Man Tai Sang the Managers of the 'Man Un (or Yun) Uk Wai (文元屋圍)' Registered Under S.15 of the New Territories Ordinance v. Man Luk Sing and Others

HCMP 1005/2020

[2023] HKCFI 1423

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1005 OF 2020

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REASONS FOR JUDGMENT
AND FURTHER DECISION ON ORDER

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A.  INTRODUCTION

1.These proceedings concern some 800,000 square feet of land (“the Land” or “the said land lots”) in San Tin (新田), the New Territories, in Lot Nos 741, 744RP, 746RP and 748RP, all in Demarcation District 99, owned by Man Un (or Yun) Uk Wai (文元屋圍) (“the Wai”).

2.Man Tai Sang and Man Hon Choi had since 8 October 1984 been registered as the managers (司理人) of the Wai under section 15 of the New Territories Ordinance[1] and were, at the commencement of these proceedings on 14 July 2020, the sole surviving managers thereof. They commenced these proceedings jointly as the applicants. Man Hon Choi passed away on 20 October 2020 (whereupon his appointment as a manager of the Wai terminated with no cancellation or revocation being necessary[2]), and Man Tai Sang is now the sole manager of the Wai. This matter carries on with Man Tai Sang as the sole applicant, and the name of Man Hon Choi was deleted by order dated 19 April 2021.[3]

3.The four respondents are the four members of the Wai. By order dated 16 December 2020 made by DHCJ To, leave was granted under Order 15, rule 13A, of the Rules of the High Court,[4] to serve notice of these proceedings on the District Officer of Yuen Long (“DOYL”), which was effected on 11 January 2021. On behalf of DOYL, the Secretary for Justice appears before me by counsel as an interested party. I thank the DOYL and his counsel, Ms Connie Lee, for their assistance.

4.This is an application for directions by me under section 56 of the Trustee Ordinance[5] and Order 85 of the Rules of the High Court regarding a proposed sale of the Land by the Wai. There is no dispute that at least Order 85 is applicable to a wai in the New Territories[6] and I shall proceed under Order 85 herein.

B.  THE FACTS

5.From the evidence filed before me, the following facts, which are not in dispute, can be stated.

6.The Wai is a business t’ong (商堂) founded by members of the Man (文) and Poon (潘) clans prior to 1898, when the New Territories was, as a result of the Second Treaty of Nanking, ceded to the then British Empire for a term of 99 years. It is not an ancestral tso or t’ong.

7.In setting up the Wai, money and money’s worth were contributed by members of the Wai and used to acquire agricultural land at San Tin, and such land has been let in return for rental income to be shared amongst members in accordance with their respective shares of interest in the Wai.

8.The Wai is, at all times, divided into 334.45 dou (斗), being a traditional Chinese weight measurement, and members have definite shares of interest as evidenced by the Land Entitlement Books (田份簿) issued by the managers of the Wai which contain, inter alia, terms of the relationship amongst members.

9.As at the date of the Block Crown Lease (1905), the Wai had 2.4 million square feet of agricultural land all situated at San Tin but, as time went by, sizeable parts thereof were resumed by the government resulting in the area of the Land now owned by the Wai to be reduced to slightly over 800,000 square feet.

10.At all times the Wai has managers registered with the Land Registry as its representatives in accordance with the traditional Chinese law and custom (as recognised under section 13 of the NTO), holding landed interest in the New Territories.

11.It is common ground that the running of the business of the Wai (inclusive of holding meetings and passing of resolutions etc.) is to be governed by Chinese law and custom and not by Hong Kong law.

12.Transferees of shares in the Wai are not confined to members of the Man clan and this appears to be in accordance with the traditions of the Wai.

13.From records kept by the Wai since 1997 (when computer started to be used in managing the business of the Wai), as a result of acquisition by existing members, by and since 2015, there have been only the following four persons/entitles as members:[7]

(1)  The 1^st respondents, who jointly hold 315.2 dou, i.e. 94.245%.

(2)  The 2^nd respondent, who holds 9 dou, i.e. 2.69%. It is to be noted that Man Tai Sang is the sole manager of both the Wai and the R2 Tso (in which capacities he is both the applicant and the 2^nd respondent in these proceedings).

(3)  The 3^rd respondent, who holds 5.25 dou, i.e. 1.569%.

(4)  The 4^th respondent, who holds 5 dou, i.e. 1.494%.

14.Given a term in the 1990 Land Entitlement Book (the latest edition of that Book available) that, apart from expenses, all rental income received by the Wai needs to be distributed amongst members, the Wai is unable to accumulate substantial income for the development of the Land. The 1^st respondents, being members holding over 94% share of interest in the Wai have, on more than one occasion, called for meetings of members to pass a resolution with a view to selling the Land so that they could retrieve their investment in the Wai.

15.On 26 October 2017, a notice of meeting of the Wai was issued and signed by the two managers (one of whom was Man Tai Sang) of the Wai for a meeting of members to deal with a proposal of the 1^st respondents for the sale (with consequential directions) of the Land.

16.On 12 December 2017, during a meeting of the Wai attended by all four members (i.e. all four respondents), due to the fact that some of those attending needed time to consider the issue, the meeting was adjourned to 12 February 2018.

17.On 10 February 2018, the managers of the Wai issued a notice reminding members of the adjourned meeting. While the notice was purportedly in the name of both managers, only Man Tai Sang signed the same. On 11 February 2018, the 4^th respondent sent a letter to the Wai giving notice that:

(1)  The 4^th respondent would oppose the 1^st respondents’ proposal to sell the Land; and

(2)  The 4^th respondent was willing to have the Land partitioned in accordance with the share of interest held by members (presumably for his own share to be transferred to him).

18.Prior to the meeting to be held on 12 February 2018, Man Tai Sang did not convene a meeting of the R2 Tso to inform its members of the forthcoming meeting or to ascertain their wishes on the proposal to sell the Land.

19.The adjourned meeting was held on 12 February 2018. The adjourned meeting was attended by the 1^st, the 2^nd and the 3^rd respondents, but not the 4^th respondent. It is not clear from the record of the meeting whether Man Hon Choi was present, but the record was signed by both managers. At the meeting, the letter of the 4^th respondent was considered and treated as an additional agenda item for consideration and various resolutions were passed inclusive of:

(1)  vetoing the proposal of the 4^th respondent; and

(2)  accepting the proposal of the 1^st respondents,

by overwhelming majority (“the Resolutions”).

20.During the adjourned meeting, Man Tai Sang (one of the two managers of the Wai), in his other capacity as the manager of the R2 Tso, stood neutral to all proposals.

21.Since the adjourned meeting of 12 February 2018, a record of what happened at that meeting was given to all members of the Wai inviting them to consider and raise issue (if any) on the record but none of them did so.

22.On 19 July 2018, the former solicitors for the applicant wrote to the DOYL applying for consent to sell the Land under section 15 of the NTO.

23.By letter dated 30 August 2019, the DOYL notified the applicant that six objections to the proposed sale of the Land had been received. The letter said that the DOYL had obtained the consent of two of the objectors to disclose their reasons for objecting, which were:

“(a) 不同意土地以低價出售, 司理人應列出有關土地的面積及每平方呎地價; and

(b) 對申請全不知情, 沒有人通知他(們)有關出售事宜.”

