FOO TAK CHING v. TANG MAN KIT

HCMP 3361/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3361 OF 2014

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DECISION

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1.  This is an application of Mr Tang for a variation of the costs order nisi made in the Judgment handed down on 11 September 2015 (“the Judgment”) by his summons dated 24 September 2015 (“the Summons”).  I refer to the Judgment for the background facts and in this decision I adopt the abbreviations used therein.

2.  By the Judgment, this court dismissed the OS and ordered on a nisi basis that Mr Tang’s costs of the OS be paid by Mr Foo. This court also made it clear that no certificate for two counsel should be granted.  

3.  By the Summons, Mr Tang asks for certificate for two counsel and/or that Mr Foo be made personally liable for costs of this action on an indemnity basis. Mr Foo opposes this application.

4.  Mr Szeto, appearing for Mr Tang again, confirms that he only insists on certificate for two counsel and indemnity costs.

Certificate for two Counsel

5.  In the Judgment, this court acknowledged the helpful assistance rendered by the leading counsel and his junior appearing for Mr Tang. This court was also aware of the fact that Mr Foo was represented by two counsel, one senior junior counsel Mr KM Chong and Mr Alvin Chong, another junior counsel having started his practice not long ago. This court was of the view that this matter was not complicated in terms of fact and law and hence concluded that it was inappropriate to grant  certificate for two counsel.

6.  In fact, before coming to that conclusion, this court had gone through the basket of relevant factors set out in O.62 r.38A, Rules of the High Court. I am aware that the list therein is not meant to be exhaustive and all the particular circumstances of this matter have to be taken into account. I was, and still am, not convinced that the instruction of two counsel was reasonable or proper despite the able submission of Mr Szeto.

7.  One important consideration of this court, as indicated to Mr Szeto, is that I find Mr Szeto to be experienced enough to handle this litigation on his own. He alone made an interlocutory application in these proceedings well before the substantive hearing of the OS and he showed his in-depth knowledge of this matter. As rightly pointed out by Mr Chong, for Mr Foo, Mr Szeto is an active and senior practising member of the bar. I am not persuaded that it was necessary to engage a senior counsel in addition to Mr Szeto to oppose Mr Foo’s straightforward application.

8.  Mr Szeto impresses upon this court that this matter is not as simple as it may appear and indeed it could bring serious consequences to Mr Tang in his capacity as the statutory manager of the Heung. He points out that if Mr Foo’s application were to be accepted, Mr Tang, after delivery up of all the documents and chattels of the Heung, would be unable to fulfil his duty as the statutory manager of the Heung under section 15 of the New Territories Ordinance, Cap.97 (“the NTO”). As a result, the entire welfare of the Heung would be jeopardised as well.

9.  I am unable to accept this submission. I am not convinced of the dire consequences allegedly following from the grant of Mr Foo’s application. Under section 15 of the NTO, a clan, family or t’ong holding any land from the Government under lease or other grant, agreement or licence in its name is obliged to appoint a manager. Such an appointment has to be reported to the relevant authorities for approval. If the approval is granted, the manager so appointed will be registered as the statutory manager. After registration, the manager will have full power to dispose of or in any way deal with the land so held as if he were the sole owner thereof subject to the consent of the Secretary for Home Affairs and shall be liable for payment of all rents and charges and for the observance of all covenants and conditions in respect of the land.

10.  If an order were to be made in favour of Mr Foo, it must be made on the basis that the Delivery up Resolution, predicated upon a previous valid removal of Mr Tang as manager of the Heung, was valid. Under section 15 of the NTO, the Heung could change its manager and prove a new appointment to the relevant authorities. Such a newly appointed manager would then be registered in place of Mr Tang if his appointment is approved. It should be noted that the Heung could also remove Mr Tang without any replacement if there are other managers.

11.  Thus, after the removal of Mr Tang as manager of the Heung implicit in the Delivery up Resolution, unless the Heung fails to inform the relevant authorities, Mr Tang will soon be deregistered as the statutory manager under section 15 of the NTO. I fail to see how he can complain about or be accused of being unable to carry out his duties as the statutory manager of the Heung.

