CHEUNG MAN YU v. LAU YUEN CHING AND OTHERS

CACV 213/2006 & CACV 265/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 213 AND 265 OF 2006

(ON APPEAL FROM HCMP NO. 2421 OF 2000)

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Judgment

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Hon Tang VP (giving the Judgment of the Court):

Introduction

1.  CACV 213 of 2006 is the applicant’s appeal from the judgment of Deputy Judge L Chan.

2.  CACV 265 of 2006 is the cross appeal by the 1^st, 2^nd and 3^rd respondents against the learned judge’s costs order.

3.  After a trial which lasted seven days, and which concluded on 3 May 2006, on 4 May 2006, the learned judge (Deputy Judge L Chan) gave judgment dismissing the applicant’s claim.

4.  On 1 June 2006, the learned judge decided that costs should not follow the event and made no order as to costs.  That is the subject matter of the appeal by 1^st, 2^nd and 3^rd respondents.

5.  Before we deal with the issues in these appeals, it will be helpful to set out some of the background facts.

Events leading to litigation

6.  On 10 September 1931, Cheung Tim and Cheung Oi purchased Lots Nos. 1556, 1557, 1558, 1559, 1560, 1561, 1562, 1563, 1564 and 1565 in D.D.132 for $650.  In the same year, they bought Lot No. 1829 in D.D.132 at a government auction for $51.  We will refer to the above mentioned lots of land collectively as “the Land”.  With the money raised in 1932 or 1933, a 2-storey building with a Guan Yin Temple was built on the Land (“the Building”).

7.  On 18 August 1960, one Lok Kwai (also known as Lok Kwai-fong) was registered as the successor to Cheung Tim and Cheung Oi under section 17 (now repealed) of the New Territories Ordinance, Cap. 97, in respect of the Land.  According to the record of the Tuen Mun District Office, Lok Kwai succeeded to the Land as the disciple of the deceased Cheung Tim and Cheung Oi.

8.  By a conveyance on sale dated 5 August 1971, the Land was purportedly sold to the 2^nd respondent and Lau Hing-lin for $99,677.  The learned judge held that it was not a sale and no money was actually paid.

9.  In 1972, a “Tin Hau Temple” (天后廟) was built.  There are 17 donation books which recorded donations received for the purpose of “renovating the building for Guan Yin, and the building of a building for Tin Hau” (重修觀音屋宇，新建天后屋宇).  On the front covers of the donation books Lau Hing-lin was described as the keeper (主持) of Lin Fat Tong.  According to the learned judge:

“

16.

… The inside of some of the front covers contain a pricelist for different types of ancestral tablets.  These books show that there were 1,361 donors who together donated $41,778.  The Tin Hau Temple was built in about 1972.”

10.  On 23 March 1982, Lau Hing-lin and the 2^nd respondent surrendered the Land to the government in return for a cash compensation of $9,124,448 as well as an ex gratia payment of $3 million.  They were deposited into a bank account in the joint names of the 2^nd respondent and Lau Hing-lin.

11.  On 25 November 1982, Lau Hing-lin and the 2^nd respondent used part of the compensation money to buy two village type houses in Lots Nos. 1306 and 1307 in D.D.131 for $2.1 million (“the houses”).

12.  On 6 June 1994, Lau Hing-lin and the 2^nd respondent assigned the houses to themselves and the applicant as joint tenants by way of gift.

13.  On 21 May 1997, the 3^rd respondent, then named Sheen Bridge Limited was acquired by the 1^st respondent.

14.  On 10 December 1997, its name was changed to Sheen Bridge (Group) Investments Limited.

15.  The 3^rd respondent’s name was changed to Lin Fat Tong Company Limited on 19 February 1999.  The applicant remained as director and the 1^st and 2^nd respondents became directors of 3^rd respondent.

16.  According to the annual return filed on behalf of the 3^rd respondent on 21 May 1999, the issued share capital of the 3^rd respondent was $10,000 divided into 10,000 shares of $1 each, registered as to 6,000 shares in the name of the 2^nd respondent, 500 shares in the name of the 1^st respondent, 2,500 shares in the name of the applicant, and 1,000 shares in the name of Chung Shui-tai.  Apparently, Chung Shui-tai was also a director of the 3^rd respondent.

17.  About $20 million (or $18 million according to the 2^nd respondent) which came from the compensation money paid in 1982 and interest thereon, in the joint account of the 2^nd respondent and Lau Kwai-lin, were transferred into the bank account of the 3^rd respondent.  At that time, the bank account could only be operated upon joint signatures of the applicant and the 2^nd respondent.

18.  On 17 July 1999, Lau Hing-lin passed away.

19.  On 31 January 2000, the bank mandate was changed so that the bank account of the 3^rd respondent could be operated on the joint signatures of the 1^st respondent and the 2^nd respondent, or the joint signatures of the 2^nd respondent and the applicant.

20.  On or about 25 February 1999, the 1^st respondent and the 2^nd respondent transferred most of the company’s funds into their personal account(s).

The Proceedings

21.  On 16 May 2000, the applicant commenced proceedings by originating summons in HCMP 2421 of 2000 claiming the following relief:

“	(a)	That the 1st, 2nd and 3rd Respondents (and in the case of the 3rd Respondent, by the 1st Respondent, its director) and each of them do forthwith:-
		(i)	disclose in an affirmation, the whereabouts of the money and fund which had been deposited on or before 31st March 2000 with the bank accounts set out in the Schedule hereof (hereinafter called the said bank accounts); and
		(ii)	deposit with the Registrar of this Court all money which had previously been deposited with the said bank accounts on or before 31st March 2000 together with any interest thereon accrued.
	(b)	That the 1st and 2nd Respondents be removed as trustee and/or members of the 4th Respondent.
	(c)	That the 4th Respondent be administered by a Scheme of Trust to be prepared by the Applicant and approved by the 5th Respondent for due and proper administration of the charitable trust constituted in the 4th Respondent.
	(d)	That such further or other relief for better administration of the charitable trust constituted in the 4th Respondent therein.
	(e)	That provision may be made for costs of this application.”

