TANG KAP WING TSO v. TANG LEUK TSO AND ANOTHER

HCA 1944/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1944 OF 2007

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J U D G M E N T

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Introduction

1.  The plaintiff commenced this action in September 2007.  She seeks various kinds of relief against the defendants.

Background

2.  The plaintiff (“Mdm Liu”) is the lawful and natural mother of the 2^nd defendant (“Tang junior”).

3.  Tang junior’s father (“Tang senior”) married Mdm Liu when they were respectively about 19 and 15 years old (according to the judgment in the 2000 divorce suit (see para. 25(a) below), the marriage took place in around 1951).  There are two children to the marriage: Tang junior and his sister.

4.  A “Tang Kap Wing Tso” and a “Tang Leuk Tso” have respectively been established pursuant to the provisions of the New Territories Ordnance (Cap. 97).  Mdm Liu and Tang junior are the managers of the “Tang Kap Wing Tso”.

5.  It is common ground the “Tang Kap Wing Tso” is a family Tso.  The true nature of the “Tang Leuk Tso” is disputed (but see also para. 13 and 14 below).  The 1^st defendants (“the Managers”) contend that it is a t’ong and not a t’so.  The members’ interest in the “Tang Leuk Tso” has been held in the form of shares in the t’so (according to Mdm Liu) or t’ong (according to the Managers); there were and are 285 shares in total.

6.  Tang senior used to be one of the 3 managers of the “Tang Leuk Tso” until he passed away in 2005.

7.  Tang senior and Tang junior have been involved in two legal proceedings:-

(a)     High Court Action No. 2125/1978 (“the 1978 action”) was brought by Tang senior against various parties including Mdm Liu, Tang junior and Tang junior’s children.  It ended in a settlement which is contained in a consent order dated 8 July 1983 (“the 1983 order”);

(b)    HCA 12547/1999 (“the 1999 action”) was brought by Tang junior against Tang senior and the other 2 managers of the “Tang Leuk Tso”.  This again settled (as evidenced in 2 documents: a “home-made” agreement between the father and son dated 4 December 2002 (“the Dec 2002 agreement”)and a subsequent deed dated 21 January 2003 (“the 2003 deed”) between them).  It appears the Dec 2002 agreement merged into the 2003 deed as a matter of law.

8.  The “Tang Kap Wing Tso” used to hold 23 shares in the “Tang Leuk Tso” (“the said 23 shares”).  The main dispute in this action is whether it still holds the said 23 shares.  Mdm Liu says so (so does Tang junior), the Managers say otherwise.

9.  Two sums arose out of the said 23 shares:-

(1)    the government resumed some of the land of the “Tang Leuk Tso” in 1999.  Mdm Liu claims to be entitled to about $600,000 being the share of the total resumption compensation payable for the said 23 shares;

(2)    sometime before 2007, the “Tang Leuk Tso” sold its land.  The amount of proceeds payable should be $50,000 per share.  Accordingly, $1.15 million should be payable for the said 23 shares.

Another dispute in this action is whether the Managers correctly paid these sums to Tang senior (or his successors).

The Parties’ Case

(a)     Mdm Liu and the Managers

10.  The essence of Mdm Liu’s case against the Managers is that they failed their duties as managers of a New Territories t’so and were in breach of trust: para. 3, written closing submissions.

11.  There is no dispute Tang senior at various times claimed to the Managers he became the holder of the said 23 shares.  Mdm Liu alleges that the Managers wrongfully heeded his words and caused the said 23 shares to be registered in Tang senior’s name.  She claims not to know about Tang senior’s claim or the transfer.  According to her, the Managers ought to have (i) sought her confirmation, and (ii) verified the claim from the relevant documents: para. 5B(c), re-amended statement of claim.

12.  The Managers deny the allegations.  They claim:-

(a)     by a verbal agreement made in about 1983 between Tang senior and Tang junior (acting for himself and the “Tang Kap Wing Tso”), 10 shares were transferred to Tang senior.  This was evidenced by the 1983 order;

(b)    by the 2003 deed, Tang junior (acting for himself and the “Tang Kap Wing Tso”) agreed with Tang senior that 13 shares were transferred to Tang senior.  $800,000 was paid by Tang senior to Tang junior in accordance with the 2003 deed;

(c)     Tang junior has had actual and/or ostensible authority to act on Mdm Liu’s behalf in doing so.  Further, Mdm Liu knew about the same.

The 1983 verbal agreement was no longer mentioned by the end of the trial (see also para. 62 below).

13.  As stated above, the nature of the “Tang Leuk Tso” is disputed.  However, in her verbal closing submission, Mdm Liu indicated that the dispute is irrelevant.  This is because she simply relies on s. 15, Cap. 97 which makes no practical distinction among “clan, family or t’ong” in relation to dealings in land belonging to “clan, family or t’ong”.

14.  The above approach of Mdm Liu explains why expert evidence concerning Chinese customary law was not adduced during trial.

(b)     Mdm Liu and Tang Junior

15.  A few words need to be spent on this topic because of the rather unusual way in which matters proceeded in this action.

16.  When this action commenced in September 2007, Tang junior was one of the co-plaintiffs (with Mdm Liu).  There was no averment relating to Tang senior’s conduct.

17.  The statement of claim was amended in May 2008.  Tang junior was added as a defendant (having been removed as a co-plaintiff).  A new para. 13 of the amended statement of claim avers:-

“[Tang junior] is joined … for the purpose that any decision in this action is liability on the Plaintiff” (whatever that may mean).

No relief was sought against Tang junior at all.  Further, there was still no averment relating to Tang senior’s conduct.

