TANG FU SUN (or spelt as SUM) v. TANG LIK YUEN

HCA 2028/2006 & HCA 2846/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2028 OF 2006

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BETWEEN

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2846 OF 2006

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D E C I S I O N

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Applications

1. There are 2 applications of Summary Order for Account under Order 43 rule 1 of the Rules of High Court (“RHC”) before me.

Background

2. “Tong” (堂) or “Tso” (祖) is the legal vehicle to hold landed properties in New Territories in the name of and for a clan (宗族).  Under section 15 of the New Territories Ordinance (Cap. 97), Manager (司理) is appointed and registered to deal with such landed properties.

3. In the present two proceedings HCA 2028/2006 and HCA 2846/2006 (formerly DCCJ 841/2006), the Plaintiff is the Manager of Tai Hong Wai Community (泰康圍大眾) and Tang Shung Kok Tso (鄧嵩閣祖) (collectively “the Tsos”).

4. The Plaintiff commenced the two proceedings against the Defendant as Duty Manager (值理) of the Tsos.  It was said that, in accordance of the practice, the Manager would engage the Duty Manager to assist in discharging part of his duty, including, collecting rent from landed properties and preparing books/accounts for audit, and so on.  In about 2001, the Defendant was appointed the Duty Manager of the Tsos.  The term was renewed annually until 28 January 2006.  It is the Plaintiff’s case that the Duty Manager has committed various breaches of his duty and the office of the Defendant has been terminated by:

(a)     effluxion of time on 28 January 2006,

(b)     resolutions of members of the Tsos on 22 January 2006 and/or 6 August 2006, or

(c)     service of the proceedings herein.

5. The Defendant defended the proceedings.  Briefly, he argued, among others, that there was no custom for removal of Duty Manager, the resolutions to remove him was the result of irregular meetings, the new Duty Manager was improperly appointed.

6. On 27 April 2006, in DCCJ 841/2006, the Plaintiff attempted to seek various interim injunctive relief against the Defendant to restrain him from continuing acting as the Duty Manager of Tang Shung Kok Tso and to surrender of properties thereof.  The matter was argued before Her Honour Judge CB Chan who later handed down her written decision on 24 May 2006.  The learned Judge refused the application.

“54.      Although the Plaintiff’s case does have a good prospect of success, I am however not able to say that the Defendant has no real chance of succeeding at the trial.  As far as the adequacy of the notice for the meeting of 22 January 2006 is concerned, the Defendant has an arguable defence.  In relation to the issue whether the Defendant is liable for Conversion/Detinue and Trespass in my view it cannot be said that the Defendant has no real chance of succeeding at the trial.  In view of the principle stated in Mak Chi-sing cited above, in my view the mandatory injunction ought not to be granted as it cannot be said that the Defendant has no real chance of success.  As the mandatory injunctions sought go hand in hand with the prohibitory injunctions sought, I am of the view that this is a case where the application should be refused.”

7. As the matter has developed, the parties are now litigating in the High Court.  The Defendant has not filed his Defences.  But, on 14 February 2007, the Plaintiff took out the present Order 43 rule 1 applications and the Defendant opposed to the same.

8. I heard the substantive argument on 25 September 2007.  Mr. K.M. Chong of Counsel, leading his junior Mr. Shuni Yoneya acted for the Plaintiff and Mr. Stanley Siu of Counsel represented the Defendant.  At the outset of the hearing, Mr. Chong told me that he would not proceed with the relief for interim payment and asked the same to be adjourned sine die pending the determination and result of the applications of summary order for account.

Ruling

9. Now, having carefully considered the parties’ evidence authorities and submission, I decide to allow Mr. Chong’s applications.

The Law

10. There is no dispute as to the applicable law relating to Order 43 application, namely, “the Court may, unless satisfied that there is some preliminary question to be tried, order that an account be taken …… (Order 43 rule 1(3) RHC)”.

Preliminary question?

11. There is also no dispute that the Defendant, as Duty Managers of the Tongs, is under a duty to account to the Plaintiff in his capacity of Manager thereof.

12. The Defendant nonetheless raised a number of factual disputes, including the validity of the resolution of members to remove him, the irregularity of accounts from the Former Duty Manger and the unauthorized involvement of the invalidly appointed new Duty Manager.  However, in my view, they are not preliminary question to be tried because, irrespective of the eventual rulings of them, and assuming for our present purpose that they would be ruled in favour of the Defendant in the end, they do not affect the Defendant’s liability to account.  In short, the Defendant shall account for what and how monies have come into and gone out of his hand during the period when he is the Duty Manager.

13. I can understand the Defendant’s assertion that a complete account is not possible in the circumstances.  However, it does not relieve him from his liability to prepare the accounts with suitable riders, namely, pending determination proceedings against the Former Duty Manager and the “new” Duty Manager in DCCJ 5475/2006 and HCA 2310/2006 respectively.  In my experience, reservation and qualification are not uncommon in audited accounts signed by auditors and certified by directors.

Misconceived application?

14. Mr. Siu, in his skeleton submissions, raised a number of objections to the effect that the Plaintiff’s summonses were premature and misconceived because they were tantamount to application for summary judgment.  Further, evidence specified under Order 29 was not properly put before the Court.  In this respect, as Mr. Chong did not pursue the interim payment, it is not necessary for me to deal with them.

Exercise of discretion

15. Mr. Siu further attempted to convince me that this Court should not order the account because it would, inter alia, prejudice the Defendant’s position at trial and prejudice him from exercising his duty as the Duty Manager of the Tsos.  I respectfully disagree.  Quite to the contrary, I think otherwise.  The parties are disputing quite some matters, including integrity towards the Tsos.  Although a disclosure of the accounts of the Tsos with the Defendant will not be decisive on all the disputes among the parties, it can shed some light.  If the Defendant has done everything properly, there is nothing to hide.  He should do the accounts and has his name cleared, at least at this stage.  Alternatively, if something has been wrong, appropriate address can be taken accordingly.

Order

16. In the circumstances, I order that:

(1)      The Defendant do within 60 days, provide true and proper account of all moneys, assets and properties belonging to the Tsos which has, at any time, come into and out of the hands of the Defendant, his employees, servants or agents or received by any other person on his behalf in his capacity as the Duty Manager (值理) thereof and that such accounts to be:-

(a)       prepared in accepted Hong Kong accounting practice; and

(b)      verified by an affidavit/affirmation of the Defendant;

(2)       The Plaintiff is at liberty to inspect all the relevant documents in the possession or power of the Defendant in respect of the said accounts within 30 days thereafter.

(3)       The Plaintiff’s applications for interim payment are adjourned sine die with liberty to restore.

Costs

17. There is an order nisi that the Defendant shall bear the costs of the Plaintiff in relation to the Order 43 applications, including all costs reserved and certificate for counsel on 25 September 2007, to be taxed if not agreed, in any event.  As to the Order 29 applications, costs will be reserved.