O’reilly Mark v. Mandatory Provident Fund Schemes Authority
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HCAL 1543/2024 [2025] HKCFI 382 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 1543 OF 2024 ________________________
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_________________ D E C I S I O N _________________ A. Introduction 1.The Applicant is one of two trustees of a pension scheme, governed by a trust deed and registered under the Occupational Retirement Schemes Ordinance Cap 426 (“ORSO”). The Applicant’s co-trustee is Deloitte China Pension (PTC) Ltd (“DCP”). 2.The Applicant sent a complaint document dated 1 December 2023 (“Complaint”) to the Putative Respondent (“MPFA”), alleging that:
3.In its reply letter dated 21 June 2024 (“Letter”), the MPFA rejected the allegations contained in the Complaint, and explained that the Applicant’s grievances were in any event outside the purview of the ORSO and the ambit of the MPFA’s authority. It was suggested that the more appropriate route to resolve the Applicant’s dispute with DCP would be through civil proceedings in the British Virgin Islands (“BVI”), whose laws govern the trust deed. 4.By his Form 86 dated 9 September 2024, the Applicant seeks leave to challenge specific paragraphs 20, 31, 32 and 37 of the Letter. He seeks by way of relief:
5.In the body of the Form 86, the Applicant makes various submissions (lettered A, B, C & D) and gives certain illustrations (lettered A & B), and asks:
6.I gave directions permitting the MPFA to file an Initial Response, and for the Applicant to file a Reply. I indicated that, depending on the contents of those documents (if any), I would decide whether to deal with the application for leave to apply for judicial review on paper and, if so, would proceed to do so without further notice to the parties. An Initial Response was filed, signed by Mr Rimsky Yuen SC and Mr Ian Yu of Counsel. The Applicant filed his Reply. 7.Subsequently, there was correspondence from the parties about the potential filing of additional materials, but I declined to entertain further correspondence nor application until I had given any other directions I thought fit in accordance with my previous directions. Having considered the materials already filed, I am satisfied that it is appropriate to deal with this application on paper. 8.This is my Decision. B. The Scheme 9.The material scheme was named in the relevant amended trust deed dated 2 March 2020 (“Amended Deed”) as ‘The Deloitte China Offshore Pension Scheme’ (“Scheme”). The Amended Deed varied the terms of an original trust deed dated 24 July 2015, which first established the Scheme. The Scheme is therefore governed by the Amended Deed and also the rules annexed to it (“Scheme Rules”). 10.The parties to the Scheme are the Applicant and DCP – as co-trustees – and Deloitte Touche Tohmatsu (Greater China) Holdings Ltd (“Deloitte China”). 11.Amongst other things, the Amended Deed’s operative provisions recognise that the Applicant is not and cannot be an employee or an Associate of Deloitte China or any relevant employer (as defined under the ORSO) which has employees who are Contributors of the Scheme. Hence, the Applicant is a ‘Non-Employer Trustee (“NET”). 12.DCP is an Employer Trustee (“ET”). Deloitte China is the relevant employer under the Scheme. 13.The Scheme is a pension trust into which money contributions are made in exchange for the promise from the trustees that pensions shall be paid to the contributors from returns generated from investing the money. 14.The Scheme Rules include provisions relating to the appointment of an actuary, whose powers include advising the trustees that the Scheme is underfunded in relation to its commitments to beneficiaries where it would be imprudent to allow that underfunding to continue. In those circumstances, Rule 16 requires the trustees to present to Deloitte China a written report by the actuary setting out his findings and making a recommendation as to the amount of a special contribution from Deloitte China as would restore the Scheme to a prudent level of funding. 15.Further Rule 32 provides that:
16.Rule 38 provides that:
C. Statutory Provisions 17.Before turning to the Applicant’s complaint and the MPFA’s Letter, it is convenient to identify the material statutory provisions around which the dispute in this case centres – within the overall statutory context. 18.The ORSO establishes a registration system for occupational retirement schemes and a framework to regulate them, both for schemes located within or without Hong Kong. By way of overview, it comprises various Parts, as follows:
