CHONG KAI MAN (person appointed by Order dated 21st April 2022 to substitute FOO TAK CHING, the Manager of ‘WAH YAN MO FAN HEUNG’) v. YU HON CHIU and YU PUI LAM, the Managers of ‘YU LUK SHUN TONG’ AND OTHERS

HCMP 724/2017

[2025] HKCFI 5765

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 724 OF 2017

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J U D G M E N T

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A.  INTRODUCTION

1.  Wah Yan Mo Fan Heung (華人模範鄉) (“Heung”) is a business t’ong under Chinese customary law. This case concerns the membership of the Heung.

2.  This is the trial of the Re-Amended Originating Summons (“the OS”) taken out by the Applicant. For the reasons set out later in this judgment, both the 1^st Respondents (“R1”) and the 2^nd Respondent (“R2”)[1] are members of the Heung. In this trial, Mr Anthony Neoh SC, leading Mr Alvin Chong, represent the Applicant. Ms Audrey Eu SC, leading Mr Nelson Miu, represent R1. Mr Timothy YH Wong, represents R2.

B.  THE HISTROY[2]

3.  In 1924, two gentlemen, the late Mr Wong Yuet Chiu (黃月樵) and the late Mr Lui Lap Ka (雷立家) (“the Founders”) purchased land in the New Territories with a vision to create a self-sustaining residential community by way of subscription by advertisement in a Chinese Newspaper. The Founders called this community the Wah Yan Mo Fan Heung (華人模範鄉).

4.  In 1925, the following advertisement was published in the newspaper (“the 1925 Advertisement”):

“港商場信黃月樵黃仲彝等﹑現在新畀壆圍處X[3]地一大段﹑擬闢為模範鄉﹑業經請人打平水﹑訂立界址﹑但凡華人皆可加入﹑惟每股額收港銀五百元﹑以收足四百股為限﹑除購地及各種經費外﹑每股分囘樓地一間﹑至後續拓權利﹑均歸股份所有﹑聞現下加入認股者﹑已有多起云 ……” (Emphasis added)

5.  As shown in the evidence, the original sum of HK$500 was subsequently lowered to HK$250 for one “house lot”.

6.  With the investment subscriptions received, the Founders bought lands in New Territories in Demarcation Districts (“DD”) 93, 104 and 107 which formed part of a Block Crown Lease granted by the then Government under the New Territories Lease, declaring themselves trustees of the lands purchased for the Heung. After purchase of these Lands, the Founders, pursuant to the terms of the Subscription, designed and exhibited a plan of the Heung divided into streets with House Lots (“HL”)[4] and a common area to be commonly enjoyed by members or rented out to produce income. Between 1932 and 1937, the Founders assigned individual house lots in DD 107 to the subscribers (“the Subscribers”). The Founders also issued share certificates in an unincorporated company (“the share certificates”) to the Subscribers according to the subscriptions received[5]. The name of this company is Chiap (Chap) Shing Company (集成公司) (“the Company”). A Subscriber of one HL would have one share in the Company.

7.  As explained latter in this judgment, the Founders admitted 66 members (“the Original Members”) and assigned 334 HLs to them.[6] In total 338 share certificates were issued.

8.  Each of the Original Members were issued with a receipt, which is a stub to the share certificate issued to the member. The contents of one sample stub are as follows:

“集成公司

英新界華人模範鄉

茲據

趙好賢 君遵照本鄉章程繳交股銀合特給發正式股票內附錄數之屋地壹間歸其永遠管業此據第四路中拾捌號一千九百二十八年六月廿號中華民國十七年五月五日香港新界集成公司存根”[7] (Emphasis added)

9.  As a result of WWII and the fall of Hong Kong, the vision of creation of the community was not carried out. After the war, the Founders rented out the common land of the Heung deriving income. Upon their demise, the management of the Heung was passed on to others.

10.  Over the years, some of the Original Members had devised their HLs to either family members or others, some having informed the managers and some have not. Some of these devisees were re-issued the share certificates but some have not obtained the share certificates.

11.  Subsequent managers of the Heung also issued share certificates to persons who never had any interest in any of the HLs. This state of affairs gave rise to disputes over who are rightful members of the Heung and over who has the right to attend meetings and appoint the manager(s) of the Heung.

12.  Subsequent managers also sold 12 new HLs (“the New 12 HLs”) without issuing any new share certificates to the purchasers. This leads to a question, ie whether the purchasers of the New 12 HLs are members of the Heung.

13.  The HLs devised by the Heung to its Original Members were all situated in DD107, Yuen Long comprised in the Block Crown Lease issued on 24 January 1905.

14.  The Block Crown Lease contains the following restrictive conditions:

(1)  “AND FURTHER that the Lease or any other person or persons shall not, nor will, during the continuance of this demise, use, exercise or follow, in or upon the said premises, or any part thereof, any noisy, noisome or offensive trade or business whatever, nor convert any ground hereby expressed to be demised as agricultural or garden ground into use for building purposes other than for the proper occupation of the same ground as agricultural or garden ground without the previous Licence of His said Majesty, His Heirs, Successors or Assigns, signified in writing by the Governor of the said Colony of Hongkong, or other person duly authorized in that behalf. AND FURTHER that the Lease or any other person or persons shall not nor will at any time during the said term erect or construct any building or structure of any description on the said demised premises or any part thereof whether demised as agricultural or garden ground or otherwise without first having obtained the approval thereto of the Surveyor to His said Majesty, His Heirs, Successors or Assigns, or other person duly authorized by the Governor of the said Colony of Hongkong, in that behalf.” (Emphasis added) (“the Building Restriction”)

(2)  “AND ALSO that the Lessee shall not, nor will, assign, demise, mortgage, or otherwise part with all or any part of the said premises hereby expressed to be demised for all or any part of the term hereby expressed to be granted without forthwith registering such alienation in the Land Office, or such other Office as may hereafter be instituted for the purpose of Land Registration in the said Colony of Hong Kong, and paying all reasonable fees and other expenses thereon.” (Emphasis added) (“the Registration Requirement”)

15.  The lands purchased by the Founders were registered under the name of “Wah Yan Mo Fan Heung” with the two Founders listed as Managers.

16.  The lands not converted into HLs are lands held by the Heung for the common benefit of Members. Such lands (the unassigned land in DD107 and the land in DD93 and 104) comprised the majority of the purchased land by the Heung. The intention was that such lands would be managed by the Company and rented out for farming, deriving income for the Heung to be distributed among the Heung’s members according to their respective shares.

17.  The assignments of HLs within the Heung were conducted pursuant to Section 28 of the New Territories Ordinance 1911 and Form A therein, by way of a “Conveyance on Sale”, where a memorandum alone (ie without an assignment) would be sufficient for the purpose of registration at the District Administration. All the conveyances of the 66 HLs by the Founders to the Original Members were registered in the Land Registry. The remaining land was rented out by the managers on behalf of the Heung, generating rental income.

18.  As said in the above, as a result of WWII, no houses were ever built on the land. During this period, the Heung’s activities were limited to leasing agricultural land to farmers in exchange for rental income. After the decision by the Court of Appeal in AG v Melhado Limited[8], some of the HLs and some of the common lands held by the Heung were used for storage purposes. Over time, portions of the common land of the Heung were resumed by the Government, and compensation was paid to the Heung. Some HLs were also resumed and compensation was paid to the owners of the HLs registered in the Land Registry. Some HLs had been adversely possessed and the paper titles had been extinguished.

19.  In 1996, Mr Robert Tang QC (as he then was) provided a written legal advice on the nature of the Heung. However, by reason of lack of information, Mr Tang QC was unable to give a concrete answer at that time. He raised numerous questions and the possibility of bona vacantia. He advised enquiries to be made to ascertain the nature of the Heung and who are entitled to its assets and land, and its membership.

20.  In April 2000, the late Mr Tang Man Kit (“MK Tang”, originally the 3^rd Respondent (“R3”) in this case) and the late Mr Foo Tak Ching (“TC Foo”) commenced legal proceedings against the SJ under HCMP 2082/2000, asserting their status as registered managers of the Heung under Section 15 of the New Territories Ordinance (“NTO”). At the end, a compromise was reached, and a Tomlin order was made by Yuen J (as she then was) on 30 August 2000.

21.  Thereafter, the District Office of Yuen Long (“YLDO”) formally acknowledged the Heung as a Section 15 T’ong under the NTO. YLDO also recognized that, inter alia, MK Tang and TC Foo had been managers of the Heung since 1999 within the meaning of Section 15. YLDO issued formal approval of TC Foo’s appointment on 31 August 2000, and this was registered in the Yuen Long Land Registry on 1 September 2000. In their letter dated 31 August 2000, YLDO said:

“It is acknowledged that:

1. The ‘Wah (or Wa) Yan Mo Fan Heung’ was, and still us, a t’ong within Section 15 of the New Territories Ordinance;

2. CHAN Kam Cheung and TANG Man Kit were, between 1989 and 1999, managers of the ‘Wah (or Was) Yan Mo Fan Heung’ within the meaning of Section 15 of the New Territories Ordinance;

3. The said TANG Man kit and FOO Tak Ching, were, since 1999, and still are, managers of the said ‘Wah (wa) Yan Mo Fan Heung’ within the meaning of Section 15 of the New Territories Ordinance.”

22.  However, the membership issue of the Heung remained unresolved.

23.  In July 2013, the Applicant and R1 herein, together with one Wong Kwan Fat, executor of the estate of Wong Pui, sued MK Tang in HCA 1342/2013. The three of them claimed that they were members of the Heung, and they sued MK Tang as a manager of the Heung for breach of fiduciary duties owed by MK Tang to the Heung. That action is still pending for determination.

