TANG POON LAP v. TANG KAM KAI & OTHERS

HCA 761/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 761 OF 1996

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J U D G M E N T

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1. This is an application to re-amend the amended defence. The trial of this action is due to start on 23 February 2004. It is estimated to last 6 days. The application is strenuously opposed by the Plaintiff. Given the tight timetable - bearing in mind in particular the intervening holidays, I am anxious to give judgment as soon as possible, so that the parties may know where they stand in respect of the issues that they have to prepare for and deal with at trial. For that reason, the reasons I set out in the following judgment will not be as detailed and refined as I would otherwise like them to be. But I believe they will still be sufficiently intelligible and comprehensible to the parties, who are of course well familiar with the disputes between them, as well as the arguments that have been raised in respect of the present application.

2. Very briefly, the Plaintiff's case is that the Defendants are the registered managers of Wing Lung Wai Community, a customary association holding lands in the New Territories, that is governed by sections 13 and 15 of the New Territories Ordinance (Cap. 97). The gist of the Plaintiff's claim is that he is the lawful son and heir of a Tang Tat Yi, deceased, who during his life-time was a member or household member of the Community. The Plaintiff claims that he is entitled to succeed to his late father's membership after his demise and be accepted or recognised as a member or household member of the Community. However, the Defendants as registered managers of the Community have been refusing his application for admission as a member or household member. He claims various forms of relief against the Defendants accordingly.

3. Again very briefly, the gist of the defence, as is presently pleaded in the amended defence, is that the Defendants as registered managers of the Community have a discretion on the admission of household members of the Community, and since the Defendants are not satisfied that the Plaintiff is the lawful son of Tang Tat Yi, and since he does not reside in the Community and does not perform any duties and obligations of a member of the Community including ancestral worship, the Defendants have exercised their discretion against admitting the Plaintiff as a household member of the Community. In the particulars that have been supplied in respect of the amended defence, the Defendants admit and accept that Tang Tat Yi in his life-time was a member of the Community and that "the lawful heir of Tang Tat Yi would be entitled to membership of the Community". This is because "[m]embership is primarily through lineage on the male side of the family i.e. blood relations [and the] right to membership is conferred at birth to the lawful descendents of the testators who had originally vested property in the Community". Although a general discretion on the part of the registered managers has been pleaded, the amended defence does not plead any other reasons based on which the Defendants have exercised their discretion to refuse membership, or which could justify the Defendants' decision to refuse membership. Furthermore, given the particulars referred to above regarding "the right to membership", the discretion can only be a limited one.

4. Pausing there, on the existing pleadings, it would seem that the disputes between the parties are relatively straightforward: if the Plaintiff can establish at trial that he really is the lawful heir of the late Tang Tat Yi, and if he can deal satisfactorily with the Defendants' point about taking up residence in the Community and performance of duties and obligations of a member of the Community including ancestral worship, he would be entitled to admission as a member or household member of the Community. In my judgment, that is a fair reading of the existing pleadings of the parties.

5. The present application to amend was only taken out on 22 October 2003, i.e. 4 calendar months before the scheduled commencement of the trial of this action, which was started back in 1996. By the proposed amendments, the Defendants essentially seek to raise two matters. Mr George Chu, the present counsel of the Defendants, frankly admits that this is an attempt to "revamp" the case of his clients, after he has been instructed as their counsel. First, Mr Chu seeks to introduce, in the draft re-amended defence, the contention that the Community is not an ordinary tso or tong established for "any filial-piety or any other charitable reasons". Rather, it was "formed under customary Chinese law for the purpose of land holding and other purposes akin to a 'business tong' or quasi-partnership". Secondly, the intended amendments seek to delete the previous defence that the mangers refused the Plaintiff's application for membership because of doubts about his true identity, the residence requirement, and the requirement to perform the duties and obligations of a Community member, but seek to rest the refusal simply on the managers' "unfettered power to admit any new members to the Community".

