CHAN CHOY FONG v. THE SECRETARY FOR HOME AFFAIRS

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1997, No. 149
(Civil)

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REASONS FOR JUDGMENT

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Nazareth, V.-P.:

1. Having heard counsel, we allowed the appeal and set aside the order made below. We now give our reasons.

2. The applicant/respondent ("Mr Chan") is a member of a t'so which owns three pieces of land in the New Territories. The last two managers appointed and registered under the New Territories Ordinance (Cap. 97) died in 1973 and 1974. No new manager or managers have since been appointed. Mr Chan suggested in 1982 that new managers should be appointed but met with objection from Mr Chan Tao-sang who belonged to another branch of the members. In December 1985 and February 1986 Mr Chan, and Chan Tao-sang reached agreement between themselves and the District Officer that the two of them should be appointed as new managers, and the majority of members apparently agreed. Unfortunately Chan Tao-sang went back on the agreement. He wished the consent of Mr Chan Koon-wah, a member of yet another branch to be secured. The District Officer therefore felt unable to proceed with the matter. In April 1996 Mr Chan's solicitors again wrote to the District Officer. They were provided with forms to be completed as the District Office felt that after ten years the situation might have changed. There was in the forms and letters from the District Office an emphasis upon consent from each of the members of the t'so, which can only be regarded as unfortunate as it became the focus of contention between the District Office and Mr Chan's solicitors. His present solicitors had by this time come into the picture. The solicitors insisted that s.15 of the New Territories Ordinance empowered the Land Officer to appoint a new manager whereas the District Officer took the view that he needed further information including a list of members, a family tree and a letter of consent from the t'so members. That view of the District Officer was communicated inter alia in his letters of 15th April 1996 and 19th August 1996. It was endorsed in a letter from the Secretary for Home Affairs dated 13th September 1996 stating inter alia that any new appointee must have the consensus support of members.

3. On 6th December 1996 Mr Chan filed a notice of application for leave to apply for judicial review of the decision of the Secretary for Home Affairs in his letter of 13th September 1996 affirming the decision of the District Officer made in his letter of 15th April 1996. He obtained leave on 10th December 1996 from Yeung J. The relief sought by Mr Chan included declarations that the District Officer had discretion under s.15 of the New Territories Ordinance to cancel the appointment of the registered managers and select and register new managers, and that good cause had been shown for such cancellation of the registration of the former managers by reason of their death; it also included "an order of mandamus to direct the District Officer ... to exercise his duty and power to cancel the [former] registered managers ... and select and register new managers pursuant to s. 15". Following the substantive hearing before him, Yeung J granted the relief sought with a direction that the new appointments be made within 6 months. The respondent/appellant, the Secretary for Home Affairs, now appeals to this Court against the order of Yeung J.

4. It is convenient at this stage to set out the text of s. 15 of the New Territories Ordinance, which lies at the heart of this appeal:

"15. Registration of manager of "t'ong", etc.

Whenever any land is held from the Crown under lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the City and New Territories Administration, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong, which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong. The Secretary for Home Affairs may on good cause shown cancel the appointment of any manager and select and register a new manager in his place. If the members of any clan, family or t'ong holding land do not within 3 months after the acquisition of the land make and prove the appointment of a manager, or within 3 months after any change of manager prove the appointment of a new manager, it shall be lawful for the Crown to re-enter upon the land held by such clan, family or t'ong, which shall thereupon become forfeited. Such re-entry shall be effected by the registration of a memorial thereof in the appropriate New Territories Land Registry." (emphasis supplied)

5. The judge rightly recognised that the role of the Secretary for Home Affairs under s. 15 has two limbs. The first is set out in the first passage in s. 15 emphasised above ("the first limb") and was characterised by the judge as "passive" involving as it does merely approval and registration of managers appointed by the t'sos themselves. The second set out in the second passage similarly emphasised ("the second limb") was described as "a more active role" and enables the Secretary for Home Affairs on good cause shown to cancel the appointment of a manager and select and register a new manager in his place.

