張新霖 v. 黎錦文及另十一人

CACV 252/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 252 OF 2004

(ON APPEAL FROM HCA 4389 OF 2003)

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REASONS  FOR  JUDGMENT
AND
DECISION  ON  COSTS

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Hon Tang JA (giving the Reasons for Judgment and Decision on Costs of the Court):

REASONS FOR JUDGMENT

1. On 4 March 2005, we dismissed the plaintiff’s appeal.  These are our reasons.

2. This is the plaintiff’s appeal from the dismissal of his application for summary judgment by Chung J (“the Judge”).

3. This action concerns the Tsung Tsin Association (“the Association”), in particular, the election of the Association executive and supervisory committee held on 19 June 2003.

4. The Association was incorporated under the Companies Ordinance on 2 May 1959 as a company limited by guarantee for the purpose of taking over the management and assets of an unincorporated association of the same name which had been founded in 1921 by 11 civic-minded Hakka citizens.  Upon incorporation, the registrar of company dispensed with the use of the word “limited”.

5. Article 70 (formerly article 68) of the Articles and Association of the Company provided the procedure and mode of election : 

“70.	The following shall be the procedure and mode of election within the Association:—
	(a)	The Election Commissioners shall, at a meeting of their Members, fix the date for election and carry out all that is necessary in connection with the election of the Executive and Supervisory Committees.
	(b)	The Election Commissioners shall prepare and distribute voting vouchers to every Member who shall, within the prescribed period, personally bring them back to the Association in exchange for voting tickets.
	(c)	After obtaining his voting ticket each Member shall, according to the number of officers to be elected, make a mark against the names of the candidates whom he proposes to elect, subscribe his signature or chop thereon and cast it into the voting box provided for the purpose.
	(d)	On the date fixed for opening the voting box a certain number of Members of the Executive Committee and Supervisory Committee for the time being in office shall be nominated by the Election Commissioners to supervise the opening of the voting box on the spot.”

6. The articles also provided for 21 election commissioners to be elected by the members of the Association. 

7. The defendants were 12 of those election commissioners.  The other 9 supported the plaintiff in this action.

8. This is how the Judge described the event which led to this action :

“7.  After votes have been cast in the Jun 2003 election, it was resolved by the election commissioners on 19 June 2003 effectively that the counting of the votes be ‘suspended’.  The relevant parts of the resolution say:-

‘關於此事選舉所發出之選權證，選舉票及通告，因三者文字說明有疑義，與會同人未能取得共識，決定交法庭仲裁…無人反對一致通過

關於此次選舉開票，如第一案所說未能取得一致意見，決定聘請律師先行將票箱封存，並交律師保管，直至法庭仲裁為止…在律師未封存前，票箱及首長室大門繼續以封條封起…無人反對一致通過

…’.

The remaining commissioners were also present at the meeting during which the resolution was passed.  They also took part in the voting.  Further, the defendants’ affirmations disclose that there have been alleged misdeeds with regard to past election, giving rise to suspicion of fraud, corruption and irregularities being practiced during the Jun 2003 election.”

9. By the action, the plaintiff seeks only one substantive relief, namely :

"1)	A mandatory injunction that the Defendants do forthwith together and/or cooperate with the remaining Commissioners to fix a date for the opening of the ballot box and upon the date so fixed to open the ballot box and count the votes therein and announce the result of the said Election."

In essence, his application for summary judgment dated 23 February 2004 sought final judgment to similar effect.

10. The primary submission of Mr Derry Wong, who appeared on behalf of the plaintiff, was that article 70 did not give the election committee the power to suspend the counting of the votes.  He submitted that the resolution passed by the election committee was ultra vires article 70.  Mr Wong correctly submitted that article 70 did not confer power on the election committee to defer counting of the votes at whim.  He went on to submit that article 70 required the election committee to count the vote no matter the circumstances.  We do not think that can be right.  We believe under article 70, the election committee was entitled to defer counting in suitable circumstances.  Provided they had exercised their power in good faith and the decision was not unreasonable when viewed objectively, the court should not intervene.

