CHEUNG MAN YU v. LAU YUEN CHING AND OTHERS

CACV 70/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 70 OF 2003

(On appeal from High Court Miscellaneous Proceedings No. 2421 of 2000)

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REASONS FOR DECISION

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Hon Yuen JA (giving the reasons for decision of the Court):

1. On 4 July 2003 we heard an appeal from an order made by Deputy Judge Jeremy Poon on 6 November 2002 that the originating summons issued by the Applicant on 17 May 2000 be continued as if begun by writ, and giving directions for the filing of pleadings, discovery and inspection, that affirmations stand as witness statements and that the parties have liberty to restore before the Listing Master for setting down. It was further ordered that costs be in the cause.

2. At the end of the hearing, we allowed the appeal and set aside the deputy judge's order, and at the parties' request, in view of the indication by counsel for 1st - 4th Respondents that new evidence would be filed, directed that the matter be re-listed for hearing before the Listing Judge at the first listing hearing after the Vacation. We indicated that we would give the reasons for our decision in writing in due course. We do so now.

3. The procedural history of these proceedings is somewhat convoluted but it is necessary to set it out briefly.

Originating summons

4. On 17 May 2000, the Applicant issued an Originating Summons seeking the following order or relief, briefly:-

(a) that the 1st and 2nd Respondents and the 3rd Respondent (which I shall call "the Company" to distinguish it from the 4th Respondent, which bears the same name) disclose the whereabouts of certain funds which had previously been deposited in 4 bank accounts in the name of the Company and that they cause the funds (together with any interest accrued) to be deposited with the Registrar of the High Court;

(b) that the 1st and 2nd Respondents be removed as "trustees and/or members" of the 4th Respondent ("the Unincorporated Association");

(c) that the Unincorporated Association be administered by a Scheme of Trust to be prepared by the Applicant and approved by the 5th Respondent, the Secretary for Justice; and

(d) further or other relief for the better administration of the charitable trust constituted in the Unincorporated Association.

5. It is clear from paragraph (d) that the Applicant's case is premised on the Unincorporated Association being a charitable trust. The originating summons was said to be in the matter of s.57A of the Trustee Ordinance and in the matter of Order 120 of the Rules of the High Court. Section 57A of the Trustee Ordinance governs charitable trusts and Order 120 RHC provides a procedure for applications relating to charities.

1st - 4th Respondents' position

6. Solicitors acting for the 1st - 4th Respondents filed an acknowledgment of service contesting the proceedings.

7. In the 2nd Respondent's affirmation in opposition to the originating summons, she denied that the Unincorporated Association was an association or organization at all. "Lin Fat Tong" was (according to her) merely a "label ascribed" to a place of worship, teaching and residence. That affirmation was supported by the 1st Respondent who also stated in his affirmation that the Company was never meant to be a charitable company, although its founders "are committed to charity works or the like". Apart from these allegations, other factual matters were raised.

8. These allegations prompted an affirmation in reply from the Applicant asserting that the Unincorporated Association was a "branch" of the Kik Lok Tung Benevolent Society Ltd, which is a registered public charitable trust. Other factual matters were also disputed.

5th Respondent's position

9. Surprisingly and perhaps regrettably, the Secretary for Justice has not participated in the proceedings at all.

Application for conversion

10. On 22 May 2002, solicitors for the 1st -4th Respondents issued a summons for an order under Order 28 rule 8 RHC that the proceedings be continued as if the action had been begun by writ. This was opposed by the Applicant.

Master's order

11. On 25 July 2002, after a hearing conducted by counsel on both sides and lasting 2 hours, Master Yuen dismissed the summons. According to the transcript, the master said:

"Hence, at the moment, I do not accede to their application for the OS to be converted to a writ to enable the court to reach a speedy decision as to which portion of the funding falls within charitable trust. If, at the end of the hearing of the OS, the first instance judge is of the view that whatever is remaining should be within the personal belongings of the 2nd Respondent, I'm sure appropriate direction will be given for account to be taken in that regard".

There was no appeal.