6. Having identified the two limbs the judge in his judgment went on to say:

"In my view, the word 'may' in the context of Section 15 of the Ordinance must necessarily mean 'shall' as unless a new manager is appointed, the t'so runs the risk of having the land forfeited. The Secretary for Home Affairs has the duty, in my view, to safeguard the interest of any t'ong or t'so in the New Territories."

The appellant in his first ground of appeal challenges that view, while Mr Johnson Lam for Mr Chan seeks to uphold it. In the end, however, it has turned out to be a somewhat peripheral issue. However that may be, it is convenient to dispose of it, and I do not find it necessary to say more than that in the light of its context "may" clearly has its usual permissive or discretionary meaning and does not impose upon the Secretary for Home Affairs the duty contended for by Mr Chan.

7. The competing submissions of counsel thus boil down to two questions:

(1) Whether the second limb of s. 15 was engaged at all.

(2) If so, whether the exercise of discretion or the refusal to exercise discretion can be challenged as being irrational in the Wednesbury sense or contrary to principle.

8. The first question conceals a point of construction, i.e. whether the words "cancel the appointment of any manager" extends to cancellation of the appointment of a deceased manager, or whether it must refer to a subsisting appointment of a manager who is alive and discharging his functions. In the ordinary way, any appointment would terminate with the death of the appointee, and no cancellation or revocation would be necessary. Thus upon the death of a manager, a successor could be appointed without the necessity to cancel the earlier appointment. Moreover, it is argued, that the cancellation of an appointment would normally relate back to its inception, which would not be right with reference to the two deceased managers since there is no question about the validity of their appointments or of their actions while in office. However, it is difficult to see why the latter point could not be met by the cancellation being made with effect from their death or preferably the appointment of their successors.

9. Yet another argument in favour of the narrow construction is said to be the distinction plainly drawn between appointment and registration of a manager in both limbs. I cannot say I am persuaded that such a distinction weighs significantly in resolving the matter.

10. I have no doubt that s. 15 in the context of the second limb should be given a purposive approach. Thus I would accept that the purpose of the New Territories Ordinance in the present context is to provide a simple working system for t'sos in relation to the land they own and the management of and dealings in it with due regard to the customary law applicable. Thus a construction that is open upon the wording, which enables managers to be appointed, as opposed to one that does not, is clearly to be preferred, if the latter perpetuates a situation in which there are no managers, dealings are frozen, rights of members are unenforceable and indeed prejudiced, and so on. It is unlikely that the legislature could have overlooked the possibility of an impasse particularly one caused by dissent. Given also the broader object of good land administration underlying the relevant provisions of the New Territories Ordinance, it cannot have been the intention of the legislation that the resultant vacuum in terms of management and dealing in the land should not be amenable to resolution by the District Office, if practicable. These considerations, Mr Lam argues powerfully, clearly warrant the construction he contends for.

11. Those are weighty considerations. But they are far from being the only ones.

12. On its face, it is absurd and unreal to construe a provision to cancel an appointment as applying to appointments that have already been terminated. Not one single instance of the cancellation of the appointment of a deceased manager has been brought to notice; and here it should be noted the death of the two managers concerned occurred no less than 13 and 14 years ago. That aspect, Mr Lam has sought to overcome by pointing to the unusual feature here that the registrations of the two deceased as managers continue to stand in the sense that they have not been cancelled or superseded, and thereby inhibit dealings in the land and so forth. But, of course, it is not the cancellation of the registration that the second limb provides for but the cancellation of the appointment. Again, Mr Lam counters that the second limb, which is the only one he relies on, is the only way out of what he calls the impasse, and must therefore have been intended by the legislation as the solution. I do not accept that. The way out, it seems to me, is for the members of the t'so to get together and appoint a manager, if not unanimous, then by a majority or conceivably even by a relatively substantial minority who are able to show that the appointment should be approved under the first limb. There is simply no evidence that such a solution is not possible here or generally. Of course, where a new appointment is made, it is not necessary to cancel an earlier appointment which is implicitly and manifestly thereby superseded. That has apparently long been the implied basis of the registration of new managers without cancellation of the appointments of their predecessors (or even their registration). For my part, I would be most reluctant to be party to disturbing such obviously sensible procedures that have been in place for so long.