11. Mr Wong has referred us to Rayfield v. Hands [1960] CD 1 and Jacques v. Amalgamated Union of Engineering Workers (Engineering Section) [1987] ALL ER 621.  These cases showed that article 70 should be interpreted “to validate [the Articles] if possible”.  We believe Mr Wong’s submission is supported by the words of Jenkins LJ in Holmes v. Keyes quoted by Mr Justice Vaisey in Rayfield v. Hand at page 4 as follows:

"… article of association of the company should be regarded as a business document and should be construed so as to give them reasonable business efficacy … in preference to a result which would or might prove unworkable."

12. We agree that this is the correct approach to the construction of article 70.  However we do not agree that thus construed article 70 conferred no power on the election commissioners to resolve to suspend the counting of the votes. 

13. Mr Wong also argued that the decision was not justified by the circumstances.

14. What were the circumstances?  The learned judge held that one of the triable issues in the case was whether there were in effect misdeeds in relation to June 2003 election. 

15. If the judge gives unconditional leave to defend under Order 14, because he thinks that there is a triable issue of fact, the Court of Appeal will rarely differ, Hong Kong Civil Procedure 59/1/50.

16. Mr Wong has endeavoured to persuade us that there was in effect no basis for the judge’s conclusion that there were triable issues in relation to the so-called “misdeeds”. 

17. He referred us, in particular, to the question whether there was any ambiguity in the voting voucher, voting ticket and notice to vote.  They concern the deadline for the casting of votes.  The notice to vote is in the following terms:

“

敬啟者：本會定於二零零三年六月十九日下午二時正，在香港摩利臣山道八十四至八十六號崇正大廈九字樓本會會所，舉行第三十六屆理監事選舉大會，希於收到本選權證後，依後面所列日期攜同此證、及具身份證明書或授權書到會換領選舉票選舉為要。除登報週知外，特此通告 本會各會員

”

18. The voting voucher contained three relevant provisions :

“

… 二、換選舉票日期：由二零零三年六月十三日至十九日中午十二時正換妥，逾期恕不換發。 … 四、換票時間：每日上午十時至十二時，下午二時至四時。 五、選舉開票時間：二零零三年六月十九日下午二時正。

”

19. The issue here is whether the deadline for voting was 12:00 noon or some later time.

20. The notice to vote does not say that the deadline was 12:00 noon. 

21. Clause 5 of the voting voucher has made clear that the counting would begin at 2:00 p.m.  Clause 2 provided that the exchange of the voting voucher for the ballot paper could be effected up to noon of 19 June.  It is silent on whether one could vote after noon on 19 June.  Insofar as one could exchange the voting voucher for the ballot paper up to the last moment, namely, at noon, and that the voting must take place thereafter, the voting voucher does suggest that the actual voting could take place after noon.

22. So far as the ballot paper is concerned, clause 3 is relevant :

“

… 三、選舉人，須於二零零三年六月十九日正午十二時以前，將選票投遞本會選舉票匭，逾時或用另紙抄錄及書寫者該票作廢。 …

”

23. However, this document does not help because this was not sent to a member but would only be obtained by the member when he exchanged his voting voucher for the ballot paper, which he could do up to and including noon on 19 June 2003.

24. Mr Wong has also made the point that in newspaper advertisements, it was stated clearly that the deadline for voting was 12 noon.  That may be so, but we believe that the voting voucher and the notice were potentially misleading, and members could not be expected to remember the advertisements.

25. Whether any members had been misled, if so, how many and whether that would affect the outcome of the election are matters which required investigation.  We are not prepared on the basis of the analysis of the affirmation evidence to conclude that there is no triable issue in relation to this.

26. Mr Wong has also referred us to the case of Woodward v. Sarsons & Ors, Vol. 10 CP 733.  This was cited for the proposition that irregularities which do not affect the result of the election are immaterial.

27. Mr Wong submitted that until the votes were counted, one would not know whether the misdeeds complained of would or might have affected the result of the election.  That being the case, he submitted it was illogical not to count the votes but to apply to the court for assistance.

