GREAT SOURCE ENTERPRISE LTD v. SINO ESTATES MANAGEMENT LTD

CACV 253/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 253 OF 2003

(ON APPEAL FROM LDBM 167 OF 2001)

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JUDGMENT

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Hon Cheung JA:

1. I agree with the judgment of Yuen JA on the analysis of the implied terms. I, however, take a different view on the issues concerning dishonesty and election.

Dishonesty

2. The dishonesty of a person can be proved by either an expressed statement of intention of that person or by the surrounding circumstances. Usually dishonesty is proved by the latter.

3. In my view the applicant has adequately particularised the allegation of dishonesty. The gist of the case against the respondent is that it was an agent for the owners of the building. It owes a duty to all the owners to act properly in the discharge of its obligations under the DMC and should not favour one against the other of the owners. In this case it had favoured one of the owners i.e. the developer of the building who had given an undertaking to make up for the deficits incurred in the management of the building. The respondent had deliberately refused to improve the security measures in the building so as to ensure that the developer would not be called upon to perform its undertaking. If this allegation is substantiated, then obviously an inference can be drawn that the respondent had acted dishonestly.

4. As Millett L.J. (as he then was) observed in Armitage v. Nurse [1997] 2 All ER 705, dishonesty in such a context

"connotes at the minimum an intention on the part of the trustee to pursue a particular course of action, either knowing that it is contrary to the interests of the beneficiaries or being recklessly indifferent whether it is contrary to their interests or not.'

5. The conduct of the respondent in this case, if proven, is obviously against the interests of the other owners of the building and is capable of substantiating a charge of dishonesty. This part of the Notice of Application should not be struck out.

Election

6. Starting with the premises that the respondent should not favour one against the other of the owners, what the applicant has pleaded about the activities of respondent in respect of the election is sufficient to sustain a cause of action.

7. I do not regard the particulars given for the claim, namely, the staff or agent of respondent accompanying some of the candidates to visit the residents, the respondent arranging its preferred candidates to sit in the front row during the election and the respondent procuring the developer to vote for the preferred candidates are so obviously frivolous, vexatious or an abuse of the process of the court as to justify a striking out.

8. In any event the applicant did not plead dishonesty in relation to the election issue. So the arguments on the particulars of dishonesty will not apply.

9. Further there is a serious arguable issue on whether Clause 43 of the DMC which exempted the respondent from liability is applicable at all if it had acted in breach of the implied terms of the DMC even if such breach does not involve 'criminal liability', 'dishonesty' or 'gross negligence'. It is arguable that Clause 43 is not intended to have such a wide ambit.

10. There is further argument that Clause 43 of the DMC may fall foul of the Control of Exemption Clauses Ordinance (Cap. 71) ('the Ordinance').

11. HH Judge Downey in Discovery Bay Services Management Ltd. v. David Buxhaum [1995] HKDCLR 7 took the view that a DMC is excluded from this Ordinance since it is a contract which 'relates to the creation or transfer of an interest in land' within the meaning of paragraph 1(b) of Schedule 1 of the Ordinance.

12. However, there are contrary views expressed by textbook authors that this Ordinance should apply to a DMC since it is only intended 'to regulate the owners' rights in land' and 'to provide for the management of the development', rather than 'to create, transfer or extinguish property right' : see, Kent, Merry and Walters on Building Management in Hong Kong, p. 180 and Nield, Hong Kong Land Law (2nd ed.), p. 434.

13. This part of the Notice of Application should also not be struck out.

Informal nature of Lands Tribunal proceeding

14. In this case there is a more fundamental reason why the Notice of Application should not be struck out. Section 10(5)(a) of the Lands Tribunal Ordinance expressly requires proceedings in the Lands Tribunal to be conducted in an informal manner consistent with attaining justice.

15. A Notice of Application is not in the nature of a formal pleading like a statement of claim. Many of the Lands Tribunal applications are conducted by litigants in person. It would be unrealistic to expect these litigants to plead their case with sufficiency like a formal pleading. Application to strike out should only be taken in the clearest of the cases.

16. The same principle would apply to those cases which are represented by lawyers like the present case. So long as the Notice of Application contains sufficient information for the other party to know the nature of the applicant's case so that a reasoned response can be made, it really is not the intention of the legislation for the parties or the presiding officer of the Lands Tribunal to minutely examine the Notice of Application or Notice of Opposition to see if an allegation is sufficiently pleaded or not.

