LAM SAI KIT v. POON KWOK HUNG AND OTHERS

   HCA580/2010

   IN THE HIGH COURT OF THE

   HONG KONG SPECIAL ADMINISTRATIVE REGION

   COURT OF FIRST INSTANCE

   ACTION NO. 580 OF 2010

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BETWEEN

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DECISION

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Introduction

1.  The plaintiff obtained his taxi driver licence in or about March 2005 and became a full time taxi driver in the Lantau Island in July 2008. He joined the Lantau Taxi Association (“the Association”) as a member on 17 March 2005. He was expelled by the Association by virtue of a unanimous resolution passed at its extraordinary general meeting held on 6 July 2009 (“the July Meeting”) on the purported ground that he had committed acts which were prejudicial to the Association’s reputation and the members’ interest. He has ceased to be a taxi driver since 12 April 2010.

2.  On 26 April 2010, he commenced the present action, suing the defendants on their own behalf and on behalf of all other members of the Association except the plaintiff himself. He alleged, among other things, that the July Meeting was not valid, that the termination of his membership was not bona fide but an act of retaliation against him for his frank and open criticism of the 12^th committee of the Association, of which the 1^st defendant was chairman and the 2^nd to 8^th defendants were members. He further complained that the current committee, of which the 9^th defendant is chairman and the 8^th to 16^th defendants are members, has failed to reinstate his membership. He asked for a declaration that the purported resolution passed at the July Meeting terminating his membership was null and void and of no effect; and consequential relief including an injunction, an order of reinstatement and damages to be assessed.

3.  All the defendants have filed their defence. Their principal defence is that the July Meeting was valid and the termination of the plaintiff’s membership was fully justified by various acts complained of.

4.  The plaintiff now applies for summary judgment.

Issues

5.  It is trite that the burden rests on the defendants to show that they have a bona fide defence against the plaintiff’s claims. Pertaining to the central dispute as to whether the resolution terminating the plaintiff’s membership was valid are four main issues :

(1)  Whether on a proper construction of the relevant provisions in the articles of association of the Association (“the Articles”), the July Meeting was properly convened (“Issue 1”).

(2)  Whether as a matter of fact, the July Meeting had been held (“Issue 2”).

(3)  Whether there were sufficient reasons to terminate the plaintiff’s membership (“Issue 3”).

(4)  Whether the plaintiff had been given an opportunity to defend the complaints made against him (“Issue 4”).

The circumstances leading to the July Meeting

6.  To set the main issues in context, the relevant circumstances leading to the July Meeting are summarized as follows.

7.  By a written notice dated 19 May 2009 and addressed to the 1^st defendant, the 2^nd to 7^th defendants requested an extraordinary general meeting be held to terminate the plaintiff’s membership.

8.  It was also on 19 May 2009 that the 12^th committee held its monthly meeting. It would appear that the requisition had been discussed at that meeting. It is the 1^st defendant’s evidence that he then decided to hold the extraordinary meeting on 22 June 2009.

9.  Paragraph 1 of the minutes of the aforesaid meeting of the committee (“the Minutes”) recorded :

“1.  續議上次議程有關附頁，林世傑先生向運輸署投訴本會內容失實，目的是供會員參考，因委員會通過將於今年6月22日晚上7時30分，於本會會址召開全體會員大會，議決林世傑會員之會藉去留問題。”

10.  Both the 1^st and 9^th defendants said in their affirmation that because each member had to come to the Association premises to pay their monthly subscriptions, the Association used that opportunity to serve the notice of the extraordinary general meeting to the members by giving them a copy of the Minutes. A member, Mr Ng Kam Yiu (transliteration, referred to as ‘Mr Ng’ below), confirmed that he was given a copy of the Minutes in early June 2009 when he went to the Association premises to pay the monthly subscription in early June 2009.

11.  On 22 June 2009, only 61 members turned up at the extraordinary general meeting (“the June Meeting”). Since it required at least 66 members to form the quorum, the June Meeting was adjourned to 6 July 2009. The committee then issued a notice dated 29 June 2009 informing the members that the adjourned meeting would take place on 6 July 2009.

12.  The plaintiff alleged that he did not come to know of the June Meeting until 2 July 2009 when a fellow taxi driver sent him a copy of the said notice of 29 June 2009. The plaintiff wrote an email to the Association on 4 July 2009 protesting about the proposed meeting. By another email dated 6 July 2009, he informed the Association that he would not attend the July Meeting because he had not received the particulars of “違反事項” and that he reserved all his rights.

