Tsung Tsin Association and Another v. Lai Kwok Wai and Others

CAMP 170/2022

[2022] HKCA 1409

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 170 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO. 516 OF 2021)

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Before :  Hon Cheung and Chu JJA in Court

Date of Hearing :  6 September 2022

Date of Decision :  6 September 2022

Date of Reasons for Decision :  22 September 2022

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REASONS FOR DECISION

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Hon Cheung JA (giving Reasons for Decision of the Court) :

I.  Introduction

1.This is the renewed application by the plaintiffs for leave to appeal against the decision of Deputy High Court Judge Le Pichon (‘the Judge’) dated 22 March 2022. The Judge refused to grant an interlocutory injunction to the plaintiffs and discharged the interim injunction granted ex parte by Au‑Yeung J dated 9 April 2021. On 12 May 2022, the Judge refused to grant leave for the plaintiffs to appeal against the Decision (‘the Leave Decision’).

2.The plaintiffs after obtaining the interim injunction had withdrawn their case against the 2^nd defendant. Originally, their application for leave was directed against the 1^st, 3^rd and 4^th defendants. Recently, the plaintiffs and the 3^rd defendant reached an agreement and the plaintiffs withdrew their application against the 3^rd defendant. Hence, the hearing was only concerned with the 1^st and 4^th defendants. We refused to grant leave at the conclusion of the hearing and will now give our reasons for decision.

II.  Background

3.The background of the case is set out in the detailed decision of the Judge. It is not necessary to repeat them, except to state the following.

4.The 1^st plaintiff is the grantee of a government land (‘the Lot’) on which Tsung Tsin Middle School (‘the School’) is erected. The 1^st plaintiff was approved as the sponsoring body of the School by the Education Bureau on 15 October 2001.

5.The 4^th defendant was registered as a charity on 15 February 1993 and has operated the School since its incorporation.

6.The 1^st and 2^nd defendants were the appointed members of the 36^th Executive Committee and Executive Standing Committee (‘ESC’) of the 1^st plaintiff. The 1^st defendant was also registered as a manager of the School on 20 February 2019 by the Permanent Secretary for Education (‘PSE’).

7.At an Extraordinary General Meeting held on 22 May 2018, the 36^th EC of the 1^st plaintiff was replaced by the elected 37^th EC. The 2^nd plaintiff and the 3^rd defendant were elected as the Chairman and Vice‑Chairman of the 37^th EC of the 1^st plaintiff. The 36^th EC handed over all books, records and assets of the 1^st plaintiff to the 37^th ESC on 20 January 2020.

8.There were disputes between the plaintiffs on the one hand and the 1^st and 4^th defendants on the other hand about, inter alia, the management of the School, namely, whether the 4^th defendant was entitled to hand over the management and operation of the School to Starlight 88 Limited (‘Starlight’), an education institution, under a Management Agreement entered between the 4^th defendant and Starlight; whether the 1^st defendant and other members of the School management committee (being members of the 36^th EC) had been replaced and whether the 4^th defendant’s then existing directors had been dismissed and replaced.

9.The event that precipitated the proceedings was the demands by the plaintiffs to the defendants to hand over the management of the School to them. The 2^nd plaintiff and others visited the School twice in order to ‘take over’ the School but was refused entry by the 4^th defendant’s employee. Injunction was then sought by the plaintiffs. Au‑Yeung J ordered :

1)  The defendants be restrained from interfering with the 1^st plaintiff’s use, occupation and enjoyment of the Lot and the School Premises, and/or causing nuisance to the 1^st plaintiff in respect of its use, occupation and enjoyment of the Lot and the School Premises by any means, including (but not limited to) preventing access by the plaintiffs, to the Lot and the School Premises.

2)  The 4^th defendant shall provide copies of the books and accounts of the School for four years from 29 March 2017 to 28 March 2020 to the plaintiffs’ solicitors within 28 days hereof.