18.  The statement of claim was re-amended in March 2010 (subsequent to queries raised by the court during a pre-trial review on 17 March 2010).  The averments summarised in para. 10 and 11 above were added.  Para. 13 was changed to:-

“[Tang junior] is joined … for the purpose that any decision in this action is found liable to the Plaintiff” (whatever that may mean).

19.  The relief sought against Tang junior is in short:-

(1)    a declaration that any purported transfer of the said 23 shares (whether by way of verbal agreement or Tang senior’s self-claim) was invalid;

(2)    a declaration that the 2003 deed was executed in Tang junior’s personal capacity, without Mdm Liu’s authority or consent and was invalid.

20.  Tang junior’s defence was filed and served in April 2010.  He expressly admits that he executed what in effect was the Dec 2002 agreement and the 2003 deed, and that they were executed without Mdm Liu’s knowledge.  Hence, that transaction could not be valid.

21.  Despite Tang junior’s admission of Mdm Liu’s claim against him, for reason(s) not immediately apparent, Mdm Liu has not sought to enter judgment against Tang junior.

(c)      Potential Claim against Tang Senior

22.  In view of the averments relating to Tang senior’s conduct, and the related issue of the identity of the true owner of the said 23 shares (see also para. 68 below), query was raised during the pre-trial review hearings on 17 March and 26 April 2010 as to the need to join Tang senior’s estate as a party.  The query was raised in view of RHC Ord. 15 r. 6(2).

23.  After ample opportunity to consider the matter, Mdm Liu decided not to join Tang senior’s estate, despite having been expressly warned that her decision may have an impact on the outcome of this action.  The trial proceeded on that basis.

24.  This aspect will be dealt with under the heading “Non-joinder of Tang Senior” below.

Related Earlier Proceedings

25.  The following proceedings were mentioned during the trial of this action (set out below in chronological order):-

(a)     FCMC 2250/2000 (“the 2000 divorce suit”) was a divorce petition commenced in March 2000 by Mdm Liu against Tang senior seeking a divorce decree.  The dispute relating to ancillary relief was dealt with in a judgment handed down on 2 September 2002;

(b)    HCA 3/2006 (“the 2006 trespass action”) was an action commenced in January 2006 by Tang senior’s other children (not born out of wedlock) against Tang junior and another defendant for trespass to land.  In a judgment handed down on 29 April 2010, final judgment was entered against the defendants;

(c)     HCAP 7/2006 (“the 2006 probate action”) was a probate action commenced in March 2006 by Tang senior’s other children (not born out of wedlock) against Tang junior seeking probate to be granted to them (and to have Tang’s junior’s caveat withdrawn).  In a judgment handed down on 27 September 2007, Tang junior’s pleading was struck out and judgment was entered against him (without objection from Tang junior save as to costs).

26.  Although the contents of the above judgments are strictly not evidence in this action, they enable one to better understand some of the questions asked during cross-examination, as well as to comprehend some of the verbal exchanges and/or demeanour of the witnesses who testified in this action.

27.  The judgment of the 2000 divorce suit sets out the marital history of Tang senior and Mdm Lai.  In accordance with Chinese customary practice, the marriage between Tang senior and Mdm Liu was arranged by the older generation.  But by then, Tang senior already had a relationship with another female.  He brought along his lover to meet Mdm Liu before the marriage.

28.  It can be imagined the relationship between the married couple was not totally emotional or harmonious.  This was borne out by the fact Tang senior was seldom at home and spent most time with the other female, as well as by the bitterness shown in parts of Mdm Liu’s testimony concerning Tang senior.  Mdm Liu and her children were by and large supported by the family of Tang senior.  In 2000, the couple was formally divorced (on the ground of desertion since 1956) after the marriage lasted (at least on paper) for about half a century.

29.  Further, it can also be imagined that the relationship between Mdm Liu and her children (including Tang junior) has been close.  This was demonstrated by the exchanges between her and Tang junior in court when he “cross-examined” her.  More will be said below about their relationship during the times of the 1978 action and the 1999 action.

30.  The importance of the 2006 trespass action and the 2006 probate action is that they show that Mdm Liu and Tang junior ought to be well aware of the identity of who has/have been administering Tang senior’s estate (see also para. 69 below).

31.  The matters set out in para. 27 to 29 above are relevant to the assessment of the witnesses’ credibility and/or reliability.

Witnesses’ Credibility and/or Reliability

(a)     Mdm Liu

32.  Judging from the totality of the evidence, I find that Mdm Liu has in effect admitted that she left matters relating to the 1978 action (and the 1983 order) and the 1999 action (and the 2003 deed) to Tang junior to deal with.  Although she did not know the details relating to those matters, she was content for Tang junior to make the decisions for her.  Certain parts of Tang junior’s testimony also support such conclusion (see para. 44 below).

33.  To the extent those parts of her testimony can be so understood, full weight should be given.  On the other hand, insofar as it may be argued that other parts of her testimony (including those elicited during Tang junior’s “cross-examination” of Mdm Liu) militates against that admission, they are rejected as incredible and unreliable.

34.  For ease of reference, the parts of Mdm Liu’s cross-examination which amount to the said admission are set out below:-

“問：…

嗱，首先我想問妳，就係一九八--一九七 -- 1983年呢件案 -- 1978年喇，呢件案開始嘅時候，妳已經係甲榮祖嘅司理喇嘛，係咪？

答：1978年？

問：係，妳已經係喇，係咪？

答：係，係。

                       …..