22.  The Secretary for Justice, the 5^th respondent, has declined to take part in the proceedings.  The learned judge recorded that:

“

34.

… The Secretary is only willing to take part if the Tong should be determined a public charity. …”

The Applicant’s case

23.  The applicant’s case is that in the early 1930s, a public charity was established in Tuen Mun, and that the 4^th respondent Lin Fat Tong, an unincorporated entity, is the name which has been given to that public charity.  The learned judge held on the basis of the evidence of Madam Lau Tim-tai (PW2), the neice of Lau Hing-lin, that the name Lin Fat Tong (“the Tong”) was in use in the 1950s (See para. 37 of the judgment), although the oldest documentary evidence of the use of the name Lin Fat Tong are the 17 donation books in 1972.  For brevity sake, we will refer to this unincorporated entity throughout as the Tong.

24.  It is common ground that in order to qualify as a public charity, three conditions must be satisfied:

“

… First, the purposes of the institution must have charitable character, that is, they must be within the spirit and intendment of the preamble to the Charitable Uses Act 1601.  Secondly, the institution must exist for the benefit of the public and, thirdly, it must be exclusively charitable.”  Tudor on Charities, (9th ed), para. 1-002 at p.2

25.  In Lord Macnaghten’s famous words in The Commissioners For Special Purposes of the Income Tax v Pemsel [1891] AC 531 at 583:

“‘	Charity’ in its legal sense comprises four principal divisions: trusts for the relief of poverty; trust for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. …”

26.  We understand, by public charity, it is meant a charity in its legal sense; it is public in the sense that it must exist for the benefit of the public.  As Tudor on Charities pointed out in para. 1-008 at p. 7:

“

… it was established by the Court of Chancery that a trust, in order to be charitable, must be of a public character, that is, it must be for the benefit of the community or an appreciably important section of the community.  This requirement may involve the consideration of two questions which are closely related, first, whether the purposes of the trust confer a benefit on the public or a section of the public, and secondly, whether the class of persons eligible to benefit constitutes the public or a section of it. …”

27.  The 1^st, 2^nd and 3^rd respondents’ case is that none of the conditions was satisfied, and that in any event the applicant has no locus standi to bring the present proceedings.

28.  Since the applicant’s case is that the charity was constituted in the early 1930s, primarily it is to the events in 1930s that we should turn our attention.

1930s

29.  There was an organization called Kik Lok Tung Benevolent Society (極樂洞善堂) (“the Society”) which operated in Shau Kei Wan.  The Society was subsequently incorporated on 4 July 1964, a copy of its Articles and Memorandum of Association was produced at trial.

30.  This is how the learned judge described the Society:

“	4.	I will briefly deal with the history of the Tong.  It is related to an organisation called Kik Lok Tung Benevolent Society (極樂洞善堂) (“the Society”) which operated somewhere in Shau Kei Wan off Yiu Tung Estate.  The Society was incorporated on 4 July 1964.  The first objects in the memorandum are to propagate Confucianism and to promote the teachings of the Four Books and Five Canons (四書五經) for the edification of men.  The next object is for promotion of vegetarianism and to provide a means of intercourse between persons professing vegetarian principles.  There are other objects for the advancement of general education for the orphans and the poor; establishing homes for the aged; promoting music and establishing libraries.  There is, however, no evidence of what the Society does or what it did prior to incorporation save and except that some people had been taught the learnings of Confucianism, Buddhism and Taoism at that place and that it would hold seminars.  There is also no evidence of who would attend the seminars save its disciples and followers.
	5.	There is some evidence that this Society worshipped Xin Tian Dao (先天道) or “The Way of Former Heaven”, a popular branch of Taoism in Hong Kong.  But the Society is not a famous Taoist society in Hong Kong.  It is less well known than other Taoist societies or temples like Wong Tai Sin Temple (黃大仙祠)，Fung Ying Seen Koon (蓬瀛仙館) or Tsing Chung Koon (青松觀).”

31.  In para. 6 of the judgment the learned judge said that Cheung Oi was a female disciple of the Society and that:

“	She wanted to branch out from the Society and set up another place of worship in Tuen Mun.”

32.  For that purpose, the Land was purchased and a building to worship Guan Yin was built on the Land.  Funds were raised.  Six donation books (dated from the autumn of 1932 to the winter of 1933) were produced in relation to that event, and as the learned judge said, each of the donation books had, what the parties have called, a preface on the inside of the front covers.  The prefaces were not identically worded but the effect was the same.  As the learned judge said:

“

7.

… They praised Guan Yin for the miraculous deeds.  They further stated that though Guan Yin’s grace had been bestowed on Hong Kong for long, however the hall for worshipping Guan Yin was not solemnly respectful. …”

33.  Donations were sought from “各鄉君子仁人” (gentlemen and benevolent persons of all villages) so that a proper place of worship of Guan Yin could be built.

34.  The name of Wong Po-yin (黃保元) appeared on the covers of the donation books as “主持”.  The judge described her as the first prioress.  We prefer to refer to her as “the keeper”.  It is common ground that all the keepers were spinsters.  Also, it was stated on the covers of the donation books that the donation was for the purpose of the building of a building for Guan Yin (建造觀音屋宇).

35.  Mr Chain, who appeared for the 1^st to 3^rd respondents accepted that on the basis of the donation books, it is open to the court to infer that the purpose of the donation was the building of a place for public worship.  However, he submitted that the donation books do not support any inference that the donations were raised in order to advance religion by preaching.  He also accepted that the setting up of a place for public worship could satisfy the requirement of a public charitable purpose.  However, he submitted that that was not the sole purpose of the donations.  He relied, in particular, on the fact that Cheung Oi and Wong Po-yin were accommodated in the building that was built as a result of the donations, and thereafter the other keepers together with others, such as disciples and some old women were accommodated in the Building, and then after the surrender of the Land, in the houses.

