TONG CUN MING AND OTHERS v. CHEUNG SUN LING SANNY, the Administratrix of the Estate of KWAN YAU HANG, deceased AND OTHERS

bjbj TIN HO 4th Plaintiff and CHEUNG SUN LING SANNY, the Administratrix of the Estate of KWAN YAU HANG, deceased 1st Defendant LUK YAU TONG 2nd Defendant (otherwise known as LUK NGAI) TANG SIU BING 3rd Defendant CHAN JOY SING 4th Defendant CHAN WING CHEUNG STEPHEN 5th Defendant KAM LAN KOON THE MATTER of the Councillors Resolution of 17th March 2011 and IN THE MATTER of the Members Resolution of 20th March 2011 and IN THE MATTER of the 5 Chairpersons Resolution of 30th April 2011 and IN THE MATTER of the Members Resolution of 8th May 2011 extending the appointment of the 17 Councillors for an indefinite term and IN THE MATTER of the refusal of the 5 Chairpersons of 8th May 2011 to table a proposal of a member of the Company for consideration of members in AGM and, if they consider desirable, to pass the same as a Special Resolution of Members ____________ BETWEEN LAU MAN WAI JOSEPH 1st Plaintiff CHAN CHUNG MOU PHILIP 2nd Plaintiff LI TZE PING PHILIP 3rd Plaintiff CHEUNG CHI KIN KENNETH 4th Plaintiff LAW CHEUNG KEUNG 5th Plaintiff KONG WAI 6th Plaintiff WONG MAN SHUN 7th Plaintiff CHUN KIN MAN 8th Plaintiff YEUNG TAK MING 9th Plaintiff PUN WAI FUN 10th Plaintiff FUNG SHUK YEE 11th Plaintiff KWOK TIN HO 12th Plaintiff LAI PUI KI 13th Plaintiff CHAN MANG WA 14th Plaintiff CHAN HOK WING 15th Plaintiff LEUNG WING SZE WINS 16th Plaintiff KONG YIN PING 17th Plaintiff SIU KA CHIU 18th Plaintiff WONG CHEUNG HEI 19th Plaintiff HUI WAI KEUNG 20th Plaintiff and CHEUNG SUN LING SANNY, the Administratrix of the Estate of KWAN YAU HANG, deceased 1st Defendant LUK YAU TONG 2nd Defendant (otherwise known as LUK NGAI) TANG SIU BING 3rd Defendant CHAN JOY SING 4th Defendant CHAN WING CHEUNG STEPHEN 5th Defendant KAM LAN KOON ( guarantee without a share capital ( the Company ) and IN THE MATTER of the Councillors Resolution of unknown date appointing one Cheng Chung Chin as the Honorary Legal Advisor of the Company and IN THE MATTER of the Councillors Resolution of 15th October 2011 purporting to remove the 1st 22nd Plaintiffs from membership of the Company and IN THE MATTER of Order 120 of the Rules of the High Court, Cap 4A and IN THE MATTER of the inherent jurisdiction of the Court ____________ BETWEEN LAU MAN WAI JOSEPH 1st Plaintiff CHAN CHUNG MOU PHILIP 2nd Plaintiff LI TZE PING PHILIP 3rd Plaintiff CHEUNG CHI KIN KENNETH 4th Plaintiff LAW CHEUNG KEUNG 5th Plaintiff KONG WAI 6th Plaintiff WONG MAN SHUN 7th Plaintiff CHUN KIN MAN 8th Plaintiff YEUNG TAK MING 9th Plaintiff PUN WAI FUN 10th Plaintiff FUNG SHUK YEE 11th Plaintiff KWOK TIN HO 12th Plaintiff LAI PUI KI 13th Plaintiff CHAN MANG WA 14th Plaintiff CHAN HOK WING 15th Plaintiff LEUNG WING SZE WINS 16th Plaintiff KONG YIN PING 17th Plaintiff SIU KA CHIU 18th Plaintiff WONG CHEUNG HEI 19th Plaintiff HUI WAI KEUNG 20th Plaintiff TONG CUN MING 21st Plaintiff CHONG KAI MAN 22nd Plaintiff and CHEUNG SUN LING SANNY, the Administratrix of the Estate of KWAN YAU HANG, deceased 1st Defendant LUK YAU TONG 2nd Defendant (otherwise known as LUK NGAI) TANG SIU BING 3rd Defendant CHAN JOY SING 4th Defendant CHAN WING CHEUNG STEPHEN 5th Defendant CHAN CHOR KUEN DIANA 6th Defendant LIU SUET MUI 7th Defendant CHU SIU WING SAMMY 8th Defendant SECRETARY FOR JUSTICE 17th Defendant ____________ (Heard together) Before: Hon Lok J in Chambers Dates of Hearing: 4 & 5 July 2017 Dates of Further Written Submissions: 30 August 2017, 25 & 27 September 2017, 18 October 2017, 11, 18 & 19 September 2018 Date of Decision: 29 September 2022 __________________ DECISION __________________ These cases have a chequered history. There was serious dispute between the members of a Taoist institution known as Kam Lan Koon t of the affairs of the Koon. The factual background of these cases has been set out in my Judgment on Preliminary Issues dated 2 September 2015 ( the 2015 Judgment ) and I do not want to repeat the same here. For the purpose of this Decision, I will adopt the same abbreviations that I used in the 2015 Judgment. After the handing down of the 2015 Judgment, the Traditionalists Camp lodged an appeal against such