24.  On 4 October 2013, a notice was issued by TC Foo as manager of the Heung calling for a meeting to be held on 26 October 2013 to discuss a resolution to remove MK Tang as manager of the Heung, and appointing one Madam Wong Pik Yee Pat (“Pat Wong”) as manager. This resolution was passed in the meeting (“1^st Removal and Appointment Resolution”).

25.  In January 2014, TC Foo and Pat Wong commenced legal proceedings against, inter alia, MK Tang, for breach of fiduciary duties under HCA 83/2014. The action is also pending for determination.

26.  On 17 July 2014, TC Foo issued another notice to call for a meeting of the Heung to be held on 23 August 2014 (“the 2014 Meeting”). On 7 August 2014, TC Foo gave another notice setting out the proposed resolution to demand MK Tang to deliver up all documents and chattels of the Heung. A meeting was convened and a resolution passed to ratify and confirm the 1^st Removal and Appointment Resolution (“2^nd Removal and Appointment Resolution”) and also to require MK Tang to return all documents and chattels of the Heung (“Delivery Up Resolution”).

27.  After the 2014 Meeting:

(1)  On 25 August 2014, the Heung’s solicitors, Messrs Au Thong Tsang (“ATT”) wrote to YLDO on 25 August 2014, advising them of the results of the resolutions passed in the Heung’s meetings, and asking YLDO to register the removal of MK Tang and appointment of Pat Wong as manager of the Heung. Following the normal practice, YLDO caused to be published and posted at the Heung a Notice of Application for Removal and Appointment of Manager of the Heung on 29 January 2015.

(2)  In December 2014, TC Foo as manager of the Heung commenced HCMP 3361/2014 in December 2014 against MK Tang requiring him to deliver up all documents and chattels (including the chops for bank statements) of the Heung, relying on the Delivery Up Resolution.

28.  In April 2015, ATT wrote to YLDO and enquired if there were any objections to the appointment of Pat Wong and removal of MK Tang. After a series of correspondence, ATT was advised that there were 21 objections to the appointment of Pat Wong: 20 of these were anonymous and in standard form, with just one sentence of objection and neither full name nor address was given. The only letter with the full name of the objector came from MK Tang.

29.  MK Tang initially did not give any grounds for his objection, but asked repeatedly for time extensions to provide the grounds. Later, on 28 May 2015, MK Tang’s solicitors raised, inter alia, the ground of objection that the issue of who were members of the Heung had not been resolved, and until this had been done, no proper resolutions could be passed by the Heung or acted upon.

30.  On 13 July 2015, the substantive hearing of HCMP 3361/2014 took place before DHCJ Kent Yee. On 11 September 2015, the learned judge handed down a written judgment, in which he dismissed TC Foo’s claim, on the ground that the notice concerning the proposed Delivery Up Resolution had not been advertised in the newspapers. The learned judge also said that it was important for the membership issue of the Heung to be resolved, and before that YLDO was justified in refusing to act upon the resolutions removing MK Tang and appointing Pat Wong as managers of the Heung.

31.  MK Tang passed a copy of DHCJ Kent Yee’s Judgment to YLDO. On 15 December 2015, YLDO wrote to ATT advising that, having regard to the judge’s comments in the judgment in HCMP 3361/2014, they were shelving the processing of the removal and appointment of managers of the Heung.

32.  On 29 March 2017, TC Foo commenced these proceedings to determine the membership of the Heung. MK Tang was joined as R3 in his personal capacity (as opposed to his managerial role) in these proceedings.

33.  On 17 June 2020, TC Foo passed away.

34.  Thereafter, Mr Chong Kai Man (“KM Chong”) made an application as an intervenor to substitute TC Foo as the Applicant of the current proceedings. MK Tang also made an application to substitute himself as the Applicant but he subsequently withdrew his application. On 21 April 2022, on an uncontested basis, K Yeung J ordered that KM Chong doth substitute the late TC Foo as the Applicant herein, and that pursuant to Order 15 rule 13 of the Rules of the High Court, KM Chong doth represent the interest of the Heung and its members solely for the purpose of these proceedings (“the 21.04.2022 Order”).

35.  The Applicant and the R1 then respectively filed their Chinese Law Customary Reports on the issue of Membership of the Heung. The Applicant’s expert is Professor Michael Palmer, and R1’s expert is Dr Patrick Hase. After the filing of their respective reports, the experts also produced a Joint Statement on 27 March 2023. Apart from the Applicant and R1, no other party in this case has filed any expert report.

36.  As mentioned in footnote 1, R1’s solicitors, Messrs Liu, Choi & Chan (“LCC”), have prepared the Study on 24 August 2023. In the Study, LCC have gone through various documents and set out their observations. The Study is a thorough research. The analysis done by LCC is meticulous and the observations made therein are insightful. Both the Applicant and R2 agree with the analysis and the observations set out in the Study. Having considered the Study, I endorse the analysis made therein. The Study is a valuable reference material in these proceedings, and I must express my gratitude to the solicitors for their hard work and the helpful assistance provided to the Court.

37.  Upon R1’s application and with no objection from the other parties, on 18 September 2023, K Yeung J granted leave to R1 to make a counterclaim by an affirmation pursuant to Order 28 rule 7 of the Rules of High Court. On 20 September 2023, R1 filed the 2^nd Affirmation of Mr Ng Chung Ying Daydes (“Daydes Ng”). The counterclaim has been raised in [4] of that affirmation (“the Counterclaim”).

38.  On 18 November 2024, MK Tang passed away.

39.  On 17 February 2025, after hearing submissions from the Applicant, R1 and R2, I gave, inter alia, the following directions (“the 17.02.2025 Order”):

(1)  Leave to R1 to publish a prescribed notice in one English and one Chinese local newspaper within 14 days inviting persons claiming to have interest in the Heung to, within 28 days of the date of publication, respond to the notice or apply to the Court to become a respondent in these proceedings;

(2)  Leave to Wang Qiu Xiang, the Executrix of MK Tang’s estate (“the Estate”) to apply to represent the Estate in these proceedings within 21 days; and

(3)  Leave to R1 to bring the newspaper advertisements and this order to the notice of Messrs Wong Hui & Co, solicitors acting for the Executrix of the Estate of MK Tang, and Messrs Robinson, Lawyers, solicitors in HCMP 1439 of 2021 since 30 July 2024 for Tinting Group Development Limited, of which Tang Ting Kwan (“TK Tang”)[9] is a director and shareholder.

40.  R1 has duly complied with the 17.02.2025 Order and has done everything required to be done in that order. The Executrix of the Estate did not make any application to represent the Estate in these proceedings. No person, including TK Tang, has made any application to become a respondent in these proceedings.

41.  On 12 March 2025, in view of the absence of any application from the Executrix of the Estate to represent the Estate in these proceedings, I ordered that, inter alia, MK Tang shall cease to be a party of these proceedings.

42.  In the PTR on 29 September 2025, I granted leave to the Applicant and R1 to file and serve a Supplemental Joint Report by Professor Palmer and Dr Hase. On 15 October 2025, the Supplemental Joint Report was filed.

43.  At the beginning of the trial, after hearing the parties, I directed that the experts’ respective reports, the Joint Report, and the Supplemental Joint Report be treated as evidence in the trial without calling the experts to give oral evidence.

44.  In his oral opening submissions, Mr Neoh SC referred to [6] and [9] of the Expert Report of Wejen Chang in HCA 8000/1990, in which (a) the characteristics of a business t’ong and (b) differences between a business t’ong and a family t’ong were discussed. The contents of these paragraphs are not controversial. With no objection from R1 and R2, I treat these two paragraphs as evidence in the trial.

45.  In view of the 21.04.2022 Order, on 14 November 2025, after hearing submissions from the parties, I granted an order specifying that the capacity of the Applicant in these proceedings is representing all members of the Heung save and except R1 and R2. Further, I order that the 21.04.2022 Order be varied that the Applicant would represent the interest of the Heung and its members (save and except R1 and R2) solely for the purpose of these proceedings.[10]

C.  THE CLAIM AND THE COUNTERCLAIM

46.  The Applicant’s claim as per the OS is inviting the Court to answer the following questions:

(1)  Whether the membership of the Heung are confined to one or more of the following persons:

(a)  persons/entities holding both:

(i)  HLs; and

(ii)  appeared in the share certificates correspond with the interest in the HLs;

(b)  persons holding both:

(i)  HLs; and

(ii)  appeared in the Share Certificates correspond with the interest in the HLs as assignees and transferees thereof;

(c)  persons holding the Share Certificates without holding corresponding HLs.

(2)  If the answer to any part of (1) above is to be answered in the affirmative, it may be declared that membership of the Heung be confined to those set out in (1)(a) and/or (1)(b) and/or (1)(c) above, or one or more of them; and

(3)  If the answer to (1) above is to be answered in the negative, it may be determined as to persons constituting membership of the Heung.

47.  By the Counterclaim, R1 is seeking the following directions from the Court:

(1)  Directions for the formation of a Committee to work out a list of members of the Heung, after the Court has ruled on the criteria for membership (or which categories of persons/entities should be regarded as members);

(2)  Directions for the calling of a meeting of the members of the Heung where issues such as appointment/removal of managers can be discussed and voted upon;

(3)  Directions regarding the procedure to be adopted at such meetings (eg whether resolutions are to be carried by a simple majority of members present or voting in proxy); and

(4)  Liberty to apply for further directions regarding the above.

48.  In this trial, the parties are able to agree on many issues. The Applicant and R1 have different stances on some issues. As to the issues on which the Applicant and R1 differs, R2 is in general agreement with R1.

49.  I would discuss the evidence and answer the aforesaid questions in this judgment.

D.  THE COURT’S JURISDICTION

50.  As said in the beginning of this judgment, the Heung is a business t’ong. Its status is recognized by s.15 of the NTO. This is affirmed in [62] of the CA Judgment.

