LI SIU MEN TRADING AS SOAR ATHLETIC ASSOCIATION v. HONG KONG TRIATHLON ASSOCIATION LTD

HCA 1610/2020

[2021] HKCFI 3378

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1610 OF 2020

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D E C I S I O N

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1.  The Defendant is as its name suggests a company, which operates as the association of sports people involved in the triathlon in Hong Kong. The Plaintiff operated a business teaching various sports including swimming instruction, which it did at public pools including Sham Shui Po.

2.  In late June 2020 it came to the attention of the Defendant that it appeared that swimming lessons were being given at the Sham Shui Po pool by an instructor (Wong Ho Ming Edwin, who was not a Defendant approved instructor) other than the two registered with the Defendant as being qualified instructors giving lessons on behalf of the Plaintiff and recorded as such by the Leisure and Cultural Services Department (“LCSD”). It would appear that Mr Wong was signing the LCSD attendance record as Tang Ka Wai Alex, who was approved.  This is expressly pleaded in [18] of the Defence.  The allegation is not denied in the Reply and is admitted by Li Siu Men Simon, the owner of the Plaintiff, in [12] of his affirmation in support of the summary judgment application that I have before me.

3.  The Defendant on becoming aware of the above matter sent an email to the Plaintiff on 30 June 2020 seeking an explanation from the Plaintiff. There was than an exchange of emails on the subject culminating in the following email of 10 July 2020 from the Chairman of the Defendant, Genevieve Pong, to Mr Li:

“We write to inform you that it has been unanimously agreed by members of the Executive Committee that Soar Athletic Club be removed from the Hong Kong Triathlon Association as an affiliated club with immediate effect due to serious contravention of the rules and regulations of hiring of LCSD swimming pool lanes during the month of June 2020. The incident has been reported to LCSD as well as the Hong Kong Police Force for their respective handling.”

4.  The Defendant also reported the matter to the LCSD, who it would appear as a consequence terminated the Plaintiff’s right to hire swimming lanes and forfeited rental deposits (HK$4,880).  The Plaintiff claims what he says are the losses caused by the termination by the LCSD of access to its facilities, which in addition to the lost deposit total HK$269,598.

5.  The formulation of the Plaintiff’s claim elides two complaints:

(1)  What is said to be a breach of the articles in the Defendant purporting to terminate the Plaintiff’s membership without going through the process specified in the Articles of the Defendant; and

(2)  The wrongful notification by the Defendant to the LCSD of the termination of the Plaintiff’s membership and the Defendant’s conclusion that it was not the coach approved by the Defendant and notified to the LCSD that conducted the swimming lessons, but Mr Wong, who forged Mr Tang’s signature to Mr Tang’s knowledge.

6.  In formulating the claim a number of matters have been overlooked:

(1)  The Plaintiff has not pleaded what is the consequence of the alleged breach of Article 12.  It is not pleaded in the body of the Statement of Claim whether it is said that as a consequence of the failure to follow the mandated procedure the purported termination was of no effect.  However, in the Prayer the Plaintiff seeks, first, that “the decision of removing the Plaintiff from the membership in the Defendant has violated the Articles …. and was void” and, secondly, “directions for reinstatement of the plaintiff’s membership ….”.  The pleader has not appreciated that these are inconsistent.  If the purported termination is of no effect (as the Defendant accepts) there is no need for reinstatement.  Maybe what the pleader had at the back of his in mind was an incomplete notion that that the notice dated 10 July 2020 was a repudiatory breach and the membership was terminated.  However, for the agreement between the Plaintiff and the Defendant constituted by the Articles to be terminated it would have been necessary for the breach to have been accepted and for this case to have been pleaded; which it has not.

(2)  It is not clear from the Statement of Claim what loss if any was caused by termination of membership of the Defendant and I note that despite pleading loss in the body of the Statement of Claim it is not included in the Prayer.

(3)  It appears that the Defendant’s concerns about an unauthorised coach teaching lessons purportedly on behalf of the Plaintiff were justified.  It is difficult to see, and no case in this regard is pleaded, how reporting what had happened to the LCSD was in a relevant way wrong.  For example, it is not pleaded (if this is the Plaintiff’s case) how this was a breach of the Articles.

7.  The Articles do a contain a provision in Article 12 for termination of membership for cause:

“1. In addition to the provisions of Article 11 (Suspension & Termination – Non-payment Of Subscription), the Committee shall have the power on due cause being shown (of whatever nature) to suspend any Member from membership for such period as it shall think fit or to terminate his membership. The Association shall be under no obligation to refund admission or subscription fees paid by such a Member. Nevertheless, the Committee reserves the right to do so on a discretionary basis.

2. No motion for the suspension or termination of membership shall be considered except at a meeting of the Committee. Such a motion shall not be deemed carried except by a majority of two-thirds of the Committee members present and voting.

3. A Member shall be given at least fourteen days notice of the meeting at which suspension or termination of his membership is to be considered and of the grounds on which suspension or termination of his membership is sought and such Member shall be entitled to submit representations to the Committee in writing and at that meeting orally in person.”

8.  It is not in dispute that this procedure was not followed and that the purported termination of membership on about 10 July 2020 was ineffective.  It would seem likely, although Ms Genieve Pong in her evidence on behalf of the Defendant does not expressly say so, that the Defendant subsequently realised this.  As a consequence it then purported to operate the process in Article 12 leading to a decision by the Defendant’s Committee (its board) on 5 October 2020 to terminate the Plaintiff’s membership.  The Plaintiff chose not to participate in the process.  This is pleaded in [4] of the Defence.  In [4(d)] of the Reply it is pleaded that: “There was no basis for the Plaintiff to attend the Committee Meeting on 5 October 2020, which served to remedy the Defendant’s breach of its procedural rules contained in its Articles.  The Plaintiff by then was already not a member of the Defendant.”  However, as I have already pointed out the Plaintiff has not pleaded in the Statement of Claim that his membership was terminated.  In fact a conventional analysis of the complaints of procedural irregularity would conclude that the membership was not terminated, which is the Defendant’s case.

9.  It would appear from the Statement of Claim and Mr Cheng’s skeleton argument that the ill-thought through formulation of the Plaintiff’s claim may be due to the erroneous assumption that the failure to follow Article 12 in June and July 2020 engaged public law notions like audi alteram partem. It does not.  The Articles are a contract between the member (Plaintiff) and the Company (Defendant)[1]. There is no need or justification for complicating the analysis of the contract and its terms by importing concepts from public law.  If the claim has been analysed, as it should have been, solely in terms of the law of contract and Company law perhaps the problems that I have identified might have been avoided.

10.  It is quite clear that there are triable issues.  I dismiss the application.  The Plaintiff shall pay the Defendant’s costs such costs to be taxed if not agreed and paid forthwith with a certificate for counsel.