17. In this case the Notice of Application is a 17 page document which had been amended twice. One of which was done after the application to strike out was issued. It contained details of the applicant's case including what it said to be the basis of dishonesty of the respondent. The case is sufficiently framed and particularised to be tried. In my view it is just a waste of precious court time to go through the exercise that had been carried out in the Lands Tribunal. It took three days on the striking out application. It is a classic case of satellite litigation in which no useful purpose is served apart from incurring unnecessary costs. Very often such an exercise will drain the ability of a party who is less endowed than the other, to continue pursuing the claim.

Conclusion

18. I would allow the appeal and order costs (on a provisional basis) of the appeal and below be to the applicant.

Hon Yeung JA:

19. I have the advantage of reading the draft judgments of Cheung JA and Yuen JA and I agree with their judgments.

20. In so far as Cheung JA and Yuen JA disagree on the issues of "Dishonesty" and "Election", I respectfully prefer the analysis of Cheung JA.

21. Clearly it is not possible for the Applicant to have direct evidence (without full discovery) on the motive of the Respondent in refusing to improve the security measures, which improvement, on the Applicant's case, are reasonable and necessary.

22. However, it is not disputed that the Respondent and the developer are related companies and that the developer had given an undertaking to make up any deficits incurred in the management of the development.

23. If the Respondent were to improve the security measures, the deficits would have been significantly increased, thus exposing the developer to greater financial liability. An obvious motive for not improving the security measures in order to minimize the developer's financial liability can be readily inferred.

24. The undisputed facts could certainly support the suggestion that the Respondent's decision not to improve the security measures was made with a view to favour the developer to the detriment of the Applicant and is therefore a dishonest decision.

25. S 10 (1) of the Lands Tribunal Ordinance gives the Tribunal the discretion whether to follow the practice and procedure of the Court of First Instance in the exercise of its civil jurisdiction. Cheung JA refers to s 10(5)(a) to demonstrate the informal nature of the Proceedings in the Lands Tribunal. There are other similar provisions giving significant discretion to the Tribunal, enabling it to be free from other procedural restraints and/or formalities in order to do justice to the parties.

26. Such provisions include: The Tribunal may...of its motion, order any party... to disclose...any document... (s 10(2)(a) Lands Tribunal Ordinance). The Tribunal may at any time amend any document...of its own motion (rule 12(3) Lands Tribunal Rules). The Tribunal may...of its own motion, require further and better particulars of any document...(rule 13(1) Lands Tribunal Rules).

27. An order to strike out should only be made in the plain and obvious cases. Silke JA in Ha Francesca v Tsai Kut Kan (N0 1) [1982] HKC 382 made the following observation at p 392:

"My attention has been directed by counsel to the principles upon which the court acts on striking applications. If I may encapsulate them, striking out should only be done in plain and obvious cases, there should be no trial upon affidavit. Disputed facts are to be taken in favour of the party sought to be struck out. The claim must be obviously unsustainable, the pleading arguably bad and that it be impossible, not just improbable, for the case to succeed before a court will strike out. If the court does not think the matter to be clear beyond doubt or if it fails to be satisfied that there is no reasonable cause of action or that the proceedings are frivolous or vexatious, then, there should be no striking out. One must be careful not to drive a plaintiff from the judgment seat nor should the court decide difficult point of law in proceedings such as this."

28. Being in mind the inquisitorial approach that the Lands Tribunal should adopt and the discretion that it can exercise in relation to the conducts of the proceedings, the "reasons" for the Respondent's failure to improve the security system can perhaps be ascertained with greater profundity after orders of discovery are made either on application or on court's own motion.

29. I am mindful of the need to properly inform the Respondent of the nature of the case that it has to meet despite the informal nature of the proceedings in the Lands Tribunal.

30. I have carefully considered the Notice of Application issued by the Applicant together with the subsequent amendments. I am satisfied that there are sufficient details supporting the allegation of dishonesty and that the Respondent is fully aware of the case that it has to meet.

31. I am not persuaded that the allegation of dishonesty made by the Applicant against the Respondent should be struck out.

32. On the Respondent's showing favour to some candidates in the Owners Committee election, in view of argument that the Control of Exemption Clauses Ordinance could apply to a DMC, I too, am of the view that the Applicant's case on "Election" is not so obviously frivolous, vexatious or an abuse of the process of the court as to justify a striking out.

