TANG KUN NIN, TONY MANAGER OF HUNG SHING TEMPLE v. CHENG WAI FONG AND OTHERS

HCA 87/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 87 OF 2011

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I. INTRODUCTION

1.  There is no dispute that:

(a) Hung Shing Temple also known as Fanling Hung Shing Temple (粉嶺洪聖宮, “Temple”) was/is situated at Hung Ling Miu Lot No 1 in Demarcation District No 76 (“DD76”), North, New Territories (“HLM Lot”) under a government lease dated 27 June 1907 originally in the name of On Leung Yeuk (安良約)[1] with Tang Yui Shan (鄧銳臣) as trustee (司理) by order of court;

(b) by an appointment of managers dated 29 August 1958 registered at the Land Registry (“Old Appointment”), Lo Chak Tong (羅澤棠, “Lo”), Tang Chong Tai (鄧創泰), Tang Tim Shui (鄧添瑞) and Ip Kat Ming (葉吉鉻) were appointed and registered as new co-managers of the Temple in place of four deceased managers;

(c) by an approval of appointment of manager dated 29 January 1988 registered in the Land Registry (“New Appointment”), Tang Kun Nin Tony (鄧根年, “Tang KN”) was appointed as new co-Manager of the Temple to replace Tang Tim Shui deceased, and his appointment was approved by the Assistant Land Officer, New Territories with effect from 4 December 1986 in accordance with section 15 of the New Territories Ordinance Cap 97 (“NTO”);

(d) the current managers are Tang KN, Ip Wai Cheung (葉偉彰, “Ip”), Tang Fuk Wo (鄧福和, “Tang FW”) and Lo (now deceased) (and for the sake of convenience, the former/current managers of the Temple are referred to as “Managers” in this Decision);

(e) the Managers nominated the 1^st defendant (鄭維芳, “D1”) as keeper to look after the Temple;

(f) D1 passed away in May 2013 after the commencement of the present action in January 2011;

(g) the 2^nd and 3^rd  defendant brothers (張文輝 and 張文傑, “D2 and D3”) are the grandchildren of D1’s old friend Madam Cheng Cheung-kiu (鄭長嬌), who resided in the neighbourhood of the Temple and who took care of and spent time with D1 before she passed away.

II. PLAINTIFF’S CLAIM

2.  I set out below a summary of the plaintiff’s claim according to the Statement of Claim filed on 21 February 2011 and the Reply and Defence to Counterclaim filed on 12 August 2011.

3.  The Temple was built in/about 1763 for the villagers of four yeuk (約, “Yeuk”), ie Loi Tung (萊洞), Lung Yeuk Tau (龍躍頭), Lin Ma Hang (蓮麻坑) and Tan Chuk Hang (丹竹坑) of about 18 villages (“Four Yeuk”), for holding ancestral/religious worships, public events, and social gatherings. The Four Yeuk formed an unincorporated association and named themselves On Leung Yeuk.

4.  The Temple was at the centre of the Four Yeuk, and was visited by the public and the villagers of the Four Yeuk. At first, Tang Yui Shan from Leung Yeuk Tau was the only manager in charge of the management/affairs of On Leung Yeuk. He failed to properly manage On Leung Yeuk, so the Four Yeuk decided that each Yeuk would nominate a representative to act as Manager, and the four co-Managers would jointly administer and manage the affairs of On Leung Yeuk.

5.  The Temple was/is surrounded by four pieces of land owned by various villagers of the Four Yeuk (“Four Lots”), ie Lot No 1468, Lot No 2105,the Remaining Portion of Section B of Lot No 2106 andLot No 2107all of DD76 (“Lot 1468, Lot 2105, Lot 2106SBRP and Lot 2107”)identified in the schedule to the relevant government lease. The first owners of the Four Lots were:

Lot No	Name of Owners
1468	Tang Wing Shing Tong (鄧永盛堂), Ma Mei Ha Village (馬尾下村) of Tan Chuk Hang Yeuk (丹竹坑約)
2105	Hung Shing Kung (洪聖宮), Tang Cheuk Chi, Manager of Ma Mei Ha Village (馬尾下村) of Tan Chuk Hang Yeuk (丹竹坑約)
2106SBRP	Hau Tsap Shun (侯執信) of Ping Kong Village (丙崗村) of Tan Chuk Hang Yeuk (丹竹坑約)
2107	Hau Siu Cheung (侯兆祥) of Hung Leng Village (孔嶺村) of Tan Chuk Hang Yeuk (丹竹坑約)

6.  In/about early 1900, a nun Leung Chi (梁智) alias Leung A Chi (梁亞智) (“Leung”) brought with her some children nuns to beg (化緣) at the villages of the Four Yeuk. Since the Temple needed a keeper and Leung (and her children nuns) seemed to have nowhere to go, the ancestors of the Four Yeuk (“Ancestors”) nominated her as keeper of the Temple, and allowed her to keep worship monies for her living expenses and the Temple’s daily expenses. She would ask the Managers for monies if the Temple needed repairs or to hold events.

7.  Over time, the number of villagers who visited the Temple increased, and the Templerequired monies for expansion and maintenance. The Ancestors decided to acquire more land for the Temple’s expansion as well as more agricultural landfor letting purpose to generate income to meet the Temple’s needs. They solicited the owners of the Four Lots to sell/donate land to the Temple, and the Temple thereby obtained or (with worship monies) bought the Four Lots. For easy management and avoidance of possible conflict amongst the Four Yeuk, the Managers caused/permitted/authorised Leung to hold the Four Lots as legal owner on trust for the Temple, and further allowed her to accept rental income from leasing the agricultural lands of the Four Lots (“Rental Income”) on trust for the Temple.

8.  Ah Pui (張杏培, “Pui”), Tai Kam Chau (戴金就, “Tai”), Cheung Tai (張齊, “Cheung”) and D1 (who was the youngest) were Leung’s disciples, and Pui was also master of Tai and Cheung. With the Managers’ consent/authority/permission, Pui helped Leung keep books and receive monies paid by the Managers to the Temple. In/about the 1960s, after Leung passed away, Tai and Pui with the Managers’ consent/ authority/permission succeeded Leung to become keepers to manage the Temple. Pui accepted the Rental Income on trust for the Temple, and she would ask the Managers for monies should the Temple required finance for repairs or to hold events.

9.  Tai left the Temple in/about the early 1970s. With the Managers’ consent/authority/permission,D1 became the sole keeper to manage the Temple and to accept Rental Income on trust for the Temple. She would ask the Managers if the Temple needed monies for repairs or to hold events. The income generated by the Temple and the Four Lots were insufficient to maintain D1’s living expenses between 1991 and 2009, so at her request the Managers paid her a monthly salary of $2,000 (from 1991 to 1995) which was later increased to $2,500 (from 1995 to 2009).In short, the Managers entrusted and/or paid D1 to keep/maintain the Temple and the Four Lots, and with theirconsent/authority/ permission she became a trustee holding the Four Lots on trust for the Temple.

10.  The ownership history of the Four Lots was as follows:

(a) On/about 16 March 1929, Leung on behalf of the Temple used the Temple’s income to buy Lot 1468 from Tang Tai Cheung (鄧大章), trustee of Tang Wing Shing Tong (鄧永盛堂). When Leung died in the early 1960s, D1 and Tai succeeded her as owner of Lot 1468. In/about 1970, Tai gifted her share in Lot 1468 to D1 and left the Temple. Thereafter, D1 solely held Lot 2105 on trust for the Temple.

(b) On/about 25 March 1909, Tang Cheuk Chi (trustee of Hung Shing Kung) donated Lot 2105 to the Temple. For easy management, the Ancestors caused/permitted/authorised Lot 2015 to be registered under Leung’s name on trust for the Temple. When Leung died in the early 1960s, D1 and Tai succeeded her as owner of Lot 2105. In/about 1970, Tai gifted her share in Lot 2105 to D1 and left the Temple. Thereafter, D1 solely held Lot 2105 on trust for the Temple.

(c) The Ancestors caused the entire Lot No 2106 of DD76 (“Lot 2106”) to be donated to the Temple, and it was registered under Leung’s name on trust for the Temple. On 6 June 1929, with the Managers’ permission/consent/authority, Leung caused such Lot to be registered under Cheung’s name on trust for the Temple. Cheung went missing after World War II, and D1 continued to look after the Temple and the Four Lots (including taking up possession of and continuing to use Section B of Lot 2106). In the 1990s, the government resumed a portion of such Lot to build public roads. For convenience and easy management, D1 asked the Managers for their permission/consent/authority to have Lot 2106SBRP registered under her name on trust for the Temple. She subsequently became the sole registered owner of Lot 2106SBRP, but unbeknownst to the Managers and without their permission/consent/authority, D1 obtained a court order to the effect that since 1 January 1965 she had acquired adverse possession over inter alia Lot 2106SBRP. But in fact, she was only allowed/entrusted to look after and manage the Four Lots and the Temple building.

(d) Lot 2107 was first sold to Leung in 1908 and paid for out of the Temple’s worship monies.  In 1961, D1 and Tai succeeded Leung as owner of Lot 2107. In 1970, when Tai left the Temple, she transferred her share in Lot 2107 to D1. Lot 2107 was resumed by the government at the end of November 1995.