12.  Next Mr Szeto submits that Mr Foo has adduced expert evidence of Chinese customary law in his application and this has complicated the matter.  He stresses that Chinese customary law is a specialised area and there are only a handful of counsel having this expertise. He submits that it is hence reasonable and/or proper for Mr Tang to instruct a senior counsel equipped with this expertise to deal with the expert evidence.

13.  As stated in paragraphs 19 and 20 of the Judgment, Mr Tang has not filed any contrary expert evidence and the expert report of Wejen Chang adduced by Mr Foo is actually relied on by both parties. Mr Szeto explains that it was only with the benefit of the expertise of his leader that Mr Tang decided to adopt this position in regard to the evidence relating to Chinese customary law.

14.  I have no doubt about the contribution of the leading counsel of Mr Tang. However, the material question is whether two counsel should be instructed to conduct the defence before this court at the hearing on 13 July 2015. Given the position of Mr Tang in light of the advice of his senior counsel, in the absence of any contrary evidence, no argument was ever raised about the applicable Chinese customary law at the hearing. I fail to see why the engagement of senior counsel for the purpose of the hearing was still necessary.

15.  For the reasons given, I am not persuaded that it was necessary or proper for Mr Tang to instructed two counsel for the purpose of the hearing.  Accordingly, I refuse to grant certificate for two counsel as a matter of principle.

Indemnity costs 

16.  Mr Szeto submits that Mr Foo should be ordered to pay costs on an indemnity basis for various reasons. First, he argues that Mr Foo’s application was made with ulterior motives, trying to seize control of the Heung and oust Mr Tang from the management of the Heung. In this connection, he relies on an averment of Mr Tang in his opposing affirmation to the similar effect, which was not traversed by Mr Foo.

17.  It is true that Mr Foo did not deal with the averment in his reply affirmation but it does not follow that he accepts the accusation. It is not relevant in the first place in his application, which was made on the simple basis that the Delivery up Resolution was validly passed. Mr Foo asked this court to enforce it after Mr Tang’s refusal to comply with the same.

18.  In the Judgment, this court did not accept the validity of the Delivery up Resolution for want of the requisite notice to all the members of the Heung. On this basis, this court refused Mr Foo’s application. If the Delivery up Resolution had been a valid one, this court would have made an order to ensure its compliance regardless of whether there was a power struggle within the Heung.

19.  For completeness, I am not convinced that Mr Foo made his application with ulterior motives on the evidence. After all, he is also the manager of the Heung and it was his duty to enforce the resolutions of the Heung. Mr Szeto submits that Mr Foo did not have any genuine belief as to the validity of the Delivery up Resolution. This is not the conclusion I am able to draw on the evidence.

20.  Mr Szeto goes on to complain about the way the application was made and argued at the hearing by Mr Foo’s counsel. He highlights the false factual basis and the arguments made on unpleaded matters which were rejected by this court in the Judgment. Suffice it to say I find little merits in such complaints. I do not think Mr Foo should be penalised on that basis.

21.  However, I am displeased with Mr Foo’s failure to respond, let alone accept the proposal of Mr Tang in paragraph 26 of his opposing affirmation, which was dated 9 April 2015. There, Mr Tang proposed to resolve the dispute between the parties in the following terms:

a. On the undertaking of Mr Foo that any and all documents/chattels that were delivered to Mr Foo shall be kept and used solely by Mr Foo in his capacity as co-manager of the Heung and for the purposes of the Heung, Mr Tang is prepared to within 42 days on condition that Mr Foo do pay reasonable photocopying costs deliver to Mr Foo copies of all documents of the Heung that are currently in his possession;

b. On the same undertaking and condition, Mr Tang is prepared to continue and deliver to Mr Foo copies of documents of the Heung that come into his possession until further order or final disposal of this matter;

c. Mr Tang shall within 7 days deliver all cheque books and chops of the Heung to his solicitors to stakehold the same on condition that either Mr Foo or Mr Tang can obtain and use the same by giving not less than 7 days’ prior written notices to their respective solicitors giving full particulars for the purpose of such use;

d. Mr Tang states that he is not aware of any other chattels of the Heung that are in his possession and of significance in light of Mr Foo’s application.