13. Besides, the underlying approach in the Ordinance seems to me to leave t'sos to run their own affairs while providing only such reasonable legal facilities as are necessary. I am not persuaded that it is necessary to remove deceased managers at all, and certainly not for the more obvious sort of purposes for which the second limb must have been intended, e.g. maladministration and misappropriation by managers, where the appointments would of necessity have to be cancelled.

14. Furthermore, the intervention of the District Officer and the Secretary for Home Affairs to achieve what is sought by Mr Chan and his advisers, would require those public officers, at the expense of public funds, to trace members who might have emigrated or even been born overseas, to procure meetings and decisions of uncooperative, even hostile members, and possibly impose a manager whose task may be rendered impossible by a group of members resolutely opposed to his appointment. If such were the intention of the legislation, I think it would have been spelt out and moreover the public officers concerned provided with the additional powers that seem to me would be required. In that regard, it is significant that the selection and registration of a new manager under the second limb is expressly made part of the same exercise as the cancellation of the previous appointment. I pause to observe here that in any case there have to be reservations about the judge's direction that a new manager be selected and registered within six months; leave to apply does not meet those reservations and itself raises questions as to whether it is appropriate for the courts to be supervising such matters outside established trust and similar procedures.

15. In the result, although I have not reached that conclusion with the ease with which Mortimer V-P and Liu JA have done, I reject the construction contended for by Mr Chan, i.e. that the words "the Secretary for Home Affairs may on good cause shown cancel the appointment of any member and select and register a new manager in his place" in s. 15 extend to the cancellation of the appointment of a deceased manager.

16. That disposes of the appeal. I nevertheless propose also to briefly address the second question. This has, of course, to be addressed upon the basis that the second limb does extend to cancellation of the appointment of deceased managers. Mr Lam's submission in substance is that Mr Chan did all he possibly could to procure the appointment of successor managers, but was frustrated by being unable to trace the present members of one branch of the t'so. At the same time Mr Chan Tao-sang proved intractable despite the concessions made by Mr Chan. Because the previous managers had died so long ago and their appointments were yet those registered, the properties could not be dealt with. Since 1980 it had not been possible to make any progress in the appointment of successor managers. There had been a lack of mediation on the part of the District Office. There had been also been mismanagement and above all an impasse. And finally, the first limb in his submission, does not work. All these factors in his submission amply establish good cause within the meaning of the second limb of s. 15(1), and the District Officer and the Secretary for Home Affairs could not be other than Wednesbury unreasonable in refusing to proceed to consider the application.

17. However, on the other hand, the two public officers cannot be faulted in their view that the expiration of ten years warranted a re-consideration of the position. In my view, they were entirely reasonably in seeking the information they sought. Notwithstanding their unfortunate emphasis upon the signed consent of all members of the t'so, I am satisfied upon consideration of all the written material sent to Mr Chan's solicitors and to the circumstances, that it should have been known to Mr Chan and his solicitors that they were only required to procure the signed consent of those members who could reasonably be contacted and who in fact consented. It should not have been too difficult for Mr Chan and his solicitors to demonstrate, upon the situation then current, that they had done all they could to procure an appointment by the majority of such members as it was reasonably possible to contact, if that were so. But they did not do so, nor did they provide all the information, which I have said was reasonably required, and which, it seems to me on the material before this Court, they should have been able to procure. In those circumstances I am satisfied that the public officers in question cannot be held to have acted unreasonably in deferring their consideration of Mr Chan's request to intervene until he had submitted the information required or explained why it was not available. In this respect too, the appeal must succeed.