24.By another letter dated 16 September 2019, the DOYL said that one Man Fu Chai (文富齊), who claims to be a member of the R2 Tso, also raised the following reasons for objection:

“ (a) [The R2 Tso] 司理人從未就題述事宜召開會議; and

(b) 沒有記錄將物業出售給任何人或公司.＂

25.The former solicitors for the applicant asked the DOYL to disclose the identities of the six objectors so as to see if they had the locus standi to object, but the latter declined the request.[8] In any event, the former solicitors acting for the applicant wrote back to the DOYL which inter alia purported to answer the objections.

26.On 14 July 2020, after giving notice to the DOYL of their intention to do so, the then two managers of the Wai applied, by way of an Originating Summons, to this Court for the determination of the following questions or issues:

“(a) Whether the Applicants, in their capacity as the statutory managers of the Wai registered under s.15 of the New Territories Ordinance, may act upon the resolutions passed by members of the Wai during a meeting of its members held on 12.2.2018 (hereinafter called ‘the said Resolutions’);

(b) Whether, the objections raised by persons undisclosed to the Applicants and received by the District Officer, Yuen Long and referred to by him in his letters of 30.8.2019 and 16.9.2019 are valid objections so that the Applicants would be precluded from acting upon the said Resolutions;

(c) if, answers to:-

(i) question/issue (a) be positive; and

(ii) question/issue (b) be negative

directions of the Honourable Court may be given as to the modes and manners of sale and disposal of the landed interest of the Wai set out in the Schedule hereto subject to the consent of the District Officer, Yuen Long, to be given under s.15 of the New Territories Ordinance;

(d) Such further and/or other relief as this Honourable Court may deem necessary and expedient to give consequential upon determination of any of the questions/issues set out in (a) – (c) above;

(e) Provisions may be made for costs of and occasioned by the application herein”.

27.In the joint supporting affirmation of Man Tai Sang and Man Hon Choi, the reason for making this application is stated as follows:

“The whole purpose of the present exercise is for us to obtain guidance from this Honourable Court as to the mode and manner of sale so that we would be advised as to how the said Resolutions could be implemented. At the same time, given the existence of the aforesaid objections raised by some objectors, we would also need guidance from the Court as to their validity or otherwise how to deal with them before considering the directions on the mode and manner of sale”.

28.The Originating Summons dated 14 July 2020 and the supporting affirmation dated 2 July 2020 were served on the DOYL on 27 July 2020 at the Yuen Long District Office. In the covering letter, solicitors for the applicant stated:

“We are instructed to send for your information copies of the Originating Summons with supporting affirmation to enable your esteemed office to know the substance and progress of the issues between our applicant client and the respondents. In so doing, your esteemed office would receive notice of our client’s application to the Court which may assist your esteemed office to consider whether S. 15 consent should be given”.

29.The reason why those documents were served on the DOYL although he was not named as a respondent is further elaborated in the joint supporting affirmation as follows:

“82. Insofar as (a) is concerned, given the refusal of the District Officer, Yuen Long to disclose their identities, the 6 objectors are anonymous to us and, in the absence of their identities and addresses, it is not possible for us to join them as respondents to the Originating Summons herein even should we choose to do so.

83. Despite that, upon the issue of the Originating Summons, a copy of the Originating Summons would be served upon the District Officer, Yuen Long for him to transmit notice of the Originating Summons to these anonymous objectors and, should the latter choose to do so, they could apply to join in the proceedings herein under Order 15 rule 6(2)(b) RHC upon showing their interest.

84. We are forced to take this step as the District Officer, Yuen Long has, despite demands, refused to reveal their identities so as would enable Counsel to consider their locus standi, if any, and the necessity of joining them in our present application.

…

89. Insofar as the District Officer, Yuen Long is concerned, upon advice, apart from giving notice of our intention to take out the present legal proceedings, our solicitors would serve informally the Originating Summons and the supporting affirmation to him so as to enable him to know the substance and progress of the issues between the Applicants and the 1^st – 4^th Respondents. In doing so, the District Officer, Yuen Long would receive notice of our application to the Court which may assist him to consider whether s.15 consent should be given”.

30.As stated at [3] above, by order dated 16 December 2020 DHCJ To, after hearing counsel for the applicant and counsel for the 1^st respondents, granted leave to serve notice of these proceedings on DOYL under Order 15, rule 13A.

31.Acting by the Department of Justice, the DOYL acknowledged service on 21 January 2021 and indicated his intention to contest the proceedings.

32.On 9 March 2021, by consent of the applicant and the Secretary for Justice on behalf of the DOYL as the interested party, Master Tse made a consent order ordering inter alia the DOYL to file and serve affirmation in opposition to the application by 16 March 2021.

33.The DOYL did so by affidavit dated 16 March 2021. In that affidavit, while stating that he maintains a neutral stance in this matter, the DOYL raises inter alia the following issues on the validity of the resolution to sell the Land:

(1)  Whether Man Tai Sang, whilst acting as the manager of the R2 Tso, would be in a position of conflict of interest and duty (as he was also one of the two managers of the Wai in convening the meeting) during the adjourned meeting; and

(2)  Whether Man Tai Sang’s neutral vote would be valid without first calling a meeting of the R2 Tso to determine the issue.

34.By a notice dated 25 March 2021 issued by Man Tai Sang as the sole surviving manager of the R2 Tso, a meeting of members of the R2 Tso was convened, which was held on 6 April 2021 when a majority agreed to oppose the proposed sale of the Land and the relief sought in these proceedings. This was reported to the Court by an affirmation of Man Tai Sang in his capacity as the manager of the R2 Tso with supporting documents.

35.The matter was heard before me on 19 and 20 April 2021. It was adjourned on 20 April 2021 in circumstances as stated at [38]-[39] below.

36.It is noted that some of the objectors have withdrawn their objections to the proposed sale. Ultimately, as summarised by the DOYL, the following three objections remain:

(1)  “現本人就…出售許可申請提出反對, 並且聲明此出售許可申請並沒有獲得本人授權或同意, 並提出反對此出售許可申請.” The objector is anonymous.

(2)  “元朗民政事務署祖堂事務組近日張貼通告指文元屋圍司理通過有份人會議出售祖堂物業, 但祖堂眾子孫對此是毫不知情, 特函反對物業出售”. This anonymous objector claims to be a member of one of the tsos which is a member of the Wai.

(3)  “[The R2 Tso] … 從來未向子孫召開會議和記錄出售給任何人和公司, 大部份子孫即持份者對於上述出售買賣事項堅決反對, 及希望司理人不要越權和濫權今次出售…”. This objection was raised by Man Fu Chai and Man Mei Kwai.

37.I also note that after the hearing was adjourned on 20 April 2021, on 13 May 2021, another meeting of the Wai was convened. The 1^st, the 2^nd and the 3^rd respondents attended, but not the 4^th respondent. Man Tai Sang, in his capacity as the manager of the Wai, was assisted by solicitors in holding the meeting. At the meeting, the resolutions at the meeting of 12 February 2018 were affirmed. However, rather inconsistently, a resolution was then passed that the Wai should cast another round of votes in relation to the agenda enclosed in the members’ notice dated 10 February 2018. That is, having just affirmed the resolutions of 12 February 2018, it was resolved that the members would vote on those matters all over again. Be that as it may be, the proposed sale of the Land and the terms of sale were voted on again, and approved by majority. For each proposed resolution on 13 May 2021, the 1^st and the 3^rd respondents were recorded as voting in favour, and the 2^nd and the 4^th respondents were recorded as voting against (save that the 2^nd respondent also voted in favour of voting on the agenda items again).