Judgment. The Traditionalists Camp also took out summonses in each action to strike out the claims of the Reformists Camp on the grounds that, inter alia: (i) the Plaintiffs in these actions (being members of the Reformists Camp) do not have locus standi to bring the claims against the Koon and the members of the Traditionalists Camps; and (ii) the claims in these actions should be struck out because they are not properly constituted as derivative actions. In the appeal, I understand that the Traditionalists Camp also sought to challenge the 2015 Judgment on the ground of lack of locus standi. The striking out summonses came before me for argument on 4 and 5 July 2017. By that time, the Court of Appeal had dismissed the appeal against the 2015 Judgment with reasons to be handed down at a later date. In the Reasons for Judgment handed down on 28 July 2017, the Court of Appeal had made it clear that they would not entertain the challenge of the Traditionalists Camp on the lack of locus, and they would leave the matter to be considered by me in the striking out applications. In view of the dismissal of the appeal, the parties agreed that the claims in the Resolutions Action (HCMP 1013/2011) and the Membership Action (HCMP 2477/2011) became academic. The Koon would then convene meetings and conduct the affairs giving effect to the rulings in the 2015 Judgment in respect of the Resolution Action and the Membership Action. The parties also agreed for the Plaintiffs to discontinue the claims in these two actions with the question of costs to be argued later. The Reformists Camp also sought to discontinue the Better Administration Action (HCMP 143/2011). But in view of the outstanding striking out summons on the lack of locus in commencing better administration proceedings, the parties require this court to determine the merits of the striking out application which may have an implication in the arguments on costs later. The question that I have to decide is whether the Plaintiffs in the Better Administration Action has the locus to bring the claim against the 5 Chairpersons, the Koon and the Secretary for Justice ( ) claiming for, inter alia: (i) a declaration that the Koon was a charity in the legal sense and there be a better administration order for the operation of the Koon; (ii) an order that the 5 Chairpersons be removed as councillors of the Koon by reason of their misconduct and mismanagement of the Koon; and (iii) an order that that there be proper election of the councillors of the Koon in accordance with the provisions in the Memorandum and Articles of the Koon. The SJ did not appear in the hearing. However, the court was of the view that the SJ should make submissions on the question as to whether there are any other persons apart from the SJ who have the locus to ask the court to invoke the parens patriae jurisdiction over charities. The SJ made such written submissions on 30 August 2017 and the other parties made their written submissions in response on 25 and 27 September and 18 October 2017. Sometime in 2018, the court came to know that the Court of Appeal had handed down an important ions in light of this new authority. The parties therefore made further written submissions pursuant to the directions of the court. Unfortunately, after the filing of these submissions, the file was left unattended for a considerable period of time and the outstanding decision only came to the attention of the court recently. That explains the delay in the handing down of this Decision. The ong ( ) which held and managed a Buddhist temple called Chuk Lam Sim Yuen ( the Temple ). He commenced proceedings by way of originating summons against the SJ, the Secretary for Home Affairs ( ), and the manageresses of MWT claiming for the following relief: intervention by the SJ in its capacity as parens patriae (protector of charities); authorisation in writing by the SHA, pursuant to the Chinese Temples Ordinance (Cap 153) ( ), of an appropriate person to enter the Temple and investigate if there was evidence of contravention of the CTO; and restructuring of the Tong into a company limited by guarantee under the Companies Ordinance (Cap 622) to which assets under the