By reason of the above matters, the plaintiff claimed that D1 owed various fiduciary duties to the Temple as particularised in the Statement of Claim.

11.  In/about end of November 2009, the government granted the Managers $800,000 to renovate the Temple (“Works”). But on/about 4 January 2011, when their contractor attempted to carry out the Works, they were denied access to the Temple by D1, D2 and D3(collectively, “Ds”).D2 and D3 claimed they were the owners of Lots 1468, 2105 and 2106SBRP (“Remaining Lots”). On 15 January 2011, aninterlocutory injunction was granted against the Ds restraining them from inter alia interference with the Works and reasonable enjoyment of the Temple. On 21 January 2011, the Ds gave undertakings to similar effect until judgment or further order.

12.  On/about 9 November 2007, in breach of trust and fiduciary duties owed to the Temple and without the Managers’knowledge/consent/permission/authority, D1 wrongfully sold/assigned the Remaining Lots to and accepted monies from D2 and D3 at gross undervalue such as tomisappropriate trust property without consent/approval/knowledge/authority, or alternatively the Ds conspired together with the predominant intention to injure the Temple and/or to use unlawful means against the Temple so that they became constructive trustees in respect of all monies and properties received in relation to such transactions.  The sale/purchase of the Remaining Lots at gross undervalue caused the Inland Revenue Department (“IRD”) to assessstamp duty, which the Ds did not pay, and the IRD charged and encumbered the Remaining Lots for payment of the same.

13.  It was claimed that D2 and D3 all along knew and/or had actual/constructive/imputed knowledge that D1 held the Remaining Lots on trust for the Temple. The Temple further claimed to have suffered loss and damage, and sought inter alia the following reliefs:

(a) a declaration that D1 held the Remaining Lots on trust for the Temple, and that D2 and/or D3 held the Remaining Lots as constructive trustee for the Temple;

(b) a declaration that the sale and purchase of the Remaining Lots by D1 to D2 and D3 was null and void and should be set aside;

(c) an order that D2 and/or D3 do take necessary steps and execute necessary documents to transfer the Remaining Lots to the Temple, failing which the Registrar of the High Court shall execute all the necessary documents to effect such transfer;

(d) an account by the Ds of all profits, and an order to pay sums due to the Temple upon the taking of such account;

(e) all consequential or necessary orders, directions, accounts or inquiries and all remedies of tracing;

(f) further or in the alternative, damages;

(g) interest and costs.

14.  It was averred in the Answers to the Request for Further and Better Particulars of the Statement of Claim filed on 3 June 2011 (“FBP Answers”) that the Temple, On Leung Yeuk, Tang Wing Shing Tong, Hung Shing Kung and Tang Chuk Hang Yeuk respectively was not a clan, family or t’ong within the meaning of sections 15-16 of the NTO.

15.  In the FBP Answers, it was further averred that the former co-Managers of the Temple were Choi Cho Yau (蔡祖有, “Choi”), Tang Chong Tai, Tang Tim Shui and Ip Kat Ming. But according to the Old Appointment, one of the former co-Managers was Lo instead of Choi. I note, however, that Choi signed P’s Articles on behalf of Tang Chuk Hang.[2]

III. Ds’ PLEADINGS

16.  The Ds were formerly represented by the same firm of solicitors who filed a Defence and Counterclaim on their behalf on 17 June 2011.  On 18 September 2013, I granted leave for Ds’ solicitors to cease to act for D1 after her death. On 13 November 2013, the D1’s solicitors filed the Certificate of Service of Order for Withdrawal of Solicitors from the Record, and formally ceased to act for D1.

17.  The Ds denied the plaintiff’s claim, but for the purpose of the summonses discussed below, it is unnecessary to deal with all aspects of their substantive causes of defence. I set out their relevant pleas and averments below:

(a) On Leung Yeuk, the Temple, Tang Wing Shing Tong and Hung Shing Kung were/are t’ongs within the meaning of sections 15-16 of the NTO, but Hung Shing Kung with Tang Cheuk Chi (鄧卓志) as trustee and the Temple were two different t’ongs since they had different manager(s)/trustee(s);

(b) Tang KN should have known the Temple was/is a t’ong within the meaning of section 15 of the NTO, and his appointment was permitted/approved by the Assistant Land Officer in accordance with such provision;

(c) by a transfer dated 5 September 1914 and registered in the Land Registry, On Leung Yeuk by order of court transferred the HLM Lot to Hung Shing Temple (now known as the Temple) with Tang Yui Shan remaining as trustee;

(d) by the Old Appointment, the four co-Managers of the Temple Ip Kat Ming, Tang Tim Shui, Lo and Tang Chong Tai were appointed as new Managers of the Temple in place of four deceased Managers;

(e) Tang KN, Ip, Tang FW and Lo are the current registered Managers of the Temple, but Lo had passed away;

(f) by the New Appointment dated 29 January 1988, Tang KN was appointed as a new co-Manager of the Temple (expressly referred to as “Hung Shing Temple Tong”) to replace Tang Tim Shui deceased;

(g) since a time unknown to the Ds, the Temple had established a custom of having four appointed Managers, and had developed a custom of replacing a deceased co-Manager by a newly appointed co-Manager;

(h) from the time of the Old Appointment dated 29 August 1958 until the Amended Writ of Summons dated 21 February 2011, the aforesaid custom of the Temple remained unchanged for more than 50 years;

(i) by virtue of section 13 of the NTO, the application of Chinese customary law is mandatory, and under Chinese customary law each of the four Managers for the Temple only had ¼ or limited power/authority to represent the Temple;

(j) by reason of the above matters and since no one had been appointed to replace Lo as registered Manager of the Temple after his death in accordance with section 15 of the NTO, Tang KN being one of four co-Managers would not automatically (i) become the sole Manager of the Temple with full power and authority to represent the Temple or (ii) have the authority/consent/approval of the other surviving co-Managers to inter alia commence the present action against the Ds on/after Lo’s death;

(k) further or in the alternative, the proper plaintiff in the present action should be the four Managers of the Temple duly appointed under section 15 of the NTO, and Tang KN alone or the three surviving co-Managers of the Temple together had no cause of action against the Ds at the time of re-filing the Amended Writ of Summons on 21 February 2011.

IV. PLAINTIFF’S REPLY AND DEFENCE TO COUNTERCLAIM

18.  In the Reply and Defence to Counterclaim, the plaintiff denied the four co-Managers of the Temple each had only ¼ or limited power/authority to represent the Temple or that sections 13 and 15-16 of the NTO applied to the present action. In any event, the plaintiff claimed the other three surviving co-Managers had authorised/consented/approved the present action. It is unnecessary for the purpose of the summonses discussed below to refer to other matters pleaded in the Reply and Defence to Counterclaim.

V.  PROCEDURAL HISTORY

19.  On 8 November 2012, Master Hui granted leave for the plaintiff to set the present action down for trial with a pre-trial review (“PTR”) before the trial judge. The trial was due to commence on 10 December 2013, and a PTR hearing was scheduled to be heard on 18 September 2013 (“1^st PTR”). At the 1^st PTR, I raised a number of matters with the parties.

20.  First, although D1 passed away in May 2013 and D1’s solicitors ceased to act for her pursuant to leave granted on 18 September 2013. But the plaintiff did not take any step under Order 15 rule 7 of the Rules of the High Court (“RHC”) to proceed against D1’s estate (as defendant) or under Order 15 rule 9 of the RHC in respect of D1’s estate (as plaintiff by counterclaim). Such omission was not without significance since the plaintiff sought substantive reliefs against D1 in the present action. It was therefore doubtful whether the trial could proceed as scheduled.

21.  Secondly, I queried the status of the Temple. If it were not a clan, family or t’ong within the meaning of sections 15-16 of the NTO as suggested in the FBP Answers, question immediately arose as to its legal capacity. If, say, it were an unincorporated association, it would be doubtful whether the Temple could sue by Tang KN as its Manager without a representation order. At the 1^st PTR, Ms Lau, counsel for the plaintiff, agreed that this had to be clarified.

22.  Thirdly, it was plain from the Ds’ pleadings that they challenged the plaintiff’s authority to sue in the name of “[Tang KN], Manager of [the Temple]”. But instead of taking out a striking out application, the Ds merely raised such challenge by way of defence. The parties did not raise such issue with any of the learned masters who dealt with the pre-trial case management, and the present action was set down for trial without resolving such question.

23.  The legal principles in this respect are trite. “If the court becomes aware that the plaintiff is incapable of giving a retainer, it will strike out at the trial without any formal application …… But if the defendant desires to question the authority to sue in the plaintiff’s name, he must apply to strike out the plaintiff’s name at an early stage; he cannot by his defence dispute the authority, nor can he do so at the trial ……”[3]

24.  At the 1^st PTR, I drew the parties’ attention to Kammy Town Limited v Super Glory Corporation Limited[4] in which A Cheung J (as he then was) said as follows:

“11. In short, a point on lack of authority must be taken by a defendant at the earliest opportunity.  It should not be raised as a point of defence, for it is not a defence, and for that reason the matter should not be left for determination at trial.  Furthermore, given the nature of the point, the matter should not be left to be determined at trial together with the substantive issues between the parties, the determination of which issues at trial would become a total waste of time and resources if the point on lack of authority should be upheld at the end of the day.

