the same date (22 June 1928) appears on all the share certificates, it is clear from the counterfoils that not all shares were issued that day, because for instance, No.67 and No.264 refer to the same house-lot and the same member, with an endorsement on the counterfoil for No. 67 that the original share certificate had been lost. Further share certificates issued to transferees also bore the same date.

Transfer of land to name "Wah Yan Mo Fan Heung" in 1929

69. In late 1929, i.e. nearly one and a half years after the issue of shares, the lands acquired by Lui Lap Ka and Wong Yuet Chiu were transferred to the name "Wah Yan Mo Fan Heung".

70. The Land Office posted a notice in Chinese asking if there would be objections. It referred to the intention that the lands of the Company be transferred to Wah Yan Mo Fan Heung managers or trustees Lui Lap Ka and Wong Yuet Chiu (改歸華人模範鄉司理雷立家黃月樵).

71. The transfers were effected on 30 December 1929. There was apparently no instrument of transfer, such as a vesting deed or assignment or any document purporting to transfer property according to Chinese custom or law. According to the memorial, the consideration was "payment of Crown rent". Stamp duty of $2 was charged, much less than at the acquisition of the lands.

72. It has been submitted on behalf of the Plaintiffs that prima facie, by this process of transfer, the Land Officer must have accepted that Wah Yan Mo Fan Heung was a t'ong. However, if that were the case, one would have expected to find an appointment and approval of managers of the t'ong recorded and registered in order to comply with s.15 NTO (at that time, s.27 NTRO). There was none. Nor was there a list of members lodged at the Land Office, which was the practice of the Land Office (as stated in evidence by Tommy Tam and not disputed by C. J. Robinson, both of whom have had many years' experience in dealing with t'ong lands in the New Territories).

73. Accordingly I do not accept the Plaintiffs' submission that this transfer supported their argument that Wah Yan Mo Fan Heung is a t'ong. Given that the lands were already held in the name of Chap Shing Company or Lui Lap Ka and Wong Yuet Chiu its trustees , and in the absence of the usual matters accompanying the holding of land by a t'ong, the transfer is consistent with "Wah Yan Mo Fan Heung" being used as the land-holding name or style of the Company.

Division of some lands to some members in 1932

74. In 1932, some of the lands were divided and distributed to some members. It is not clear from the evidence why only some (and not all) members who had shares were given lots.

75. What is however interesting is that before the division took place, a notice was posted by the Land Office. This was a printed form in which the printed words "t'ong/tso" had been deleted in two places and the word "Heung" written in manuscript. Mr Tam emphasised these deletions in his affirmation but in cross-examination his evidence was somewhat confused. In my view, it would be fair to say that since these deletions would not have been done by the Land Officer himself but by his staff, not much mileage can be made of it. However, the deletion of the generic words "t'ong/tso" in the second place where they appear on the notice (as contrasted to part of the proper name, in the first place where they appear) might show that at least the staff of the Land Office had insufficient materials to identify Wah Yan Mo Fan Heung as a s.15 t'ong with any degree of certainty.

76. As for the submission of the Plaintiffs that the notice would not have been necessary if Wah Yan Mo Fan Heung were not a s.15 t'ong, there is no evidence that these notices were only posted for s.15 t'ongs.

Unrest and War

77. As a matter of completeness, at this stage of the chronology, it should be recorded that no houses were ever built on the house-lots and no construction took place. According to Mr Chong's affirmation, this could have been due to the outbreak of unrest on the Mainland in the mid- to late 1930's.

78. In any event, Mr Chong's evidence of his belief as to the members' intentions for the house-lots was unclear. In his affirmation, he referred to the members' intention to build dwelling-houses for themselves. However, that seems inconsistent with his evidence that as the members came from wealthy families, it would have been unlikely that they would have intended to reside in the houses which were small.

Account books

79. It would appear that at some stage after the Second World War, part of the lands were occupied by a confectionery company and a timber yard. These are referred to in accounts books kept when Lui Lap Ka was alive. They were entitled "Chap Shing Company Wah Yan Mo Fan Heung". If Wah Yan Mo Fan Heung were a s.15 t'ong to which Chap Shing Company had transferred the lands, it is difficult to see why the Company was still involved with the lands in the absence of any management agreement or fees. Chap Shing Company was not referred to in any of the title deeds as "managers" of Wah Yan Mo Fan Heung. Nor did there appear to be any account rendered by Chap Shing Company to the members of Wah Yan Mo Fan Heung.

Minutes of meeting during Lui Lap Ka's lifetime

80. The only minute of a meeting of "New Territories Wah Yan Mo Fan Heung Chap Shing Company" held when Lui Lap Ka was alive also suggests that the real property was that of the Company. It refers to the selection of signatories for management of the property of "this company" (本公司物業管業簽字人). Wong Tat To and Lui Lap Ka were elected to represent "this company" as signatories of title deeds and for control of the property (代表本公司為管業地契簽字人).

81. In my view, the fact that Lui Lap Ka made no application for s.15 approval or even a report of his appointment as manager of Wah Yan Mo Fan Heung before land was transferred to that name in 1929, coupled with his continued inactivity in this respect during his lifetime is evidence that he (who had direct knowledge of the intention behind "Wah Yan Mo Fan Heung") did not regard Wah Yan Mo Fan Heung as a s.15 t'ong.

Land Officer's position

82. Lui Lap Ka died in 1965. By a letter dated 12 June 1972 referring to "the Company's" property, Wong Tat To notified the Land Officer of Lui Lap Ka's death and informed him that due to the dispersal of the members, there had been no meeting to elect a replacement.

83. This gave rise to various discussions within the Land Office which culminated in the Land Officer adopting the position that Wah Yan Mo Fan Heung was not a t'ong within the meaning of s.15 NTO. That was the Land Officer's firm position from that point in time until shortly before the Tomlin Order referred to above. It remained the Land Officer's position even when compensation was payable in the 1980's for resumption of certain lands registered in the name "Wah Yan Mo Fan Heung", and legal advisers within Government had the invidious position of having to advise both the Land Officer (who did not accept that Wah Yan Mo Fan Heung was a s.15 t'ong) and the paying authority (which was anxious to effect payment).

84. I will deal in section (3) with the Plaintiffs' submission that since the appointment of managers were registered, approval could be inferred.

Events after 1972

85. As a matter of completeness, I would record that matters were in a state of flux after 1972. In 1984, a company called Mutual Progress (in which Chan Kam Cheung and Tang Man Kit were interested) was appointed by Wong Tat To to act as managers of the lands. Chan and Tang later purportedly became members and then managers of Wah Yan Mo Fan Heung.

86. There was also a number of proceedings concerning the lands, including an action started in 1988 by Mr Chong in which he asserted Wah Yan Mo Fan Heung was not a s.15 t'ong, a position shared by Tang Man Kit in an action in 1989, and proceedings commenced by a company called Tonkit seeking relief against Tang Man Kit. None of those actions has proceeded to the stage of a decision or judgment.

Section 16 NTO

87. I have set out above the reasons why I have come to the conclusion that t'ong in s.15 NTO does not include the Plaintiffs' concept of a "business t'ong" and why on the facts as found, Wah Yan Mo Fan Heung is not a t'ong within the meaning of s.15 NTO.

88. Briefly, I would now discuss s.16 NTO in deference to counsel's submissions. It was the Defendant's submission that even if Wah Yan Mo Fan Heung were a "business t'ong", it did not fall within the exemption of s.16, so that it was required to be registered under the Companies Ordinance. Because there was no such registration, Wah Yan Mo Fan Heung was an illegal organization and the common law does not recognize the existence of illegal organizations except for penal purposes.