Trust should be transferred on a cy-pr s principles and to which professional persons, holders of public office and respected members of society should be appointed as directors. The managers of MWT issued a summons to strike out the originating summons on the ground that the applicant did not have the locus to commence the proceedings. Lisa Wong J ruled in favour of MWT and the applicant appealed to the Court of Appeal. According to the Court of Appeal, the crucial issue in the striking out application was whether the applicant could be regarded as a person otherwise interested in the trust within the meaning of s 57A(a)(iii) of the Trustee Ordinance (Cap 29). S 57A is a provision about proceedings relating to the administration of charitable trusts. In considering the appeal, the Court of Appeal examined the statutory scheme for the supervision of charities in England under the Charities Act 1960 and observed that there was inadequacy in term of public supervision and accountability for charities in Hong Kong. In England, there were a body of Charity Commissioners responsible for supervising the proper administration of charities. In contrast, Hong Kong does not even have any charities legislation, and it has to rely on the SJ as parens patriae to police abuses in charities. Due to lack of funds or lack of interests, the SJ tends to take out enforcement actions infrequently and arbitrarily, and the legitimately interested parties may be put in difficult positions when they seek to prevent abuses in charities. The Court of Appeal also expressed dissatisfaction that no follow up actions had been taken after the publication of the Report of the Law Reform Commission on Charities in December 2013. Against such background, the Court of Appeal was of the view that the expression persons otherwise interested in the trust in s 57A(a)(iii) should not be construed too narrowly. The Court approved the dicta of Nicholls LJ in Re Hampton Fuel Allotment Charity and held that if a person has an interest in securing the due administration of a charitable trust greater than those of ordinary members of the public, he or she may be qualified as a person interested . The Court of Appeal held that the judge below had not fully considered the applicant s interest in securing the due administration of the Temple and so it remitted the case back to the court below for reconsideration. Cheung JA even went further and observed that, by reason of the various factors identified in 52 of the Judgment, the applicant appeared to be someone who had an interest materially greater than or different from those possessed by ordinary members of the public which might qualify him to bring the proceedings. The Traditionalists Camp argue that the dicta of the Court of Appeal in the the latter, managerial decision is a matter for the board of the incorporated company and the court should be reluctant to override rules applicable to corporations generally. Further, Mr Chan, SC, counsel for the Traditionalists Camp and the Koon, argues that the only legislations in Hong Kong dealing with the management of charities are the Trustee Ordinance and Order 120 of the RHC. As there is no primary legislation governing who has the right to invoke the court s inherent jurisdiction to intervene in the management of charitable corporations (as opposed to charitable trusts), only the SJ or person with the consent of the SJ has the right to ask the court to invoke such jurisdiction in the case of charitable corporations. According to Mr Chan, the role of the SJ is to act as a protector of public interest. Relying on cases such as Gouriet v Union of Post Office Workers and Attorney General ex rel. Mcwhirter v Independent Broadcasting Authority , Mr Chan submits that the proper plaintiff for enforcing a public right should be the Attorney General or now the SJ. A private individual who did not suffer damage beyond that suffered by the public at large may seek to enforce a public right only through relator proceedings. The individual can relate the action to the SJ who may then bring an action to assert the said public right. Such restriction serves as a safeguard against multiplicity of proceedings and