III.  Decision of the Judge

10.It is important to bear in mind the causes of action relied upon by the plaintiffs for the injunction, namely, trespass and nuisance. However, the only pleaded cause of action is trespass. The plaintiff had acknowledged before the Judge that the issues concerning the identity of the managers and members of the management committee of the School are controversial and these matters could not be decided at that hearing.

11.The Judge held that the plaintiffs have not shown that there is a serious issue to be tried based on trespass and nuisance :

‘ 76. In so far as P1 is grantee of the Lot, as is common ground, P1 holds it as a trustee in furtherance for the specified charitable purpose of maintaining a school on the Lot. Unlike a private owner, P1 does not have an absolute right to enter the Lot.

77. The evidence is that since its incorporation D4 has been entrusted with the management of the School erected on the Lot. As at 31 December 2021, D4 is shown as a charitable institution of a public character exempt from tax under section 88 of the Inland Revenue Ordinance with the School listed as its subsidiary. The evidence shows that, currently, there is a functioning school operating on the Lot.

78. Incidentally, as D4’s accounts are subject to the Revenue’s scrutiny, the basis for the plaintiffs’ allegations that D1 through D4 has misappropriated funds for purposes other than for the benefit of the School is unclear.

79. The plaintiffs’ pleaded cause of action is in trespass. It is therefore incumbent on the plaintiffs to show that D1 and D4 are not entitled to be on the Lot. On the facts presented, at the very least, the defendants must have a contractual license to occupy the Lot and until that license is legitimately terminated, they cannot be considered trespassers with no right to be on the Lot.

80. That notwithstanding, the plaintiffs continue to maintain that denial of entry to P1 amounts to an act of trespass but have cited no authority in support of the proposition that a mere denial of entry to the grantee of land by someone entitled to be in possession can amount to trespass. But as occupiers entitled to possession of the School, D1 and D4 must be entitled to refuse entry to persons who have no legitimate reason to visit the School.

......

83. P2 is not the grantee of the Lot and, in any event, what is stated in §§76-80 would apply. Even if (contrary to my view) P1 has any right of access, for my part, until the doubts concerning P2’s appointment as supervisor have been removed, it would not be “just and convenient” for this court to entertain access by P2 under the guise of representing P1.

84. That D4 is a separate and independent entity and a registered charity is clear. There is nothing in its Articles to show that its powers of management over the School are subject to P1’s overriding control. Rather, like P1, it is subject to the statutory scheme and the oversight powers of the PSE/EDB.’

12.The Judge held that it is not relevant to consider nuisance as it was not pleaded.

13.The Judge further held that even if there is a serious question to be tried, the balance of convenience lies in refusing the Injunction sought.

14.On the basis of the 1^st and 4^th defendants continuing with their undertakings not to part with any of the assets, books and accounts of the School, the Judge refused to grant the injunction and discharged the interim injunction against the defendants.

IV.  Intended grounds of appeal

15.The intended grounds of appeal are as follows :

1)  The Judge erred in law in finding (absent any factual or legal basis to do so) that there is no serious issue to be tried (‘Ground 1’);

2)  The finding of contractual licence does not deny the plaintiffs’ right of entry (‘Ground 2’); and

3)  The balance of convenience lies in favour of the continuation of the Injunction (‘Ground 3’).

V.  Our view

1)  Principles

16.For leave to appeal to be granted, the Court must be satisfied that the intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard.

17.The grant or continuation of an interlocutory injunction is an exercise of discretion of the Court. The well‑established principle is that the appeal court is not to exercise an independent discretion of its own. Its initial function is one of review only. It may set aside the judge’s exercise of discretion only if it can be shown that the judge was plainly wrong in the sense that, for example, he had acted on wrong principles, taken into consideration irrelevant factors, ignored relevant factors or the decision is outside the generous ambit within which reasonable disagreement is possible.