51.  S.13(1) of the NTO provides:

“…… in any proceedings in the Court of First Instance or the District Court in relation to land in the New Territories, the court shall have power to recognize and enforce any Chinese custom or customary right affecting such land.”

52.  There is no dispute, and it is well established that traditional bodies within s.15 of the NTO are to be treated as analogous to trusts, and managers are to be regarded as analogous to trustees and members are to be treated as persons having beneficial interests in the property of the traditional body. In these proceedings, the Court is asked to provide appropriate reliefs so that the Heung (ie the trust) could be lawfully administered and the beneficial interests appropriately protected. In doing so, the Court should recognize and enforce the relevant Chinese customs affecting the land in question.

53.  For matters covered by s.13 of the NTO, Chinese Customary Law applies to the exclusion of any English or Hong Kong law that might be relevant. The point has bee made clear by DHCJ A Cheung (as the CJ then was) in Liu Ying Lan v Liu Tung Yiu & anor[11], in which the learned judge said:

“13. This decision [ie Tang Kai-chung v Tang Chik-shang [1970] HKLR 276] has since been generally regarded as the authority on the proper construction of section 13 in general, namely, that the Court must recognise and enforce Chinese custom and customary right in all matters in relation to land in the New Territories, to the exclusion of any English or Hong Kong law that might otherwise be relevant……” (Emphasis in original)

E.  DISCUSSION

E1.  The Study

54.  In the Study, as to the 334 HLs allocated by the Founders to the Original Members, the current owners of these HLs are divided into the following 6 categories:

(1)  Category 1: Original Members of the HLs (with share certificates) (including Tso & T’ong, absent owners[12] and owners whose land are now occupied by the Heung[13])

(2)  Category 2: Assignees and transferees of HLs and share certificates from the Original Members (recognized by managers and/or members meeting)[14]

(3)  Category 3: Assignees and transferees of HLs only without share certificates from the Original Members (or without proof of transfer/holding of the relevant share certificates) and never approved or recognized by the managers and/or members of the Heung[15]

(4)  Category 4: Owners whose HLs were resumed by the Government

(5)  Category 5: Adverse possession

(a)  Category 5A: Adverse possessors acquired possessory titles to HLs by adverse possession

(b)  Category 5B: Owners of HLs who had been dispossessed

(6)  Category 6: Ownership uncertain

55.  Apart from the owners of the original 334 HLs, the Study also identifies the following:

(1)  Bare Share Certificate Holders: There are 3 bare share certificate holders, namely (a) MK Tang (1 share), (b) TK Tang (1 share), and (c) Tonkit Development Ltd (“Tonkit”) (5 shares). Tonkit was deregistered in January 2008 as a defunct private company and no longer exists as a legal entity.

(2)  12 New HLs: In 1964, the managers of the Heung assigned (a) 7 new HLs to Calford Catering Group (“Calford”), and (b) 5 new HLs to Fanwide Development Ltd (“Fanwide”), without any indication that share certificates pertaining to those lots were issued.

E2.  The expert evidence

56.  Regarding Professor Palmer and Dr Hase, I have considered the background, qualification and experience of each of them. I am satisfied that both of them are well qualified to give expert evidence on Chinese customary law, and I have duly considered their respective reports, the Joint Report, and the Supplemental Joint Report. Professor Palmer and Dr Hase are almost in complete agreement on each and every matter, and they only have very little difference in their opinion.

57.  Professor Palmer and Dr Hase jointly opine on the following:

(1)  Original Membership of the Heung: Original assignees of HLs and holders of share certificates are Original Members of the Heung.

(2)  The Company’s role: The Company was intended to function as an estate management company for the Heung.

(3)  Bearer of share certificates: Holding a share certificate alone does not qualify for membership of the Heung.

(4)  Transfer of Rights: Rights from Original Members may be transferred through succession or assignment.

(5)  Loss of share certificates: Loss of share certificates does not disqualify the holder of the certificates from membership in the Heung.

(6)  Evidence for claims for membership: Evidence needed to support a membership claim may be decided by a meeting of Heung members.

(7)  Membership is tied to land ownership: Membership of the Heung is entirely tied to land ownership in the Heung area, regardless of whether transfers were recorded as members by managers.

(8)  Manager authority: Manager cannot create new members without the agreement of existing members in Meeting.

(9)  Tso and T’ong membership: Tso and T’ong can be members of a business t’ong like the Heung.

(10)  Resolution passing: A simple majority suffices for passing a resolution in a Members’ Meeting.

(11)  Bona Vacantia: The concept of bona vacantia does not exist under Chinese Customary Law.

(12)  Unclaimed funds: Surplus funds of the Heung should be dealt with by members’ meetings, with options like establishing a fund or transferring rights to managers until bona fide claimants are found.

(13)  Land ownership rights: Under Customary Law, land ownership rights persist even after long absences.

(14)  Dismissal of managers: Members have the right in a Members’ Meeting to dismiss managers for misconduct, such as peculation or unauthorized disposal of trust land. Managers may be removed by a decision of Members in a properly called meeting, but there are no specific rules on how meetings should be held or resolution passed. NTO requires the District Office to endorse such a decision by Members to avoid frivolous exercise of this right.

(15)  Non-appearance at meetings: If due notice and reasonable time are given for a members’ meeting, non-appearance must be treated as voluntary.

58.  I accept the joint opinion of the two experts as set out in the paragraph above, and I attach weight to that opinion.

59.  As to the matters on which the two experts are not in complete agreement, I will address those matters in the below.

E3.  The Categories identified in the Study

60.  In this subsection, I would discuss each category identified in the Study.

    E3.1  Category 1

61.  Persons and entities in Category 1 are the Original Members, who are the original owners of the HLs with corresponding share certificates. These original owners acquired the HLs (with the relevant conveyances registered in the Land Registry) and the share certificates directly from the Founders. Both experts agreed that they are the members of the Heung. All the parties in the trial are of the same view.

62.  It is plain that the persons and entities in Category 1 are members of the Heung.

    E3.2   Category 2

63.  Persons and entities in Category 2 are assignees and transferees of the HLs and the share certificates. They have attended the Heung’s meetings in the past, and they were allowed to vote in the Heung’s meetings. In other words, their memberships have been recognized by the managers and/or the members of the Heung. Both experts and all the parties agreed that they are members of the Heung.

64.  Two questions arise here:

(1)  In order to be a member of the Heung, whether an assignee or transferee of a HL would need to register the assignment or the transfer in the Land Registry first.

(2)  In order to be a member of the Heung, whether recognition from the managers and/or members of the Heung is necessary.

        E3.2.1  Necessity of registration in the Land Registry

65.  On this questions, the parties’ respective stances are as follows:

(1)  The Applicant submits that registration of ownership in the Land Registry should be sufficient proof of membership of the Heung. The Applicant poses the question as to whether assignees/transferees, in the absence of registration in the Land Registry, may be accepted based on customary rules or procedures, or by acceptance by the members in meetings.

(2)  R1 submits that registration in the Land Registry is neither necessary nor sufficient. Valid proof of transfer of HLs and share certificates, together with general acceptance by members in meetings, are required.

(3)  R2 concurs with R1.

66.  The experts are of different views on this questions:

(1)  Professor Palmer refers to the Block Crown Lease, which contains the Registration Requirement. Professor Palmer points out that without complying the Registration Requirement, there would be a breach of the Block Crown Lease. The issue is whether the Heung can accept anyone as a member by way of some customary rules in the absence of compliance with the Registration Requirement in the Block Crown Lease. Professor Palmer asks the question: As a person takes his or her title from the Block Crown Lease, can that person take title without complying with it by way of some customary rules? Professor Palmer’s view is that it would be best to retain the Original Members or subsequent members with title registered in the Land Registry as members of the Heung.

(2)  Dr Hase is of the view that in accordance with customary law, what is required is reasonable proof of transfer ownership and/or succession. Registration in the Land Registry is sufficient proof of transfer or ownership, but it is not the only way. Further, registration in the Land Registry is not part of the customary law. Dr Hase refers to the fact that the share certificates were issued to the Subscribers in 1928, but the HLs were only assigned to them in 1932.

67.  Having considered the parties’ respective submissions and the expert evidence, I am in agreement with Professor Palmer.

(1)  The two experts agreed that membership of the Heung is entirely tied to land ownership in the Heung area. As said by Professor Palmer, an assignee or transferee takes his or her tile from the Block Crown Lease. Thus, in my view, in order to be a member of the Heung, acquiring HL(s) in a way in compliance with the Block Crown Lease is essential.

(2)  With respect, the question posed by Professor Palmer, ie can a person take title without complying with the Block Crown Lease by way of some customary rules, has not been answered by Dr Hase. There is no evidence showing by what customary rule(s) an assignee/transferee of a HL can take title without complying with the Registration Requirement in the Block Crown Lease. Further, there is no evidence showing by what customary rules the Heung can recognize an assignee or a transferee as a member of the Heung while the Registration Requirement in the Block Crown Lease has not been complied with. Without evidence on all these, the answer to the question posed by Professor Palmer can only be “No”. The fact that the share certificates were issued to the Subscribers in 1928 but the HLs were only assigned in 1932 is not an answer to the aforesaid queries.

(3)  In my judgment, an assignee or a transferee can only be a member of the Heung after compliance with the Registration Requirement in the Block Crown Lease.

68.  For avoidance of doubt, I have to make it clear that the Registration Requirement in the Block Crown Lease only applies to alienation. After the death of an owner of a HL, by operation of the law, the HL would be an asset in the deceased’s estate. There is no alienation, and hence the registration requirement in the Block Crown Lease would not be relevant. The personal representative of the deceased’s estate should be entitled to exercise all the rights attached to the HL, including the right to attend the Heung’s meetings and to vote in the meetings. As to who should be recognized as the personal representative of the deceased’s estate for the purpose of exercising the rights attached to the HL, apart from the probate or letters of administration issued by the Court, other evidence may also suffice. As to what evidence would be sufficient for proving the identity of the personal representative of a deceased member’s estate, this would be a matter to be determined by the members of the Heung. See [56(6)] above.

