XCHRX TANG MAN KIT AND ANOTHER v. HIP HING TIMBER CO. LTD.

HCA 8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 8000 of 1990

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REASONS FOR DECISION

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1. On 23-24 May 2000, I heard (i) the Defendant's application to amend its Notice of Motion which had been filed on 26 March 1999 and (ii) its application for specific discovery under O.24 r.7 RHC. Both applications had been resisted in their entirety by the Plaintiff.

2. At the end of the hearing, I gave leave to the Defendant to amend the Notice of Motion and ordered that discovery be made by the Plaintiffs of certain items in the schedule attached to the summons for discovery. I said I would reduce the reasons for my decision into writing to be handed down.

Background

3. The background to the present applications is as follows. The Defendant has since the 1970's been occupying some land in the New Territories which is registered under the name "Wah Yan Mo Fan Heung".

4. In 1990, the present proceedings were instituted by ""Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers" as the plaintiff, for possession of the land occupied by the Defendant. In paragraph 1 of the Statement of Claim, the plaintiff pleaded that Wah Yan Mo Fan Heung "was and is an unincorporated association beneficially interested" in the land.

5. It is not clear why the action did not proceed to trial in the many years after 1990 but in 1998, the Defendant issued a summons to strike out the Statement of Claim and dismiss the action on the ground that the plaintiff, as an unincorporated association, had no corporate or separate legal existence or capacity to sue.

Application to strike out - December 1998

6. When the application to strike out came before me on 15 December 1998, the plaintiff applied for leave to amend the title of the writ and to re-amend the Statement of Claim.

7. The plaintiff sought to amend the title to "Tang Man Kit (suing as sole manager of Wah Yan Mo Fan Heung)". I should add that since then, there has been a further amendment to add Mr Foo Tak Ching in the title as a co-manager.

8. The Statement of Claim sought leave to add a new paragraph 1A to plead that Wah Yan Mo Fan Heung was and is a t'ong within the meaning of s.19 of the New Territories Ordinance 1960 ed. and s.15 of the current Ordinance.

9. The parties argued the strike-out application on the basis de bene esse of the draft Re-Amended Statement of Claim. Although counsel for the Plaintiff did not abandon the case of an unincorporated association, there was no argument that the action could be maintained on that pleading alone.

10. Applying the high standard required for a strike-out application, I held that the Defendant (whose burden it was) had failed to show that the Plaintiff did not have an arguable case that Wah Yan Mo Fan Heung was not a t'ong nor did it show that there had been no approval of managers under s.15 New Territories Ordinance.

Notice of Motion - March 1999

11. In March 1999, after the Defendant had at first attempted to raise a preliminary issue on the pleadings, the Defendant issued the present Notice of Motion seeking to set aside the writ as having been issued without authority. This was pursuant to Banco de Bilbao v Rey [1938] 2 All ER 253, where it was held that if the defendant in an action denies that the action is really the action of the entity whose name appears as plaintiff, and asserts that the action was really the action of a person claiming without legal justification to represent the named plaintiff, that denial cannot be set up as a defence to the action, and the defendant should issue a motion to set aside the writ as having been issued without authority.

Amendment of Notice of Motion

12. The Defendant now wishes to amend the Notice of Motion to add the following:-

"TAKE FURTHER NOTICE that it will be contended at the hearing of the this Amended Notice of Motion that this action has been issued without authority since:-

(1) the Heung is not a clan, family or t'ong within the meaning of section 15 and 16 of the New Territories Ordinance (cap. 97)("NTO") or exempted from the requirement to be registered under the Companies Ordinance by virtue of section 16 of the NTO;

(2) the Heung has no legal status and is not recognised in law as a legal entity capable of enforcing rights over the land or authorising the commencement of an action on its behalf; and

(3) no application for approval has been made under section 15 of the NTO or approval granted pursuant to any such application or at all."

13. Mr Ernest Koo counsel for the Plaintiffs has opposed this as he says the Plaintiffs had been under the impression that the Defendant was only going to challenge the `t'ong' part of its case at the hearing of the Motion which will be in about a month's time. He says the Plaintiffs would not have time to prepare the `unincorporated association' part of its case.

14. In my view, the amendment was strictly speaking, unnecessary as the language of the original Notice of Motion challenged the Plaintiffs' authority to issue the writ - it was wide enough to embrace both the Plaintiffs' contentions that Wah Yan Mo Fan Heung was an unincorporated association (under paragraph 1) or a t'ong (under paragraph 1A).

15. I take Mr Koo's point that the Affirmation of Barbara Chang Sze Wan filed on behalf of the Defendant on 6 May 1999 did say at paragraph 3 that "the Notice of Motion involved the determination of the question whether (the then sole Plaintiff) Mr Tang Man Kit was validly approved and registered as manager of Wah Yan Mo Fan Heung under s.15 of the New Territories Ordinance". That seems to imply that it would not involve argument on the `unincorporated association' part.

16. On the part of the Defendant, Mr Johnny Mok has referred me to that part of Miss Chang's Affirmation that says that the Defendant intended to rely on the 2nd Affirmation of Wong Shu Pui (which attacked the legal status of Wah Yan Mo Fan Heung). He says the Plaintiffs were thereby alerted to the fact that the Defendant challenged the authority to issue proceedings on both those grounds.

17. On reading Mr Wong's 2nd Affirmation, it appears he dealt with both the `unincorporated association' part and the `t'ong' part of the Plaintiffs' case. Therefore it could be said that when Miss Chang said the Defendant would rely on that affirmation, after having said what the Notice of Motion involved in paragraph 3 of her affirmation, a reasonable reader would assume that only that part of Mr Wong's affirmation that dealt with the `t'ong' part would be relied upon by the Defendant.