33. I, too, would allow the Applicant's appeal, and order costs of the appeal and below be to the Applicant.

Hon Yuen JA:

34. This is an appeal from a decision of Judge Chow as presiding officer of the Lands Tribunal given on 12 August 2003 striking out the Application and giving an order nisi that the Applicant pay the Respondent's costs ('the Decision").

35. All the pleadings in the Tribunal had been written in English as were all the affirmations filed. The document at the heart of the dispute, a Deed of Mutual Covenant ("DMC"), was in English. The submissions made to this court, written and oral, were also in English. Accordingly, even though the Decision had been written in Chinese, this judgment has been written in English.

Background

36. The Applicant is the owner of an apartment in a development known as Dynasty Heights. The Respondent is the manager of the development. Although not pleaded, it is common ground that the Respondent is connected with Victory World Ltd ("the developer").

Applicant's complaints

37. In April 2001, the Applicant issued a Notice of Application in the Tribunal. By the time the matter came before the Tribunal, the Notice had been re-amended. Essentially, the Applicant's complaints were that the Respondent was in breach of its duties as manager in (1) not implementing a better security system at the development, thereby saving expense for the developer which had given a collateral warranty to all owners (including the Applicant) to pay any deficit in management expenses for the first 2 years of occupation of the development; and (2) promoting certain candidates at an election of members of the Owners Committee of the development.

Proceedings in Tribunal

38. A Notice of Opposition was filed in the Tribunal in May 2001. However, in September 2002, the Respondent issued a summons to strike-out the application.

39. It is clear from the summons that the grounds of the strike-out application were that the application was frivolous and vexatious and an abuse of the process. There was no application to strike-out on the ground that the Notice of Application disclosed no reasonable cause of action.

40. However, it is common ground that when the summons was heard in the Tribunal, both parties and the presiding officer proceeded on the basis that the summons had also included a ground that the Re-Amended Notice of Application did not disclose a reasonable cause of action.

41. When an application to strike-out is based both on the "no reasonable cause of action" ground and the "frivolous and vexatious" ground, it is important to know under which ground the court had decided to strike-out the whole or a part of the case. It is important because the principles applicable to different grounds of striking-out are different. It would appear in some parts of the Decision in this case that the order to strike-out had been based on no reasonable cause of action being disclosed on the pleadings and in other parts, that the order had been based on the action being frivolous or vexatious or an abuse of the process.

Principles applicable to different grounds of striking-out

42. Where it is suggested that a pleading should be struck-out on the ground that it discloses no reasonable cause of action, it must be assumed that all the allegations of fact in the pleading can be proved and all disputed facts taken in favour of the party whose pleading is sought to be struck-out. No reference should be made to matters outside the four corners of the pleading, thus excluding reference to evidence or even the pleadings from the other party: Hong Kong Civil Procedure 2004 paragraphs 18/19/3(4) and 18/19/6.

43. However where it is suggested that a pleading should be struck-out on the ground that it is frivolous or vexatious and an abuse of the process of the court, both parties are entitled to file evidence for the consideration of the court.

Basis of Tribunal's order

44. At first sight, the strike-out order here seemed to have been founded only on the ground that the Re-Amended Notice of Application did not disclose a reasonable cause of action. The presiding officer made no reference at all in the Decision to any of the evidence filed by either party. This approach seemed to suggest that he had struck-out the Re-Amended Notice of Application by virtue of Order 18 rule 19(1)(a) only.

45. However, in certain parts of the Decision, the presiding officer relied on clause 43 of the DMC (which had not been pleaded in the Re-Amended Notice of Application), and in paragraph 10 of the Decision, he specifically referred to the Application being frivolous and vexatious under Order 18 rule 19(1)(b).

46. In the circumstances, this court can only approach the Decision on the basis that the presiding officer might have struck-out different parts of the Re-Amended Notice of Application on different grounds, and we should consider in respect of each of the reasons given in the Decision, whether it supported a strike-out order. There was no respondent's notice from the Respondent asking this court to affirm the presiding officer's order on any other grounds.

Re-Amended Notice of Application

47. The Re-Amended Notice of Application, it has to be said, could have been pleaded in a much clearer way. As it is, it pleads substantial sections of evidence, interspersed with allegations, and the nature of the "duty under the DMC", which is pleaded in a number of places, was not defined. Having said that, one can make out the following causes of action fairly clearly.