12. It was unfortunate that the order was not filed until 27 November 2002. The order was quite clear - it was ordered that "the application for these proceedings [to] be continued as if this action had been commenced by Writ of Summons be dismissed".

Hearing before the deputy judge

13. On 6 November 2002, the matter came before the deputy judge at 9:30 a.m. for directions under rule 4 of the originating summons procedure. No new evidence had been filed in the meantime.

14. The parties appearing by counsel indicated their agreement that the "trial" of the originating summons would take 5 days due to the need for cross-examination.

15. The deputy judge raised the question whether, in view of the disputes of facts, it was appropriate to turn the proceedings into a writ action.

16. Counsel for the Applicant (who had not appeared before the master) said that it had been decided by the master "subject to your Lordship's direction" that "it would be better that the affirmations stand as evidence" and referred to the fact that there had not been an appeal from the master.

17. However, counsel for the 1st - 4th Respondents (not Mr Benjamin Chain who appeared before us) then indicated that he had appeared before the master and that there was "no definitive ruling" from her on the application to convert the proceedings into an action begun by writ. He said that the master was "of the view that the matter perhaps for the time being should stand as it is but nevertheless would leave the ultimate question later to the trial judge".

18. As noted above, the master's order had not been drawn up or filed at that stage. The deputy judge obviously took the word of counsel for the 1st - 4th Respondents, remarking "I don't know why the master did not make a ruling on the question whether this matter should be turned into a writ". Counsel for the Applicant also assumed that that was the position.

19. It was in this context that the deputy judge gave the order and directions which are the subject-matter of this appeal. The appeal was lodged on 19 November 2002. (The lapse of time between the lodging of the Notice of Appeal and this hearing was due to a series of erroneous procedural steps taken on behalf of the Applicant, which are not relevant to this decision).

Appeal

20. Before us, Mr Chain accepted that former counsel for the 1st - 4th Respondents had been inaccurate when he said that the master had not made a definitive ruling. However, he submitted that the deputy judge was entitled, under Order 28 rule 8, to exercise his discretion to make the order that he did, given that the parties had agreed that the hearing would take 5 days due to the need for cross-examination of the deponents and the possibility that a foreign witness (who has not made any affirmation) may be called to give evidence. Further the 1st - 4th Respondents were intending to file further evidence, as a result of which the master's ruling may be rendered inappropriate in any event.

21. Mr K.M. Chong, for the Applicant, submitted that: (1) the matter was res judicata as a result of the master's ruling, so that the deputy judge could not overturn the ruling without an appeal; (2) even if the deputy judge retained a discretion under Order 28 rule 8, that discretion had not been exercised with full knowledge of the true circumstances, as the deputy judge and both counsel who argued the matter had been under the misapprehension that the master had not made a ruling and there had been no change of circumstances (such as new evidence); and (3) in any event, on the merits, the evidence disclosed in the affirmations showed that it was unarguable for the 1st - 4th Respondents to deny that the Unincorporated Association was a charitable trust.

22. In my view, in light of the unfortunate set of circumstances before the deputy judge, as a result of which both counsel and the court were proceeding under a misapprehension of the master's order, this court had to entertain this appeal, although it was from an order made in the exercise of the deputy judge's discretion (59/1/49 Hong Kong Civil Procedure 2002). There has been no determination by the deputy judge of the three issues set out above.

23. Although it appeared tempting for this court to step into the judge's shoes and determine those issues, we took the view that it would be unsafe for us to do so, as it is generally inappropriate for an appellate court (and especially a court comprising of two judges) to be drawn into making primary findings or decisions. Further, in the light of Mr Chain's indication that new evidence was going to be filed by the 1st - 4th Respondents, any findings or decisions might be rendered academic.

Order

24. In the circumstances, we allowed the appeal and set aside the deputy judge's order, and directed that the matter be re-listed for hearing before the Listing Judge at the first listing hearing after the Vacation. We also made an order that the costs of the appeal be to the Applicant as the misapprehensions came about as a result of submissions made by those representing the 1st - 4th Respondents. No application was made for the costs below.