C.  EXPERT EVIDENCE

C1.  The need for expert evidence

38.It can be seen from the above narrative that various issues are raised in this matter which the Court has to resolve, and for which the Court would require the assistance of expert evidence on Chinese law and custom. However, no such evidence was filed before the hearing which was to commence on 19 April 2021. At the start of the second day of the hearing on 20 April 2021, Mr KM Chong,[9] counsel for the applicant, applied for leave to adduce expert evidence on various matters, as a result of certain observations by me during the previous day as to the lack of such evidence. While wholly unsatisfactory, as the need for expert evidence on those matters must have been plain and obvious well before the hearing, I, subject to the question of costs, allowed the application and adjourned the hearing, because, given the nature of this application, a disposal thereof by reason of lack of necessary evidence, which would most likely happen had I refused to adjourn, is even less satisfactory as that would prejudice the proper administration of the Wai to the detriment of all its members, i.e. all the respondents. I shall deal with the question of costs at the end of this judgment.

39.As a result, I adjourned the hearing and gave directions that expert evidence be filed by the parties. The issues to be dealt with by expert evidence, set out below, are distilled from the materials in this matter so far, as directed by me with input from the parties (including the DOYL). In the end, only the applicant files expert evidence on Chinese law and custom, by filing a report dated 16 May 2022 by Professor Michael Palmer, whose qualification as an expert in Chinese law and custom is not in any doubt whatsoever and I accept him as such an expert. I deal with his evidence in Sections C2 and C3 below. I am grateful to him for the considerable assistance that he renders.

40.Mr KM Chong, for the applicant, whose position is supported by the 1^st respondent, strongly questions whether the DOYL has any locus standi to raise the various issues in this matter, this being, he submits, a matter that concerns the internal management of the Wai only. While Mr KM Chong accepts that if the sale of the Land is to take place eventually, consent by the DOYL under section 15 of the NTO is necessary, he submits that the matter has not reached that stage yet. A considerable number of authorities are cited by him in support. Indeed, Mr KM Chong goes as far as saying that if I am with him on the locus standi point, I do not even have to consider the expert evidence of Professor Palmer, as the issues which he discusses are raised by the DOYL.[10]

41.The question of the locus standi of the DOYL to raise the issues which may affect the validity of the meeting or the Resolutions is relevant to two matters. First, whether I can or should consider those issues. Second, on the question of costs. I shall deal with the question of costs in Section D3 below. As for the first matter, I do not accept Mr KM Chong’s submissions that I do not need to consider the issues of Chinese law and custom raised, even if I accept his submissions on locus standi, for the following reasons.

42.This is not an adversarial proceeding. This is an application for directions under Order 85 of the Rules of the High Court. As stated by Chu JA[11] (as she then was) in Re Estate of Chiu Keung:[12]

“In the context of an O.85 application, it has also to be borne in mind that the court is essentially engaged solely in determining what ought to be done in the best interests of the trust estate and not in determining the rights of adversarial parties: Marley v Mutual Security Merchant Bank & Trust Co Ltd at p.201.”

43.Indeed, it is the submissions, correctly, of Mr KM Chong, citing Lord Oliver of Aylmerton[13] in Marley v Mutual Security Merchant Bank and Trust Co Ltd[14] in his written opening, that:

“In dealing with trust property, it is the duty of and, in fact, advisable for, trustees to seek the guidance from the Court whenever they are in genuine doubts as to the propriety of the steps to be taken in relation to the trust property.”

44.Genuine issues concerning the validity of the Resolutions and the procedural propriety of the adjourned meeting, which are governed by Chinese law and custom, having been raised (no matter how), they have to be resolved properly by me, before I can decide what directions I can and should give regarding the proposed sale of the Land. It is hardly necessary for me to say that it is not in the best interests of the Wai for the Land to be sold if there are legal objections to the validity of the meeting or the Resolutions, since it must be in the best interests of the Wai for its business and affairs to be lawfully and properly conducted according to all the applicable substantive and procedural legal requirements. The fact that the objections are ultimately dismissed as unsubstantiated does not necessarily mean that it is not legitimate to raise and consider them in the first place, and I do find the issues raised and for which expert evidence is directed to be legitimate issues which call for consideration and ruling by this Court before I can make the directions asked for, if at all.

45.Mr KM Chong’s own case is that all the issues which concern the validity of the meeting and the Resolutions were raised by the DOYL. Assuming that to be so, I reject the submissions of Mr KM Chong that had I ruled in his favour on the locus standi of the DOYL I do not need to consider the various issues opined upon by Professor Palmer, as if I can pretend that they do not exist. As I said, this is not an adversarial proceeding so that I only need to deal with issues that are properly raised in pleadings. As I put to Mr KM Chong during the hearing, even if the DOYL has not joined as an interested party and has not filed any affidavit, and indeed not involved in this matter whatsoever, but the applicant or his legal representatives somehow have been told, or otherwise become aware, of the legal issues raised and the potential invalidity of the meeting and the Resolutions, it must be their duty to bring them to the Court’s attention, and it must be my duty to consider them.

46.As Lam J (as he then was) said in Wu Shuk Chun v Kwong Oi Lin:[15]

“Second, whilst the Court can give directions or determine questions for the administration of estate under the O.85 procedure, the co-executors must ensure all the necessary information is placed before the court before they can expect this Court to give the necessary guidance.”

47.Asking the Court in effect to sanction a sale, knowing that there are legitimate legal issues which may invalidate the resolution to sell, even if the view taken is that those issues can be answered in favour of validity, without informing the Court of the same, cannot be the proper conduct of a trustee or persons in similar positions, and may even amount to misleading the Court.

48.Thus irrespective of the locus standi or otherwise of the DOYL to raise the various issues for which expert evidence is adduced, which I need not decide, it is necessary for me to consider those issues and the evidence therefor.

C2.  A wai in Chinese law and custom

49.Before I set out each issue for which expert evidence is sought and the answer thereto, I shall set out Professor Palmer’s evidence on the nature of the Wai as a business t’ong, which I accept.

