WONG LOI YEUNG v. LEUNG AH SHUI AND ANOTHER

HCA 1157/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1157 OF 2011

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DECISION

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1. There are two applications for today’s hearing, namely:

a.  The plaintiff’s application for specific discovery under O. 24 RHC against the 2^nd defendant for the documents set out in the plaintiff’s summons, which are set out as follows:

   i.  Item 1) all yearly audited reports of the 2^nddefendant since its incorporation until now relating to the relevant period;

  ii.  Item 2) all the monthly account ledgers of the 2^nddefendant since its incorporation until now relating to the relevant periods;

  iii.  Item 3) all the bank accounts statements of the 2^nddefendant since its incorporation until now relating to the relevant period;

  iv.  Item 4) all the payment evidence of the annual liens fees of the Temple allegedly paid by the 2^nddefendant since its incorporation until now relating to the relevant period; &

  v.  Item 5) all records of the donation, income and donation money for the candles and incense,income from actual sale of candles and incense at the Temple and or any other income, since its incorporation until now relating to the relevant period.[1]and

b.  The defendants’ summons to strike out the plaintiff’s action under Order 18 rule 19 RHC for the reason that the plaintiff has no locus standi to institute this action against the defendants.

2. It is only logical and sensible for the defendants’ application to be heard first, following the decisions of A. Cheung J. (as he then was) in Kammy Town Limited v Super Glory Corporation Limited HCA3524/2003, 14 January 2005.

3. Having considered respective counsel's written submissions, I had, 2 days before this hearing,  sent a message to the solicitors acting for the parties that I would seek assistance from counsel for the plaintiff and counsel for the defendants relating to the following issues at the hearing today:

"Having considered respective counsel's written submissions, the Court would seek assistance from counsel for the plaintiff and counsel for the defendants relating to the following issues at the hearing on 25 October 2013:

1.)  Defendants' application for striking out on the ground of want of authority, namely the locus standi of the plaintiff, which was discussed in Kammy Town Ltd v Szuper Glory Corp Ltd HCA 3524 of 2003, Cheung J (as he then was), in which event, Order 18 rule 19 is not applicable and therefore PD19.1 has no application;

2.)  The defendants had in para.3 of the Defence admitted and affirmed that the plaintiff was one of the managers of the Temple as stated on the Government Land Lease. The 1st defendant and Leung Fuk Yau, the chairman of the 2nd defendant had signed the statement of truth [62 of bundle]. Is it an abuse of the process for the defendants now to say that the plaintiff has no locus standi to institute this proceeding?

3.)  It seems that the parties agree that the Temple in question is governed under The Chinese Temple Ordinance, Cap.153 ("the Ordinance"). The plaintiff asks for an order to be registered under the Ordinance and see para.23 of defence counsel's written submissions.

4.)  Section 7 of the Ordinance provides:

(1) Notwithstanding anything in the Secretary for Home Affairs Incorporation Ordinance (Cap 1044), the revenues, funds, investments and properties of all Chinese temples shall, subject to the provisions of section 8, be under the absolute control of a committee which shall be known as the Chinese Temples Committee.  (Replaced 5 of 1932 s. 2. Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940; 26 of 1961 s. 2; L.N. 22 of 1969; L.N. 67 of 1985; L.N. 262 of 1989)

5.)  Section 6 of the Ordinance provides:

No person shall-

(a) take any part in the establishment or maintenance of any Chinese temple established or maintained contrary to any of the provisions of this Ordinance or of any regulation made thereunder; or

(b) ake any part in the management or in the service of any such Chinese temple; or

(c) derive any profit from the revenue of any such Chinese temple; or

(d) knowingly supply any false or inaccurate information for the purposes of this Ordinance.

6.)  Section 15 of the Ordinance provides:

  Any person who contravenes any of the provisions of this Ordinance shall be liable on summary conviction to a fine of $1000.

7.)  The defendants in paragraph 5(v) and (vi) of the Defence affirmed that the 2nd defendant was incorporated to take over the management and operation of the Temple without stating under what authority it had to do so. It appears to be contrary to section 7 of the Ordinance.