36.  We believe that the learned judge in deciding that no charity was established had failed to pay proper regard to the evidence relating to the 1930s.  Furthermore, with respect, he had misinterpreted or placed undue weight on the evidence of subsequent events.  The evidence shows quite clearly that Cheung Oi went to Tuen Mun to set up a place of worship.  The purpose and the nature of the enterprise that she was engaged in could be gathered from the donation books.  The learned judge noted that a not inconsiderable sum of $2,893.30 was raised from 203 donors.  It appeared that those donors came from at least 6 different villages.  The learned judge said:

“	39.	… There is, however, no evidence on who were the donors and why did they donate.  Some donation books show a number of donors of the same surname.  They might well be villagers of the same village and hence related to each other.  They might have been told that the donations were for the construction of a Taoist vegetarian hall which would have Guan Yin as the primary subject of worship.  There is of course no evidence on this and I would not so find.  However, the Guan Yin Temple, as described by the applicant, appeared more like a Taoist vegetarian hall than a temple that we usually come across.
	40.	… there is no evidence that the money had come from members of the public rather than from the followers of the Cheungs and Wong, the relatives and friends of these followers and some villagers living in nearby villages.  I do not accept that the building put up in 1933 was with public donation.”

37.  Presumably the learned judge thought that the donations were obtained only from followers and disciples.  There is no evidence that in the 1930s there were this number of disciples and followers.  The membership books (眾等進道部) produced showed that in the 1930s there were few converts.  Moreover, the language of the prefaces are inconsistent with that inference.  It is quite obvious that donations were sought from inhabitants of nearby villages, and that the appeal for donation was addressed to them.  We do not know the population in Tuen Mun in the early 1930s but believe it was likely to be small.  But we see no reason why the inhabitants of the various villages even if they were all in the Tuen Mun area could not constitute the public or a section of it.

38.  The learned judge seemed to have been influenced by his belief that:

“

44.

The more important point is that neither the prioress nor her disciples would reach out to the public to spread their faith or Dao or perform other charitable work.  When seminars were conducted, they were only for the followers of the Tong.  The seminars were never advertised by circulars, posters or any other means that would reach the public.  I think the work of the Tong was limited to its followers and its followers came by way of introduction.  There is no evidence that anyone from the Tong would reach out to the public to spread the faith or to gather followers from the public.”

39.  We have two comments on this.  First, on the evidence it is permissible for the court to infer that, in 1932 or 1933, money was to raise specifically for the building of a place for public worship and that would satisfy the requirement of a charity.  There is no evidence that the Tong “was limited to its followers” or that “When seminars were conducted, they were only for the followers of the Tong.”  There were evidence dealing with such matters in later years, which we will deal with later in the judgment.

40.  Secondly, we do not believe it is fair to say that the evidence relating to the 1930s show that there was no attempt to reach out to the public.  As noted, Chung Oi went to Tuen Mun to start a new branch.  And there is no evidence that there were existing members in Tuen Mun, although the membership books contained the name of one individual who was converted before 1930.  Nor do we believe the advancement of religion would fail to qualify as a public charity unless one advertises “by circulars, posters or any other means that would reach the public”.  Religion could be advanced by word of mouth.  Many religions started modestly and some remain so.  One might try to convert one’s friends and relatives because one has the better opportunity to do so.  But that does not mean there is an absence of the required public element in the advancement of religion.

41.  The learned judge also said:

“	53.	The Court of Final Appeal in Secretary of Justice v. To Kan Chi and Others [2000] 3 HKCFAR 481 at 488 identified four types of temple ownership.  They are:
		‘	(1)	ownership by all the people of the relevant faith in the case of a temple amounting to a large monastery containing a large number of monks;
			(2)	ownership by the body of clergy residing in a hereditary private temple and forming a pseudo-family there;
			(3)	ownership by an individual, clan, family or t'ong (remembering that a t'ong may include a tso) of a private temple; and
			(4)	ownership by the inhabitants of a geographical area of a temple without resident clergy established for the benefit of the inhabitants of that area.’
	54.	The applicant’s expert agreed with this.  On the evidence, I find that the Tong does not belong to the first or fourth categories.  I think the Tong may be something between the second and third categories in that all the assets of a Tong are held by the prioress on trust for the Tong and the Tong being a perpetual entity.  This is similar to other ancestral worshipping Tsos and Tongs commonly found in the New Territories.  I, however, have no expert or clear-cut evidence on this and I refrain from making this finding.”

42.  Mr Chain submitted that it is important that we should have regard to the ownership of the temple.  But ownership is not confined to the four types mentioned by the learned judge.  See per Bokhary and Chan PJJ at 488H in Secretary of Justice v To Kan Chi.  We agree ownership of the Land and the Building on it is important.  Guidance is available from Leahy v Attorney General for New South Wales [1959] AC 457.  As Cross J (as he then was) said in Neville Estates Ltd v Madden [1962] 1 Ch 832 at 849.

“

I turn now at last to the legal issues involved. The question of the construction and effect of gifts to or in trust for unincorporated associations was recently considered by the Privy Council in Leahy v. Attorney-General for New South Wales. The position, as I understand it, is as follows. Such a gift may take effect in one or other of three quite different ways. In the first place, it may, on its true construction, be a gift to the members of the association at the relevant date as joint tenants, so that any member can sever his share and claim it whether or not he continues to be a member of the association. Secondly, it may be a gift to the existing members not as joint tenants, but subject to their respective contractual rights and liabilities towards one another as members of the association. In such a case a member cannot sever his share. It will accrue to the other members on his death or resignation, even though such members include persons who became members after the gift took effect. If this is the effect of the gift, it will not be open to objection on the score of perpetuity or uncertainty unless there is something in its terms or circumstances or in the rules of the association which precludes the members at any given time from dividing the subject of the gift between them on the footing that they are solely entitled to it in equity.