問：妳以甲榮祖司理人嘅身分，妳當時係知道有一件案嘅存在，妳知道高等法院有呢件案嘛？

答：係。

問：咁妳亦都知道係去到呢件案發展到1983年嗰陣時，就卒之啲訴訟雙方就大家達成一個妥協，其實係有開過庭嘅。咁但係就妥協之後，就廖子明大法官當時亦都批准你哋，大家雙方同意法庭有個令嘛，出過嘛，係咪？

答：係。

問：咁妳就全部係知情嘛，都知道呢啲嘢喇嘛？

答：知。

問：妳當時係司理人嚟嘛？

答：係。

問：咁點解妳又話乜--一概都唔知呢？聽都冇聽過嘅呢？

答：我唔記得嗰啲年份喇。

…..

問：1999年，1999年呢？

答：1999年，我知。

問：又打官司，妳知唔知吖？又有--又出票告。

答：我知，我知。

問：吓？妳知唔知？妳知？

答：我知。

問：係。

答：佢追佢攞 -- 1999年追佢攞收地嘅錢同埋嗰啲利益。

問：嗰次係追咩嘢吖嘛，嗰次唔係追贍養費喎，直情係追甲榮祖嗰啲錢喎？

答：係。

…..

問：咁所以嗰件案妳交呢個仔處理就唔奇嘅，但係起碼妳--即係個仔會--有咩嘢事會同妳商量喇，嗰啲。

答：係。

…..

問：會向妳報告，而家--阿媽，而家進行成點，係咪先？

答：嗰次我知道。

問：係喇，咁嗰件案後來...

答：佢追佢攞收地嗰啲錢同埋利息。

問：係喇，咁後來嗰件案又冇判到嘛，法庭冇判嘛，因為嗰啲--雙方又係妥協咗喇嘛？

答：係，係。

問：當時妳個仔又有請律師，記唔記得？好大行，啲老字號，胡伯全律師樓吖嘛？

答：我知道佢請律師，我唔知道佢點樣妥協。

問：係囉，妳同個仔...

答：妥協到我唔知。

問：...一齊都係司理吖嘛，去到嗰個階段。1999年妳係司理，鄧添柱，妳個仔都係司理嘛？

答：咁佢同佢--佢追佢--鄧添柱追佢吖嘛，咁佢有一個人去追緊佢咪得。

問：係，咁妳唔使追？

答：吓？

問：妳唔追喇，妳唔理喇，妳唔使理喇喎？妳都係司理。

答：咁有一個人去追得喇。

…..

問：妳唔係，即係唔係案件其中一個原告或者被告嘅。

答：1999年嗰陣時，佢喺祠堂就係收...

問：都係追甲榮嗰啲錢嘅？

答：都係追究嗰啲數。

問：係，但係就凈係妳個仔一個人個名嘅。

答：係。

問：… 但係呢件案我又睇到個標題，就係1999年高等法院嘅12547號案件嚟嘅，原訴人就係妳個仔鄧添柱，就三個被告嘅，鄧心安、鄧裕宗同埋鄧少球。

答：我知道個仔同佢發生呢件事。

問：係，妳知道呢件案嘅，係囉。

答：係。

問：雖然就用妳個仔一個人個名去告件案，但係其實都係追緊甲榮祖嗰二十三份嘅，係咪？

答：係，係。

…..

問：係囉，即係妳--咁呢件事進行，梗係你哋兩個有商有量喇，係咪，即係兩母子，做嘢就佢做，但係妳都--佢會同佢...

答：我知道佢告佢。

問：係喇，妳都知道，係。

答：係。

問：咁做個--做--譬如搵律師呀，準備好多嘅動作，就即係個仔做晒，處理晒嗰啲...

答：哦，都係佢喇，我--嗰陣時我身體好唔好，係呀，我離婚嗰陣，我都對法官講呀，我需要錢睇醫生㗎。

…..

官：咁我諗大律師嘅意思成日想問就係呢樣嘅啫，咁妳有冇追問下佢「喂，點樣妥協法先？」有冇咁問佢吖，妳有冇問佢「點妥協法先，妳同老竇？」咁樣樣，有冇吖？

答：事先我就冇問佢點樣妥協喎，佢話係...

官：係，之後呢，譬如佢講畀妳聽「媽媽，我同爸爸妥協咗喇」，咁得喇，佢講妳聽喇，...

答：係喇，呢件嘢，呢件嘢...

官：咁妳就話「咁咪住先，詳情係點嘅先，點樣妥協法？」妳有冇問佢吖？

答：我問佢點樣妥協，...

官：係，唔。

答：...佢咪話等第二日老竇賣咗嗰幅地，而家個個都攻擊佢，唔賣，等佢賣咗嗰陣時，佢先同我哋計數。

官：係，咁妳有冇問佢「喂，咁有冇簽過紙，唔係佢改口...」

答：哎呀，佢咁大個人，簽唔簽紙佢自己知喇，呢啲嘢...

官：即係妳由佢喇，佢簽就由佢喇，妳唔會再「喂，畀份--畀個文件嚟睇下先，你同...」

答：哎呀，呢啲我管唔到呀。

官：妳管唔到喇。

答：因為有咁多嘢喺度，你若果賣嘅，真係要我簽紙賣嘅時間呢，我就會顧慮到喇。

官：因為嚟講呢啲官司係緊要嘅事嚟嘅，妳唔會話畀我聽打官司都唔緊要嘛，冇人咁諗嘅，係咪？

答：係。

…..

問：個仔有冇話畀妳聽佢收咗八十萬，有冇呀？

答：收咗幾多呀？

問：收咗鄧心安八十萬，佢有冇話畀你聽？

答：嗰八十萬可能係利息，同埋--同埋嗰啲...

