XCHRX Tang Man Kit v. Hip Hing Timber Co. Ltd.

A8000/1990

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

----------------------------------------

--------------

DECISION

--------------

1. There were three categories of matters before me:-

(a) arguments on costs arising from the determination of various summonses in December 1998;

(b) the Plaintiff's summons for an order that the Defendant should not be permitted to adduce evidence, for failure to comply with an order of Yeung J., or at least for an unless order prohibiting it from adducing any evidence after a certain period;

(c) the Defendant's summons for an order for preliminary issues.

2. However, since the determination of all three categories of matters are, to one degree or another, affected by the Defendant's argument on the Plaintiff's authority to sue, that is a matter which I should deal with first. To do this, it is necessary to consider the procedural labyrinth in which this case has found itself.

3. This action commenced in 1990. It was started in the name of "Wah Yan Mo Fan Heung with Chan Kam Cheung and Tang Man Kit as Managers", and pleaded that the Plaintiff was and is an "unincorporated body beneficially interested" in certain land being occupied by the Defendant.

4. In March 1998, the Plaintiff issued a summons for leave to re-amend to change the name of the Plaintiff to that of "Tang Man Kit (suing as sole manager of Wah Yan Mo Fan Heung)". There was no pleading in the body of the Statement of Claim that the Heung was a t'ong under the New Territories Ordinance cap. 97, but the title of the new pleading follows that advised by the court in Tang Yau Yi Tong v Tang Mou Shau Tso [1996] 2 HKLR 212, 219, for actions instituted by managers of t'ongs under the Ordinance.

5. Before that summons was heard, the Defendant issued a summons to strike out the writ and Statement of Claim on the ground that the Plaintiff "as an unincorporated association" had no corporate or separate legal existence or capacity, "wherefor" no reasonable cause of action had been disclosed, and the action was frivolous, vexatious and/or an abuse of the process.

6. It is clear however from the evidence filed by the Defendant in support of the summons that although a t'ong had not explicitly been pleaded in the proposed Re-Amended Statement of Claim, this was very much in the forefront of the Defendant's mind. The Affirmation contains passages querying amongst other things, whether the Heung was a t'ong, and throwing doubt on the appointment of managers.

7. This was met by an Affirmation filed on behalf of the Plaintiff which asserted, amongst other things, that the Heung was and is a t'ong and that the managers had been duly appointed.

8. In May 1998, the Plaintiff issued another summons for leave to re-amend the Statement of Claim (the March summons not having been heard) to plead specifically that the Heung was and is a t'ong (although the pleading of the Heung as an unincorporated association remained).

9. The Defendant filed further evidence to deal with the proposed re-amendment, to the effect that the Heung was not recognised as a t'ong, and that Mr Tang had no authority.

10. This was followed by the Defendant's summons to amend its March summons to add, in addition to an order for striking-out, an application for stay. Of course, there could not at that stage have been an application to strike out the action on the ground that Mr Tang had no authority to sue in the name of the t'ong, because as yet, the Plaintiff's summons for leave to re-amend its case to plead a t'ong had not been heard.

11. I heard the Plaintiff's summons for leave to re-amend in December 1998. The approach of all parties was that in the usual way, if the proposed re-amendment (to plead the case that the Heung was a t'ong and Mr Tang its registered manager) was bound to fail, leave to re-amend would not be granted. Although counsel for the Plaintiff did not abandon the case of an unincorporated association, there was no argument that the action could still be maintained on that assertion alone.

12. The case was approached by the parties therefore on the basis whether the Plaintiff had an arguable case that the Heung was a t'ong and Mr Tang its registered manager. Certainly that was the way in which I approached it, as illustrated in my Decision handed down on 15 December 1998, and no submissions had been made to me, on Mr Tang's authority to sue as manager of the t'ong (if the Heung be such), that I should consider the matter for the purposes of a final determination.

13. The Defendant's submission today is that the question of Mr Tang's authority to sue (on the basis that the Heung is a t'ong) should be a matter for final determination by the Court before trial of the action.

14. The authority on which the Defendant has now relied is Banco de Bilbao v Rey [1938] 2 All ER 253, which followed and applied the principles laid down in the House of Lords in Russian Commercial & Industrial Bank v Comptoir d'Escompte de Mulhouse [1925] AC 112 :-

"Where the answer to an action consists of a denial by the defendant that the action is really the action of the person or corporation whose name appears as plaintiff, and an assertion that the action is really the action of a person claiming without legal justification to represent the named plaintiff, this answer cannot be set up as a defence in the action. This answer must be set up by taking steps to satisfy the court, before the action comes on for trial, that the truth is as the defendant alleges, and, if the defendant succeeds in so satisfying the court, the result will be, not that the defendant will succeed in defending the action, but that he will succeed in having the action struck out or stayed, the costs incurred being thrown, not on the nominal plaintiff whose name has been wrongfully used, but on the solicitor who has taken upon himself to represent to the court that he is retained by the proper organ of, or representative of, the plaintiff to urge the plaintiff's suit before the court"

and at 259:-

"It will be observed, however, that if the principles already mentioned as having been laid down by the House of Lords had been regarded, ... there would have been a motion to set aside the writ as having been issued without due authority ..."

15. It is clear from the passages set out above that where a defendant alleges lack of authority to sue, the matter should be considered by way of a final determination of the question before the substantive trial begins.

16. Although in this case Mr Tang's name appears as the Plaintiff, he is suing only as registered manager of the t'ong, and not in his personal capacity. If the Defendant can show that Mr Tang was not in truth the registered manager of the t'ong, then the institution of these proceedings is not the act of the t'ong. This has repercussions not only for costs. If lack of authority to sue is established, the entire foundation of the proceedings collapses.

17. If the Court finds in favour of the Defendant on this point, there are no proceedings which have been instituted by the t'ong. In my view, the importance of this matter outweighs the prejudice that would inevitably be caused by a delay of the trial.

18. There is no problem of res judicata arising from my decision in December. What was argued and decided then was whether there should be leave to the Plaintiff to re-amend the Statement of Claim, which for the first time has pleaded a case that the Heung was a t'ong and that Mr Tang was its registered manager. I decided that there was an arguable case pleaded.

19. The result is that Mr Tang has since the re-amendment in December 1998 purported to sue as manager on behalf of the Heung as a t'ong. The Defendant, now faced with such an action, is in my view entitled to challenge his authority by reference to the procedure set out in Banco de Bilbao for the determination by the Court on a final basis of the question of authority.

20. Applying the above considerations to the three categories of matters before me, I think I should in respect of (a), reserve my decision on costs until the outcome of the determination of the point of authority to sue, given that the Defendant has indicated that it is raising this point. As shown in Banco de Bilbao, there may be ramifications on the liability for costs, depending on which way the decision goes. I would for the same reason reserve my decision on the costs of the hearing on 10 March 1999.

21. As for (b), it seems to me that the question of authority to sue should be dealt with first before any further costs are incurred on steps such as witness statements. I would therefore adjourn the summons relating to witness statements sine die with liberty to both parties to restore.

22. As for (c), I do not think that the procedure of preliminary issues is the correct one since one cannot join issue until there are pleadings, and it was said in Banco de Bilbao that lack of authority to sue should not be raised as a defence as such in the action. This view is accepted by Mr Mok counsel for the Defendant. I would therefore dismiss the Defendant's summons of 4 February 1999. If the Defendant is minded to raise the question of authority to sue by another procedure, I would expect it to do so without delay, given the history of this case which started in 1990. I would give both parties liberty to apply.