8.)  The long title of the Ordinance is

To suppress and prevent abuses in the management of Chinese temples and in the administration of the funds of Chinese temples.

9.)  There is a public interest involved in this action.

10.) Under Order 15 rule 13A of RHC, the Court has the power, of its own motion, to direct that notice should be given to a non-party:

13A. Notice of action to non-parties

(O. 15, r. 13A)

(1) At any stage in an action to which this rule applies, the Court may, on the application of any party or of its own motion, direct that notice of the action be served on any person who is not a party thereto but who will or may be affected by any judgment given therein.

11.) In the circumstances, the Court will consider directing parties or any of them to give notice to the Secretary for Home Affairs who is the chairman of the Chinese Temple Committee by virtue of section 7(2) of the Ordinance, a representative of the public interest to join as a party. Counsel for the parties should consider and make comments on this proposal.”

4. Mr. Tang, has made further written submissions in response to my observations above.  Mr. Tang submitted that the defendant only acknowledged the fact that the plaintiff, the 1^st defendant and Madam Wong were so described as “managers” in the government land licence, but otherwise made no admission as to their legal capacity.[2] I have difficulty in understanding Mr. Tang’s submission on this issue, in particular, his submission that the plaintiff, the 1^st defendant and Madam Wong are described as the managers without admitting their legal capacity as such.  The licence was granted to the Temple and they were granted the capacity as the managers of the Temple. On the plain meaning of the word “managers”, it simply means ones who had the power of management of the Temple itself. Their legal capacity should be understood accordingly.  In fact, Mr. Chan has pointed out that the 1^st defendant had also pleaded management of the Temple in his Counterclaim.

5. Section 5 of The Chinese Temple Ordinance (Cap.153) (“the Ordinance”)provides:

(1) No Chinese temple shall be established or maintained unless it is registered in accordance with the provisions of this Ordinance. (Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940)

(2) Registration shall be effected at the office of the Secretary for Home Affairs and the following particulars shall be supplied in order to effect registration- (Amended L.N. 262 of 1989)

(a) the name of the temple or intended temple;

(b) the address of the temple or intended temple, including the street or road and lot number;

(c) the gods worshipped or intended to be worshipped;

(d) the nature or intended nature of the control of the temple, that is to say, whether by a committee or by a family or by an individual, and the title of the committee or the name of the family or individual;

(e) the name and address of the sz chuk (司祝, temple keeper), if any;

(f) particulars of the funds, investments and properties held at the time of registration and where, how and by whom those funds, investments or properties are held;

(g) the application or intended application of the revenue of the temple, including the revenue from funds, investments or property held or to be held. (Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940; L.N. 22 of 1969; L.N. 67 of 1985)

6. It is on the basis of section 5 above that plaintiff applies to the Court for an order that the 1^st defendant should sign the application for the registration of the Temple.

7. Under section 7(1) of the Ordinance, the revenues, funds, investments and properties of all Chinese temples shall, subject to the provisions of section 8, be under the absolute control of a committee which shall be known as the Chinese Temples Committee (“the Committee”).

8. Section 7(2) of the Ordinance provision for the constitution of the Committee as follows:

The Chinese Temples Committee shall consist of the following persons-

(a) the Secretary for Home Affairs who shall be Chairman of the Committee; (Amended L.N. 22 of 1969; L.N. 67 of 1985; L.N. 262 of 1989)

(b) (Repealed 78 of 1999 s. 7)

(c) the chairman for the time being of the Board of Directors of the Tung Wah Group of Hospitals, or a director of the Board nominated by the chairman as his representative;

(d) 6 persons appointed by the Chief Executive, who shall each hold office for a period of 3 years, but who shall each be eligible for re-appointment from time to time. (Added 26 of 1961 s. 2. Amended 50 of 1973 s. 2; 33 of 1999 s. 3; 78 of 1999 s. 7)

9. Under section 7 of the Ordinance, the Committee has the following powers:

(6) In order to make such control effective it shall be lawful for the Chinese Temples Committee, without prejudice to any powers that the committee may possess, to require any person other than the Secretary for Home Affairs Incorporated, who may be in possession or control of, or in whom may be vested, any property held on behalf of or for the purposes of any Chinese temple, to transfer or assign any such property to the Secretary for Home Affairs Incorporated. (Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940; L.N. 15 of 1970; L.N. 68 of 1985; L.N. 263 of 1989)

(7) Any such direction shall be signed by the Chairman of the Chinese Temples Committee, and shall be served on the person required by the direction to transfer or assign the property in question.