Thirdly, the terms or circumstances of the gift or the rules of the association may show that the property in question is not to be at the disposal of the members for the time being, but is to be held in trust for or applied for the purposes of the association as a quasi-corporate entity. In this case the gift will fail unless the association is a charitable body. If the gift is of the second class, i.e., one which the members of the association for the time being are entitled to divide among themselves, then, even if the objects of the association are in themselves charitable, the gift would not, I think, be a charitable gift.”

43.  We believe the evidence is sufficiently clear to show that the “branch” which Cheung Oi went to establish in Tuen Mun existed in the early 1930s and that the members of the “branch” which subsequently became known as Lin Fat Tong, had at least 3 members, namely, Cheung Tim, Cheung Oi and Wong Po-yin.  However, Mr Chain contended that the donors in 1932 and 1933 probably intended to make a gift of their donations to Cheung Oi and / or Wong Po-yin.  It is not clear why Mr Chain excluded Cheung Tim.  The evidence was that only an unmarried woman could become the keeper but a man could be a member.  However, on the evidence we believe it is more likely that the donation fell within the third category identified by Cross J, and that the donors intended their donation should be used to build a place of public worship, and that they be held in trust for or applied for the proposes of the Tong (though it had not yet adopted the name) as a quasi-corporate entity.

44.  Mr Chain did not make any separate point about the Land, which remained registered in the names of Cheung Oi and Cheung Tim until 1961.  It is not clear when Cheung Oi or Cheung Tim died.  But it is obvious that the Land was purchased for the purpose of the erecting thereon a place of worship.

45.  Mr Cheung Tim and Mr Cheung Oi signed the building contract dated 8 November 1933, as a result the Building was built.  We believe they intended that the Land be held for the purpose that a place of public worship should be built on it.  The fact that there was no formal declaration of trust does not matter.  Chap Yick Clansman’s Association Ltd v Mok Fai [1997] 2 HKC 557.

46.  If the building was built for the advancement of the religion, and there was the requisite public benefit, a legal charity would have been established.  It does not matter, whether the Cheungs or Wong Po-yin knew that they had established a purpose trust which was charitable.  Moreover, subsequent conduct could not change the nature of the trust.  So although subsequent events or conduct might throw light on whether a charitable trust had been established in the early 1930s, they could not by themselves convert a properly constituted charitable trust, or its assets, into a private trust or private property.  What Lord Simonds said in a rather different context in National Anti-Vivisection Society v Inland Revenue Commissioner [1948] AC 31 at 65, which was quoted in Re Watson, [1973] 1 WLR 1478, an authority relied on by Mr Chong, supports Mr Chong’s submission that when the evidence supports the existence of a charity, the court should not be astute to find otherwise:

“

I would rather say that, when a purpose appears broadly to fall within one of the familiar categories of charity, the court will assume it to be for the benefit of the community and, therefore, charitable, unless the contrary is shown, and further that the court will not be astute in such a case to defeat on doubtful evidence the avowed benevolent intention of a donor.”

47.  Here the court is required to probe into events which occurred over 70 years ago.  There is no suggestion that there is a rival claimant to the assets of the Tong.  According to the affirmation of the 2^nd respondent, filed on 27 June 2001:

“	Her (Lau Hing-lin) death wish was both the plaintiff and I would carry on working for the charities.”

48.  We should not be astute to find that no valid charitable trust was established and that, e.g. the Building or the Land were private property.

49.  Neville Estates Ltd v Madden, a decision of Cross J (as he then was) was relied on by Mr Chong.  Neville was concerned with the sale of 2 plots of land by the Catford Synagogue to the plaintiffs for £10,000, which was made subject to the consent of the Charity Commissioners.  The Charity Commissioners refused consent to a sale to the plaintiffs for less than £14,300, which was the amount of the highest offer.  The plaintiffs then sued for specific performance, contending that consent was not required because, inter alia, the Land was not held on charitable trusts.  It was in such context that Cross J had to decide whether the 2 plots of land were held on a charitable trust.

50.  The Catford Synagogue was an unincorporated association.  It was established in 1937, when some 30 or 40 persons of the Jewish faith living in or about Catford decided that instead of going to the New Cross Synagogue, which was some five miles away, they would try to set up a synagogue of their own which should be affiliated with the United Synagogue.  The following statement of the facts by Cross J can be found in the report at 835:

“	The United Synagogue was an institution which was brought into being in 1870 by a scheme of the Charity Commissioners confirmed by an Act of Parliament [33 & 34 Vict. c. cxvi, ‘the United Synagogue Act’], under which five existing synagogues in London were amalgamated into a single body, the objects of which were declared to be ‘the maintaining, erecting, founding, and carrying on, in London and its neighbourhood, places of worship for persons of the Jewish religion who conform to the Polish or German ritual, the providing means of burial of persons of the Jewish religion, the relief of poor persons of the Jewish religion, the contributing with other Jewish bodies to the maintenance of a Chief Rabbi and of other ecclesiastical persons, and to other communal duties devolving on Metropolitan congregations, and other charitable purposes in connection with the Jewish religion.’
	By clause 5B(ii) the United Synagogue was given power: ‘To found or assist in founding, in any district or districts in Great Britain, places of worship for persons of the Jewish religion who conform to the Polish or German ritual, such places of worship not being or necessarily to be or become constituent synagogues of the United Synagogue, in such a manner as shall be mutually agreed to by the Council of the United Synagogue and the other persons (if any) promoting the foundation of such non-constituent synagogue.  Each such non-constituent synagogue shall contribute to the like purposes as hereinbefore provided in the case of a union of non-constituent synagogues.’
	The Catford Synagogue was an unincorporated association.  Its by-laws, which were in the form prepared by the United Synagogue, were formally adopted by a general meeting of the members in 1948.  By-law A1 read: ‘The members of this synagogue consist of seatholders, i.e. persons (whether male or female) who ‘shall be in occupation of seats at this synagogue.’  An applicant for membership was first interviewed by the minister.  His application then went before the board of management, and if they considered him suitable the application was sent to the United Synagogue for its approval.  Each member paid a subscription and forfeited his rights of membership if he failed to keep up his payments.  The subscription covered not only the rental of the member’s seat, but also his contribution to a funeral expenses scheme organised by the United Synagogue towards which each affiliated synagogue contributed.  The synagogue was managed by a board of management elected annually by the members of the synagogue at a general meeting.  The by-laws contained no provision for dissolution, but the last of their rules was as follows: ‘the by-laws applicable to this synagogue may be modified by or with the approval of the board of management, provided that no modification be made that would be repugnant to or inconsistent with the Jewish Faith.’”