48. In paragraph 10, the Applicant asserts that the Respondent owed a duty under the DMC, and it was an implied term of the DMC, that the Respondent would:

"(i) manage the development in a proper manner and exercise all due care skill and diligence in the performance of its duties under the DMC" and

"(iii) maintain a proper security system within [the development] to protect all residents".

The Applicant alleges that in breach of that duty and of the implied term, the Respondent has failed to implement a proper security system, which cause(s) of action is/are supported by the allegations pleaded in paragraphs 11-30, except paragraph 11(8).

49. In paragraph 10, the Applicant also asserts that the Respondent owed a duty under the DMC, and it was an implied term of the DMC, that the Respondent would:

"(ii) act in the best interests of all owners of the development in discharge of its duty and must not prefer the interest of one or more owners at the expense of others and put itself in a position which conflicts with the interest of the owners".

The Applicant alleges that in breach of that duty under the DMC, and of the implied term, the Respondent failed to implement a proper security system to save expense for the developer (paragraph 11[8]) and promoted certain candidates in the election of members of the Owners Committee (paragraph 32).

50. There is also an allegation that the Respondent acted outside the ambit of the duty and responsibility of a manager under the DMC in promoting certain candidates only, thereby rendering such acts improper, unlawful and unauthorised (paragraphs 32-3).

51. Two aspects of the Re-Amended Notice of Application require mention. First, as noted above, in alleging that the Respondent owed "a duty under the DMC" in paragraphs 10, 11 and 32, the nature of the duty has not been pleaded. Before this court, Miss Eu SC, leading counsel for the Applicant, submitted that besides a contractual duty, the Respondent also owed a fiduciary duty to the Applicant by reason of being its agent. That may or may not be so, but if a fiduciary duty is to be alleged, it should be clearly pleaded, and in my view, it has not been so pleaded at all. The presiding officer was therefore entitled to construe the reference to a "duty under the DMC" as a contractual duty only.

52. Secondly and perhaps more importantly, in paragraph 11 it has been pleaded that

"In breach of its duty under the DMC and the implied terms under the DMC, the Respondent (i) fails to maintain proper security of the Development for the protection of the residents of the Development; (ii) did not act for the best interest of the owners of the Development in discharge of its duty and preferred the interest of [the developer] at the expense of all other owners; (iii) put itself in a position which conflict with the interest of the owners and (iv) did not manage the Development in a proper manner and exercise all due care, skill and diligence in that:-

...

(8) the Respondent dishonestly and wilfully kept down the management expenses by not installing sufficient securities facilities and deploying sufficient security staff for reason set out in paragraph 27 hereof".

Paragraph 27 pleaded that

"the Respondent had purposely kept down the management expenses by not installing sufficient security facilities and deploying sufficient security staff so as to minimize the liability of [the developer] in fulfilling the collateral warranty".

53. The reference to the Respondent "dishonestly and wilfully" keeping down management expenses was added (with leave from the presiding officer) after the summons to strike-out was issued and during the course of hearing the summons (which took 3 days). The amendment may have been sought in anticipation of clause 43 of the DMC which provided that the Respondent

"shall not be liable to the Owners or any of them ... for or in respect of any act, deed, matter or thing done or omitted ... not being an act or omission involving criminal liability or dishonesty or gross negligence ...".

54. The relief sought were declarations, an injunction and damages to be assessed.

Implied terms of managing "properly" and "with due care" - Decision para. 7

55. In paragraph 7 of the Decision, the presiding officer first considered the implied terms of managing the development "properly" and "with due care" pleaded in paragraphs 10(i) and (iii). He referred to the well-established contractual principle that a term should not be implied if it contradicted an express term.

56. The presiding officer then referred to clause 36(t) of the DMC (which had been pleaded in the Re-Amended Notice of Application), which provided:

"36. ... the Manager shall have full and unrestricted authority to do all such acts and things as may be necessary or expedient for or in connection with the Development and the management thereof including in particular but without in any way limiting the generality of the foregoing: -

............

(t) To provide and maintain as the Manager deems necessary security force, watchmen, porters, caretakers, closed circuit T.V. system and burglar alarms and other security measures in the Development at all times".