13.  On 6 July 2009, the July Meeting was, on the defendants’ case held as scheduled. Sixty-six members attended and unanimously passed the resolution to terminate the plaintiff’s membership.

14.  I now come to the four main issues and deal with them in turn.

Issue 1 – Was the Meeting properly convened?

15.  Articles 15 and 16 provide :

“十五)  會員大會於每年一月舉行一次，由主席召集，開會通知書須於會議舉行前七天知會各會員，並以全體會員人數超過半數出席為法定人數，如第一次舉行法定人數不足則宣佈流會，並由該日起十五天內再次舉行，仍須于七天前知會各會員，經第二次舉行則不論人數多少均作法定人數。

十六)  如有必要時經過半數委員或會員三十人之聯署書，請求主席開會，主席須於接到請求書七天內舉行特別會員大會，惟討論事項祇限於請求書上各點。其通知會員方法及法定人數與會員大會相同。”

16.  Under Article 16, the first step that triggers an extraordinary general meeting is a requisition by no less than half of the committee members or 30 members. Here, the requisition was made by 6 committee members, which was more than half of the extant committee members. So the requisition is valid. As I understand his case, the plaintiff does not challenge the validity of the requisition.

17.  The next step is that upon receipt of the requisition, the chairman should hold the extraordinary general meeting within 7 days. Article 16 goes on to provide that the method of notifying the members of the extraordinary general meeting would be the same as that for the annual general meeting under Article 15.

18.  Mr Lam for the plaintiff contended that giving a copy of the Minutes to the members did not constitute a proper notice of the June Meeting because it was not a notice at all. And members might not be aware of the purported notice when there was no evidence to show that their attention had been drawn to paragraph 1 of the Minutes.

19.  The Articles do not prescribe any form of the notice of meeting. The only requirement under Article 15, which applies to Article 16, is that the notice should be in writing. The Articles do not prescribe the manner for service of the notice of the meeting either. In the circumstances, it is within the general function of the committee of the Association to decide how notice of a meeting should be given on each occasion : see Labouchere v Earl of Wharncliffe (1879) 13 Ch.D. 346, at p.352. In my view, it is plainly arguable that giving a copy of the Minutes to the members in the manner relied on by the defendants could constitute a proper notice of the June Meeting. On the evidence before me, 61 members attended the June Meeting. This prima facie contradicts Mr Lam’s argument that members were not aware of the notice in paragraph 1 of the Minutes.

20.  Mr Lam then argued that under Article 16 an extraordinary general meeting must be held within 7 days from the receipt of the requisition. But the June Meeting was not held within 7 days after the requisition dated 19 May 2009. So the June Meeting was invalid. It follows that the resolution passed at that meeting to adjourn was invalid.

21.  It is true that under Article 16, an extraordinary general meeting must be held within 7 days after the requisition has been received. However, the same Article also provides that the method of notifying the members of a general meeting under Article 15 applies equally to an extraordinary general meeting. Under Article 15, at least 7 days notice must be given to the members. But, it would simply be impossible to give the requisite 7 days’ notice for any extraordinary general meeting to be held within 7 days of the receipt of the requisition. The way to resolve the apparent conflict between the two Articles appears to be twofold provisionally. First, the time to hold the extraordinary general meeting under Article 16 prevails. Irrespective of Article 15, less than 7 days’ notice will suffice. Alternatively, the notice requirement under Article 15 prevails. The extraordinary general meeting can be held more than 7 days after receipt of the requisition. Both options are plainly arguable and which of them will ultimately prevail depends on a proper construction. Mr Lam submitted that a proper construction can be made at this stage. I disagree. The Articles cannot be construed in vacuum. Due regard must be given to all the relevant factual matrix in construing them and resolving the apparent conflict. I am not sure if all the relevant circumstances are before the court now.

22.  Mr Lam next submitted that Article 16 does not allow an extraordinary general meeting, which has fallen through because of insufficient quorum, to be adjourned. A fresh requisition has to be submitted.

23.  However, arguably, it is permissible to read Article 16 together with Article 15, as the 12^th committee had done in the instant case. So when the June Meeting was not quorate, it could arguably be adjourned and dealt with in the way as prescribed by Article 15.

24.  Finally, as to whether or not the plaintiff had received the notice for the June or July Meeting, it is clearly a triable issue, which can only be resolved at trial.

