WONG LOI YEUNG as Manager of SAM CHAU TIN HAU GODDESS TEMPLE v. LEUNG AH SHUI AND ANOTHER

HCA 1157/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1157 OF 2011

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D E C I S I O N

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1. On 25 October 2013, Mr Registrar Lung dismissed the Defendants’ summons to strike out the Plaintiff’s Amended Statement of Claim (“ASOC”) and ordered the Defendants to pay the Plaintiff’s costs of the summons on indemnity basis. This is the Defendants’ appeal against the learned Registrar’s decision.

Factual background

2. The subject matter is a dispute concerning the operation of a Chinese temple.  The temple is situated at Tuen Mun, New Territories, and named Sam Chau Tin Hau Goddess Temple (青山三洲媽廟) (“the Temple”).  It is built on a piece of land licensed from the Government with conditions, inter alia, that it is to be used for the purpose of a temple.

3. On the written Government Land Licence, the Temple was named as the licensee and the Plaintiff, the 1^st Defendant, and a Madam Wong Yim Chun Kiu were named as “managers”.  Madam Wong has passed away in May 2011, before the Plaintiff’s commencement of the present action.

4. Although the Plaintiff brought this action in the capacity as “manager” of the Temple, it is not his case that he is a manager registered under section 15 of the New Territories Ordinance, Cap 97 (“NTO”).  It is also not pleaded that the Temple is owned by any identified clan, family or t’ong or that the Temple itself is a clan, family or t’ong.

5. No particulars have been given by the Plaintiff, in the pleadings or otherwise, regarding in what way and by whom he was appointed as a manager of the Temple.  The only information given, upon the Defendants’ request, is that the appointment was authorized “by custom” and the appointment date was 1 July 1993, being the same date as the commencement date of the previous Government Land Licence on which the Plaintiff was first named as one of the managers.

The Plaintiff’s pleaded case

6. The allegations of the Plaintiff against the Defendants are basically that :

(a)   the 1^st Defendant refused to give his signature on the form for registration of the Temple under the Chinese Temples Ordinance, Cap 153 (“CTO”).  As it is an offence under the CTO to operate a temple without such registration, the 1^st Defendant’s conduct may render the operation of the Temple unlawful and subject the Plaintiff to criminal prosecution.

(b)   the 1^st Defendant has misappropriated the Temple’s money by depositing the Temple’s income into an unauthorized account.

(c)   by incorporating and using the 2^nd Defendant to operate the Temple, the 1^st and 2^nd Defendants have passed off the Temple’s goodwill and reputation and therefore liable to the tort of passing off.

7. The legal basis of the Plaintiff’s causes of action is however not apparent.

Breach of fiduciary duty and implied obligation

8. It is pleaded in the ASOC[1] that, in refusing to sign the temple registration form, the 1^st Defendant was:

“in breach of fiduciary duties and/or obligations and/or implied obligations to be a Sze Lie[2]/manager of the Temple and/or a licencee of the land”

9. The Defendants have requested for further and better particulars as to the person to whom the 1^st Defendant was said to owe such fiduciary duties.  The answer given by the Plaintiff was “the Temple”.  Regarding implied obligations, curiously enough, the answer given was “to the Temple and the Government of Hong Kong”.

10. Under paragraph 9 of the ASOC, the Plaintiff set out certain “implied obligations” of the manager of the Temple.  For example, “the manager should act at all times in the best interest of the Temple” and “the manager should act in his best endeavours to proceed with the Temple’s registration under the CTO”, etc. 

11. However, there is nowhere in the pleadings providing any basis for the proposition that managers of the Temple, as in this case described only on a Government Land Licence as they are, owe to the Temple such implied obligations or fiduciary duties.

12. Even if it meant that the 1^st Defendant owes a legal duty under the CTO to register, the CTO does not create a right of action in private law[3] and the fact that it is unlawful to operate the Temple without registration does not in itself confer a right to the Plaintiff to sue against the Defendants.

13. The Plaintiff’s cause of action against the 1^st Defendant for the alleged misappropriation of the Temple’s fund premised also on the so called breach of fiduciary duty or obligation, albeit in a slightly different language:

“The said deposit of monies made by the 1^st Defendant was in breach of fiduciary duty and/or obligation and/or implied contractual obligation to be Sze Lies or manager of the Temple.” (emphasis added)

14. Nowhere in the ASOC refers to the existence of any contract or agreement between the 1^st Defendant and the Plaintiff or the Temple.

15. Instead, the Plaintiff pleaded that :

“16. It is the common intention of the Sze Lies/manager and the members of the Temple that the donations belong to the Temple for its maintenance and for the Temple’s day to day operations.