2)  Serious question to be tried

18.On the issue of a serious question to be tried, the authorities show that the prospect of the plaintiff’s success is to be investigated to a limited extent, it is not a very steep hurdle and so long as there is a serious issue it matters not the Court thinks that the plaintiff’s chance of success at trial is 90% or 20% : Hong Kong Civil Procedure 2022 vol 1 para 29/1/10. Trespass is committed where there is unjustifiable intrusion by a person on another person’s land. Although there is no issue in this case of ‘unjustifiable intrusion’ as the 4^th defendant has been operating the School on the Lot since 1993, the relevant serious question is whether the defendants have the right to deny the plaintiffs from entering the School bearing in mind the status of the plaintiffs in respect of the Lot and the School.

19.What the Judge held at the last sentence [80] of her Decision assumes that the denial of entry can be resolved in the defendants’ favour at this interlocutory stage, but the Court has yet to consider and resolve the other interwinning disputes concerning the management of the School. In our respectful view, there is, at least in the case of the 1^st plaintiff, a serious question to be tried as to whether denial of entry to it amounts to an act of trespass.

3)  Balance of convenience

20.The real hurdle faced by the plaintiffs is on the issue of balance of convenience. Before the Judge, the plaintiffs stated their entry to the School is necessary to carry out three purposes : a) to inspect the facilities and see how they have been managed by Starlight; b) to investigate the dealings between Starlight, and the 1^st defendant and 4^th defendant; and c) for the 2^nd plaintiff to assume the management role as Chairman of the 1^st plaintiff and as supervisor of the School.

21.Mr Sunny Chan and Mr Samkei Chan for the plaintiffs submitted that the 1^st plaintiff, as grantee of the Lot, has a mandate to ensure that the Lot is used for educational purposes and in order to carry out that mandate, an investigation for the purposes has to be carried out, hence access is necessary. Mr Sunny Chan also submitted before us the plaintiffs need to see if the renovation of the School had been carried out by Starlight under the Management Agreement.

22.The Judge addressed these purposes :

‘ 71. ..... it is not evident how purposes a) and b) above of the contemplated investigation can be accomplished through gaining physical entry to the School. Further, purpose c) would literally drive a coach and six through the plaintiffs’ avowed position that the court is not being asked to adjudicate on the controversial matters mentioned in [66] above.

72. Moreover, it does not necessarily follow from the fact that there are matters that merit investigation that the plaintiffs and/or the 1^st plaintiff are/is entitled to conduct that investigation.

73. Purposes a) and b) relate to the scope of the 4^th defendant’s powers under its Articles. Prima facie, it is an internal matter to be resolved within the framework of the 4^th defendant’s Articles.’

23.In [66] and [67], the Judge stated :

‘ 66. As matters stand, P2’s appointment as supervisor (and manager) of the School, D1’s removal as a manager and his expulsion as a member of P1 are disputed issues that can only be resolved at trial.

67. At the hearing, Mr Sunny Chan, counsel for the plaintiffs, acknowledged that issues concerning the identity of the current managers (and hence members of the management committee of the School) are controversial and that this hearing is not the occasion for deciding those matters.’

24.The Judge concluded on the issue on balance of convenience as follows :

‘ 90. The paramount consideration must be to ensure that the School should continue to function without disruption or interference. At stake is the education of its students. The undertakings presently offered by the plaintiffs do little to assuage concerns of incidents erupting in the future as past incidents bear traits of highhandedness. Given the fraught relationship between the parties, little will be required to spark off another incident especially since the plaintiffs now seek unrestricted access and without prior notice.’

25.In our view, the Judge had fully dealt with the matter.

26.The plaintiffs submitted that the Judge has failed to take into account some relevant and incontrovertible factors such as the plaintiffs’ visit to the School after the interim injunction was peaceful and this status should continue, there was no class under COVID, there is no reason why the defendants should be put in a better position than the plaintiffs when both of the parties have the same right to enter the School, particularly the injunction was required to enable the plaintiffs to achieve their task to uphold the public interest of running a school on the Lot.