interference by members of the public nosing into the affairs of others. Further, it prevents charities from flittering away money subject to charitable trusts in pursuing litigation in relation to internal disputes. Mr Chan therefore submits that in order for private individuals to seek better administration of a charity, they can only do so by one of the following options: through the SJ by relator proceedings; in accordance with any legislation that provides them with a right to do so (such as s 57A of the Trustee Ordinance); or establishing a cause of action against the charity of an infringement of their private rights, or establishing any damages suffered due to the charity s infringement of public right beyond those suffered by the public generally. As the Plaintiffs claim in the Better Administration Action does not fall within any of these categories, the claim should be struck out. I disagree. Charitable organisations in Hong Kong are usually operated in one of the following forms: a company which may be limited by shares or by guarantee, or an overseas company; an unincorporated association which may or may not be required to be registered under the Societies Ordinance (Cap 151); a trust; or a statutory body established under a specific Hong Kong Ordinance. The parens patriae jurisdiction over charities is an inherent jurisdiction of the court with the object of preventing abuses in the operation of charities. Such jurisdiction covers all charities including charitable corporation which does not depend on their assets being held subject to charitable trusts. In fact, according to History of the Law of Charities 1532-1827 Jones , it is clear that the courts in England have exercised inherent jurisdiction over charities since the earliest of time. From 1532 onwards, bills or petitions were used to enforce charitable uses, and such petitions included applications to correct maladministration of charitable funds. The petitions were often made by private individuals with some interests in the success of their petitions, and it was not just the government (or the Crown in England) which possessed the right to invoke the parens patriae jurisdiction of the court over charities. However, the law in England was subsequently amended with the introduction of Charity Commissioners. With such public guardians, there may be some justification to restrict the right of ordinary members of the public to invoke the parens patriae jurisdiction of the court. As observed by the Court of Appeal in the atriae jurisdiction is to prevent abuses in charities, there is no reason to disallow interested persons to invoke such jurisdiction of the court in appropriate cases. In fact, there seemed to be the position of the common law before the introduction of charities legislations in England. In Ware v Cumberlege , Sir John Romilly MR observed that it was impossible to lay down hard and fast rule as to who might be the proper plaintiff to bring a claim relating to charities. However, it was contemplated in that case persons other than the Attorney General (SJ in Hong Kong) might bring claims, as the judge discussed the necessity of joining the Attorney General as a party to the litigation depending on the nature of the claims. Further, it would be absurd to suggest that there would be two thresholds for invoking the parens patriae jurisdiction of the court over charities: person interested would have the right to ask the court to intervene in the case of charitable trust within the meaning of s 57A, while the bout the inadequacy of the law in Hong Kong in term of public supervision and accountability for charities and the unsuitability of the SJ as the sole guardian for proper operation of charities, I am of the view that the dicta of the Court of Appeal is also applicable in considering the locus of an applicant who seeks to invoke the parens patriae jurisdiction of the court over other forms of charities. In fact, the distinction between a charitable trust and other forms of charity may be blurred at times. The public may be making donations to a charitable corporation. Though the charity is operated by way of a corporation, it may also involve a charitable trust as