CHONG KAI MAN v. KWAN YAU HANG AND ANOTHER

HCA 1298/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1298 OF 2011

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R U L I N G

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1.  This is an appeal against the decision of a master made on 22 July of this year, rejecting the application of an intended intervener to be made a defendant to these proceedings pursuant to Order 15 rule 6 of the Rules of the High Court. The order states that at any stage of civil litigation, a person may be entered as a defendant, the decision whether or not that should be so being dependent on the judicious exercise of discretion by the court.

2.  The fundamental purpose of the order is to ensure that, on the one hand, there is not a proliferation of actions arising out of a single cause and at the same time, to ensure that an action brought by a plaintiff should not be overburdened by the adding of layers of a dispute, thereby turning a clearly defined cause of action into something far greater and, in practice, amorphous.   

3.  In any application of this kind, a balance must be struck between a plaintiff and the intended intervener as to their proposed interests, it being remembered that a plaintiff should not have to be vexed against his or its will by having to face more than one opponent at trial, thus adding to the time and expense of action.  In this regard, see Barton v London and Northwest Railway Company (1883) 38 Ch.D 144, mentioned recently in the case of Wing Mou Construction Company Limited v Cosmic Insurance Corporation Limited & Mansion Holdings Limited, a judgment as yet unreported, dated 20 June 2002, the reference being HCCT 40/2001.

4.  The background facts that give context to this application are lengthy as to chronology and complex as to allegations and counter-allegations.  But as often happens in cases of this kind, the core issues, that is the issues that are directly relevant, may be summarised fairly succinctly. 

5.  The litigation between the plaintiff and the 1^st and 2^nd defendants relates to a piece of land, Lot 555RP.  The plaintiff in the present action claims that in or about 2005, he entered into an oral agreement with the 1^st defendant for the joint acquisition of this piece of land, each of them to have a half share in the title.  As to matters related to purchase of that half share, the plaintiff asserts in the statement of claim that he has paid certain moneys and that it was agreed that the balance of the moneys would be paid as and when certain events took place.

6.  The 1^st defendant is an individual.  The 2^nd defendant is a company which, for the purposes of this application, may be said to be the corporate entity through which the plaintiff and the defendant have and would operate.  The piece of land was acquired in the name of the 2^nd defendant, that is the company, and the plaintiff claims a direction that he is the beneficial owner holding a half share of interest of and in the piece of land as a tenant in common.  He seeks further declarations, more particularly, a declaration that upon the plaintiff paying the balance of the purchase price and certain other moneys, the 1^st defendant be obliged to cause and procure the transfer by the 2^nd defendant of legal title and beneficial interest in respect of the half share in the land sought by the plaintiff. 

7.  Put simply, the issue, therefore, in the present action goes to whether or not the plaintiff is entitled to a declaration that he has a beneficial one-half share in the piece of land as tenant in common and whether, as a consequence of that declaration, he is entitled to have the effects of the declaration put into effect, namely, that he be duly registered as having such a share in title.

8.  There are certain consequential orders that have been sought in the action.  One of them is that a structure presently on the piece of land be demolished and removed and that the land be reinstated in accordance with what I think is town planning limitations – restricted to agricultural use – or such other use permitted under the grant.

9.  I am informed by Mr Benjamin Chain, counsel for the plaintiff, that, if I have concerns as to this request, for reasons to which I shall turn in a minute, then the plaintiff is happy to give an undertaking that he will not proceed with this particular aspect of his claim.

10.  The purpose behind this provisional concession, as Mr Chain makes quite clear, is to emphasise the fact that the claim presently brought by the plaintiff is a limited claim, it is defined within a very clear context, that context being: is he entitled to a declaration that he holds a half share of interest in the property?  If so, is he entitled to have that half share duly registered? 

11.  What happens to the land if the plaintiff succeeds will be a matter for determination by the plaintiff and the defendant.  That goes to the use of the land thereafter which, as Mr Chain has emphasised, is really a consequential issue and is not therefore directly and absolutely integral to the claim itself.

12.  Why then, if this is the simple issue, do we have an application made by the intended intervener, the Kam Lan Koon? 

13.  In explaining the purpose of the application, something should briefly be said about the intended intervener. The Kam Lan Koon is a Taoist organisation which has as its fundamental aim the promotion of the religious beliefs and practices emanating from Taoism.  It was established in Hong Kong many years ago and it now promotes the practice and beliefs of the religion.  The Koon, as I will call it, established a temple at its present site.  The lands directly surrounding the temple became integral to its various activities.  I am told that the plaintiff was, at one time at least, a legal adviser to the Koon and played a very real part in its management. 

14.  I am further told that in order to ensure the future of the Koon as a viable organisation, the plaintiff and the 1^st defendant agreed that the land which is the subject of the present action should be retained always for the use of the Koon and, indeed, would be donated by way of a donation transfer to the Koon. 

15.  I am told by Mr Victor Luk, counsel for the intended intervener, that the agreement to secure the position of the Koon on the lot which is the subject of the litigation was evidenced not only by oral agreements or undertakings but by the actions of all relevant parties over a lengthy period of time.

16.  The Koon is established, clearly, for the very best of purposes.  I have not the slightest doubt that it does a great deal of good work in the community.  I have not the slightest doubt that there are many members of the community who do their best endeavours to ensure that the Koon continues.  Equally, I have not the slightest doubt, when litigation of this kind arises, that the members of the Koon and those who advise the Koon are deeply concerned that their interests must in some way be protected.  The issue really is should those interests be protected by joining the Koon in the present action as an intervener and therefore as a defendant, or can those actions, and indeed, should those actions, more properly be dealt with consequent upon the present action?