12. The procedure to raise the point on lack of authority is an application to strike out the plaintiff’s name under the inherent jurisdiction of the court.  ……

13. However, unlike an ordinary application to strike out a pleading, the present type of striking out applications inevitably requires a definitive determination by the court seised of the application on the point.  In other words, either the action was authorised by the company or it was not.  There is no halfway house.  …… Subject to any subsequent ratification (where necessary) of the action by the company, the action will stand or fall depending on the court’s determination of the question of authority.

……

21.  …… in my view, when properly understood, it simply means that if there is any real doubt about the authority to sue, the question must be resolved first, before the case should be allowed to proceed any further; ……”

25.  The above principles were summarised by the Court of Appeal in Liquidation Committee of Foshan Hongda Development Ltd v East Legend Investment Ltd as follows:[5]

“18. The principles concerning the challenge on the lack of standing by a plaintiff to commence an action are well established and they are:

(a) The challenge cannot be raised by way of defence.

(b) It must be raised at the outset or when it comes to the attention of the court or of the defence in the course of the proceedings.

(c) Once the issue has been raised it must be decided.

(d) It would be wrong to allow the action to go on without deciding the issue of standing: this is because the defendant will not have a further chance to challenge the issue.

(e) Once it is clear that the action was improperly constituted it must be brought to an end either by way of dismissal, striking out or stay. ……”

26.  It was therefore inappropriate to leave the disputed issue of the plaintiff’s authority to sue to the then upcoming trial. That being the case, given this unresolved dispute, there was serious doubt as to whether the trial could still proceed on the scheduled dates.

27.  As a result of the above matters, Ms Lau and Mr Ng, counsel for D2 and D3, required time to take instructions, and I adjourned the PTR hearing to 7 October 2013 (“2^nd PTR”).

28.  On 3 October 2013, the plaintiff issued a summons for (a) leave to amend the Reply and Defence to Counterclaim as per the draft annexed thereto (“1^st Reply Draft”), and (b) an order that the present action be carried on between the plaintiff and the Ds “without having to require the personal representative of [D1] to join in despite the death of [D1] in May 2013” (“P’s 1^st Summons”).

29.  By the 1^stReply Draft, the plaintiff (a) averred that the Temple was/is a tso/t’ong, but the Ds could not pray in aid sections 15-16 of the NTO, and (b) did not admit On Leung Yeuk, Tang Wing Shing Tong and Hung Shing Kung were t’ongs and put the Ds to strict proof that sections 15-16 of the NTO applied. It was further averred that the 1^stReply Draft would “overwrite” all FBP Answers to the limited extent that “the Temple was not a clan, family or t’ong within the meaning of Sections 15 and 16 of [the NTO]”.

30.  On 3 October 2013, the plaintiff filed the affirmation of his solicitor Kwong Ting Chung Simon (“Kwong”) in support of P’s 1^st Summons. It was said that the suggested amendments, which hinged on legal arguments, would not prejudice the Ds. It was further said that no one was willing to be the personal representative of D1’s estate because she (a) was a nun who never married and had no children/siblings/parents, (b) died intestate with no personal representative appointed to manage her estate, and (c) had meagre/nil earnings and no savings apart from her monthly salary of $2,500 and some worship monies generated by the Temple. Kwong claimed that given the Ds were jointly and severally liable, leave should be granted for the plaintiff to carry on the present action without any application under Order 15 rule 7 of the RHC.

31.  I was not persuaded it would be appropriate to do so. I bear in mind that the plaintiff sought substantive reliefs against D1, and there was no information before me as to what steps had been taken to ascertain whether anyone was interested in D1’s estate (eg any search made at the Probate Registry), and if there was none, whether the Official Solicitor had been approached for assistance. Further investigative steps were plainly required. Ms Lau therefore applied, and I granted leave, for withdrawal of the application in paragraph 28(b) above.

32.  At the 2^nd PTR, I raised further queries on the proposed amendments in the 1^stReply Draft. First, for proper amendment to be made in respect of the FBP Answers, application should have been made for leave to file and serve amended FBP Answers with the amendments marked up in red, and not by a general plea in the proposed Amended Reply and Defence to Counterclaim to “overwrite” relevant (but unidentified) parts of the FBP Answers. Secondly, the proposed amendments still did not make clear whether the Temple was/is a tso or a t’ong. So at the 2^nd PTR, I granted leave for the plaintiff to amend P’s 1^st Summons to deal with these matters.

33.  Thirdly, the proposed amendments did not bring enlightenment as to why the Ds could not pray in aid sections 15-16 of the NTO when on the plaintiff’s case the Temple was/is either a tso or a t’ong. I therefore directed the plaintiff to either (a) file/serve affirmation in support of the amended P’s 1^st Summons yet to be filed or (b) lodge/serve a written statement of law, whichever would be appropriate, on the proposed amendments. I also granted the following consequential directions, ie (i) leave to D2 and D3 to file/serve affirmation in opposition, failing which they shall inform the plaintiff in writing whether they would or would not oppose the amended P’s 1^stSummons yet to be filed, and (b) leave to the plaintiff to file/serve affirmation in reply (if any).

34.  Pursuant thereto, the plaintiff filed the amended P’s 1^st Summons on 16 October 2013 (“Amended P’s 1^st Summons”) with no changes to the 1^stReply Draft but with proposed amendments to the FBP Answers in the manner marked in red as per the draft annexed thereto (“FBP Draft”). In contra-distinction to the 1^st Reply Draft, the plaintiff in the FBP Draft averred that the Temple, On Leung Yeuk, Tang Wing Shing Tong, Hung Shing Kung and Tan Chuk Hang Yeuk were t’ongs within the meaning of sections 15-16 of the NTO.

35.  On the same day, the plaintiff filed Kwong’s 2^nd affirmation in support of the Amended P’s 1^st Summons (“Kwong 2^nd Aff”). The Kwong 2^nd Aff confirmed that the Temple was registered with the Home Affairs Department as a t’ong under section 15 of the NTO as shown by the New Appointment, so the plaintiff would like to amend the FBP Answers by pleading that the Temple was/is a t’ong, which averment they claimed would not prejudice the Ds or cause delay to the trial. The Kwong 2^nd Aff further confirmed that the plaintiff would apply for leave to add the other two surviving co-Managers of the Temple Ip and Tang FW to be the plaintiff in the present action against the Ds to forestall their challenge to the plaintiff’s authority to sue.

36.  So on 18 October 2013 (which was two days out of time under the order made at the 2^nd PTR), the plaintiff issued a summons (“P’s 2^nd Summons”) inter alia for leave to re-amend the Amended Writ of Summons in the manner shown in green as per the draft annexed thereto (“Writ Draft”). By the Writ Draft, the plaintiff proposed to add Ip and Tang FW (being Managers of the Temple) as the plaintiff in the present action.

37.  On the same day, the plaintiff filed the respective affirmation of Ip and Tang FW in support of P’s 2^nd Summons that confirmed their consent to the commencement/continuation of the present action by Tang KN against the Ds as well as their authorisation for Tang KN to act on behalf of the Temple in the present action. For the avoidance of doubt, Ip and Tang FW being co-Managers of the Temple also agreed to join as the plaintiff in the present action.

38.  On 31 October 2013, D2 and D3 issued a summons for the following reliefs (“Ds’ Summons”):

(a) the plaintiff’s name of “[Tang KN], Manager of [the Temple]” or the intended plaintiff’s name of “[Tang KN, Ip and Tang FW], Managers of [the Temple]” be struck out as plaintiff in the present action under the inherent jurisdiction of the court on the ground of lack of authority to sue;

(b) the Statement of Claim and the Reply and Defence to Counterclaim be struck out and the present action be dismissed;

(c) the registration of the memorial in respect of the sealed copy of Amended Writ of Summons the Land Registry against the Remaining Lots be vacated;

(d) the plaintiff do pay D2 and D3 costs of the action including all costs reserved and costs of and occasioned by Ds’ Summons to be taxed if not agreed.

39.  On 1 and 22 November 2013, D2 and D3 respectively filed the 2^nd and 3^rd affirmations of their solicitor Chong Fu Chuen (“Chong”) in support of D’s Summons (“Chong 2^nd and 3^rd Affs”), and on 13 November 2013 the plaintiff filed Kwong’s 3^rd affirmation in opposition (“Kwong 3^rd Aff”).

40.  In view of the above outstanding matters, the trial could not proceed, and at the 2^nd PTR I vacated the trial and directed the outstanding applications be made returnable before me on 10 December 2013 (which should have been the first day of trial) (“Hearing”).

41.  As regards the approach to be adopted for the determination of D’s Summons, guidance could be found in Kammy Town Limited as follows:

“14. For those reasons, …… at the substantive hearing, the court has to see whether the objection raised by the defendant can be summarily disposed of on the affidavit evidence that has been placed before the court for the purpose, and if not, how the objection can be determined and give directions accordingly.

