KONG HA MAN CLANSMEN ASSOCIATION CO LTD v. MAN SI WO AND ANOTHER

HCA 1786/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1786 OF 2007

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D E C I S I O N

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1.  The 1^st and 2^nd Defendants sought an interlocutory injunction to restrain the Plaintiff from holding an Extraordinary Meeting pending the determination of this case.

2.  I granted the interlocutory injunction and here are my reasons.

Background

3.  The Plaintiff is a kinship association for the Man’s clan of Kong Ha village.  An Annual General Meeting was held in May 2007 for the election of the 6^th Committee.  Disputes as to the list of members and right to vote arose.  The meeting was interrupted, but at the end of the day, the 1^st and 2^nd Defendants and others were elected as the 6^th Committee (“May Committee”).

4.  The 5^th Committee (of whom the 1^st and 2^nd Defendants were also members) queried the election of the May Committee, and gave fresh notice for election of the 6^th Committee to be held in July.  The Defendants alleged there was no valid resolution as to holding the election afresh. 

5.  Another Committee was said to have been elected (“July Committee”).  The 5^th Committee handed over the accounts and documents of the Plaintiff to the July Committee. 

6.  The July Committee commenced the present proceedings in the name of the Plaintiff seeking an injunction against the 1^st and 2^nd defendant from claiming that the May Committee was duly elected.

7.  The Plaintiff also sought an interlocutory injunction in terms of the permanent relief.  The matter came before me in February this year.  The matter was temporarily resolved by the parties giving mutual undertakings that they would not seek to hold any activity in the name of the Plaintiff without giving the other side prior notice, and the other side would not object to the notified activity without reasonable ground.

8.  On 2 August 2008, the July Committee gave notice for an EGM of the Plaintiff to pass the following resolutions:

(1)   to confirm the July Committee’s instruction of Messrs. Kevin Lee & Co in representing the Plaintiff in the present action;

(2)   to confirm that notwithstanding any order to the contrary, the solicitors for the Plaintiff need not be responsible for any liabilities including costs;

(3)   to confirm that the members of the July Committee need not be joined as the 2^nd Plaintiff;

(4)   Messrs. Man Chi-keung and Man Tim-pui shall manage the funds raised for the litigation for the time being until the conclusion of the litigation.

Issues

9.  The issues at trial shall be:

(1)   Who are members entitled to vote at a general meeting of the Plaintiff;

(2)   Whether the May Committee was duly elected;

(3)   If not, whether the July Committee was duly elected.

10.  The Defendants have taken out a summons challenging authority to sue on the part of the Plaintiff.  The summons was adjourned to the trial as the issue is the same as the main issues.

Relevant principles

11.  The consideration in granting an interlocutory injunction is as follows:

(1)   serious question to be tried;

(2)   adequacy of damages;

(3)   balance of convenience.

(see American Cyanamid Co v Ethicon [1975] AC 396).

Discussion

12.  Both parties agreed there is a serious question to be tried.

13.  Mr. Ho, for the Plaintiff, referred to Kammy Town Ltd v Super Glory Corporation Ltd HCA 3524/2003 (14 January 2005) and raised the concern of the solicitor’s liability for costs in the event the Plaintiff is found to be lacking the authority to sue.  He submitted that by holding the EGM, the authority to sue will be resolved.  To grant the interlocutory injunction would be to deprive the members of their voting rights.  The resolutions seek to deal with matter of costs, and damages will be an adequate remedy in the event the Plaintiff loses.

14.  Mr. Ng, for the Defendants, submitted that without the Court’s determination of who is entitled to vote at a general meeting, any voting will not determine any substantive rights at all, and will just add to the disputes before the Court.

15.  Mr. Ng submitted that the dispute is really between the May Committee and the July Committee and Mr. Ho agreed.

16.  Mr. Ng suggested intentional delay on the part of the Plaintiff.  The Plaintiff failed to exchange witness statements as per directions given, and an unless order was taken out, and witness statements exchanged by the Plaintiff were 3 months out of time.  The Defendants’ solicitors wished to make an appointment to set the case down for trial.  The Plaintiff’s solicitors refused.  Mr. Ng queried the July Committee’s seriousness to proceed as discovery did not reveal any minutes of the July EGM.

17.  Mr. Man Tim-pui (of the July Committee) filed an affidavit stating that the Plaintiff was not eager to go to trial as they are pursuing alternative ways of resolving the matter.  For one moment I thought the parties are considering mediation, but Mr. Ho informed me that the alternative means is the EGM.

18.  I agree with Mr. Ng that to hold any meeting without first sorting out the right to vote is merely to add to the May and July 2007 saga.  It begs the question of whose right to vote is being deprived, or diluted if unauthorised persons be entitled to vote.  Mr. Ho submitted that the July Committee will determine the entitlement to vote, and voting can go ahead.  The Court can then rule on the July Committee’s determination at the trial.  This very stance militates against the balance of convenience.  The July Committee can always come to suitable arrangement on costs with the solicitors, and the general members can vote to sanction and/or ratify any steps taken in due course.  That is the only sensible way to go about it.

Conclusion

19.  In the premises, I granted the interlocutory injunction on costs to the Defendants, to be taxed if not agreed.

20.  Talking about good sense, mediation should be actively considered as the parties may have an ongoing relationship in sight.  Amicable resolution is conducive to the unity and betterment of the clan.  Mr. Ng agreed with me.