Issue 2 – Had the July Meeting been held actually?

25.  As already alluded to, the plaintiff did not personally attend the July Meeting. He, however, pleaded and alleged in his affirmation that some fellow taxi drivers told him that no meeting had been held. The drivers just came to sign their names on the attendance record and the voting forms. In their defence, the defendants did not specifically deny this particular allegation. They just put forward a general denial at the end of their defence. That is not sufficient : see Order 18 rule 13 of the Rules of the High Court, Cap. 4. Mr Lam convincingly argued that how the defendants have pleaded their case led the plaintiff to believe that there was no denial. However, in the affirmations filed to oppose the present application, the 1^st and 9^th defendants said that the July Meeting had been held. Mr Ng corroborated them by deposing that he attended the Meeting. Mr Lam submitted that what the 1^st and 9^th defendants and Mr Ng have said confirmed that the July Meeting had not been held. I am unable to accept Mr Lam’s submission. While they did not give full particulars on the conduct of the July Meeting, the thrust of their evidence is that the July Meeting had in fact been held.

26.  Given the conflicting evidence, whether the July Meeting had in fact been held is a triable issue which can only be determined at trial.

Issue 3 – Were there sufficient reasons for terminating the plaintiff’s membership?

27.  In the Minutes, the complaint raised was that the plaintiff had made untrue accusations against the Association to the Transport Department. In the letter addressing to the plaintiff dated 25 July 2009, the 1^st defendant as chairman of the Association told him that members at the July Meeting unanimously terminated his membership was terminated because of his “損害本會聲譽及會員利益的行為”. No particulars were given, which are to be found only in the defence. There, various matters were pleaded but none referred to the plaintiff’s wrongful accusations made to the Transport Department. All the matters relied on by the defendants in the defence has been verified by the 1^st and 9^th defendants on oath.

28.  While how the grounds for termination were formulated from time to time may attract legitimate criticism, I think on the evidence before me it is plainly arguable that there were sufficient reasons for terminating the plaintiff’s membership. In any event, it is a matter for trial.

Issue 4 – Had the plaintiff been given an opportunity to defend?

29.  Mr Lam submitted that as a matter of natural justice, where the conduct of a member of a club is called in question, and such conduct forms the basis of expulsion, the meeting must make a fair inquiry into the truth of the alleged facts, after giving notice to the member concerned that his conduct is about to be inquired into, and giving him an opportunity to state his case to the meeting : Labouchere, ibid, Ho Man-fat (No. 2) v The Royal Hong Kong Jockey Club [1976] HKLR 452. He went on to submit that the alleged complaints were not specified and have remained highly fluid. The plaintiff could not properly defend himself.

30.  As can be seen in paragraph 27 above, there is considerable force in Mr Lam’s submission that the grounds for terminating the plaintiff’s membership have remained fluid. But it does not necessarily follow that the plaintiff had not been given a fair opportunity to defend himself. It is accepted that the notice of the July Meeting needed not spell out all the complaints against the plaintiff. Prima facie, the matters referred to must have been raised at the July Meeting. Assuming that they were new matters, it was still permissible to raise them at the July Meeting and the plaintiff was not necessarily prejudiced by lack of notice : Davis v Carew-Pole [1956] 1 WLR 833, Russell v Duke of Norfolk [1949] 1 All ER 109. Whether or not he had been prejudiced must depend on all the relevant circumstances, for example, whether he was already aware of the complaints in advance and whether those complaints were not in dispute or capable of being disputed. These are fact-sensitive matters to be canvassed at trial.

Conclusion

31.  For the above reasons, the plaintiff’s application for summary judgment must fail. I will give the defendants unconditional leave to defend.

32.  On costs, I think in light of the insufficient denial in the defence against the plaintiff’s allegation that the July Meeting had not been held, the plaintiff was entitled to take out the present application. But for this point, the application was clearly not justified. After the defendants filed the affirmations in opposition on 26 November 2010, it must have become apparent to the plaintiff that the question whether the July Meeting had been held has to go to trial. He should not have pressed on with the application. In the circumstances, I will order that the costs of the application incurred by the parties up to and inclusive of 26 November 2010 be in the cause, and that the defendants’ costs thereafter be borne by plaintiff, to be paid forthwith and to be taxed if not agreed. The plaintiff’s own costs are to be taxed in accordance with the legal aid regulations.