15. An objection of the present type can be dealt with summarily at the substantive hearing before the court seised of the application if, for instance, the objection is plainly bad on the affidavit evidence.  Conversely, if on the affidavit evidence, it is plain beyond reasonable argument to the contrary that even taken to the highest, the affidavit evidence put in by those suing in the name of the company does not support the claim that the action has been authorised, then barring any question of ratification, the court would be quite entitled to summarily determine the objection in the defendant’s favour and strike out the name of the company from the action and thus bring an end to the litigation. 

……

19.  …… In my view, if the court cannot decide the dispute of fact on paper, the proper course to take is to adjourn the hearing, with appropriate directions, to another date when oral evidence will be heard and tested.”

42.  At the Hearing, both Ms Lau and Mr Ng confirmed that D’s Summons could be summarily disposed of on affirmation without cross-examination. Most of the background matters were documented by uncontroverted documents and not seriously challenged. In the ultimate analysis, D’s Summons was likely to be determined by legal arguments.

43.  At the Hearing, Ms Lau applied for retrospective leave to file/serve and to rely on Tang KN’s 2^nd affirmation filed on 9 December 2013 to oppose D’s Summons, which application was opposed by Mr Ng. But upon more mature consideration, Ms Lau decided to withdraw such application.

VI.  D’s SUMMONS

(a) Plaintiff’s applications

44.  The plaintiff maintained that Tang KN had been properly authorised to sue on behalf of the Temple, but for the avoidance of doubt, the plaintiff applied by the Amended P’s 1^st Summons and P’s 2^nd Summons to (a) join the other two surviving co-Managers Ip and Tang KW as the plaintiff to confirm Tang KN’s authority to commence and continue the present action, and (b) admit the Temple was/is a t’ong within the meaning of section 15 of the NTO. But D2 and D3 argued that the plaintiff’s name (whether in the original or to be amended form) was defective, and the plaintiff’s claim was liable to be struck out.

(b)  Delay

45.  Kwong claimed D’s Summons was a late application. But in my view, it lied ill in the plaintiff’s mouth to make such complaint when the Amended P’s 1^st Summons and P’s 2^nd Summons also came late, and when the plaintiff urged the court to consider adding Ip and Tang FW as the plaintiff in the present action on de bene esse basis in order to oppose D’s Summons. Since the outcome of D’s Summons would necessarily impact on the viability of the plaintiff’s claim, it must be resolved on the merits.

(c) Kwong’s personal knowledge/belief

46.  Chong claimed that Kwong was merely the plaintiff’s solicitor and not a co-Manager of the Temple, so there was no basis for Kwong to assert in the Kwong 3^rd Aff that at all material times he had been “personally involved in management of affairs of the Temple”.  Chong further claimed that on such basis Kwong could not have any personal knowledge in relation to the matters stated in the Kwong 3^rd Aff. Be that as it may, the material background facts set out in the Kwong 3^rd Aff were not materially challenged for the purpose of dealing with D’s Summons, which summons ultimately had to be resolved on interpretation of those largely uncontroversial facts in accordance with the law.

(d) Plaintiff’s case

47.  In my view, upon considering the overall affirmation evidence, it was not the plaintiff’s case that Tang KN is the sole Manager of the Temple. Rather, it was common ground that the Temple had four registered co-Managers, ie Ip, Lo, Tang KN ad Tang FW, but upon Lo’s death on 21 December 2005, the present surviving co-Managers are Ip, Tang KNand Tang FW. The Kwong 3^rd Aff claimed that the three surviving co-Managers had authority to sue the Ds on behalf of the Temple (which was/is a t’ong) because whether or not Lo would be replaced by a new co-Manager was an internal matter for the Temple. The Temple’s business vis-à-vis outsiders could not be handicapped or put on hold because one of its co-Managers had died and was not yet replaced. Here, the dispute was not between opposing camps with some supporting D1’s appointment as trustee of the Temple’s properties and others refuting such appointment. Rather, it was the Temple that sued inter alia D1 (now deceased) as its trustee for her allegedly wrongful transfer/assignment/sale of the Remaining Lots to D2 and D3.  Kwong claimed that the Four Yeuk were united in their intention to uphold the interests of their members, and D2 and D3 should not be allowed to take technical advantage when in truth the members acted consensually to seek recovery of the Remaining Lots that belonged to them. With the approval/consent of Ip and Tang FW, it was argued that Tang KN clearly had authority to commence the present action, but for the avoidance of doubt, Ip and Tang FW would join as plaintiff to feed the standing to sue if necessary.

(e) D2’s and D3’s case

48.  On the other hand, D2 and D3 claimed that given the history of the Temple (which was/is a t’ong) having been administered and managed by four co-Managers each of whom representing the interests of one of the Four Yeuk, the four co-Managers had to act jointly in order to properly commence the present action, and the absence of appointment of any new co-Manager to replace Lo meant the surviving co-Managers had no power/authority to commence and/or continue the present action against the Ds. D2 and D3 explained there was an established custom/practice of having four co-Managers to act jointly for all matters of the Temple which they claimed accorded with Chinese customary law.

49.  The Chong 2^nd and 3^rdAffs claimed that “粉嶺洪聖廟佈告” dated 17 March 2008 and placed before the Temple (“Notice”) was issued in the names of the four co-Managers with chops affixed thereto (save that for unknown reason two of them were named as Ip Wah Ching (葉華清) and Lo Pak Fan (羅伯芬)). Chong claimed the Notice demonstrated the Temple had an established custom/practice of having four co-Managers to act jointly for all matters.

50.  I pause here to note that Kwong claimed the validity of the Notice was not something that concerned D2 and D3; rather the Notice demonstrated that D2 and D3 must have knowledge that D1 was merely a trustee running the Temple for the plaintiff. To clarify, Kwong explained that Lo’s son Lo Pak Fan was at that time a potential candidate to replace his father as Manager, so he signed his name on the Notice.  Ip Wah Ching acted for Ip Wai Cheung because Ip Wai Cheung was busy with his own affairs and wanted Ip Wah Ching to replace him as Manager, so Ip Wah Ching signed the Notice for Ip Wai Cheung. Kwong claimed the Notice only went to show that the Temple’s business was carried out in a casual and informal manner, and it was irrelevant to the present action. 

51.  Returning to Chong’s 2^nd and 3^rd Affs, Chong noted the Old Appointment dated 29 August 1958 that appointed four co-Managers of the Temple (ie Ip Kat Ming, Tang Tim Shui, Lo and Tang Chong Tai) was also registered against Lot No 1475 in DD76 (“Lot 1475”) at the Land Registry. The land search records revealed that shortly thereafter, the four co-Managers acted jointly to deal with land held by the Temple by jointly executing a Surrender of Crown Lease on 2 December 1958 to surrender a part/portion of Lot 1475 to the government (“Surrender”). 

52.  Chong further noted the plaintiff’s pleadings admitted that On Leung Yeuk was formed by the Four Yeuk consisting of about 18 villages for the management of the Temple, and that each Yeuk would nominate one representative to be the Manager in the administration/management of the affairs of the Temple. By the Amended P’s Summons, it was further admitted by the plaintiff that the Temple is a t’ong within the meaning of section 15 of the NTO, and Chong said it would follow that the villagers of the Four Yeuk would be members of the Temple.

53.  The account record of On Leung Yeuk dated 15 November 1956 (under lunar calendar) (“P’s Articles”), which appeared to have come into existence about two years before the Old Appointment, contained the following “articles” that concerned the Temple:

「安良約組織簡章

(一) 名稱：安良約

(二) 組織：由蓮蔴坑、龍躍頭萊洞丹竹坑四約組織而成。

(三) 宗旨：…… 及保存洪聖宮產業為宗旨。

(四) 司理職權：由四約推選司理一名司理本約廟宇及產業。

(五) 輪值職權：輪值方式依以前習慣按照次序由以上四約輪流值理主持任租務聖宴會倘有其他事情須[?]四約代表議決方可施行。

(六) 召集：由當年值理負責召集。

(七) 經費：司理值理屬義務性質不[?]領支薪水如有特別事情要艮需用須要四約代表議次決才可支付。

(八) ……

(九) ……

(十) ……

(十一) 期滿：由當年值理在農曆十一月內用書面通知四約代表開投。

(十二) 底價：每年租穀四仟斤。

蓮蔴坑約代表 葉吉銘

龍躍頭約代表 鄧添瑞

萊洞約代表 鄧創泰

丹竹坑約代表 蔡祖有」

54.  Chong claimed that by virtue of such “articles”, the Temple had established a custom/practice of appointing four co-Managers acting jointly in dealing with not only the land held by the Temple as evidenced by the Surrender but also all other matters as stipulated in P’s Articles.