問：妳唔好話可能係咩嘢，妳唔好理，佢有冇話畀妳聽呢件事？

答：有。

問：有，妳知道...

答：我知道有八十萬，佢話收咗八十萬。

問：...佢收咗人八十萬？

答：係。

問：咁佢有冇話畀妳聽，呢八十萬係咩嘢錢嚟？

答：佢冇喎。

問：冇。

答：係，我又唔需要攞佢啲錢喎，...

問：我知道。

答：...我就話佢要啲仔女...

問：咁佢有冇話畀妳聽，呢八十萬佢收咗呢，係鄧心安畀佢嘅，有冇，有冇話畀妳聽呢樣...

答：佢自己知喇，呢啲唔需要我理呀。

..…

問：即係總之一句講晒，妳呢件案後來點樣完結妳大致上都冇乜理喇，即係交晒畀個仔理，佢嘅事，唔關妳事？

答：係呀，佢喺屋企...

問：管唔到喇，仔大仔世界喇。

答：係，佢唔--我唔係仔大仔世界，我都要顧慮下嘅，因為佢收利息，係應得要付喇鄧心安，係，應該付畀個仔喇，即係利息同埋收地銀。

問：妳忘記咗妳係甲榮祖嘅司理，妳有個責任要處理呢個問題，唔記得咗囉嗬，嗰陣時？

答：唔係唔記得，一個閒人嘅嘢呢我就一啲都唔客氣，因為佢係佢老竇，佢點樣同佢溝通，咪佢兩個自然有分數，係咪？”

(emphasis supplied).

35.  In so concluding, I have borne in mind:-

(1)    the marital background of Mdm Liu, and the related fact that her children (including Tang junior) were brought up by her without Tang senior around them;

(2)    the cooperative attitude between Mdm Liu and Tang junior exhibited by the manner in which they conversed with each other during Tang junior’s “cross-examination” of Mdm Liu;

(3)    Tang junior’s said “cross-examination” was intended to, and did, elicit answers from Mdm Liu which support her case and are adverse to Tang junior’s (and the Managers’) case;

(4)    Tang junior already attained majority at the time of the 1978 action and the 1999 action; he was aged about 26 in 1978, about 47 in 1999 and about 51 in 2003 (according to his testimony, he was 31 years old in 1983);

(5)    Tang junior’s level of education (university level) is much higher than that of Mdm Liu (primary level).

(b)     Tang Junior

36.  I find Tang junior to be a shrewd witness, but, unfortunately, I find him not to be an entirely truthful or reliable one.  The matters in support of the finding include the following.

37.  First, in view of the matters set out in para. 16 to 21, 29 and 35(2) to 35(3) above, Mdm Liu and Tang junior are not real adversaries.  Instead, these are signs Tang junior’s role as a co-defendant is only part of an elaborate litigation strategy.

38.  Further to the matters set out in para. 16 to 21, 29 and 35(2) to 35(3) above, there were occasions during trial when Tang junior attempted to answer the court’s queries (addressed to Mdm Liu’s counsel) regarding the relevance of questions asked by counsel.

39.  Secondly, during his cross-examination, Tang junior disclosed that the 2003 deed was a device purely to avoid getting Tang senior into trouble.  His claim can be summarised as follows.  The 1999 action was commenced to sue the 3 managers of the “Tang Leuk Tso” (one of them being Tang senior), and put the propriety of their conduct in issue.  The other co-defendants approached Tang junior and threatened to expose the criminal acts of Tang senior for misrepresenting the share ownership.  In order to save Tang senior, Tang junior decided to settle the 1999 action.  However, both Tang senior and Tang junior were at the same time well aware the 2003 deed would not affect the interest of “Tang Kap Wing Tso” because it was not signed by Mdm Liu.

40.  The above claim is inherently implausible for several reasons.  One, although the Dec 2002 agreement was some kind of “home-made” document, it merged into the 2003 deed which was drafted by qualified lawyers.  That lawyers were engaged shows the solemnity of the occasion.

41.  Two, the above claim differs from the lengthy defence of Tang junior filed in April 2010.  According to the pleading, it was Tang senior who proposed to settle the dispute (which should mean the 1999 action) by buying-out the said 23 shares: para. 7 thereof.  His defence pleads that the amount Tang junior received from Tang senior ($800,000 gross, but only about $600,000 net) was in fact only the compensation payment for government land resumption.  Hence, the 2003 deed was not a pure “dress-up” deal.

42.  Three, assuming Tang senior’s conduct to be improper (or even criminal), there was no necessary link between his (or Tang junior’s) desire to have the 1999 action ceased and any of the said 23 shares; the 1999 action could simply have been withdrawn (or even dismissed) by consent without any reference to the said 23 shares.

43.  The more probable background explaining why the 1999 action was brought and why the 2003 deed was executed can be gleaned from the following parts of Tang junior’s cross-examination by the Managers:-

“問：嗱，我嘅問題其實就係你既然講到話--即係鄧裕宗咁唔滿意，對鄧心安，譬如佢--即係佢阻住人發達吖嘛，咁都想整死佢喇，「煮」死佢吖嘛，你係--頭先咁講吖嘛。咁就點解喺158頁呢個證人供詞呢度就隻字不提呢回事呢？即係我嘅問題其實好簡單。

答：即係你話鄧裕宗隻字不提呢件事？

問：係，鄧裕宗嗰個--佢自己答辯呢件案嗰個證人供詞，佢提都冇提過呢方面嘅嘢。

答：佢證人供詞呢個即係從簡，嗱，佢呢個律師樓我都去過，其實，後來佢介紹畀我識，即係後來嗰件事，佢由始至終都係為咗--即係自己清白之嘛。佢即係話--喂，我唔知喎，嗰啲事，最緊要就係佢自己清白。呢件事我唔知嘅，我畀少咗錢你，因為鄧心安一早同我講話佢仲有四成咁樣樣吖嘛。

…..