57. The presiding officer considered that the Respondent's contractual duty under clause 36(t) was to only provide and maintain such security measures as it "deemed necessary" and it did not specify the standard with which the Respondent had to comply. Therefore, he held, to imply a term that the Respondent would manage the development in a "proper" manner and to maintain a "proper" security system would contradict clause 36(t), which was an express contractual provision. The same reasoning was applied to the implied term that the Respondent would manage the development in a "proper" manner and exercise "due care" in the performance of its duties.

58. With respect to the presiding officer, I do not see any obvious contradiction between the express provisions and the terms sought to be implied. Clause 36 simply gives power to the Respondent to do all things necessary and expedient to manage the development, including the power under sub-clause (t) to provide and maintain such security measures as it deemed necessary. As the presiding officer himself noted, clause 36 was silent as to the standard with which the Respondent should comply when exercising the power given. That does not necessarily lead to any contradiction. The authorization of a person to do an act is not necessarily inconsistent with his being under a duty of care when he does it. He has the power to do what he deems necessary, but when he is considering what is necessary, it is at least arguable that he is under a duty of care when deliberating. The presiding officer was in effect construing clause 36 as exempting the Respondent from obligations to act "properly" or "with due care" when exercising that power.

59. In his written submissions, Mr Paul Lam counsel for the Respondent contended that the words "as deemed necessary" were not subject to "the reasonable businessman's expectation", relying on the judgment of this court (Litton VP, Bokhary JA and Liu JA) in Secan Ltd v AG of Hong Kong [1995] 2 HKLR 523 on the construction of those words. However, it is obvious that words must always be construed in their context. In Secan, the developer was obliged to implement such ameliorative measures regarding environmental problems "as deemed necessary" by the Director of Environmental Protection. It was held that it was entirely within the discretion of the Director what measures to require the developer to take, so long as he was acting in good faith and not capriciously. Those words were set in a completely different context (the owing of an obligation by the developer to the Director cf the giving of a power by the owners to the manager) and I do not think that the cited case is of any assistance here.

60. For the reasons set out above, I take the view that the presiding officer was in error when he held in paragraph 7 of the Decision that there was no room for the implied terms pleaded in paragraphs 10(i) and (iii) as they contradicted clause 36.

61. This was the only ground relied upon by the presiding officer, there was no reference to clause 43 or any of the evidence, and the inference must be that his decision on this aspect was reached only on the ground that no reasonable cause of action had been disclosed in the pleadings.

62. As for the submission by Mr Lam that in any event, this "security" claim should be struck-out because the Applicant has suffered no loss, there has been no Respondent's Notice. Accordingly, as was fairly accepted by Mr Lam, it would not be right for us to deal with this ground.

Implied term of impartiality in respect of security system - Decision para. 8

63. Coming then to the implied term pleaded in paragraph 10(ii), the presiding officer held in paragraph 8 of the Decision that the Re-Amended Notice of Application had failed to plead particulars of the allegation that the Respondent had "dishonestly and wilfully kept down the management expenses". It is apparent from paragraph 8 of the Decision that the decision to strike-out this part of the case was again based on the pleadings alone.

64. Paragraph 11(8) combined with paragraph 27 pleaded that the Respondent had kept down the management expenses so as to minimize the developer's liability in fulfilling the collateral warranty. Miss Eu SC submitted that in addition, the court should take into account the matters pleaded in paragraphs 2 and 2A (i.e. the developer's collateral warranty), paragraphs 11(1) - (8) (i.e. why the existing security measures were regarded as insufficient) and paragraphs 12-27 (i.e. matters after the commencement of proceedings and apparently after the expiry of the collateral warranty), even though these matters had not been pleaded as particulars of dishonesty.

65. The courts have always been cautious in scrutinizing a pleading of dishonesty. Whether or not fraud or a financial motive has been alleged, it remains the most serious type of allegation and it must be sufficiently and properly particularized. It is not only so that the party alleged to be dishonest knows what the accusation is. He is entitled, in my judgment, to clear particulars so that he could determine whether they are sufficient to sustain such a serious allegation and if not, to take steps to remove this serious allegation against him at the earliest opportunity. The fact that proceedings are in the Lands Tribunal does not, in my judgment, reduce the requirement for proper particularisation. An allegation of dishonesty remains a serious allegation in whichever forum it is made and informality is not an excuse for failure to meet the law's standards.