19.The ORSO has three schedules: Schedule 1 lists the documents required for registration; Schedule 2 deals with actuarial certificates; and Schedule 3 lists the information to be contained in statements made under section 35 (a provision that bears no relevance to this case). 20.It is apparent that, as Registrar under the ORSO, the MPFA has no power to decide upon disputes arising from the management of registered schemes. Rather, the sorts of decisions the MPFA may make include exempting schemes from registration, withdrawal of exemptions, and modification or waiver of registration conditions, all of which are appealable to the Appeal Board. At least on first reading, the various provisions identify that the MPFA has no jurisdiction to adjudicate upon disputes between trustees, such as that between the Applicant and his co-trustee. 21.Looking at the most important provisions for present purposes, they can be seen as follows (in the order in which they appear in the ORSO):
22.In his Reply, the Applicant has also emphasized that his Complaint was made by reference to section 33A, which provides (insofar as seems material for present purposes):
23.I can return to these various provisions later. D. The Applicant’s Complaint 24.In a lengthy document dated 1 December 2023, with the heading ‘Complaint by the Non-Employer Trustee against the Employer Trustee’, sent undercover of an email dated 4 December 2023, the Applicant outlined his Complaint. It is apparent from the document’s title that the Complaint is directed by him against DCP. 25.At pages 19-20, the Applicant lists his items of complaint. These items target DCP’s alleged conduct acting as “sole trustee” without the Applicant’s consent on certain matters. They include, amongst other things, appointing a new actuary and blocking the Applicant’s attempts at accessing information in respect of the Scheme. 26.At pages 22-27, the Applicant explains why he considers that acting as sole trustee DCP contravened ORSO. He says the following:
27.At pages 33-36, the Applicant also says that as a NET, he is co-owner of the Scheme Assets with Deloitte, thus entitling him to use the assets in defraying his legal expenses arising from his efforts in performing his duties as a NET. E. The MPFA’s Letter 28.The MPFA carried out an investigation into the matter. After considering the materials submitted by the Applicant and DCP, the MPFA was satisfied that the Applicant’s Complaint failed to establish any non-compliance with the ORSO. 29.It is helpful to set out particular paragraphs of the Letter, including those paragraphs identified as the specific subject matter of the intended challenge in these proceedings (the latter being paragraphs 20, 31, 32 and 37):
F. Preliminary Objections 30.In addition to the submission that the Applicant’s contentions are not reasonably arguable – and Mr Yuen says they are also not properly supported by evidence – a number of preliminary objections are also taken. Mr Yuen submits that:
G. Whether “Decision” in Public Law Sense 31.Mr Yuen submits it is important to note that: (1) the Applicant’s Complaint is one made against his co-trustee; (2) it was not made pursuant to any statutory scheme or regime laid down in the ORSO; and (3) indeed, the ORSO does not contain any specific statutory provision or mechanism obliging the MPFA, in its role as the Registrar, to resolve disputes among trustees. 32.On that basis, Mr Yuen says that the Letter was in essence only the expression by the MPFA of its responses to the various allegations made by the Applicant. Hence, Mr Yuen submits that the MPFA did not make any “decision” (nor is there any “action” or “failure to act”) within the intended meaning of Order 53 rule 1A or what can properly be made the subject-matter of an application for judicial review. 33.As that submission identifies, Order 53 rule 1A provides that an application for judicial review includes an application in accordance with Order 53 for a review of the lawfulness of “a decision, action or failure to act in relation to the exercise of a public function”. The last aspect of that phrase is of some importance. 34.In this case, the MPFA’s reaction to the Applicant’s Complaint – which on its face stated it was made under section 33A of the ORSO, the section requiring trustees to document certain non-compliant events to the MPFA as Registrar – was to engage in an investigation, which included an examination and analysis of the provisions of the ORSO on which the Applicant had placed reliance. As the Applicant points out, this is consistent with information on the MPFA’s website that states that the MPFA may exercise its power to carry out investigations on suspected breaches related to ORSO schemes. 35.The MPFA provided its formal response, stating amongst other things that it saw no breach of the requirements of the ORSO. In doing so, it would appear that the MPFA was acting in its public capacity as the Registrar of the ORSO, even though its conclusion was also that it had no power to resolve the disputes between co-trustees, on its understanding of its own role and the correct interpretation of the statutory provisions. 