問：就算係有咗呢個後果，我哋當佢係喇，咁有好多方法去處理嘅，唔一定要八十萬賣晒啲份畀佢？可以--你可--你係控制，你係民事案嘅原訴人吖嘛，你隨時都可以控制吖，你可以大家妥協，discontinue，withdraw action order -- no order as to costs ，咁咪搞掂囉，收工囉。

答：最簡單--點會收工啫，我要交代畀阿媽嘛，佢唔肯畀佢嗰啲錢大約係幾十萬，係咪？

問：唔。

答：我唔告，我阿媽--我唔叫阿媽去告，因為阿媽精神唔好，我代佢追數之嘛。

問：咁你監平監賤...

答：咁如果唔告嗰陣時間，就嘩，送晒畀人，我點樣交代阿媽啫，我後來攞幾十萬番嚟你話我同阿媽講過，係。

問：你八十萬咪仲難交代？

答：點會難交代？

問：好似你咁講，四百萬嘅--你嘅地，你八十萬賣咗佢，監平監賤賣咗佢，咪仲更加難交代？

答：黎律師，我而家再交代一次，點會交代唔到？當時我同媽媽講--我喺--其實喺抗辯書都講過喇，嗰啲--嗰個--呢啲咁嘅官司，已經追數嗰度搞掂咗，攞番啲錢喇，加埋我媽媽喺供詞度--我唔知佢講得--老人家講得唔清楚。我加埋話就係爸爸去賣地嗰陣時間會同你商量嗰二十三份，再要徵求你嘅意見，因為你係司理，你唔簽字賣唔到，佢要再同你商量，呢八十萬減咗律師費幾十萬，攞番收地嗰啲錢。….. 大家都知道呢個法例喇，於是我爸爸又知，鄧裕宗又知，我又知。咁於是我同媽媽咁樣講，我覺得咁樣做法，暫時係咁樣妥協咗，就唔好再將件事就搞喎喇，就好得人驚嘅，即係頭先我講嗰啲嘢喇。咁於是我同媽媽咁樣交代。

…..

問：呢個2003年，呢個喺律師樓簽呢個deed喇，佢嗰個法律效果就唔係好以你咁講嘛？係賣斷嘛，八十萬直情所有嘅權益賣斷晒嘛。

答：嗱，第一，好倉促嘅。

問：嗱，呢樣嘢你了解，律師有話過畀你聽。

答：嗱，當時簽就好倉促嘅，但係照我嘅法律意--嗰個當時最緊要就係件事唔好再燒落去喇，冚熄佢。但係以我嘅法律知識，我知道--我爸爸亦都係，我阿媽一日唔簽字，甲榮祖嗰啲嘢--唔凈止我阿媽簽字，佢仲要買--問過啲孫，佢代表啲孫嘅利益嘛，佢要問過啲孫賣唔賣地，如果合理要咁樣做法嘛。”

(emphasis supplied).

44.  In fact, some of Tang junior’s answers given during the Managers’ cross-examination show that Mdm Liu gave him practically a free hand to deal with the legal matters relating to the said 23 shares, and the land belonging to the “Tang Kap Wing Tso”, since the 1978 action:-

“問：1983年，即係廖官嗰個order，即係第一次訴訟嗰陣時，實際上即係邊一個出面係做處理呢件案？

答：83年嗰陣時？

問：係囉。

答：阿嫲，王興全。

問：王興全？

答：係。

…..

問：...我凈係想問你，就係喺呢件案裡頭，你有嘅參與，有冇參與，有參與係參與到有幾活躍呢？

答：好活躍。

問：好活躍？

答：係。

問：即係所有人--成件案一九--呢件係講緊1978年呢件案喎？

答：係，係。

…..

問：咁如果簡單啲講，我哋中國人嘅通俗話講，即係邊個話事喇，呢件--呢單嘢，呢個官司主要--即係話事人，其實你話事喎呢單嘢，係咪？即係和解嗰陣時，你話事？

答：係，係我話事。

問：係喇，即係個律師同你傾，攞instruction、攞指示，「和唔和解？和解就簽，好唔好？okay喇嘛？」岌頭，即係你岌頭嘅？

答：係，係。

…..

問：你媽媽廖全妹女士就話佢根本都唔知道呢件事喇，咁但係就知，因為你係話事人吖嘛，即係嗰個和解83年嗰個consent order，你當然由頭到尾都好清清楚楚喇，當時你亦都一路都喺香港定居嘅，…

…..

答：我講咗成兩日，我相信你英文係好過我好多嘅，我相信就今日開始，你都同意我講，甲榮祖嗰四成，喺略祖，係唔係鄧心安喇，你唔好話畀我聽你唔識睇喇，okay？佢呢一個--我頭先補就番你，我媽媽唔係唔知，我話嗰個解決嗰個方案，當時，喺律--湯家驊佢哋寫嗰個協議嗰陣時候，畀四成嗰啲咁嘅大律師中間嗰啲嘢，係我approve，係我自己個個人approve，我阿嫲年紀大，又唔係好識嘢，鄉下人，我阿媽亦都唔好得幾多，佢亦都...

問：你講你媽媽唔係唔知，佢其實係知嘅，不過佢等你做咁解，係咪咁嘅意思？你頭先啱啱講嘅好似話你媽媽...