(8) If the person so served fails without lawful excuse to transfer or assign the property forthwith he shall be deemed to have been guilty of a contravention of this Ordinance.

(9) If the property in question is immovable property and the person in whom it is vested fails without lawful excuse to comply with the direction of the Chinese Temples Committee to assign the property to the Secretary for Home Affairs Incorporated, or cannot be served, it shall be lawful for the Court of First Instance, upon the hearing of an originating summons taken out by the Chairman of the Chinese Temples Committee, to make an order vesting the said property in the Secretary for Home Affairs Incorporated. Any such vesting order shall have the same effect as a vesting order made under section 45 of the Trustee Ordinance (Cap 29). (Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940; L.N. 15 of 1970; L.N. 68 of 1985; L.N. 263 of 1989; 25 of 1998 s. 2)

(10) If the property in question consists of stock as defined in the Trustee Ordinance (Cap 29), or is a chose in action, and the person by whom or in whose name it is held or in whom the right to sue and recover it is vested fails without lawful excuse to comply with the direction of the Chinese Temples Committee to transfer the property to the Secretary for Home Affairs Incorporated, or cannot be served, it shall be lawful for the Court of First Instance, upon the hearing of an originating summons taken out by the Chairman of the Chinese Temples Committee, to make an order vesting in the Secretary for Home Affairs Incorporated the right to transfer or call for a transfer of the stock or to receive the dividends or income thereof or to sue for or receive the chose in action, as the case may be. Any such vesting order shall have the same effect as a vesting order made under section 52 of the Trustee Ordinance (Cap 29). (Amended 33 of 1939 Supp. Schedule; G. N. 840 of 1940; L.N. 15 of 1970; L.N. 68 of 1985; L.N. 263 of 1989; 25 of 1998 s. 2)

(11) If the property in question is of any other nature than is referred to in subsections (9) and (10), and the person in whose possession or under whose control the property is fails without lawful excuse to comply with the direction of the Chinese Temples Committee to transfer the property to the Secretary for Home Affairs Incorporated, or cannot be served, it shall be lawful for a magistrate to make an order authorizing any police officer to take possession of the property, using such force as may be necessary for the purpose, and to transfer it to the Secretary for Home Affairs Incorporated. (Amended 33 of 1939 Supp. Schedule; G.N. 840 of 1940; L.N. 15 of 1970; L.N. 68 of 1985; L.N. 263 of 1989)

10. In this action, the plaintiff and the 1^st defendant point their fingers against one another, accusing the other of misappropriation of the Temple’s funds involving millions of dollars and other assets.[3]

11. I am therefore concerned that this action may concern public interest under the Ordinance and the Chairman of the Committee, a statutory body under section 7 of the Ordinance should be joined as party to the proceedings.

12. Mr. K. Chan for the plaintiff agrees that the matter should be referred to the Chairman of the Committee as he says at paragraph 9 of his further submissions:“There is definitely public interest involved in this action and the Plaintiff agrees the proposal in which the Court should on its own motion send notice to Secretary for Home Affairs and join it as a party.”

13. Mr. Tang disagrees and says at paragraph 6 of his further submissions: “The powers of the Chinese Temple Committee are derived from the Chinese Temple Ordinance.  As pointed out by Mr Justice Bokhary PJ in Secretary for Justice v To Kan Chi & Others (2000) 3 HKCFAR 481, at 496E, these powers were concerned with management and administration, not with ownership. Thus, the Committee does not have to be joined in any proceedings to enforce those powers.  The subject matter of the present application does not concern the Committee.” He further said that the 2^nd defendant had been registered as a charity since 31 March 2008, it has been subject to Government supervision.