51.  Initially, the Catford Synagogue held its meetings in the Town Hall; but £440 odd was raised as a result of a building fund appeal, in 1941, No. 53 Catford House was purchased for about £1,100, some £700 being left on mortgage.  The house was conveyed to be held on the trusts dated 1941.  The lower part of No. 53 Catford Hall was used as a synagogue and the upper part as a residence for the minister.

52.  In 1943 a fresh building fund was started and on Feb 10, 1943, a building fund committee was set up.  The committee decided to hold a dance to raise money and a compulsory levy of 3 pence a week on each member.  That was resolved upon at the annual general meeting on Oct 10, 1943.  The building fund was kept in a separate bank account.  By year end 1951, the building fund consisted just over £2000.  In 1953, a site was found, consisting of three adjoining plots of land.  On one there was a disused squash court, on the second some derelict tennis court; while the third was in case as a bowling green; for £3,250.  The factual narration went on at 839:

“	The land was registered land.  On March 25, 1953, a transfer was executed by the owner to the defendants and another gentleman who is no longer a trustee, under the description of the trustees for the time being of the Catford Synagogue, to be held upon the trusts of a deed of even date.  The transfer contained the following declarations by the trustees: ‘The trustees hereby declare as follows: 1. The land hereby transferred will for the purposes of section 29 of the Settled Land Act, 1925, be held by the trustees upon charitable trusts. 2. The provisions of the Trustees Appointment Acts, 1850 to 1890, apply to the land in the above-mentioned title acquired by us the trustees.’
	The trustee deed of even date was made between the trustees and one, J. M. Harris, on behalf of the board of management.  Recital 2 was as follows: ‘The said consideration of £3,250 was ‘paid out of moneys provided by the board of management who form the board of management for the time being of the Catford Synagogue (hereinafter called “the synagogue”) and the said money was the property of the members of the synagogue.’
	By clause 1 of the operative part it was provided, inter alia, that ‘“the members” means the members of the synagogue for ‘the time being.’  Clause 2 provided that the trustees should hold the property ‘until sold leased or otherwise disposed of upon ‘trust to permit the board of management and the members to ‘use the same free of rent for all the purposes of the synagogue and for such other purposes as the board of management shall from time to time resolve upon and communicate to the trustees.’  Finally, clause 8 provided that the trustees should hold the net proceeds of the sale of the property upon trust in discharge of any mortgage, and ‘to pay the balance to such persons or for such purposes as the board of management may direct.’   Clause 1, 2 and 8 were in the same form as the corresponding clauses in the trust deed executed in 1941 with regard to 53, Catford Hill.
	The trustees were registered as proprietors of the land on July 7, 1953, the following restrictions being entered against them on the register: ‘5. Except during such period as the buildings on the land are registered as a place of meeting for religious worship and bona fide used as such no disposition or other dealing is to be registered without the consent of the Charity Commissioners or an order of the registrar.  6. Except under an order of the registrar no disposition by the proprietors of the land is to be registered unless the requirements of the Trustees Appointment Acts, 1850 to 1890, have been satisfied.  7. Except under an order of the registrar no disposition is to be registered without the consent of the council of the United Synagogue of the United Synagogue Offices.’
	It is to be observed that the United Synagogue did not require the land to be vested in them or in trustees for them under clause 3 of the agreement of March 8, 1938.
	The squash court was duly converted into a synagogue and a communal hall built near it on the first plot.  The tennis court plot remained unused, and the third plot ceased to be used about 1956, when the bowls club became defunct.”

53.  It was the 2^nd and 3^rd plots which were the subject of the litigation.  Cross J said at 850:

“

The questions which I have to decide on this branch of the case are, therefore, as I see them, first, whether the members of this synagogue for the time being are legally entitled to divide its property, including the land which is the subject of the contract, between themselves; and, secondly, if they are not so entitled, whether the trusts on which the property of the synagogue is held are charitable.”

54.  Cross J commented on the argument that the synagogue’s property belongs to the members for the time being beneficially, that:

“

… prima facie the property of an unincorporated association is divisible amongst its members; that there is nothing in the by-laws to negative this conclusion, and that it is strongly supported by the terms of the second recital and of clause 2 of the trust deed of March 25, 1953. …

… But although I feel the force of the argument based on the wording of the trust deed, it would, in my judgment, be wrong to hold that the £3,250 belonged to the existing members beneficially.  In the first place, I do not think that members of a body of this sort envisage for a moment that its property can legally be divided between the members for the time being.  Secondly, I think that the passing of a by-law enabling some majority of the members or even all the members to dissolve the synagogue and divide its property among themselves would be a violation of the spirit, if not of the letter, of the final by-laws.  There is, as I see it, enough in the circumstances of this case to show that this fund be held on a trust for or to be applied for the purposes of the synagogue as a quasi-corporate entity.”