89. I agree that if Wah Yan Mo Fan Heung were a t'ong, it did not fall within the exemption in s.16 NTO, if only because it did not own land in 1910 (whether by itself or Chap Shing Company or Lui Lap Ka and Wong Yuet Chiu as trustees). It is unnecessary to consider any other elements of s.16.

90. However, I do not think it follows that a t'ong (if Wah Yan Mo Fan Heung were such) which failed to register under the Companies Ordinance would simply cease to exist. Section 13 NTO provides that Chinese law and customs must be applied if it affects land (Tang Kai Chung v Tang Chik Shang [1970] HKLR 276) , so that if lands are owned by a t'ong, it cannot be said that the t'ong would suddenly cease to exist for non-compliance with the Companies Ordinance.

(3) Authority of Tang Man Kit and Foo Tak Ching

91. The Plaintiffs' main case is that they are s.15 managers. I have found that Wah Yan Mo Fan Heung is not a s.15 t'ong. However, if I am wrong and Wah Yan Mo Fan Heung is a s.15 t'ong, my views on the disputes concerning their approval and registration are as follows.

92. First there is their submission that approval and registration do not matter because the commencement and continuation of proceedings is not "dealing with land" that requires the Land Officer's consent under s.15. I do not agree. The commencement and continuation of proceedings is the means by which occupation of land by a tenant may be determined and land is recovered. Such a recovery of land is the corollary to the grant of a lease. It is well-established that the grant of a lease of land is a dealing with the land. There is no reason why the same rationale does not apply to the determination of a lease and recovery of land.

93. I shall now deal with the aspect of approval of appointments as managers. The Plaintiffs' submission is that even before the Tomlin Order, their appointments as managers have been registered in the Land Registry and thus it could be inferred that their appointments had been approved. I cannot accept that submission.

94. Approval requires consideration and decision, whether reasoned or evaluated. Both the Land Office's internal documents since 1972 and the correspondence between a succession of Land Officers and the various persons purporting to be managers and their solicitors since at least 1980 clearly show as a fact that the Land Officer never intended to approve such purported appointments. In the light of that, the Plaintiffs' submission that by reason of the delegation and division of tasks between the Land Office (Registrar General) and the District Office, somehow the Land Officer unintentionally approved the appointments when he registered them, when his intention not to approve was overt, is artificial. Such an argument might have been more attractive if made by a third party, but not by the purported managers themselves.

95. The registration of the appointment of managers was explained (albeit somewhat elliptically) by the Land Officer Kenneth Wong in his letter dated 26 April 1988 as that of the appointment of managers of the land (as opposed to managers of a t'ong). Although there was no similar express rationalization of registration by other persons who had held the office of Land Officer, the fact remains that since 1972, the refusal to accept Wah Yan Mo Fan Heung as a s.15 t'ong had been made very clear, and that might also explain the pre-1972 registrations of appointment of managers in the absence of other indicia of treatment as a t'ong, such as reports of appointment before the transfer of property to the Heung's "managers" or applications for approval, notes of approval in the Land Officer's file, and requests for a list of members.

96. The terms of the recent approval of managers by the District Officer also makes it clear that previously there had been no approval. Approval can however be backdated to the date of appointment (Light Ocean Investments Ltd v Enway Development Ltd, supra).

97. As for registration, it was held in Light Ocean that this is an important step in the s.15 procedure. It was also held in that case that it was essential in dealings with the public, such as in that case a purchaser of land held in the name of a t'ong. For that reason, I would differ with respect from the judgment of Keith J (as he then was) in Wing Tung Yick v AG [1997] 4 HKC 432 in which he held that registration in s.15 was effected by the making by the Land Officer of a note on a file not available to the public. First, historically the Land Officer is an officer of the Land Registry, which is a public office for the maintenance of records. Secondly, although it is true that the Land Registry is meant for the registration of documents evidencing certain acts or transactions, statutes may (if drafted clearly enough) expressly provide for substantive actions or results to be effected by the registration of a document. Re-entry by Government of leasehold property is an example in point.

98. It is because of this effect on the public that I do not accept that registration of the District Officer's approval of appointment as managers can have a retrospective effect here. The purpose of registration is to provide a physical chronological record of public documents. Accordingly, the approval of the appointments of Tang Man Kit and Foo Tak Ching (assuming everything else in their favour) were still registered only as at 1 September 2000.

99. Since s.15 NTO provides that it is only "thereupon", after approval and registration, that the managers have power to act (Light Ocean, supra), they would only have power to sue after such registration on 1 September 2000. However, since there is no issue of competing priorities, it would be adequate if authority is vested before the determination of proceedings by way of ratification, subject always to arguments as to costs.

100. Finally, as regards authority to sue, the Plaintiffs have submitted that the Defendant is estopped from denying its landlord's title. However the issues on this motion are not what title the landlord has, but whether Tang Man Kit and Foo Tak Ching have authority to issue proceedings at all. They have not purported to sue in their own personal right, and in so far as Wah Yan Mo Fan Heung is an unincorporated association, the evidence as to the composition of the association and the validity of votes is far from clear.

Order

101. In the light of my findings, I would decide the Motion in the Defendant's favour. I will hear the parties as to the form of the order and costs unless they are agreed. It only remains for me to thank all counsel who have taken part in these proceedings at various stages.

Representation:

Mr Edward Chan SC and Mr Ernest Koo instructed by KW Lai & Co for Plaintiff

Mr Daniel Fung SC (5 September 2000) and Mr Johnny Mok instructed by Wai & Co for Defendants

Appeal allowed: see CACV137/2002 dated 11 December 2002

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

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_______________

R U L I N G

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1. This is an application by the Defendant for an Order that unless the Plaintiff do make and file an affirmation in compliance with para. 2 of my Order dated 24 May 2000 by 4.00 pm on Monday 12 June 2000, this action be dismissed with costs.

2. The summons was due to have been heard this morning at 9.30, 12 June 2000. However, as a result of the black rainstorm warning this morning, the matter had to be adjourned until 3.30 in the afternoon today. Therefore, any reference to anything required to be done by 4.00 pm today has been overtaken by events.

3. The matter arises in this way. I shall not repeat that part of my Reasons for Decision handed down on 25 May 2000 which deals with the background to the present action. The Defendant has been occupying some land in the New Territories registered under the name "Wah Yan Mo Fan Heung" and in 1990, the present proceedings were instituted by, amongst other persons, Mr Tang Man Kit as one of the managers of Wah Yan Mo Fan Heung.

4. One of the main matters in dispute is the capacity of Mr Tang Man Kit to act as manager of Wah Yan Mo Fan Heung. That is due to a dispute between the parties as to exactly what "Wah Yan Mo Fan Heung" is.

5. On 24 May 2000, I ordered, amongst other things, that the Plaintiffs do within 14 days make and file an affirmation stating whether they have or have at any time had in their possession, custody or power the documents or classes of documents specified in the order, and if the said documents or any of them has or have been but is or are not now in their possession, custody or power, stating when they parted with the same and what has become of the same. The documents or classes of documents were:-

(a) all registers, lists and records of the members of Wah Yan Mo Fan Heung;

(b) all documents of transfer or transmission and other documents relating to the transfer, transmission or devolution of the shares or rights and interests of the original members of the Heung to the alleged present members of the Heung; and

(c) the constitution or charter of the Heung.