答：係，係，我阿媽當時係即係佢畀...

…..

答：…但係佢哋知唔知，咁佢寫咗之後，廖官批咗出嚟，幾個月之後或者半年之後，佢梗知喇…

…..

官：…除咗頭先你講嗰啲原因，會唔會仲有一個原因就係好簡單嘅啫，譬如我哋香港其實唔係就話凈係新界嘅，就算香港，我相信好多都係嘅，…以前，你知道香港經濟環境冇咁好，其實以前啲人整體地，文化冇咁高嘅，咁佢下一代嗰啲細路咪有機會讀多啲書，好多時到啲細路長大成人之後，佢哋讀得書多，老一輩就成日覺得佢哋應該係識嘢啲，聰明啲嘅，好多時就會「既然有呢啲咁複雜，都唔知咩嘢嚟喇，不如咁喇，交畀個下一代，佢處理咗佢好過喇。」會唔會有嗰個因素响度呢？

答：你就講甲榮祖呢樣嘢？

…..

官：總言之嗰啲官司又好--即係呢啲好複雜嘅，對一啲老人家嚟講，好多時呢啲咩嘢官司好複雜嘅，對佢哋嚟講。

答：法官閣下，呢個係因事--因人而異嘅，...

官：即係譬如舉個例喇，譬如舉個例就以你同你媽媽之間嘅關係嚟講，佢會唔會有呢個傾向「阿仔，嘩，喺加拿大呢啲外國地方讀咗咁多年書，搞呢啲要文化嘅嘢，不如你搞就可能可好啲喎。」會唔會有咁嘅情況？

…..

官：即係譬如要處理，同律師又好，唔知同咩嘢人都好，要周旋呢啲「阿仔，你搞喇，我唔搞喇。」會唔會有呢啲咁嘅情況呢？我想問下你。

答：直接答覆你嘅問題就係咩嘢？呢啲土地嘅嘢，我媽媽亦都冇乜能力去處理，即係後來發展賣地嗰啲，即係笪地有咩嘢用，走去建設好佢喇，搵啲人去投資喇，整好個地盤喇，睇下有冇商機或者重建嗰啲咁嘅嘢，我阿媽冇能力嘛，咁83年之後呢啲一定係叫我去做喇。”

(emphasis supplied).

 (c)     Defence Witness

45.  The testimony of the defence witness covers essentially three matters:-

(a)     the origin and nature of the “Tang Leuk Tso”;

(b)    the procedure for the transfer of shares of the “Tang Leuk Tso”;

(c)     relying on (i) records handed over by the former managers, (ii) the verbal representations of Tang senior, and (iii) the 1983 order and the 2003 deed, the Managers accepted that the said 23 shares had been effectively transferred to Tang senior by way of two transfers.

46.  Despite the cross-examination, I find that the testimony of the defence witness concerning the above matters to be truthful and reliable.

Findings of Fact

47.  Having considered the totality of the evidence, I make the following findings of fact.

48.  Tang senior verbally represented at various stages he was entitled to the said 23 shares.

49.  The Managers (or their predecessors, as the case may be) sought, and were shown, the 1983 order and the 2003 deed as documentary proof of his verbal claim of entitlement.

50.  Tang junior knew (or at least expected) that the 1983 order and the 2003 deed would be made use of by Tang senior.  Especially with regard to the 2003 deed, he knew (or at least expected) that Tang senior would make use of it in relation to the said 23 shares.

51.  The 2003 deed should be understood, and be given effect, in according with the language appearing on the face of the document.

52.  Mdm Liu placed Tang junior in charge of the matters relating to the “Tang Kap Wing Tso”, in particular those relating to the said 23 shares.  She either was actually aware of those matters, or at the very least was content to allow Tang junior to determine what he considered to be appropriate.

Can the 1983 Order Assist the Managers ?

53.  This depends (among other things) on the true meaning of the 1983 order.  But before dealing with that aspect, the history of the Managers’ pleadings need to be briefly mentioned.

54.  The 1983 order was not referred to in the defence filed in February 2008 (or the amended defence filed in March 2008).  It was first mentioned in the re-amended statement of claim filed in May 2009 (para. 5B thereof).

55.  Mdm Liu avers in gist Tang senior relied on the 1983 order in support of his verbal claim that 10 of the said 23 shares had been transferred to him: para. 5B(a), re-amended statement of claim.  The re-amended defence relies on the 1983 order as support for the following:-

(1)    Tang senior was Tang junior’s father and Mdm Liu’s former husband;

(2)    Mdm Liu and Tang junior are mother and son;

(3)    the history leading to the 1978 action, the 1983 order, the 1999 action and the 2003 deed.

See para. 24 (especially para. 24(2) to 24(3)) thereof.

56.  Thus, it has never been the Managers’ pleaded case that the 1983 order by itself should provide a cause of defence.  The 1983 order is rather relied on as a matter in support of their case that:-

(a)     the dispute among Tang senior, Mdm Liu and Tang junior was domestic in nature; the Managers were not under a duty to inquire into, or otherwise get involved in, such dispute;

(b)    Tang junior was clothed with the apparent and/or ostensible authority to act on Mdm Liu’s behalf.

See para. 24(5) to 24(6), re-amended defence.

57.  The Managers seem to have departed from their case summarised above (see, for example, para. 2.1(1), written closing submissions).

58.  Because of the state of their pleadings, I doubt if it is open to the Managers to put forth such a case.  But even if they were, the true meaning of the 1983 order cannot support it.