69.  Ms Eu SC for R1 submits that compliance with the Registration Requirement should not be a condition which must be satisfied in order to be a member of the Heung. Ms Eu SC argues that:

(1)  Hong Kong does not adopt a system of title registration and ownership can always be proved in many other ways apart from land registration.

(2)  The Land Registration Ordinance governs the priorities of registered documents in accordance with the order of their registration. Failure to register an assignment or transfer may expose the assignee or transferee to the risk that a subsequent encumbrance may be registered and take precedence over their interests. However, as between the assignee and the Crown/Government, failure to promptly register any deeds had never been held to be a breach of the Block Crown Lease resulting in forfeiture/re-entry, or for that matter, any other penalty. R1 refers to Wu Koon Tai v Wu Yau Loi[16], in which a purchaser who purchased land in 1934 from the son of the Crown Lessee who had died in 1921 was held by the Privy Council to have acquired the beneficial interest so that his successor is entitled to compel the successor of the Lessee’s grandson (who registered himself as successor in 1951) to vest the title of the land on him, notwithstanding the fact that the son had never registered his right as successor under s.17 of the NTO. R1 says that in that case, there was a breach of the requirement to forthwith register the alienation/succession under the Block Crown Lease, but this breach did not feature in the judgment or in any argument before the Court.

(3)  Ms Eu SC argues that the requirement for registration before recognition would be sure to create problems and unfairness. When a person dies, the application for a grant (whether of probate or letters of administration) takes time. If non-registration means non-recognition, then a deceased member’s estate will be deprived of the chance to participate (and vote) in Heung’s meetings until the grant is issued, which can take months if not years. This has never been the practice of the Heung. More importantly, Chinese customary law, which should be applied to succession and transfer of land in the New Territories, may give rise to dispute and delays which the members of the Heung can deal with, or failing that, can apply to Court.

(4)  Ms Eu SC refers to the situation of Ng Chun Ying Daydes (伍仲英) (“Daydes Ng”):

(a)  Daydes Ng’s late father Ng Shil Ming (伍紹明) had in December 1953 purchased 10 HLs together with the share certificates from Tong Wing Yiu (湯榮耀), one of the sons of Tong Shun (湯信) (one of the original 66 members). Tong Wing Yiu brought Ng Shil Ming to meet the then managers (ie the two Founders), informed them of the sale, and requested them to register Ng Shil Ming as a member of the Heung in respect of the HLs sold, in place of Tong Shun.

(b)  Due to the objection from the brothers of Tong Wing Yiu, the other executors of Tong Shun, the registration could not be put through. But his father was accepted as a member of the Heung and attended four meetings (and prepared the minutes of those meetings ) in April 1959, May 1962, June 1963 and October 1964.

(c)  In 1956, Tong Wing Yiu took Ng Shil Ming and two other purchasers (Kwong Loong Hoi and Lee Yuet Oi) to the office of Messrs Lo & Lo to meet a solicitor, Arthur Lui, with instructions to prepare assignments of the legal title of the relevant HLs. The three purchasers left the relevant share certificates with Messrs Lo & Lo, but Tong Wing Yiu procrastinated and said he needed more time to sort out the problem with his brothers. In 1972 when Ng Shil Ming and the other two purchasers went back to Messrs Lo & Lo, the share certificates could no longer be found, and Arthur Lui made a statutory declaration of the loss.

(d)  Ng Shil Ming died in May 1990 and Letters of Administration of his estate was granted to his wife Ng Mo Ching, who obtained a final judgment on behalf of Ng Shil Ming’s estate against the executors of Tong Shun for delivery of possession of the relevant HLs to her or her nominee in HCMP 6326/1999 on 5 January 2001 (“the 2001 Judgment”).

(e)  After Ng Mo Ching passed away in 2020, Daydes Ng had to apply for a grant of administration de bonis non of Ng Shil Ming’s estate. The Estate Duty Office (“EDO”) had yet to include the 10 shares in the Company in the Schedule of Property. Daydes Ng’s solicitors wrote to the EDO on 2 December 2024 but EDO has not responded to date.

(f)  Despite the lack of registration, Daydes Ng had attended Heung’s Meetings (as representative of his late father) in February 2011 and October 2013 .

Ms Eu SC submits that as shown by this example, despite clear evidence of transfer of the HLs, registration of land ownership in the New Territories may take years. Ms Eu SC further submits that Daydes Ng has contributed to the funding of these proceedings and the funding in HCMP 1439/2021[17]. To adopt this new criterion of registration would mean that Daydes Ng would not be recognized as a member until he is able to register the 10 HLs in his name. That would not be a result fair to Daydes Ng.

(5)  Ms Eu SC also refers to the case of Or Mun Yuet (柯敏月) or Chong Or Mun Yuet (莊柯敏月):

(a)  Or Mun Yuet purchased 6 HLs in 1975 and been given 6 share certificates at the time of purchase. She personally attended the Heung’s meeting held on 5 September 1984 and was represented at the Heung’s meetings held on 28 January 1989, 26 October 2013 and 23 August 2014.

(b)  The HLs were actually not registered in Or Mun Yuet’s name but in the name of her husband, Chong Kam Hing (莊金興), from 18 April 1975 until 31 March 2005. From 31 March 2005 onwards, the HLs were registered in the name of Chong Yuet Ping Richard Africa.

(c)  As for the share certificates given to Or Mun Yuet, they were originally issued to 3 Original Members: 黃景昌, 黃德聰 and 伍輝明. These names have been crossed out and replaced with 司徒雅. 司徒雅 had never been registered as owners of the corresponding 6 HLs, nor attended any Heung’s meetings.

(d)  According to R1, Or Mun Yuet’s case illustrates that when there was an intention to transfer membership upon transfer of the HL(s), the original share certificate(s) would be passed along by the vendor to the purchaser. Land registration was not a requisite for membership. Chinese customs have their own way of proving or accepting transfer of membership.

70.  With respect, I am unable to accept Ms Eu SC’s submissions.

(1)  In my view, the points as set out in [67] above have not been answered by R1’s submissions, and there is no answer to those points by referring to the Wu Koon Tai case cited by R1.

(2)  For the reasons set out in [68] above, adopting the criterion of registration would not be unfair to the estate of any deceased owner, for the personal representative of the estate may exercise the rights attached to the relevant HLs without registering any document in the Land Registry. The only matter required is that the personal representative of the deceased’s estate should prove his or her status by evidence to the satisfaction of the members in a Heung’s meeting.

(3)  Adopting the criterion of registration would not be unfair to Daydes Ng.

(a)  The 2001 Judgment has been registered in the Land Registry. That judgment is an affirmation of the transfer of the relevant HLs from Tong Shun’s estate to Ng Shil Ming. By the registration of the 2001 Judgment, the Registration Requirement in the Block Crown Lease has been satisfied.

(b)  Daydes Ng has made a claim to the Heung that he should be regarded as the representative of Ng Shil Ming’s estate, and should be entitled to exercise the rights attached to the relevant HLs. Based upon the documentary evidence adduced by Daydes Ng, I see no reason why his application could be refused by the Heung. In fact, both the Applicant and R2 have not challenged that Daydes Ng’s late father’s estate should be regarded as a member of the Heung, and Daydes Ng could represent his late father’s estate and participate in the Heung’s meetings.

(4)  Or Mun Yuet’s case does not show that the registration of the ownership of the relevant HL(s) in the Land Registry is not necessary in order to be a member of the Heung. After all, her husband’s ownership in the 6 HLs, and Chong Yuet Ping Richard Africa’s ownership in the 6 HLs, have been registered in the Land Registry. Thus, the attendance of Or Mun Yuet in previous Heung’s meetings could well be regarded as the attendance in the capacity of being the representative of her husband, or being the representative of Chong Yuet Ping Richard Africa. Alternatively, attendance in any previous Heung’s meetings is not evidence of membership. A clear example is MK Tang. MK Tang did attend various Heung’s meetings and did vote in those meetings. However, since MK Tang was a bare share certificate holder and had never had any HL in the Heung’s area, it is clear that MK Tang had never been a member of the Heung.

71.  For avoidance of doubt, the Registration Requirement can be satisfied by registering the relevant assignment or transfer instrument in the Land Registry. The Registration Requirement can also be satisfied by the registration of a document in the Land Registry affirming or evidencing the transfer, like the registration of the 2001 Judgment in the Land Registry in Daydes Ng’s case.

        E3.2.2  Necessity of recognition by the managers and/or members of the Heung

72.  As to whether the assignees or transferees of the HLs would need to be recognized by the managers and/or members of the Heung in order to acquire membership of the Heung, in my judgment, the answer is “Yes”, but the managers and/or members of the Heung could only refuse an application for membership by an assignee or a transferee on the ground the applicant is unwilling to bind himself to the responsibilities of membership.

73.  It is worth to note what Cheung JA has said in the CA Judgment:

“63. The next question is whether the Heung offends section 345(1) of the Companies Ordinance, Cap.32 which provides that:

‘No company, association, or partnership consisting of more than 20 persons shall be formed for the purpose of carrying on any business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under this Ordinance, or is formed in pursuance of some other Ordinance.’