In purported compliance with this order, there was filed on 7 June 2000 (the last day for filing) an affirmation of Mr Wong Chor Wan who is the solicitor for the purported present managers Mr Tang Man Kit and Mr Foo Tak Ching.

6. In my view, it is not sufficient for the solicitor for the purported managers to make and file an affirmation. This is an affirmation pursuant to an order under Order 24 rule 7 for specific discovery. It is clear that under Order 24 rule 5, the mandatory form 27 of the Rules of the High Court specifies that the affirmation deposing to a list of documents should be sworn by the party personally. This is also affirmed by the Court of Appeal in Landauer v. Cumins & Co., [1991] the Times August 7.

7. In the present case, in my view, not only is it implied but it is also express that the affirmation in support of the list should be sworn by the parties personally, in other words, either Mr Tang Man Kit or Mr Foo Tak Ching or both of them.

8. I say it is implied because if it is a requirement under Order 24 rule 5 that the affirmation in support of a list should be sworn by the parties personally and not by solicitors or agents, then all the more reason when the order is made for an order of specific discovery, (in other words to complement the original inadequacies) that that affirmation in support of the new list should also be filed by the parties personally.

9. Further, in my view, it is also expressly so because the Order that I made on 24 May was that the Plaintiff do make and file an affirmation. In other words, that makes it also clear that the obligation is of the Plaintiff personally, consistently with the requirement under Order 24 rule 5.

10. Accordingly, in my view, the affirmation filed by Mr Wong Chor Wan is inadequate. No reason was given why Mr Foo could not make the affirmation. It is said that Mr Foo would only be making an affirmation on hearsay evidence because he would not have adequate personal information. That may be the case. But it remains that Mr Foo, who is purporting to be manager of Wah Yan Mo Fan Heung, is the party and therefore the affirmation should be made by him even if Mr Tang Man Kit is not available because he is not in Hong Kong.

11. Further, it would appear to me that the contents of Mr Wong's affirmation leaves something to be desired. He refers, for example, at para. 3 of his affirmation, that the list was first prepared in or around September 1984 when there was a meeting called to appoint Wong Pui as one of the managers of the Heung. According to Mr Tang Man Kit, the members of the Heung all brought along with them their share certificate to attend the meeting and according to Mr Tang, Wong Tat To confirmed the status of these members by checking the names appearing in the share certificates with the counterfoils kept by the Heung.

12. Therefore, it would certainly appear to be the case that the precursor of the list in 1984 were the counterfoils which apparently had been kept by Wong Tat To. It would appear to me that clearly these counterfoils would be one of the documents which ought to have been disclosed.

13. In view of the fact that Mr Tang is not in Hong Kong and in view of the fact that according to Mr Koo, the counterfoils would need some care before photocopies can be properly made, I would give sufficient time for the Plaintiffs to make proper discovery of this and possibly other documents and for a proper affirmation in support to be sworn and filed. I will therefore give the Plaintiffs until 4.00 pm on Thursday to make proper discovery and to make and file an affirmation in support.

14. I will not for the present moment make this an "unless" order because it may be the case that logistics would be sufficiently difficult for the Plaintiffs not to be able to comply with that time limit. However, both parties, I am sure, are aware that the hearing is imminent, the hearing being scheduled for 4 days starting next Monday 19 June. Therefore the Court would expect that all parties would deal with these matters with the utmost expedition.

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 of 1990

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_______________________

REASONS FOR DECISION

_______________________

1. On 23-24 May 2000, I heard (i) the Defendant's application to amend its Notice of Motion which had been filed on 26 March 1999 and (ii) its application for specific discovery under O.24 r.7 RHC. Both applications had been resisted in their entirety by the Plaintiff.

2. At the end of the hearing, I gave leave to the Defendant to amend the Notice of Motion and ordered that discovery be made by the Plaintiffs of certain items in the schedule attached to the summons for discovery. I said I would reduce the reasons for my decision into writing to be handed down.

Background

3. The background to the present applications is as follows. The Defendant has since the 1970's been occupying some land in the New Territories which is registered under the name "Wah Yan Mo Fan Heung".

4. In 1990, the present proceedings were instituted by ""Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers" as the plaintiff, for possession of the land occupied by the Defendant. In paragraph 1 of the Statement of Claim, the plaintiff pleaded that Wah Yan Mo Fan Heung "was and is an unincorporated association beneficially interested" in the land.

5. It is not clear why the action did not proceed to trial in the many years after 1990 but in 1998, the Defendant issued a summons to strike out the Statement of Claim and dismiss the action on the ground that the plaintiff, as an unincorporated association, had no corporate or separate legal existence or capacity to sue.

Application to strike out - December 1998

6. When the application to strike out came before me on 15 December 1998, the plaintiff applied for leave to amend the title of the writ and to re-amend the Statement of Claim.

7. The plaintiff sought to amend the title to "Tang Man Kit (suing as sole manager of Wah Yan Mo Fan Heung)". I should add that since then, there has been a further amendment to add Mr Foo Tak Ching in the title as a co-manager.

8. The Statement of Claim sought leave to add a new paragraph 1A to plead that Wah Yan Mo Fan Heung was and is a t'ong within the meaning of s.19 of the New Territories Ordinance 1960 ed. and s.15 of the current Ordinance.

9. The parties argued the strike-out application on the basis de bene esse of the draft Re-Amended Statement of Claim. Although counsel for the Plaintiff did not abandon the case of an unincorporated association, there was no argument that the action could be maintained on that pleading alone.

10. Applying the high standard required for a strike-out application, I held that the Defendant (whose burden it was) had failed to show that the Plaintiff did not have an arguable case that Wah Yan Mo Fan Heung was not a t'ong nor did it show that there had been no approval of managers under s.15 New Territories Ordinance.

Notice of Motion - March 1999

11. In March 1999, after the Defendant had at first attempted to raise a preliminary issue on the pleadings, the Defendant issued the present Notice of Motion seeking to set aside the writ as having been issued without authority. This was pursuant to Banco de Bilbao v Rey [1938] 2 All ER 253, where it was held that if the defendant in an action denies that the action is really the action of the entity whose name appears as plaintiff, and asserts that the action was really the action of a person claiming without legal justification to represent the named plaintiff, that denial cannot be set up as a defence to the action, and the defendant should issue a motion to set aside the writ as having been issued without authority.

Amendment of Notice of Motion

12. The Defendant now wishes to amend the Notice of Motion to add the following:-

"TAKE FURTHER NOTICE that it will be contended at the hearing of the this Amended Notice of Motion that this action has been issued without authority since:-

(1) the Heung is not a clan, family or t'ong within the meaning of section 15 and 16 of the New Territories Ordinance (cap. 97)("NTO") or exempted from the requirement to be registered under the Companies Ordinance by virtue of section 16 of the NTO;

(2) the Heung has no legal status and is not recognised in law as a legal entity capable of enforcing rights over the land or authorising the commencement of an action on its behalf; and

(3) no application for approval has been made under section 15 of the NTO or approval granted pursuant to any such application or at all."

13. Mr Ernest Koo counsel for the Plaintiffs has opposed this as he says the Plaintiffs had been under the impression that the Defendant was only going to challenge the `t'ong' part of its case at the hearing of the Motion which will be in about a month's time. He says the Plaintiffs would not have time to prepare the `unincorporated association' part of its case.

14. In my view, the amendment was strictly speaking, unnecessary as the language of the original Notice of Motion challenged the Plaintiffs' authority to issue the writ - it was wide enough to embrace both the Plaintiffs' contentions that Wah Yan Mo Fan Heung was an unincorporated association (under paragraph 1) or a t'ong (under paragraph 1A).