59.  The relevant parts of the 1983 order are:-

“It is declared that … [Tang senior] is entitled to the properties comprised in Packages 1, 5, 7 and 8 as defined in the Report and Valuation of Messrs. Jones Lang Wootton dated the 6th November 1982 … ” (para. 1(a)(1) thereof);

“[Mdm Liu, Tang junior and another defendant therein] do pay to [Tang senior] (as [his] money) 40% … of the net proceeds of sale of the properties known as Lots Nos.2042 and 2075 in Demarcation District No.124 as and when received by [Mdm Liu, Tang junior and the other defendant therein] or any of them” (para. 1(c) thereof);

“Neither [Tang senior] nor his children … (but which term does not include [Tang junior]) has or have or will have any claim of any whatever, whether past, present or future as against [Mdm Liu, Tang junior and the other defendant therein] and/or the said Tang Kap Wing Tso in respect of [Tang senior’s] alleged membership of or alleged right to succession in the said Tang Kap Wing Tso” (para. 2(c) thereof);

“[Tang junior] is the sole successor of the said Tang Kap Wing Tso” (para. 2(d) thereof);

“For the avoidance of doubt, neither [Tang senior] nor his children … (but which term does not include [Tang junior]) have or will have any claim whatsoever, if any, on any property of the said Tang Kap Wing Tso (except the said Packages 1, 5, 7 and 8 as set out in paragraph 1(a)(1) and the said 40% of the net proceeds of sale as set out in paragraph 1(c) hereof) or any other property of which the said Tang Kap Wing Tso has or will have an interest in … ” (para. 2(e) thereof);

“[Tang junior] is and was at all material times since his appointment a manager of the said Tang Kap Wing Tso” (para. 2(f) thereof);

“[Tang junior] and [2 of his 3 children] are and were at all material times members of the said Tang Kap Wing Tso” (para. 2(g) thereof)

(emphasis supplied).

60.  The Jones Lang Wootton report referred to in the 1983 order has not been adduced as evidence, nor have its contents been disclosed in this action.  There is therefore nothing in the above terms of the 1983 order which can indicate a transfer of 10 of the said 23 shares in Tang senior’s favour.

61.  For this reason, except to the extent set out in para. 56 above and 64 and 66 below, I conclude that the 1983 order by itself cannot advance the Managers’ case.

62.  Para. 7, re-amended defence pleads a verbal agreement made between Tang senior and Tang junior in about 1983 for the transfer of 10 of the said 23 shares.  The 1983 order is said to be part of that verbal agreement.  However, the verbal agreement is no longer mentioned by the end of the trial.

Can the 2003 Deed Assist the Managers ?

63.  The relevant parts of the 2003 deed are:-

“[Tang junior] and [Tang senior] are in dispute as to [Tang junior’s] entitlement in TANG LEUK TSO … ” (recital (A));

“[Tang junior] has agreed to abandon his claims against [Tang senior] and the other 2 managers of the [Tang Leuk Tso] and agreed to transfer his 13 shares of [Tang Leuk Tso] no standing in his names in the books of [Tang Leuk Tso] to [Tang senior] … ” (recital (B));

“IN CONSIDERATION of … HK$800,000 … to be paid by [Tang senior] to [Tang junior] … [Tang junior]:

(a) acknowledges and agrees he is and was at all material times entitled to 13 out of 285 shares of [Tang Leuk Tso] … ;

(b) acknowledges and agrees, in his personal capacity and as the sole successor of Tang Kap Wing Tso, that Tang Kap Wing Tso is not and has never been entitled to any share in [Tang Leuk Tso] (other than the 13 shares as specified in sub-paragraph (a) above);

(c) waives any claims which he or Tang Kap Wing Tso may have against [Tang senior] or [Tang Leuk Tso] arising out of the matters raised in [the 1999 action]; and

(d) hereby assign unto [Tang senior] absolutely his rights, title and interest of and on his 13 shares of [Tang Leuk Tso] as specified in sub-paragraph (a) above” (clause 1);

“[The 2003 deed] shall be binding on and shall be for the benefit of each party’s successors and assigns” (clause 4)

(emphasis supplied).

64.  It is immediately apparent the reference to Tang junior being “the sole successor of the ‘Tang Kap Wing Tso’” in clause 1(b), the 2003 deed  ties in with para. 2(d), the 1983 order.  That part of the 1983 order lends support to the truth of that reference in the 2003 deed.

65.  It is undisputed that, prior to the 1978 action, the “Tang Kap Wing Tso” was entitled to the said 23 shares.

66.  According to the Managers, they became satisfied that the said 23 shares were transferred to Tang senior after they were (i) shown records handed over by the former managers, (ii) informed by Tang senior verbally, and (iii) also shown the 1983 order and the 2003 deed: para. 45 above.

67.  The 2003 deed only expressly referred to 13 of the said 23 shares (the remaining 10 of the said 23 shares were not): clause 1(d) thereof states that 13 of the said 23 shares have been assigned to Tang senior.  However, clause 1(b) thereof acknowledges in addition that the “Tang Kap Wing Tso” was not entitled to any other shares in the “Tang Leuk Tso”.  When these clauses are read together, the 2003 deed also lends support to Tang senior’s claim of entitlement to the said 23 shares (in place of the “Tang Kap Wing Tso”).

Non-joinder of Tang Senior

68.  As the Managers correctly point out, Mdm Liu’s claim in this action:-

(1)    involves an allegation of unlawful conduct on the part of Tang senior (whether in his capacity as a manager or otherwise): para. 5B(a) and (b) and 5C to 5D, re-amended statement of claim;

(2)    directly affects the proprietary rights of Tang senior in relation to the said 23 shares,

Tang senior is a necessary party to this action.  Further, the benefit of the 2003 deed expressly devolves upon Tang senior’s successors and assigns (clause 4 thereof).