55.  Chong said the land search records of the HLM Lot also showed that at least since the Old Appointment the Temple all along had four co-Managers appointed in accordance with section 15 of the NTO as follows:

Period	Names of the four co-Managers of the Temple during the Period	Reason(s) for change of Manager(s)	Document(s) that evidenced the change of Manager(s)
From 29/08/1958 to 14/06/1979	Ip Kat Ming, Tang Tim Shui, Lo and Tang Chong Tai	To replace the four deceased managers	Old Appointment
From 15/06/1979 to 28/01/1988	Tang Tim Shui, Lo, Tang Tin (鄧田) and Yip Sing (葉勝)	Ip Kat Ming and Tang Chong Tai passed away	Appointment of Manager Memorial No N195712
From 29/01/1988 to 07/01/1992	Lo, Tang Tin, Yip Singand Tang KN	Tang Tim Shui passed away	New Appointment
From 08/01/1992 to 13/03/1995	Lo, Tang Tin, Tang KN and Ip	Yip Sing passed away	Death of Manager Memorial No N268749 and Approval of Appointment of Manager Memorial No N268750
From 14/03/1995 onwards	Lo, Tang KN, Ip, and Tang FW	Tang Tin passed away	Death and Appointment of Manager Memorial No N339350 and Approval of Appointment of Manager Memorial No N339351

Hence, the Temple had established a custom/practice of appointing new Manager(s) to replace deceased co-Manager(s) to maintain having four co-Managers.

56.  Chong noted that Lo passed away on 21 December 2005, so for more than five years until issuance of the Writ of Summons on 17 January 2011, no one had been appointed and/or approved by the Secretary for Home Affairs to replace Lo in accordance with section 15 of the NTO. But pursuant to P’s Articles and the Temple’s established custom/practice, all four co-Managers from the Four Yeuk should act jointly in dealing with all matters of the Temple. Mr Ng complained (a) there was no evidence of the number of members of each of the Four Yeuk that was represented by one of the four co-Managers of the Temple, and (b) the stance of the Yeuk represented by the deceased co-Manager Lo as to the present action was unclear.

57.  Although Ip and Tang FW in their affirmations claimed they together with Tang KN were the three surviving co-Managers of the Temple, so far no one had been appointed to replace Lo and no new co-Manager was registered with the Home Affairs Department in accordance with section 15 of the NTO. Chong claimed that Chinese customary law and/or the Temple’s established custom/practice demonstrated that as a matter of fact and law the three surviving co-Managers of the Temple would not have authority to sue because after Lo’s death they lacked full power/authority to act for the Temple to commence the present action against the Ds.

(f)  Burden of proof

58.  In her written submissions, Ms Lau argued that since D2 and D3 took out D’s Summons to strike out the plaintiff’s name and claim, they should bear the burden of proof to establish that the plaintiff had no standing to sue. Ms Lau relied on the observation by Yuen J (as she then was) in Tang Man Kit and Foo Tak Ching (suing as managers of Wah Yan Mo Fan Heung) v Hip Hing Timber Company Limited that “[the] burden is of course on the Defendant to show that [the managers] have no authority to sue”.[6]

59.  Tang Man Kit had spawned a large number of judicial decisions all the way to the Court of Appeal and the Court of Final Appeal. Later in this Decision, it will be necessary to set out the background of this case in order to put the rulings in context, but it suffices for present purpose to note that the decision by Yuen J (as she then was) was allowed on appeal by the Court of Appeal.[7] The matter went to the Court of Final Appeal,[8] and question arose as to whether the decision by Yuen J (as she then was) was a final or interlocutory one. The Court of Final Appeal held that it was a final order, which meant that the two-member Court of Appeal had no jurisdiction to determine the appeal. Subsequently, the original appeal was reinstated and heard afresh by a three-member Court of Appeal.[9] The appeal was allowed.

60.  Yuen J (as she then was) did not give legal analysis for her observation as to the burden of proof set out in paragraph 58 above. Although, as Ms Lau pointed out, Lord Millett NPJ in the Court of Final Appeal mentioned that “[the] judge ruled that the burden was on the defendant to show that the plaintiffs had no authority to sue”,[10] he was merely recounting the history of the litigation. Such ruling by Yuen J (as she then was) was not a subject matter of the appeal to the Court of Final Appeal, which did not form any view on such ruling.

61.  In my view, Mr Ng’s contention (as borne out by more recent authorities) that the burden fell on the plaintiff to prove authority to sue is more persuasive.

62.  In Kammy Town Limited, Cheung JA said as follows:

“13. …… The point has to be decided according to the burden and standard of proof – the burden lies with those suing in the name of the plaintiff to prove authorization. ……

……

21. …… in the determination of the question, the burden is on those suing in the name of the company to establish consent to the commencement of the action, on a balance of probabilities – if the standard of proof is not achieved, then there is no consent and the name of the company must be struck out and the action dismissed. Put another way, either there was authorization or there was not. Any adjective like “doubtful” merely places emphasis on the burden and standard of proof.”

63.  Mr Recorder H Wong SC in Billion Express Industrial Limited v Tsang Hung Kong[11] followed Kammy Town Limited in holding that the plaintiff carries the legal burden of proving authority to sue whilst the defendant carries the evidential burden. He referred to Phipson on Evidence[12] and reminded that the evidential burden (which is no more than a burden to adduce evidence of what is asserted that is sufficient to go to the jury, ie that it is on its face believable) must not be conflated with the legal burden. Unless the defendant discharges the evidential burden, there will be nothing to contradict the prima facie effect of the evidence adduced by the plaintiff, but it is not quite the same as saying that the defendant bears the burden of proving his assertions on the balance of probabilities. The legal burden rests with the plaintiff and does not shift.

64.  In the circumstances, whilst D2 and D3 carried the evidential burden, it is ultimately for the plaintiff to establish authority to sue on the balance of probabilities.

(g) Chinese customary law

65.  Mr Ng submitted that Chinese customary law was relevant pursuant to section 13 of the NTO, and that although D2 and D3 did not adduce any expert evidence I am entitled to take judicial notice of Chinese customary law and custom as found in previous decisions.[13] In Tang Che Tai & ors v Tang On Kwai & ors,[14] it was said that:

“72. In summary, I find that the following are the principles of Chinese customary law which may be applicable to the present case:

……

(5) a custom must be immemorial, certain in respect of its nature generally as well as in respect of the locality where it is applied and the persons whom it is alleged to affect;

(6) a custom must have obligatory force from within the custom itself which is derived from continued practice without interruption since its immemorial origin; and

(7) a custom may evolve with changing social, economical and political circumstances; a new custom has evolved or an old custom modified if the evolving custom has acquired the above characteristics; to have the force of a custom, an evolving custom must have at least had a substantially long period of existence and recognition, though not necessarily since time immemorial, so that the persons whom this new custom is alleged to affect would feel it an obligation to follow in preference to the old one.”

(h)  Nature of a t’ong

66.  Mr Ng argued that a t’ong is not a legal entity but a customary land trust. According to Tang Che Tai & ors,

“10. A t’ong is an ancient Chinese institution of ancestral land-holding, whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetimes and so on from generation to generation indefinitely. …… A landowner in China might, instead of allowing succession to his land to devolve according to custom to be divided equally among his sons, decide all or part of his land would remain intact to be enjoyed in common by his sons and their male descendants in perpetuity, for the veneration of his name after his death and for the upkeep of his grave, buildings and temples. If a landowner thus disposed of his land as aforesaid during his lifetime, the land is held in the name of his t’ong. ……

11. A classic judicial statement of the nature of a tso or t’ong and the interest of its members is to be found in the often quoted dicta of Mills-Owens J in Tang Kai-chung and another And Tang Chik-shang and others [1970] HKLR 276. His Lordship said at 279-280:

“Speaking generally, a Tso may be shortly described as an ancient Chinese institution of ancestral land-holding whereby land derived from a common ancestor is enjoyed by his male descendants for the time being living for their lifetimes and so from generation to generation indefinitely. Thus every male descendant of the common ancestor automatically becomes entitled at birth to an interest in the land for his life-time; on his death his interest merges so as automatically to enlarge the interests of the surviving male descendants; thus his interest at any given moment during his lifetime depends on the number of male descendants then living and on his death it forms no part of his estate.” ……

43. …… As was held in [Tang Kai-chung and another], a tso or t’ong is a mode of devolution unknown to the English common law which is preserved by section 13 of the NTO and to which the rule against perpetuities is inapplicable. It is a trust and the registered managers are trustees within the meaning of the Trustee Ordinance. These dicta have been quoted and adopted in many subsequent decisions, including Kan And Kanand Leung Kuen Fai and Tang Kwong Yu (or U) Tong or Tang Kwong Yu Tso [2002] 2 HKLRD 705. These characteristics of this ancient form of institution are now firmly established. ……

72. In summary, I find that the following are the principles of Chinese customary law which may be applicable to the present case:

(1) t’ong property is meant to be indivisible, inalienable and perpetual;

(2) t’ong land may not be disposed of except under circumstances of necessity and by unanimous consent of all members of the t’ong, no single member may compel partition or sale of t’ong land;

…… ”

(i)  Sections 15-16 of the NTO

67.  Sections 15-16 of the NTO provide that:

“15. Whenever any land is held from the Government under lease or other grant, agreement or licence in the name of a …… t’ong, such …… t’ong shall appoint a manager to represent it. Every such appointment shall be reported at the appropriate New Territories District Office of the Home Affairs Department, and the Secretary for Home Affairs on receiving such proof as he may require of such appointment shall, if he approves thereof, register the name of the said manager who shall, after giving such notices as may be prescribed, have full power to dispose of or in any way deal with the said land as if he were sole owner thereof, subject to the consent of the Secretary for Home Affairs, ……

16. Any clan, family or t’ong owning land on 28 October 1910, in respect of which a manager has been duly registered under this Ordinance, shall not, so long as such land is certified by the Secretary for Home Affairs as being used for agricultural, religious, educational or charitable purposes or such other uses of a similar nature as are recognized by established local custom, or for dwelling-houses occupied by bona fide members of the clan, family or t’ong, be required to be registered under the Companies Ordinance (Cap 32), although such clan, family or t’ong may consist or more than 20 members.”

