NG PAK MAN AND OTHERS v. FUNG MING KAI AND OTHERS

IN THE COURT OF APPEAL

__________

JUDGMENT

___________

Kempster, J.:

1. By writ dated 29th April 1983 the thirteen plaintiffs claimed against the three defendants declarations that an agreement entered into between all parties and two others (who subsequently withdrew) in relation to three public light bus routes constituted a partnership and that the first defendant held the government franchise for operating such routes in trust for the firm. The plaintiffs also claimed consequential partnership accounts and injunctions restraining the first defendant from excluding them from the exercise of their partnership rights and from employing vehicles other than those of the several partners in the operation of the franchise. The Statement of Claim annexed to the writ was subsequently amended and re-amended.

2. By their Amended Defence the defendants denied that the agreement in question established a partnership but went on to describe the application of monies for its purposes and to allege that the sixth plaintiff had been in breach of one of its terms, as a result of which the first defendant had terminated the agreement as between that plaintiff and himself, and that in other respects the first defendant had acted as a quasi agent of necessity on behalf of all parties. They pleaded that the first defendant held the franchise in a purely personal capacity.

3. The hearing of the action before Deputy Judge Leathlean took some time. He gave judgment on 13th April 1984 holding that the agreement concluded between the parties did not constitute a partnership in law. Against that finding the appeal was abandoned.

4. The learned Deputy Judge also found, as he was entitled to do albeit the point had not been pleaded and probably to the surprise of all concerned, that the agreement in question had the effect of so bringing the parties into association as to constitute a "society" within the meaning of section 2(1) of the Societies Ordinance (Cap. 151); that such society, not having sought registration pursuant to section 5, was unlawful as provided by section 18 and that no relief was available to the plaintiffs in consequence. Against that finding the plaintiffs maintain their appeal contending in the alternative that their remedies as cestuis que trust remain unaffected.

5. At first blush the terms of the Societies Ordinance suggest that in its anxiety to control and limit criminal combinations the legislature was concerned to bring within its ambit all known forms of human and, having regard to the definition of "person" in section 3 of the Interpretation and General Clauses Ordinance (Cap. 1), of corporate association. "Society" is expressed in section 2(1) to mean "any club, company, partnership or association of persons, whatever the nature or objects, to which the provisions of this Ordinance apply". However, section 2(2) expressly excludes "any person listed in the Schedule". The plaintiffs did not suggest that they were "a person" so listed. It is also to be inferred from the terms of section 5(1) that the "Society" must be "local" for the provisions of the Ordinance to apply to it. "Local society" is defined in section 2(1) as "any society organized and established in the Colony or having its headquarters or chief place of business in the Colony". It can hardly have been contemplated that local married or less formally linked couples of different or even the same sex would be liable to prosecution for failing to apply for registration or exemption or, having registered, to answer an inquiry from the Registrar as to every place kept or used by them as a place of meeting! Families do not normally have headquarters or chief places of business. They have homes. No more do they have "office-bearers"; also defined. Further, section 8 appears to contemplate clubs, companies, partnerships or associations of persons having sufficient formality and substance to have or to be able to formulate constitutions of rules. I find this section, together with the definition of "local society", helpful in further indicating the true intention of the legislature when referring to associations of persons "to which the provisions of this ordinance apply". To adopt the words of Huggins, J. (as he then was) in YIM Wai-tsang v. LEE Yuk-har⁽¹⁾ at page 10 these sections illustrate "the indications which may be looked for" when seeking to determine which associations of persons (a wider definition than "association") come within the parameters of the ordinance.

 

Reference was made in argument to section 27 which reads:

 

"In any proceedings under this Ordinance -

 

With due deference to the decision of the Full Court in YIM Wai-tsang v. LEE Yuk-har⁽¹⁾, I consider it irrelevant to our present task. These are not proceedings under the Societies Ordinance and the learned Deputy Judge had to be satisfied on the balance of probabilities and without any presumption that the parties to the present litigation constituted an "unlawful society". There was ample evidence which entitled him so to find.

6. The association of the parties to this litigation for the purposes of raising money and, through the agency of the first defendant, of applying for and exploiting a maxicab franchise for their joint and several purposes was local and, while neither a formal constitution nor written rules were drawn up, membership was limited to the persons named in paragraph 1 of the Re-Amended Statement of Claim. The objects were as defined in the same paragraph and the obligations of the members, subject to some dispute, are also set out in that paragraph and in paragraph 5. The association had a name "Shing Lee Partnership Company" and could certainly have been given an address; probably that of the first defendant. It kept accounts and minutes of the meetings of its members. Provision was made for officers and for those officers to receive salaries. Its operations were a matter of public concern. I am satisfied that the learned Deputy Judge not only was entitled but was right to hold that the parties had, by the agreement they concluded between themselves, formed an association of persons to which the provisions of the Societies Ordinance applied. It was argued that this Court should hesitate so to hold because, by analogy, barristers' chambers would constitute an association of persons within the meaning of section 2(1). Be that as it may it would not affect my conclusion in the present instance.