15. I take Mr Koo's point that the Affirmation of Barbara Chang Sze Wan filed on behalf of the Defendant on 6 May 1999 did say at paragraph 3 that "the Notice of Motion involved the determination of the question whether (the then sole Plaintiff) Mr Tang Man Kit was validly approved and registered as manager of Wah Yan Mo Fan Heung under s.15 of the New Territories Ordinance". That seems to imply that it would not involve argument on the `unincorporated association' part.

16. On the part of the Defendant, Mr Johnny Mok has referred me to that part of Miss Chang's Affirmation that says that the Defendant intended to rely on the 2nd Affirmation of Wong Shu Pui (which attacked the legal status of Wah Yan Mo Fan Heung). He says the Plaintiffs were thereby alerted to the fact that the Defendant challenged the authority to issue proceedings on both those grounds.

17. On reading Mr Wong's 2nd Affirmation, it appears he dealt with both the `unincorporated association' part and the `t'ong' part of the Plaintiffs' case. Therefore it could be said that when Miss Chang said the Defendant would rely on that affirmation, after having said what the Notice of Motion involved in paragraph 3 of her affirmation, a reasonable reader would assume that only that part of Mr Wong's affirmation that dealt with the `t'ong' part would be relied upon by the Defendant.

18. But be that as it may, I do not see why that should be a ground for refusing leave to amend the Notice of Motion. The point of the Notice of Motion is to consider whether the Plaintiffs have authority to sue. Clearly all the issues that arise between the parties on this aspect should be before the Court for determination once and for all.

19. I do not see how the Plaintiffs would be prejudiced by the amendment. Despite an adjournment to enable the Plaintiffs to consider their position on the application to amend the Notice of Motion of which they were given short notice, no evidence has been adduced to show what prejudice would be suffered by them, nor has any longer adjournment been sought to enable them to adduce any evidence.

20. Mr Koo's submission was that the amendment would lead to delay in the hearing of the Motion. In the absence of evidence showing that there would be delay, I do not see how that could be the case.

21. This action was instituted in 1990, 10 years ago. It was pleaded on the basis of an unincorporated association, so presumably the plaintiff would have prepared its case and marshalled its materials on that basis. I note that Mr Tang Man Kit has been involved throughout (as purported co-manager, sole manager and now co-manager again), so it is not a situation where the present Plaintiffs have to consult their predecessors.

22. Further, the Defendant had challenged the claim of Wah Yan Mo Fan Heung to be an unincorporated association beneficially interested in the land since 1998, so even if it could be said that there had been no previous dispute on the point, that would have become a live issue in 1998.

23. So this is not a situation where a challenge has been `sprung' on a party who has not had any previous opportunity to gather materials to support its case. Further, there is about a month to go before the hearing of the Motion listed for 19 June 2000. In my view, the amendment should be allowed and I so ordered.

Discovery

24. As far as the application for discovery is concerned, the items sought were listed in the schedule to the Defendant's Summons filed on 14 April 2000. Items (4), (6) and (7) were not pursued at the hearing.

25. Item (1) was "all registers, lists and records of the members of Wah Yan Mo Fan Heung". I am satisfied that such items must be in existence. Meetings of the members have recently been held and the purported managers would not have known whom to admit to the meetings unless there is a register or list or record of members against which they can check the entrants' claim to membership.

26. Further it is clear that these documents are necessary for the determination of the Motion, because the number of members may have a bearing on the Defendant's submission that Wah Yan Mo Fan Heung is not a clan, family or t'ong within the meaning of sections 15 and 16 of the New Territories Ordinance. Section of the New Territories Ordinance provides:-

"Any clan, family or t'ong [the words used in s.15] owning land on 28 October 1910, in respect of which a manager has been duly registered under this Ordinance, shall not, so long as such land is certified by the Secretary for Home Affairs as being used for agricultural, religious, educational or charitable purposes or such other uses of a similar nature as are recognized by established local custom, or for dwelling-houses occupied by bona fide members of the clan, family or t'ong, be required to be registered under the Companies Ordinance (cap. 32), although such clan, family or t'ong may consist of more than 20 members".

It is not for me to decide now how valid the Defendant's submission is or may be. Mr Koo has not challenged the Amended Notice of Motion on the ground that it is unarguable. Since it is an issue in the proceedings, it is clear that the request for registers or lists or records of members have satisfied the test of necessity under O.24 r.8 RHC.

27. I do not accept the Plaintiff's submission that this request is a fishing expedition or is oppressive. The issue of s.16 having been raised and not challenged as invalid, the request is not "a search for material in the hope of being able to raise allegations of fact, as opposed to the elicitation of evidence to support allegations of fact which have been raised bona fide" (cf In re Norway's Application [1987] 1 QB 433, 482). Further, I do not see how it can be oppressive when the status of Wah Yan Mo Fan Heung has been challenged for 2 years and the parties must have marshalled all their materials by now.

28. As for Item (2), I did not order discovery as I did not see why the number of shares held by each member would be at all relevant to the issues now raised between the parties. Mr Mok in answer to a query has confirmed that the Defendant is not alleging that if Wah Yan Mo Fan Heung were an unincorporated association that could validly hold land, that nevertheless the Defendant was disputing the appointment or election of the Plaintiffs as managers.

29. As for Item (3), I ordered that documents of transfer or transmission and documents relating to the transfer or transmission or devolution of the shares or rights and interests of the original members of the Heung to the alleged present members of the Heung should be disclosed on discovery. Clearly these documents would be in existence as transfers have been referred to in the evidence filed on behalf of the Plaintiffs.

30. As for relevance, I accept that an unincorporated association is by its very nature a nebulous 'being'. So documents pertaining to the mode of transfer or transmission of interests would be relevant and necessary to the investigation of its nature. I consider that this is not a `fishing' exercise, and I would not repeat my views expressed in relation to Item (1) above that this is not oppressive.

31. Finally, Item (5) was the constitution or charter of Wah Yan Mo Fan Heung. The `Share Certificates' which have been exhibited by the Plaintiff refer to a constitution or charter. One would certainly expect the Plaintiffs who claim to be managers of Wah Yan Mo Fan Heung to have custody of it.

32. It is also clear in my view that this should be a document that should be disclosed as being relevant to the understanding of the nature of the `being' that Wah Yan Mo Fan Heung is said to be. Mr Koo submitted that if an analogy could be drawn with a limited company, its articles of association would not show what was the nature of the company. But that begs the question - it is precisely because Wah Yan Mo Fan Heung is not a company registered under the Companies Ordinance that the issue has arisen as to exactly what it is.

33. In the circumstances, I ordered discovery of Items (1), (3) as set out above and (5) and gave half of the costs to the Defendant in any event. I considered this to be fair as the issue of the Summons was inevitable because the Plaintiff had refused disclosure of even Item (5). On the other hand, the Defendant had also sought discovery of items which were no longer pursued at the hearing. I ordered the costs of the amendment to be in the cause as the Notice of Motion was, as originally drafted, sufficiently wide to cover the `unincorporated association' point and it seemed to me that the amendment served to clarify the issues which clarification would benefit both parties and the Court.

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

____________

_______________

R U L I N G

_______________

1. The Plaintiff has applied today for a number of orders. The first is that the Plaintiff be granted leave to file out of time the affirmation of Chong Kai Man affirmed on 14 March 2000.