……

69. In a general sense the Heung is an association of members which exceeded twenty in number. However, it is still necessary to consider the nature of an ‘association’. The individual members of the Heung acquired the house lots in the land which would be transferred to their names. The remaining part of the land would be let and the rent would be distributed to the members in accordance with their share of interest as represented by the house lots they owned. Apart from having a right to the part of the land belonging to them and having a right to the rent of the land belonging to the Heung, the members really do not have any mutual rights and obligations towards each other. From the information disclosed, the interest of the members in the Heung is freely transferable. [KM Chong]’s grandaunt transferred her interest to [KM Chong]’s aunt who in turn transferred it to [KM Chong]. As James LJ observed in Smith v Anderson, persons who have no mutual rights and obligations do not constitute an association because they happen to have a common interest or several interests in something which is to be divided between them. I would adopt the same approach and hold that the Heung is not an association within the meaning of section 345.” (Emphasis added)

74.  In the CA Judgment, based upon the evidence in that case, the Court of Appeal reached the conclusion the interest of the members in the Heung is freely transferable. For the reasons stated in the below, in view of the evidence in this case, I would say that members in the Heung is freely transferable, subject to the requirement that the assignee or transferee of the HL(s) is willing to bind himself to the responsibilities of the Heung.

75.  In his expert report, Professor Palmer said: .

“36. …… The general purpose of [the share certificate] was to evidence the conferral of ownership of house lots and therefore membership of the Heung. Since the certificates describe themselves as ‘official shares’ (zhengshi gupiao: 正式股票) and place no restrictions on sale (as a traditional Chinese land deed might well have done), there would seem to be no intention to place an explicit bar to subsequent conveyance of the plot and therefore membership of the Heung to another party. ……” (Emphasis added)

76.  Professor Palmer is of the view that membership derives directly from actual ownership of HLs within the Heung area. The recording of transfers by the Heung is not relevant to the membership status. Assignees and transferees would be entitled to attend Heung’s meetings as members upon production of their title registration as proof of their entitlement and no other formality is required.

77.  On the other hand, Dr Hase is of the view that assignees and transferees would not automatically become members. They can apply to become members, and when they do, the Heung has a duty to consider. Recording of transfers by the Heung is not essential, but the owners must have participated in meetings or otherwise indicated that they wish to be members, and were prepared to accept responsibilities as well as benefits, before they can be regarded as members.

78.  Mr Neoh SC accepts that it would be fair to say that assignees and transferees would need to indicate that they bind themselves to the responsibilities of membership. However, subject to this requirement, admission to membership should not be a matter of discretion of the members of the Heung.

79.  Ms Eu SC submits that in order to acquire membership of the Heung, an assignee of a transferee of a HL would need to be admitted to membership by the members of the Heung. Ms Eu SC submits that:

(1)  The Heung was not only set up for investment purpose. It was also set up for social purpose. As stated in the 1925 Advertisement, the Heung was a community for Chinese to join (“凡華人皆可加入”). Further, Professor Palmer said in his report:

“8. The WYMFH is a business project intended to generate profits, and also a social development project intended to create a residential community that was both new and also drew some inspiration from Chinese traditions.” (Emphasis added by counsel)

(2)  The Heung was managed by managers whose role is akin to that of trustees. Becoming a member is not simply a matter of land ownership. There is a clear difference between an intention to buy a lot of land on the one hand and an intention to join a community in another. It requires some mutual trust rather than simply being neighbourly. There is also the need for trust, rights and obligations in the management of communal land. The need for an application to join the Heung and acceptance by the other members of the Heung via general meetings should be seen in this light.

80.  Ms Eu SC submits that there are examples showing that transfer of membership had always required approval.

(1)  The Case of KM Chong

(a)  KM Chong obtained two share certificates and 3 HLs in 1974 from his late aunt, Chong Kam Yung (莊金容), who had obtained the same from one of the Original Members Chiu Ho Yin (趙好賢), the sister of his grandmother.

(b)  In 1974, his late aunt brought him to the office of Messrs Hastings & Co and assigned a number of land lots to him. Shortly thereafter, his late aunt brought him to see Wong Tat To (黃達道) (“TT Wong”), who was then the manager of the Heung. His late aunt told TT Wong that she was retiring and she was introducing KM Chong to TT Wong as her nephew and successor, and TT Wong was informed of the transfer of her membership in the Heung to KM Chong. TT Wong said that there would be no problem of the transfer and asked the late aunt to provide records of the transfer of the HLs so that TT Wong would make a record.

(c)  According to KM Chong, from his dealings with the Heung since 1974, the Heung has been very careful in dealing with persons claiming as members of the Heung.

(d)  KM Chong said that transfer of membership of the Heung would require transfer of the HLs and the consent of the Heung, and this was evidenced from the fact that, in 1974, despite the transfer of the HLs to him, it was necessary for his late aunt to bring and introduce him to TT Wong to give notice of the transfer of membership.

(2)  The Case of Fung Jo Ning (馮祖寧) (“Fung”) and So Ngan Ping (蘇銀屏) (“So”)

(a)  In the Minutes of Meeting of the Heung held on 7 October 1964, item 5 of the matters reported in the meeting: “司理報告收到馮祖寧及蘇銀屏二人先後來函各一件有關請求轉換股票事”.

(b)  The Minutes did not record whether this matter was discussed/approved in the meeting. However, this is a record showing that transfer of shares/membership required approval by members in meetings, otherwise Fung and So would not have made the request for approval. Fung had attended two previous Heung meetings, in 1962 and 1963, but not after that.

(3)  The Case of Ng Shil Ming / Daydes Ng – see [69(4)] above.

(4)  The Case of R2

R2 is a direct descendant of Tam Chik Sun (or Tam Chak Sam) (譚植三). After his death, his son Tam Chi Tak Simon was registered as successor in September 2001. In October 2015, Tam Chi Tak Simon gifted the HL to R2. Although there is no formal record of approval, R2 had attended meetings of the Heung in February 2011, October 2013 and August 2014, which (according to R1) indicated her acceptance by other members.

(5)  The Case of Or Mun Yuet (柯敏月) or Chong Or Mun Yuet (莊柯敏月) – see [69(5)] above.

81.  With respect, the examples mentioned by Ms Eu SC in her submissions as summarized in the paragraph above may not clearly tell whether, apart from acquiring a HL in the Heung area, the assignee or transferee of the HL would need to be recognized by the managers and/or members of the Heung in order to be members of the Heung.

(1)  In the case of KM Chong, it seems that the most important matter in his case is the transfer of the relevant HLs. What TT Wong required from the late aunt was records of the transfers of the HLs. KM Chong was of the view that apart from the transfer of the HLs, it would be necessary for the late aunt to introduce him to TT Wong in order to give notice of the transfer of the membership to TT Wong. Obviously, giving notice to the manager is different from seeking approval from the manager.

(2)  In the case of Fung and So, there is no evidence showing how their applications were dealt with by the Heung. Further, there is no evidence showing that apart from the applications made by Fung and So, there were applications of this kind made by other transferors and/or transferees of share certificates. With so many unknowns, it would not be safe to reach a conclusion based upon the case of Fung and So.

(3)  Regarding the case of Ng Shil Ming/ Daydes Ng, the case of R2, and the case of Or Mun Yuet, I do not think these cases can be examples showing that transfer of membership would need recognition by the manager or members of the Heung. The example of MK Tang shows that attendance in previous Heung’s meetings (including participating in the voting in those meetings) does not necessarily constitute evidence of membership.

82.  As pointed out by Professor Palmer at [36] of his report, there is no restriction of sale in the share certificates, which evidences the conferral of ownership of HLs, and therefore membership of the Heung. Subject to the matter mentioned by Dr Hase as set out in [77] above, there is no evidence showing that transfer of membership of the Heung would be subject to any condition, or would need to be approved by the manager or members of the Heung.

83.  Dr Hase’s opinion concerning acceptance of the responsibilities of the Heung as set out in [77] above is in accordance with common sense and is not disputed by all the parties in these proceedings. I accept that opinion, and I agree that in order to be a member of the Heung, one must agree to bind himself to the responsibilities of the Heung (“the Responsibilities Requirement”).

84.  I have considered in order to be a member of the Heung, whether one would need to be a Chinese. It is stated in the 1925 Advertisement: “…擬闢為模範鄉……但凡華人皆可加入……”. Mr Wong submits that “但凡華人皆可加入” means that Chinese can join the Heung, but it does not necessarily mean that only Chinese can join the Heung. Mr Neoh SC and Ms Eu SC are of the same view. Having heard the parties’ submissions, I am persuaded that there is no sufficient evidential basis to say that only Chinese can join the Heung as members.

85.  Based upon the evidence before me in this case, I conclude that in order to be join the Heung as a member, apart from acquiring HL(s) in the Heung’s area, the applicant for membership would also need to satisfy the Responsibilities Requirement. The Responsibilities Requirement should apply to all assignees and transferees of HLs. The application for membership can be made to the manager of the Heung, or made to the members of the Heung in a Heung’s meeting. Once the applicant has made it clear that he is willing to bind himself to the responsibilities of the Heung, the manager and/or the members of the Heung should accept his application for membership and has no discretion to refuse the application.

86.  Save and subject to the above, membership of the Heung should be freely transferable. The Heung is not entitled to impose some other requirements to restrict transfer of membership.

        E3.2.3  Conclusion on Category 2

87.  For the reasons set out in the above, for persons and entities in Category 2, subject to the compliance with the Registration Requirement, and subject to the recognition of the manager and/or members of the Heung (for the purpose of checking compliance with the Responsibilities Requirement set out in [83] above), they are members of the Heung.

    E3.3  Category 3

88.  Persons and entities in Category 3 are assignees and transferees of HLs only without share certificates. They had not attended any Heung’s meetings in the past.

89.  Mr Neoh SC submits a person in Category 3, after declaring that he is willing to bind himself to the responsibilities of the Heung, he should be admitted as a member of the Heung, and the Heung should have no discretion to reject him.