50.According to Professor Palmer:

“The ‘business’ t’ong was one of several types of ‘t’ong, (堂, tang, literally ‘hall’), in the Qing dynasty in late imperial China and before. Perhaps forming a business t’ong in traditional China would ordinarily agree on a number of matters including, especially, the main purposes of the t’ong. Often in the New Territories and other parts of southern China, the purpose of creating this kind of traditional commercial organization would be to make profits from a land development project, primarily by means of rental income. Another common purpose was the establishment and management of a shop, often in a market town. The organization would be given a t’ong name, often ending with a Chinese term that spoke to Chinese traditions – perhaps (in Cantonese) ‘t’ong’ (堂), but perhaps alternatively ‘heung’ (鄉) or ‘she’ (社) or ‘wui’/‘ooi’ (會) or ‘gei’ (記) or in more recent times, ‘kung-sze’ (公司). This type of t’ong was (and still is) explicitly a business venture, established with a profit motive, and continuing profitability was needed if it was to continue to function. Founding and subsequent members and their respective financial contributions would likely to be listed, and a scheme agreed for rewarding their particular contributions, and dealing with any losses, would also be recorded. It is likely that the managers would also be appointed for the organization, and their duties specified. But there would be considerable variation in practice on the degree of formality used in setting up and running the business, and in the actual arrangements to which agreement was reached. The very distinguished mainland scholar specializing in legal aspects of the economy in Qing times, Professor Yang Guozhen, to whom reference has already been made, has emphasized that the evolution in Qing contracts for the creation of business organizations reflected developments in the commercial customs of the people (民間商業習慣法的發展: minjian shangye xiguanfa de fazhan). Contracts agreeing on the rights and obligations of the parties gradually moved in style from being relatively general in their wording to being more concretely drafted, and from being abstract to being more detailed in their provisions. However, since traditional Chinese law did not establish a specialized and independent contract law, the norms governing civil contracts were often localized in nature. In some cases, the membership of a guild in traditional times might have provided a more generalized framework of rules, as Jameson [sic] suggests:

each Guild issues rules and regulations by which all members are bound, prescribing the method of conducting business as for instance, length of credit to be given, responsibility for buyer and seller in case of damage by fire or water, period of free storage, mode of packing, quality of goods and so forth.[16]

However, in the rural society of the region (southern Xin’an Xian (新安縣) that became the New Territories of Hong Kong in 1898, there was only very limited guild development, and therefore guilds could not serve to provide a common corpus of customary rules. The latter were a matter of local understandings and practice.

A t’ong (堂: tang) has been characterized in Hong Kong by Mr Justice Bokhary PJ and Mr Justice Chan in the Introduction to their joint judgment in Secretary for Justice (Appellant) v. TO Kan-chi and Ors, TO Fuk Tim and TO Kan-Chau as Managers of the TO KA YI TSO (First Respondents) and TO Cheung Lam & Ors (as representatives of the TO clan) (Second Respondents) [2000] Final Appeal No. 8 of 2000 (Civil) on Appeal from CACV No. 32 of 1999) as follows:

The t’ong is an institution of Chinese law and custom. At least as they are generally understood, t’ongs are essentially in the nature of unincorporated associations composed of individuals and with continuous succession through patrilineal descent from their founding members. A t’ong’s type depends on its purpose and activities. Generally if not invariably, the context in which the Hong Kong courts have dealt with t’ongs has been that of land in the New Territories.

The t’ong is also a more flexible organization than a tso. As characterized by James Hayes, the business t’ong is:

a business association as often as not … At the time of the lease [of the New Territories], that is, in 1898 there were [several] recognizable types.

The first was a purely business organisation between friends or business associates with no common relationship (e.g. Shui Shang T’ong of Tai O, which was formed by several otherwise unrelated Tai O businessmen, shopkeepers and farmers to buy land in the locality and share in the profits). The second was also a business organisation but one formed between clansmen etc. (e.g. CHI Wing Shing T’ong of Shek Pik which originated in the CHI clan of that place and was, among other things, a money loan association). [Unpublished Note entitled ‘T’ong and Tso in the New Territories’, by J. W. Hayes, 13 December 1962].[17]

The Man Yuen Uk Wai belongs to the first type of business t’ong as identified by Hayes, and although some of the constituent elements of the Wai were tso formed by clansmen, the Wai itself was a business organisation”.

“On the question of partnerships, the likelihood is that the terms ‘partnership’ hehuo (合夥) or heben (合本) and ‘business t’ong’ or shangtang (商堂) overlap. Both were created by contract, to which the parties agreed (as opposed to kinship ties) and, and aimed at profit (rather than ancestor veneration). Some of the important characteristics of a business t’ong are identified by Madeleine Zelin in her study of the business community of Zigong in Sichuan during the later nineteenth and early twentieth centuries,[18]

(a) a profit-seeking objective, such as developing agricultural land or engaging in commercial enterprise;

(b) a proper name, usually ending with the word t’ong (堂: tang) or a similar term, indicating ‘business’;

(c) the membership of the t’ong as accorded to the parties to the original contract or ‘constitutional document’ and those who invest subsequently in the t’ong. Often, the founding agreement was in writing, but oral agreements could also serve the purpose. Such members could and did include kinship based groups such as ancestral t’ong, and the male descendants of a founding individual member could become a member of that kinship group as time passed;

(d) the capital contributions made by the original and subsequent members in the form of money, land, other property or skill and labor,

(e) a management headed by one or several of the members or a person or persons appointed by the members;

(f) with respect to (d) and (e) there might be a clear distinction drawn between managing partners (huo夥) who had responsibility for business operations and purely investing partners (東dong) who did not.[19]

(g) an agreed mode for distribution of the t’ong’s profits and losses to its members, usually in proportion to their respective agreed contributions;

(h) transfer of membership of the t’ong by assignment was also possible.

Many of the bodies set up as ‘partnerships’ exhibited these features too. In an analysis of ‘heben’ Yang Guozhen (楊國楨 ‘The mode of ‘joint capital’ conducted by merchants since Ming and Qing period (明清以來商人 ‘合本’ 經營的契約形式)’ Studies on the History of the Chinese [Social Economy [中國社會經濟史研究], No. 3 [1987]: 1-9) points to such features, noting how the foundational agreement documents – very often providing the relevant details of the agreement between the parties – became more detailed and sophisticated over time in their provisions. He notes that they are likely to have a dispute resolution clause. Jamieson points to limitations of liability in the event of bankruptcy – in the partnership each partner is liable for a share of the debts proportionate to his share in the total capital, and perhaps a clearer division of labour between investors and managers of the partnership.[20] The article by Yang suggests that partnerships could be quite short lived, whereas with business ‘t’ong’ perhaps there was a longer term intention, but that is only my impressionistic view.”

51.The Wai being a business t’ong and not an ancestral tso or t’ong, it is not in dispute that, as a matter of Chinese law and custom, disposal of land does not require unanimous consent of its members. A majority decision suffices.[21]

C3.  Issues in relation to validity of the meeting and the Resolutions

52.Issue 1: Whether Man Tai Sang, as a co-manager of the Wai, could validly convene a meeting of its members when he was also, and would participate as, the manager of one of its members, the R2 Tso, and vote on behalf of the R2 Tso at the same meeting.

53.Answer by Professor Palmer:

“I conclude that Man Tai Sang could validly convene and vote at a meeting of the Wai”.

54.Issue 2: Whether Man Tai Sang, as a co-manager, might co-hold a meeting of the members of the Wai, despite being the sole surviving manager of the R2 Tso, to deal with internal management of the Wai, inclusive of the intended disposal of the said land lots by sale.

55.Answer by Professor Palmer:

“I conclude that in these circumstances Man Tai Sang could validly convene and vote at a meeting of the Wai held to deal with the Wai’s management including intended sale of land”.

56.I accept the answers of Professor Palmer to both Issue 1 and Issue 2. Relevant to both Issues, on the question of a possible conflict of interests for Man Tai Sang to act as both the manager of the Wai and the manager of the R2 Tso being a member of the Wai, Professor Palmer says, which I accept:

“In my view, any such conflict of interest is built into the system where there is a plurality of managers and those managers are chosen are representatives of the particular branch of which they are a member.