27.We disagree. The Judge had addressed these points in the Leave Decision :

‘ 22. The suggestion that the plaintiffs’ visitations to the School have been largely peaceful after the 2021 injunction was in place is debatable. There were 2 such visits, namely the 3^rd and 4^th visits. While the 4^th visit passed without incident, the 3^rd visit caused a dispute as to compliance or otherwise with the 2021 injunction.

23. But the prior history (namely the 1^st and 2^nd visits) is not irrelevant. It is an understatement to say that the plaintiffs’ conduct was unnecessarily confrontational and aggressive. That coupled with what was sought being unrestricted access without prior notice not unnaturally caused serious concern having regard to the fact that one is dealing with access with a fully operational and functioning School.

24. In so far as it was submitted that no classes would be ongoing as Covid had caused the summer break to take place in March 2022, it is a fact that Covid causes an ever-changing regimen of freedom and restrictions with little notice. It would not have been prudent to disregard its unpredictability and the speed at which conditions could change. In any case, the plaintiffs’ submission has been overtaken by events as all schools have re-opened.’

28.The plaintiffs relied on The Church of Jesus Christ and Latter Saints Hong Kong Ltd v Jessica Park and Ano HCA 1167/2001 (Decision 8 November 2001) and submitted that an injunction should be granted as a matter of course unless the defendants can demonstrate as a matter of course that they are entitled to prevent the 1^st plaintiff from entering the Lot. Deputy High Court Judge Poon (Poon CJHC as he then was) in that case held :

‘ 9. A landowner whose title was not disputed is prima facie entitled to an injunction to restrain trespass on his land, even if the trespass did not harm him, although there could be exceptional circumstances which would make the granting of an injunction inappropriate. On an interlocutory application, such an injunction should, in the absence of exceptional circumstances, be granted unless the defendant satisfies that court that there was an arguable case that she has a right to do that which the plaintiff alleged to constitute a trespass. Only if such the defendant could show such an arguable case should the court go on to consider the balance of convenience, the preservation of the status quo and the adequacy of damages as a remedy: Patel & others v. WH Smith (Eziot) Ltd & another [1987] 1 WLR 853, English Court of Appeal, followed in Lea Tai Property Development Ltd v. Incorporated Owners of Lea point Industrial Building [1996] 1 HKC 193, CA.’

29.In our view, this is one of those cases where it is inappropriate to grant the injunction in view of the nature of the case and the factors that the Judge had addressed.

30.Before Au‑Yeung J the plaintiffs had given undertakings that they would give advance notice for the visit, the number of visitors would be limited to five and they would only enter at restricted hours. They refused to give similar undertaking at the inter partes hearing before the Judge. The plaintiffs changed their position again in this application and indicated that they would give prior notice before any visit and would accept restricted access. In our view, the giving of these undertakings does not affect the core decision by the Judge as to why the visit would not accomplish the purposes relied upon by the plaintiffs. Further, as Ms Sabrina Ho and Ms Kelly Cheng for the defendants have submitted, the plaintiffs have not proffered any explanation as to why they should be allowed to rely on this new position on appeal.

V.  Conclusion

31.In our view, it is not reasonably arguable, or the appeal has no reasonable prospect of success (which is the same), that even if the Judge was wrong on the issue of serious question to be tried, she was plainly wrong on the issue of balance of convenience. Put it in another way, even if we were to exercise the discretion afresh, we would not have come to a different view on the issue of balance of convenience.

32.Accordingly, the application for leave was refused with costs to be paid by the plaintiff to the 1^st and 4^th defendants. Having considered the 1^st and 4^th defendants’ statement of costs (as amended) and the plaintiffs’ list of objections, we summarily assess the 1^st and 4^th defendants’ costs at $130,000. The 1^st defendant’s own costs are to be taxed according to the Legal Aid Regulations.

Mr Sunny Chan and Mr Samkei Chan, instructed by K. C. Ho & Fong, for the plaintiffs

Ms Sabrina Ho and Ms Kelly Cheng, instructed by Tai & Co. for the 1^st defendant (assigned by the Director of Legal Aid) and the 4^th defendant