14. The dispute between the plaintiff and the defendants is not on the ownership of the Temple.  As seen from the pleadings, they are disputing over the power of administration and management of the Temple, which under the Ordinance has to be under the control of the Committee.  Mr. Tang has missed the question that I raised on the authority under which the 2^nd defendant was set up as a charity, which, as pleaded by the 1^st defendant, has taken over the Temple’s management.  The fact that the 2^nd defendant is a charity is not relevant if there is no power for its establishment.  As the Temple is under the absolute control of the Committee under the Ordinance, other government departments simply has no power above the Committee. I am therefore not satisfied with Mr. Tang’s submission that this action has nothing to do with the Chairman of the Committee.

15. Mr. Tang then argues that the Court may bring these proceedings to the Chairman’s attention, but it is unnecessary to join him as a party because under the Ordinance, his powers of management of the fund cannot be challenged. However, he agrees that the Chairman may obtain legal advice as to what steps have to be taken.  Now the monies had been kept by the plaintiff and the defendants as they have admitted in their pleadings, the Committee may want to obtain a court order for a declaration of the entitlement to the monies and for the transfer of the monies to the Committee’s account.  Mr. Tang agrees that this is one of the possible remedies available to the Committee.

16. As both counsel agree, this Court will proceed to determine the defendants’ application for striking out.

17. Mr. Tang relies upon Order 18 rule 19 RHC in support of his application.  He has categorized the plaintiff’s causes of action into three, viz. 1) for compulsory order for registration of the Temple; 2) for compulsory return of the donations to the plaintiff and 3) for an injunction of passing off by the 2^nd defendant.

18. He submits that the plaintiff has no locus for the compulsory order for registration of the Temple as the defendants do not admit the legal capacity of the plaintiff described as a manager in the Licence granted by the Government to the Temple.  Therefore the plaintiff has no legal basis to make this claim.  Secondly, he further argues that the plaintiff cannot base upon statutory provisions to lay the foundation of his cause of action against the defendants.  This is on the basis that the management powers are vested in the Committee under section 7 of the Ordinance.  He refers to the authorities of Mohammed Yaqub Khan v AG in CACV155/1982 [1987] HKLR 145 delivered on 18 January 1983, in which the plaintiff relied upon a statutory provision under the ICAC Ordinance to sue the defendant for damages.  The Court of Appeal held that the plaintiff was not allowed to do so.  The other case is Ko Hon Yue v Liu Ching Leung HCA3494/2003 by Chu J. (as she then was) [2008] 1 HKLRD 482, in which the plaintiff relied upon regulation 76 of the Education Regulations (Cap. 279A) to claim for damages against the defendant. The Court held that the plaintiff was not allowed to do so and dismissed his claim.

19. In reply to this argument, Mr. Chan argues that the plaintiff is not relying upon the provisions under the Ordinance for his cause of action, but rather, he is relying upon his position as one of the managers and trustees of the Temple and the 1^st defendant’s same positions to ask the Court to make an order that the 1^st defendant should sign on the application form to have the Temple, the plaintiff and the 1^st defendant registered under the Ordinance.  I agree with Mr. Chan on this point. As to the proprietary interest in the money, the plaintiff argues that the 1^st defendant is also relying upon his same position as the manager and trustee of the Temple to claim against the plaintiff for the money received by the plaintiff.  It lies ill in the 1^st defendant’s mouth to accuse the plaintiff’s locus in the action. I also agree with Mr. Chan. The 1^st defendant is simply not allowed to take the benefit of his own breach of the Ordinance. Besides, the plaintiff may be wrong to ask the Court to make an order for the money kept by the defendants to be paid into the plaintiff’s account, the proper account should be the Committee’s account.  But it is not correct to strike out his claim for this reason alone.  As a trustee of the Temple, and in view of the 1^st defendant’s explicit resistance to register the Temple under the Ordinance as pleaded in the Defence and Counterclaim, the plaintiff has the right to ask for an order against the 1^st defendant to abide by the Ordinance.