55.  Here posing the same question to ourselves, we do not believe the members of the Tong (whoever they might have been), Cheung Oi or Wong Po-yin:

“	… envisage for a moment that its property can legally be divided between the members for the time being”

56.  Also, we believe there is:

“	… enough in the circumstances of this case to show that this fund be held on a trust for or to be applied for the purposes of the synagogue as a quasi-corporate entity.”

57.  We acknowledge that in our case, the evidence is not clear who the members were.  Nor, what was the purpose of the Tong as a quasi-corporation.  However, the best evidence is the donation books and what have been described as their prefaces.  They clearly support the inference that what was intended was the establishment of a place of public worship.

58.  Mr Chain argued that the Tong was a private trust in favour of members and followers for the time being and that the assets can be divided between them.  For the reasons given above we do not agree.

59.  He further submitted that the Tong’s purposes were not wholly charitable.  He relied in particular on the following.  First, the fact that the keeper and others were permitted to reside in the Building and after 1982, in the houses.  Secondly, the provision of vegetarian meals.  Thirdly, the installation of ancestral tablets on the premises.  The photographs show a large number of such tablets have been accumulated through the years.

60.  So far as accommodation is concerned, we can see nothing inconsistent with a legal charity for the keeper of the establishment and her disciples to reside on the premises.  In Neville, the minister was also provided with accommodation.  It is true that according to PW2, she had seen a small number of elderly women being accommodated as well.  They were probably helpers who helped out in the kitchen and vegetable garden.  We believe their accommodation was incidental to the true purpose of the Tong, namely, the advancement of religion.

61.  Mr Chain drew our attention in particular to clause 12 of the building agreement, which provided for stoves to be built in the kitchen.  Mr Chain submitted that this supported the establishment of a vegetarian hall.  It is not necessary for us to decide whether the promotion of vegetarianism itself a charitable object.  We are satisfied that the promotion of vegetarianism was auxiliary to the advancement of religion, and is not inconsistent with the Tong being a charity for the advancement of religion.  The learned judge said:

“

39.

… However, the Guan Yin Temple, as described by the applicant, appeared more like a Taoist vegetarian hall than a temple that we usually come across.”

62.  No doubt the learned judge had in mind the evidence of the applicant and PW2.

63.  It is true, vegetarian meals were served there.  But it is clear from the evidence, especially of PW2, that the Tong was not just a provider of vegetarian meals on religious festivals or the usual vegetarian days, namely, 1^st and 15^th days of the lunar month.  The learned judge was probably also influenced by the modesty of the temple.  But that reflected the means and size of the congregation.  A modest chapel can be a place for public worship.  Judging from the photographs, taken for the litigation, the houses are very modest.  But the character of the Tong depended principally on what happened in the early 1930s.  Subsequent events may throw light on those events, but they have to be treated with circumspection.  Most probably, the Building was equally modest but we do not think that detracted from its essential religious character.

64.  We can see no reason why the provision of such meals on religious festivals or the usual vegetarian days should detract from the advancement of religion.  They are merely ancillary.

65.  In Neville Cross J said at 851:

“	… But just as today church activity overflows from the church itself to the parochial hall, with its whist drives, dances and bazaars, so many synagogues today organise social activities among the members.”

66.  He concluded that at 852:

“	… the social aspect is merely ancillary.”

67.  We have come to the same conclusion here.

68.  As for the ancestral tablets, the learned judge was of the view that ancestral tablets would be installed for a fee and referred to the 1972 donation books in support.  However, the donation books made it clear that depending on the size of the donation, they would be recognised differently.

69.  For example, in Exhibit P3-14 (one of the 17 donation books), the following was written:

「	捐助	壹仟元	長生祿位正面牌一只
		伍佰元	長生祿位總牌一位
		少數目	上表 懸榜」

70.  Thus, on a donation of $1,000, the recognition would be on an individual tablet, $500 on a group tablet, and for smaller account, recognition would be given in a written notice.  We do not believe this would in any way detract from the charitable purpose of the Tong.  However, according to PW2, in 1982, she paid $2,000 for a tablet for her mother.  We do not believe this is sufficient to show that it was not ancillary.  Nor would it make us doubt the charitable character of the Tong when it was established in the early 1930s.

71.  The other point taken by Mr Chain is whether the purpose of the Tong was sufficiently public.  Mr Chain relied in particular on Gilmour v Coats [1949] AC 426.

72.  In Neville at 852, Cross J dealt with a similar argument, and dealt with the submission based on Gilmour v Coats as follows:

“

I turn now to the argument that this is a private, not a public trust.  In an article which he contributed in 1946 to volume 62 of the Law Quarterly Review, Professor Newark argued that the courts ought not to concern themselves with the question whether or not a trust for a religious purpose confers a public benefit.  Even assuming that such questions can be answered at all, judges, he said, are generally ill-equipped to answer them and their endeavours to do so are apt to cause distress to the faithful and amusement to the cynical.  I confess that I have considerable sympathy with Professor Newark’s views; but the decision of the House of Lords in Gilmour v. Coats has made it clear that a trust for a religious purpose must be shown to have some element of public benefit in order to qualify as a charitable trust.  In that case it was held that a trust to apply the income of a fund for all or any of the purposes of a community of Roman Catholic nuns living in seclusion and spending their lives in prayer, contemplation and penance, was not charitable because it could not be shown that it conferred any benefit on the public or on any section of the public.  The trust with which I am concerned resembles that in Gilmour v. Coats in this, that the persons immediately benefited it are not a section of the public but the members of a private body.  All persons of the Jewish faith living in or about Catford might well constitute a section of the public, but the members of the time being of the Catford Synagogue are no more a section of the public than the members for the time being of a Carmelite Priory.  The two cases, however, differ from one another in that the members of the Catford Synagogue spend their lives in the world, whereas the members of a Carmelite Priory live secluded from the world.  If once one refuses to pay any regard – as the courts refused to pay any regard – to the influence which these nuns living in seclusion might have on the outside word, then it must follow that no public benefit is involved in a trust to support a Carmelite Priory.  As Lord Greene said in the Court of Appeal: ‘Having regard to the way in which the lives of the members are spent, the benefit is a purely private one.’  But the court is, I think entitled to assume that some benefit accrues to the public from the attendance at places of worship of persons who live in this world and mix with their fellow citizens.  As between different religions the law stands neutral, but it assumes that any religion is at least likely to be better than none.”