90.  Mr Wong’s position is similar. Mr Wong submits that if a person in Category 3 can prove that he obtain the HL(s) by transfer or by succession, he should be eligible for membership. However, that person would need to make an application for membership to the Heung. The person should be given the right to choose to be or not to be a member of the Heung. The Heung would assess the application to ensure that the applicant is a bona fide assignee or transferee of the HL(s).

91.  Ms Eu SC submits that a person in Category 3 should make an application for membership to the Heung, and the Heung would consider whether he could prove that he had acquired interest in the unallocated land (“the common land”) in the Heung’s area, and he had acquired membership of the Heung. If the Heung is satisfied that he could prove all the these, then the Heung would admit him as a member.

92.  Both Mr Neoh SC and Ms Eu SC submit, and I agree, that an owner of a HL would have both an interest in the HL, and an interest in the common land.

(1)  As stated in the CA Judgment:

“69. …… The individual members of the Heung acquired the house lots in the land which would be transferred to their names. The remaining part of the land would be let and the rent would be distributed to the members in accordance with their share of interest as represented by the house lots they owned. ……”

(2)  This view is also supported by the expert evidence in this case.

(a)  Professor Palmer in his report said:

“19. …… The idea of setting up of the WYMFH was to maintain and develop the common areas not assigned to individual members into the roads and comment facilities envisaged in the development. Thus the unassigned lands (namely, lands which were retained after assignment of individual lots to members) and funds derived therefrom must remain in common ownership of the entire body of members.”

(b)  Dr Hase in his report said:

“41. …… The 66 who received “house lots” in the 1932/1933 distributions were the only people who could have formed the community the Prospectus spoke of. They, and the heirs and assigns, must be treated as the only members of the Heung today, subject to the possibility of there being some further subsequent sale of land within the Heung area. They hold their allocated “house lots” as Crown Lessees in their own names, and the land registered in memorial 84441 under the name of Wah Yan Mo Fan Heung (the unallocated land) must be seen as being owned in common by the 66 allocated Agricultural Land Holders.” (Emphasis added)

93.  Ms Eu SC submits that a share certificate is evidence of membership, and is also evidence of interest in the common land.

94.  Ms Eu SC submits that based upon Professor Palmer’s opinion, a share certificate bears significance.

(1)  While holders of bare share certificates who do not also own the corresponding HLs are not members, a share certificate is not irrelevant. It is evidence of membership. Ownership of share certificates plus the corresponding HL would be prima facie evidence of membership.

(2)  A share certificate denotes joint ownership of the common land in addition to the HL. There is evidence of a market for such share certificates. Such share certificates probably originated from some Original Members who had chosen to withhold them while disposing of their interests in the HLs.

(3)  In the event that a share certificate relating to a HL is lost, it would be for the members of the Heung to decide what evidence would be required to support a claim for membership made by that owner of that HL.

95.  Ms Eu SC submits that there is evidence showing that there is a market for the share certificates. For the owners of the HLs in Category 3, as to why they acquired the HLs without the corresponding share certificates, there are two possibilities. When they acquired the HLs from their predecessors-in-title:

(1)  They did not know that there were accompanying share certificates, or if they knew, the share certificates were never offered by the vendor to them. They acquired the HLs purely as a land transaction.

(2)  They were offered the chance to buy the corresponding share certificates, but decided not to pay the extra money for the membership and the interest in the common land, and instead only pay the price for the HLs.

96.  Ms Eu SC argues that:

(1)  In the first scenario, the present owners had intended to buy HLs, and that was what they got. There is no reason why membership of the Heung and interest in the common land should now be conferred/imposed upon them.

(2)  In the second scenario, the argument against conferring membership and interest in the common land on the present owners is even stronger. They had been given the opportunity to become a member of the Heung and to buy the interest in the common land, but had made a conscious decision that membership and interest in the common land were not worth the extra money. To give them the membership and interest in the common land now when they had chosen not to pay for it would be an unjustified windfall.

97.  Ms Eu SC submits that R1’s stance is not that Category 3 owners should be denied membership absolutely. Any owners in Category 3 wish to become members of the Heung may make an application to the Heung and to prove to the satisfaction of the Heung that notwithstanding the fact that they do not have the share certificates, they have actually acquired membership and interest in the common land, and the Heung would consider their applications on a case-by-case basis in general meetings.

98.  To examine the correctness of Ms Eu’s submissions, it would be necessary to examine (a) the true nature of the share certificates, and (b) whether interest in a HL and interest in the common land can be assigned or transferred out separately.

99.  The points made by Ms Eu SC as summarized in [94] above are based upon the following paragraphs in Professor Palmer’s report:

“13. Any loss of certificates by such persons would not in itself be fatal in Chinese customary law. What evidence would be needed to then support a claim would be matter for the Heung members themselves to decide. In my view, there is a considerable body of evidence available - assignments and allocation of house lots in the Heung to named parties - that would enable an accurate determination of original membership to be made.”

“30. …… the share certificates that indicated specific property lots on their face, conferred membership of the Heung on their holders, share certificates that did not indicate specific property lots would not therefore indicate membership of the Heung, which was intended to be a residential community. This was the view taken by the Court of Appeal in the judgment of Mr. Justice Cheung, JA, in CACV137/2002.”

“32. As an unincorporated association, the Chap Shing may not hold property in land in the New Territories. The likely purposes of securing a share in the Chap Shing were to assist in the creation of a management system that would generate income and, if possible, distribute profits to shareholders and manage the affairs of the Heung as a residential community in a satisfactorily and accountable manner. For avoidance of doubt, however, any person claiming an interest in the Chap Shing but without any ‘house lot’ rights would not be a Heung member. The Heung is the body that holds the common lands and is the body registered as the business t’ong under S.15 of the NTO. So the members of the Heung are the persons with shared interests in common in the lands held by the Heung. ……”

“34. It seems that there is no surviving written constitution of the Heung, nor any other form of written agreement between the original members available. In my view, in Chinese customary law it is the original assignees of house lots in the Heung and the original holders of share certificates that would be characterized as the original members. Holding a share of the Chap Shing company alone would in itself not be sufficient, as the Chap Shing was a separate entity in tended to function as an estate management company for the Heung.”

100.  With respect, I am of the view that Ms Eu SC’s submissions as summarized in [94] above are not supported by Professor Palmer’s opinion.

(1)  Reading [13] of Professor Palmer’s report in context, the term “such persons” in that paragraph is referring to the original owners directly obtaining the HLs and the share certificates from the Founders. In that paragraph, Professor Palmer is not discussing owners of HLs in Category 3.

(2)  What has been said by Professor Palmer in [30] of his report as quoted in the above is his understanding of the CA Judgment, not his personal opinion of the effect or purpose of the share certificates. With respect, having read the CA Judgment carefully, I do not think that the Court of Appeal has said the matter stated in [30] of Professor Palmer’s report.

(3)  In both [32] and [34] of his report, Professor Palmer did not say that an assignee or a transferee of a HL without the corresponding share certificate would not or might not be recognized as a member of the Heung.

101.  As to the true nature of the share certificates, both experts have given direct comments in their respective reports.

(1)  Professor Palmer said in his report:

“36. …… The general purpose of the certificate was to evidence the conferral of ownership of house lots and therefore membership of the Heung. ……” (Emphasis added)

Thus, according to Professor Palmer, the purpose of the share certificates is to evidence the conferral of ownership of HLs. Membership of the Heung follows the ownership of HLs.

(2)  Dr Hase said in his report:

“43. The question of the “share certificates” is, in my opinion, a red-herring. The Customary Law knows nothing of share certificates. No other Customary Trust ever issued anything called “Share Certificates”. Those issued by the Heung were, and must be seen as, no more than elaborately decorated receipts. At best, they merely prove that money was received and “houselots” allocated. However, the distribution of 1932/1933 proves that even more certainly: the Proposers distributed the land they held to those they recognised as subscribers. The presence or absence of a share certificate means nothing. Any attempt to invest these “share certificates” with any more mystic significance is an attempt to impose Common Law practices and should be strenuously avoided. Owners of land in the 1932/1933 distributions (or their heirs or assigns) are members of the Heung, whether they have “share certificates” or not. Any talk of “bearer certificates” is even more an attempt to impose alien Common Law practices on a Customary Law situation. Any holder of land in the 1932/1933 distribution who sold that land, or part of it, therefore, sold Membership of the Heung as well. Since (as Professor Palmer pointed out) Tsap Shing Company was intended to function as an estate management company, a share in the estate management company clearly cannot translate into a share of the estate.” (Emphasis added)

Plainly, Ms Eu SC’s submissions are not supported by R1’s own expert.

102.  I accept the expert evidence on the true nature of the share certificates. The share certificates would not have the effect of conferring membership of the Heung on the holder of certificates. Those certificates are merely receipts showing that subscription money had been paid by the Subscribers to the Founders in the 1920s. The fact that there are some people misunderstanding the true nature of the share certificates, and the fact that there are some people trading these certificates, would not change the true nature of the share certificates.

103.  As to whether interest in a HL and interest in the common land can be assigned or transferred out separately, I agree with Mr Neoh SC that the answer is “No”.

(1)  In the 1925 Advertisement, it is stated:

“…… 每股額收港銀五百元 … 每股分囘樓地一間﹑至後續拓權利﹑均歸股份所有” (Emphasis added)

(2)  As submitted by Mr Neoh SC, as shown in the 1925 Advertisement, the whole scheme at the very beginning is that all the rights would be bundled together. Thus, there is no basis to say that interest in a HL and interest in the common land can be assigned or transferred out separately.

(3)  There is also no expert evidence showing that interest in a HL and interest in the common land can be assigned or transferred out separately.

104.  With respect, I am unable to accept Ms Eu SC’s submissions concerning Category 3 owners. In my judgment, Category 3 owners, subject to complying with the Registration Requirement and the Responsibilities Requirement, should be regarded as members of the Heung.