22.  Mr Chong submits that the proposal is neither a sanctioned offer nor a “without prejudice save as to costs” offer. In any event, it is unreasonable that Mr Tang asked for photocopying costs. Mr Chong also points out that this application was made against the backdrop of two other actions between the parties and the parties could not trust each other. Mr Foo could not accept a complete delivery up in the absence of a verifying affirmation as sought in the OS.

23.  I am not persuaded by Mr Chong’s submission. As rightly pointed out by Mr Szeto, the proposal is an open offer and whether it is a sanctioned offer is irrelevant. Their differences on photocopying charges could well be ironed out. Mr Foo, legally represented throughout and himself being a practising solicitor, should have due regard to the underlying objectives of CJR. The proposal made in the opposing affirmation sounded serious and sensible enough.  It is regrettable that Mr Foo did not see fit to start negotiation with Mr Tang in light of his proposal at all.

24.  To mark my disapproval of Mr Foo’s failure to work on the reasonable proposal and his insistence on his unmeritorious application, taxation on common fund basis is in my view appropriate: Golden Eagle International (Group) Limited v. GR Investment Limited [2010] 3 HKLRD 273 at §46. I thus allow Mr Tang’s costs incurred after 30 April 2015 to be taxed on common fund basis.

Conclusion and order

25.  In summary, I vary the costs order nisi to the extent that Mr Foo should pay Mr Tang’s costs of the OS on party and party basis until 30 April 2015 and thereafter on common fund basis, to be taxed if not agreed. There be no certificate for two counsel.

26.  As regards costs of this application, I am persuaded that the costs order nisi should be varied albeit to a limited extent. Mr Tang should still be entitled to have his costs of this application to be borne by Mr Foo, to be taxed if not agreed, on common fund basis. I so order.

27.  Lastly, I thank both counsel for their assistance.

HCMP 3361/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3361 OF 2014

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JUDGMENT

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Introduction

1.  Mr Foo in his capacity as the Manager of “Wah Yan Mo Fan Heung” (“Heung”) brought these proceedings by way of an Originating Summons dated 31 December 2014 (“the OS”) for an application for the following orders against Mr Tang:

(a) that Mr Tang doth forthwith delivery up all the documents and chattels belonging to the Heung to Mr Foo or at his order and direction; and

(b) that upon due compliance with the foregoing order Mr Tang doth make and file an affirmation deposing upon the fact that he has no further documents or chattels belonging to the Heung which are or may be within his possession, custody and control.

2.  Mr Tang contends that he is presently the manager of the Heung and the demands of Mr Foo have no legal basis.

3.  Mr Chong, counsel for Mr Tang and himself a member of the Heung, puts his application on two bases in his skeleton submissions. First he maintains that Mr Tang as the manager of the Heung, is a trustee and fiduciary of the Heung and he is a constructive trustee and a fiduciary of the properties of the Heung. Thus, he submits that Mr Tang owes a common law duty to account its properties to the Heung.

4.  Secondly, Mr Chong relies on a resolution passed at a meeting of members of the Heung on 23 August 2014 (“the 2014 Meeting”) whereby it was resolved that Mr Tang and one Mr Chan Wai Ying do return all the documents and chattels of the Heung (“the Delivery up Resolution”). Mr Chong submits that the Delivery up Resolution was passed in a duly convened meeting and is binding on Mr Tang.

5.  In fact, at the 2014 Meeting, another resolution was passed. It was resolved that the Heung do confirm, ratify and approved the resolution to remove Mr Tang as manager of the Heung (“the 2^nd Removal Resolution”) passed at the meeting held on 26 October 2013 (“the 2013 Meeting”).

6.  Mr Chong expressly indicates that this court is not concerned with the validity of the two resolutions relating to the purported removal of Mr Tang as manager of the Heung respectively passed at the 2013 and 2014 Meetings. He merely relies on the Delivery up Resolution in this application.

7.  The present state of the OS does not allow Mr Chong to argue on the first basis. Order 7 r.3(1) of the Rules of the High Court provides that every originating summons must include a concise statement of the relief or remedy claimed with sufficient particulars to identify the cause or causes of action in respect of which the plaintiff claims that relief or remedy: Securities and Futures Commission v Tiger Asia Management LLC & Or [2011] 6 HKC 149 at §9 per Harris J.