69.  It is common ground Tang senior passed away in November 2005, leaving behind his estate (which apparently has been administered by the plaintiffs of the 2006 probate action (see para. 25(b) and 25(c) and 30 above)).

70.  During the pre-trial review hearings on 17 March and 26 April 2010 (respectively about 2-1/2 months and one month before the trial), Mdm Liu has specifically been alerted to the need to join Tang senior (or, more precisely, his estate).  Because of the 2006 probate action, the identity of Tang senior’s successors should be well known to Mdm Liu (at least through Tang junior (see para. 25(c) and 30 above)).

71.  Despite the above, Mdm Liu instructed her legal advisers not to seek any joinder of parties.  Except that it was a deliberate decision, no satisfactory explanation has been given.

72.  Ord. 15 r. 6 prevents an action from being defeated by the non-joinder of parties, and removes the plea in abatement and with demurrers for want of parties: Hong Kong Civil Procedure 2010, Vol. 1, para. 15/6/1.  The purpose is to enable all parties to disputes relating to one subject-matter to be brought before the court at the same time so that the disputes may be determined without delay, inconvenience or additional expense of multiple-proceedings.

73.  In fact, Ord. 15 r. 6(2)(b) empowers the court to order a joinder of its own motion.  The practical problem with this action is that the dates of the pre-trial review hearing were too proximate to the trial date, so that any joinder would very likely result in a delay.  Added to this was Mdm Liu’s deliberate choice of not seeking a joinder.

74.  For those reasons, no joinder was ordered.  However, Mdm Liu was expressly informed that the absence of a necessary or proper party may have an impact on the outcome of this action.

75.  Part of the relief sought by Mdm Liu is discretionary in nature, that is, the injunctive and declaratory orders.  Having considered the matters above, I find that the non-joinder should be taken into account as a factor which militates against granting such orders.

Conclusion

76.  By virtue of the matters set out above, I am satisfied that Mdm Liu has in effect authorised Tang junior to also act on her behalf in relation to the 1978 action, the 1983 order, the 1999 action and the 2003 deed.

77.  Mdm Liu’s written closing submissions have from time to time referred to the need for the unanimous consent of all members of the “Tang Kap Wing Tso” before the t’so properties can be effectively disposed of: for example, para. 16 to 17 and 25 thereof.  However, this is not what the re-amended statement of claim avers as the cause of action: see para. 5B(c) to 5D(b) thereof.  It was not how Mdm Liu testified; there is no expert evidence to support such a case either.

78.  Accordingly, the Managers have established that they have adequately discharged their duties in relation to the said 23 shares.  There has been no lack of due diligence or care when they accepted Tang senior’s verbal representations and the documents shown by him.

79.  The claim against the Managers is dismissed.  Logically, the claim against Tang junior should be dismissed as well.

Other Matters

80.  In her written closing submissions, Mdm Liu relies on Light Ocean Investments Ltd. & Another v. Enway Development Ltd. [1994] 3 HKC 31 for the legal proposition that the Managers have occupied the position of a trustee for sale: p. 36F thereof.

81.  If her purpose of relying on the Light Ocean Investments Ltd. case is to advance her case of the Managers’ breach of trust, then that decision can provide little assistance.  The case concerned a dispute between the vendor and purchaser of lots of land in Yuen Long.  The issue was whether a vendor without title (but who obtained it through the new appointed managers of a t’so) could force the purchaser to complete the transaction.  That issue in turn hinged on the registration (pursuant to s. 15, New Territories Ordinance (Cap. 97)) of the newly appointed managers.  The court of appeal decided that because the managers’ appointment has not been registered, any agreement for sale entered into by them could only be a conditional sale.

82.  Having said that, it seems trite law the Managers’ duty is to act with diligence and care: see, for example, Man Ping Nam & Another v. Man Fong Hang (2006) 9 HKCFAR 674, 692.

83.  Mdm Liu also refers to the “self-dealing” rule in her written closing submissions.  She asserts Tang senior has taken advantage of his position without disclosing the 2003 deed to her or seek her consent for the transfer of the said 23 shares.

84.  As stated above, Mdm Liu for her own reasons has declined an invitation to join Tang senior’s estate.  In addition, the “self-dealing” rule has not been included in her pleading.  It is trite law (and accepted by Mdm Liu) such a transaction is not void but only voidable.  The beneficiary can only have the transaction set aside within a reasonable time after its discovery: Beningfield v. Baxter (1886) 12 App Cas 167.  Not pleading the “self-dealing” rule will have the effect of depriving the Managers a proper opportunity to plead, and prepare their defence, to such a case.

85.  In any event, the reference to the “self-dealing” rule as against the Managers may be entirely unnecessary (Mdm Liu not having alleged they were personally involved); she claims the Managers were under a duty to make investigation or inquiries: para. 32, written closing submissions.  This is not much different from her case regarding the Managers’ overall duty of due diligence and care (see para. 10, 11 and 82 above).

Costs Order Nisi

86.  As between Mdm Liu and the Managers, there is no apparent reason to depart from the usual rule that costs should follow the event.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this action be paid by Mdm Liu to the Managers, to be taxed if not agreed.

87.  I leave it to the parties to decide if any further submissions are required as regards the costs between:-

(a)     Mdm Liu and Tang junior;

(b)    the Managers and Tang junior.

Any written submission regarding the above should be lodged with court and serve within 14 days.  In the absence of further submissions, there will also be the same costs order nisi as between Mdm Liu and Tang junior.