(j)  Discussion

68.  Mr Ng argued that since (a) properties held by the Temple were in the nature of trust property in which all members had beneficial interest, and (b) the power to deal with the Temple’s properties was vested in the four co-Managers under section 15 of the NTO, the four co-Managers being trustees were required to act jointly or unanimously in exercising such power.

69.  Mr Ng submitted that P’s Articles, which provided that On Leung Yeuk was set up for the purpose of maintaining the relationship of the members of the Four Yeuk and the properties of the Temple, and which governed how the Temple should be managed (including the requirement that matters concerning the Temple should be decided by the four appointed co-Managers from the Four Yeuk), reflected the Ancestors’ original intention that each Yeuk was to have a representative appointed as Manager of the Temple to represent its interests. Mr Ng argued that all along the Temple operated along such basis, eg the four Managers were the signatories of the Temple’s bank account, and when Lo resigned as Manager in 2001 he recommended Choi to take up his position.

70.  Mr Ng contended that since the present action was not commenced upon the consensus/agreement by all four co-Managers of the Temple (because Lo died without replacement before 2011), and there was no evidence of any meeting having been convened for the purpose of seeking the consensus/agreement of the Four Yeuk, the plaintiff whether by Tang KN alone or by Tang KN, Ip and Tang FW jointly would not have proper authority to commence the present action against the Ds, and the plaintiff’s name and claim were liable to be struck out.

71.  Mr Ng cited Tang Kam Wah & ors v Tang Yat Ming & anor[15]and Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso v Lau Kar Yau[16] in support of his propositions.

72.  In Tang Kam Wah & ors, there was dispute over the validity of a lease over land belonging to two tsos. The plaintiff claimed inter alia that under section 15 of the NTO and on the principle of unanimosity, only the respective managers of the two tsos being trustees acting unanimously in the exercise of their powers could deal with or lease tso properties, and the lease was invalid since it inter alia did not have the consent of and was not signed by all the managers of the respective tsos, hence such lease was incapable of binding the trust. Each of the two tsos should have six managers, one from each branch of descendants, but the lease was signed by only two of the Managers.

73.  On the other hand, although the defendants did not take issue with the mandatory nature of section 15 of the NTO nor the principle of unanimosity, they argued that since the lease was agreed/approved at a duly convened meeting by the members of the tsos, it was valid and binding pursuant to a customary rule, and the court should not equate “manager” with “trustee” in the context of section 15 of the NTO or import the English legal concepts of “trustee” when construing section 15 of the NTO.

74.  Chu J (as she then was) referred to the oft-cited description of a tso by Mills-Owens J in Tang Kai Chung & anor v Tang Chik-shang & ors[17] in which Mills-Owens J concluded that a tso is a trust and the manager registered under section 15 of the NTO is a trustee within the meaning of the Trustee Ordinance Cap 29.[18] In Leung Kuen Tai v Tang Kwong Yu (or U) T’ong or Tang Kwong Yu Tso, DHCJ Lam (as he then was) also concluded that the concept of trust applies to a tso with the managers as trustees and the members as beneficiaries, which is an instance of applying the concepts of trust in English law to a Chinese customary institution, but having regard to local circumstances, certain concepts (such as the rule against perpetuities) are held to be inapplicable.[19]

75.  Chu J (as she then was) concluded that the well established legal principles of tso, tso property and managers appointed under section 15 of the NTO are as follows:

(a) a tso is a form of Chinese customary land holding;

(b) the concepts of the English law of trust are capable of applying to a tso with regard to property it holds, its members and also its manager(s) appointed under section 15 of the NTO;

(c) property held by a tso is in the nature of trust property to which all members enjoy a beneficial interest;

(d) section 15 of the NTO was created to facilitate transactions relating to tso land, and upon registration of the appointment the manager is in the position of a trustee and has full power to deal with the tso land, subject to the supervision of the District Officer through the system of consent.

On the basis of the above principles, Chu J (as she then was) held that:[20]

“Under Section 15 [of the NTO], the power of dealing with Tso land, including the granting of a lease, is vested in the manager. Accordingly in exercising the power to let, the manager being trustees are required to act unanimously : Lewin on Trust (17th edn) p.737. The consent of only one manager from each of the two Tsos in question is insufficient to make the Lease a valid and binding one. It also follows that the unanimous decision of managers cannot be overridden by the decision of the members of Tso because under Section 15, the power to deal with Tso property is conferred solely on the managers and no one else : per Litton JA (as he then was) in Light Ocean Investments Ltd, at p.40. This being the case, even if the defendants were to succeed in proving the existence of the Pleaded Custom, the Lease remains invalid and unenforceable by reason by Section 15.”

76.  Like the parties in Tang Kai Chung & anor, Ms Lau and Mr Ng also had no dispute that the principle of unanimosity applied to the Managers of the Temple being a customary land trust. But Tang Kai Chung & anorwas not concerned with the situation in the present action in which one of the co-Managers had passed away. Rather it dealt with the situation where some of the existing co-managers of the tso failed to endorse the lease, which was clearly in breach of the principle of unanimosity.

77.  In Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso, DJ Mimmie Chan (as she then was) dealt with the Mak Tsok Sui Tso which was an entity for holding ancestral land under Chinese law and custom under section 15 of the NTO with beneficiaries comprising four branches of the Mak family. Mak Yuk Hon (descendent of the first branch) and Mak Lai Chuen (descendent of the fourth branch) were registered as managers of the subject land under section 15 of the NTO. Historically, the registered managers/trustees of the tso came from the first and/or fourth branches of the family. Mak Yuk Hon died in 1997 and there was no change to the registration of managers under section 15 of the NTO since members of the tso could not come to any agreement.

78.  The disputed land was occupied by Mak Yuk Hon’s family, but in 2000 two tenancy agreements were entered into between the tso (signed by Mak Kam Fat and Mak Tim Fat) and the defendants  (ie Mak Yuk Hon’s daughter and daughter-in-law) respectively. In 2005, the tso served notices to quit on the defendants, and later commenced action to recover vacant possession of the land, outstanding rent, mesne profits and interest. The defendants claimed inter alia that after the demise of Mak Yuk Hon, Mak Lai Chuen had no authority or right to act on behalf of the tso to issue the notices to quit and had no authority or capacity to commence action as the sole manager of the tso.

79.  It was argued that under Chinese customary law, where two or more persons were appointed as managers of the tso, they act jointly and have joint power and authority to act, and on the death of one of such managers, the survivor does not automatically assume full power and authority, and the members of the tso must agree to appoint someone else to replace the deceased manager.

80.  The learned judge held that section 15 of the NTO did not make express provision for such situation, and under section 13 of the NTO the court had power to and should recognise and enforce any Chinese custom or customary right affecting land in the New Territories.[21] The expert witness opined that Mak Yuk Hon and Mak Lai Chuen each had 50% power and authority to represent the tso, and this did not change on Mak Yuk Hon’s death such that Mak Lai Cheun would not automatically become the sole manager with full power and authority to represent the tso.[22]

81.  Further, according to the expert witness, decisions by the tso and in particular important decisions such as decisions to select or cancel the registration of a manager “and decisions to evict members of the family of the Tso from Tso property, must be decided by the majority of all the members of the Tso, and not by the Manager himself. In [her] judgment, this point which emerges from the expert evidence of Professor Chang is important and quite distinct from the issue of whether, on Yuk Hon’s death, Lai Chuen as sole surviving manager has full authority to act for the Tso”.[23] The expert witness also opined that (a) if one family line of the various branches of the family did not participate in the decision making process it would seriously if not fatally affect the validity of any decision affecting the tso,[24] and (b) the notice of meeting was to be given to each family line thus giving them a chance to vote at the meeting on decisions affecting the tso was a pre-requisite for any valid meeting to make decisions which affected the tso.[25]

82.  The learned judge concluded that after Mak Yuk Hon’s death, Mak Lai Chuen did not have the right to act for the tso to terminate the tenancies and to commence these proceedings to seek recovery of the land from the defendants :

“33. …… The reasons are, first, Lai Chuen did not have full power to represent the Tso after Yuk Hon's death. There was never a validly convened meeting of the Tso as a whole to decide on the appointment of Lai Chuen as the sole manager after Yuk Hon's death, or on the appointment of any one to replace Yuk Hon. It is not necessary for me to decide whether the first branch and the fourth branch must be represented on the management team. As Professor Chang has pointed out, this is for the Tso as a whole to decide at a meeting of which notice has been given to all family lines in the Tso.