8.  The OS, strictly speaking, is defective in that there is no cause of action identified in its body at all. The Delivery up Resolution is only mentioned in the title. Whilst I am inclined to allow Mr Chong to advance his case based on the Delivery up Resolution in the absence of any objection by Mr Wong SC (appearing for Mr Tang with Mr Sezto), I cannot accept that Mr Chong can argue on an unpleaded case.

Background Facts

9.  Therefore, the only issue calling for resolution is the validity of the Delivery up Resolution, which is indeed within a very narrow compass. Mr Wong submits that the 2014 Meeting was not duly convened at all and the Delivery up Resolution cannot be valid.

10.  To provide the context relating to this issue, a summary of the undisputed background facts evidenced by documents is as follows.   

(1) In or about 1924, a group of developers led by one Wong Yuet Chiu and one Lui Lap Kar formed an unincorporated company to acquire lands in the New Territories for the development of a model village. Between 1924 and 1928, certain lands were acquired by them first in the personal names of the said two persons and subsequently transferred to the Heung and/or its managers. The Heung is essentially a business t’ong.

(2) Mr Tang together with one Mr Chan Kam Cheung became the managers of the Heung on 28 January 1989 and Mr Tang was duly registered with the District Office under the New Territories Ordinance, Cap.97. From 1984 to January 1999, Mr Tang also assumed the position of the secretary of the Heung.

(3) In 1984, Mr Tang prepared a list of the members of the Heung under the direction of Mr Wong Tat To, the then manager of the Heung (“the 1984 List”).

(4) The development project intended by the Heung never got off the ground and the lands acquired remain vested in the Heung and/or its managers. In the 1980s, the Government resumed some of such lands and as a result substantial compensations were paid to the Heung. Dispute arose as to whom and how such compensations should be distributed. Verification of membership of the Heung has become an issue.

(5) In 1989, Mr Tang compiled another member list of the Heung (“the 1989 List”) based on the 1984 List.

(6) Mr Chan Kam Cheung passed away in January 1997. On 17 December 1999, Mr Foo too became one of the managers of Heung.

(7) Mr Foo and Mr Tang are the plaintiff in High Court Action under HCA 8000/1990 suing as managers of the Heung against Hip Hing Timber Company Limited for recovery of possession of certain lands belonging to the Heung (“the Hip Hing Action”).

(8) Three members of the Heung commenced a High Court Action under HCA1342/2013 in July 2013 against Mr Tang alleging breach of fiduciary duty as the manager of the Heung (“the 2013 Action”).

(9) On 26 October 2013, Mr Foo convened the 2013 Meeting. There, the attending members purportedly passed a resolution to remove Mr Tang as manager of the Heung (“the 1^st Removal Resolution”) and another one to appoint Ms Pat Wong to be an additional manager of the Heung (“the Appointment Resolution”) despite the objection of Mr Tang.

(10) On 14 January 2014, Mr Foo and Ms Pat Wong commenced a High Court action under HCA 83/2014 against Mr Tang and other persons alleging his breach of fiduciary duty as the manager of Heung (“the 2014 Action”).

(11) Mr Foo on 17 July 2014 gave notice to members of the Heung to convene the 2014 Meeting. The notice was also posted in Sing Tao Daily and South China Morning Post on 25 July 2014  (“the 1^st Notice”). The 1^st Notice made no mention about any obligation of delivery up of Mr Tang.

(12) On 7 August 2014, Mr Foo gave further notice in respect of the 2014 Meeting setting out the proposed resolution to demand Mr Tang and Chan Wai Ying to deliver up all documents and chattels of the Heung (“the 2^nd Notice”).

(13) At the 2014 Meeting, the Delivery up Resolution was purportedly passed by the members in attendance.  

(14) Despite repeated demands made by Mr Foo’s solicitors to register the purported removal of Mr Tang as manager and the purported appointment of Ms Pat Wong as an additional manager, the Yuen Long District Office has not yet agreed to act pending further investigation of this matter.

11.  I should make it clear that the foregoing summary is made with my full awareness of the core contention of Mr Tang. Mr Tang does not accept the propriety of the 2013 and 2014 Meetings and the validity of all resolutions purportedly passed at the two meetings.

Discussion

12.  The parties’ debate is centred on the propriety of the 2014 Meeting including the adequacy of the 1^st and 2^nd Notices and the membership of the Heung.  