2. Ms Ng has, on behalf of the Defendant, objected to the filing of this affirmation. She says that two paragraphs in this affirmation are not in reply to the Defendant's affirmation. The first paragraph that she refers to is para. 17, which deposes to the fact of the rental of the remaining part of the land and asserts that at that time farming was the principal source of income to be derived from land ownership in New Territories, and para. 19, which really consists mainly of submissions of conclusions to be drawn from the rest of the affirmation.

3. In my view, these two paragraphs can be said to be in reply to the Defendant's affirmation. The only question left therefore is whether the Plaintiff should be granted leave to file this affirmation out of time. This affirmation is delayed by about 2 months and there is nothing in the affirmation to explain the delay.

4. The hearing will be in June and I had considered what possible prejudice the late filing of this affirmation might cause to the Defendant. However, the Defendant itself is considerably late in compliance with time. Ms Ng has had to ask for further time for the exchange of experts' reports which had been ordered by me in May 1999, and taking every thing in the round, I would give leave to the Plaintiff to file an affirmation within 7 days deposing to the reasons for the delay in the filing of this affirmation as submitted by counsel.

5. I would make an order in terms of para. 1 of the summons of 18 March 2000, and I would make an order in terms of para. 2 with the time for exchange of experts' report to be within 21 days from today. I make an order in terms of para. 3, with the costs thrown away by the amendment to be paid by the Plaintiff to the Defendant in any event, and there will be an order in terms of para. 4, there being no objection to this paragraph.

A8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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Coram: Hon Madam Justice Yuen in Chambers

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DECISION

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1. There were three categories of matters before me:-

(a) arguments on costs arising from the determination of various summonses in December 1998;

(b) the Plaintiff's summons for an order that the Defendant should not be permitted to adduce evidence, for failure to comply with an order of Yeung J., or at least for an unless order prohibiting it from adducing any evidence after a certain period;

(c) the Defendant's summons for an order for preliminary issues.

2. However, since the determination of all three categories of matters are, to one degree or another, affected by the Defendant's argument on the Plaintiff's authority to sue, that is a matter which I should deal with first. To do this, it is necessary to consider the procedural labyrinth in which this case has found itself.

3. This action commenced in 1990. It was started in the name of "Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers", and pleaded that the Plaintiff was and is an "unincorporated body beneficially interested" in certain land being occupied by the Defendant.

4. In March 1998, the Plaintiff issued a summons for leave to re-amend to change the name of the Plaintiff to that of "Tang Man Kit (suing as sole manager of Wah Yan Mo Fan Heung)". There was no pleading in the body of the Statement of Claim that the Heung was a t'ong under the New Territories Ordinance cap. 97, but the title of the new pleading follows that advised by the court in Tang Yau Yi Tong v Tang Mou Shau Tso [1996] 2 HKLR 212, 219, for actions instituted by managers of t'ongs under the Ordinance.

5. Before that summons was heard, the Defendant issued a summons to strike out the writ and Statement of Claim on the ground that the Plaintiff "as an unincorporated association" had no corporate or separate legal existence or capacity, "wherefor" no reasonable cause of action had been disclosed, and the action was frivolous, vexatious and/or an abuse of the process.

6. It is clear however from the evidence filed by the Defendant in support of the summons that although a t'ong had not explicitly been pleaded in the proposed Re-Amended Statement of Claim, this was very much in the forefront of the Defendant's mind. The Affirmation contains passages querying amongst other things, whether the Heung was a t'ong, and throwing doubt on the appointment of managers.

7. This was met by an Affirmation filed on behalf of the Plaintiff which asserted, amongst other things, that the Heung was and is a t'ong and that the managers had been duly appointed.

8. In May 1998, the Plaintiff issued another summons for leave to re-amend the Statement of Claim (the March summons not having been heard) to plead specifically that the Heung was and is a t'ong (although the pleading of the Heung as an unincorporated association remained).

9. The Defendant filed further evidence to deal with the proposed re-amendment, to the effect that the Heung was not recognised as a t'ong, and that Mr Tang had no authority.

10. This was followed by the Defendant's summons to amend its March summons to add, in addition to an order for striking-out, an application for stay. Of course, there could not at that stage have been an application to strike out the action on the ground that Mr Tang had no authority to sue in the name of the t'ong, because as yet, the Plaintiff's summons for leave to re-amend its case to plead a t'ong had not been heard.

11. I heard the Plaintiff's summons for leave to re-amend in December 1998. The approach of all parties was that in the usual way, if the proposed re-amendment (to plead the case that the Heung was a t'ong and Mr Tang its registered manager) was bound to fail, leave to re-amend would not be granted. Although counsel for the Plaintiff did not abandon the case of an unincorporated association, there was no argument that the action could still be maintained on that assertion alone.

12. The case was approached by the parties therefore on the basis whether the Plaintiff had an arguable case that the Heung was a t'ong and Mr Tang its registered manager. Certainly that was the way in which I approached it, as illustrated in my Decision handed down on 15 December 1998, and no submissions had been made to me, on Mr Tang's authority to sue as manager of the t'ong (if the Heung be such), that I should consider the matter for the purposes of a final determination.

13. The Defendant's submission today is that the question of Mr Tang's authority to sue (on the basis that the Heung is a t'ong) should be a matter for final determination by the Court before trial of the action.

14. The authority on which the Defendant has now relied is Banco de Bilbao v Rey [1938] 2 All ER 253, which followed and applied the principles laid down in the House of Lords in Russian Commercial & Industrial Bank v Comptoir d'Escompte de Mulhouse [1925] AC 112 :-

"Where the answer to an action consists of a denial by the defendant that the action is really the action of the person or corporation whose name appears as plaintiff, and an assertion that the action is really the action of a person claiming without legal justification to represent the named plaintiff, this answer cannot be set up as a defence in the action. This answer must be set up by taking steps to satisfy the court, before the action comes on for trial, that the truth is as the defendant alleges, and, if the defendant succeeds in so satisfying the court, the result will be, not that the defendant will succeed in defending the action, but that he will succeed in having the action struck out or stayed, the costs incurred being thrown, not on the nominal plaintiff whose name has been wrongfully used, but on the solicitor who has taken upon himself to represent to the court that he is retained by the proper organ of, or representative of, the plaintiff to urge the plaintiff's suit before the court"

and at 259:-

"It will be observed, however, that if the principles already mentioned as having been laid down by the House of Lords had been regarded, ... there would have been a motion to set aside the writ as having been issued without due authority ..."

15. It is clear from the passages set out above that where a defendant alleges lack of authority to sue, the matter should be considered by way of a final determination of the question before the substantive trial begins.

16. Although in this case Mr Tang's name appears as the Plaintiff, he is suing only as registered manager of the t'ong, and not in his personal capacity. If the Defendant can show that Mr Tang was not in truth the registered manager of the t'ong, then the institution of these proceedings is not the act of the t'ong. This has repercussions not only for costs. If lack of authority to sue is established, the entire foundation of the proceedings collapses.

17. If the Court finds in favour of the Defendant on this point, there are no proceedings which have been instituted by the t'ong. In my view, the importance of this matter outweighs the prejudice that would inevitably be caused by a delay of the trial.

18. There is no problem of res judicata arising from my decision in December. What was argued and decided then was whether there should be leave to the Plaintiff to re-amend the Statement of Claim, which for the first time has pleaded a case that the Heung was a t'ong and that Mr Tang was its registered manager. I decided that there was an arguable case pleaded.

19. The result is that Mr Tang has since the re-amendment in December 1998 purported to sue as manager on behalf of the Heung as a t'ong. The Defendant, now faced with such an action, is in my view entitled to challenge his authority by reference to the procedure set out in Banco de Bilbao for the determination by the Court on a final basis of the question of authority.