28. The decision to defer counting was made unanimously by the election commissioners.  We do not believe it can be said that such decision was one which no reasonable election commissioners would have come to.  Nor can we rule out the possibility that the irregularities were such that the election could be said not to have been fairly or properly held, so that the attainment of a numerical majority should not be decisive of the election.

29. Mr Derry Wong also made the point that the allegation of corrupt practice by or on behalf of a candidate was irrelevant because the bribe had been refused.  The matter has been reported to the ICAC for investigation.  We believe this is relevant to whether or not a fair and proper election had been held.

30. Mr Wong has conceded that whether the Association is a charitable organisation should not affect the construction of article 70.  We agree.  But was the Association a charity as the defendants contend?

31. Despite Mr Wong’s persuasive argument, we do not believe it is necessary or desirable to come to any decision on this question.  This must await full argument and mature consideration.  Suffice it that even if Mr Wong is right and the Association is not charitable organisation, the matter would still have to go to trial.

32. Mr Wong has also submitted that he could demonstrate that the construction put on article 70 by the defendants are unworkable by reference to the proceedings brought by some members of the Association in HCMP 1856/2004.  There were 10 applicants in HCMP 1856/2004.  The 1^st, 2^nd, 4^th, 5^th, 7^th, 8^th, 10^th and 11^th defendants in the present proceedings were amongst them.  HCMP 1856/2004 was brought under section 57A of the Trustees Ordinance and Order 120 of the Rules of the High Court.  In other words, on the basis that the Association is a charitable trust.  The relief sought in that action included the following :

“(a)	That such order and/or relief as this Honourable Court shall deem necessary and desirable be made for better administration of the public charitable trust constituted in the 7th Respondent, in particular, :-
	(i)	as to whether the Ballot Papers kept in the Ballot Box for election of members of the Executive and Supervisory Committees of the 7th Respondent now sealed and kept by Messrs. King & Co., as custodian, should be counted and the result of the election of members of the Executive and Supervisory Committees for the year 2003 announced; or alternatively
	(ii)	as to whether there should be re-election of the members of the Executive and Supervisory Committees of the 7th Respondent and, if so, the modes and means by which the same should be achieved inclusive of all necessary and consequential directions.”

33. Mr Wong submitted that HCMP 1856/2004 is misconceived because the Association is not a charitable trust.  But even if Mr Wong is right, it does not mean that article 70 is unworkable.  The matters complained of could nevertheless be subject of judicial determination.  The fact that on Mr Wong’s argument, the wrong procedure has been invoked does not by itself show that article 70 is unworkable.

34. Mr Wong also made the point that the election commissioners were not entitled to delegate their duties.  He referred us to Bowstead on Agency,17^th Edition and submitted that because the performance of the obligations of the election commissioners involved the exercise of discretion, no delegation to any agent, including lawyers, was permissible.

35. But the decision here to suspend or defer the counting of votes was in substance a decision by the election commissioners to seek a determination by the court so that they should act accordingly.  The decision would or might depend on resolution of disputed facts.  The guidance of the court on questions of law was also required.  So this is not a case of any delegation by the election commissioners as such.

36. For the above reasons, we dismissed the plaintiff’s appeal.

DECISION ON COSTS

37. Mr Anthony Neoh, SC, who appeared on behalf of the defendants asked that the costs of the appeal be awarded to the defendants on an indemnity basis.  He said that the appeal ought not have been made.  Moreover that since the funds of the Association are devoted to charitable purposes the Association should not have to bear the shortfall in the event of a taxation on a party-and-party basis. 

38. Although we have dismissed the appeal, we do not believe the plaintiff has been guilty of conduct which would warrant an order for indemnity costs.  Nor should the nature of the Association affect the liability of the opposing party. 

39. Mr Derry Wong submitted that costs should be in the course.  We do not agree.  Mr Wong is wrong to compare the dismissal of the appeal to the defendants being granted unconditional leave to defend on an application for summary judgment. 

40. We order that the plaintiff is to pay the defendants’ costs of the appeal, such costs to be taxed unless agreed and paid forthwith.