    E3.4  Category 4 and Category 5B

105.  Persons and entities in Category 4 are owners whose HLs were resumed by the Government. Persons and entities in Category 5B are owners of HLs who had been dispossessed by adverse possessors. In my view, subject to the compliance with the Responsibilities Requirement (if they were assignees or transferees of the HLs in the past), they should still be regarded as members of the Heung.

106.  As to persons and entities in Category 4, they lost their HLs because of Government’s resumption. However, only the HLs were resumed by the Government. The interests of these owners in the common land of the Heung have not been resumed by the Government.

107.  As to persons and entities in Category 5B, they lost their HLs because of adverse possession. However, by operation of the Limitation Ordinance, only their titles to the HLs were extinguished. The interests of these owners in the common land of the Heung have not been extinguished by the law of adverse possession.

108.  Although the interest in a HL and the interest in the common land of the Heung cannot be assigned or transferred out separately, for persons and entities in Category 4 and Category 5B, by operation of the law, their interests in the HLs disappeared, but their interests in the common land subsist. Thus, subject to the compliance with the Responsibilities Requirement (if the owners in these categories were assignees or transferees of HLs in the past), they should be regarded as members of the Heung.

    E3.5  Category 5A and Category 6

109.  As shown in the Study, Category 6 is the 22 HLs owned by Kentwell Int’l Limited (“Kentwell”). Kentwell acquired these 22 HLs by adverse possession. Thus, Kentwell in fact should be regarded as an entity in Category 5A.

110.  Both experts agree that adverse possessors are not members of the Heung. I accept the joint opinion of the experts on this point. In my judgment, persons and entities in Category 5A and Category 6 are not members of the Heung.

    E3.6  Bare Share Certificate Holders

111.  Both experts agree, and I accept, that bare share certificate holders are not members of the Heung. Based upon the expert evidence accepted by this Court, I rule that bare share certificate holders are not members of the Heung.

    E3.7  12 New HLs

112.  Both experts agree, and I accept, that managers of the Heung cannot create new members without the agreement of existing members in a Heung’s meeting. Based upon the expert evidence accepted by this Court, I rule that the owners of the 12 New HLs, ie Calford and Fanwide, are not members of the Heung.

F.  APPLICANT’S CLAIM - MEMBERS OF THE HEUNG

113.  As a result of the ruling made in the above, my answers to the questions posed in the OS are as follows:

(1)  persons/entitles holding both HLs and appeared in the share certificates correspond with the interest in the HLs (ie the Original Members) are members of the Heung;

(2)  persons holding both HLs and appeared in the share certificates correspond with the interest in the HLs as assignees or transferees thereof, subject to the compliance with the Registration Requirement and the Responsibilities Requirement, are members of the Heung;

(3)  persons holding the share certificates without holding corresponding HLs are not members of the Heung;

(4)  apart from the above, persons/entities in Category 3, Category 4 and Category 5B as set out in the above, subject to the compliance with the Registration Requirement and the Responsibilities Requirement (if they acquired the relevant HLs by assignments or transfers from the Original Members or their successors-in-title), are members of the Heung.

114.  Save the above, it would not be necessary to answer the other questions in the OS.

115.  Mr Neoh SC seeks a declaratory judgment determining the membership of the Heung.

116.  Ms Eu SC submits that it would not be necessary or appropriate to grant a declaratory judgment in this case, for not all the parties affected may be before the Court in this hearing. Ms Eu SC submits that it is better for the Court to set out the criteria for membership of the Heung, without making any declaration.

117.  In my view, all the parties affected are indeed before the Court in this hearing. As a result the 21.04.2022 Order (including the variation to the Order made by me in this judgment), all the members of the Heung are before the Court in this trial. Further, pursuant to the 17.02.2025 Order, notices have been published to invite persons claiming to have interest in the Heung to apply to the Court to become a respondent in these proceedings. In view of all these, I am of the view that it would be appropriate, and indeed necessary, to grant a declaratory judgment determining the membership of the Heung in this judgment. I grant a declaratory judgment to set out my decision on the membership of the Heung as contained herein. The parties shall jointly prepare a draft declaration in accordance with this judgment and lodge the same with the Court for my approval within 28 days.

G.  R1’s COUNTERCLAIM - THE WAY FORWARD

118.  By the Counterclaim, R1 is seeking directions concerning the preparation of a list of the members of the Heung (“List of Members”) and to convene the first meeting of the Heung after this judgment (“the First Meeting”) to determine the appointment and/or removal of the managers of the Heung and some other necessary issues.

119.  I would first discuss a few matters concerning the First Meeting.

(1)  Quorum of the First Meeting

(a)  Professor Palmer is of the opinion that that there is no evidence showing that the Heung had a formal quorum in its meetings. In an advertisement in a newspaper in 1959, it stated that a quorum was not reached. However, there was no indication in the advertisement as to what was the quorum.

(b)  Dr Hase is of the opinion that quorum is a modern concept. Customary law only requires meetings be properly advertised in advance, and be held at a reasonable venue, so all members can have an opportunity to attend.

(c)  In view of the expert evidence, I would not say that there should be a quorum requirement in the First Meeting. As to whether there should be a quorum requirement in the Heung’s meetings in future, that would be an internal management matter of the Heung and should be determined by the Heung.

(2)  Responsibilities Requirement

In my view, save and except the Original Members, each of the persons and the entities in Categories 2, 3, 4 and 5B shall sign an undertaking (“the Undertaking”), in which he shall declare that he bind himself to the responsibilities of the Heung, and submit the Undertaking to the Chairman of the First Meeting at the beginning of the meeting. Only upon submission of the Undertaking, that person should be formally regarded as a member of the Heung and to vote in the First Meeting.

(3)  Issues to be discussed and determined in the First Meeting

(a)  The parties are in agreement that in the First Meeting, the appointment/removal of managers should be discussed and determined.

(b)  Mr Neoh SC submits that the constitution of the Heung should also be discussed and determined in the First Meeting. With respect, I decline to adopt this suggestion. Unless it is absolutely necessary, the Court should not interfere with the internal management of the Heung, and should leave the internal management matters to the members of the Heung. In my view, the matter which is really necessary to be discussed and determined in the First Meeting is the appointment/removal manager(s) of the Heung. The Heung can only properly operate and function with manager(s) duly appointed by the members of the Heung. As to the other internal management matters, including whether the Heung should have a written constitution and if yes, what should be in that constitution, are matters which can be discussed and determined by the members in other Heung’s meetings later.

(4)  Voting Right

(a)  In my view, the voting right of each member of the Heung should be proportionate to his interest in the common land of the Heung. If a member have more interest in the common land of the Heung, when the Heung distribute the proceeds generated from the common land, that member would have a larger share. Similarly, a member having more interest in the common land would need to contribute more if some works on the common land would need to be done.

(b)  A share certificate is a mere receipt evidencing the payment of the subscription money by a Subscriber to the Founders in 1920s. It would not confer membership of the Heung on the holder of the certificate. By the same token, it would not confer voting right on the holder of the certificate.

(c)  A member’s interest in the common land of the Heung is linked with the number of HLs owned by him. A member having more HLs would have a larger interest in the common land of the Heung.

(d)  By reason of the aforesaid, I am of the view that in a Heung’s meeting, the voting right of a member should be proportionate to the number of HLs owned by him. Since the size of each HL is the same, to put it simply, one HL should carry one vote.

(e)  In this case, each of the share certificates corresponds with one HL, save except one share certificate. The exception is a share certificate produced by KM Chong as exhibit “CKM-4” in his affirmation dated 27 March 2017. On this share certificate (“the CKM-4 Certificate”), two HLs’ numbers appear, ie HL 46 and HL 50. It is not known why two HLs have been stated on the CKM-4 Certificate. Based upon the evidence before me in this case, as said in [80(1)(a)] above, KM Chong obtained two share certificates and 3 HLs in 1974 from his late aunt, Chong Kam Yung. In my view, KM Chong, like any other member of the Heung, should have one vote per one HL owned by him in the Heung’s meetings. At present, there is no challenge against KM Chong’s ownership of the 3 HLs. If there is such a challenge at a later time, that challenge would be dealt with in another case.

120.  Understandably, all the parties would like to settle the List of Members and to have the First Meeting in a prudent and a cost-efficient way. In the trial, I told the parties that perhaps appointing a committee to prepare the List of Members and to handle the First Meeting would be costly and time consuming. I told the parties that I might consider appointing the solicitor in LCC handling this case to prepare the List of Members, and to convene and to chair the First Meeting. The reason behind is that since LCC have prepared the Study, LCC would be familiar with all the facts concerning the Heung. With this background knowledge, the handling solicitor in LCC may be able to prepare the List of Members and to finish the First Meeting within a relatively short period of time. Of course, everything done by LCC would be scrutinized and commented by the other parties, and the List of Members prepared by LCC, as well as the resolutions passed in the First Meeting, would need to be endorsed by the Court. All the parties have expressed their agreement to this idea.

121.  On 19 November 2025, LCC provided to the Court (a) draft directions agreed by R1 and R2 to the Court; and (b) the Applicant’s comments on those draft directions. The parties are broadly in agreement and only differ on a few matters.

122.  Having considered LCC’s proposed directions and the parties’ respective submissions on those proposed directions, I give the following directions[18]:

(1)  Mr S H Choi (“Mr Choi”) of LCC, Solicitors for R1, be appointed as the Convenor and the Chairman for the first meeting of the Heung (“First Meeting”) to be held in accordance with this judgment.

(2)  Within 42 days from the date of delivery of judgment, Mr Choi shall compile a Draft List of Members of the Heung (together with the number of votes for each member and their addresses if known) (“the Draft List”) in accordance with the criteria of membership set out in this judgment, and circulate the same to the other parties herein via their solicitors for their comments.

