HONG KONG KAM LAN KOON LTD v. REALRAY INVESTMENTS LTD

HCA 15824/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 15824 OF 1999

____________

(by counterclaim)

____________

______________

J U D G M E N T

______________

1. These proceedings began by way of action by Hong Kong Kam Lan Koon Limited (the Company) as plaintiff against Realray Investments Limited (Realray) as defendant, in which the Company sought a declaration that Realray's title to certain new Territories land had been extinguished.

2. In the statement of claim it is first alleged that between 1969 and 1972 an unincorporated association, Kam Lan Koon (the Association) built a Taoist temple on the land, that until 1972 the land was in the adverse possession of the Association, and that since 1972 it has been in the adverse possession of the Company, until the present time.

3. Realray has filed a defence to the action and has counterclaimed against the Company alleging trespass to the land, seeking an injunction to restrain future trespass and seeking damages amongst other relief. In the counterclaim Realray seeks also to join the Association as 2nd Defendant because of its alleged occupation of the land between 1969 and 1972. In the counterclaim as well as damages for the trespass, an injunction is sought restraining future interference with the land.

4. By virtue of the provisions of O. 15 R. 12 where numerous persons have the same interest in any proceedings, the proceedings may be begun or continued against any one or more of them representing those numerous persons. Such proceedings are known as representative proceedings.

5. Now, Realray, by summons, seeks an order that Mr Kwan Yau-hang be appointed to represent the Association. The application is made, in part, because the Company now alleges that the Association ceased to operate since the incorporation of the Company in 1972, and that what remains of the Association is a name only.

6. Realray's case however is that the Association is still alive and well and active and that accordingly it ought to be a party to the proceedings.

7. In dealing with this matter I have first regard to the decision of Megarry J in John v. Rees [1970] Ch 345, correctly summarized in the headnote in the following terms:

"The rule for representative actions laid down in RSC O. 15 R. 12(1) was not a rigid one, but was a rule of convenience; that what was important was to have before the court, either in person or by representation, all those who would be affected, so that all should be bound by the result."

Having regard to the nature of this matter, and the past history of the Association, the need to have all who would be affected bound by the result assumes a real and critical importance in this case.

8. Mr Chong for the company and for Mr Kwan says first, it must be shown that the defendants are numerous, second that the court must be satisfied that the person appointed is authorized by the others to represent them in that particular matter, and third, that a representative order ought not be made when the claim involves an action against certain members of an unincorporated association on behalf of others to enforce a strictly personal liability.

9. His primary submission, however, is that an order should not be made on disputed facts and that these interlocutory proceedings are inappropriate to determine disputed facts. Mr Chong refers here to the dispute between the parties as to whether the Association has existed since 1972, and whether it has had any members since 1972. Mr Kwan has made an affidavit in opposition to the order being made in which he asserts that since 1972 the Association has become a defunct association with no members.

10. This is, in my view, a most audacious submission having regard to the history of the Association and Mr Kwan's involvement in the Association, and indeed Mr Chong's own personal involvement in other proceedings.

11. In Judicial Review proceedings brought by the Association against the Government in HCAC 42/1997, the Association, by its representative Mr Kwan, sought certain declarations in relation to nearly the same land as is the subject of these proceedings. In those proceedings, Mr Kwan made an affidavit in which he asserted that he was the 'Chairman of the Executive Committee of the Association' and that he was duly authorized by the Association to make the affidavit. The proceedings were conducted, plainly on the instructions of Mr Kwan on behalf of the Association, right through to the Court of Final Appeal with the Association being the appellant, and therefore the instigator the proceedings, before both the Court of Appeal and the Final Court of Appeal. At no stage throughout those proceedings did Mr Kwan ever assert that the Association was defunct, that it had existed in name only since 1972, or that it had no members. Throughout those proceedings Mr Chong appeared as counsel for the Association and Mr Kwan.

12. I have had regard to the provisions of O 38 r 12 and I am satisfied that the relevant affidavits in those earlier proceedings have been duly exhibited in these proceedings and are accordingly now evidence which may be considered in these proceedings. It is not without significance that the rule does not assert that evidence may not be used in other proceedings.

13. Findings of fact were made in the course of the Judicial Review proceedings that Mr Kwan "was an still is the head of the Association". It is right that in affidavits Mr Kwan and a Mr Wong Wing-hau have asserted that in 1972 the Company took over the affairs of the Association, but they do not assert that the Association was wound up and ceased to exist. Such an assertion would be quite inconsistent with the Association pursuing as it did, the Judicial Review proceedings.

14. I am satisfied that the members of the Association are numerous. The evidence before me establishes that on 25 June 2003 a website purporting to be that of the Association proclaimed Mr Kwan as its chairman and asserted 4 vice-chairmen and 69 committee members. In his affirmation Mr Kwan makes no reference to the website and does not disavow it in any way at all. Mr Chong seeks to say that the website is the Company's website, but there is no evidence to that effect from either the Company or Mr Kwan.