the donations may be made for a particular cause. In the present case, the parties agreed at the outset of the proceedings that the Koon is not a charitable trust. However, it does not make a lot of sense that the exercise of the court s parens patriae jurisdiction depends on these fine distinctions. As demonstrated by the facts in the uctant to intervene unless there is clear evidence supporting the allegations of the complainants. Under such circumstances, restricting the right of interested persons to invoke the court s parens patriae jurisdiction would defeat the very object of the jurisdiction. As such kind of proceedings involve the parens patriae jurisdiction over charities and the Plaintiffs are not trying to protect their own private rights, the company law concept of proper derivative action is not applicable in considering the locus of the Plaintiffs. After all, they are asking the court to grant a better administration order which is a relief unique to charities proceedings and not a relief for mismanagement under the company law. Further, Lam VP (as then was) observed in Secretary for Justice v Joseph Lo Kin Ching that the court s inherent jurisdiction may in appropriate cases override the rules applicable to corporations. Nevertheless, whether the court should invoke such power would have to be considered on a case by case basis . Hence, it is beyond doubt that the court s inherent jurisdiction extends to charitable corporations. There is a faint suggestion by Mr Chan that Order 120 of the RHC provides the only means by which applications concerning charities may be made to the court. I do not propose to deal with such argument in great details here. It suffices for me to say that such procedural rules do not by themselves confer any new jurisdiction or power on the court, but merely provide a summary and less expensive procedure for the exercise of the court existing jurisdiction over charities. Such procedural rules do not and could not have been intended to curtail or restrict the scope of the court s inherent jurisdiction in general covering, inter alia, charitable corporations. Nor do such procedural rules have the effect of restricting the persons who may (as a matter of general law) otherwise be entitled to invoke the court s inherent jurisdiction over charities. For the above reasons, I agree with Mr Chain and Ms Tong, counsel for the Reformists Camp and the SJ, that as a matter of common sense, and taking into account the nature of the court s inherent jurisdiction, the historical development with regard to the exercise of such jurisdiction and the dicta of the Court of Appeal in the the her the Plaintiffs have the right to commence the Better Administration Action? The court should therefore apply the aforesaid principles in considering whether the Plaintiffs have the locus to commence the Better Administration Action. Following the rulings made in the 2015 Judgment (in particular about the legal effect of the Termination Resolution), it is now common ground that: all the Plaintiffs in the Better Administration are and were at all material time members of the Koon; the 2nd to 4th Plaintiff gdW2 gdW2 gdW2 gdW2 gdW2 heY# gdW2 gdW2 gdW2 gdW2 gddt gddt }titititi gddt gd~? gdF9 gdF9 wi]L] ug\XTg hb0J hb0J hb0J qmiaiqY hx hb0J hb0J hb0J hb0J hb0J hb0J hb0J h64A gd:) gd=TB gd_6 h64A h?xM h?xM h?xM h?xM h?xM h64A wpld h64A h?xM h?xM |tlt` h64A h64A h=TB h=TB h=TB gdf^3 gdg` u}u}u s were at all material time members of the Executive Committee of the Koon and were involved in the decision making process or the execution of the decision of the Board of Councillors for the management of the business and affairs of the Koon; and the Plaintiffs (in particular the 1st Plaintiff) had made significant donations to the Koon. Unlike the applicant in the As they are and were members of the Koon, they certainly have a legitimate interest in ensuring that the Koon, which the parties agree is a charity, is administrated properly giving effect to the object of the Koon and not to break any law in its operation. Further, some of the Plaintiffs were members of the Executive Committee and they were clearly persons involved in the administration of the