13.  It, however, appears to me that there is a fundamental problem with the Delivery up Resolution. In the 2^nd Notice, the first sentence of the proposed Delivery up Resolution, to be followed by a list of documents and chattels of the Heung, read:

“That Tang Man Kit, the former Manager of the Heung and Chan Wai Ying, the former employee of the Heung, shall return to the Heung…” (emphasis supplied)

14.  In the 1^st Notice, the proposed resolutions tabled for the 2014 Meeting included a resolution for the confirmation of the 1^st Removal Resolution (the removal of Mr Tang as the registered manager of the Heung). Eventually, the 2^nd Removal Resolution was passed together with the Delivery up Resolution.

15.  In the Delivery up Resolution, Mr Tang was described as former Manager of the Heung. It is clear that the Delivery up Resolution was premised on the purportedly valid removal of Mr Tang. The members voted in favour of the Delivery up Resolution on the basis that Mr Tang was merely the former manager of the Heung and had ceased to be a manager by reason of the 1^st and/or 2^nd Removal Resolutions. Since Mr Tang came into possession of the documents and chattels of the Heung only by reason of his office, it seems only logical that Mr Tang should return them to the Heung upon his removal as manager of the Heung.

16.  It is worthy of note that for the purpose of these proceedings, Mr Chong asks this court to disregard the issue of validity of the 1^st and 2^nd Removal Resolutions. However, without my determination of this validity issue, this court cannot uphold the validity of the Delivery up resolution predicated upon the valid removal of Mr Tang as manager.

17.  On this ground alone, this court should dismiss Mr Foo’s application by the OS.

Adequacy of the 1^st and 2^nd Notices

18.  I shall nevertheless proceed to consider the validity of the complaints raised by Mr Wong in regard to the adequacy of the 1^st and 2^nd Notices. First, concerning the governing legal principles, Mr Wong accepts that by reason of the nature of the Heung, Chinese law and custom are relevant. All the common law principles in respect of meetings of corporations expounded in the authorities cited do not really assist this court.

19.  Mr Chong relies on the expert report of Wejen Chang filed by Mr Tang and Mr Foo in the Hip Hing Action for the general principles. There is no contrary evidence. Mr Wong expressly relies on the same too.

20.  The relevant part of the expert evidence is set out as follows:

“A business tong needs someone to oversee its regular operation. For this reason a manager is appointed. Where the work is heavy, a tong may appoint more than one manager. But the members of the tong always retain the power of making the most important decisions, including the election and dismissal of the rnanager(s). The decision is usually reached by a process known as bing-gong yi-ding 秉公議定 or simply gong-yi 公議，meaning ‘to decide after open and fair discussion’. No formal procedural rules govern this process. The reasonable basic requirements are, of course, that the members are notified of a meeting where the important issues are to be decided and that the meeting is attended by a majority of the members who are reasonably expected to respond to the notification. (Those who without an acceptable reason fail to respond can be lawfully assumed uninterested in the issues and willing to let those who do attend the meeting to decided.) Ideally a decision of the meeting reflects a consensus but, in practice, it is usually an agreement among the majority of the members present. When a decision is thus made and presented as that of the tong,no one outside the tong is in a position to challenge it.”

21.  I accept his evidence quoted above. It can be seen that the overriding concern is still very much fairness, as with the common law principles. Members must be given an adequate notice of the issues to be decided so that they can make an informed decision as to whether to attend the meeting and take part in the decision making process. If they are not interested in such issues to be decided, they are at liberty not to respond to the notice and allow other members attending the meeting to make the decisions for them.

22.  In light of the agreed expert evidence, the 1^st and 2^nd Removal Resolutions underpinning the Delivery up Resolution were the most important decisions in a business t’ong. All members must have been duly notified beforehand so that they could opt to take part in the meetings and had an open and fair discussion about the issues.  

23.  The evidence of Mr Foo in relation to the 1^st and 2^nd Notices is that for the 1^st Notice, he not only gave it to members of the Heung but also published it in the two local newspapers. As regards the 2^nd Notice, it was not posted in any newspaper.

24.  Mr Foo explained further that he sent the 2^nd Notice by post to all the members who are traceable through their corresponding addresses kept by the Heung in the 1984 List.