18. For the reasons I have given, the appeal had in my view to be allowed and the judge's order set aside. I would also make an order nisi that the respondent/appellant is to have his costs of the appeal and below, and that the applicant/respondent's own costs are to be taxed in accordance with the Legal Aid Regulations.

Liu, J.A.:

19. This appeal was allowed and the orders of Yeung, J. set aside. On my part, I merely wish to say this : the whole appeal hinges, in my view, upon the true construction of s. 15 of the New Territories Ordinance, Cap. 97. S. 15 reads :

"15. Registration of manager of "t'ong", etc.

Whenever any land is held from the Crown under lease or other grant, agreement or licence in the name of a clan, family or t'ong, such clan, family or t'ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the City and New Territories Administration, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, and shall be personally liable for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land. Every instrument relating to land held by a clan, family or t'ong, which is executed or signed by the registered manager thereof in the presence of the Secretary for Home Affairs and is attested by him, shall be as effectual for all purposes as if it had been executed or signed by all the members of the said clan, family or t'ong. The Secretary for Home Affairs may on good cause shown cancel the appointment of any manager and select and register a new manager in his place. If the members of any clan, family or t'ong holding land do not within 3 months after the acquisition of the land make and prove the appointment of a manager, or within 3 months after any change of manager prove the appointment of a new manager, it shall be lawful for the Crown to re-enter upon the land held by such clan, family or t'ong, which shall thereupon become forfeited. Such re-entry shall be effected by the registration of a memorial thereof in the appropriate New Territories Land Registry."

20. By law, land held in the name of a T'so requires "a manager to represent it". The manager shall be appointed by the T'so. Upon the presentation of an appointment to the Secretary for Home Affairs (Secretary), he may approve the appointment and register the name of the appointed manager. Thus far it is clear that since what is registered by the Secretary is not the T'so's appointment but the name of the manager the T'so has appointed, the appointment of a manager under this first part of s. 15 is within the exclusive province of the T'so. What, then, is the nature of an appointment a T'so is obliged to make for securing its representation in property holdings?

21. A T'so is required to appoint a manager to represent the T'so for T'so land. The manager so appointed represents the T'so. It would be ludicrous to suggest that any T'so would wish to be so represented or continue to be so represented by a deceased person. A dead man cannot speak or act for the T'so and no T'so would likely allow itself to be ineffectively represented or continue to be ineffectively represented. After his death, an appointed manager cannot provide any or any personal service to the T'so.

22. In this case, the appointments of the last managers who are now both deceased were not produced, but it is not suggested that the last managers' appointments were made for a specific term. For the reasons I have given, it would be absurd to keep these appointed managers as representatives of the T'so in land holdings beyond their life. Further, the T'so could not have been unaware that its appointed managers were to assume the statutory powers, obligations and personal liability as specified in s. 15. An appointed manager "shall have full power to dispose of or in any way deal with the said land as if he were sole owner thereof". He "shall be personally responsible for the payment of all rents and charges and for the observance of all covenants and conditions in respect of the said land". (Emphasis supplied). The power of disposition and personal responsibility cannot be exercised or discharged by a deceased manager. Further, the execution or signing of "every instrument relating to land" "in the presence of the Secretary for Home Affairs" "shall be as effectual for all purposes as if it had been executed or signed by all the members of the (T'so)". An appointed manager is able to execute or sign these instruments only when he is alive. It is axiomatic that the office of an appointed T'so manager vacates by death.