18. But be that as it may, I do not see why that should be a ground for refusing leave to amend the Notice of Motion. The point of the Notice of Motion is to consider whether the Plaintiffs have authority to sue. Clearly all the issues that arise between the parties on this aspect should be before the Court for determination once and for all.

19. I do not see how the Plaintiffs would be prejudiced by the amendment. Despite an adjournment to enable the Plaintiffs to consider their position on the application to amend the Notice of Motion of which they were given short notice, no evidence has been adduced to show what prejudice would be suffered by them, nor has any longer adjournment been sought to enable them to adduce any evidence.

20. Mr Koo's submission was that the amendment would lead to delay in the hearing of the Motion. In the absence of evidence showing that there would be delay, I do not see how that could be the case.

21. This action was instituted in 1990, 10 years ago. It was pleaded on the basis of an unincorporated association, so presumably the plaintiff would have prepared its case and marshalled its materials on that basis. I note that Mr Tang Man Kit has been involved throughout (as purported co-manager, sole manager and now co-manager again), so it is not a situation where the present Plaintiffs have to consult their predecessors.

22. Further, the Defendant had challenged the claim of Wah Yan Mo Fan Heung to be an unincorporated association beneficially interested in the land since 1998, so even if it could be said that there had been no previous dispute on the point, that would have become a live issue in 1998.

23. So this is not a situation where a challenge has been `sprung' on a party who has not had any previous opportunity to gather materials to support its case. Further, there is about a month to go before the hearing of the Motion listed for 19 June 2000. In my view, the amendment should be allowed and I so ordered.

Discovery

24. As far as the application for discovery is concerned, the items sought were listed in the schedule to the Defendant's Summons filed on 14 April 2000. Items (4), (6) and (7) were not pursued at the hearing.

25. Item (1) was "all registers, lists and records of the members of Wah Yan Mo Fan Heung". I am satisfied that such items must be in existence. Meetings of the members have recently been held and the purported managers would not have known whom to admit to the meetings unless there is a register or list or record of members against which they can check the entrants' claim to membership.

26. Further it is clear that these documents are necessary for the determination of the Motion, because the number of members may have a bearing on the Defendant's submission that Wah Yan Mo Fan Heung is not a clan, family or t'ong within the meaning of sections 15 and 16 of the New Territories Ordinance. Section of the New Territories Ordinance provides:-

"Any clan, family or t'ong [the words used in s.15] 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 of more than 20 members".

It is not for me to decide now how valid the Defendant's submission is or may be. Mr Koo has not challenged the Amended Notice of Motion on the ground that it is unarguable. Since it is an issue in the proceedings, it is clear that the request for registers or lists or records of members have satisfied the test of necessity under O.24 r.8 RHC.

27. I do not accept the Plaintiff's submission that this request is a fishing expedition or is oppressive. The issue of s.16 having been raised and not challenged as invalid, the request is not "a search for material in the hope of being able to raise allegations of fact, as opposed to the elicitation of evidence to support allegations of fact which have been raised bona fide" (cf In re Norway's Application [1987] 1 QB 433, 482). Further, I do not see how it can be oppressive when the status of Wah Yan Mo Fan Heung has been challenged for 2 years and the parties must have marshalled all their materials by now.

28. As for Item (2), I did not order discovery as I did not see why the number of shares held by each member would be at all relevant to the issues now raised between the parties. Mr Mok in answer to a query has confirmed that the Defendant is not alleging that if Wah Yan Mo Fan Heung were an unincorporated association that could validly hold land, that nevertheless the Defendant was disputing the appointment or election of the Plaintiffs as managers.

29. As for Item (3), I ordered that documents of transfer or transmission and documents relating to the transfer or transmission or devolution of the shares or rights and interests of the original members of the Heung to the alleged present members of the Heung should be disclosed on discovery. Clearly these documents would be in existence as transfers have been referred to in the evidence filed on behalf of the Plaintiffs.

30. As for relevance, I accept that an unincorporated association is by its very nature a nebulous 'being'. So documents pertaining to the mode of transfer or transmission of interests would be relevant and necessary to the investigation of its nature. I consider that this is not a `fishing' exercise, and I would not repeat my views expressed in relation to Item (1) above that this is not oppressive.

31. Finally, Item (5) was the constitution or charter of Wah Yan Mo Fan Heung. The `Share Certificates' which have been exhibited by the Plaintiff refer to a constitution or charter. One would certainly expect the Plaintiffs who claim to be managers of Wah Yan Mo Fan Heung to have custody of it.

32. It is also clear in my view that this should be a document that should be disclosed as being relevant to the understanding of the nature of the `being' that Wah Yan Mo Fan Heung is said to be. Mr Koo submitted that if an analogy could be drawn with a limited company, its articles of association would not show what was the nature of the company. But that begs the question - it is precisely because Wah Yan Mo Fan Heung is not a company registered under the Companies Ordinance that the issue has arisen as to exactly what it is.

33. In the circumstances, I ordered discovery of Items (1), (3) as set out above and (5) and gave half of the costs to the Defendant in any event. I considered this to be fair as the issue of the Summons was inevitable because the Plaintiff had refused disclosure of even Item (5). On the other hand, the Defendant had also sought discovery of items which were no longer pursued at the hearing. I ordered the costs of the amendment to be in the cause as the Notice of Motion was, as originally drafted, sufficiently wide to cover the `unincorporated association' point and it seemed to me that the amendment served to clarify the issues which clarification would benefit both parties and the Court.