66. In Three Rivers District Council and others v Governor and Company of the Bank of England (No. 3) [2003] 2 AC 1, Lord Millett held (paragraph 184):

"It is well established that fraud or dishonesty ... must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence; see Kerr on Fraud and Mistake, 7th ed (1952), p644; Davy v Garratt (1878) 7 Ch D 473, 489; Bullivant v Attorney General for Victoria [1901] AC 196; Armitage v Nurse [1998] Ch 241, 256. This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so" (emphasis added).

(Paragraph 186)

" ... an allegation of fraud or dishonesty must be sufficiently particularised, and ... particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance".

67. In other words, a plaintiff may ask the court to infer dishonesty from acts allegedly done or omitted by the defendant, but if those acts or omissions are in themselves consistent with something other than dishonesty, such as innocence, or negligence ,or gross negligence, or honest incompetence, then there is not a sufficient particularization of the pleading of dishonesty. The mere addition of the word "dishonestly" does not turn an insufficiently particularised pleading into a sufficiently particularised one (Three Rivers, paragraphs 187-9).

68. In the present case, even if we were to take into account the other matters relied on by the Applicant, I do not consider that there has been a sufficiently particularised pleading of dishonesty. It is not enough for the Applicant to plead that the Respondent had failed to implement "proper" security measures and that in so doing, saved the developer expenses under the collateral warranty. It is not even enough that the saving of expenses may have been one of the purposes of the Respondent's decision not to implement those measures. Other purposes may have been, for instance, to reduce future maintenance fees for all owners.

69. In my view, applying Three Rivers, for a proper pleading of dishonesty, the Applicant would have to plead (with sufficient particulars) that the failure to implement those security measures was for that one purpose only, intending or knowing (or at least being recklessly indifferent to) the loss or damage that would be caused to the other owners by its decision not to implement those measures.

70. The present pleading, in my view, falls short of the requirement of sufficient particulars of dishonesty. No amendments have been suggested in any attempt to cure the insufficiency. Accordingly I take the view that the word "dishonestly" in paragraph 11(8) should remain struck-out.

Allegations in respect of election - Decision paras. 9 and 10

71. Coming then to the section of the Decision entitled "allegations in respect of the Owners Committee election", it would appear from paragraph 9.2 that the presiding officer had taken into account clause 43 of the DMC, which, as noted above, had not been pleaded in the Re-Amended Notice of Application but which had been pleaded in the Notice of Opposition and had been referred to in the evidence adduced before the presiding officer. Further, the presiding officer referred specifically to Order 18 rule 19(1)(b) in paragraph 10. It is therefore fairly clear that this claim (unlike the claims of implied terms of "proper" management and "duty of care", and the pleading of dishonesty) was struck-out on the ground that it was frivolous or vexatious or was an abuse of the process.

72. The Applicant's allegations were that the Respondent had "shown favour" to some candidates by having their staff accompany some candidates on visits to residents, arranging them to sit in the front row of a meeting and asking the developer to vote for them. In paragraph 10 of the Decision, the presiding officer held that in his opinion none of the allegations in paragraph 32 of the Re-Amended Notice of Application could be regarded as "an act or omission involving criminal liability or dishonesty or gross negligence". Consequently, he held, this part of the proceeding was frivolous and vexatious and an abuse of the process.

73. This was an exercise of the presiding officer's discretion, having considered the allegations pleaded (and it not having been suggested by the Applicant that there was anything else in the evidence that would have added to the pleaded allegations). It is well-established that an appellate court can only disturb a judge's exercise of discretion if it could be shown that the judge was under any mistake of law or misapprehension of facts, or had disregarded any principles, or that he had taken into account irrelevant matters or had failed to take into account relevant matters, or that the conclusion he reached was "outside the generous ambit within which a reasonable disagreement is possible". For my part, given the insubstantial nature of the acts pleaded as breaches of the duty of impartiality and the effect of clause 43, I take the view that the presiding officer was entitled to come to the view that this part of the case was frivolous or vexatious and an abuse of the process, and I am not prepared to interfere with the exercise of his discretion.

74. For the reasons set out above, I consider that the Applicant's appeal should only be allowed in part and I would dismiss that part of the appeal in respect of the presiding officer's order that the pleading of "dishonestly" and the pleadings relating to the election claim be struck out.

Hon Cheung JA:

75. The appeal is accordingly allowed (the issues concerning dishonesty and election being allowed by a majority). There shall be a provisional order that the applicant shall have the costs of the appeal and below.