34. In this context, I accept that on Yuk Hon's death, Lai Chuen on his own does not have the full right to possession of the Land. ……

35. Second, according to Professor Chang, the decision to terminate the Agreements had the effect and consequence of evicting members of the family clan from Tso property and this is a very important decision which must be decided not by the Manager as a matter of routine management, but by the Tso members as a whole.  The effect of the decision goes against the very purpose of putting property in the name of the Tso, which is to provide for family and clan members, particularly the elderly and needy ones.  There is no evidence of any properly convened meeting having been held before Lai Chuen instructed solicitors to issue a Notice to Quit and to commence proceedings for recovery of the Land from [the defendants].  …… it is for the Tso members to consider and decide whether there is valid ground to complain of any breach of the Agreements and whether there are valid reasons to recover possession of the Land.  There is no evidence that the Tso had by the majority of its members made such a decision, or to authorise the recovery of the Land from [the defendants].  According to Professor Chang's evidence, these fall outside the routine management matters that can be decided by the manager of a Tso - even a sole/single manager.”

83.  What emerged from the above was that the subject matter of the dispute in Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso was between the surviving Manager and “insiders” being members of the family clan. According to the expert evidence, which the learned judge accepted, one of the defendants being the widow and daughter-in-law of members of the tso, although not literally being a member, had the same rights as her husband. The other defendant was a daughter of a member of the tso. The expert witness opined that “[an] unmarried daughter has certain rights to the Tso property and in the case of a married daughter who takes care of an elderly parent …… the daughter is given preferential treatment by the Tso …… On the strength of Professor Chang’s clear evidence, [the learned judge] find that [the defendants] have the right to challenge [the plaintiff’s] authority to act for the Tso in this case”.[26]

84.  Here, Mr Ng submitted since the plaintiff pleaded that the Ds were trustees of the Temple, they could not be described as outsiders. I disagree. Insofar as the Temple being a t’ong is a customary land trust, the trustees are the Managers and the beneficiaries are all the members of the t’ong, which proposition Mr Ng accepted as seen in paragraph 52 above. There is no evidence that D2 and D3 are male members/descendents of the Four Yeuk. On the plaintiff’s case, they were merely wrongful purchasers of the Remaining Lots, and as such they became constructive trustees. As for D1, she is neither a daughter nor wife of any of the members of the Four Yeuk, but merely a salaried outsider whom the Managers of the Temple as trustees permitted to be the keeper of the Temple and legal holder of the Four Lots on behalf of the Temple. She was not an insider beneficiary of the Temple as a t’ong.

85.  In any dispute as between the managers/trustees and the insider beneficiaries (ie the members of the t’ong and also widows and unmarried daughters of members of the tso as well as married daughters looking after elderly parents in Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso), it is always open to the insider beneficiaries to challenge the managers’ authority to sue for they are the very parties interested in the internal management of the t’ong. Hence, the defendants in Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso was entitled to challenge the authority of Mak Lai Chuen to act when there was no replacement for his co-Manager Mak Yuk Hon who had passed away. But the question is whether this conclusion still remains applicable when the dispute is between the Managers and outsiders.

86.  Ms Lau argued that the authority of the Managers of the Temple to sue was an internal management matter for the Temple that did not concern D2 and D3 who were at all material times outsiders. She pointed out there was no evidence that any member of the Temple as a t’ong objected to the present action. Ms Lau further contended that since all the surviving co-Managers of the Temple are now prepared to join in the present action as plaintiff, there could not be any viable challenge to the plaintiff’s authority to sue, and D’s Summons should be dismissed.

87.  Ms Lau relied on the observations by Lord Millett NPJ in the Court of Final Appeal Decision in Tang Man Kit in support.[27] Lord Millet NPJ in considering the authority of Tang Man Kit and Foo Tak Ching as manager of Wah Yan Mo Fan Heung to represent the heung in seeking recovery of the heung’s land from an outsider tenant holding over after the expiry of the notice to quit said as follows:[28]

“…..the authority of the plaintiffs to represent the Heung was a matter of the Heung’s internal administration and had nothing to do with the defendant. It was entitled to challenge their authority to represent the Heung, but its only legitimate interest in doing so was to ensure that it was not exposed to the risk of being made the subject of a second claim. It was entitled to be protected against this risk; but the proper way to protect it was not to enquire into the propriety of the plaintiff’s appointment, which was a matter between the plaintiffs and the Heung, still less to strike-out the proceedings, but to make an appropriate representation order. When difficulties appeared to arise, however, this course did not occur to any one, and no such order was sought.”

88.  In that case, Wah Yan Mo Fan Heung was beneficially interested in land in the New Territories. The defendant, a former tenant occupying part of such land, was holding over after the expiry of the notice to quit. When the action commenced in 1990, the plaintiff (originally named as “Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers”) pleaded that the heung was an unincorporated association with Lui Lap Ka (later replaced by Wong Pui) and Wong Tat To as its managers/trustees, and sought to recover such land and mesne profits. The defendant admitted that Wong Tat To had been a manager of the heung, but claimed there was (a) lack of authority to issue the notice to quit, and (b) an oral agreement with Wong Tat To as manager/trustee that they would be entitled to remain in possession until the government resumed the land.

89.  Following the death of Wong Pui and Wong Tat To, the Statement of Claim was amended in 1997 to plead that Chan Kam Cheung and Tang Man Kit had become the new managers/trustees of the heung. In 1998, the defendant applied to challenge the capacity of the heung as an unincorporated association to sue or hold land, and the plaintiff was given leave to amend the title to “Tang Man Kit suing as sole manager of Wah Yan Mo Fan Heung” and to re-amend the Statement of Claim to add an alternative case that the heung was a t’ong. Later in the year, the defendant raised four preliminary issues, ie (a) whether Tang Man Kit was the validly approved/registered manager of the heung under section 15 of NTO, (b) whether the heung was a t’ong within the meaning of section 15 of the NTO, (c) whether the plaintiff had locus to bring the action, and (d) whether Wong Tat To and Wong Pui were the validly approved and registered managers of the heung under section 15 of the NTO when the notice to quit was served. Yuen J (as she then was) held that the issue of authority to sue should be raised by proper procedure without delay, so the defendant applied to set aside the Writ of Summons as having been issued without authority.

90.  However, in 2000 the District Land Officer issued (and registered in the District Land Registry) two documents under section 15 of the NTO confirming (a) the appointment of Tang Man Kit and Chan Kam Cheung as managers of the heung to replace Lui Lap Ka, Wong Tat To and Wong Pui (and others) with effect from 1989, and (b) the appointment of Foo Tak Ching to replace Chan Kam Cheung as a manager of the heung with effect from 1999. There was a subsequent re-amendment to the pleadings to add Foo Tak Ching as a plaintiff.

91.  In the first instance judgment, Yuen J (as she then was) concluded that the plaintiffs had no authority to sue and dismissed the action. She held inter alia that the heung was not a t’ong within section 15 of the NTO, and that even if it were a t’ong, the plaintiffs were not the registered managers of the t’ong at the time when the action was commenced and therefore could not commence such action. The Court of Appeal[29] held the heung was and always had been a t’ong within the meaning of section 15 of the NTO.

92.  In the Court of Final Appeal, Lord Millet NPJ drew a distinction between the managers’ authority to bring the proceedings in their own names and the question whether they were the persons in whom the cause of action was vested. He noted that Yuen J (as she then was) found that Tang Man Kit and Foo Tak Chingwere not suing in their own right and had no authority to sue on behalf of the heung, which decision “did not go to their authority to bring the proceedings in their own names, which was beyond dispute, but to the question whether they were the persons in whom the cause of action was vested”. But this issue was not raised by the Defence which proceeded on the basis that the heung was the beneficial owner of the land, that at that time Wong Tat To was its manager/trustee, and that he entered into the relevant agreements on behalf of the heung which bound the heung. Thus, there was no pleaded issue as to the questions of fact and law which Yuen J (as she then was) decided.

93.  The eventual appeal from the decision by Yuen J (as she then was) was heard before a three-member Court of Appeal in April 2005.[30] Cheung JA held that by 2000 the District Land Office clearly recognised the heung was a t’ong under section 15 of the NTO, and gave retrospective approval of the managers, so it was not open to anyone including the defendant to litigate on the issue again to challenge the status of the heung and the plaintiffs. The learned judge repeated Lord Millet NPJ’s observations in paragraph 87 above and said “[the] defendant, as an outsider of the Heung, had gone to undue length to challenge the status of the Heung and the managers when its stake in the land only came from the Heung and the managers. This is an extraordinary approach which in my view was totally unjustified”. Cheung JA further noted that the defendant never applied for “an appropriate representation order” as envisaged by Lord Millett NPJ. Also, Cheung JA drew a distinction between the question of title of the managers (which was irrelevant because the person who was entitled to recover land rested on his right to possession of the land and not on his right to pass title to a third party) and their capacity to sue to recover the land.[31] As approved managers of the heung, Tang Man Kit and Foo Tak Ching clearly were in possession of the land when they began the action to recover land.