20. Applying the above considerations to the three categories of matters before me, I think I should in respect of (a), reserve my decision on costs until the outcome of the determination of the point of authority to sue, given that the Defendant has indicated that it is raising this point. As shown in Banco de Bilbao, there may be ramifications on the liability for costs, depending on which way the decision goes. I would for the same reason reserve my decision on the costs of the hearing on 10 March 1999.

21. As for (b), it seems to me that the question of authority to sue should be dealt with first before any further costs are incurred on steps such as witness statements. I would therefore adjourn the summons relating to witness statements sine die with liberty to both parties to restore.

22. As for (c), I do not think that the procedure of preliminary issues is the correct one since one cannot join issue until there are pleadings, and it was said in Banco de Bilbao that lack of authority to sue should not be raised as a defence as such in the action. This view is accepted by Mr Mok counsel for the Defendant. I would therefore dismiss the Defendant's summons of 4 February 1999. If the Defendant is minded to raise the question of authority to sue by another procedure, I would expect it to do so without delay, given the history of this case which started in 1990. I would give both parties liberty to apply.

Representation:

Mr Patrick Fung SC instructed by Susan Liang & Co for Plaintiff

Mr Johnny Mok instructed by Was & Co for Defendant

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 OF 1990

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Coram: The Hon Mdm Justice Yuen in Chambers

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DECISION

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1. This is an action for possession of several pieces of land in the New Territories. The registered owner of the land is "Wah Yan Mo Fan Heung, Chan Kam Cheung (Manager) and Tang Man Kit (Manager)". The land is occupied by the Defendant, who had entered onto the land as a tenant.

2. This action started in 1990. I am told that the trial is scheduled to take place in the next few months.

Application

3. Although there were a total of 5 summonses before me, the substantive application was by the Defendant to strike out the Amended Statement of Claim and to dismiss the action on the grounds that it discloses no reasonable cause of action and is frivolous, vexatious and/or is otherwise an abuse of the process. Alternatively, the Defendant seeks a stay of the proceedings.

4. The application was based originally on the ground that the Plaintiff, as an unincorporated association, has no corporate or separate legal existence or capacity; and on lack of authority for the issue of the Notice to Quit.

5. The Plaintiff has applied for leave to amend the title of the Writ and to re-amend the Statement of Claim, to the effect that the title of the action would be changed to "Tang Man Kit (suing as sole manager of Wah Yan Mo Fan Heung 華人模範鄉) " and, whilst maintaining at paragraph 1 the pleading that the Wah Yan Mo Fan Heung ("the Heung") was and is an unincorporated body, adding paragraph 1A to plead that it was and is a t'ong within the meaning of s.19 of the New Territories Ordinance (cap. 97, Laws of Hong Kong 1960 edition) and s.15 of the New Territories Ordinance (cap. 97, Laws of Hong Kong current edition).

6. The parties have accordingly argued the strike-out application on the basis de bene esse of the draft Re-amended Statement of Claim.

Principles

7. It is well-established that it is only in plain and obvious cases that the Court should strike out an action before it goes to trial. In exercising its discretion, the Court should also take into account the stage which the proceedings have reached, and that the jurisdiction should not be exercised except with great circumspection and unless it is perfectly clear that the Plaintiff's case cannot succeed. On the other hand, it should also be borne in mind that authority to sue is an important matter of which the Court should be conscious, as it may affect, amongst other things, the ability of a successful defendant to recover its costs.

Issues

8. The issues for the purpose of these proceedings can be condensed into the following questions:

(1) does the Plaintiff have an arguable case that the Heung is a t'ong?

(2) if so, has the Defendant succeeded in showing that there has been no approval of managers under s.15 New Territories Ordinance so that:-

(a) the Notice to Quit had not been issued by anyone with authority to represent the Heung?

(b) Mr Tang Man Kit ("Mr Tang") has no authority to issue and carry on these proceedings as the Heung's manager?

Arguable case that the Heung was a t'ong

9. It is to my mind clear that the Defendant would have succeeded in striking out if the Plaintiff had not sought to amend the title of the writ and to re-amend the Statement of Claim to plead that the Heung was a t'ong. It is difficult to see what persons were comprised in the unincorporated body known as the Heung as originally pleaded, and how (absent representative proceedings) Chan Kam Cheung and Mr Tang could have sued as "managers" on their behalf.

10. Whilst not conceding that he was out of court if the Heung was not a t'ong, Mr Patrick Fung SC, counsel for the Plaintiff, did not put forward any substantive arguments on capacity to sue on the basis of an unincorporated association only.

11. The Plaintiff's case is that the Heung is and was a non-ancestral t'ong. Mr Fung was able to refer me to a number of materials which show that the Heung could be a non-ancestral, or association, t'ong.

12. As far as the law is concerned, he referred to passages in the Lockhart Report (1900) and the Strickland Report (1948) which describe how under Chinese law and custom, land was held by associations ("ui tin"). He also referred to cases in which the courts of Hong Kong have held or accepted that a t'ong does not need to have the word "t'ong" in its name (Chu Tak Hing v Chu Chan Cheung-kiu [1968] HKLR 542, and Tang Yau Yi Tong v Tang Mou Shau Tong [1995] 2 HKC 245), and that a t'ong need not be ancestral in character (Tang Yau Yi Tong, supra).

13. As for evidence, the land now registered in the name of the Heung (together with other land) were first acquired in 1924 in the name of Chap (Tsap) Shing Company, or in the personal names of Wong Yuet Chiu and Lui Lap Ka, the funds having been raised by individual contributors. In 1929, all these lands were transferred to the Heung, with the same Wong and Lui acting as "sze lei" (trustees or managers).

14. Such an acquisition of land in the New Territories in the name of an association with trustees or managers is consistent with (although not exclusively) the concept of an association t'ong.

15. There is also some evidence showing that the Heung (and perhaps also its predecessor Chap Shing Company) had been acknowledged (or at least treated) by the Land Office as a t'ong. When land in the name of Chap Shing Company was transferred to the Heung in 1929, and when some land of the Heung was divided in 1932, the notices given by the Land Office of the proposed transfer and division were identical to, or at least consistent with, notices given when land of a t'ong is disposed of.

16. Although there is reference in the present case to the issue of share certificates, this is not fatal to the Plaintiff's t'ong argument, as share certificates have been known to have been issued by customary land trusts not formed on a family basis (Selby, 1991 HKLJ 45).

17. Miss Audrey Eu SC, counsel for the Defendant, has indicated that for the purposes of these proceedings only, she is not seeking to argue that a t'ong must consist of family members and be formed for ancestral worship. Indeed, so long as the Plaintiff's points as recounted in the foregoing paragraphs are arguable, they can hardly be the subject of a strike-out.

18. The bone of contention lies in the Defendant's submission that the Heung's case as a t'ong is doomed to failure because there had been no approval of managers required under s.15 New Territories Ordinance, so that

(a) the Notice to Quit issued by solicitors purportedly acting for the Heung was invalid for lack of authority, and/or

(b) the present proceedings could not be issued or carried on by Mr Tang purportedly as manager of the Heung.

It is common ground that a t'ong can only act by its registered manager(s) under s.15 New Territories Ordinance (Ip Cheung Kwok v Ip Siu Bun [1988] HKC 437, [1990] 2 HKLR 499).