17.  It is the common intention of the Plaintiff and the 1^st Defendant that the donations of the Temple should be held in trust for the benefit of the Temple.”

16. Notwithstanding the request from the Defendants, the Plaintiff gives no particulars as to the identities of “the members” of the Temple. 

17. Following the above quoted paragraphs of the ASOC, the Plaintiff mentioned two “Declaration of Trusts” executed for the benefit of the Temple in 1999 and 2003 in which the Plaintiff and some other persons were named as the trustees.  It is pleaded that under the said trusts all income of the Temple shall be deposited into a designated account. 

18. However, the 1^st Defendant was not a party to any of the above mentioned trusts. 

19. It is then pleaded that, by depositing the income of the Temple to an account other than the designated account as stipulated under the Declaration of Trusts without the consent of the trustees or managers, the 1^st Defendant was in breach of fiduciary duty and/or obligation and/or implied contractual obligation to be a Sze Lie or manager of the Temple.

20. It is inconceivable how the declaration of trust by some other persons may impose a duty or obligation, be it fiduciary or contractual, on the 1^st Defendant towards the Temple or the Plaintiff himself.

21. Throughout the whole ASOC, the Plaintiff has treated the Temple as a separate entity in that it is capable of holding properties and also, one may owe fiduciary duty to it. 

22. The proposition that a Chinese temple is something in the nature of a juristic entity that can be the owner of itself has been put forward by the Secretary for Justice before the Court of Final Appeal (“CFA”) in Secretary for Justice v To Kan Chi[4]. The CFA rejected this argument and stated that the mere fact that land is found in the name of a temple does not mean that it is a separate entity.  In that case, the temple was owned by a t’so and it was held that the properties under the name of the temple were in fact properties of the t’so.

23. Mr Kenneth CL Chan, counsel for the Plaintiff, once conceded at the hearing that a temple cannot be treated as a separate entity in law.  He described the nature of a temple by drawing an analogy to a “business” or “operation” that can be owned and managed by a group of people.  Having realized the shortfall of his pleaded case in view of the lack of legal status of a temple, Mr Chan once suggested an innovative concept of a temple not in the nature of one under the Chinese custom, but a kind of “corporation” under the Hong Kong law.  With respect, such proposition was but a desperate attempt seeking to salvage the Plaintiff’s case and in the end, Mr Chan no longer pursued this line of arguments in serious terms.

24. Instead, Mr Chan stressed repeatedly on the fact that the Defendants have in their Defence and Counterclaim pleaded that the Temple is an unincorporated association and the Plaintiff has admitted this in his Reply and Defence to Counterclaim.  Expanded from this Mr Chan submitted yet another new proposition that the Temple was operated by an unidentified unincorporated association and the fiduciary duty was owed to this unincorporated association rather than the Temple.

25. As admitted by Mr Chan, the above new propositions were not pleaded in the ASOC or ever mentioned before the learned Registrar.

26. The Temple is not a separate legal or “juristic” entity.  The properties of the Temple can only mean the properties of the people or body who own the Temple.  As admitted by Mr Chan and agreed by Mr Ronald Tang, counsel for the Defendants, the Temple cannot be appropriately described as an unincorporated association in law.  The fact that parties have erroneously averred as such in the pleadings does not turn what is wrong to right in law.

27. Under section 7(1) of the CTO, the revenues, funds, investments and properties of all Chinese temples shall be under the control of the Chinese Temple Committee (“CTC”), unless the CTC delegates such power to others under section 11 of the CTO.  It is not pleaded that the CTC has ever delegated such power to the Plaintiff or the managers of the Temple.

28. The owner(s) of the Temple is unknown and not defined.  Nowhere in the Plaintiff’s case suggests that the Plaintiff has obtained from the owners any proprietary right or interest in the fund of the Temple. 

29. The Plaintiff has failed to show in his case he has sufficient rights to sue on the monies of the Temple allegedly misappropriated by the Defendants.

Licencee of the land

30. It is not pleaded in the ASOC that the 1^st Defendant has committed a breach of the licence.  The pleaded case is that the 1^st Defendant was in breach of fiduciary duties and/or implied obligations as a licencee of the land.

31. Again, Mr Chan can provide no legal basis on the suggestion that the capacity as a licencee of land can give rise to any fiduciary duty or implied obligation.

32. At the hearing I queried whether the Plaintiff’s case was that the 1^st Defendant was in breach of an agreement as between the licencees to operate the Temple on the licensed land.  Although Mr Chan indicated that this is in fact the Plaintiff’s case, he did not put forward any proposal or even express any intention to further amend the ASOC to spell it out properly.