In my view if there is a conflict of interest and duty it is one that is built into the system – which is common – where a traditional organisation holding land in the New Territories has decided on the appointment of multiple managers. Typically, in such systems, the Managers are heads of the branches, as well as Managers of the organisation. So, in the absence of local custom dealing with this matter and specific to the tso in question, this is a generic problem rather than one in which Man Tai Sang might be considered to have acted unethically. Accordingly, in my view Man Tai Sang could validly convene and vote at a meeting of the Wui [sic]. The managers were under no obligation to reject the vote of Man Tai Sang, even though Man Tai Sang knew that no meeting of the tso had been called to discuss the intended sale of the Wai land”.

57.Issue 3: Whether Man Tai Sang and Man Hon Choi, as the co-managers of the Wai, were obliged to:

(a)  accept the vote cast by Man Tai Sang, in his capacity as the sole surviving manager of the R2 Tso, as a vote as a member of the Wai; and

(b)  reject the vote cast by Man Tai Sang, in his capacity as the sole surviving manager of the R2 Tso, when one of the co-managers of the Wai, namely Man Tai Sang himself, had actual knowledge that no meeting of members of the R2 Tso had been held to deal with matters relating to the meeting of the Wai with regards to the intended disposal of the said land lots by sale.

58.Answer by Professor Palmer:

“On (a) I conclude that they were so obliged.

On (b) I conclude that there was no obligation to reject the vote”.

59.Issue 4: Whether, should the resolution of members of the Wai to sell the said land lots be supported by a majority vote of 94.246% in voting rights during a meeting of members of the Wai, the said resolution would be rendered null and void by reason of:

(a)  One of its members (being the R2 Tso) holding 2.69% interest in the Wai, as represented by Man Tai Sang, had not convened a meeting amongst its members to consider the matters to be decided at the meeting of the Wai and he nevertheless cast a neutral vote during the said meeting;

(b)  Man Tai Sang had actual knowledge of the matters stated in sub‑paragraph (a) above;

(c)  during the meeting of members of the Wai, in counting votes, the managers of the Wai did not count the neutral votes as supporting the resolution.

60.Answer by Professor Palmer:

“On (a), I conclude that the said resolution was not null and void.

On (b) this is not relevant in my view.

On (c) the Managers are entitled to not count neutral votes. As a practical matter, more than 94% of members have voted in favour of the decision to sell the land, which is a very substantial majority for a business t’ong”.

61.I accept the answers of Professor Palmer to both Issue 3 and Issue 4, which concern the validity of the neutral vote casted by Man Tai Sang in his capacity as the manager of the R2 Tso when he, as the manager of the Wai, actually knew that he had not held a meeting of the R2 Tso itself to consider the proposed sale. Professor Palmer elaborates as follows, which I accept:

“In my view it would have been preferable to call [a meeting of the R2 Tso first], but not strictly necessary”.

“I see no reason why Mr Man Tai [Sang] should not be allowed to caste [a neutral vote]. There are gave an [sic] explanation as to the reason for him casting a neutral vote (eg. not possible to convene a meeting due to: (i) too many members; (ii) some of whom live overseas, and (iii) too impractical due to quarrelling)”.[22]

“It is suggested that the neutral votes offered in the present case are inappropriate. I do not know of any norms in traditional Chinese law and custom, nor in local custom, which require [say] a branch head to limit decision-making to either ‘Yes’ or ‘No’. The neutral vote may be interpreted as ‘not opposing’ and thereby in effect implying consent in the absence of manifest opposition. There are good reasons for casting a neutral vote including the difficulty of convening a meeting with numerous members, some of them residing overseas and quarrelling between members”.

“As indicated above, unless there is a customary norm specific to the tso in question, requiring such a meeting, I would assume that there was some consultation and that Mr Man Tai Sang thought that his authority as tso Manager was sufficient. The tso was a segment of a business t’ong, and I would interpret Re Man Sham Chung Wui [2011] as indicating that processes of decision-making in a business t’ong context do not need to be as rigid in the case of organizations intended to venerate ancestors. Accordingly, I conclude that given these circumstances, Man Tai Sang could validly convene and vote at a meeting of the Wai held to deal with the management’s intended sale of land”.

62.Issue 5: What is the effect upon the resolution to sell the said land lots at the meeting of the Wai on 12 February 2018 when a resolution was passed by members of the R2 Tso in a subsequent meeting opposing the sale of the said land lots.

63.Answer by Professor Palmer:

“I do not think that the subsequent resolution by the tso is relevant”.

64.This appears to follow from the view of Professor Palmer that the neutral vote casted on 12 February 2018 was a valid vote. I accept the answer and the view of Professor Palmer.

65.Issue 6: Whether it is a Chinese tradition and/or customary practice that, whenever land belonged to an ancestral tso/t’ong or business t’ong, be disposed of by sale, a member would be given the priority to purchase or bid the same at the same price offered by the highest tendered of a non-member.

66.Answer by Professor Palmer:

“In general, there was a system of priority purchase in traditional Chinese law and custom in the sense that landowners intending to sell land were often expected first to offer the land for sale to a member of the same local lineage or clan. However land sales were private matters and I do not think this priority extended to a rule of priority that allowed for successful bid by a member at the same price offered by the highest tendered of a non-member”.

67.I accept the answer of Professor Palmer, who elaborates as follows, which I also accept:

“In many traditional Chinese land sales in southern China there was a customary norm to first offer land for sale to fellow lineage or clan mates. Only if an agreement for such a sale could not be achieved would the land be offered to outsiders. Selling land to outsiders was not only a loss in itself, but if the land to be sold was situated with the confines of that community then it had the potential to undermine the territorial integrity of the local community (heung: 鄉: xiang).[23]

In this sense there was a priority of purchase. I surmise that this was the basis for the system of closed ‘village auctions’ that evolved in the New Territories in the past century in which bidders may only be drawn from members of the local community. But I have not come across this being extended and formalized into a ‘customary’ rule such that a member would be given the priority to bid successfully at the same price as that offered by the highest price tendered by a non-member. In general, land sales in traditional China were negotiated in private rather than dealt with by public auction”.

68.Issue 7: Whether Man Tai Sang, as the sole surviving manager of the R2 Tso, had full power and authority to act for the Tso upon the death of the other two co‑managers in the circumstances where:

(a)  R2 is an ancestral tso which originally had three managers including Man Chau Lam and Man Chan Wan, registered under section 15 of the NTO; and

(b)  according to Man Tai Sang, no member of the R2 Tso has ever raised any doubt or objection to such of his capacity or statutory role including in the recent meeting on 6 April 2021.

69.Answer by Professor Palmer:

“On (a), in the operation of Section 15 of the NTO, the death of a manager does not formally confer on surviving managers authority to continue to make managerial decisions for the organization. Either a replacement manager should be selected and appointed or a decision formally taken not to replace the manager who has passed away. However, in practice traditional social organizations do not always carry out these formalities, for various reasons.

On (b) the absence of any such challenge in the form of expressed doubts or objection in my view confirms the authority of the manager”.

70.He elaborates as follows:

“It is often the case that a manager is expected to serve for life or until retirement, although nowadays sometimes a fixed term appointment is also used. Upon death a manager’s appointment is naturally terminated, as may be inferred from the provisions of Section 15 of the New Territories Ordinance:

If the members of any clan, family or t’ong holding land do not within 3 months after the acquisition of the land make and prove the appointment of a manager, or within 3 months after any change of manager prove the appointment of a new manager, it shall be lawful for the Government to re-enter upon the land held by such clan, family or t’ong, which shall thereupon become forfeited.