7. It follows that the courts will not enforce obligations arising by reason of membership of "Shing Lee Partnership Company". By so doing, whether by making a declaration of trust or ordering accounts or otherwise, they would be furthering the purposes of an unlawful society. Any trust, together with the various financial dispositions described in evidence, arose out of and was alleged to arise out of the parties' agreement to further the purposes of the unlawful society. Sykes v. Beadon⁽2); Jennings v. Hammond⁽³⁾; Shaw v. Benson⁽⁴⁾; YIM Wai-tsang v. LEE Yuk-har⁽1) at page 14.

8. Had proprietary remedies been available; had it been possible to plead a collateral agreement untainted by illegality or had relief been sought before the monies contributed had been appropriated for unlawful purposes other considerations might well have applied.

9. I share the reaction of the learned Deputy Judge to the outcome of these proceedings. They have been determined not on what would generally be regarded as the merits but by reason of an Ordinance the effects of which on the civil law may not, when it was enacted on 27th May 1949, fully have been appreciated.

10. I would dismiss this appeal.

McMullin, V-P.:

11. I am in respectful agreement with the judgment which has just been delivered and generally with the reasons given therein. There is however one aspect of the decision of the Full Court in Yim Wai Tsang v. Lee Yuk Har⁽¹⁾ which I believe has relevance to the circumstances we have been confronted within the present case. In that case the Full Court was compelled to consider the distinctly unsatisfactory manner in which the legislature has defined the key term "Society" in the Societies Ordinance. There were three separate judgments and each one drew attention to an apparent circularity in the definition as it appears in section 2. In resolving that difficulty my brother Huggins and myself had resort to the provisions of section 27 of the Ordinance. While it is true that the proceedings before the courts of trial both in the present case and in Yim Wai Tsang were not proceedings taken under the Ordinance, section 27 as I interpret it, appears to give the clearest illumination in deciphering the intention of the legislature on the vital question of the application of the law. Although I agree that some help is to be had from sections 5 and 8, without the assistance of section 27 I confess that I would find that the intention remained inscrutable.

12. The Chinese Loan Association or chit fund with which the court was concerned in Yim Wai Tsang⁽¹⁾ had not been registered under the Societies Ordinance. Although the parties to that action - as is the case also in the present suit - were not either of them confronted with the need to rebut the presumption in section 27 in the sense in which that would have been true of some person who had been prosecuted under the provisions of the Ordinance, they and the trial judge were nevertheless confronted with the existence of that section and its effect on the interpretation of the statute as a whole. This is so because it is necessary, in my view, to resort to section 27 in order to extract an effective definition out of section 2. Whatever the nature of the proceedings, provided only that there is evidence before the court that a combination of persons exists, the law itself presumes that such a combination is one requiring registration under the Ordinance. If it is the interest of any party to any proceedings to assert that that is not so, that party will be confronted with the need to rebut this presumption in any of the ways provided by the Ordinance. Even if neither party to such proceedings has raised the point it will be for the judge, as in the present case, to act upon this presumption where he thinks the evidence has activated it. It will then be for the interested party to rebut it.

13. In venturing to dissent in Yim Wai Tsang I argued that anybody confronted with this presumption might turn it back in a way more fundamental still than those expressly set out in the Ordinance by showing that the combination to which he belonged was of such a character that it could not have been the intention of the legislature to place it within the grasp of the Ordinance. The majority were of the opposite view and such associations have in any event since been expressly exempted by inclusion in the Schedule to the Ordinance.

14. Whatever value the view I then expressed may have had in respect of the circumstances of the chit fund with which we were then concerned I am quite satisfied, for the reasons given by my Lord, that it can be of no service to the appellant in the present case.

Sir Alan Huggins, V-P.:

15. I have come to the same conclusion, but I respectfully agree with McMullin, V-P. as to the relevance and effect of the dicta in Yim Wai-tsang v. Lee Yuk-har 1973 H.K.L.R. 1, albeit that the case is distinguishable on the facts from the one before us.

(1)    1973 H.K.L.R. 1

(2)    (1879) 11 Ch.D. 170

(3)    (1882) IX Q.B.D. 225

(4)    (1883) XI Q.B.D. 563