25.  Thus, it is apparent that there are members who are not traceable by reason of the absence of knowledge of their valid correspondence address on the part of the Heung.    

26.  Probably due to the existence of such untraceable members, Mr Foo found it necessary to publish the 1^st Notice in the newspapers by way of substituted service of the same. 

27.  Mr Wong helpfully draws my attention to the fact that previously the Heung had also published notices to its members in the newspapers on the following occasions:

(1) On 6 January 1989, the notice for the meeting to be held on 28 January 1989 was published in local newspapers;

(2) On 15 November 1999, the notice for the meeting to be held on 17 December 1999 was published in two local newspapers; and

(3) In a consent order made by Le Pichon J (as she then was) on 16 January 1998 in an action against Mr Tang and Chan Kam Cheung by the members of the Heung, it was ordered that notice of a general meeting in both the English and Chinese languages be published in the South China Morning Post, the Sing Tao Daily and the Ming Pao Daily.

28.  It is thus clear to me that for an effective notice to be given to all of its members regarding important resolutions to be decided at a forthcoming meeting, the Heung should publish the relevant notice in local newspapers in good time ahead of the meeting.

29.  It is not in dispute that the proposed Delivery up Resolution was not mentioned in the 1^st Notice. It only appeared in the 2^nd Notice, which was not published in any local newspapers. It cannot be disputed that no effective notification of the proposed Delivery up Resolution was given despite the 2^nd Notice. 

30.  I therefore come to the conclusion that the Delivery up Resolution cannot be valid for want of the requisite notice to be given to all the members of the Heung.

31.  Mr Chong argues that there was no conflicting votes casted in respect of the Delivery up Resolution. Be that as it may, this could not cure the deficiency of the 2^nd Notice. This does not begin to show that all the members who were interested in the resolution opted to appear at the 2014 Meeting and voted on the resolution after an open and fair discussion.

32.  Mr Chong further highlights to me that the members who attended the 2014 Meeting and voted in favour of the Delivery up Resolution were substantially the same members who attended the 1989 Meeting and resolved to appoint Mr Tang as manager of the Heung.

33.  With respect, I do not think this has any bearing on the validity of the 2^nd Notice at all.

34.  Mr Wong mounts another challenge to the adequacy of the 2^nd Notice. He draws my attention to the fact that the actual term of the Delivery up Resolution included the additional phrase “若失責鄕則採取適當的法律行動” (my English translation: in case of default, Heung would take appropriate legal actions). Mr Wong argues that the Delivery up Resolution cannot be valid because the 2^nd Notice made no mention about the possibility of legal actions in case of Mr Tang’s non-compliance of his delivery up obligations.

35.  Given my conclusion about the effectiveness of the 2^nd Notice above, this challenge is academic. In any event, I cannot agree to Mr Wong’s submission.

36.  In my judgment, it must be clear that the proposed Delivery up Resolution in the 2^nd Notice, if passed, should be legally binding on Mr Tang. It must be implicit in the 2^nd Notice that if Mr Tang did not comply with the resolution, the Heung might take legal action to enforce the resolution.   

37.  In the circumstances, I do not find anything untoward about the inclusion of the additional phrase in the Delivery up Resolution after further discussion by the members present at the 2014 Meeting. It was only an express record of a logical and reasonable course to be taken in case of the default of Mr Tang.

38.  Mr Wong has another point to make about the propriety of the 2014 Meeting. He argues that membership of the Heung is in a “complete state of flux” and so there cannot be a collective expression of the wishes of the members of the Heung in the Delivery up Resolution.

39.  He first refers to me a letter of Mr Foo’s solicitors issued to the Yuen Long District Office dated 12 April 2014. A copy of the 1984 List was enclosed with the letter and it had the following to say about the 1984 List:

“We enclosed herewith a copy list of members of the Heung for your attention. The Heung had previously obtained advice from Mr Robert Tang of Senior Counsel (now Tang PJ of the Court of Final Appeal) that the Heung should apply to the Court for determination as to the status of its members since some of the members only possess a share certificate of Chap Shing Co. (集成公司), the management company of the Heung, but without owing any land lots within the Heung while some members own land lots within the Heung but without possessing any share certificate of the said company. Therefore, the exact status of people whose names appeared on the said list will be subject to the determination by the Court as to whether they are members of the Heung pursuant to an application to be made by the Heung in due course. However, the said list will suffice for your purpose.”