An alternative manager should be appointed, unless the members decide that no replacement is needed and this fact is reported to the District Officer (Secretary for Home Affairs). Disagreement about a replacement can be very disruptive for a traditional social organisation holding land in common, generating dissent and tension. Also, I am of the view that New Territories villagers are not always aware of the need to appoint and register a replacement manager. Sometimes an appointment is made but the appointee not registered with the government as required by the provisions of Section 15 of the NTO, for some considerable length of time. It would be very disruptive to the operations of the traditional social organisation if the District Officer (Secretary for Home Affairs) refused to recognise transactions carried out by surviving managers, and the penalty of reentry has to the best of my knowledge generally not been imposed.

The wording of Section 15 of the NTO thus provides that if an organisation has several managers, the death of one manager does not allow the remaining manager to make decisions unilaterally. But in my experience, sometimes it seems that surviving managers are simply unaware that they may not act alone. In Mak Lai Chuen v Lau Kar Yau [2009] 3 HKC 217, the District Court (Her Honour Judge Mimmie Chan) took the view that where two or more Managers are registered under Section 15 of the NTO, the surviving manager does not have the power to act for the organisation (in that case, a tso) up[on] the death of the deceased manager. This view was based on expert evidence on traditional Chinese law and custom that, so far as I can tell, was given without detailed understanding of the situation in the New Territories. In any event, in the appointment of managers the applicable law is Section 15 of the New Territories Ordinance and not traditional Chinese law and custom”.

71.It is interesting that Professor Palmer considers the question of the authority of a surviving manager of a Wai to be not a matter of Chinese law and custom. I would have thought that it is myself, and so did, for example, HHJ Mimmie Chan (as she then was) in Mak Lai Chuen v Lau Kar Yau.[24] As stated by Lord Millett NPJ[25] in Hip Hing Timber Co Ltd v Tang Man Kit,[26] the authority of a person to represent a heung (and it must be the same for a wai) is a matter of internal management, and presumably that ought to be a matter of Chinese law and custom.

72.In any event, the issue appears to me to be a question of fact, being the existence or otherwise of the authority of Man Tai Sang, as the sole surviving manager of the R2 Tso, to represent the R2 Tso and voted at the meeting of the Wai. On this, section 15 of the NTO[27] recognises that the manager of a clan, family or t’ong is primarily to be appointed by its members, subject to the power of the Secretary for Home Affairs to cancel the appointment and to select and appoint a new one on good cause being shown. Reporting of such an appointment, and the failure of making such an appointment and its reporting, carry certain consequences in relation to land held by the clan, family or t’ong. However, I do not read section 15 of the NTO to have the effect of depriving a manager, or a surviving manager, unless the appointment is cancelled by the Secretary for Home Affairs, the authority to act on behalf of a tso when he somehow has been conferred with such authority as a matter of fact.

73.In Mak Lai Chuen, there was expert evidence before the Court that since the managers were initially appointed jointly, they were to act jointly, and the death of one did not have the effect of conferring full power on the survivor, or transferring the power of the deceased to the survivor. The surviving manager therefore could not act alone. The tso had to appoint the surviving manager to be the sole manager, or to appoint someone to replace the deceased manager.

74.In the present case, there is no evidence of the terms of the initial appointment of Man Tai Sang and the two other managers who had passed away, and it is not clear if the factual circumstances in Mak Lai Chuen are applicable here. However, the evidence of Man Tai Sang, which I accept, is that no one has questioned his authority to act as the sole surviving manager of the R2 Tso, as evidenced by the fact that he did convene a meeting of the R2 Tso in April 2021 where there is no evidence that his authority to act as the manager of the R2 Tso at all was challenged. The objections taken were that Man Tai Sang ought to have called a meeting of the R2 Tso to consider the proposed sale of the Land before voting at the meeting of the Wai (which in itself implies that Man Tai Sang was indeed accepted as the sole manager of the R2 Tso with proper authority to act as a manager), rather than whether Man Tai Sang was the sole manager of the R2 Tso at all with whatever authority which he might have from such a position.

75.I find that Man Tai Sang did have authority to act as the sole manager of the R2 Tso at the meetings of the Wai notwithstanding the passing of the other two managers and with no apparent record of him being the sole manager registered under section 15 of the NTO. It is to be noted that there was no disposal or dealings of land held by the R2 Tso itself and thus the primary object of section 15, which deals with land held by a clan, family or t’ong and the positions of the managers in relation thereto, does not apply.

76.Issue 8: Whether the meeting of the Wai held on 12 February 2018 was validly convened and the resolution to sell the said land lots was valid where:

(a)  at the time, Man Hon Choi was the co-manager of the Wai registered under section 15 of the NTO;

(b)  but only Man Tai Sang had signed the Notice of Meeting;

(c)  it was not stated in the signed minutes of that meeting that Man Hon Choi was present and he therefore appeared to be absent at the said meeting.

77.Answer by Professor Palmer:

“On (a) This would not invalidate the calling of the meeting or the resolution to sell the said lots of land.

On (b) & (c): (b) & (c) are issues that are not matters of traditional Chinese law and custom. Rather, they are matters for the rules and practices that have evolved over the past century or so as a result of interaction between traditional social organizations holding land in the New Territories and the District Officer (Secretary for Home Affairs) in addressing the requirements of Section 15 of the NTO”.

78.Professor Palmer further states as follows:

“More specifically, the meeting of the Wai held on 12 February 2018 was validly convened and the resolution to sell the said land lots were valid, unless there is evidence to the effect that these events were against established customs of the Wai. I say this taking into account that at that time, Man Hon Choi was the co-manager of the Wai registered under Section 15 of the NTO, only Man Tai Sang had signed the Notice of Meeting, and it was not stated in the signed minutes of that meeting that Man Hon Choi was present and he therefore appeared to be absent at the said meeting. In any event, these are not matters of traditional Chinese law and custom”.

79.As in Issue 7 above, I find it strange that Professor Palmer does not consider this to be a matter of Chinese law and custom. In any event, it is clear that he does not consider that there is any principle of Chinese law and custom which may invalidate the meeting. Nor can I think of any such principle or reason as a matter of any Hong Kong law applicable. The meeting was a meeting of members of the Wai to discuss a proposal on how to deal with the only asset of the Wai. It was important that all members were duly notified of the meeting and were allowed to attend and to vote. They were and they did (except the 4^th respondent but it was he who gave up the right to attend himself on 12 February 2018, but then his written views were considered). Unless there is some rule in the Wai itself that both managers have to act together at all times, on which there is no evidence, I do not see how the fact that the notice of the adjourned meeting was only signed by one of the two managers, and only one of them might have attended,[28] can invalidate the meeting or the resolution to sell.

80.Issue 9: Whether Man Mei Kwai and Man Fu Chai being members of R2 Tso have any locus to raise objections to the proposed sale of the said land lots when they are not members of the Wai.

81.Answer by Professor Palmer:

“Man Mei Kwai and Man Fu Chai, members of R2 Tso do not have any locus to raise objections to the proposed sale of the said land lots as they are not members of the Wai”.