94.  Both the Court of Appeal and Court of Final Appeal decisions in Tang Man Kit were considered and distinguished by DJ Mimmie Chan (as she then was) in Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso.[32]In Tang Man Kit, there was no issue of whether on the death of one of two registered managers the surviving registered manager had authority to act because upon the death of one manager in Tang Man Kit another manager was appointed and registered before the next controversial act was carried out. Further, the Court of Final Appeal in Tang Man Kit pointed out the Managers’ authority to act was a matter of internal management of the tso, and it was not open to outsiders (eg the corporate tenant in that case) to challenge or query the managers’ authority.  But in Mak Lai Chuen suing as sole manager of Mak Tsok Sui Tso, the tenants whom Mak Lai Chuen sought to evict from the land were not “outsiders” of the family clan, but the wife and daughter of clan members who had the same rights as the male members of the tso to be protected by the tso and to enjoy the tso property, and according to the expert witness, the decision to evict members of the family clan from tso property was a very important decision that must be decided not by the manager as a matter of routine management but by the tso members as a whole.[33] It was in the context of such a dispute between Mak Lai Chuen as manager/trustee and the “insider” defendants being members of the family clan that the court under section 15 of the NTO took into account the expert evidence (which Mak Lai Chuen did not challenge by adducing other evidence) on Chinese customary law in respect of the limited powers of jointly appointed manager upon the death of his co-manager.[34]

95.  As explained above, the present situation is different in that the surviving co-Managers were dealing with the Ds as “outsiders”. The present situation is also not one in which some of the existing appointed and registered co-Managers failed to join in as the plaintiff. In such circumstances, I find Lord Millett NPJ’s observations in the Court of Final Appeal’s decision in Tang Man Kit relevant and pertinent. The authority of Tang KN, Ip and Tang FW to represent the Temple was matter of the internal administration of the Temple (being a t’ong) and had nothing to do with the “outsider” Ds, and D2 and D3 cannot enquire into the propriety of the surviving co-Managers’ authority to act or on such basis strike out the present proceedings. That being the case, I need not consider  any custom and practice of the Four Yeuk and the Temple raised in the Chong 2^nd and 3^rd Affs which were internal administration matters beyond the concern of D2 and D3.

96.  In the circumstances, I dismiss D’s Summons and grant a costs order nisi that D2 and D3 shall pay the plaintiff’s costs of such summons (with all costs reserved, if any) on High Court scale to be taxed if not agreed.

VI.  AMENDED P’s 1^ST SUMMONS AND P’s 2^ND SUMMONS

97.  D2 and D3 did not take any issue over P’s 2^nd Summons for being out of time. Given the outcome of Ds’ Summons, D2 and D3 had no objection to P’s 2^nd Summons. But the application to join Ip and Tang FW as plaintiff was not a mere matter of amendment of pleadings. Application should also have been made under Order 15 rule 6 of the RHC. However, since Ip and Tang FW both filed affirmations confirming their consent to be added as plaintiff, and D2 and D3 did not raise any substantive objection to P’s 2^nd Summons, I am prepared to grant leave for the plaintiff to join Ip and Tang FW as plaintiff in the present action and for the Amended Writ of Summons to be re-amended to reflect the same.

98.  As regards the Amended P’s 1^st Summons, D2 and D3 raised some initial objections. D2 and D3 noted that the FBP Draft admitted that the Temple, On Leung Yeuk, Tang Wing Shing Tong, Hung Shing Kung and Tan Chuk Hang Yeuk are t’ongs within the meaning of sections 15-16 of the NTO, but the 1^st Reply Draft still (a) maintained that the plaintiff is a tso/t’ong but the Ds could not pray in aid of sections 15-16 of the NTO, and (b) also put the Ds to strict proof that sections 15-16 of the NTO applied to On Leung Yeuk, Tang Wing Shing Tong and Hung Shing Kung. The Chong 1^st Aff complained that the 1^st Reply Draft failed to clearly admit that the plaintiff is a t’ong within the meaning of sections 15-16 of the NTO, and the differences between the 1^st Reply Draft and the FBP Draft were embarrassing and might lead to confusion.

99.  The plaintiff exhibited a revised draft of the Amended Reply and Defence to Counterclaim (“2^nd Reply Draft”) to the Kwong 3^rd Aff. In the 2^nd Reply Draft, the plaintiff averred that the Temple is a t’ong registered with the Home Affairs Department under section 15 of the NTO and On Leung Yuek, Tang Wing Shing Tong and Hung Shing Kung were t’ongs within the meaning of sections 15-16 of the NTO, and that the surviving co-Managers Tang KN, Ip and Tang FW had either by themselves, their agents, representatives, successors or otherwise authorised, consented to and approved the present action.

100.  At the Hearing, Mr Ng confirmed that D2 and D3 had no further objection to the 2^nd Reply Draft and the FBP Draft. Given the outcome of D’s Summons, there is no reason not to accede to the Amended P’s 1^st Summons and P’s 2^nd Summons. Further, at the Hearing, Ms Lau applied (and Mr Ng had no objection) for the Statement of Claim to be amended to bring it into line with the amendments proposed in the 2^nd Reply Draft and the FBP Draft, and she agreed to provide a draft amended Statement of Claim  to D2 and D3 for consideration.

101.  I therefore grant the following order:

(a) leave to join Ip and Tang FW to be the plaintiff together with Tang KN in the present action against the Ds;

(b) leave to the plaintiff to re-amend the Amended Writ of Summons in the manner marked in green as per the Writ Draft;

(c) the plaintiff shall within seven days from today serve on D2 and D3 draft amended Statement of Claim with proposed amendments limited to those in line with the proposed amendments in the Writ Draft, the 2^nd Reply Draft and the FBP Draft;

(d) any application by the plaintiff for leave to amend the Statement of Claim shall be made returnable at the 3^rd PTR referred to in paragraph 107 below;

(e) leave to the plaintiff to amend the Amended Reply and Defence to Counterclaim in the manner marked in red as per the 2^nd Reply Draft;

(f) leave to the plaintiff to amend the FBP Answers in the manner marked in red as per the FBP Draft;

(g) the plaintiff shall file the Re-Amended Writ of Summons, the Amended Reply and Defence to Counterclaim and Amended FBP Answers within seven days from today, and serve such documents/pleadings on D1;

(h) service of the Re-Amended Writ of Summons, the Amended Reply and Defence to Counterclaim and Amended FBP Answers on D2 and D3 be dispensed with;

(i) the acknowledgment of service filed by D2 and D3 on 25 January 2011 shall stand as their acknowledgment of service to the re-Amended Writ of Summons;

(j) leave to D2 and D3 to file and serve their Amended Reply to Defence to Counterclaim (if so advised) within 14 days thereafter.

102.  At the Hearing, Ms Lau accepted (and I now so order) that costs of and occasioned by the Amended P’s 1^st Summons and the P’s 2^nd Summons (including all costs reserved if any) on High Court scale be paid by the plaintiff to D2 and D3 to be taxed if not agreed.

VIII.  WAY FORWARD

103.  At the Hearing, I urged the plaintiff to take steps to clarify the position in relation to D1 so that the present action could move forward again towards trial. Ms Lau assured me that the plaintiff was taking active steps in this regard.

104.  In their Defence and Counterclaim, the Ds urged for the present action to be transferred to the District Court. The Ds averred that the collective annual rateable value of the Remaining Lots did not exceed $240,000. However, the plaintiff was initially diffident about such approach since they considered their claim for damages might exceed District Court jurisdiction.

105.  But with the trial dates vacated and further steps to be taken before the present action would be ready again for setting down for trial, and given the state of the court’s diary in the Court of First Instance, it is most unlikely for a trial to be scheduled in the near future. I drew the parties’ attention to section 44 of the District Court Ordinance Cap 336 (“DCO”) which provides as follows:

“(1) The Court of First Instance may, if the parties consent, order the transfer to the [District Court] of all or part of an action or proceeding, including a counterclaim, which is outside the jurisdiction of the Court, but would have been within its jurisdiction except for the monetary limits specified in section 32, 33, 35, 36 or 37.

(2) An order may be made under this section at any stage of the proceedings.

(3) Upon a transfer under subsection (1), the [District Court] shall have jurisdiction to hear and determine all or part of an action or proceeding, including a counterclaim, so transferred notwithstanding any enactment to the contrary.”

106.  I echo the following sentiments by Lam J (as he then was) in Re Estate of Chow Nai Chee:[35]

“42. After the implementation of the Civil Justice Reform, the court and the parties together with their lawyers should be more proactive in case management and more sensitive to cost effectiveness. It is necessary to have regards to the underlying objectives under O.1A in choosing the forum. In my experience, there are civil cases in the High Court that can be justly and efficiently dealt with in the District Court. In many cases, a transfer to the District Court would bring about more expeditious and more cost effective disposal of the case. To evoke s.44, the parties have to consent. That means a case cannot be transferred to the District Court if one or more parties object. However, a refusal to consent may be taken into account when the court considers the question of costs, particularly when the court has indicated that the case can properly be tried in the District Court and one party has agreed to such a course.

……

44. In my view, consistent with the spirit of the Civil Justice Reform, we should make more use of …… ss. …… 44.”

107.  Subsequent to the Hearing, having considered their position, both parties confirmed their agreement to transfer the present action to the District Court pursuant to section 44 of the DCO. In the circumstances, I further direct that (a) the present action be transferred to the District Court pursuant to section 44 of the DCO, and (b) the plaintiff shall within 21 days of such transfer apply to a District Court judge for a PTR for further case management and, where appropriate, for leave to set the present action down for trial (“3^rd PTR”).