73.  We are in respectful agreement.  The evidence, especially, the donation books, and the fact that Cheung Oi went to Tuen Mun to start a branch show that the members “live in the world”.  Indeed, there is no evidence to show that they lived or it was ever intended that the members should live in seclusion, “in prayer, contemplation and penance”.

74.  Mr Chain then submitted that the Tong was only open to disciples and followers, their families and friends.

75.  Again as Cross J explained at 854, it has never been disputed that trusts for dissenting chapels or for the benefit of a congregation of Jews attending a synagogue were charitable trusts.

“

… It is, for example, obvious that Parliament and the Charity Commissioners assumed in 1870 that the four synagogues which became the constituent synagogues of the United Synagogue were charitable bodies.  Yet it is equally clear from clause 6a of this scheme that the constituent synagogues have not been open to all persons of the Jewish faith, but were unincorporated associations with a list of members.

Generally speaking, no doubt, an association which is supported by its members for the purposes of providing benefits for themselves will not be a charity.  But I do not think that this principle can apply with full force in the case of trusts for religious purposes.  As Lord Simonds pointed out, the law of charity has been built up not logically but empirically, and there is a political background peculiar to religious trusts which may well have influenced the development of the law with regard to them.”

76.  We turn to the activities of the Tong relied on by Mr Chong:

“	(a)	‘Accepting the gift from heaven (領天恩)’;
	(b)	‘Returning to one’s origin (皈依)’;
	(c)	‘Setting free (animals and birds) (放生);
	(d)	‘Holding Taoist religious ceremonies (e.g. ‘Yu Lan Festivals (盂蘭節)’ for memory of one’s ancestors) and holding vegetarian feasts on Taoist festivals available to members of the public indiscriminately;
	(e)	‘Saying of Taoist and Buddhist sacred prayers (頌經)’ by R4’s members and by Taoist and Buddhist believers as well as members of the public.
	(f)	Maintenance of ‘ancestral tablets for the dead (先人靈位)’;
	(g)	‘Preaching (講道)’ on every 1st and 15th day of the Lunar Calendar month after service of vegetarian meals at R4 both and also outside R4’s village type houses at believers’ residence;
	(h)	Helping others to ‘practise Taoism (自修)’;
	(i)	Holding religious ceremonies and blessing at believers’ residence (法事,祈福);
	(j)	Dissemination of Taoism and Buddhism (inclusive of printing books) at R4’s village types houses as well as at believer’s residences;
	(k)	Healing the sick (看病) both at R4’s village type houses as well as at the residences of the ill and the sick”

77.  Mr Chong submitted that these activities of the Tong were open to non members, and referred us to the oral evidence given at the trial.  It is only necessary to refer to some of these activities, such as preaching (講道), helping others to practise Taoism (自修), dissemination of Taoism and Buddhism.

78.  PW2, Lau Tim-tai is the niece of Lau Hing-lin.  She was born in 1938, and visited the Tong for the first time in about 1950.

79.  In 1950, the keeper was Lok Kwai-fong.  According to her, wages were low and buses expensive, and she did not visit very often.

80.  Her evidence that the establishment was known by the name Lin Fat Tong as early as 1950s was accepted by the learned judge.  According to PW2, she visited the Tong regularly, and helped out in the kitchen.  She was not a convert, nor was she a full time vegetarian, but she would kowtow to the deities there.  According to her, on religious festivals there would be 60 odd tables (of about 10 persons per table) of vegetarian meals served.  People would be notified by word of mouth.  There would be about 30 volunteers working there.  On the 1^st and 15^th days of the lunar month after vegetarian meals, there would be preaching, which she did not attend, but which according to her, would occasionally be attended by “街外人”, (outsiders or men in the street).  She was asked to solicit donations, e.g. in 1971-1972 when she asked people whom she knew to donate.  She explained she asked people she knew because other people would not trust her.

81.  She also said throughout the decades during which she was associated with the Tong, she had never seen a member of the public refused admission, she said according to the master (Lau Hing-lin):

「	四方八面都嚟得，(“people from all directions can come,”)」

82.  Mr Chain submitted that not all these activities are charitable in the legal sense, but as we have explained, ancillary activities such as ancestral tablets would not negate the charitable purpose.

83.  We do not believe any of these activities are inconsistent with the Tong being a charity.  More importantly they are not such which would lead us to infer or conclude that the Tong, when it was established in 1930s, was not a charity.

84.  Then the learned judge said:

“

52.

One more factor that militates against my finding that the Tong is a public charity is the 2nd respondent’s inability to read.  She in fact is illiterate.  I cannot imagine that Lau would have appointed the 2nd respondent as a co-prioress for whatever purpose if the Tong should be a public charity.”

85.  We believe little weight should be given to this.

86.  One argument which Mr Chain pressed on us, is that, if the Tong was a charity, the way that Lau Hing-lin dealt with the money belonging to the charity would suggest that she had acted in breach of trust.  That is a serious finding and not one which the court should find in the absence of cogent evidence.  So we were asked to conclude that there was no charitable trust.  It is not necessary for us to find whether Lau Hing-lin acted in breach of trust.  Certainly, she felt able to dispose of substantial sums when she was dying in favour of her relatives and disciples, including substantial sums in favour of the applicant.  It may be that out of ignorance Lau Hing-lin thought that she was entitled to dispose of part of the money at the time of her death to deserving persons.  However, her conduct in the 1990s, whilst they might cast some light on the events of the 1930s is not determinative.