82.I accept his answer. On objections by members of the tsos which are members of the Wai, Professor Palmer also says, which I accept:

“Such objections are not valid as the objectors do not have appropriate standing. Their relationship with the Wai is only indirect, that is, through their tso’s membership of the Wai. The Wai held the registered properties owned in common, and its purposes were at variance with those of an ancestral tso. That is, it was and is a contractual agreement between parties and the purpose of the Wai was and is with making a profit – as one would expect for a business – not the commemoration of an ancestor. The fact that a tso was co-owner of the larger traditional social organization was not a reason to prevent a sale – albeit with reference to a slightly different context, see Re Man Sham Chung Wui ([2011] 1 HKLRD 427) at para. 57”.

“Whether non-members have any right to be heard will depend, in Chinese law and custom, on the customary norms specific to the organisation in question. The general position is that there was no such right for non-members, although the Chinese consensual approach to decision-making might encourage consultation with non-members likely to be impacted by any such decision”.

83.Regarding the anonymous objectors, Professor Palmer says, which I accept:

“I agree with the view that anonymously-made objections should not be considered on the ground that the Managers cannot be certain that the objectors are members of the Wai. The remaining objections are internal matters of the tso to which the objectors belong”.

D.  DISPOSITION AND COSTS

D1.  Order and directions made on 27 February 2023

84.For the above reasons, at the conclusion of the hearing on 27 February 2023, after considering the helpful expert evidence of Professor Palmer and hearing the parties further, I answered the two questions stated in the Originating Summons ([26] above) in the affirmative and in the negative respectively. I also gave directions for the sale of the Land. However, given that the 4^th respondent appeared before me in person and he claimed that he did not have sufficient time to consider the expert reports on the valuation of the Land adduced by the applicant, I gave him leave to file evidence and submissions within 28 days on the valuation of the Land. I therefore made the orders as set out in the Annex hereto, with [5] thereof granting the 4^th respondent the said leave.

85.The 4^th respondent sent a five-page submissions in Chinese, dated 26 March 2023 to the Department of Justice, which was apparently received by the latter only on 30 March 2023. Those submissions were not filed with the Court, or served on the applicant or any respondents. It was the Department of Justice which forwarded the submissions to the Court and the parties. Despite these problems, I decided to consider those submissions in any event. In the meantime, I directed that all the other orders and directions I made on 27 February 2023 be stayed.

D2.  The 4^th respondent’s further submissions

86.The valuation of the Land is relevant to the reserve price to be set for the auction thereof.

87.The applicant has filed two expert reports on valuation:

(1)  A report dated 16 January 2023 by Sat Wei Ling, of Memfus Wong Surveyors Limited, who opines the market value of the Land to be at HK$241,000,000.

(2)  A report dated 16 January 2023 from Siu Leung Hung Keith, of RHL Appraisal Limited, who opines the market value of the Land to be at HK$259,000,000.

The lower of the two figures is adopted as the reserve price in the directions I gave on 27 February 2023, subject to any further submissions of the 4^th respondent.

88.The leave which I granted to the 4^th respondent is confined to making further submissions and filing further evidence (including expert evidence) on valuation only, and not on the question of whether a sale of the Land should be sanctioned or to take place. Some of the further submissions of the 4^th respondent relate to matters other than valuation, which I shall ignore. I shall deal only with his further submissions which relate to valuation.

89.I note that the 4^th respondent has not filed any expert valuation report of his own in support of his submissions, or to challenge the two reports filed by the applicant. His comments, and my views thereon, are as follows:

(1)  The 4^th respondent says that the location of the Land means that it has great development potential, which should be taken into account. However, the Land has different planning uses which restrict the development of the Land. Its development potential on the basis of a variation of the permitted uses is highly speculative and I do not accept that the same ought to be taken into account.

(2)  Both reports cite the total area of the Land to be 802,076 square feet, supported by public documents. On the other hand, the 4^th respondent asserts that the total area of the Land is 850,776.62 square feet (i.e. 48,700.62 more than the figure in the reports). No evidence is adduced by the 4^th respondent in support of his assertion, which I reject.

(3)  The 4^th respondent says that the valuations in the reports are substantially lower than the true market value of the Land, referring to Internet searches. However, the Court simply cannot refer to any alleged comparables (even if they are truly comparables) without any expert assistance on adjustments to be made.

(4)  The 4^th respondent says the Land is now used for various purposes (mainly for storage and repair and maintenance of large vehicles), and not used for agricultural purposes or vacant like before. However, the valuation ought to be done on the basis of permitted use and not otherwise.

90.In the premises, the 4^th respondent has produced no proper basis to challenge the valuations. I direct that, apart from [5] thereof, all the orders and directions I made on 27 February 2023 are to be effective from the date of these reasons. For the avoidance of doubt, the date of the order for the purpose of [2] of the order is 27 February 2023.

D3.  Costs

91.I shall explain the order I make that the costs of the Secretary for Justice, acting for the DOYL, are also to be paid out of the assets of the Wai.

92.I have explained above how, irrespective of the question of locus standi, the DOYL, and Ms Lee, have helpfully assisted in identifying issues which legitimately called into question the validity of the meeting and the Resolutions, although those issues are resolved in favour of validity. This is something which the applicant (or those acting for him) should have done himself (or themselves) but did not.

93.Further, the history of the involvement of the DOYL, through the Secretary for Justice, in this matter as an interested party is highly important. As stated at [26] above, the DOYL was notified of the intention to commence these proceedings before the commencement. It was then on the applicant’s own application that DHCJ To gave leave for notice of these proceedings to be served on the DOYL under Order 15, rule 13A, which only authorises such service on a non-party

“who will or may be affected by any judgment given therein”.

94.By taking out the application, the applicant therefore must have accepted that the DOYL will or may be affected by any judgment given therein, otherwise he would have been knowingly making an application without basis. Further, not only is this consistent with the position stated in the letter dated 27 July 2020 from solicitors acting for the applicant ([28] above), in the skeleton submissions before DHCJ To seeking the order to serve the DOYL under Order 15, rule 13A, Mr KM Chong said:

“As DO/YL would be affected, albeit indirectly, to the judgment to be delivered in due course, Ps seek leave of this Honourable Court to give notice of these proceedings to DO/YL formally so that, if advised, DO/YL might consider applying to become a party under Order 15 rule 13A(4) RHC.”

95.On being served pursuant to an order under Order 15, rule 13A, either the party served acknowledges service, by which he becomes a party, or he does not acknowledge service, by which he will be bound by any judgment made as if he were a party. See Order 15, rule 13A(4). Thus, in either case, the party is bound by any judgment made. Contrary to what Mr KM Chong said in his skeleton quoted above, the DOLY did not have to apply to become a party. Indeed, as part of his submissions challenging the locus standi of the DOYL to raise the issues herein, Mr KM Chong says that the DOYL has failed to apply to become a respondent. There is no need for him to do so.

96.In this case, as I said, the DOLY did acknowledge service (indicating an intention to contest[29]), and becomes as a party hereto pursuant to Order 15, rule 13A(4). Being a party and being made to be bound by any judgment to be given herein by reason of the application by the applicant himself, for the DOYL to raise for consideration potential legal objections to the validity of the meeting and the Resolutions, cannot in my judgment be criticised by the applicant whatsoever. Indeed, without the proper and helpful assistance of the DOYL and Ms Lee, some of those issues might well have escaped my attention totally.