33. Furthermore, although it is pleaded that the Plaintiff, the 1^st Defendant and the late Madam Wong were licencees of the land, the name of the licencee of the land as appeared on the written Government Land Licence was, on the other hand, the Temple.  It is also stated in Mr Chan’s own written submission[5] that the licence was granted to the Temple.  There is nothing from the Plaintiff to explain this discrepancy.

Passing off

34. The case of the Plaintiff against the Defendants on passing off is that the Temple owns the goodwill and reputation in the names “Sam Chau Tin Hau Goddess Temple”, “青山三洲媽廟” and “青山三洲媽”. 

35. As mentioned in the above paragraphs, the Temple is not a separate legal entity and cannot own the intellectual property by itself.

36. The alleged infringing acts of the Defendants are that they used the 2^nd Defendant’s company name in promoting and organising activities, including a Cantonese opera for the celebration of the birth of the Tin Hau Goddess, a banquet and an inauguration ceremony.  It is averred in the ASOC that:

“The aforesaid acts of the 1^st and/or 2^nd Defendant were calculated to lead and are likely to lead members of the public to believe, contrary to the fact, that ‘Castle Peak Sam Chau Ma Committee’ (青山三洲媽委員會) and/or ‘Castle Peak Sam Chau Ma Committee Limited’ (青山三洲媽委員會有限公司) are set up and authorized by the Sze Lies and/or managers of the Temple or are otherwise connected with the Temple.”

37. As submitted by Mr Chan, the complaint of the Plaintiff is not that the Defendants have operated another temple using a similar name of the Temple.  The complaint is really that the 1^st Defendant has hijacked the Temple by excluding the Plaintiff in the management of the Temple and the 2^nd Defendant was set up for such purpose.  That would not amount to passing off.

Capacity of “managers” of the Temple

38. As can be seen from the above outline of the Plaintiff’s pleaded case, there is no sustainable cause of action disclosed under the ASOC. 

39. There is yet another major defect in the Plaintiff’s case. Whether the Plaintiff as “manager of the Temple” has the legal capacity to sue is also questionable. 

40. Unlike the manager of a family, clan, t’ong or otherwise[6] registered under section 15 of the NTO, the legal meaning and vested power of a so called manager of a temple is not defined anywhere in the law.  There is also no mention of the term “manager” in the CTO. 

41. Without registration under section 15 of the NTO, the description of “manager of the Temple” is unknown in law.

The Defendants’ counterclaim and the Registrar’s decision

42. Faced with the above obvious defects of the ASOC, Mr Chan urged me to consider and adopt the learned Registrar’s reasoning in rejecting the Defendants’ application.

43. An appeal against a master’s decision on interlocutory matters is by way of an actual rehearing.  The judge hearing the appeal should treat the matter as though it came before him for the first time.  It is not necessary for this court to deal with the reasons of the decision of the learned Registrar.

44. Suffice for me to say is that, in taking the view that “the Defendants had in the Defence admitted that the Plaintiff was one of the managers of the Temple as stated on the Government Land Licence and hence it is an abuse of the process for the Defendants to say that the Plaintiff has no locus standi to sue”, the learned Registrar had assumed, and in my view incorrectly, that the manager of the Temple, as merely described under the Government Land Licence as he is, has necessarily the authority to sue on the properties of the Temple.

45. Besides, the fact that the 1^st Defendant has himself sued in the capacity of the manager and trustee of the Temple and founded his counterclaim also on the Plaintiff’s breach of fiduciary duty to the Temple, does not bar the Defendants from denying the Plaintiff’s capacity to sue.  It is not right for the court to allow both unsustainable claims to proceed simply because of the parties having made the same mistake in formulation of their claims.  In any event, Mr Tang has before me accepted that the Defendants’ counterclaim is also unsustainable and liable to be struck out.

Conclusion

46. To conclude, the ASOC has disclosed no reasonable cause of action and the Plaintiff has not demonstrated that he has the locus to sue.  

47. The appeal is allowed and the learned Registrar’s orders are set aside.

48. The ASOC be struck out and the Plaintiff’s action against the Defendants is dismissed. 

49. I make a costs order nisi that costs of the Plaintiff’s action, including the Defendant’s striking out application and this appeal, be to the Defendants, to be taxed if not agreed.  This costs order nisi will be made absolute upon the expiry of 14 days from the date of this decision.

50. In view of Mr Tang’s concession as to the merits of the counterclaim.  Parties are to submit to me, by way of a joint letter or consent summons, their proposed directions for the disposal of the counterclaim within 28 days.