36.In those circumstances, I would not dismiss this application for leave to apply for judicial review on the basis that the Letter does not contain a decision amenable to judicial review. H. Whether Academic 37.Mr Yuen submits that, since the Letter, the Scheme Assets have been transferred to a new scheme on 21 August 2024. The transfer was apparently effected with the consent of all the beneficiaries. Because the Applicant is not concerned with the new scheme, Mr Yuen submits that (1) it is wholly academic and/or it serves no useful purpose to continue to examine the issues raised in the Form 86, and (2) in any event, the Court should also decline to exercise its discretion to provide a remedy if to make an order would serve no practical purpose or would otherwise be a pointless exercise of discretion. These points, Mr Yuen says, justify dismissal of the present application for leave to apply for judicial review. 38.For completeness, Mr Yuen also points out that the MPFA feels obliged to inform the Court that the Applicant has separately challenged the transfer to the new scheme, though that falls outside the scope of the matters raised by the Form 86. 39.I see some force in the submissions, but I would not dismiss the application for leave to apply for judicial review on this basis alone. Where there is apparently an extant challenge to the transfer to the new scheme, it may not be appropriate to assume that all matters of potential complaint relating to the Scheme prior to transfer have thereby become entirely irrelevant or academic. Also, the present application is hinged upon a challenge to the MPFA’s interpretation of various provisions of the ORSO on the then pertaining facts, and I do not think it appropriate to dismiss the application on the basis that it could not serve any useful purpose. 40.Nevertheless, I note that in his Reply the Applicant has sought to raise and describe a “hypothetical case” where he “ask[s] the Court to advise on law, as addition to” this application. To an extent, the way in which the present application is framed itself seeks advice on the law – see above, and the description of the Form 86 which invites the Court to choose between various submissions as stating the position correctly. This is a point which I shall return in a Postscript below. However, it is worth stating here that the Court generally does not give “advice”, and in particular not on hypothetical cases. It will not do so in this case either. I. Remedy of Last Resort 41.It is trite that judicial review is a remedy of last resort, and that it would be only in the most exceptional circumstances that a Court will entertain an application for judicial review if other means of redress are conveniently and effectively available. 42.But this point seems to me to be inextricably wrapped up in the main aspects of the intended challenge, and can be dealt with in that context. J. Unanimity of Action by Trustees 43.I have set out above the statutory provisions found in section 25(2) and the 4th Paragraph of the ORSO. 44.By reference to those provisions, the Applicant argues that when the relevant employer or its associate is an ET, it must act unanimously with the NET; otherwise, it would be acting unilaterally or as “sole trustee”. In essence, the Applicant is arguing that section 25(2) and the 4th Paragraph impose a substantive obligation on trustees to act jointly. 45.I disagree that the interpretation offered by the Applicant is reasonably arguable. 46.It seems to me that section 25(2) is dealing with the appointment and existence of trustees. The section identifies simply that (1) if there is only one trustee, that trustee cannot be an ET, and (2) if there are two or more trustees, then there must be at least one NET appointed. The section goes no further, and it certainly does not arguably impose obligations or requirements on how acts are to be performed or decisions are to be made by the NET and any other trustees as a group. That does not reduce the role of the NET simply to one of an advisor (as the Applicant suggests). 47.I also agree with Mr Yuen’s submission that the Applicant’s contention is inconsistent with the statutory language, where a statutory obligation is never lightly imposed except expressly or by clear implication. That is not this case. 48.Further, to read the 4th Paragraph together with section 25(2) as the Applicant does, is to ignore the context of the existence of the 4th Paragraph, which in fact forms part of section 15. That section prescribes requisite documents (not obligations) for the purposes of registration. Hence, in the case of an offshore scheme, the 4th Paragraph simply obliges an applicant for registration to provide a statement by a foreign lawyer on the effect of the trust instrument, namely that it requires that the relevant employer of the scheme and his associate cannot act as the sole trustee of the trust. The paragraph was probably also intended to obviate the need for the MPFA to ascertain for itself the effect of the relevant trust instrument under foreign law. 49.I have also set out above the provision of Rule 38 of the Scheme Rules. This seems to me to be an express provision of the Amended Deed in line with the requirement of the 4th Paragraph. 