40.  Indeed in the legal advice referred to therein, which was obtained 29 November 1996 pursuant to a court order made in HCMP 1173 of 1996, it was advised that an enquiry was necessary to determine the membership of the Heung and who the beneficiaries of the assets of the Heung were.

41.  It is common ground that no such enquiry has ever been made despite the lapse of almost two decades.

42.  On the other hand, the membership issue has been complicated by the fact that after the creation of 1984 List, there were sale transactions whereby the shares in and hence the membership of the Heung were transferred. Examples include the purported sale by Kwong Pui Kiu to Tonkit Development Limited on 19 April 1991 and the purported sale by Wong Kwan Fat to Tang Chi Man on 23 August 2012.

43.  It should also be noted that even in the 1^st Notice which was published in local newspapers, it was expressly stated that the Heung reserves all its rights to challenge and seek the determine of the court as to who are members of the Heung, in particular, the identity of any attendee of the meeting unless and until such membership of the Heung will have been determined and confirmed by the court.

44.  This court, very rightly, is not called upon to determine the membership of the Heung. It is not within the ambit of the OS to start with. Absent such a determination, this court can hardly be satisfied that all the members of the Heung were given notice of the 2^nd Notice and hence the proposed Delivery up Resolution. This is an additional reason why the Delivery up Resolution cannot be upheld.

45.  Mr Chong seeks to persuade this court that the change in the membership of the Heung is irrelevant for the present purposes by giving his detailed analysis of the compositions of the members of the Heung. He submits that the members of the Heung cannot go beyond the 3 categories set out in Mr Foo’s 2^nd affirmation. Mr Chong can however only go so far as to submit that there has been no material change in membership of the 2^nd and 3^rd categories.  He has to accept that there were indeed changes in the membership albeit they are allegedly not material and confined to the two categories only.

46.  I am far from convinced by his submissions in light of the foregoing matters. So long as the fact that not all the members of the Heung (traceable and untraceable) were given notice of the proposed Delivery up Resolution in the 2^nd Notice, the requisite notice requirement was not met and the 2014 Meeting was not properly convened to pass the Delivery up Resolution.

47.  Mr Chong lastly submits that it would be absurd if the administration of the Heung could only be carried out with the final determination of its membership. I disagree. For important decisions to be decided by members collectively such as the removal of Mr Tang as manger, it is imperative to first determine the membership of the Heung and worthwhile to wait for such a determination. There is a valid reason why the Yuen Long District Office has persistently refused to act on the Removal Resolutions and the Appointment Resolution.

Alternative position

48.  Mr Chong argues as his alternative case that Mr Foo as one of the beneficiaries of the Heung is entitled to sue for the wrong done to the Heung by Mr Tang. In this regard, he relies on the dicta of DHCJ Johnson Lam (as hse then was) in Leung Kuen Fai v Tang Kwong Yu Tso [2002] 2 HKLRD 705.

49.  Mr Wong points out that factually it is incorrect. Mr Foo’s wife and not he himself is one of the beneficiaries.  Moreover, there is not any alleged wrongdoing identified to support any cause of action in the OS and the OS does not permit such a course to be taken.

50.  Thus, I do not accept Mr Chong’s submission.

Undertaking offered

51.  The upshot is that Mr Tang remains one of the registered managers of the Heung and he is entitled to equal possession to the documents and chattels of the Heung with his co-manager, of course for the purpose of the Heung only.

52.  Very sensibly, Mr Tang in his affirmation (§26) offers an undertaking so as to allow Mr Foo equal access to the documents and chattels of the Heung. Though I shall not impose such an undertaking upon Mr Tang, I expect Mr Tang with the good advice of Mr Wong would agree to act reasonably with such properties of the Heung together with Mr Foo.

Conclusion and Order

53.  For the reasons given above, I am not convinced of the merits of the application. I dismiss the OS accordingly.

54.  I see no reason why costs should not follow the event. I make a costs order nisi that Mr Tang’s costs of the OS be paid by Mr Foo.