Section 15 New Territories Ordinance

19. This section has been amended from time to time, but substantively it has changed little. As at the date of the Notice to Quit (April 1986) and Mr Tang's appointment (January 1989), it was in the following terms:

"Whenever any land is held from the Crown under lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories Land Office, and the Land Officer on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Land Officer, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong, which is executed or signed by the registered manager thereof in the presence of the Land Officer and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong. The Land Officer may on good cause shown cancel the appointment of any manager and select and register a new manager in his place. If the members of any clan, family or t'ong holding land do not within 3 months after the acquisition of the land make and prove the appointment of a manager, or within 3 months after any change of manager prove the appointment of a new manager, it shall be lawful for the Crown to re-enter upon the land held by such clan, family or t'ong, which shall thereupon become forfeited. Such re-entry shall be effected by the registration of a memorial thereof in the appropriate New Territories Land Office".

20. It will be seen from this section that a clan, family or t'ong holding land must appoint a manager to represent it, or risk forfeiting its land. When it appoints a manager, it has to report the appointment to the Land Officer. The Land Officer may require proof (or further proof) of the appointment. He then has to decide whether to approve the appointment, and it is only if he does approve the appointment that he proceeds to register the name of the manager.

21. It seems fairly clear from the above process that the manager's name is only registered by the Land Officer after the Land Officer has approved of the appointment. So the appearance of the manager's name on the register would appear to be at least prima facie evidence that he has been approved by the Land Officer (perhaps subject to evidence to the contrary from the Land Officer).

Defendant's burden in these proceedings

22. So in asking the Court to strike-out the Plaintiff's claim, the Defendant will have to satisfy the Court that clearly the managers' names have not appeared in the register for the purposes of s.15 New Territories Ordinance; or that if the names have appeared, that there is clear evidence from the Land Officer that the managers have not been approved.

The "register" for the purposes of s.15 NTO

23. The next question must be: what is the "register" for the purposes of s.15 New Territories Ordinance?

24. It is at least arguable (when one considers the purpose of s.15) that this must be a public record, not an internal record of the Land Officer for his eyes only. The public has an interest in knowing the identity of the registered manager because of the registered manager's powers over the t'ong's land.

25. The manager (once registered) has power to dispose of or in any way deal with the t'ong's land as if he were sole owner thereof, so long as he gives the prescribed notice and obtains the consent of the Land Officer. And the execution of instruments relating to the t'ong's land by the registered manager, made in the presence of the Land Officer and attested by him, is equivalent to the execution of the instrument by all the members of the t'ong.

26. So, it must be at least arguable that the register contemplated in s.15 New Territories Ordinance is a public register, or a record open to public inspection.

Wing Tung Yick

27. At this point, it may be relevant to consider the case of Wing Tung Yick Investment Co Ltd and others v The Attorney General HCMP2557/1995 (unrep). In that case it was held that registration of a successor of property under s.17 New Territories Ordinance was constituted by the Land Officer's record recording the details of the application and the written notice approving his succession.

28. In that case, there appeared to have been evidence (p.9) of what the Land Officer actually did when he received an application for succession, but unfortunately, it is not clear from the judgment whether the Land Officer's record (of approval of successors) was open for public inspection.

29. If it was open to public inspection, then one can readily understand the judge's finding that the record was a register for the purposes of s.17. If it wasnot, then it would be less easy to understand how an internal record could be regarded as a "register" with such important public consequences as the vesting of property in another person.

30. In any event, there is no evidence in the present case that (i) whenever a t'ong's manager was approved by the Land Officer Yuen Long under s.15, there would be some internal record kept by him and that (ii) the names of the Heung's managers have not been found in that record. (Indeed, the fact that there appears to be 2 possibly inconsistent views held by 2 Government officials whether there had been s.15 registration of Wong Tat To as manager in 1960 - as discussed later - may indicate that there were no such specific internal records).

Arguable case that Heung's managers were registered under s.15 NTO

31. The crux of the dispute here is whether the Heung did have registered (and thus, previously approved) managers under s.15 New Territories Ordinance. I note that in Mr Tang's Affirmation, he asserts that he was approved as manager, but does not go into specifics as to if or when he had received notification from the Land Officer of such approval. It would appear that for Mr Tang's appointment, as with the 1984 managers, the Plaintiff is relying on a number of public documents:

(1) a Memorial No.143161 "required to be registered in the New Territories Administration of Hong Kong according to the provisions of the Land Registration Ordinance (cap 111) and the New Territories Ordinance (cap 97)" and registered on 4 January 1960, where the nature and object of instrument was stated to be "Appointment of Manager" followed by a reference number. Against the box printed "Names and additions of parties" are recorded "Wong Tat To of [address] is hereby appointed as manager for Wah Yan Mo Fan Heung in place of Wong Yuet Chiu, deceased".

(2) a Memorial No.293048 also stated to be "required to be registered in the Yuen Long District Land Office of Hong Kong according to the provisions of the Land Registration Ordinance (cap 128) and the New Territories Ordinance (cap 97)" and registered on 20 September 1984, where the nature and object of instrument was stated to be "Notice of Appointment of New Manager (a copy whereof is hereto annexed)". Against the box printed "Names and additions of parties" are recorded "Wong Tat To of [address], the existing manager of Wah Yan Mo Fan Heung; Wong Pui of [address], the newly appointed manager of Wah Yan Mo Fan Heung in the place and stead of Lui Lap Ka, deceased".

(3) a Memorial No. 367910 entitled as above and registered on 3 June 1988 where the nature and object of instrument was again stated to be "Notice of Appointment of New Manager (a copy whereof is hereto annexed)". Against the box printed "Names and additions of parties" are recorded "Wong Tat To of [address], the existing manager of Wah Yan Mo Fan Heung; Wong Fook Pui of [address] and Wong Kwan Fat of [address], the newly appointed managers of Wah Yan Mo Fan Heung in the place and stead of Wong Pui deceased".

(4) a Memorial No. 388993 entitled as above and registered on 31 January 1989 where the nature and object of instrument was stated to be "Notice of Appointment of New Managers of Wah Yan Mo Fan Heung (a copy whereof is hereto annexed)". Against the box printed "Names and additions of parties" are recorded "Chan Kam Cheung of [address] and Mr. Tang of [address] the new managers of Wah Yan Mo Fan Heung in place of Wong Tat To and Wong Pui and including Wong Fook Pui and Wong Kwan Fat in so far as they have been purportedly appointed additional managers of the Heung".

32. The Defendant's submission is that these are registrations under the Land Registration Ordinance and s.11 of the New Territories Ordinance, and not under s.15 New Territories Ordinance. It submits that the registration was only registration of the documents, viz. the documents evidencing the appointment of those persons qua ordinary estate managers (like managers of say, Fairview Park), not qua s.15 managers.

33. The Defendant relied on the fact that the notice of appointment by Wong Tat To (albeit expressly subject to the consent of the Land Officer) of Wong Fook Pui and Wong Kwan Fat as additional managers in 1988 had been registered, even though it did not purport to be an appointment by the Heung as would have been necessary under s.15.

34. Now, it is not stated on the face of these memorials that they were registered under the Land Registration Ordinance and only under s.11 of the New Territories Ordinance. It does not appear plain and obvious to me that they should be read so restrictively, so as to exclude even the possibility that they may have been registrations of managers under s.15 New Territories Ordinance.

35. Further, an attractive argument against the Defendant's submission (that these were registrations only of documents appointing ordinary estate managers) is that the managers here were described in the registrations as managers "of the Heung", not managers of the various lots of land. And more importantly, the registrations have appeared under the "Owners Particulars" part of the Register, not the part registering dealings with the land where one would expect to find appointments of ordinary estate managers.