6. It is apparent from Mr Chu's submission that the two matters are not separate but interlinked. The contention of a business tong is made in order to distance the Community from a traditional tso or tong, in which it is well-known that membership is primarily based on the male lineage. By contending that instead the Community is a business tong, the Defendants hope to be able to argue that there is indeed a discretion on the part of the registered managers on membership admission. Based on that premise, the Defendants further seek to argue that the discretion comprises an "unfettered power" on their part regarding membership admission.

7. I have been referred to the general principles regarding amendment of pleadings, particularly late amendments. I will not rehearse the same here. I agree totally that in a late amendment situation, it is incumbent upon the party seeking the amendment to ensure adequate particularity: Perak Pineeror Ltd v Carrian Holdings Ltd CA 59/85 (unreported); Re Unisoft Group (No. 2) [1994] BCC 766; Wellfit Investments Ltd v Poly Commence Ltd [1995] 3 HKC 56; Hong Kong Civil Procedure 2004 (Vol. 1) para 20/8/10. Furthermore, the court will not allow futile or useless amendments: Hong Kong Civil Procedure 2004 (Vol. 1) para 20/8/24.

8. In relation to the latest contention that the Community is (or is akin to) a business tong (see Tang Man Kit v Hip Hing Timber Co. Ltd CACV 137/2002, 11 December 2002), the proposed amendments cry out for particulars. Thus, for instance, particulars are badly required relating to the alleged circumstances of the formation of the alleged business tong, the alleged "other purposes" of the alleged business tong, the rules and regulations agreed by the founding members of the alleged tong (or subsequently by its members) regarding the tong's management, operation, and most importantly for our present purpose, admission of new members and transmission of membership upon death - and particularly, the discretion, if any, on the part of the managers regarding membership admission. All this is lacking in the proposed amendments, which belatedly plead a business tong in the present case. I agree with Mr Li, appearing for the Plaintiff, that it is a quantum leap to say that because the Community is a business tong, therefore there must be a discretion on the part of the managers of the tong regarding membership admission. One would have thought that the question must to some extent depend on the constitution, rules and regulations, and/or agreement governing the establishment of the tong, that are applicable to the tong. As I say, the proposed amendments are entirely silent on these important matters. And as I have already said, the introduction of this contention of a business tong is really for the purpose of backing up the Defendants' case that they have an unfettered power relating to membership admission. Mr Chu, the author of the latest proposed amendments, has accepted all this in his submission. The business tong contention is intended to serve no other purpose in the present action.

9. Understood in that light, the latest contention of a business tong really goes against the existing pleaded case of the Defendants, because as I said, according to the particulars supplied in respect of the amended defence, it has been accepted and admitted that membership is primarily based on the male lineage, and it has been further accepted that the right to membership is conferred at birth and that the lawful heir of Tang Tat Yi would be entitled to membership of the Community. No amendment is sought to withdraw these admissions in the particulars.

10. As regards the second matter, i.e. the question of an unfettered power or an absolute discretion regarding membership admission, to some extent, that is not a new matter: in the existing amended defence, it has already been pleaded that the registered managers have an "absolute discretion" regarding membership admission. But as has been explained above, according to the amended defence, the pleaded reasons for the managers exercising their discretion against admission in the present case relate only to the true identity of the Plaintiff, the alleged residence requirement, and the alleged requirement to perform duties and obligations of a member of the Community including ancestral worship. And as I have also outlined above, no alternative reasons or grounds, or "fall-back position", as it were, have been pleaded or relied on to justify the exercise of discretion by the Defendants. Furthermore, the discretion pleaded in the amended defence must be read subject to the particulars that have already been alluded to above. Therefore, as I have already observed, the dispute between the parties is relatively straightforward. The goal-posts are clear and fixed.

11. However, the latest amendments seek to change all that substantively. The Defendants no longer seek to rely on their doubts about the true identity of the Plaintiff, or the alleged residence requirement or the alleged requirement to perform the duties and obligations of a member. They simply rely on their absolute discretion or unfettered power regarding membership admission. Indeed, this is not a case of a party seeking to move the goal-posts shortly before the trial; it is a case where he seeks to remove the goal-posts altogether.