50.Even if it is implicit that one of the purposes of the statutory requirements is that trustees – including both ET(s) and the NET – should act together, that does not make the MPFA arguably the ‘policeman’ of whether that happens as a matter of fact. The ORSO is concerned with setting up the correct structures and so forth. If the complaint arises – as with the Applicant’s Complaint – that a trustee has acted incorrectly as a matter of fact, the remedy lies in the private law relevant to that trust. 51.The above points seem to me to be conclusive. It is, therefore, not necessary to engage at any length with Mr Yuen’s further argument that the legislature has specifically refrained from engaging in a qualitative assessment of the NET’s “effectiveness”. I simply note the submission, made by reference to the Official Record of Proceedings (16 December 1992), that the issue of the NET’s “effectiveness” was once brought up but the draft legislation then specifically refrained from imposing any requirements on the NET’s qualifications, or any criteria on the appointment of trustees. On the other hand, I would also note that the relevant discussion seems to me to be more concerned with background qualifications, rather than any question of effectiveness or independence as a trustee in practice. I do not think the legislative materials are helpful. K. “Joint Tenancy” of Trust Assets 52.The essence of the Applicant’s argument is that the Scheme Assets were vested in him and DCP as joint trustees, which meant that those assets were held under a “joint tenancy”. However, as DCP had sole title and authority over the assets, the Applicant says he was precluded from accessing or otherwise using the assets towards the performance of his duties. 53.Although in his Complaint he did not raise section 21(1)(a) of the ORSO – which provision I have set out above – this was instead raised by the MPFA in the Letter, and the Applicant has since argued that the MPFA misunderstood the effect of that section. 54.The MPFA observed at §20 of the Letter that DCP did not breach section 21(1)(a) because DCP kept the Scheme Assets in separate accounts, despite doing so in its name, ever since the commencement of the Scheme, and that DCP did not have other accounts, assets or business of its own. This was confirmed by an unqualified audit report as true and fair as at 31 May 2023. 55.The Applicant says this ignores that section 21(1)(a) “assumes as a matter of common law that assets neither possessed by, nor vested in, a trustee under a trust instrument cannot be that trust’s assets”. The Applicant says that if he is precluded from accessing the Scheme Assets, even though at common law he and DCP are “joint tenants” to the assets, then such assets do not legally form part of the Scheme Assets. 56.I do not accept that this is reasonably arguable. The essence of section 21(1)(a) is simply that scheme/trust assets must be kept separate and distinct from, that is segregated from, other and/or personal assets held by the trustees and the employer. This is no more than a reflection of the established rule that trustees are generally not allowed to jeopardise trust assets by mixing them with non-trust assets, the rationale for which is to ensure that trust assets are able to be clearly identified, preserved and available for payment to the relevant beneficiaries. 57.In any event, the section makes no reference at all (whether express or implied) to the concept of “joint tenancy”. The concept of “joint tenancy” cannot be said to be implicit, either from the wording of the section or its context. I also agree with Mr Yuen’s submission that if section 21(1)(a) does impose a “joint tenancy”, an inherently common law concept, that may make little sense in civil law jurisdictions. Yet the ORSO’s design seeks to accommodate off-shore schemes wherever they may be. 58.Even if the Applicant does not mean to refer to “joint tenancy” in its usual technical legal sense – but instead simply intends a reference to trustees jointly holding all trust assets – I do not think that is a requirement encompassed by section 21(1)(a). As I say, that section seems to me to be dealing with segregation of trust assets from other assets as may be held by a trustee (or the employer), and not dealing with any general requirement that all trust assets of whatever nature must be held only under the joint ownership of all trustees, or that all trustees must hold title to trust assets jointly. 