23. Under s. 15, the T'so is enjoined to appoint a manager. The Secretary is concerned with his registration (not, be it noted, his appointment). It is only to be expected that after the death of an appointed manager, the registration of his appointment would stay in the record until it is superseded, vacated or otherwise erased. But the real question for our consideration is what term the last managers in this case were appointed to serve or whether each appointment would end upon their respective deaths. A T'so cannot be properly served by its manager appointed under s. 15 after his demise. A deceased manager cannot discharge personally the s. 15 statutory powers and obligations. He would then cease to assume personally any liability. It is inconceivable, therefore, that a T'so would appoint a manager under s. 15 beyond his life or that the Secretary would ever consider approving such an extended appointment. Clearly, s. 15 does not envisage an appointment of a T'so manager to run after his death. The personal service to be rendered by a manager appointed under s. 15 would be dependent upon his survival. A manager is chosen by a T'so for the confidence reposed in him, and the relationship between an appointed manager and his T'so must be a highly personal one, and death would terminate his authority and the relationship. It is hardly necessary to refer to any decided cases, but in Farrow v. Wilson, (1860) LR 4 CP 744 at p. 747, the Court of Common Pleas observed : Where, however, personal considerations are of the foundation of the contract, as in cases of principal and agent and master and servant, the death of either party puts an end to the relation." In Stubbs v. Holywell Railway Co., (1867) LR 2 Exch 311, at p. 315 Channel, B. said : "It is not denied that this contract was one of personal confidence. That being so, on the death of [the employee consulting engineer] it was at an end."

24. In this case, there was no T'so appointment before the Secretary for his approval and registration. The first limb of s. 15 could not be called in aid, but s. 15 further provides that the Secretary "may on good cause shown cancel the appointment of any manager and select and register a new manager in his place". The reference to "a new manager" presupposes an incumbent. In the instant appeal, the appointments of the last managers by the T'so must have been intended to discontinue upon death. They were life appointees. These appointed managers are now dead. There were no subsisting appointments for the Secretary to cancel and there were no surviving appointed managers to be ousted. The Secretary could not possibly put any new manager "in his place".

25. S. 15 may be invoked in two ways. First, there needs to be an appointment of the T'so before the Secretary for his approval and registration. Secondly, the current appointment must remain in place when the Secretary considers any good cause for its cancellation. The circumstances in this case simply did not engage either limb of s. 15. The decision of the judge cannot be supported.

26. I agree with the order nisi proposed by my Lord Nazareth, V-P.

Mortimer, V.-P.:

27. This case demonstrates the difficulties which may arise in the management of t'so lands. The relevant legislation aims so far as practical to allow t'so's to regulate their own affairs through managers.

28. The appeal turns upon the true interpretation of s.15 of the New Territories Ordinance. It is not necessary to repeat the words of the whole section but they are central. The relief granted by the judge included an order of mandamus to the Secretary for Home Affairs to exercise his powers under s.15 to cancel the appointment of the registered managers and select and register new managers within six months.

29. Yeung J granted the order on the basis that the Secretary for Home Affairs is obliged to exercise his power to cancel and appoint under s.15.

30. For my part, I have little difficulty in concluding that the words "may on good cause shown cancel the appointment of any manager" are not apt to enable the Secretary for Home Affairs to indulge in the fiction of cancelling the appointment of a manager when the office has undoubtedly become vacant on death.

31. The words provide a power to cancel for good cause. That will usually - but not exclusively - be for misconduct or an inability to fulfil the office. The Secretary for Home Affairs may then select and appoint a new manager.

32. Clearly these are discretionary powers. The words "may" in its context cannot mean "must". The fact that in the absence of a manager dire consequences may result for the t'so do not in my judgment provide a good reason for not giving the words their plain and obvious meaning.

33. In these circumstances I do not have difficulty in holding that the judge fell into error. The Secretary for Home Affairs is not obliged to exercise these powers. The powers are discretionary. Further, there is no basis upon which it can be established that the failure to exercise the powers was "Wednesbury" unreasonable.

34. The provision earlier in s.15 that on the appointment of a manager the Secretary for Home Affairs shall in certain circumstances register the name of the manager is not engaged in this case. There was no appointment to either approve or register.

35. That is sufficient to dispose of the appeal which I would allow. As to the way forward, the members of the t'so faced difficulties in appointing a manager which they have failed to surmount. If they wish to avoid possible serious consequences, they must get together to resolve these difficulties in the ways suggested by Nazareth V-P in his judgment.

36. For these reasons, I agree that this appeal had to be allowed.