20. As to compulsory return of the donations, Mr. Tang submits that the plaintiff is unable to show that he is the proprietary owner of the money himself.  The money should be given to the Committee under the Ordinance.  He simply has no locus to claim for the money.  Mr. Chan argues that the plaintiff will agree that the money should be paid to the Committee.  But the 1^st defendant is simply not allowed to use this ground for striking out as the 1^st defendant is also relying upon his similar locus for his Counterclaim.  I agree.

21. As to the application for an injunction of passing off, Mr. Tang submits that under the law of passing-off, the plaintiff has to establish the Temple’s reputation, the conduct of the 2^nd defendant and damages sustained.  From the pleadings, the plaintiff was unable to give particulars in answer to the 2^nd defendant’s requests relating to the issues. Therefore the plaintiff has no reasonable cause of action against the 2^nd defendant and his claim should be struck out.  If the plaintiff fails to provide particulars to the 2^nd defendant’s requests, the proper course will be for the 2^nd defendant to obtain an “unless order”. It will not be appropriate to strike out the plaintiff’s claim under Order 18 rule 19.  However, Mr. Chan shows from the pleadings that the plaintiff has pleaded the reputation of the Temple.

22. Mr. Tang also has the difficulty in giving the reason for having been in breach of Practice Direction 19.1, which requires the defendants to give notice to the plaintiff at least 5 clear working days, setting out the grounds on which the application for striking out are based.  See Tadano South China Co Ltd v Brightford Ltd & Another CACV 152/2006 delivered on 17 August 2006 at paragraph 23.

23. It is trite law that striking out discretion should be exercised for clear case and the pleadings are really bad, being incapable of being rectified by amendments.[4]  This is not the case here.

24. Having considered counsel’s submissions, I hold that there is no ground for the defendants’ application and it is dismissed.

25. I also take the view that this matter should be brought to the attention of the Chairman of the Committee, who will consider what appropriate steps should be taken to protect the Temple’s interest under the Ordinance.  Because of my decision, I have to adjourn the plaintiff’s application for specific discovery to a date to be fixed pending the decision of the Chairman of the Committee.

26. As to the costs of the applications, Mr. Chan asks for the costs of the defendants’ summons dismissed to be taxed on an indemnity basis and for a certificate of two counsel as the defendants also have a junior counsel to assist Mr. Tang.  Mr. Tang agrees that the costs should follow the event, but argues that the costs should not be on a more generous basis and that only one counsel should be allowed.  I have the plaintiff’s schedule of costs before me.  I will award the costs to the plaintiff on an indemnity basis for the reasons that the defendants are in breach of the Practice Direction 19.1 and that I had already given the issues to the parties before this hearing.  As the defendants insist on proceeding despite the issues outlined by me before this hearing, which coupled with my reasons above, I find that a more generous basis should be allowed.  But I decline to award a certificate for two counsel because I do not consider this case is of such complexity that requires two counsel for argument.  I say that the costs for the solicitors in preparation for this hearing, in particular, the time for attendance on clients and the perusal of documents are excessive. On a broad brush approach, the plaintiff’s costs are assessed under Order 62 rule 9A RHC at $125,000 to be paid by the plaintiff within 14 days from the date hereof.

27. I shall now make an order in terms as follows:

a. The plaintiff’s summons for specific discovery be adjourned to another date to be fixed, with time estimate of one and a half hours;

b. The costs of the plaintiff’s application be reserved;

c. The defendants’ summons be dismissed;

d. The costs of the defendants’ summons be as per paragraph 26;

e. The Clerk of the Court shall, within 7 days from the date hereof, issue a letter to the Chairman of the Committee, giving notice to him/her of this action, together with a copy of this Decision and leave be given to the representatives of the Chairman of the Committee to inspect the court file in this action;

f. The Chairman of the Committee shall within 28 days from the date of the letter reply what steps he/she will take in this action; and

g. The adjourned hearing shall be fixed for hearing after the Chairman has been joined in this action or alternatively confirmed that he/she will take no action in this action;

h. Liberty to apply.