36. The fact that they appear under the "Owners Particulars" part of the Register would appear to be arguably more consistent with their being s.15 registrations, because, of course, registered managers under s.15 represent the t'ong which owns the land.

37. Accordingly, I do not agree with the Defendant that it is plain and obvious that the Plaintiff's case must fail on the ground that the Heung's managers had not been registered under s.15 New Territories Ordinance.

Letters from LACO & Yuen Long District Office

38. Even if there is evidence that the Heung's managers had been registered under s.15 New Territories Ordinance, this may perhaps be rebutted if there is clear evidence that the Land Officer in 1984 and 1989 had in fact not approved the managers.

39. However, for a strike-out application, such rebutting evidence would have to be very clear before the Court would exercise its discretion to deny the Plaintiff a right to trial without the chance to put forward its case and to cross-examine such witnesses as may be called for the Defendant. I do not find such clear evidence here.

40. The Defendant relied heavily on two letters for its submission that the managers in 1984 and 1989 had not been approved by the Land Officer. These were (i) a letter dated 12 January 1995 from Mr C.J. Robinson, Assistant Principal Solicitor from the Legal Advisory and Conveyancing Office, Lands Department ("the Robinson letter") and (ii) a letter dated 23 March 1998 from Mr Arthur MT Wong of the Yuen Long District Office ("the Wong letter").

41. Mr Robinson's letter does state that the Government's view "is" very clear that neither the Heung nor Tsap Shing Company "can" be considered to come within the ambit of s.15 of the New Territories Ordinance. So articulated, however, it does not state clearly (or clearly enough for a strike-out) that the Land Officer in 1984 and 1989 had considered that the Heung was not a t'ong, and had not approved the managers. What is important in the present proceedings between these parties is not the view of a legal adviser of the Lands Department now, but whether the Land Officer in Yuen Long at the time (in 1984 and 1989) had approved the managers.

42. This letter then continues to express Mr Robinson's own view that the lots "registered in the name of the Heung through the managers was erroneously done purportedly under s.15 of cap. 97. The registration of Memorial No.141363 relating to the appointment of manager [Wong Tat To's appointment as manager in 1960] was in my opinion not registered by the then District Officer pursuant to s.15 of cap.97". It is not clear whose error was being referred to, and the opinion that there was no s.15 registration appears to be an ex post facto rationalization by a legal adviser, rather than a narration of actual fact.

43. As for the appointment of Wong Pui, Wong Fuk Pui and Wong Kwan Fat, the letter says that "Wong Tat To was advised by Government that Government was not prepared to deal with him as the sole manager in view of the uncertainty around 1984 as to the legal status of the Heung. He was advised that an additional manager should be appointed by members of the Heung and Government would not recognise any such appointment unless" certain requirements as to calling of meetings were complied with. These requirements were met and "Wong Pui was duly elected in accordance with the agreement reached with Government and Wong Pui's appointment as manager was registered by M/N 293048".

44. No source of information is disclosed for these statements. It is not known which arm of Government was referred to by Mr Robinson.

45. The "agreement" with "Government" would presumably have been documented, but this has not been provided.

46. I find it difficult in a strike-out application to assume that this "agreement" was only for the purposes of facilitating payment of resumption compensation (as suggested by the Defendant) and not possibly also for approval of s.15 managers, when the Court has not been shown any primary documents or affidavit evidence from the "Government" side of the agreement (Wong Tat To and Wong Pui both having died). It is at least arguable that as a result of their complying with the conditions imposed by "Government", these persons were recognised qua "managers"as such, not just as say, "representatives" of an unknown body of individuals which was not a t'ong.

47. Wong Tat To and Wong Pui were the managers who had authorised the issue of the Notice to Quit. As for the appointment of Mr Tang, the rest of the Robinson letter does not add anything. If anything, it seems to validate Mr Tang's appointment as having been made in compliance with the conditions imposed by "Government".

48. Therefore I cannot agree with the Defendant that the Robinson letter provides sufficiently clear evidence that the Land Officer Yuen Long had not approved the appointments of the managers in 1984 and 1989.

49. I then turn to the Wong letter. This reiterated that the Heung "does not come within the meaning of s.15 of the New Territories Ordinance" and states that any appointment of manager/new manager "does not require the consent of the District Officer". Expressed that way, it does not assist when the question is what the Land Officer Yuen Long did (or did not do) in 1984 and 1989.

50. The letter then advises that "the registration of Memorial No.143161 on the appointment of Mr Wong Tat To as manager for the above `Heung' was not made pursuant to s.15 of the New Territories Ordinance. The then District Officer was involved in a variety of duties, one being the District Land Registry and the registration of that Memorial was made by him in that capacity".

51. Now, that appears to be a categorical statement of fact, written presumably after consulting such documents as were in the possession of the writer in his official capacity as a representative of the Land Officer Yuen Long. However it did not explain Mr Robinson's reference to Wong Tat To's registration under s.15 being in error (even though a copy of the Robinson letter was enclosed with the Wong letter).

52. More importantly, it did not go on to say that the 1984 and 1989 registrations (which are the relevant ones for present purposes) were also "not made pursuant to s.15 of the New Territories Ordinance". No similar assertion was made on these appointments.

53. In the circumstances, I am also unable to see from this letter a plain and obvious case that the managers in 1984 and 1989 were not approved by the then Land Officer Yuen Long notwithstanding the registrations.

Notice to Quit

54. As a matter of completeness, I would also add that the Defendant had challenged the authority of Wong, Hui & Co., solicitors, to issue the Notice to Quit on behalf of the Heung.

55. Mr Tang has however recently exhibited a Power of Attorney whereby the Heung's managers (registered in 1984 under Memorial No.293048) had appointed a company called Mutual Progress to be their attorney, empowering it to inter alia give notices to quit to tenants, and to employ and retain solicitors in relation to any matter to which the powers relate.

56. Thus, if the managers were registered managers under s.15 (and I have found there is at least an arguable case), then Wong, Hui & Co were authorised in the name of the Heung to issue the Notice to Quit here.

57. If however I am wrong, and only Mr Tang were authorised, but not the managers in 1984, then I would agree with the Defendant that Mr Tang cannot simply ratify the issue of the Notice to Quit now. A notice to quit is a document that affects interests in land (Divall v Harrison [1992] 2 EGLR 64, 66). If an agent had not been authorised to issue it, it is not the act of the principal and the tenant's interests in the land have not been affected.

Orders

58. At the hearing there was no objection to, and I made an order in terms of, paragraphs 1 and 2 of the Defendant's Summons dated 17 November 1998.

59. By reason of the matters set out above, the Defendant's Amended Summons to strike out the Writ and Amended Statement of Claim is dismissed. Consequently, its application to dismiss or stay the action is dismissed.

60. I make an order in terms of the Plaintiff's Summons to amend the title to the Writ and to re-amend the Statement of Claim as per the draft attached to its Summons dated 13 May 1998.

61. I will leave it to the parties to agree costs, or to restore the summonses for argument as to costs. I am not inclined to make an order nisi for costs to be paid by the Defendant to the Plaintiff (even though the Plaintiff has succeeded in the arguments before me) in light of my view that the Defendant would have originally succeeded in striking-out had the Plaintiff not applied to re-amend to plead a case based on the concept of a t'ong.

62. Finally I would like to thank counsel for their assistance.

Representation:

Miss Audrey Eu SC & Mr Johnny Mok (instructed by Wai & Co) for the Defendant

Mr Patrick Fung & Mr P.Y. Lo (instructed by Susan Liang & Co) for the Plaintiff