97.Further, the filing of the affidavit by the DOYL is pursuant to an order made with the consent of the applicant. It is in that affidavit that issues are identified which I consider to be legitimate issues for me to consider, and for which the opinion of Professor Palmer is filed.

98.In the premises, not only is the presence of, and participation by, the DOYL in this matter caused and initiated by the applicant, the DOYL and Ms Lee have positively assisted me in identifying the issues. Once joined, the DOYL is entitled to raise any relevant issues that he can see to assist me, in particular given the nature of the proceedings herein (being non-adversarial), even if (which I need not decide) strictly he is in no position to challenge positively the validity of the meeting or the Resolutions. In these circumstances, it seems to me that it is only fair that the costs of the DOYL should be paid out of the assets of the Wai. I do not think that even if (but which there is no need for me to decide[30]), as Mr KM Chong submits, the DOYL has no locus standi to say anything about the internal management of the Wai at this stage (before the application for consent under section 15 of the NTO is to be decided by the DOYL), that should affect the question of costs. If indeed the DOYL has no locus standi in the sense that he has no interest (and no say) at all in the subject matter of this application, then why was the order under Order 15, rule 13A, applied for, which could only have been on the basis that the DOYL “will or may be affected by any judgment” to be given herein, and why was he made an interested party, in the first place? What the applicant cannot do is to say that the DOYL may be affected by the judgment herein when it suits him (when he wanted an order under Order 15, rule 13A), and then say that the DOYL cannot even raise some genuine issues for me to consider later when that suits another objective of his.

99.I would observe that the professed reason of the applicant to seek to involve the DOYL in this matter, namely that by notifying the DOYL then it was “contemplated” that the anonymous objectors would be notified by the DOYL, is not a proper or valid one. It is not a proper use of Order 15, rule 13A, for a party to seek an order for the service of notice of proceedings on someone who, according to that party, has no locus standi or interest in the matter, but just so that other (unidentified) parties which may have such locus standi or interest may then be notified. That is, this procedure is being used as some sort of substituted service. What the applicant wants is to impose some obligations on the DOYL (to serve proceedings on the objectors on his behalf), and to bind the DOYL to the judgment herein (which as the applicant accepts may affect his consideration of the application for consent under section 15 of the NTO), without allowing the DOYL any say on anything as a party. This is unfair and unreasonable to the extreme. Further, there is in fact no order that the DOYL, on being served, is to notify the anonymous objectors, nor any order that service on the DOYL is deemed good service on the anonymous objectors. Thus, there is no basis at any time to think that the professed purpose of the applicant to serve the DOYL is likely to be achieved. Further, I doubt if such orders will be granted even if asked for. However, whatever is the reason for the applicant to involve the DOYL in these proceedings, and whether such reason is good, bad or indifferent, having done so, the applicant can hardly complain if the DOYL rendering (helpful) assistance to the Court and for the Wai as a whole to pay for his costs.

100.I have mentioned my view that expert evidence on Chinese law and custom ought to have been prepared before the hearing on 19 April 2021. In the premises, the adjournment for expert evidence to be prepared can be said to be the fault of the applicant, or more correctly those acting for him. I have considered an adverse costs order against the applicant or those acting, but since no respondents present ask for any such order I eventually decide against doing so.

101.For the avoidance of doubt, the order that the costs of various parties (and of the DOYL) be paid out of the assets of the Wai also applies to the costs incurred in relation to the further submissions of the 4^th respondent on valuation.

Mr K M Chong and Ms Vivian Li, instructed by Messrs. Wong & Poon, for the Applicant

Mr Alvin Chong, instructed by Messrs Gloria Chan & Co, for the 1^st Respondent

Mr Daniel W S Chan, instructed by Messrs T K Tsui & Co, for the 2^nd Respondent

The 3^rd Respondent was absent

The 4^th Respondent was absent on 19 and 20 April 2021 and appeared in person on 27 February 2023

Ms Connie Lee, instructed by Department of Justice, for the Interested Party

Annex

1.  Subject to paragraph 5 below, the applicant does have conduct and manner of sale of the land and premises known as Lot Nos 741, 744RP, 746RP and 748RP all in DD99 (“the said land lots”) subject to and in accordance with the directions set out in the Schedule hereof.

2.  The costs of and occasioned by the applicant’s application herein be paid out of the money and asset of the Man Un (or Yun) Uk Wai (文元屋圍) (“the Wai”) on a trustee basis with certificate for two counsel.

3.  The costs of the 1^st and the 2^nd respondents and the interested party be paid out of the money and asset of the Wai on a common fund basis with certificate for one counsel for each of them.

4.  There be no order as to costs as between the applicant and the 3^rd and the 4^th respondents.

5.  The 4^th respondent does have leave to file submissions and further evidence (including expert evidence) within 28 days hereof on the valuation of the said land lots. If he does file such submissions and/or evidence, then paragraph 1 above and the Schedule shall not have effect until further order of the Court and costs thereof are reserved. If he does not file such submissions and/or evidence, then paragraph 1 above and the Schedule shall take effect forthwith.

Schedule

1.  Subject to paragraph 3 of the directions below, the land and premises known as Lot Nos 741, 744RP, 746RP and 748RP all in DD99 (“the said land lots”) may be sold by the applicant as the manager of the Man Un (or Yun) Uk Wai (文元屋圍) (“the Wai”') to the highest bidder to be obtained by public auction with a reserved price of $241 million or their open market value as assessed in a valuation report to be obtained by the Wai pursuant to paragraph 2 below on an “as is” basis without vacant possession upon completion.

2.  Should the date of the issue of consent for sale of the said land lots be more than six months from the date of this Order, the applicant, as the manager of the Wai, shall within 14 days after the issue of consent for sale of the said land lots under section 15 of the New Territories Ordinance, obtain an update valuation advising him of the open market value of the said land lots on an “as is” basis without vacant possession.

3.  The applicant, as the manager of the Wai, shall, within 14 days after the issue of consent for sale of the said land lots under section 15 of the New Territories Ordinance publish an advertisement for three consecutive days in one English and one Chinese local newspaper giving notice of a public auction for the sale of the said land lots giving not less than 14 days' notice of the date of the public auction.

4.  Upon completion of the sale of the said land lots, all proceeds of sale of the said land lots shall be paid into a bank account in the name of Messrs Wong & Poon, solicitors for the Wai, who shall apply the same in the following manner and priority:

(a)  to discharge any government rent, rates, title document, custody fee payable in relation to the said land lots which remains outstanding and unpaid immediately before the completion of sale;

(b)  to pay and/or set aside a reasonable sum for the purpose of paying all legal costs, professional fees, expenses and disbursement payable or incurred or to be incurred for the purpose of or in connection with the sale of the said land lots and the distribution of proceeds, including but not limited to the legal costs of the parties as provided for in the Order herein and all other costs or expenses incurred for engaging counsel (including senior counsel if they consider necessary), solicitors, valuers and other professionals for their professional assistance in respect of all matters necessary or incidental to the sale of the said land lots and the distribution of proceeds;

(c)  to pay such other costs as ordered or directed by the Court; and

(d)  to distribute the remaining proceeds among the members of the Wai in accordance with their shares of interest of and in the Wai.

5.  There be liberty to the applicant to apply for further directions.