17.  In this case, I am told that there has been a proliferation of actions and indeed, this is just one of apparently eight actions.  If that is the case, it is a matter - I say this by way of observation only - of very considerable regret.  My decision, being based on a discretion, must turn on how best the present litigation can be advanced to deal with the issues at stake in the present litigation.

18.  The rule to which this judgment refers, that is Order 15 rule 6 of the Rules of the High Court, requires some interest in the matter by the would-be intervener which is directly related to the subject matter of the action.  A mere commercial interest in its outcome divorced from the subject matter of the action is not enough.  I confess that, in my view, from the outset, I have had a real concern as to whether the would-be intervener, the Koon, does have some interest in the matter directly related to the subject matter of the action.  The subject matter of the action is whether the plaintiff is entitled to a half interest in the piece of land, that is all.  What happens to the land thereafter is another matter entirely.

19.  Mr Luk, counsel for the intended intervener, has said, during the course of the debate before me this morning, that the Koon, if made a defendant, would seek, by way of a counterclaim, to seek some form of order of specific performance of donation or something of that kind.  But as Mr Chain has said - and I am with him here - the intended intervener does not seek to join itself in the defence put forward by the 1^st and 2^nd defendants; it has no role to play, nor is it integrally and directly involved in that issue.  At best, it may be called as a witness on behalf of the defendants to say whether or not there was any agreement as to title which was beneficial to the plaintiff, but no more.  Its interest really lies in what happens if the plaintiff, having obtained his interest in the land, then seeks to undertake certain actions as a consequence of having obtained that interest.  That is really the issue.  The would-be intervener seeks to limit that by bringing a counterclaim.

20.  The present action, as I have said, started in 2011.  I am told by Mr Chain that if it were not for this present application which has delayed matters considerably, the plaintiff would be ready for trial and indeed would seek leave to set the matter down at the next pre-trial hearing.  The intended intervention, therefore, comes well into the litigation.

21.  It seems to me, in the exercise of my discretion, that the action as it is presently constituted is limited in its extent.  As I have said several times, it goes simply to whether or not the plaintiff is entitled to a share of title in the land.  Obviously, in that regard, the question of the alleged oral agreements and whether that oral agreements were evidenced in writing at any later stage, and/or whether the actions of the parties support the agreements, will have to be led.  But it goes no further than that.  What the would-be intervener seeks to do is to say - and I in fact quote from what Mr Luk said - “Let’s deal with everything all at one time.  Those who have undertaken such good work on the part of the Koon are anxious that we should not let matters drag on into infinity.  Therefore, if the Koon is joined, all questions of the Koon’s interest in the land, whether it should be entitled to remain there, whether it has any proprietary interest by way of estoppel or constructive trust, all of these matters can be dealt with”. 

22.  My concern is that if that happens, the plaintiff is going to find himself not only having to face a new defendant but having to deal not with the limited issue of whether there was an agreement as to title but with matters which go far further than that and which I think could well sink the present limited litigation, if only on an evidential basis, and most certainly add very substantially to the costs of the matter.

23.  In truth, as Mr Chain himself has said, if, as is the case, the Koon argues that there is already an agreement in terms of which its position on the land will be secured in perpetuity and if the 1^st defendant is a party to that agreement and admits it is a party to that agreement, why has it not already transferred its interest in the title to the Koon?  Mr Chain said there would have been nothing to prevent it doing so in the past and no action would be taken by the plaintiff to prevent it doing so in the future.  That would put a half interest in the land in the Koon and would, of itself, act to its protection.  But that has not been done.  Why that is, I do not know, but it is an indication, I think, that the plaintiff does not himself, in this action, seek some broader resolution of matters.

24.  The issue of whether or not buildings on the land are to be demolished, whether or not there are town planning matters to be resolved and the position of the Koon itself as the occupier of the land, these are all matters of consequential issue.  We do not even know at the moment whether decisions will be made which affect any of these issues, not with certainty. 

25.  In all the circumstances, therefore, I am drawn to the conclusion that this is not an appropriate case to grant the order that is sought. 

26.  If I was of the view that the voice of the Koon and, therefore, its interests were to be silenced permanently by this decision, then obviously, I would have approached the matter differently.  But there is no such suggestion.  As Mr Chain himself has said, if an attempt is made after the action is over for the plaintiff, if the plaintiff is successful, to ensure that the Koon is ejected from the land, the Koon itself will have its remedies.  It will then be able, in a separate, distinct and limited action, for example, to make a claim against the plaintiff that it has agreed to donate the land to it.

27.  I return to the proposed undertaking by Mr Chain that any consequential order sought as to the demolition of property on the land would be struck out by agreement.  I think that that is a wise decision.  It does limit the action and it gives some cold comfort, I think, to the Koon that there is not going to be somehow some tactical manoeuvre at the end of trial to gain, obliquely, an advantage over the Koon by getting a court order that the land be changed in the way suggested.  It makes it quite clear that the action is limited to one of title only.  I am not going to make a relevant order.  I note that there has been an undertaking to that effect and that is sufficient.

(Submissions on costs)

28.  I will make an order of summary assessment in the same amount as was before the master, $180,000.