87.  The learned judge had no doubt that Lau Hing-lin was an honest person.  He believed that:

“	… she treated everything under her name as the Tong’s property.”  Para. 47

88.  We do not believe such conduct on Lau Hing-lin’s part assist in determining whether in the early 1930s, a legal charity was established.

89.  The learned judge went on to say:

“

51.

I would rather think that Lau, being an honest and devoted Taoist, would have been prepared to advance the Tong’s money to the Tong’s followers.  This would not be surprising if this Tong was a fairly private and closely-knit organisation rather than a public organisation.”

90.  A charity is not defined by its scale or resources.  A legal (and public in this sense) charity may be small and run by one or a few people.  It does not have to be a public organisation.

91.  We conclude that the Tong when it was established in the 1930s was a charity in the legal sense, and remains one to-date.

Locus Standi

92.  Mr Chain submitted that the applicant was not entitled to sue.  Ip Cheung-kwok v Ip Siu-bun and Ors [1988] 2 HKLR 247 (Godfrey J) and [1990] 2 HKLR 499 (Court of Appeal), is authority that:

“

A trustee was entitled to contend that property was held on charitable trusts if he was doing so to protect the interests of the trust against a third party or to defend a claim for an account made against him, notwithstanding a decision of the Attorney General not to argue that any of the properties were held upon charitable trusts.”  Headnote at 500.

93.  Mr Chain accepted that if there is a dispute over whether the houses, which are registered in the names of the applicant, the 2^nd respondent and Lau Hing-lin, the applicant would have locus standi to contend against, say the 2^nd respondent, that the houses are held on a charitable trust, rather than by them beneficially.  Since the money which was paid into the 3^rd respondent’s account were originally held in a joint account in the names of Lau Hing-lin and the 2^nd respondent and not the applicant, Mr Chain submitted that the applicant would have no locus standi over such money.

94.  We think that takes too narrow a view of the matter.  If the Tong is a charitable trust as we think it is, we have no doubt that the applicant and the 2^nd respondent are the trustees or quasi trustees of that trust.  That being so, the fact that trust money was kept in an account in the name of the 2^nd respondent and / or Lau Hing-lin made no difference.  The applicant was equally entitled, indeed bound to protect such trust money.  Moreover, on the direction of Lau Hing-lin, the money was transferred into the account of the 3^rd respondent.  On the evidence, the only sensible inference is that the 3^rd respondent held the money in trust for the charitable trust.  The money was not a loan, capital, or a gift to the 3^rd respondent.  The applicant and the 2^nd respondent were originally the only signatories.  We believe it is a reasonable inference to draw that neither Lau Hing-lin nor the applicant was aware that the bank mandate could so easily be changed so that the applicant would lose control over the money.  The applicant must be regarded as a trustee or quasi trustee of the money.  The applicant has the locus standi to defend the trust fund against a third party.  In this context, a co-trustee could be regarded as a third party.  Mr Chain accepted that the applicant would have been entitled to sue if she had been a joint account holder.

Costs Appeal

95.  Although the applicant’s claim was dismissed, the judge deprived the 1^st, 2^nd and 3^rd respondents of costs.  That is the subject of CACV 265 of 2006.  Mr Chain relied on Jones v McKie [1964] 1 WLR 960 and submitted that the learned judge had taken into consideration wholly extraneous and irrelevant matters.  It is clear from the decision on costs that the learned judge was of the view that the money belonged to the Tong:

“

11.

… It was the common case of all parties that Lau [Hing-lin] wanted to incorporate the 3rd respondent so that her good work could be continued by the future prioresses of the 4th respondent through the 3rd respondent. … ”

96.  Mr Chain submitted that this is extraneous material and irrelevant.  We do not agree.  We believe that the proceedings were the direct result of the 1^st and 2^nd respondents removing the money from the 3^rd respondent’s account.  The 1^st respondent’s allegation that Lau Hing-lin was engaged in business was not supported by oral evidence and is highly improbable.  We do not believe he could shelter behind Mr Chain’s contention that the only issue at trial was whether the Tong was a charity.  The learned judge was entitled to take into account the genesis of the dispute between the parties.

97.  In Jones v McKie, the learned judge refused to award costs to the successful employer.  That case arose out of an accident by an employee who was allowed to use his employer’s vehicle when he went home for his midday meal.  The learned judge held that the employer was not vicariously liable for the accident whilst the vehicle was so used but refused costs to the employer.  On such facts, the Court of Appeal refused to interfere because it was impossible to say that the matter which had been relied upon by the judge was something which was not connected with the litigation, or that the judge could not properly have found their behaviour in connection with their vehicles to be reprehensible, or that they had not had a fair opportunity of dealing with the matter at the trial.

98.  So too, here, the removal of the money was the reason for the proceedings.  The respondent had had ample opportunity to explain their action.  No oral evidence was given by them.  It does not matter that they thought that it was tactically advantageous for them not to do so.  The learned judge was quite entitled to take the view which he did.

99.  The learned judge’s other reasons, e.g. time taken over the identity and existence of the Tong, are not the subject of serious challenge by Mr Chain.  It is clear the learned judge was entitled to have regard to them.

100.  For the above reasons, we would have dismissed the costs appeal even if we had not allowed the substantive appeal.

Conclusion

CACV 213 of 2006

101.  We would allow the appeal with costs here and below.  We make an order in terms of para. 21(a) above, and give liberty to apply in relation to sub-paras. (b), (c) and (d) and generally.

CACV 265 of 2006

102.  We dismiss the appeal with costs.