59.It seems to me that matters regarding vesting of trust property in the trustees, and their shared authority and decisions over it, are matters beyond the purview of the ORSO. But this only illustrates the private nature of what is the real dispute raised by the Applicant, on matters best dealt with through civil proceedings. 60.As Mr Yuen submits, stripped of its outer garments, the matters raised by the Applicant ultimately are matters of discord and conflict between two trustees. Whether or not the Applicant’s grievances are justified, the nature of the dispute is one for which he can commence an ordinary civil action. I note that the Form 86 makes reference to a previous attempt to engage the ET in arbitration for resolution of the disputes, and though no arbitration ensued in the absence of an arbitration agreement, that tends to identify a recognition that a private law dispute resolution process is appropriate. 61.Lastly, I agree with Mr Yuen that resorting to judicial review proceedings against the MPFA, when the Applicant’s real dispute is with DCP, is inappropriate. The Applicant has another remedy. L. Result 62.With respect, the present application is misguided. The true nature of the Applicant’s challenge is directed against DCP, and not the MPFA. His misgivings arose from DCP’s handling of matters under the Scheme, he says on occasions without his consent. These are matters between them both as trustees. The dispute is a civil private law matter and not a public law matter. 63.The reason why it has reached this Court is because the MPFA disagreed with the Applicant’s allegations of non-compliance with the ORSO. I see no basis to interfere with that stance. 64.But the MPFA did not rule upon the underlying dispute between co-trustees, disclaiming that it had any powers to do so. Besides, it is difficult to see how these proceedings would resolve that dispute, which only highlights the inappropriateness of the present application. Ultimately, the Applicant still has open to him civil proceedings against DCP and/or Deloitte China in the BVI. The present application is therefore unnecessary and is not of last resort. 65.The Applicant also says that it would be inappropriate to commence foreign proceedings since the issues arising from his dispute with DCP relate to the ORSO. As I have endeavoured to explain above, the ORSO does not actually bear upon these issues. 66.For these reasons, where the Applicant has failed to identify any reasonably arguable public law grounds of review with any realistic prospect of success, the Applicant’s application for leave to apply for judicial review must be dismissed. M. Postscript 67.In the Introduction section to this Decision, I set out the slightly unusual form (in the judicial review context) of the application, where the Applicant seeks an order declaring the proper construction of certain relevant statutory provisions “reflecting the context of common law”, and where he invites the Court to agree or disagree with his various offered submissions and illustrations. 68.Be that as it may, in reaching my conclusions on the applications, I have necessarily stated what I consider to be the proper construction or interpretation of the relevant statutory provisions in their statutory context. This may be relevant to the question of costs (see below). I have, however, expressly refused to engage in any hypothetical exercise of giving general advice on the law, notwithstanding the invitation of the Applicant so to do. N. Costs 69.In the Initial Response, Mr Yuen invited the Court to dismiss the present leave application, with costs to the MPFA to be taxed if not agreed. In his Reply, the Applicant did not address the potential costs order. Therefore, I propose to reserve the question of costs, to be dealt with by me after the parties have had the opportunity to read this Decision. 70.The matter of costs will be dealt with on paper submissions. Having considered an appropriate way for those submissions (not least where the Applicant is based outside Hong Kong), it seems to me that mutual submissions, with an opportunity for mutual reply, is appropriate to the circumstances. Therefore, I direct that (1) both parties may file any costs submissions (which must be limited to no more than five pages) on or before 28 February 2025, and (2) both parties may file any reply costs submissions (which must be limited to no more than three pages) on or before 14 March 2025. Thereafter, I will make my costs ruling.
The applicant, acting in person Mr Rimsky Yuen SC and Mr Ian Yu, instructed by Clyde & Co, for the putative respondent | ||||||||||||||||||||||||
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