12. There is no law against a party relying on a defence to the effect that he has an absolute discretion in relation to a matter, which constitutes the subject matter of litigation. However, in the present context, when such a sweeping defence is raised at so late a stage, the Court is entitled to examine the purported defence raised by the amendments more closely. In my judgment, it is incumbent upon the Defendants to clarify whether they really are saying that they have an unfettered power or absolute discretion, in the strictest sense of those words, in the matter of membership admission. By way of illustration, are the Defendants claiming that they could refuse an application for membership simply because they do not like the applicant's look? Indeed, I put that to Mr Chu during his submission, in order to really understand the nature of his proposed case. The answer I got was rather ambiguous.

13. As I say, there is no law against a party seeking to say that he has such a wide and absolute discretion in a matter. But at this late stage, the Court is entitled to ensure that the amendment is not a useless or hopeless one. In this regard, I have no hesitation whatsoever in saying that any such contention of an absolute and unfettered power or discretion on the part of the registered managers would be wholly startling and surprising, and certainly I am not aware of any case law on Chinese customary law that has referred to, let alone confirmed, the possible existence of such an absolute power on the part of the registered manager of a customary trust. In those circumstances, in my judgment, it behoves the Defendants to at least put forward some material before the Court, in support of their application, that would sustain the contention that the registered managers do have such an absolute and unfettered power or discretion in relation to membership admission in the Community. In the absence of such material, prima facie, the contention is wholly unsustainable and hopeless. By material, I have in mind either the constitution, rules and practice or the agreement of the founding members of the Community, or expert evidence on the power and discretion of the managers of Chinese customary tongs or business tongs relating to membership admission. Neither category of material is available, nor indeed is there any material to that effect in the witness statements or expert reports that have been filed and exchanged in the present case.

14. Alternatively, if the true case of the Defendants is not that they have an unfettered and absolute discretion in the matter in the above sense, but rather their power and discretion must be exercised within rational and reasonable bounds and in good faith, then it is incumbent upon the Defendants to spell that out clearly in their proposed amendments. And not only that, it is further incumbent upon the Defendants to say why, in their bona fide, rational and reasonable exercise of discretion, they have reached the conclusion that the membership application of the Plaintiff should be rejected. Again, all this is missing from the proposed amendments.

15. Therefore in summary, in relation to the discretion of the managers, the proposed amendments are objectionable because it is ambiguous as to whether there is any constraint at all on the so-called absolute discretion or unfettered power of the registered managers regarding membership admission, secondly, if the power and discretion are meant to be "absolutely" absolute and unfettered, that is, on the material before the Court, a wholly hopeless and futile contention, which is contradicted by the Defendants' own particulars of pleading; and thirdly, if the power and discretion are constrained within bounds, the bounds have not been defined and the grounds for exercising the managers' discretion against the admission of the Plaintiff as a member or household member have not been pleaded.

16. Apart from all this, I also agree with Mr Li that if the present amendments are allowed, the complexion and focus of the present case will be substantially changed. Much effort expended in the past will be wasted, and much further effort, in terms of amendment of pleadings, request for particulars, discovery of documents, expert evidence and legal arguments, will have to be expended, and worst still, there is a great likelihood that the original trial dates cannot be kept. Needless to say, all this will constitute undue prejudice to the Plaintiff.

17. In those circumstances, and having borne in mind all the relevant factors and considerations, in the exercise of my discretion, I disallow the proposed amendments, with the exception of those in paragraphs 2(b), 8 and 9 of the draft re-amended defence. In other words, I give leave to the Defendants to re-amend their amended defence, but only to the extent that I have just indicated.

18. I also make a costs order nisi that the costs of and occasioned by the present application be paid by the Defendants to the Plaintiff in any event; such costs are to be taxed if not agreed.