15. In the circumstances, I am satisfied that an unincorporated association of an unknown number of persons which requires to have its administration conducted by no less than 74 persons falls clearly within the class of "numerous persons" contemplated by O 15 R 12(1).

16. Next Mr Chong says that there is no evidence that the Association has authorized Mr Kwan in this particular matter. The subject matter of these proceedings is the occupancy of land by the Company and the Association on and nearby land upon which a Taoist temple has been built. That is precisely the same subject matter that was before the courts in the Judicial Review proceedings before the Court of First Instance, the Court of Appeal and the Final Court of Appeal. I use the expression "subject matter" in its broad colloquial sense. It is right that different and discrete legal issues arose and arise in the various proceedings, but at the heart of all the litigation has been the occupancy of the land by the Association and the Company.

17. I have not the slightest doubt that, should it be asked, the Association would appoint Mr Kwan as its representative, just as he has been in the past. In any event, where it is necessary to sue an unincorporated association for the purpose of determining rights the proper course is to sue a responsible official, such as the Treasurer or the Secretary on behalf of the association: see Re Pritt, Morton v. National Church League (1915) 31 TLR 299; HKCP 2004 15/12/23. The Chairman of an Association would fall clearly in the same class.

18. It is argued that Mr Kwan should not be appointed against his wishes. He does not say in his affidavit that he is unwilling or unable to represent the Association. In the same affidavit in which he asserts the Association does not exist he deposes as to the existence or otherwise of documents held by both the Company and the Association. He is plainly authorized and willing to act for both.

19. Any assertion by him now that he was unwilling or unable to represent the Association would be seen for what it would be; namely a deliberate attempt to frustrate the resolution of the issues between the real parties and to try to ensure that individuals involved in the temple were not bound by any judgment in these proceedings. There is no doubt that as Chairman of the Association he is a proper person to represent the Association. He may even be compelled to represent the other members even against his own wishes: see Wood v. McCarthy [1893] 1 QB 772.

20. Next Mr Chong says that a representative order should not be made where the claimant seeks to enforce a purely personal liability. I understand the essence of the argument to be that the claim by Realray is one of trespass, and that any trespass by any individual is a personal action by that individual, and not the responsibility of either the Company or the Association.

21. There is no doubt that an association of incorporated persons can commit the tort of trespass. If the driver of a bulldozer, owned by a construction company, is instructed to dig a piece of land, and that action constitutes a trespass, the construction company could not be heard to say that while they may have instructed the action they were not liable and that liability should fall only on the individual who entered the land. Equally, if members of an unincorporated association take steps in furtherance of the associations objectives, and those steps constitute an actionable tort, the association must be liable.

22. The flexibility of the representative action rules sought by Megarry J, and the fact that in appropriate circumstances orders in relation to torts by individuals may be made against members of an unincorporated association, is seen clearly in the Animal Aid case: M Michaels (Furrier) Ltd v. Askew (1983) 127 SJ 597 CA, where action was brought against an unincorporated association of persons campaigning against cruelty to animals, a campaign which involved some members only of the association carrying out individual, tortuous actions against the property of the plaintiff. Mr Chong sought to distinguish this case by saying that the order sought was only an interlocutory order. That is right, but no issue was taken, nor could any have been taken, as to the suitability of the proposed representative defendant in circumstances where all of the complaints that Mr Chong now makes were equally valid.

23. It is important in making a representative order to bear in mind that while the judgment will be binding on all members of the Association, whether they are overseas or have no knowledge of the issues, it may not be enforced without leave. Such matters as lack of knowledge, and living overseas are clearly "facts and matters particular to his case", for which see Commissioner of Sewers v. Gellatly (1876) 3 Ch D 610 per Jessel MR, which would enable an individual member to escape from the damages aspect to the judgment while being properly bound by any declaration and injunction in respect of future conduct against members of the Association that might be made by the court.

24. Having regard to all of the circumstances of this case, the history of the conduct of litigation by the Company and the Association in relation to the land, centre of the dispute, I am satisfied that the interest of justice demand that both the Company and the members of the Association should be bound by any judgment given in Realray's counterclaim.

25. Notwithstanding the present assertion by the Company in the pleadings that it occupies the relevant land, and not the Association the very real danger in this case is that if a judgment is obtained against the Company it may later assert that it was the Association which occupied the land or if obtained against individuals and not the Associations itself, those individuals will assert that the occupation was by the Association. If obtained against the Company alone, individuals or the association may assert that they are free to act and not bound by any orders made.

26. The decision appealed from was quite correct. The appeal is dismissed. Costs on the appeal to Realray, to be taxed if not agreed.