Koon. It is simply absurd to suggest that they do not have the locus to bring better administration proceedings the object of which is to secure the due administration of the Koon as a charity. Furthermore, some of the Plaintiffs have made substantial donations to the Koon to promote its cause. The Plaintiffs position is certainly very different from those who just make modest donations to a charity on a flag day. In my judgment, they have an undeniable interest to ensure that the Koon is properly administered. For the above reasons, I find that the Plaintiffs do have the locus to commence the Better Administration Action claiming for the relief stated in the pleading. Whether the court should grant such relief is a different question which has to be properly investigated at the trial. I therefore dismiss the striking out application. I also make a costs order nisi that the 2nd to the 6th Defendants do pay the costs of the Plaintiffs and the 7th Defendant in respect of the striking out application, which shall be made absolute 21 days after the date of the handing down of this Decision. (David Lok) Judge of the Court of First Instance High Court Mr Benjamin Chain, instructed by Kenneth C. C. Man & Co., for the Plaintiffs in HCMP 143/2011, HCMP 1013/2011 and HCMP 2477/2011 Mr Edward Chan, SC and Mr Kwok Kam Kwan, instructed by Johnnie Yam, Jacky Lee & Co., for the 2nd to 6th Defendants in HCMP 143/2011 and HCMP 1013/2011 and the 2nd to 16th Defendants in HCMP 2477/2011 Ms Sara Tong, instructed by the Department of Justice, for the 7th defendant in HCMP 143/2011 and 17th defendant in HCMP 2477/2011 (for making the written submissions) Mr Aaron Tam, Government Counsel of the Department of Justice, for the 7th defendant in HCMP 143/2011 and 17th defendant in HCMP 2477/2011 (for the hearings on 4 & 5 July 2017) [2018] HKCA 488 [1989] Ch 484 [1978] AC 435 [1973] QB 629 Hong Kong Housing Services for Refugees Ltd v Secretary for Justice [1999] 4 HKC 292, per Ribeiro J (as he then was) at p 301C-H, Secretary for Justice v Joseph Lo Kin Ching, unreported, CACV 44/2013 (11 April 2014), per Lam VP (as he then was) at 10, Picarda: The Law and Practice Relating to Charities (4ed), p 729, Tudor on Charities (10ed) at 16-001 pp 7-8 see also another account of the history of the jurisdiction in Tudor on Charities, supra, at 16-002 to 16-004 [1855] 20 Beav 503, p 511 see also Picarda: The Law and Practice Relating to Charities, supra, pp 924-926, Tudor on Charities, supra, 13-024 to 13-025 supra, at 15 PAGE - A B C D E F G H I JE h6*e h6*e h64A hf^3 hf^3 hf^3 hf^3 gdf^3 ~tpkp K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V A B C D E F G H I J K L M N O P Q R S T U V [Content_Types].xml _rels/.rels theme/theme/themeManager.xml K Y, sQ}# theme/theme/theme1.xml $O}) Xp90 +PHI| PP yu 9xu5 fs+W VF7H q=. 8}d- qyI@ j!Q_ jyV` |PZ+ T ""p < 4V O&x$ A8>v ;EUC n 8r *~P(5 .}x E /,EE\} theme/theme/_rels/themeManager.xml.rels 5 6?$Q K(M&$R(.1 [Content_Types].xmlPK _rels/.relsPK theme/theme/themeManager.xmlPK theme/theme/theme1.xmlPK theme/theme/_rels/themeManager.xml.relsPK <?xml version="1.0" encoding="UTF-8" standalone="yes"?> <a:clrMap xmlns:a="http://schemas.openxmlformats.org/drawingml/2006/main" bg1="lt1" tx1="dk1" bg2="lt2" tx2="dk2" accent1="accent1" accent2="accent2" accent3="accent3" accent4="accent4" accent5="accent5" accent6="accent6" hlink="hlink" folHlink="folHlink"/> TUCR 5FFF RRIj^ eryjP q(P|C eryj RRIj VP,0 JDOf Judiciary Carlson-HCMC.dot Windows User Microsoft Office Word Judiciary Hong Kong Title <?xml version="1.0" encoding="UTF-8" standalone="no"?><b:Sources SelectedStyle="\APA.XSL" StyleName="APA" xmlns:b="http://schemas.openxmlformats.org/officeDocument/2006/bibliography" xmlns="http://schemas.openxmlformats.org/officeDocument/2006/bibliography"></b:Sources> <?xml version="1.0" encoding="UTF-8" standalone="no"?> <ds:datastoreItem ds:itemID="{6039A466-E510-44F7-83FF-9C051511407F}" xmlns:ds="http://schemas.openxmlformats.org/officeDocument/2006/customXml"><ds:schemaRefs><ds:schemaRef ds:uri="http://schemas.openxmlformats.org/officeDocument/2006/bibliography"/></ds:schemaRefs></ds:datastoreItem> Microsoft Word 97-2003 Document MSWordDoc Word.Document.8