WONG KEUNG AND OTHERS v. CHUNG LAP AND OTHERS

WONG KEUNG AND OTHERS v. CHUNG LAP AND OTHERS

Court held that a majority decision-making rule was an implied term of the Agreement necessary for its efficacy; the shareholders validly removed D1 as chairman but lacked unilateral power under the Agreement to remove trustees; D1 and P1 remained trustees until removed by the court exercising powers under s.42(1) Trustee Ordinance and inherent jurisdiction; D1 was removed as trustee for misconduct (freezing bank accounts and conduct obstructing the scheme) and P3 and P4 were appointed as replacement trustees with vesting orders; D1 liable for breach of trust limited to denial of shareholders' use of bank funds; other misconduct by D1 as chairman not actionable as breach of trusteeship...

Citation
WONG KEUNG AND OTHERS v. CHUNG LAP AND OTHERS
Parties
1st Plaintiff: WONG KEUNG (alias WONG CHI KEUNG); 2nd Plaintiff: CHAN CHEUK TONG; 3rd Plaintiff: LAW YU PING; 4th Plaintiff: CHAN KWONG; 5th Plaintiff: WONG KONG; 6th Plaintiff: CHEUNG KING TAK; 7th Plaintiff: HUNG HIN LUI; 8th Plaintiff: KWOK SUM; 9th Plaintiff: CHUN CHUN CHING; 10th Plaintiff: KWAN PO KAI; 11th Plaintiff: WONG YIU MAN; 12th Plaintiff: TAM CHOK LEUNG; 13th Plaintiff: WONG KUEN; 14th Plaintiff: LEE SHUT YING; 15th Plaintiff: YU CHOI; 16th Plaintiff: NG CHAK; 17th Plaintiff: KWAN PING; 18th Plaintiff: YIP CHOY MING; 19th Plaintiff: CHAN HEI; 20th Plaintiff: LEE YING SI; 1st Defendant: CHUNG LAP; 2nd Defendant (deceased): LEE NGAU; 3rd Defendant (settled/withdrawn): LAM LING; 4th Defendant (settled/withdrawn): LIU CHAI MAN; 5th Defendant (settled/withdrawn): WOO KAI CHUNG
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
11 April 1986
Case Number
HCA8817/1983
Procedural Posture
Civil Trust, Property and Contractual Dispute Arising From a Mutual Aid Housing Scheme / Full Trial Judgment Delivered (trial Heard 1984 and 1986; Judgment Delivered 11 April 1986)
Outcome
Judgment partly for Plaintiffs. D1 removed as trustee; P3 and P4 appointed trustees; declarations and vesting orders granted; limited damages liability for D1 in relation to frozen bank accounts; certain Plaintiff resolutions upheld and certain trustee-removal resolutions held ineffective but superseded by court...
Legal Topics
Majority Rule and Implied Terms, Removal and Appointment of Trustees, Breach of Trust (freezing Bank Accounts), Authority to Operate Bank Accounts, Vesting Orders, Resignation of Trustees, Agency Vs Trusteeship, Selection of Contractors and Conflict of Interest
Source Language
EN
Trusts Equity Contract Law Property Law Civil Procedure Company/association Law Majority Rule and Implied Terms Removal and Appointment of Trustees +6 more

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Parties

WONG KEUNG (alias WONG CHI KEUNG)

1st Plaintiff

CHAN CHEUK TONG

2nd Plaintiff

LAW YU PING

3rd Plaintiff

CHAN KWONG

4th Plaintiff

WONG KONG

5th Plaintiff

CHEUNG KING TAK

6th Plaintiff

HUNG HIN LUI

7th Plaintiff

KWOK SUM

8th Plaintiff

CHUN CHUN CHING

9th Plaintiff

KWAN PO KAI

10th Plaintiff

WONG YIU MAN

11th Plaintiff

TAM CHOK LEUNG

12th Plaintiff

WONG KUEN

13th Plaintiff

LEE SHUT YING

14th Plaintiff

YU CHOI

15th Plaintiff

NG CHAK

16th Plaintiff

KWAN PING

17th Plaintiff

YIP CHOY MING

18th Plaintiff

CHAN HEI

19th Plaintiff

LEE YING SI

20th Plaintiff

CHUNG LAP

1st Defendant

LEE NGAU

2nd Defendant (deceased)

LAM LING

3rd Defendant (settled/withdrawn)

LIU CHAI MAN

4th Defendant (settled/withdrawn)

WOO KAI CHUNG

5th Defendant (settled/withdrawn)

Procedural Posture

Civil Trust, Property and Contractual Dispute Arising From a Mutual Aid Housing Scheme / Full Trial Judgment Delivered (trial Heard 1984 and 1986; Judgment Delivered 11 April 1986)

Legal Issues

  1. 1 Whether a majority rule was an implied term of the Agreement
  2. 2 Whether the chairman (D1) could be removed by majority and whether removal complied with natural justice
  3. 3 Whether D1 and P1 validly ceased to be trustees or whether court intervention was required to remove/appoint trustees

Ratio Decidendi

Court held that a majority decision-making rule was an implied term of the Agreement necessary for its efficacy; the shareholders validly removed D1 as chairman but lacked unilateral power under the Agreement to remove trustees; D1 and P1 remained trustees until removed by the court exercising powers under s.42(1) Trustee Ordinance and inherent jurisdiction; D1 was removed as trustee for misconduct (freezing bank accounts and conduct obstructing the scheme) and P3 and P4 were appointed as replacement trustees with vesting orders; D1 liable for breach of trust limited to denial of shareholders' use of bank funds; other misconduct by D1 as chairman not actionable as breach of trusteeship...

Court Disposition

Judgment partly for Plaintiffs. D1 removed as trustee; P3 and P4 appointed trustees; declarations and vesting orders granted; limited damages liability for D1 in relation to frozen bank accounts; certain Plaintiff resolutions upheld and certain trustee-removal resolutions held ineffective but superseded by court...

Orders

  • Declaration: majority of members at general meetings were not entitled to remove D1 as trustee
  • Declaration: majority of members at general meetings were entitled to remove D1 as Chairman