55.  I have no doubt that both Mr Wong and Mr Szeto have done a lot to resist the present application successfully. However, after all, this matter is not complicated in terms of facts and law. In the circumstances, I am not inclined to grant certificate for two counsel despite the fact that Mr Foo is represented by two counsel as well.

56.  It remains for me to thank all counsel for their able assistance.

HCMP 3361/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3361 OF 2014

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______________________

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DECISION
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1.  This is an application of the defendant to file a further affirmation in reply to the reply affirmation of the plaintiff.  The affirmation to be adduced is exhibited to the supporting affirmation for the purpose of this application.  It consists of eight paragraphs. 

2.  Mr Szeto helpfully took me through the contents of these eight paragraphs of the said affirmation.  The second paragraph seeks to include a new allegation of the non-compliance with the notice requirement in regard to a purported meeting held in August 2014 wherein the defendant was allegedly removed as the manager of the Heung, namely, Wah Yan Mo Fan Heung. 

3.  Mr Szeto accepted that this is a new allegation because prior to this affirmation only the notice requirement of an earlier meeting in October 2013 is put in issue by way of affirmation evidence. Indeed, there was a letter sent by the defendant solicitors to the plaintiff solicitors (“the Letter”) stating that the defendant would argue that the notice requirement of the 2014 meeting was met at the substantive hearing.

4.  Mr Szeto explained that since these are OS proceedings, issues are not identified by way of pleadings and so it is necessary for the defendant to raise the allegation of the non-compliance with the notice requirement in respect of the

August 2014 meeting by way of an additional affirmation. 

5.  It is the plaintiff’s case that the defendant was validly removed as a manager at the 2013 meeting, and the removal was confirmed, rectified and/or clarified at the 2014 meeting by another the resolution of its members.

6.  Since the plaintiff now relies on the resolutions, it is for the plaintiff to first prove the validity of such resolutions, including the fulfilment of the requisite notice requirements.  I do not find it necessary for the defendant to put in an additional affirmation to raise his challenge to the notice requirement of the 2014 meeting in the circumstances. In any event, the Letter would suffice.

7.  As regards to paragraph 3 to paragraph 6, they concern the membership of Heung.

8.  In the first affirmation of the plaintiff, the plaintiff explains the attendance of the members of the Heung at the two meetings.  It was pointed out that those members attending the two meetings were indeed members of the Heung in accordance with the member lists complied by the defendant when he was the Secretary of the Heung in 1984.  It was already in the contemplation of the plaintiff that the composition of the attendees at the two meetings would be challenged. 

9.  In the first affirmation of the defendant, he reiterated the accuracy of the 1984 and 1989 members’ records and he insisted that they should be adopted as the reference and the basis of consideration for proof of membership of the Heung.  He was in a position to further explain the composition of membership, but he did not.  In the affirmation intended to be adduced, there are further explanations about the composition of the membership of the Heung. 

10.  Mr Szeto seeks to persuade me that it is necessary to fill in the

evidential loops in the parties’ evidence filed in regard to the membership of the Heung.  He submits that this new information is necessary because new allegations about the membership of the Heung are made in the reply affirmation of the plaintiff.

11.  I cannot agree.  I have studied the reply affirmation of the plaintiff.  It only further explains the composition of the membership without making any departures from the 1984 and 1989 member lists. Had the defendant found it necessary to explain in detail the composition of the membership of the Heung, he should have done so in his affirmation in opposition. In any event, I do not think it is necessary.

12.  In regard to those documents referred to in the first affirmation of the plaintiff which are not actually exhibited thereto, I agree with Mr Szeto that they should be included in the evidence for the purpose of the substantive hearing of the OS.  But those documents could be included by consent without necessitating a further affirmation. 

13.  I also studied other matters stated in these paragraphs and I believe those matters could be canvassed by way of legal submission at the substantive hearing.  All in all, I do not find the affirmation intended to be adduced by the defendant to be necessary for the fair disposal of the matters before the court.

14.  In the premises, I refuse the application of the defendant.

15.  Costs should follow the event, Costs of this application should be to the plaintiff, to be taxed if not agreed. 

(Discussion as to summary assessment)

16.  So let me take a broad-brush approach. I only allow HK$25,000 - all inclusive.  That is my assessment.