LIONS CLUB OF HONG KONG HARBOUR v. CHAN HON TSANG SEBASTIAN

HCSA18&19/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NOS.18 AND 19 OF 2001

(ON APPEAL FROM SCTC NOS.013254 AND 013255 OF 2000)

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HCSA18/2001

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J U D G M E N T

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1. This is an appeal against the order of the Small Claims Tribunal made on 3 April 2001, whereby the learned adjudicator entered judgment for the respondent against the 1st appellant for $19,500 and the 2nd appellant for $24,500, being outstanding membership fees for the period between January 1998 and June 1999.

2. The respondent is a non-profit making society, registered under the Societies Ordinance. Both appellants were formerly members and office bearers of the respondent. At the trial before the learned adjudicator, they raised as a defence that they had effectively terminated their membership by sending notice to the respondent. For the 1st appellant, the notice was said to be sent on 19 January 1998; for the 2nd appellant, 2 March 1998.

3. The 1st appellant counter-claimed against the respondent for various items :

(1) $5,000 paid on behalf of the respondent as respondent fees for a Lion Club Sister School Scheme sponsorship fees;

(2) $25,500 paid on behalf of the respondent for this operation expenses;

(3) $3,633 being damages to his tuxedo he wore on his inauguration ceremony; and

(4) $8,930 being fees for food and beverages paid for promoting the image of the respondent in Beijing.

4. The 2nd appellant also counter-claimed for $14,000, $7,000 of which was said to be expenses for participating in a meeting organised by the Lions Club International in December 1996 in Taiwan, $6,000 of which was expenses for participating in the meeting of the Korean Lions Club in Seoul in June 1996, and the balance of $1,000 being donation to the Lions Club of Victoria.

5. The respondent denied the counterclaim. In respect of the 1st appellant's counterclaim, the respondent accepted the first item of $5,000 but alleged that the same amount had already been deducted from the membership fees owed by the 1st appellant. The $25,500 paid by the 1st appellant were for membership fees of both appellants and not for operating expenses of the respondent. The damage to the 1st appellant's tuxedo was denied, likewise the right of the 1st appellant to claim for the food and beverage fees spent in China. The respondent also contended that none of the appellants had effectively given notice to terminate their membership.

6. After trial, the learned adjudicator made some finding of facts in favour of the respondent. He found that actually both appellants did not give notice of resignation. He also found that the respondent was not responsible for the damage caused to the 1st appellant's tuxedo. Mr Ho, counsel for the appellant, did not seek to challenge these findings for the purpose of this appeal. As I understand from him, he is not necessarily conceding that these findings are correct. He submitted that he was bound by section 29 of the Small Claims Tribunal Ordinance, whereby the Court of First Instance, sitting as the appellate court hearing an appeal from the Small Claims Tribunal, is not entitled to reverse or vary any determination made by the tribunal on questions of fact.

7. Mr Ho's main attack is on the adjudicator's failure to deal with the question of mitigation. Put simply, the argument runs like this. The appellants, as members of the respondent, were obliged contractually to pay the membership fees. Having defaulted in paying the membership fees, they were liable for a claim on those arrears. The evidence of the claimant, as accepted by the adjudicator, was that the appellants absented themselves from activities of the respondent since 1998 and that numerous debit notes and reminders of membership fees due had been sent to both appellants. As I gather from the appellants' evidence filed with the Tribunal, reminders had been sent as early as in December 1997.

8. Article 6 of the respondent's Constitution and By-laws provides :

"1 如有會員接到本會正式通告後卅天內拒絕或因疏忽之原因不付清任何欠繳欵項時秘書將其名呈報董事會而董事會有權議决取消該會員之會籍

2 任何會員經董事會四份之三票數表决後方可褫奪其會籍

3 任何會員若非因患病或其他適當理由（經董事會認可者）在連續兩個月內之例會中缺席四次者將由董事會於第四次缺席後開會議决應否取消該會員之會籍但名譽會員及贊助會員不在此限"

9. Mr Ho submitted that the respondent was under a duty to take all reasonable steps to mitigate its loss. This common law duty was reinforced by Article 6 of the Constitution and By-laws. Given the appellants' repeated failure to pay arrears of membership fees and absence from the respondent's activities, the respondent should consider invoking Article 6 to terminate their membership. But the respondent did not do so.

10. I accept Mr Ho's submissions. At page 8 of his reasons for decision, the learned adjudicator had this to say :

"On the other hand, I have to consider why the claimant had not exercised the right under Rule 6 of the Constitution and By-laws to terminate the membership of both defendants much earlier, when both of them had been absent in the meetings for a long time."

11. It would therefore appear that the adjudicator was alive to the issue concerning mitigation. However, having addressed his mind to this issue, he had failed to proceed to determine if the respondent had taken any reasonable step to mitigate its loss. This would, of course, affect the quantum that the respondent is entitled to claim. In my view, the learned adjudicator had erred in law in failing to deal with this question. His award on the membership fees due therefore cannot stand.

12. I now turn to the appellants' counterclaims. The way the adjudicator dealt with the counterclaim is rather brief. He merely stated that he found that there was no sufficient evidence to prove that the 1st appellant's claim for payments was made on behalf of the respondent. It is not clear what was his reasoning behind. It is also not clear whether he accepted the claimant's case on the 1st appellant's counterclaim, nor is it clear how he resolved the conflict of the evidence before him.

13. The adjudicator had simply failed to deal with the 2nd appellant's counterclaim at all. The counterclaims of the appellants will also affect the quantum, if any, the respondent is entitled to.

14. In the circumstances, I will allow this appeal. Having considered the options available to me under section 29(1) of the Small Claims Tribunal Ordinance, I will remit the case back to the Tribunal for retrial before another adjudicator.