(3)  The other parties via their solicitors shall provide their comments to LCC within 14 days after receipt of the Draft List from Mr Choi.

(4)  The parties shall try to resolve their disagreements (if any) within 7 days thereafter, if necessary, in a face-to-face meeting of the solicitors for the parties (Mr Choi, Mr Samuel Chow (“Mr Chow”) of Messrs Samuel Chow Solicitors for the Applicant, and Mr Vincent Lam (“Mr Lam”) of Messrs. Cedric & Co for R2)

(5)  Mr Choi shall submit an Agreed Draft List, or in the absence of an agreement, a Non-Agreed Draft List to the Court within 7 days thereafter. In the event that a Non-Agreed Draft List is provided to the Court, the non-agreed items and the reasons why an agreement cannot be reached on those items should also be set out in the letter to the Court.

(6)  Within 21 days after the Court rules on the Agreed Draft List/Non-Agreed Draft List and approves a list of the members of the Heung (“the Approved List”), Mr Choi as the Court-appointed Convenor shall cause to be published by inserting an advertisement in a Chinese newspaper and an English newspaper of a Chinese/English Notice of the First Meeting, to be convened not less than 28 days after the publication of the notice, for the members to meet and to consider and vote on the following resolutions:

(a)  Confirmation/Ratification of the resolution of meeting of the Heung members passed on 23 August 2014 for removal of MK Tang as a manager of the Heung.

(b)  Confirmation/Ratification of the resolution of meeting of the Heung members passed on 23 August 2014 for the appointment of Pat Wong as a manager of the Heung.

(c)  Appointment of one new manager (if the proposed resolution in (b) above is carried) or two new managers (if the proposed resolution in (b) above is not carried).[19]

(7)  In the Notice of the First Meeting, the following shall be stated:

(a)  Save and except the Original Members (ie the members who directly acquired HLs from the Founders), each member in the other categories would need to sign an undertaking declaring that he binds himself to the responsibilities of the Heung (“the Undertaking”) and submit the Undertaking to the Chairman of at the beginning of the Meeting. Only after the submission of the Undertaking to the Chairman, the member would be allowed to participate and to vote in the First Meeting.

(b)  The First Meeting would be recorded by video.

(c)  Each member may attend the First Meeting with no more than two individual legal representatives.

(8)  Copies of Notices of the First Meeting shall be

(a)  sent to the parties herein via their solicitors;

(b)  sent by prepaid ordinary post to all members whose names are on the Approved List at their addresses shown on the Approved List;

(c)  posted at not less than 5 places in the Heung’s Area.

(9)  Each of the Copies of Notices of the First Meeting shall include:

(a)  A proxy form;

(b)  a nomination form to be used to nominate person(s) to be appointed as manager(s) of the Heung; and

(c)  an unsigned Undertaking;

with a direction that the signed documents in items (a) and (b) be returned to the office of the Convenor not less than 72 hours before the time scheduled for the First Meeting, and the signed Undertaking be submitted to the Chairman at the beginning of the First Meeting.

(10)  The First Meeting be chaired by Mr Choi, who shall be assisted by Mr Chow and Mr Lam.

(11)  A poll on each of the resolution shall be taken in the following manner:

(a)  every member on the Approved List present in person shall have 1 vote for each HL owned by him (or previously owned by him but had been resumed by the Government, or previously owned by him but his title to the HL had been extinguished by the adverse possession of a squatter);

(b)  every proxy present who has been duly appointed by a member on the Approved List as per the proxy form sent to the office of the Convenor not less than 72 hours prior to the First Meeting shall have 1 vote for each HL in respect of which the proxy is appointed; and

(c)  a resolution is passed by a simple majority of the votes cast.

(12)  Mr Choi shall keep the video recording of the First Meeting and provide copies of the same to the other parties in these proceedings.

(13)  Within 7 days after holding of the First Meeting, Mr Choi shall compile and send to other parties in these proceedings via their solicitors a report of the First Meeting including results of the voting on the resolutions for their comments.

(14)  Within 14 days thereafter, Mr Choi shall file the report of the First Meeting together with comments, if any, from the parties in these proceedings for endorsement by the Court.

(15)  After the handing down of the Report of the First Meeting approved by the Court (“Court Approved Report”), Mr Choi shall send the same to all members on the Approved List and who have contact particulars.

(16)  Mr Choi shall send a copy of the Court Approved Report to the District Lands Office and assist in the registration of the elected managers of the Heung with the District Lands Office.

(17)  Mr Choi shall be indemnified by the Heung against all claims demands and actions arising out of the performance of the powers and duties set out in the above.

(18)  The costs and expenses incurred by Mr Choi, Mr Chow and Mr Lam (including their respective time costs) in the performance of the above shall be borne by the Heung and be paid out of the Heung’s funds in LCC Account Folio 1, to be taxed on a solicitor and client basis if not agreed by the parties.

(19)  There be liberty to apply.

123.  The following are the matters in the LCC’s proposed directions which have not been adopted by this Court:

(1)  [10(i)] of LCC’s proposed directions:

“every member on the Approved List present in person shall have 1 vote for each share held by him or her or the tong/tso (save that in relation to the share for HL 46 and HL 50 (of Fourth Street Central) whether it should count as one vote or two may be further decided by agreement if it should become material)”

(2)  [11] of LCC’s proposed directions:

“In case of dispute, the Chairman shall have the absolute discretion to decide on the representation for the member (ie the number of votes that a member or proxy may have).”

(3)  [12] of LCC’s proposed directions:

“A declaration by the Chairman that a resolution has been carried or lost and an entry to that effect in the Minutes of the meeting shall be conclusive of the fact, without proof of the number, proportion or validity of the vote recorded in favour of or against such resolution.”

124.  The Applicant expressly takes issue with [10(i)] and [12] of LCC’s proposed directions. Further, the Applicant’s view is that Mr Choi’s view is simply administrative and consequential upon the judgment of the Court, and Mr Choi should not be given the power to make any binding declaration usurping the jurisdiction of the Court.

125.  I agree with the Applicant. I am of the following view:

(1)  [10(i)] of LCC’s proposed directions would not be necessary, given that I have made a clear ruling that each member would have one vote per one HL owned by him (including the HL(s) previously owned by him and had been resumed by the Government, or the HL(s) previously owned by him but his title to the HL(s) had been extinguished by the adverse possession of a squatter).

(2)  [11] of LCC’s proposed directions would not be necessary, given that the Approved List would be ready before the First Meeting (only those on the Approved List are members of the Heung), and giving that the ruling on the voting right made in this judgment.

(3)  As to [12] of LCC’s proposed directions, I agree with the Applicant that Mr Choi should not be given the power to make any binding declaration. If there is any dispute in the First Meeting, the dispute should be recorded in the minutes, and the dispute would be resolved by this Court after the First Meeting.

126.  The parties are in agreement that the costs and expenses incurred by Mr Choi, Mr Chow and Mr Lam in the preparation of the Draft List and the Agreed/Non-Agreed List, and in all the matters relating to the First Meeting, should be borne by the Heung and to be taxed on a solicitor and client basis if not agreed. I accept the agreement made by the parties.

127.  The above would be sufficient to dispose of the Counterclaim raised by R1.

H.  OTHER MATTERS

128.  There are two other matters.

(1)  Mr Neoh SC submits that there are some absent members of the Heung (ie owners of HLs who did not attend Heung’s meetings previously). If no action is taken by the Heung to stop further encroachment of their HLs, the encroachment will continue. Mr Neoh SC suggest that the Heung be appointed to represent those absent owners to prevent adverse possession of their HLs. With respect, I decline to adopt this suggestion. As to whether, as a matter of law, the Heung can represent the absent members to take action to evict the squatters occupying the HLs owned by these absent members, I have reservation on this. Even if the Heung can do so, whether the Heung is willing to do so is a matter to be determined by the Heung. At present, the Heung has not made a decision that they are willing to do so. Litigation is costly, and the unsuccessful party in a litigation may need to bear his own costs as well as the costs incurred by the successful party in the litigation. The Heung has not made a decision that they are willing to commence legal proceedings to protect the HLs owned by the absent members, and to bear all the litigation risks involved in the proceedings. With all these in mind, I respectfully decline to adopt the suggestion made by Mr Neoh SC.

(2)  Professor Palmer suggests that if the Heung makes any distributions to its members, the distributions to the absent members should be kept for a period, say 10 years. If no one come forward to claim the funds after this period, the managers should publish a notice in at least one Chinese newspaper and one English newspaper. If no one responds to the notice, the unclaimed funds would be reverted to the Heung. Dr Hase has no disagreement with Professor Palmer on this point. Although the two experts are in agreement on this point, I would not give any direction concerning the distributions to absent members in this judgment. That issue should be a matter of the internal management of the Heung, and should be decided by the members of the Heung.

I.  COSTS

129.  The parties have some disagreement on costs of these proceedings (save and except the costs as mentioned in [126] above), and they suggest that costs be reserved.

130.  I direct that costs of these proceedings be reserved. Within 28 days after the handing down of the Court Approved Report, the parties shall report the following to the Court by a joint letter:

(1)  whether the parties are able to reach an agreement on costs of these proceedings;

(2)  if yes, the agreed proposed costs order;

(3)  if no, the proposed directions for the disposal of the issue of costs.

J.  DISPOSITION

131.  The Applicant’s Claim and R1’s Counterclaim are disposed of in the way as shown in the above. The parties are directed to jointly prepare a draft order in accordance with this judgment (which shall include the declaration made in [117] above) and submit an agreed draft order to the Court for approval within 28 days.

132.  Lastly, it remains for me to thank all counsel for the very helpful assistance rendered to the Court.